
<PAGE>   1





________________________________________________________________________________
________________________________________________________________________________





                           FIRST AMENDED AND RESTATED

                                CREDIT AGREEMENT

                                    BETWEEN

                              QUEST MEDICAL, INC.

                                      AND

                           NATIONSBANK OF TEXAS, N.A.


                           Dated as of March 31, 1995





________________________________________________________________________________
________________________________________________________________________________
<PAGE>   2
                               TABLE OF CONTENTS


                                   BACKGROUND


<TABLE>
<S>      <C>     <C>                                                                                               <C>
ARTICLE I.  DEFINITIONS

         1.1     Definitions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1
         1.2     Accounting and Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            19

ARTICLE II.  ADVANCES

         2.1     Facility A Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            19
         2.2     Facility B Advances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            19
         2.3     Manner of Borrowing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            20
         2.4     Evidence of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            21
         2.5     Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            21
         2.6     Prepayments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            21
         2.7     Repayment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            22
         2.8     Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            23
         2.9     Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            23
         2.10    Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            24
         2.11    Continuation and Conversion Elections  . . . . . . . . . . . . . . . . . . . . . . . .            24
         2.12    Maximum Amount of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            25
         2.13    Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            26
         2.14    Taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            26
         2.15    Capital Adequacy; Increased Costs  . . . . . . . . . . . . . . . . . . . . . . . . . .            26

ARTICLE III.  CONDITIONS PRECEDENT TO ADVANCES.

         3.1     Conditions Precedent to Advances . . . . . . . . . . . . . . . . . . . . . . . . . . .            28
         3.2     Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . . . . . . . . .            31
         3.3     Legal Details  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            31

ARTICLE IV.  AFFIRMATIVE COVENANTS

         4.1     Books, Records and Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . .            31
         4.2     Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .            32
         4.3     Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            33
         4.4     Insurance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            33
         4.5     Compliance with Applicable Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . .            33
         4.6     Other Information and Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . .            33
</TABLE>





                                      (i)
<PAGE>   3
<TABLE>
<S>      <C>     <C>                                                                                               <C>
         4.7     Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.8     Taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.9     Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.10    Filings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.11    Maintenance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.12    ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            34
         4.13    Indemnity by Borrower  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            35

ARTICLE V.  NEGATIVE COVENANTS

         5.1     Liens  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            35
         5.2     Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.3     New Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.4     Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.5     Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.6     Fixed Charges Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.7     Current Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.8     Total Liabilities to Worth Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . .            36
         5.9     Current Maturities Coverage Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.10    Obligations Ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.11    Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.12    Eligible Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.13    Merger and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.14    Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            37
         5.15    Distributions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            38

ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

         6.1     Organization; Qualification; Authority . . . . . . . . . . . . . . . . . . . . . . . .            39
         6.2     Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            39
         6.3     Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . .            39
         6.4     Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            39
         6.5     Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.6     Actions Pending  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.7     Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.8     Title to Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.9     Taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.10    Regulation G, etc  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            40
         6.11    ERISA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            41
         6.12    Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            41
         6.13    Environmental Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            41
         6.14    Sufficiency of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42
         6.15    Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42
</TABLE>





                                      (ii)
<PAGE>   4
<TABLE>
<S>      <C>     <C>                                                                                               <C>
         6.16    Acquisition Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42
         6.17    Consummation of Acquisition  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42
         6.18    Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42

ARTICLE VII.  DEFAULT

         7.1     Events of Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            42
         7.2     Remedies Upon Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            44
         7.3     Performance by Lender  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            45
         7.4     Lender Not in Control  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            45
         7.5     Waivers  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            45
         7.6     Cumulative Rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            46
         7.7     Expenditures by Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            46

ARTICLE VIII.  MISCELLANEOUS

         8.1     Money  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            46
         8.2     Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            46
         8.3     Articles, Sections, and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . .            46
         8.4     Notices and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            46
         8.5     Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            48
         8.6     Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            48
         8.7     Parties in Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            48
         8.8     Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            48
         8.9     Governing Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            48
         8.10    MANDATORY ARBITRATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            49
         8.11    WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            49
         8.12    Maximum Amount Limitation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            50
         8.13    Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            50
         8.14    Amendment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            50
         8.15    Exceptions to Covenants  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            51
         8.16    Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            51
         8.17    ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            51
</TABLE>





                                     (iii)
<PAGE>   5
                                    EXHIBITS


Exhibit A                 Facility A Note
Exhibit B                 Facility B Note
Exhibit C                 Security Agreement
Exhibit D                 Intellectual Property Security Agreement
Exhibit E                 License Agreement
Exhibit F                 Compliance Certificate
Exhibit G                 Guaranty Agreement
Exhibit H                 Borrowing Notice
Exhibit I                 Conversion or Continuation Notice


                                    SCHEDULE


Schedule 1                Affiliates
Schedule 2                Allen Property
Schedule 3                Litigation





                                      (iv)
<PAGE>   6
                  FIRST AMENDED AND RESTATED CREDIT AGREEMENT


         FIRST AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated
as of March 31, 1995, between QUEST MEDICAL, INC., a Texas corporation, having
its principal office at One Allentown Parkway, Allen, Texas  75002
("Borrower"), and NATIONSBANK OF TEXAS, N.A., a national banking association,
having its principal office at 901 Main Street, Dallas, Texas 75202 ("Lender").


                                   BACKGROUND

         Borrower and Lender have entered into the Credit Agreement dated as of
October 22, 1993 (as amended, the "Existing Credit Agreement") providing for a
line of credit in the maximum principal amount of $3,000,000 ("Existing
Facility B") and a line of credit in the maximum principal amount of $5,000,000
("Existing Facility C").  Borrower has requested that Lender restate Existing
Facility B and Existing Facility C as a single $5,000,000 line of credit
("Facility A") the proceeds of which will be used for working capital purposes
and to provide a $15,000,000 term facility ("Facility B") the proceeds of which
will be used to acquire all capital stock of Neuromed, Inc., a Florida
corporation.

         In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, receipt of which is
acknowledged by all parties hereto, the parties agree as follows:


                                   AGREEMENT.

ARTICLE I.  DEFINITIONS

         1.1     Definitions.     The terms defined in this Article I (except
as otherwise expressly provided in this Agreement) for all purposes shall have
the following meanings:

         "Account" has the meaning assigned to such term in the UCC.

         "Acquisition Agreement" means the Agreement for the Purchase and Sale
of All of the Issued Capital Stock of Neuromed, Inc.  dated February 10, 1995,
between Borrower and Seller.

         "Acquisition Documents" means all agreements and documents related to
the Acquisition Agreement.

         "Additional Costs" has the meaning set forth in Section 2.9.

         "Advance" means an advance by Lender to Borrower pursuant to Article
II, and refers to a Facility A Advance or Facility B Advance.
<PAGE>   7
         "Affiliate" means any person that directly or indirectly through one
or more Persons Controls, or is Controlled By or Under Common Control with,
Borrower or a Person who Controls or is Controlled by, Borrower.

         "Allen Property" means the real property described on Schedule 2,
together with all improvements and equipment located therein.

         "Applicable Law" means the Laws of the United States of America
applicable to contracts made or performed in the State of Texas, including,
without limitation, 12 USC Sections  85 and 86 as amended to the date hereof
and as the same may be amended at any time and from time to time hereafter and
any other statute of the United States of America now or at any time hereafter
prescribing maximum rates of interest on loans and extensions of credit, and
the Laws of the State of Texas, including, without limitation, Articles
5069-l.04 and 5069-l.07 (a), Title 79, Revised Civil Statutes of Texas, 1925,
as amended at any time and from time to time hereafter and any other statute of
the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit ("Art. l.04").

         "Applicable Margin" means (a) with respect to Prime Advances, 1.25%
per annum and (b) with respect to LIBOR Advances, 3.00% per annum.
Notwithstanding the foregoing, after completion of the first full fiscal
quarter after the Effective Date, effective on the date of receipt (if such
date is a Business Day or, if the date of receipt is not a Business Day,
effective on the next Business Day) by Lender from Borrower of a Compliance
Certificate delivered to Lender for any reason and demonstrating a change in
the Margin Ratio to an amount so that another Applicable Margin should be
applied pursuant to the table set forth below, the Applicable Margin for each
Type of Advance shall mean the respective amount set forth below opposite such
relevant Margin Ratio in Columns A and B below, until the first succeeding
Quarterly Date which is at least one Business Day after receipt by Lender from
Borrower of a Compliance Certificate, demonstrating a change in the Margin
Ratio to an amount so that another Applicable Margin shall be applied; provided
that the Applicable Margin shall never be a negative number.

<TABLE>
<CAPTION>
                                                               Column A                Column B

 Margin Ratio                                                  Prime Base Rate         LIBOR Rate
 ------------                                                  ---------------         ----------
 <S>                                                           <C>                     <C>
 Greater than 2.75 to 1.00                                     1.25%                   3.00%

 Greater than or equal to 2.00 to 1.00 but less than           1.00%                   2.50%
 or equal to 2.75 to 1.00

 Less than 2.00 to 1.00                                        0.50%                   2.00%
</TABLE>

         "Art. 1.04" has the meaning given to such term in the definition of
Applicable Law in Article I herein.





                                      -2-
<PAGE>   8
         "Borrowing" means a borrowing under Facility A or Facility B of the
same Type made on the same day.

         "Borrowing Base" means, at the time in question, an amount equal to
the sum of (i) 80% of Eligible Accounts and (ii) 50% of Eligible Inventory.

         "Broker Cash" means all cash maintained in and subject to a Brokerage
Account.

         "Brokerage Account" means each account maintained for Borrower
pursuant to a written agreement between any other Person for the purpose of
securities, cash and other investment management, including but not limited to
accounts maintained with any Person who is a "dealer" subject to the Securities
Exchange Act of 1934 or the regulations related thereto.

         "Business Days" means days other than (i) Saturdays, Sundays and other
legal holidays or (ii) days on which banking institutions are authorized or
obligated to close in Dallas, Texas or, with respect to any notice, payment or
calculation related to a LIBOR Advance, London, England.

         "Capital Leases" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Collateral" means that property of Borrower or any other Person in
which Lender shall have Liens to secure payment and performance of the
Obligation.

         "Collateral Documents" means all security agreements, pledge
agreements and any other agreements or documents executed or delivered to
secure repayment of the Obligation or part thereof.

         "Commitment Fee" has the meaning set forth inSection 2.5(a).

         "Compliance Certificate" means a certificate, signed by a duly
authorized officer of Borrower, in the form of Exhibit F, appropriately
completed.

         "Consequential Loss" means with respect to (a) Borrower's payment of
all or any portion of the then-outstanding principal amount of a LIBOR Advance
on a day other than the last day of the related Interest Period, including,
without limitation, payments made as a result of the acceleration of the
maturity of a Note pursuant to Section 6.2, and (b) any of the circumstances
specified in Section 2.9 on which a Consequential Loss may be incurred, any
loss, cost or expense incurred by Lender as a result of the timing of the
payment of the Advance or in liquidating, redepositing, redeploying or
reinvesting the principal amount so paid or affected by the timing of the
Advance or the circumstances described in Section 2.9, which amount shall be





                                      -3-
<PAGE>   9
the sum of (i) the interest that, but for the payment or timing of Advance,
Lender would have earned in respect of that principal amount, reduced, if
Lender is able to redeposit, redeploy, or reinvest the principal amount, by the
interest earned by Lender as a result of redepositing, redeploying or
reinvesting the principal amount plus (ii) any expense or penalty incurred by
such Lender by reason of liquidating, redepositing, redeploying or reinvesting
the principal amount.  Each determination by Lender of any Consequential Loss
is, in the absence of manifest error, conclusive and binding.

         "Continue," "Continuation" and "Continued" each refer to the
continuation pursuant toSection 2.6 of a LIBOR Advance from one Interest Period
to the next Interest Period.

         "Control" or "Controlled By" or "Under Common Control" mean
possession, direct or indirect, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided that, in any event (i) any Person which
beneficially owns 20% or more (in number of votes) of the securities having
ordinary voting power for the election of directors of a corporation shall be
presumed to control such corporation, and (ii) no Person shall be deemed to be
an Affiliate of a corporation solely by reason of his being an officer or
director of such corporation.

         "Conversion or Continuance Notice" has the meaning set forth in
Section 2.6.

         "Current Assets" means the current assets of Borrower and its
Subsidiaries, determined in accordance with GAAP on a consolidated basis;
provided for purposes of any calculation of "Current Ratio" during the period
from the day after the Effective Date through June 30, 1995, "Current Assets"
shall not include the value of any property transferred from Borrower to Seller
pursuant to the Acquisition Documents.

         "Current Liabilities" means the current liabilities of Borrower and
its Subsidiaries (including the current portion of all unpaid principal amount
of all Advances), determined in accordance with GAAP on a consolidated basis;
provided for purposes of any calculation of "Current Ratio" during the period
from the day after the Effective Date through June 30, 1995, "Current
Liabilities" shall not include the value of any property transferred from
Borrower to Seller pursuant to the Acquisition Documents.

         "Current Maturities" means, for Borrower and its Subsidiaries,
determined in accordance with GAAP on a consolidated basis, scheduled principal
payments in respect of Term Debt, due within the twelve consecutive months
preceding the date of determination.

         "Current Maturities Coverage Ratio" means the ratio of (i) Net
Earnings Available for Current Maturities to (ii) Current Maturities.

         "Current Ratio" means the ratio of (i) Current Assets to (ii) Current
Liabilities.





                                      -4-
<PAGE>   10
         "Debt" means, with respect to any Person, all debt, obligations and
liabilities of such Person, including without limitation, (i) all "liabilities"
which would be reflected on a balance sheet of such Person, prepared in
accordance with GAAP, (ii) all obligations of such Person in respect of any
Guaranty, (iii) all obligations of such Person in respect of any Capital Lease,
(iv) all obligations, debt and liabilities secured by any Lien on any property
or assets of such Person and (v) all obligations of such Person in respect of
letters of credit, acceptances or similar obligations issued or created for the
account of such Person.

         "Debt for Borrowed Money" means, as to any Person, at any date,
without duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
in respect of any Guaranty, (v) all obligations of such Person in respect of
any Capital Lease, and (vi) all obligations, debt and liabilities secured by
any Lien on any property or assets of such Person.

         "Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, fraudulent conveyance,
insolvency, reorganization or similar debtor relief Laws relating to the
enforcement of creditors' rights generally from time to time in effect.

         "Default" means any of the events specified in Section 6.1, whether or
not there has been satisfied any requirement in connection with such event for
the giving of notice, or the lapse of time, or the happening of any further
condition, event or act.

         "Device" has the meaning set forth in the FDA Act.

         "Distribution" means, as to any Person, (i) any declaration or payment
of any distribution or dividend (other than a stock dividend) on, or the making
of any pro rata distribution, loan, advance, or investment to or in any holder
(in its capacity as a partner, shareholder or other equity holder) of, any
partnership interest or shares of capital stock or other equity interest of
such Person, or (ii) any purchase, redemption, or other acquisition or
retirement for value of any shares of partnership interest or capital stock or
other equity interest of such Person.

         "Dollars" and the sign "$" mean lawful money of the United States of
America.

         "Drug" has the meaning set forth in the FDA Act.

         "EBITDA" means, as of any date of determination, the sum of Borrower's
and its Subsidiaries' (a) pre-tax income or deficit, as the case may be
(excluding extraordinary items and income from the sale of assets other than in
the ordinary course of business), plus (b) cash interest expense paid;
amortization of Debt discounts; any payments or fees with respect to letters of
credit, bankers' acceptances or similar facilities; fees and expenses with
respect to interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements, plus (c) consolidated depreciation and
amortization expense, all calculated on a





                                      -5-
<PAGE>   11
consolidated basis in accordance with GAAP, plus (d) with respect to any
calculation including the period from March 31, 1995 through December 31, 1995,
research and development expense related to the myocardial protection system
developed by Borrower and for which Borrower has applied for the trademark
"MPS", and related Devices.  For purposes of determining EBITDA, EBITDA shall
be (i) for the fiscal quarter ended on June 30, 1995, EBITDA for such quarter
multiplied by four, (ii) for the two fiscal quarters ended on September 30,
1995, EBITDA for such two quarters multiplied by two, (iii) for the three
fiscal quarters ended on December 31, 1995, EBITDA for such three quarters
multiplied by 1.3334 and (iv) for each fiscal quarter ended on and after March
31, 1996, EBITDA for the four fiscal quarters preceding the date of
calculation.

         "Effective Date" means March 31, 1995.

         "Eligible Accounts" means at the time of any determination thereof,
each Account as to which the following requirements have been fulfilled to the
satisfaction of Lender:

                      (i)         Borrower or a Subsidiary of Borrower has
         lawful and absolute title to such Account;

                     (ii)         Such Account is a valid, legally enforceable
         obligation of the Person who is obligated under such Account (the
         "account debtor") for goods or services delivered or rendered to such
         Person;

                    (iii)         There has been excluded from such Account any
         portion that is subject to any dispute, offset, counterclaim or other
         claim or defense on the part of the account debtor or to any claim on
         the part of the account debtor denying liability under such Account;

                     (iv)         Borrower or a Subsidiary of Borrower has full
         and unqualified right to assign and grant a security interest in such
         Account to Lender as security for the Obligation;

                      (v)         Such Account is payable in Dollars and is
         evidenced by an invoice rendered to the account debtor and such
         Account is not evidenced by any chattel paper, promissory note or
         other instrument;

                     (vi)         Such Account is subject to a fully perfected
         first priority security interest in favor of Lender pursuant to the
         Loan Papers, prior to the rights of, and enforceable as such against,
         any other Person (including holders of a purchase money security
         interest);

                    (vii)         If the account debtor in respect of such
         Account is either located outside the United States of America or
         primarily conducts business in a jurisdiction outside the United
         States of America, or if the goods or services sold giving rise to
         such





                                      -6-
<PAGE>   12
         Account are to be delivered or performed outside of the United States
         of America, (a) the account debtor is located in a province of the
         Dominion of Canada in which all actions necessary to perfect a first
         priority security interest in all Collateral in favor of Lender have
         occurred, (b) the entire amount of the payment obligation represented
         by such Account is secured by either (1) an irrevocable
         Dollar-denominated commercial letter of credit issued or confirmed by
         a financial institution (A) the short-term debt obligations of which
         have the same or higher rating, as established by either Standard &
         Poor's Corporation or Moody's Investors Service, Inc., as comparable
         obligations of Lender, (B) the short-term obligations of the holding
         company of such financial institution have the same or higher rating,
         as established by Standard & Poor's Corporation or Moody's Investors
         Service, Inc., as comparable obligations of NationsBank Corporation
         (if either or both of such financial institution and Lender do not
         have outstanding comparable short-term obligations or such obligations
         are not rated), or (C) acceptable to Lender (if (1) either or both of
         such financial institution and Lender and (2) either or both of the
         holding company of such financial institution and NationsBank
         Corporation do not have outstanding comparable short-term obligations
         or such obligations are not rated), the proceeds of which letter of
         credit have been assigned to Lender or which letter of credit shall
         specifically provide that payment thereunder shall be made solely to
         an account maintained by Borrower at Lender (which account and all
         property on deposit therein has been assigned to Lender), or (2) a
         receivables insurance policy issued by ExImBank or a private insurance
         company acceptable to Lender and ExImBank, in either case, the
         proceeds of which policy have been assigned to Lender;

                   (viii)         Such Account is not subject to any Lien in
         favor of any Person other than the Lien of Lender pursuant to the Loan
         Papers;

                     (ix)         Such Account has not been due and payable for
         more than 90 days from the invoice date; and

                      (x)         No account debtor in respect of such Account
         is (a) any Tribunal, domestic or foreign; provided, for purposes of
         determining "Eligible Account", "Tribunal" shall not include any
         government or university, medical department of any government or
         university or hospital associated with any government or university
         located in the United States of America, (b) the subject of a
         proceeding under any Debtor Relief Laws, or (c) the United States of
         America or any state;

provided, that, unless Lender agrees otherwise, no Accounts payable by an
account debtor shall constitute Eligible Accounts if 10% or more of the
aggregate dollar amount of all Accounts owed to Borrower by such account debtor
have been due and payable for 91 days or more from their respective invoice
dates.





                                      -7-
<PAGE>   13
         "Eligible Asset Value" means, as at any time of determination, each
item of Eligible Assets valued at the lower of cost or market value, multiplied
by the percentage set forth below:

                          Lender Cash                               100%
                          Eligible Broker Cash                      95%
                          Eligible Government Securities            90%
                          Eligible State Securities                 80%
                          Eligible Listed Debt                      80%
                          Eligible Listed Securities                70%

         "Eligible Assets" means Lender Cash, Eligible Broker Cash, Eligible
Government Securities, Eligible State Securities, Eligible Listed Debt and
Eligible Listed Securities.

         "Eligible Broker Cash" means Broker Cash held in and subject to an
Eligible Brokerage Account.

         "Eligible Brokerage Account" means each Brokerage Account in which
Lender has a perfected, first priority security interest and Lien in such
account, all property on deposit in such account, all documents related to such
account and all proceeds and products thereof.

         "Eligible Government Securities" means Government Securities held in
and subject to an Eligible Brokerage Account.

         "Eligible Inventory" means, at the time of any determination thereof,
each item of Inventory (excluding work-in-progress) valued at the lower of cost
or market value, as to which the following requirements have been fulfilled to
the satisfaction of Lender:

                      (i)         Borrower or a Subsidiary of Borrower has
         lawful and absolute title to such Inventory;

                     (ii)         Such Inventory is subject to a fully
         perfected first priority security interest in favor of Lender pursuant
         to the Loan Papers, prior to the rights of, and enforceable as such
         against, any other Person (including holders of a purchase money
         security interest);

                    (iii)         Such Inventory is (A) neither adulterated nor
         misbranded, (B) not the subject of any pending or threatened
         proceeding or action by FDA or other Tribunal seeking the recall,
         seizure or condemnation or the prohibition of the sale, use or
         distribution of such Inventory, (C) properly registered with FDA (if
         such registration is required), (D) produced at an Establishment
         registered with FDA (if such registration is required), (E) not
         subject to any restriction on the distribution, sale or use by Lender
         or any purchaser at any foreclosure sale or other realization on the
         Collateral and (F) not a Drug;





                                      -8-
<PAGE>   14
                     (iv)         Such Inventory was produced in compliance
         with the FDA Act and the Fair Labor Standards Act and related rules
         and regulations;

                      (v)         Such Inventory is located at 5000-A Oakes
         Road, Fort Lauderdale, Florida, 2930-G and 2930-H Grace Lane, Costa
         Mesa, California or One Allentown Parkway, Allen, Texas.

         "Eligible Listed Debt" means Listed Debt held in and subject to an
Eligible Brokerage Account.

         "Eligible Listed Securities" means Listed Securities held in and
subject to an Eligible Brokerage Account.

         "Eligible State Securities" means State Securities held in and subject
to an Eligible Brokerage Account.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "Establishment" has the meaning set forth in 21 CFR Section  807.3.

         "Event of Default" means the occurrence of any of the events specified
in Section 7.1, provided there has been satisfied any requirement in connection
with such event for the  giving of notice, or the lapse of time, or the
happening of any further condition, event or act.

         "Excess Cash" means, for Borrower and its Subsidiaries, determined in
accordance with GAAP on a consolidated basis, (i) Net Income, plus depreciation
and amortization and other non-cash charges, plus (ii) extraordinary non-cash
charges, minus (iii) all payments of principal in respect of Term Debt, minus
(iv) Capital Expenditures paid during such period.

         "ExImBank" means Export-Import Bank of the United States, an agency of
the United States of America, and any successor entity.

         "Existing Credit Agreement" has the meaning specified in the
Background section.

         "Facility A Advance" means an Advance described in Section 2.1 to be
made from time to time by Lender to Borrower.

         "Facility A Commitment" means $5,000,000, as the same may be reduced
or terminated pursuant to Section 2.3.

         "Facility A Note" shall mean the promissory note of Borrower payable
to the order of Lender, in substantially the form of Exhibit A, and any and all
renewals, extensions, modifications and amendments thereof and substitutions
therefor.





                                      -9-
<PAGE>   15
         "Facility A Termination Date" means May 31, 1997, or such earlier date
that the Facility A Commitment is terminated.

         "Facility B Advance" means an Advance described in Section 2.2 to be
made from time to time by Lender to Borrower.

         "Facility B Commitment" means $15,000,000, as the same may be reduced
or terminated pursuant to Section 2.3.

         "Facility B Note" shall mean the promissory note of Borrower payable
to the order of Lender, in substantially the form of Exhibit B, and any and all
renewals, extensions, modifications and amendments thereof and substitutions
therefor.

         "Facility B Termination Date" means March 31, 2000, or such earlier
date that the Facility B Commitment is terminated.

         "FDA" means the Food and Drug Administration and any successor.

         "FDA Act" means the Federal Food, Drug and Cosmetic Act, 21 USC
Section  301, et seq,  and all amendments and successors thereto.

         "Financial Statements" means with respect to Borrower and its
Subsidiaries, consolidated and consolidating balance sheets, consolidated and
consolidating profit and loss statements, reconciliation of capital and surplus
(prepared as to fiscal quarters and fiscal years, only), and statements of cash
flow.

         "Fixed Charges" means the sum of, for Borrower and its Subsidiaries,
determined in accordance with GAAP on a consolidated basis, (i) interest
expense (including interest expense pursuant to Capital Leases), plus (ii)
lease expense payable for Operating Leases.  For purposes of determining Fixed
Charges, Fixed Charges shall be (i) for the fiscal quarter ended on June 30,
1995, Fixed Charges for such quarter multiplied by four, (ii) for the two
fiscal quarters ended on September 30, 1995, Fixed Charges for such two
quarters multiplied by two, (iii) for the three fiscal quarters ended on
December 31, 1995, Fixed Charges for such three quarters multiplied by 1.3334
and (iv) for each fiscal quarter ended on and after March 31, 1996, determined
for the four fiscal quarters preceding the date of calculation.

         "Fixed Charges Coverage Ratio" means the ratio of Net Earnings
Available for Fixed Charges to Fixed Charges.

         "GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board, which are applicable in the
circumstances as of the date in question, and the requirement that such
principles be applied on a consistent basis shall mean that the accounting
principles





                                      -10-
<PAGE>   16
observed in a current period are comparable in all material respects to those
applied in a preceding period.  Unless otherwise indicated herein, all
accounting terms will be defined according to GAAP.

         "Government Securities" means direct obligations of the United States
of America or any agency thereof, or obligations fully guaranteed by the United
States of America or any agency thereof.

         "Guaranty" of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Debt of any other Person in any manner, whether directly
or indirectly; except that "Guaranty" shall not include the endorsement by such
Person in the ordinary course of business of negotiable instruments or
documents for deposit or collection.

         "Guaranty Agreement" means a Guaranty Agreement in the form of Exhibit 
G.

         "hereof", "hereto", "hereunder" and similar terms refer to this
Agreement and not to any particular section or provision of this Agreement.

         "Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, Lender is then permitted
to charge on the Obligation.  If the maximum rate of interest which, under
Applicable Law, Lender is permitted to charge on the Obligation shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each change in the Highest Lawful Rate without notice to Borrower.  For
purposes of determining the Highest Lawful Rate under the Applicable Law of the
State of Texas, the applicable rate ceiling shall be (i) the indicated rate
ceiling described in and computed in accordance with the provisions of Section
(a)(l) of Art. l.04; or (ii) provided notice is given as required in Section
(h)(1) of said Art. l.04, the quarterly ceiling computed pursuant to Section
(d) of said Art. l.04; provided, however, that at any time the indicated rate
ceiling, the annualized ceiling or the quarterly ceiling, as applicable, shall
be less than 18% per annum or more than 24% per annum, the provisions of
Sections (b)(1) and (2) of said Art. l.04 shall control for purposes of such
determination, as applicable.

         "Indemnitee" has the meaning set forth in Section 4.13.

         "Interest Payment Date" means the last day of each month during the
term of this Agreement, commencing with the first such day after the date
hereof.

         "Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date the Advance is made or continued as a LIBOR Advance and
ending one, two, three or six months thereafter (as Borrower shall select);
provided, however, that:





                                      -11-
<PAGE>   17
                  (i)     Borrower may not select any Interest Period that ends
         after any principal repayment date (including the Facility A
         Termination Date and the Facility B Termination Date) unless, after
         giving effect to such selection, the aggregate principal amount of
         LIBOR Advances having Interest Periods that end on or prior to such
         principal repayment date, shall be at least equal to the principal
         amount of Advances due and payable on and prior to such date;

                 (ii)     whenever the last day of any Interest Period would
         otherwise occur on a day other than a Business Day, the last day of
         such Interest Period shall be extended to occur on the next succeeding
         Business Day;provided, however, that if such extension would cause the
         last day of such Interest Period to occur in the next following
         calendar month, the last day of such Interest Period shall occur on
         the next preceding Business Day; and

                (iii)     no Interest Period for a Facility A Advance may
         extend beyond the Facility A Termination Date and no Interest Period
         for a Facility B Advance may extend beyond the Amortization Date for
         such Advance.

         "Inventory" has the meaning assigned to such term in the UCC.

         "Investment" in any Person means any investment, whether by means of
share purchase, loan, advance, extension of credit, capital contribution or
otherwise, in or to such Person, the Guaranty of Debt of such Person or the
subordination of any claim against such Person to other Debt of such Person.

         "Laws" means all statutes, laws, ordinances, regulations, orders,
writs, injunctions, or decrees of the United States, any state or commonwealth,
any municipality, any foreign country, any territory or possession, or any
Tribunal.

         "Lender Cash" means all cash and deposits (time, demand, special and
other) in an account maintained at Lender and in which Lender has a perfected,
first priority security interest and Lien.

         "Lending Office" means, with respect to Lender, its branch or
affiliate, (i) initially, the office of Lender, branch or affiliate identified
as such in Section 8.4(b), and (ii) subsequently, such other office of Lender,
branch or affiliate as Lender may designate to Borrower as the office from
which the Advances of Lender will be made and maintained and for the account of
which all payments of principal and interest on the Advances and the Commitment
Fee will thereafter be made.  Lender may have more than one Lending Office for
the purpose of making Prime Advances and LIBOR Advances.

         "LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.





                                      -12-
<PAGE>   18
         "LIBOR Rate" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, and (b) the sum of the LIBOR Rate Basis
plus the Applicable Margin.  The LIBOR Rate shall, with respect to LIBOR
Advances subject to reserve or deposit requirements, be subject to premiums
assessed therefor by Lender, which are payable directly to Lender.  Once
determined, the LIBOR Rate shall remain unchanged during the applicable
Interest Period.

         "LIBOR Rate Basis" means, for any Interest Period, the interest rate
per annum (rounded upward to the nearest 1/16th of one percent) determined by
Lender at approximately 9:00 a.m., on the date which is two Business Days
before the first day of such Interest Period to be the offered quotations that
appear on the Reuter's Screen LIBO page for dollar deposits in the London
interbank market for a length of time approximately equal to the Interest
Period for the LIBOR Advance sought by Borrower.  If at least two such offered
quotations appear on the Reuter's Screen LIBO page, the LIBOR Rate shall be the
arithmetic mean (rounded upward to the nearest 1/16th of one percent) of such
offered quotations, as determined by Lender.  If the Reuter's Screen LIBO page
is not available or has been discontinued, the LIBOR Rate Basis shall be the
rate per annum that Lender determines to be the arithmetic mean (rounded as
aforesaid) of the per annum rates of interest at which deposits in dollars in
an amount approximately equal to the principal amount of, and for a length of
time approximately equal to the Interest Period for, the LIBOR Advance sought
by Borrower are offered to Lender in immediately available funds in the London
interbank market at 11:00 a.m., London time, on the date which is two Business
Days prior to the first day of an Interest Period.

         "Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give or not to give any
of the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement.

         "Liquid Asset Value" means, as at any time of determination, each item
of Liquid Assets valued at the lower of cost or market value, multiplied by the
percentage set forth below:

                     Broker Cash                   95%
                     Government Securities         90%
                     State Securities              80%
                     Listed Debt                   80%
                     Listed Securities             70%

         "Liquid Assets" means Broker Cash, Government Securities, State
Securities, Listed Debt and Listed Securities.

         "Listed Debt" means any debt security (the issuer of which is a
corporation organized under the laws of any of the United States of America)
rated, at any date of determination, any one of the three highest ratings by
Standard & Poor's Corporation or Moody's Investors Service, Inc., each
regularly traded on the New York Stock Exchange or the American Stock Exchange.





                                      -13-
<PAGE>   19
         "Listed Securities" means any equity security regularly traded on the
New York Stock Exchange or the American Stock Exchange.

         "Litigation" means any proceeding, claim, lawsuit and/or investigation
conducted or, to the knowledge of  Borrower, threatened by or before any
Tribunal, including, but not limited to, proceedings, claims, lawsuits, and/or
investigations under or pursuant to any environmental, occupational, safety and
health, antitrust, unfair competition, securities, Tax, or other Law, or under
or pursuant to any contract, agreement or other instrument.

         "Loan Papers" means this Agreement, the Notes, any agreement securing
or assuring performance of the Obligation and all other agreements,
certificates and documents delivered by Borrower hereunder or any other Person
pursuant hereto.

         "Margin Ratio" means the ratio, as at any date of determination, of
(i) (a) the sum of the aggregate unpaid principal of all outstanding Advances,
plus all accrued, unpaid interest on all Advances, plus all other Obligations,
minus (b) the Eligible Asset Value to (ii) EBITDA.

         "Material Adverse Change or Effect" means any act or circumstance
which (i) would be material and adverse to the combined financial condition,
business operations or prospects of Borrower and its Subsidiaries or any other
Obligor, (ii) in any material manner whatsoever would adversely affect the
validity or enforceability of any of the Loan Papers or (iii) in any material
manner impairs the value of any material portion of the Collateral.

         "Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Lender is permitted to charge on the Obligation.

         "NationsBank" means NationsBank of Texas, N.A., a national banking
association.

         "Net Earnings Available for Current Maturities" means, for Borrower
and its Subsidiaries, determined in accordance with GAAP on a consolidated
basis, (i) Net Income, plus depreciation and amortization and other non-cash
charges, plus (ii) extraordinary non-cash charges, plus (iii) with respect to
any calculation including the period from March 31, 1995 through December 31,
1995, research and development expense related to the myocardial protection
system developed by Borrower and for which Borrower has applied for the
trademark "MPS", and related Devices.  For purposes of determining Net Earnings
Available for Current Maturities, Net Earnings Available for Current Maturities
shall be (i) for the fiscal quarter ended on June 30, 1995, Net Earnings
Available for Current Maturities for such quarter multiplied by four, (ii) for
the two fiscal quarters ended on September 30, 1995, Net Earnings Available for
Current Maturities for such two quarters multiplied by two, (iii) for the three
fiscal quarters ended on December 31, 1995, Net Earnings Available for Current
Maturities for such three quarters multiplied by 1.3334 and (iv) for each
fiscal quarter ended on and after March 31, 1996, determined for the four
fiscal quarters preceding the date of calculation.





                                      -14-
<PAGE>   20
         "Net Earnings Available for Fixed Charges" means, for Borrower and its
Subsidiaries, determined in accordance with GAAP on a consolidated basis, (i)
Net Income before Taxes, plus (ii) interest expense (including interest expense
pursuant to Capital Leases), plus (iii) with respect to any calculation
including the period from March 31, 1995 through December 31, 1995, research
and development expense related to the myocardial protection system developed
by Borrower and for which Borrower has applied for the trademark "MPS", and
related Devices, plus (iv) lease expense pursuant to Operating Leases.  For
purposes of determining Net Earnings Available for Fixed Charges, Net Earnings
Available for Fixed Charges shall be (i) for the fiscal quarter ended on June
30, 1995, Net Earnings Available for Fixed Charges for such quarter multiplied
by four, (ii) for the two fiscal quarters ended on September 30, 1995, Net
Earnings Available for Fixed Charges for such two quarters multiplied by two,
(iii) for the three fiscal quarters ended on December 31, 1995, Net Earnings
Available for Fixed Charges for such three quarters multiplied by 1.3334 and
(iv) for each fiscal quarter ended on and after March 31, 1996, determined for
the four fiscal quarters preceding the date of calculation.

         "Net Income" means, for Borrower and its Subsidiaries, determined in
accordance with GAAP on a consolidated basis, net profit or loss.

         "Net Worth" means, with respect to Borrower, shareholders' equity, as
shown on a balance sheet prepared in accordance with GAAP on a consolidated
basis.

         "Neuromed" means Neuromed, Inc., a Florida corporation.

         "Notes" means the Facility A Note and the Facility B Note.

         "Obligations" means all present and future obligations, indebtedness
and liabilities, and all renewals and extensions of all or any part thereof, of
Borrower and each Obligor to Lender arising from, by virtue of, or pursuant to
this Agreement, any of the other Loan Papers and any and all renewals and
extensions thereof or any part thereof, or future amendments thereto, all
interest accruing on all or any part thereof and reasonable attorneys' fees
incurred by Lender for the administration, execution of waivers, amendments and
consents, and in connection with any restructuring, workouts or in the
enforcement or the collection of all or any part thereof, whether such
obligations, indebtedness and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several.  Without limiting the
generality of the foregoing, "Obligations" includes all amounts would be owed
by Borrower, each other Obligor and any other Person (other than Lender) to
Lender under any Loan Paper, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Borrower, any other Obligor or any other Person (including
all such amounts which would become due or would be secured but for the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of Borrower, any other Obligor or any other
Person under any Debtor Relief Law).





                                      -15-
<PAGE>   21
         "Obligor" means (i) Borrower, (ii) each other Person liable for
performance of any of the Obligations and (iii) each other Person the property
of which secures the performance of any of the Obligations.

         "Operating Leases" means operating leases, as defined in the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 13,
dated November 1976, as amended.

         "PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.

         "Permitted Acquisition" means the acquisition by Borrower or a
Subsidiary of Borrower of (i) all of the outstanding equity interest of any
Person or (ii) all or a portion of the assets of any Person; provided, (a) the
board of directors of such Person has approved such acquisition and such
approval has not been revoked, and (b) such Person or the assets of such Person
the subject of the proposed acquisition are used in the research, development,
design, production or marketing of Devices; provided further, neither Borrower
nor any Subsidiary of Borrower may make any acquisition described in clause (i)
or (ii) during the period from the Effective Date through and including March
31, 1996 and neither Borrower nor any Subsidiary of Borrower may make any
acquisition described in clause (i) or (ii) during the period from April 1,
1996 through and including March 31, 1997 for any consideration other than
capital stock of Borrower or such Subsidiary of Borrower, respectively.

         "Permitted Investments" means Government Securities, Listed Debt,
Listed Securities and State Securities;provided Investments in Listed
Securities shall not exceed 25% of the outstanding equity having voting rights
of any single issuer.

         "Permitted Liens" means: (i) Liens granted to Lender to secure the
Obligation, (ii) Liens in assets of Borrower or a Subsidiary of Borrower which
assets are not required by the Loan Papers to be subject to a Lien in favor of
Lender, (iii) Liens in the Allen Property to the extent such Liens do not cover
or purport to cover any asset of Borrower which is subject to a Lien in favor
of Lender, (iv) pledges or deposits made to secure payment of worker's
compensation or occupational injury insurance (or to participate in any fund in
connection with worker's compensation or occupational injury insurance),
unemployment insurance, pensions or social security programs or to secure
performance of bids, tenders, contracts or leases, or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance or similar bonds
in the ordinary course of business, (v) Liens imposed by mandatory provisions
of law such as for materialmen's, mechanics', warehousemen's and other like
Liens arising in the ordinary course of business, securing indebtedness whose
payment is not yet due or which are being contested in good faith and as to
which adequate cash reserves established in accordance with GAAP have been
provided, (vi) Liens for taxes, assessments and governmental charges or levies
imposed upon a Person or upon such Person's income or profits or property, if
the same are not yet due and payable or if the same are being contested in good
faith and as to which adequate cash reserves have been provided, (vii) Liens in
favor of MetLife Capital Corporation or its affiliates





                                      -16-
<PAGE>   22
upon the Allen Property in existence and of record on the Effective Date,
provided such Liens do not secure Debt in excess of the amount of such Debt on
the Effective Date, as reduced by payments on and after the Effective Date,
(viii) Liens in Eligible Assets not required to be subject to a Lien in favor
of Lender pursuant to Section 5.12, or (ix) Liens to secure Borrower's or any
Subsidiary's of Borrower obligations under lease agreements related to the real
property and improvements located at 5000-A Oakes Drive, Fort Lauderdale,
Florida and 2930-G and 2930-H Grace Lane, Costa Mesa, California, or any
reasonably comparable lease agreements entered into as replacements for or
expansion of such lease agreements.

         "Permitted Venture" means any Investment in any Person; provided, (i)
such Person has not conducted any operations (other than corporate, partnership
or joint venture organizational operations) prior to Borrower's Investment in
such Person, and (ii) such Person's sole business shall be the design,
development, manufacture and/or marketing of Devices.

         "Person" means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization, and a government or any department, Tribunal, agency or political
subdivision thereof.

         "Plan" means an employee benefit plan or other plan maintained by
Borrower for employees of Borrower covered by Title IV of ERISA, or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code of
1986, as amended ("Code").

         "Prime Advance" means an Advance bearing interest at the Prime Rate.

         "Prime Base Rate" means the prime interest rate charged by NationsBank
as announced or published by NationsBank from time to time as its prime rate,
and which may not be the lowest interest rate charged by NationsBank.

         "Prime Rate" means, with respect to each Prime Advance, a rate per
annum equal to the lesser of (a) the sum of (i) the Prime Base Rate, plus (ii)
the Applicable Margin and (b) the Highest Lawful Rate.

         "Principal Office" means the principal office of Lender located at 901
Main Street, Dallas, Texas 75202.

"Quarterly Date" means March 31, June 30, September 30 and December 31.

         "Refinancing Advance" means an Advance which is used to pay the
principal of an existing Advance at the end of its Interest Period and which,
after giving effect to such application, does not result in an increase in the
aggregate outstanding amount of Advances.

         "Regulatory Modification" has the meaning set forth in Section 2.9.

         "Reportable Event" has the meaning specified in Title IV of ERISA.





                                      -17-
<PAGE>   23
         "Rights" means rights, remedies, powers and privileges.

         "Seller" means William Borkan.

         "Solvent" means, with respect to a particular date, that on such date
(a) the fair value of the property of a Person is greater than the total amount
of liabilities, including, without limitation, contingent liabilities, of such
Person, (b) 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, (c) such Person
is able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business, (d) such Person does not intend to, or believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (e) 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 unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged.  In computing the amount of contingent liabilities at
any time, it is intended that such liabilities will be computed at the amount
which, 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
material liability.

         "Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., Dallas, Texas, Special Counsel to Lender, and each other attorney or law
firm representing Lender.

         "State Securities" means direct obligations of any state or political
subdivision thereof, rated, at any date of determination, A-1 or P-1 by
Standard & Poor's Corporation or Moody's Investors Service, Inc.

         "Subsidiary" of any Person means any corporation, limited liability
company, partnership, joint venture, trust or estate of which (or in which)
more than 50% of:  (a) the outstanding capital stock having voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership or
joint venture, or (c) the beneficial interest of such trust or estate, is at
the time directly or indirectly owned by such Person, by such Person and one or
more of its Subsidiaries or by one or more of such Person's Subsidiaries.

         "Taxes" means all taxes, assessments, fees or other charges from time
to time or at any time imposed by any Laws or by any Tribunal.

         "Term Debt" means debt for borrowed money the original scheduled
maturity of the last installment of which was more than twelve months after the
date borrowed.





                                      -18-
<PAGE>   24
         "Total Liabilities" means all liabilities of Borrower which would be
classified as total liabilities on a balance sheet prepared in accordance with
GAAP on a consolidated basis.

         "Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality.

         "Type" refers to the distinction between Advances bearing interest at
the Prime Rate and LIBOR Rate.

         "UCC" means the Uniform Commercial Code of Texas, as amended.

         "Unrestricted Cash" means all cash, Government Securities, Listed
Debt, Listed Securities and State Securities owned by Borrower which are not
subject to any Lien.

         1.2     Accounting and Other Terms.  All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for Borrower
and its Subsidiaries, unless otherwise expressly stated herein.  If after the
Effective Date any change in GAAP applicable to Borrower or its Subsidiaries
results in a change in the manner of any calculation under the Loan Papers,
Borrower and Lender shall negotiate amendments to the Loan Papers to
accommodate such changes in GAAP.  References herein to one gender shall be
deemed to include all other genders.  Except where the context otherwise
requires, (a) definitions imparting the singular shall include the plural and
vice versa and (b) all references to time are deemed to refer to Dallas time.


ARTICLE II.  ADVANCES

         2.1     Facility A Advances.  Lender agrees, upon the terms and
subject to the conditions of this Agreement, to make Facility A Advances to
Borrower from time to time from the Effective Date to the Facility A
Termination Date; provided, however, that immediately after giving effect to
each Facility A Advance pursuant to this Section 2.1, the aggregate principal
amount of the Facility A Advances shall at no time exceed the lesser of (a) the
Facility A Commitment and (b) the Borrowing Base.

         2.2     Facility B Advances.  Lender agrees, upon the terms and
subject to the conditions of this Agreement, to make Facility B Advances to
Borrower from time to time from the Effective Date to the Facility B
Termination Date; provided, however, that (i) immediately after giving effect
to each Facility B Advance pursuant to this Section 2.2, the aggregate
principal amount of the Facility B Advances shall at no time exceed the
Facility B Commitment and (ii) from and after the date of the initial Facility
B Advance, Borrower may borrow Facility B Advances only as Refinancing
Advances.





                                      -19-
<PAGE>   25
         2.3     Manner of Borrowing.

         (a)     Each Borrowing of Advances shall be made upon the written
notice of Borrower, received by Lender (i) not later than 12:00 noon three
Business Days prior to the date of the proposed Borrowing, in the case of LIBOR
Advances; and (ii) not later than 11:00 a.m. on the date of such Borrowing, in
the case of Prime Advances.  Each such notice of a Borrowing (a "Borrowing
Notice") shall be by telecopy or telex, promptly confirmed by letter, in
substantially the form of Exhibit H specifying therein:

                  (i)     the date of such proposed Borrowing, which shall be a 
         Business Day;

                 (ii)     whether such Borrowing is requested to be made under
         Facility A or Facility B;

                (iii)     the amount of such proposed Borrowing which, (A)
         shall not exceed the unused portion of the Facility A Commitment or
         Facility B Commitment, as appropriate, (B) shall not, in the case of
         Facility A Advances, when added to the aggregate principal of
         outstanding Facility A Advances, exceed the Borrowing Base, (C) shall,
         in the case of a Borrowing of LIBOR Advances, be in an amount of not
         less than $100,000 or an integral multiple of $100,000 in excess
         thereof and (D) in the case of a Borrowing of Prime Advances, be in an
         amount of not less than $50,000 or an integral multiple of $10,000 in
         excess thereof;

                 (iv)     the Type of Advances of which the Borrowing is to be
         comprised; and

                  (v)     if the Borrowing is to be comprised of LIBOR
         Advances, the duration of the initial Interest Period applicable to
         such Advances.

         If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be one month.

         (b)     Provided that all conditions precedent to the making of such
Advance have been satisfied, Lender shall on the date of such Advance (other
than a Refinancing Advance) deposit the funds so requested in the deposit
account no. 1291792407 of Borrower with Lender.

         (c)     After giving effect to any Borrowing, there shall not be more
than five different Interest Periods in effect.

         (d)     No Interest Period for a Borrowing under Facility A shall
extend beyond the Facility A Termination Date and no Interest Period for a
Borrowing under Facility B shall extend beyond the Facility B Termination Date.

         (e)     Borrower shall indemnify Lender against any Consequential Loss
incurred by Lender as a result of (i) any failure to fulfill, on or before the
date specified for the Advance,





                                      -20-
<PAGE>   26
the conditions to the Advance set forth herein or (ii) Borrower's requesting
that an Advance not be made on the date specified in the Borrowing Notice.

         2.4     Evidence of Indebtedness.

         (a)     Facility A Advances shall be evidenced by the Facility A Note
in the amount of the Facility A Commitment in effect on the Effective Date.
The Facility B Advances shall be evidenced by the Facility B Note in the amount
of the Facility B Commitment in effect on the Effective Date.

         (b)     Absent manifest error, Lender's records shall be prima facie
evidence as to amounts owed Lender under the Notes and this Agreement.

         2.5     Fees.

         (a)     Facility A Commitment Fee.  Subject to the provisions of
Section 8.12, Borrower shall pay to Lender a commitment fee ("Commitment Fee")
at the rate of 3/8% per annum on the average daily unused portion of the
Facility A Commitment.  The Commitment Fee shall be payable in arrears (i) on
each Quarterly Date, commencing June 30, 1995 and (ii) on the Facility A
Termination Date.

         (b)     Origination Fee.  Subject to the provisions of Section 8.12,
Borrower shall pay to Lender an origination fee of $62,500 with respect to the
Facility A Commitment and an origination fee of $187,500 with respect to the
Facility B Commitment ($25,000 of which has been received by Lender prior to
the Effective Date).

         2.6     Prepayments.

         (a)     Borrower may, upon at least three Business Days prior written
notice to Lender stating the proposed date and aggregate principal amount of
the prepayment, prepay the outstanding principal amount of any Advances in
whole or in part, together with accrued interest to the date of such prepayment
on the principal amount prepaid without premium or penalty other than any
Consequential Loss; provided, however, that in the case of a prepayment of a
Prime Advance, the notice of prepayment may be given by telephone by 11:00 a.m.
on the date of prepayment.  Each partial prepayment shall, in the case of LIBOR
Advances, be in an aggregate principal amount of not less than $100,000 or an
integral multiple of $100,000 in excess thereof and, in the case of Prime
Advances, be in an aggregate principal amount of not less than $50,000 or an
integral multiple of $10,000 in excess thereof.  If any notice of prepayment is
given, the principal amount stated therein, together with accrued interest on
the amount prepaid and the amount, if any, due under Section 2.15, shall be due
and payable on the date specified in such notice.

         (b)     If at any time the aggregate principal of outstanding Facility
A Advances exceeds the lesser of (a) the Facility A Commitment and (b) the
Borrowing Base, Borrower shall





                                      -21-
<PAGE>   27
immediately prepay Facility A Advances then outstanding in the aggregate amount
equal to such excess, together with accrued interest to the date of such
prepayment on the principal amount prepaid without premium or penalty other
than any Consequential Loss.

         (c)     Unless otherwise specified by Borrower, any prepayment of
Advances pursuant to this Section 2.6 shall be applied first to Prime Advances,
if any, then outstanding, and second to LIBOR Advances with the shortest
remaining Interest Periods outstanding.

         (d)     No prepayments of Facility A Advances made solely pursuant to
this Section 2.6 shall cause the Facility A Commitment to be reduced.  Each
prepayment of Facility B Advances made pursuant to this Section 2.6 shall (i)
permanently reduce the Facility B Commitment by the amount of such prepayment
as of the date of such prepayment and (ii) be applied to outstanding principal
of Facility B Advances in the inverse order of maturity; provided, with respect
to each prepayment of outstanding principal in an aggregate amount of $500,000
or greater, such prepayment shall be applied to reduce the principal amount of
each remaining scheduled installment described in Section 2.7(a)(ii)(B) in an
amount equal to the gross amount of such principal prepayment divided by the
number of scheduled installments described in Section 2.7(a)(ii)(B) due after
the date of such prepayment.

         2.7     Repayment.

         (a)     General.  Borrower shall repay to Lender the outstanding
principal amount of (i) the Facility A Advances on the Facility A Termination
Date and (ii) the Facility B Advances on (A) the Facility B Termination Date
and (B) the last Business Day of each month during the period specified below
in the amount specified below:

         Effective Date through and                        $162,500.00
         including March 31, 1997

         April 1, 1997 through and including               $270,834.00
         March 31, 1999

         April 1, 1999 through and including               $216,667.00
         March 31, 2000

The Facility B Commitment shall permanently reduce by the amount of each
payment required by this Section 2.7(a) on the date due.  The principal amount
of each LIBOR Advance is due and payable on the last day of the applicable
Interest Period, which principal payment may be made by means of a Refinancing
Advance (subject to the other provisions of this Agreement).  On the date of a
reduction of the Facility B Commitment pursuant to this Section 2.7(a) and of
either Commitment pursuant to Section 2.8, the aggregate amount of the
applicable Advances outstanding on the date of reduction in excess of such
Commitment as reduced shall be due and payable, which principal payment may not
be made by means of a Refinancing Advance.





                                      -22-
<PAGE>   28
         (b)     Excess Cash.  On the first to occur of (i) March 31 of each
year (beginning March 31, 1996) and (ii) fifteen days after Borrower's receipt
of the opinion of its independent auditors with respect to its audited
Financial Statements (beginning with the receipt of Borrower's audited
Financial Statements for the fiscal year ended December 31, 1995), Borrower
shall pay to Lender an amount equal to 50% of Excess Cash for such fiscal year,
which shall be applied to prepay Facility B Advances in accordance with this
Section 2.7(b).  In addition to principal required to be prepaid pursuant to
this Section 2.7(b), Borrower shall pay to Lender, with such prepayment,
accrued interest in respect of the principal prepaid without premium or penalty
other than any Consequential Loss.  Unless otherwise specified by Borrower, any
prepayment of Facility B Advances pursuant to this Section 2.7(b) shall be
applied first to Prime Advances, if any, then outstanding under Facility B,
second to LIBOR Advances for which the date of prepayment is the last day of
the applicable Interest Period, if any, outstanding under Facility B and third
to LIBOR Advances with the shortest remaining Interest Periods outstanding
under Facility B.  Each prepayment of Facility B Advances made pursuant to this
Section 2.7(b) shall permanently reduce the Facility B Commitment by the amount
of such prepayment as of the date of such prepayment.  Each such prepayment
applied to prepay Facility B Advances shall be applied to prepay installments
of Facility B Advances, together with interest accrued thereon, in the inverse
order of maturities; provided, with respect to each prepayment of outstanding
principal in an aggregate amount of $500,000 or greater, such prepayment shall
be applied to reduce the principal amount of each remaining scheduled
installment described in Section 2.7(a)(ii)(B) in an amount equal to the gross
amount of such principal prepayment divided by the number of scheduled
installments described in Section 2.7(a)(ii)(B) due after the date of such
prepayment.

         2.8     Reduction of Commitments.  Borrower shall have the right at
any time and from time to time upon not less than three Business Days' notice
to Lender not later than 12:00 noon (if telephonic, to be confirmed by telex or
in writing on or before the date of reduction or termination), to terminate or
reduce the Facility A Commitment or Facility B Commitment, in whole or in part,
provided that each partial termination shall be in an aggregate amount which is
an integral multiple of $50,000.  Once reduced or terminated, the Facility A
Commitment or Facility B Commitment (as appropriate) may not be increased or
reinstated.  On the date of any such reduction, Borrower shall repay such
principal amount (together with accrued interest thereon and any Consequential
Loss) of outstanding Advances as may be necessary so that after such repayment,
the aggregate unpaid principal amount of Advances does not exceed the amount of
the Facility A Commitment or Facility B Commitment (as appropriate) as then
reduced.

         2.9     Interest.  Subject to Sections 2.10 and 8.12, Borrower shall
pay interest on the unpaid principal amount of each Advance from the date of
such Advance until such principal shall be paid in full, at the following rates
per annum:

                 (a)      Prime Advances.  Prime Advances shall bear interest
         at a rate per annum equal to the Prime Rate as in effect from time to
         time.





                                      -23-
<PAGE>   29
                 (b)      LIBOR Advances.  LIBOR Advances shall bear interest
         at the rate per annum equal to the LIBOR Rate applicable to such
         Advance, which at no time shall exceed the Highest Lawful Rate.

                 (c)      Payment Dates.  Accrued and unpaid interest on Prime
         Advances shall be paid in arrears on each Interest Payment Date and on
         the Facility A Termination Date and the Facility B Termination Date,
         as appropriate.  Accrued and unpaid interest in respect of each LIBOR
         Advance shall be paid on the last day of the appropriate Interest
         Period and on the date of any prepayment or repayment of such Advance;
         provided, however, that if any Interest Period for a LIBOR Advance
         exceeds three months, interest shall also be paid on the date which
         falls three months after the beginning of such Interest Period.

                 (d)      Index.  Reference to any particular index or
         reference rate for determining any applicable interest rate under this
         Agreement is for purposes of calculating the interest due and is not
         intended as and shall not be construed as requiring Lender to actually
         obtain its funds used to make any Advance at any particular index or
         reference rate.

         2.10    Default Interest.  During the continuation of any Event of
Default, Borrower shall pay, on demand, interest (after as well as before
judgment to the extent permitted by Law) on the principal amount of all
Advances outstanding and on all other Obligations due and unpaid hereunder for
each Advance equal to the lesser of the (a) the Highest Lawful Rate and (b) a
rate per annum which is determined by increasing the greatest applicable
interest rate for each Type of Advance (whether or not in effect) 3.00% per
annum for the principal amount of the Advances outstanding and at a rate per
annum equal to the greatest Prime Base Rate (whether or not in effect) plus
3.00% for any other Obligation due hereunder.

         2.11    Continuation and Conversion Elections.

         (a)     Borrower may upon irrevocable written notice to Lender and
subject to the terms of this Agreement:

                  (i)     elect to convert, on any Business Day, all or any
         portion of outstanding Prime Advances (in an aggregate amount not less
         than $100,000 or an integral multiple of $100,000 in excess thereof)
         into LIBOR Advances; or

                 (ii)     elect to convert, at the end of any Interest Period
         therefor, all or any portion of outstanding LIBOR Advances comprised
         in the same Borrowing (in an aggregate amount not less than $50,000 or
         an integral multiple of $10,000 in excess thereof), into Prime
         Advances; or

                (iii)     elect to continue, at the end of any Interest Period
         therefor, any LIBOR Advances;





                                      -24-
<PAGE>   30
         provided, however, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$100,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Prime Advances at the end of each respective Interest Period.

         (b)     Borrower shall deliver a notice of conversion or continuation
(a "Conversion or Continuation Notice"), in substantially the form of Exhibit
I, to Lender not later than (i) 12:00 noon three Business Days prior to the
proposed date of conversion or continuation, if the Advances or any portion
thereof are to be converted into or continued as LIBOR Advances; and (ii) 10:00
a.m. on the Business Day of the proposed conversion, if the Advances or any
portion thereof are to be converted into Prime Advances.

         Each such Conversion or Continuation Notice shall be by telecopy or
telex, promptly confirmed by letter, specifying therein:

                  (i)     the proposed date of conversion or continuation;

                 (ii)     the aggregate amount of Advances to be converted or
         continued;

                (iii)     the nature of the proposed conversion or
         continuation; and

                 (iv)     the duration of the applicable Interest Period.

         (c)     If, upon the expiration of any Interest Period applicable to
LIBOR Advances, Borrower shall have failed to select a new Interest Period to
be applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, Borrower shall be deemed to have elected to convert
such LIBOR Advances into Prime Advances effective as of the expiration date of
such current Interest Period.

         (d)     Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any
Advances, there shall not be outstanding Advances with more than five different
Interest Periods.

         2.12    Maximum Amount of Interest.  In no event shall any interest
rate charged hereunder exceed the Highest Lawful Rate.  If the amount of
interest payable for the account of Lender on any Interest Payment Date in
respect of the immediately preceding interest computation period would exceed
the Maximum Amount, the amount of interest payable on such Interest Payment
Date shall be automatically reduced to the Maximum Amount.  If the amount of
interest payable for the account of Lender in respect of any interest
computation period is reduced pursuant to the immediately preceding sentence
and the amount of interest payable for its account in respect of any subsequent
interest computation period would be less than the Maximum Amount, then the
amount of interest payable for its account in respect of such subsequent
interest computation period shall be automatically increased to such Maximum





                                      -25-
<PAGE>   31
Amount; provided that at no time shall the aggregate amount by which interest
paid for the account of Lender has been increased pursuant to this sentence
exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to the immediately preceding sentence.

         2.13    Computations.  Subject to the provisions of Section 8.12 of
this Agreement, interest on all Advances as well as computation of the
Commitment Fee, shall be calculated on the basis of actual days elapsed, but
computed as if each year consisted of 360 days.  All LIBOR Advances shall bear
interest from and including the first day of the applicable Interest Period to
(but not including) the last day of such Interest Period.  All Prime Advances
shall bear interest from and including each Interest Payment Date to (but not
including) the next Interest Payment Date.

         2.14    Taxes.  All payments made by Borrower under this Agreement
shall be made free and clear of and without deduction for or on account of any
present or future income, stamp or other Taxes (excluding, however, Taxes
imposed on the overall net income of Lender or any franchise Taxes).

         2.15    Capital Adequacy; Increased Costs.

         (a)     If Lender shall have determined that any change after the
Effective Date in any applicable Law or guideline regarding capital adequacy,
capital maintenance or similar requirements against loan commitments made by
Lender (including any such applicable Law or guideline which may be adopted
before the date of this Agreement but which requirements are phased in over a
period of time), or any change therein, or any change in the interpretation or
administration thereof by any Tribunal, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
Lender (or any Lending Office of Lender) or any corporation controlling Lender
with any request or directive regarding capital adequacy, capital maintenance
or similar requirements against loan commitments, whether or not having the
force of law (each such adoptions or modification and each interpretation or
administration being herein called a "Regulatory Modification"), has or would
have the effect of increasing the cost of Lender with respect to this Agreement
as a result of reducing the rate of return on Lender's or such corporation's
capital as a consequence of its obligations hereunder ("Additional Costs") to a
level below that which Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Lender's or such
corporation's policies with respect to such capital impositions) by an amount
deemed by Lender to be material, then from time to time, Borrower shall pay to
Lender such Additional Costs as will compensate Lender for such reduction.  No
failure by Lender to immediately demand payment of  Additional Costs payable
hereunder shall constitute a waiver of Lender's right to demand payment of such
Additional Costs at any subsequent time.  Determinations by Lender for purposes
of this Section 2.15 shall be presumed correct, provided that such
determinations are made reasonably and in good faith.  Nothing contained herein
shall be construed or so operate as to require Borrower to pay any interest,
fees, costs or charges greater than as permitted by Applicable Law.





                                      -26-
<PAGE>   32
         (b)     If, after the date hereof, any Tribunal, central bank or other
comparable authority, shall at any time impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, Lender,
or shall impose on Lender other conditions affecting a LIBOR Advance, the
Notes, or its obligation to make a LIBOR Advance; and the result of any of the
foregoing is to increase the cost to Lender of making or maintaining LIBOR
Advances, or to reduce the amount of any sum received or receivable by Lender
under this Agreement or under the Notes by an amount deemed by Lender to be
material, then, within five days after demand by Lender, Borrower shall pay to
Lender the additional amount or amounts as will compensate Lender for the
increased cost or reduction.  A certificate of Lender claiming compensation
under this Section 2.15 and setting forth in reasonable detail the calculation
of the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error.  If Lender demands compensation
under this Section 2.15, Borrower may at any time, upon at least five Business
Days' prior notice to Lender either (i) repay in full the then outstanding
principal amount of LIBOR Advances, together with accrued interest thereon, or
(ii) convert such LIBOR Advances to Prime Advances in accordance with the
provisions of this Agreement; provided, however, that Borrower shall be liable
for any Consequential Loss arising pursuant to such actions.

         (c)     Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for Lender to perform its obligations hereunder to
make LIBOR Advances or to continue to fund or maintain LIBOR Advances
hereunder, then, on notice thereof and demand therefor by Lender to Borrower,
(i) each LIBOR Advance will automatically, upon such demand, convert into a
Prime Advance and (ii) the obligation of Lender to make, or to convert into or
Continue Advances as, LIBOR Advances shall be suspended until Lender notifies
Borrower that Lender has determined that the circumstances causing such
suspension no longer exist.

         (d)     Upon the occurrence and during the continuance of any Default
or Event of Default, (i) each LIBOR Advance will automatically, on the last day
of the then existing Interest Period therefor, convert into a Prime Advance and
(ii) the obligation of Lender to make, or to convert into or Continue Advance
as, LIBOR Advances shall be suspended.

         (e)     Failure on the part of Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this Section 2.15 with
respect to any period shall not constitute a waiver of Lender's right to demand
compensation with respect to such period or any other period.

         (f)     The obligations of Borrower under this Section 2.15 shall
survive any termination of this Agreement; provided that at no time may Lender
demand any compensation under Sections 2.15(a) or (b) for any amount with
respect to any period prior to the date which is six months prior to the date
of the notice or certificate delivered by Lender pursuant to either Section
2.15(a) or (b); provided further that Lender shall not demand any compensation
under





                                      -27-
<PAGE>   33
Section 2.15(a) or (b) except in accordance with Lender's normal policies for
administering loans with similar provisions.

         (g)     Determinations by Lender for purposes of this Section 2.15
shall be conclusive, absent manifest error.  Any certificate delivered to
Borrower by Lender pursuant to this Section 2.15 shall include in reasonable
detail the basis for Lender's demand for additional compensation.


ARTICLE III.  CONDITIONS PRECEDENT TO ADVANCES.

         3.1     Conditions Precedent to Advances.  The obligation of  Lender
to make the first Advance to be made by it hereunder is subject to the
satisfaction of the following conditions:

         (a)     Laws.  The making of both the Facility A Commitment and the
Facility B Commitment shall not contravene any Law applicable to Lender.

         (b)     No Default.  (i) No Material Adverse Change, as determined by
Lender, shall have occurred and be continuing since December 31, 1994, (ii) no
circumstance or event shall have occurred and be continuing since December 31,
1994 that is or could reasonably be expected to, as determined by Lender, be
material and adverse to the financial condition, business operations, prospects
or property of Neuromed, and (iii) there shall not be a Default or Event of
Default existing.

         (c)     Representations and Warranties.  The representations and
warranties in Article VI and the other Loan Papers shall be true and correct in
all material respects.

         (d)     Certificate.  Borrower shall have delivered to Lender an
officer's certificate for each Obligor, executed by authorized officers of such
Obligor, dated the Effective Date, certifying (A) that attached thereto is a
copy of its certificate or articles of incorporation certified by the Secretary
of State (or other appropriate officer) of the jurisdiction of its
incorporation, which is true and complete, and in full force and effect,
without amendment except as shown, (B) that attached thereto is a copy of its
bylaws, which is true and complete, and in full force and effect, without
amendment except as shown, (C) that attached thereto is a copy of the
resolutions of the board of directors of such Obligor authorizing execution,
delivery and performance of this Agreement and all other Loan Papers and the
Acquisition Documents, which are true and complete, are in full force and
effect, were duly adopted, have not been amended, modified, or revoked, and
constitute all resolutions of such Obligor adopted with respect to this loan
transaction and the Acquisition, (D) that attached thereto are certificates of
good standing and certificates of existence for such Obligor issued not more
than ten days prior to the Effective Date, issued by the appropriate officer of
the jurisdiction of organization of such Obligor and of each jurisdiction in
which the nature of such Obligor's business or properties require such
qualification, (E) with respect to Borrower, that the pledged interests in
Neuromed have been issued and are outstanding and a description of the
ownership of the pledged interests in





                                      -28-
<PAGE>   34
Neuromed, (F) with respect to each Obligor other than Borrower, a description
of the ownership of all authorized, issued and outstanding equity interests of
such Obligor and (G) to the incumbency, name, and signature of each officer
authorized to sign this Agreement and any other Loan Paper and the Acquisition
Documents on its behalf.  Lender may conclusively rely on each certificate
delivered pursuant to this Section 3.1(d) until it receives notice from
Borrower in writing to the contrary.

         (e)     Proceedings.  All corporate proceedings of each Obligor taken
in connection with the transactions contemplated by this Agreement, the
Acquisition Documents and all documents incidental thereto shall be
satisfactory in form and substance to Lender and Special Counsel; and Lender
shall have received, as of the Effective Date, copies of all documents or other
evidence which Lender or Special Counsel may reasonably request in connection
with said transactions.

         (f)     Loan Papers.  Each Obligor shall have delivered to Lender the
Loan Papers to be executed by such Obligor, dated as of the Effective Date,
appropriately completed.

         (g)     Acquisition.

                  (i)     All terms of the Acquisition and the Acquisition
         Documents shall be acceptable to Lender in its sole discretion, and
         the Acquisition shall have been consummated in accordance with the
         terms, provisions and conditions of the Acquisition Agreement, without
         amendments, consents or waivers with respect thereto (except with the
         express written consent of Lender).

                 (ii)     Lender shall have completed all due diligence related
         to the Acquisition deemed necessary in its sole discretion, and all
         such information revealed in connection with such due diligence shall
         be acceptable to Lender in its sole discretion.

         (h)     Documents.  Borrower shall have delivered to Lender the
following (in the number of counterpart requested by Lender), all in form and
substance satisfactory to Lender:

                  (i)     Copies of all opinions rendered by any counsel in
         connection with the Acquisition and the Acquisition Documents,
         together with letters authorizing Lender to rely thereon.

                 (ii)     A copy of all Acquisition Documents, all in form and
         substance satisfactory to Lender, certified by an officer of Borrower
         to be true and complete.

                (iii)     Evidence satisfactory to Lender of the completion of
         all transactions related to the Acquisition.

                 (iv)     Evidence reasonably satisfactory to Lender that on
         the date of the initial Advance:  (A) the FDA and each other Tribunal,
         the consent of which is necessary, has consented to the Acquisition;
         (B) all representations and warranties in the Acquisition





                                      -29-
<PAGE>   35
         Documents are true and correct, and (C) all intellectual property
         intended to be vested in Neuromed is owned of record by Neuromed.

                  (v)     The undrawn letter of credit issued by Lender for the
         account of Borrower and the benefit of Seller, letter of credit number
         145407 in the original face amount of $1,500,000.

                 (vi)     The results of UCC and other Lien searches against
         the assets of each Obligor and Seller, and evidence satisfactory to
         Lender that all Liens in favor of any Person against assets of Seller,
         Neuromed and any Obligor shall have been released and any credit
         facility related to any of the above shall have been terminated.

                (vii)     Evidence satisfactory to Lender of the perfection and
         priority of the Liens in the Collateral.

               (viii)     If requested by Lender, reasonable evidence that any
         Obligor is the rightful owner and has good title to its Collateral
         (including Collateral acquired pursuant to the Acquisition), as
         applicable.

                 (ix)     A certificate computed after giving effect to the
         Initial Advance, but demonstrating compliance on the Effective Date
         with all financial ratios described in Sections 5.7, 5.8, 5.11 and
         5.12 (determined on a pro forma basis as of the Effective Date, based
         on the unaudited financial statements of Borrower and Neuromed as of
         February 28, 1995).

                  (x)     Copies of insurance binders or certificates covering
         the assets of each Obligor indicating Lender as a loss payee.

                 (xi)     Payment of all fees (including attorneys' fees
         incurred by Lender.

                (xii)     Copies of all documentation relating to debt owed by
         Borrower and each other Obligor to any Person, including without
         limitation, all credit agreements, notes, collateral documents, bonds,
         instruments and other documentation in connection with any extension
         of credit.

               (xiii)     Certificates for all of the outstanding capital stock
         of each Subsidiary of Borrower and stop transfer letters in favor of
         Lender.

                (xiv)     Stock and other powers for all shares of the
         outstanding capital stock of each Subsidiary of Borrower.

         (i)     Financial Condition Certificate.  Lender shall have received a
certificate of Borrower to the effect that: (i) the fair and saleable value of
the assets, after giving effect to this Agreement, the Notes and the other Loan
Papers of Borrower will exceed amounts that will be





                                      -30-
<PAGE>   36
required to be paid by Borrower on or in respect of its existing debts
(including contingent liabilities) as they mature; (ii) Borrower will not have
unreasonably small capital to carry out its business as now conducted or as
proposed to be conducted, and (iii) Borrower has not incurred debts beyond its
ability to pay such debts as they mature.

         (j)     Opinion of Counsel.  Lender shall have received an opinion of
Fulbright & Jaworski L.L.P. acceptable to Lender and Special Counsel.

         (k)     Further Documents.  As of the Effective Date, Lender shall
have received, in form and substance satisfactory to Lender and Special
Counsel, such other documents and instruments as Lender may reasonably require
to evidence the status, organization or authority of Borrower, and to evidence
payment of the Obligation.

         3.2     Conditions Precedent to All Advances.  Lender shall not be
obligated to make any Advance, if (a) there is in existence at such time a
Default under Section 4.2, 5.5, 5.6, 5.9, 5.10 or 5.12; (b) an Event of Default
has occurred and is continuing; (c) if any representations and warranties
contained in Article VI of this Agreement shall be false or untrue in any
material respect on the date of such Advance, as if made on such date except
for representations and warranties that are by their express terms limited to a
specific date; or (d) any Subsidiary of Borrower has not executed and delivered
to Lender a Guaranty Agreement.  Each request by Borrower for an Advance shall
constitute a representation by Borrower that it is in compliance with the
provisions of this Section 3.2.

         3.3     Legal Details.  All documents executed or submitted pursuant
hereto by Borrower shall be satisfactory in form and substance to Lender and
Special Counsel.  Lender and Special Counsel shall receive all information, and
such counterpart originals or certified or other copies of and such materials,
as Lender or Special Counsel may reasonably request.  All legal matters
incident to the transactions contemplated by this Agreement (including, without
limitation, matters arising from time to time as a result of changes occurring
with respect to any Laws) shall be satisfactory to Special Counsel.


ARTICLE IV.  AFFIRMATIVE COVENANTS

         From the date hereof, and so long as this Agreement is in effect and
until final payment in full of the Obligation and the performance of all other
obligations of Borrower under this Agreement and the other Loan Papers,
Borrower agrees and covenants that it shall, and shall cause each Subsidiary of
Borrower to, observe, perform, comply and fulfill each and every covenant, term
and provision set forth below:

         4.1     Books, Records and Properties.  Borrower shall, and shall
cause each Subsidiary of Borrower to, maintain its books and records in
accordance with GAAP.  Borrower during normal business hours and after
reasonable notice by Lender shall, and shall cause each Subsidiary of Borrower
to, permit any of Lender's agents or representatives to have access to





                                      -31-
<PAGE>   37
and examine its books and records, including statements and schedules with
respect to the Collateral, and to copy and make abstracts therefrom, and to
inspect any of the properties of Borrower and each Subsidiaries of Borrower to,
at any time(s) hereafter during normal business hours; provided, that any such
access or inspection shall not disrupt Borrower's operations.

         4.2     Financial Statements and Reports.  Borrower shall furnish or
cause to be furnished to Lender the following Financial Statements and reports:

         (a)     Accounting Period Statements.  As soon as practicable after
the end of each fiscal quarter of Borrower and in any event within 45 days
after the end of each fiscal quarter of Borrower, copies of Financial
Statements as of the end of such quarter, all in reasonable detail and
certified as complete and correct in all material respects, subject to changes
resulting from year-end adjustment, by a financial officer of Borrower or any
other Person acceptable to Lender;

         (b)     Annual Statements.  As soon as practicable after the end of
each fiscal year of  Borrower and in any event within 90 days thereafter,
copies of annual Financial Statements, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and accompanied by an unqualified opinion of independent certified
public accountants approved by Borrower's board of directors, which opinion
shall state that the Financial Statements have been prepared in accordance with
GAAP, that their examination has been made in accordance with generally
accepted auditing standards and that said financial statements present fairly
the consolidated financial position of Borrower and its Subsidiaries and their
results of operations;

         (c)     Compliance Certificate and related reports.  Within 45 days
after the end of each month;

                  (i)     The Compliance Certificate for the last day of such
         month;

                 (ii)     A schedule showing for such month an aging of
         Accounts of Borrower in categories of current, 30 days past due, 60
         days past due and 91 or more days past due; and

                (iii)     A schedule showing for such month Accounts payable by
         each account debtor of which 10% or more of the aggregate dollar
         amount of all Accounts owed to Borrower by such account debtor have
         been due and payable for 91 days or more from their respective invoice
         dates;

         (d)     Contingent Liabilities Report.  Promptly upon becoming aware,
written notice of any actual or potential contingent liabilities, including
Litigation, against Borrower or any Subsidiary of Borrower involving liability
in an amount which must be disclosed in either Borrower's financial statements
or filings with the Securities and Exchange Commission.





                                      -32-
<PAGE>   38
         (e)     FDA Reports.  Promptly upon receipt from FDA, a copy of each
inspection report received from FDA and responses from and to FDA.

         (f)     SEC Filings.  As soon as filed with the Securities and
Exchange Commission, copies of each of Borrower's forms 10- Q, 10-K and 8-K.

         (g)     Payment Report.  Not later than 15 days prior to making any
payment or other transfer of property to Seller (other than any payment on the
Effective Date) pursuant to any Acquisition Document, Borrower shall deliver
the written certification of any authorized officer of Borrower stating (i)
whether a Default or Event of Default then exists or will exist after giving
effect to such payment or transfer and (ii) the Eligible Asset Value, the
Facility A Commitment, the Borrowing Base and the aggregate amount of
outstanding Facility A Advances, after giving effect to such payment or
transfer (together with detailed calculations of such determination).

         4.3     Maintenance of Existence.  Borrower shall cause to be done all
things necessary to preserve and keep in full force and effect Borrower's and
each of Borrower's Subsidiaries' existence as a corporation; provided, (a) any
Subsidiary of Borrower may merge with and into Borrower if Borrower is the
surviving entity and (b) any Subsidiary of Borrower may merge with and into
another Subsidiary of Borrower.

         4.4     Insurance.  Borrower shall maintain, and shall cause each
Subsidiary of Borrower to, in force with financially sound and reputable
insurers, the insurance policies required pursuant to the Loan Papers in
accordance with the provisions thereof and such other policies with respect to
its respective property and business against such casualties and contingencies
(including fire, worker's compensation or occupational injury insurance,
business interruption and public liability) and in such amounts as is customary
in the lines of business of comparable size and financial strength, with a loss
payee endorsement for casualty insurance in favor of Lender and noncancelable
without 30 days prior notice to Lender.  Borrower shall supply evidence of such
insurance to Lender.

         4.5     Compliance with Applicable Laws.  Borrower shall, and shall
cause each Subsidiary of Borrower to, comply with the requirements of all
applicable Laws and orders (including but not limited to the FDA Act, ERISA and
environmental laws) of Tribunals or other governmental authorizations necessary
to the ownership of Borrower's and each of Subsidiary's of Borrower properties
or to the conduct of its business if the result of failure to so comply would
have a Material Adverse Effect.

         4.6     Other Information and Documents.  Borrower shall, and shall
cause each Subsidiary of Borrower to, promptly deliver to Lender such
information, certificates and documents in addition to those herein mentioned
as Lender may from time to time reasonably request.





                                      -33-
<PAGE>   39
         4.7     Default.  Borrower shall report to Lender immediately any
Default or Event of Default, and any notice of any claimed default under any
other Debt agreement, specifying the default and steps taken or to be taken to
cure.

         4.8     Taxes.  Borrower shall pay any stamp, loan, transaction or
similar taxes that may be imposed on this Agreement, the Advances hereunder,
the Notes, or any of the transactions hereunder, and shall pay, and shall cause
each Subsidiary of Borrower to, all income, ad valorem, and other taxes of
Borrower or such Subsidiary before they become delinquent except taxes being
contested by appropriate means and in good faith and the levy and execution of
which have been stayed and continued to be stayed.  Any such taxes must be paid
before their nonpayment causes a Lien (other than a Permitted Lien) to be filed
on any of the Collateral.

         4.9     Further Assurances.  Borrower will, and will cause each other
Obligor to, on request of Lender, promptly correct any defect, error or
omission which may be discovered in the contents of any of the Loan Papers or
in the execution or acknowledgment thereof, and will execute, acknowledge and
deliver such further instruments and do such further acts as may be necessary
or as may be requested by Lender to carry out more effectively the purposes of
this Agreement and the Loan Papers and to subject to the Liens any of
Borrower's or any other Obligor's properties, rights or interests covered or
intended to be covered thereby, and to perfect and maintain all Liens at any
time securing all or any part of the debt hereunder.

         4.10    Filings.  Borrower will pay all expenses incurred in
connection with the filing of any of the Loan Papers and every other instrument
in addition or supplemental to any thereof that shall be required by Law in
order to perfect and maintain the validity and effectiveness of Liens at any
time securing all or any part of the debt hereunder.

         4.11    Maintenance.  Borrower will, and shall cause each Subsidiary
of Borrower to, maintain all of Borrower's and such Subsidiary's material
property in good condition and repair (wear and tear excepted) and make all
necessary replacements thereof, and preserve and maintain all material leases,
licenses, privileges, franchises, certificates and the like used in the
operation of Borrower's and such Subsidiary's business (other than with respect
to any such lease, license, privilege, franchise and certificate which the
Board of Directors of Borrower or such Subsidiary of Borrower has determined
that the expiration or termination of which is in the best interest of Borrower
or such Subsidiary of Borrower, respectively).

         4.12    ERISA Compliance.  Borrower shall, and shall cause each
Subsidiary of Borrower to, (a) at all times, make prompt payment of all
contributions required under all Plans and required to meet the minimum funding
standard set forth in ERISA with respect to its Plans, (b) notify Lender
immediately of any fact, including, but not limited to, any Reportable Event
arising in connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan, together
with a statement, if requested by Lender as to the reason therefor and the
action, if any, proposed to be taken with respect thereto, and (c) furnish





                                      -34-
<PAGE>   40
to Lender, upon its request, such additional information concerning any of its
Plans as may be reasonably requested.

         4.13    Indemnity by Borrower.  Borrower shall indemnify, save, and
hold harmless  Lender and its shareholders, directors, officers, agents,
attorneys, and employees (collectively, the "Indemnitees") from and against:
(a) any and all claims, demands, actions, or causes of action that are asserted
by any Person other than Borrower, its shareholders, directors, officers,
agents, attorneys, and employees against any Indemnitee if the claim, demand,
action or cause of action relates to the Obligations, the use of proceeds of
any Advance, or the relationship of Borrower and Lender under this Agreement or
any transaction contemplated pursuant to this Agreement or any other Loan
Paper, (b) any proceeding or any administrative, investigative or arbitration
proceeding by or before any Tribunal or arbitral directly or indirectly related
to (i) a claim, demand, action or cause of action described in clause (a) above
or (ii) any claim, demand, proceeding, action or cause of action involving
Borrower or any Affiliate (including any shareholder) of Borrower in which any
Indemnitee incurs costs and expenses as a result of any requirement that such
Indemnitee testify or produce records therein (other than as a result of any
Litigation commenced by an Indemnitee or Borrower in which such Indemnitee is
not a prevailing party), and (c) any and all liabilities, losses, costs, or
expenses (including attorneys' fees and disbursements) that any Indemnitee
suffers or incurs as a result of any of the foregoing (other than as a result
of any Litigation commenced by an Indemnitee or Borrower in which such
Indemnitee is not the prevailing party); provided, however, that Borrower shall
not have any obligation under this Section 4.13 to a particular Indemnitee or
with respect to any of the foregoing arising out of the negligence or willful
misconduct of such Indemnitee.  If any claim, demand, action or cause of action
is asserted against any Indemnitee, such Indemnitee shall promptly notify
Borrower, but the failure to so promptly notify Borrower shall not affect
Borrower's obligations under this Section 4.13 except to the extent such
failure materially impairs Borrower's ability to defend any such claim, demand,
action or cause of action.  Any obligation or liability of Borrower to any
Indemnitee under this Section 4.13 shall survive the expiration or termination
of this Agreement and the repayment of the Obligation.


ARTICLE V.  NEGATIVE COVENANTS

         From the date hereof and so long as this Agreement is in effect and
until final payment in full of the Obligation, and the performance of all other
obligations of Borrower under this Agreement and the other Loan Papers,
Borrower agrees and covenants that it shall, and shall cause each of its
Subsidiaries to, observe, perform, comply and fulfill each and every covenant,
term and provision set forth below:

         5.1     Liens.  Borrower shall not, and shall not permit any
Subsidiary of Borrower to, grant, permit or suffer to exist any Lien on any of
its property or assets, except (a) Permitted Liens, and (b) Liens granted under
the Loan Papers.





                                      -35-
<PAGE>   41
         5.2     Transfer of Assets.  Borrower shall not, and shall not permit
any Subsidiary of Borrower to, sell, lease, transfer, or otherwise dispose of
assets of Borrower or such Subsidiary, except (a) payments of business expenses
of Borrower or such Subsidiary in the ordinary course of business, (b)
Inventory and Investments in the ordinary course of business and for full and
fair consideration, (c) assets which Borrower or such Subsidiary determines in
good faith are worthless or obsolete, (d) assets not subject to a Lien or
license in favor of Lender the value of which, individually and in the
aggregate, does not exceed 5% of the gross revenue of Borrower and its
Subsidiaries (determined on or consolidated basis) during the preceding fiscal
year from operations, (e) the sale of Investments permitted pursuant to Section
3.5 of the Security Agreement of Borrower or (f) in connection with Investments
permitted pursuant to Section 5.4.

         5.3     New Industry.  Borrower shall not, and shall not permit any
Subsidiary of Borrower to, enter any industry or type of business which is not
directly related to the research, design, development, manufacture and/or
marketing of Devices.

         5.4     Restricted Investments.  Borrower shall not make or have
outstanding any Investments, except for Permitted Investments, Permitted
Acquisitions and Permitted Ventures.

         5.5     Transactions with Affiliates.  Borrower shall not, and shall
not permit any Subsidiary of Borrower to, enter into any transaction with any
Affiliate, except in the ordinary course of the business of Borrower or such
Subsidiary, and on fair and reasonable terms no less favorable to Borrower or
such Subsidiary than it would obtain in a comparable arm's length transaction
with a Person not an Affiliate.

         5.6     Fixed Charges Coverage Ratio.  Borrower shall not permit the
Fixed Charges Coverage Ratio to be less than as indicated below, as at the end
of each fiscal quarter ending during the period indicated:

            March 31, 1995 through September 30, 1996          1.50 to 1.00
            December 31, 1996 through September 30, 1997       2.50 to 1.00
            December 31, 1997 and thereafter                   3.00 to 1.00

         5.7     Current Ratio.  Borrower shall not permit the Current Ratio to
be less than as indicated below, as at the end of each fiscal quarter ending on
the date or during the period indicated:

            Effective Date                                     1.75 to 1.00
            June 30, 1995 through September 30, 1996           1.30 to 1.00
            December 31, 1996 through September 30, 1997       1.40 to 1.00
            December 31, 1997 and thereafter                   1.60 to 1.00

         5.8     Total Liabilities to Worth Ratio.  Borrower shall not permit
the ratio of Total Liabilities to Net Worth to be greater than as indicated
below, as at the end of each fiscal quarter ending on the date or during the
period indicated:





                                      -36-
<PAGE>   42
            Effective Date through September 30, 1996          1.25 to 1.00
            December 31, 1996 through September 30, 1998       1.00 to 1.00
            December 31, 1998 and thereafter                   0.75 to 1.00

         5.9     Current Maturities Coverage Ratio.  Borrower shall not permit
the Current Maturities Coverage Ratio to be less than as indicated below, as at
the end of each fiscal quarter ending during the period indicated:

            March 31, 1995 through September 30, 1996          1.50 to 1.00
            December 31, 1996 through September 30, 1997       1.75 to 1.00
            December 31, 1997 through September 30, 1998       2.00 to 1.00
            December 31, 1998 and thereafter                   2.50 to 1.00

         5.10    Obligations Ratio.  Borrower shall not permit the ratio of (a)
the sum of the aggregate unpaid principal of all outstanding Advances, plus all
accrued, unpaid interest on all Advances, plus all other Obligations to (b)
EBITDA, to be greater than 3.50 to 1.00 as at the end of each fiscal quarter.

         5.11    Capital Expenditures.  Borrower shall not permit the aggregate
amount of Capital Expenditures incurred or paid during the calendar year
indicated below to exceed the amounts indicated below for such year:

                        1995                      $1,200,000
                        1996                      $1,000,000
                        1997                      $  700,000
                        1998                      $  700,000
                        1999                      $  700,000

         5.12    Eligible Asset Value.  Borrower shall not permit the Eligible
Asset Value to be less than $2,000,000 at any time.

         5.13    Merger and Consolidation.  Borrower shall not, and shall not
permit any Subsidiary of Borrower to, merge or consolidate with any other
Person or allow any other Person to merge or consolidate with it; provided, (a)
Borrower may merge or consolidate with any other Person if (i) Borrower is the
surviving entity and (ii) such merger or consolidation is the result of (A) a
Permitted Acquisition or (B) any other Investment, so long as no Default or
Event of Default exists prior to or after giving effect to such Investment and
(b) each Subsidiary of Borrower may merge with and into either Borrower or any
other Subsidiary of Borrower if Borrower or another Subsidiary of Borrower is
the surviving entity, as appropriate, and no Default or Event of Default exists
prior to or after giving effect thereto.

         5.14    Debt.  Borrower shall not, and shall not permit any Subsidiary
of Borrower to, create, incur, assume, become or be liable in any manner in
respect of, or suffer to exist, any Debt for Borrowed Money, except (a) Debt
under the Loan Papers, (b) obligations in respect





                                      -37-
<PAGE>   43
of trade payables (i) incurred by Borrower or a Subsidiary of Borrower in the
ordinary course of business and (ii) acquired or assumed by Borrower or a
Subsidiary of Borrower pursuant to a Permitted Acquisition, (c) Debt the
proceeds of which was used solely for the acquisition and construction of the
Allen Property not in excess of the amount of such Debt on the Effective Date,
as reduced by payments on and after the Effective Date, and (d) other Debt of
Borrower and each of its Subsidiaries not to exceed in the aggregate $250,000.

         5.15    Distributions.

         (a)     Dividends.  Borrower shall not declare, pay, make or become
liable for any Distribution, provided that so long as no Default or Event of
Default exists, Borrower may (i)  declare and pay dividends on Borrower's
capital stock in an aggregate amount not to exceed in any calendar year 25% of
the prior fiscal year's Net Income (determined on a non-cumulative basis);
provided, further, prior to the declaration of each such dividend, Borrower
shall deliver to Lender not later than fifteen Business Days prior to the
proposed declaration date a certificate of the chief financial officer of
Borrower stating that (A) no Default or Event of Default exists or will result
from the declaration or payment or such dividend, and (B) attached to such
certificate are calculations of Sections 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12
and 5.14, calculated on a pro forma basis as at the date twelve months after
the date of payment of the proposed dividend, (ii) enter into transactions
permitted by Section 5.12(b) and (iii) make payments to Seller in accordance
with the Acquisition Agreement; provided further (c) that no Distribution
otherwise permitted by this Section 5.12 shall be made prior to receipt by
Lender of (i) the audited financial statements of Borrower for the fiscal year
to which such proposed Distribution is attributable and (ii) the payment
required by Section 2.7(b).

         (b)     Treasury Stock.  Borrower shall not declare, pay, make or
become liable for any Distribution, provided that so long as no Default or
Event of Default exists, Borrower may (i) acquire for cash Borrower's capital
stock in an aggregate amount not to exceed $1,000,000 in any calendar year;
provided, further, not later than seven days after each such acquisition of any
of Borrower's capital stock, Borrower shall deliver to Lender a certificate of
the chief financial officer of Borrower stating that (A) no Default or Event of
Default exists or will result from the declaration or payment or such dividend,
(B) attached to such certificate are calculations demonstrating that before and
after giving effect to each acquisition of Borrower's capital stock, Eligible
Asset Value equals or exceeds $5,000,000 in the aggregate and (ii) enter into
transactions permitted by Section 5.12(a); provided further (c) that no
Distribution otherwise permitted by this Section 5.12 shall be made prior to
receipt by Lender of (i) the audited financial statements of Borrower for the
fiscal year to which such proposed Distribution is attributable and (ii) the
payment required by Section 2.7(b).





                                      -38-
<PAGE>   44
ARTICLE VI.  REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants as follows:

         6.1     Organization; Qualification; Authority.  Borrower and each
Subsidiary of Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the state indicated on Schedule 1.  Borrower
and each Subsidiary of Borrower has the power to own its properties and to
carry on its businesses as now being conducted.  The Board of Directors of
Borrower has duly authorized the execution, delivery and performance of the
Loan Papers to be executed by Borrower.  No consent of the shareholders of
Borrower is required as a prerequisite to the validity and enforceability of
any Loan Papers or any other document contemplated hereby.  Borrower has full
legal right and corporate power, and authority to execute, deliver, and perform
its obligations under the Loan Papers to be executed and delivered by it.

         6.2     Financial Statements.  The audited financial statements for
the fiscal year ended December 31, 1994 and the unaudited financial statements
for the most recent fiscal quarter (including any related schedules and/or
notes) are true and correct in all material respects (subject, as to interim
statements, to charges resulting from audits and year-end adjustments) have
been prepared in accordance with GAAP (except, as to interim statements, for
notes and year-end adjustments) consistently followed throughout the periods
specified, and fairly present in accordance with GAAP the financial condition
and results of operations of Borrower as at the dates thereof and for the
periods indicated.  There has been no material adverse change in the business,
condition or operations (financial or otherwise) of Borrower since December 31,
1994.

         6.3     Conflicting Agreements and Other Matters.  Neither Borrower
nor any Subsidiary of Borrower is a party to any contract or agreement or
subject to any restriction which materially and adversely affects the ability
of Borrower to perform its obligations under the Loan Papers.  Neither the
execution nor delivery of this Agreement, the Notes, or the other Loan Papers,
nor fulfillment of nor compliance with the terms and provisions of this
Agreement, the Notes or the other Loan Papers will conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien
(except for Liens created by the Loan Papers) upon any of the properties or
assets of Borrower or any Subsidiary of Borrower pursuant to the articles of
incorporation of Borrower or such Subsidiary, any award of any arbitrator or
any agreement, instrument, order, judgment, decree, statute, law, rule or
regulation to which Borrower or such Subsidiary is subject.  Neither Borrower
nor any Subsidiary of Borrower is a party to, or otherwise subject to any
provision contained in, any instrument evidencing indebtedness of Borrower or
such Subsidiary, any agreement relating thereto or any other contract or
agreement which limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of Borrower of the type to be evidenced by the Notes.

         6.4     Governmental Consent.  Neither the nature of Borrower or any
Subsidiary of Borrower, its businesses or properties, nor any relationship
between Borrower, any Subsidiary





                                      -39-
<PAGE>   45
of Borrower and any other Person, nor any circumstance in connection with the
execution, delivery and performance of this Agreement, the Loan Papers or the
Notes is such as to require any authorization, consent, approval, exemption of
other action by or notice to or filing with any court or Tribunal (other than
routine filings and recordings to perfect Liens) in connection with the
execution and delivery of this Agreement, the Notes, the other Loan Papers, or
fulfillment of or compliance with the terms and provisions hereof, of the Notes
or of the other Loan Papers.

         6.5     Enforceability.  This Agreement is, the other Loan Papers are
and the Notes when delivered will be legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their terms, except as
limited by Debtor Relief Laws.

         6.6     Actions Pending.  Other than as described on Schedule 3, there
is no Litigation pending or, to the knowledge of Borrower, threatened against
Borrower or any Subsidiary of Borrower, or any properties or rights of Borrower
or any Subsidiary of Borrower, by or before any court, arbitrator or Tribunal
which may reasonably be expected to result in any Material Adverse Effect.
There is no Litigation pending or, to the knowledge of Borrower, threatened
against Borrower or any Subsidiary of Borrower which purports to affect the
validity or enforceability of this Agreement, either Note or any of the other
Loan Papers.

         6.7     Outstanding Debt.  Neither Borrower nor any Subsidiary of
Borrower has any outstanding Debt except (a) as described on the balance sheet
of Borrower for the fiscal year ended December 31, 1994, (b) as described in
the balance sheet of Neuromed for the fiscal year ended October 31, 1994, (c)
trade payables incurred in the ordinary course of business and (d) Debt for
Borrowed Money owed to Lender.  There exists no default under the provisions of
any instrument evidencing such Debt or of any material agreement relating
thereto.

         6.8     Title to Properties.  Borrower and each Subsidiary of Borrower
has good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other material
properties and assets used in the operations of its business, subject to no
Lien of any kind except Liens permitted by Section 5.1.  All leases necessary
in any material respect for the conduct of the respective businesses of
Borrower are valid and subsisting and are in full force and effect.

         6.9     Taxes.  Borrower and each Subsidiary of Borrower has paid all
taxes and assessments owed by it to the extent that such taxes and assessments
have become due, except such taxes as are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP.

         6.10    Regulation G, etc.  Neither Borrower nor any Subsidiary of
Borrower owns or has any present intention of acquiring any "margin stock" as
defined in Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System (herein called "margin stock").  None of the proceeds of
any Advance will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any margin stock
or for the purpose of maintaining, reducing or retiring any indebtedness which
was originally





                                      -40-
<PAGE>   46
incurred to purchase or carry any stock that is currently a margin stock or for
any other purpose which might constitute this transaction a "purpose credit"
within the meaning of such Regulation G.   Neither Borrower nor any agent
acting on its behalf has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation G, Regulation T, Regulation X or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate the Securities Exchange Act of 1934, as amended, in each case as in
effect now or as the same may hereafter be in effect.

         6.11    ERISA.  No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived,
exists with respect to any Plan.  No liability to the PBGC has been or is
expected by Borrower or any Subsidiary of Borrower to be incurred with respect
to any Plan by Borrower or any Subsidiary of Borrower which is or would be
materially adverse to Borrower or any Subsidiary of Borrower.  Neither Borrower
nor any Subsidiary of Borrower has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any Multiemployer
Plan which is or would be materially adverse to Borrower.

         6.12    Disclosure.  Neither this Agreement or any other document,
certificate or statement furnished, or to be furnished, to Lender by or on
behalf of Borrower or any other Obligor in connection herewith or therewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading in any material respect.

         6.13    Environmental Matters.  Borrower, each Subsidiary of Borrower,
the plants and sites each owns, and to the best of Borrower's knowledge after
due inquiry of the owners of leased property the plants and sites which each
leases have complied with all federal, state, local and regional statutes,
ordinances, orders, judgments, rulings and regulations relating to any matters
of pollution or of environmental regulation or control except, in any such
case, where such failure to comply would not result in a Material Adverse
Effect.  Without limiting the generality of the preceding sentence, neither
Borrower nor any Subsidiary of Borrower has received notice of and does not
have actual knowledge of any actual or claimed or asserted failure so to comply
which alone or together with any other such failure is material and would
result in a Material Adverse Effect.  During periods of use, ownership,
occupancy or operation by Borrower and each Subsidiary of Borrower, none of
Borrower, any Subsidiary of Borrower, or their respective plants or sites have
managed, generated, released or disposed of, any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as those
terms are used or defined in the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act, the
Clean Air Act and the Clean Water Act, in material violation of or in a manner
which would result in liability under such statutes or any regulations
promulgated pursuant thereto or any other applicable law, except where such
noncompliance or liability would not result in a Material Adverse Effect.





                                      -41-
<PAGE>   47
         6.14    Sufficiency of Capital.  Borrower and each Subsidiary of
Borrower are, and after consummation of this Agreement and after giving effect
to the Obligation incurred and Liens created by Borrower and each Subsidiary of
Borrower in connection herewith will be, Solvent.

         6.15    Affiliates.  No Affiliate of Borrower exists, except as 
identified on Schedule 1.

         6.16    Acquisition Agreement.  Each representation and warranty of
Borrower contained in the Acquisition Agreement was true and correct when made,
is now true and correct, and is incorporated herein by this reference.  The
Acquisition Agreement is in full force and effect and has not been modified or
amended.  No default exists under any Acquisition Document.  Borrower has
provided, or caused to be provided, to Lender complete and correct copies of
the Acquisition Agreement and the other Acquisition Documents, all as amended,
together with all exhibits and schedules thereto.

         6.17    Consummation of Acquisition.  As of the date of the initial
advance, (a) the acquisition contemplated by the Acquisition Agreement has been
consummated substantially in accordance with such agreement, and (b) all
material consents for such consummation required by Law, order or decree or any
other material agreement, to which Neuromed, Seller or Borrower is a party or
is bound, have been obtained or waived pursuant to a written agreement
consented to by Lender.

         6.18    Certain Fees.  No broker's, finder's, management fee or other
fee or commission will be payable by Borrower with respect to the making of
commitments or Advances hereunder (other than to Lender hereunder) or the
consummation of the transactions described in the Acquisition Documents (other
than to The GulfStar Group, Inc.).  Borrower hereby agrees to indemnify and
hold harmless Lender from and against any claims, demand, liability,
proceedings, costs or expenses asserted with respect to or arising in
connection with any such fees or commissions.


ARTICLE VII.  DEFAULT

         7.1     Events of Default.  The term "Event of Default" as used
herein, means the occurrence and continuance of any one or more of the
following events (including the passage of time, if any, specified therefor):

         (a)     Borrower shall fail to pay any amount, whether principal,
interest or other amounts, payable hereunder or under the Notes when due and
such failure shall continue for three days from the date due; or

         (b)     (i) Any representation or warranty made by Borrower or any
other Obligor under or in connection with any Loan Paper shall prove to have
been incorrect in any material respect when made or (ii) (A) a breach of any
representation or warranty made by Seller under or in connection with any
Acquisition Document is discovered, (B) Lender makes a determination that





                                      -42-
<PAGE>   48
such breach has caused or will cause a Material Adverse Change or Effect and
gives notice thereof to Borrower, and (C) such breach has not already been
cured or paid for by Seller, or, alternatively, Borrower or Seller does not
cure such breach or the situation giving rise thereto to the complete
satisfaction of Lender within 30 days after receipt of such notice from Lender;
or

         (c)     Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 5.6, 5.7, 5.8, 5.9 or 5.10 and such failure
shall continue for two consecutive months or any other provision of Article V
of this Agreement; or

         (d)     Borrower or any other Obligor shall fail to perform or observe
any term, covenant or agreement contained in any Loan Paper on its part to be
performed or observed, other than described in Section 7.1(a), (b), or (c), and
such default has continued for a period of 30 days; or

         (e)     Borrower, any Subsidiary of Borrower or any other Obligor
shall fail to pay any Debt (other than under the Loan Papers) which is, singly
or in the aggregate, in an amount equal to or greater than $100,000, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other default under any agreement or
instrument relating to any such Debt, or any other event, shall occur and shall
continue after the applicable grace or cure period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or

         (f)     Borrower, any Subsidiary of Borrower or any other Obligor
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against Borrower, any Subsidiary of Borrower or any other Obligor seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any Debtor Relief Laws, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property; or Borrower, any Subsidiary
of Borrower or any other Obligor shall take any action to authorize any of the
actions set forth above in this Section 7.1(f); or

         (g)     Any judgment or order for the payment of money in excess of
10% of Unrestricted Cash (calculated as at the date of entry of the judgment or
order) shall be rendered against Borrower, any Subsidiary of Borrower or any
other Obligor and either (i) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order or (ii) there shall be any period
of 30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or





                                      -43-
<PAGE>   49
         (h)     Lender for any reason shall cease to have a valid and
perfected first priority security interest in any material portion (as
reasonably determined by Lender) of the Collateral purported to be covered
thereby; or

         (i)     FDA or any Tribunal shall issue any order resulting in the
banning, recall or seizure of any Device of Borrower or any Subsidiary of
Borrower the sales of which Device constituted 5% or more of gross sales
revenue of Borrower (determined on a consolidated basis) for the twelve months
preceding the date; or

         (j)     Any Inventory of Borrower or any Subsidiary of Borrower
produced in the United States of America is not produced in compliance with the
Fair Labor Standards Act and such failure results in the banning, recall or
seizure of Inventory constituting 5.00% or more of the value (valued at the
greater of market or book value without giving effect to such ban, recall or
seizure or any other write down is the value of such Inventory) of all
Inventory of Borrower or such Subsidiary, respectively; or

         (k)     Any material provision of the Loan Papers shall at any time
for any reason cease to be valid and binding on Borrower or any other Obligor
or shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower or any other Obligor, or a proceeding
shall be commenced by any Tribunal having jurisdiction over Borrower, any other
Obligor or any Collateral, seeking to establish the invalidity or
unenforceability thereof and such proceeding (if commenced by a Person other
than Borrower or any other Obligor) shall remain undismissed or unstayed for a
period of 30 days, or Borrower or any other Obligor shall deny that it has any
or further liability or obligation thereunder; or

         (l)     Either (i) Lender does not receive the certificate required by
Section 4.2(g), or (ii) any certificate received by Lender pursuant to Section
4.2(g) discloses that (A) a Default or Event of Default then exists or will
exist after giving effect to the payment or transfer of property described in
such certificate or (B) the sum of (I) the Liquid Asset Value and (II) the
difference between (1) the lesser of the Borrowing Base and the Facility A
Commitment and (2) the aggregate amount of outstanding Facility A Advances,
will be less than $1,500,000 after giving effect to such payment or transfer;
or

         (m)     The occurrence of a default or event of default (howsoever
designated) contained in any other Loan Paper and such default or event of
default shall continue beyond any applicable grace or cure period.

         7.2     Remedies Upon Default.  If an Event of Default specified in
Section 7.1(f) shall occur and be continuing, the aggregate unpaid principal
balance of and accrued interest on the Obligation shall thereupon become due
and payable and the Facility A Commitment and the Facility B Commitment shall
immediately terminate concurrently therewith, without any action by Lender and
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind, all of which are hereby expressly
waived.  Should any





                                      -44-
<PAGE>   50
other Event of Default occur and be continuing, Lender may do any one or more
of the following:

         (a)     Acceleration.  Declare the entire unpaid balance of the
Obligation, or any part thereof, immediately due and payable, whereupon it
shall be due and payable without any action by Lender and without diligence,
presentment, demand, protest, notice of protest or intent to accelerate or
notice of any other kind, all of which are hereby expressly waived.

         (b)     Termination.  Terminate the Facility A Commitment and the
Facility B Commitment.

         (c)     Judgment.  Reduce any claim to judgment.

         (d)     Rights.  Exercise any and all Rights afforded by the Laws of
the State of Texas or any other jurisdiction, including, but not limited to,
the UCC, or by any other Loan Papers, or by Law or equity, or otherwise.

         (e)     Offset.  Exercise the Rights of offset and/or banker's Lien
against the interest of Borrower and each other Obligor in and to every account
and other property of Borrower and each other Obligor which is in the
possession of Lender, to the extent of the full amount of the Obligation.

         7.3     Performance by Lender.  Should any covenant, duty or agreement
of Borrower fail to be performed in all material respects in accordance with
the terms of this Agreement or the Collateral Documents, Lender may, at its
option, perform, or attempt to perform, such covenant, duty or agreement on
behalf of Borrower.  In such event, Borrower shall, at the request of Lender,
promptly pay any amount expended by Lender in such performance or attempted
performance to Lender at Lender's Principal Office, together with interest
thereon at the lesser of (a) the Prime Rate plus 3% and (b) the Highest Lawful
Rate from the date of such expenditure by Lender until paid.  Notwithstanding
the foregoing, it is expressly understood that Lender shall not have any
liability or responsibility for the performance of any duties of Borrower
hereunder.

         7.4     Lender Not in Control.  None of the covenants or other
provisions contained in this Agreement shall, or shall be deemed to, give
Lender the Rights or power to exercise control over the affairs  management of
Borrower, the power of Lender being limited to the Right to exercise the
remedies provided in this Article VII; provided that, if Lender becomes the
owner of any interest in Borrower, whether through foreclosure or otherwise,
Lender shall be entitled to exercise such legal Rights as it may have by being
an owner of such interest in Borrower.

         7.5     Waivers.  The acceptance by Lender at any time and from time
to time of part payment on the Obligation shall not be deemed to be a waiver of
any Event of Default or Default then existing.  No waiver by Lender of any
particular Event of Default or Default shall be deemed to be a waiver of any
Event of Default or Default other than said particular Event





                                      -45-
<PAGE>   51
of Default or Default.  No delay or omission by Lender in exercising any Right
under any Loan Papers shall impair such Right or be construed as a waiver
thereof or an acquiescence therein, nor shall any single or partial exercise of
any such Right preclude other or further exercise thereof, or the exercise of
any other Right under the Loan Papers or otherwise.

         7.6     Cumulative Rights.  All Rights available to Lender under the
Loan Papers shall be cumulative of and in addition to all other Rights granted
to Lender at Law or in equity, whether or not the Obligation be due and payable
and whether or not Lender shall have instituted any suit for collection or
other action in connection with any Loan Paper.

         7.7     Expenditures by Lender.  Any sums, including reasonable
attorneys' fees, spent by Lender pursuant to the exercise of any Right provided
in this Article VII shall become part of the Obligation and shall bear interest
at a rate per annum equal to the lesser of (a) the Prime Rate plus 3% and (b)
the Highest Lawful Rate from the date spent until the date repaid by Borrower.


ARTICLE VIII.  MISCELLANEOUS

         8.1     Money.  Unless stipulated otherwise, all references herein to
"Dollars", "money", "payments", or other similar financial or monetary terms,
are references to currency of the United States of America.

         8.2     Headings.  The headings, captions and arrangements used in
this Agreement and the other Loan Papers are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify the terms
of any Loan Paper, nor affect the meaning thereof.

         8.3     Articles, Sections, and Exhibits.  All references to
"Article", "Sections", "subparagraphs" or "subsections" contained herein are,
unless specifically indicated otherwise, references to articles, sections,
subparagraphs and subsections of this Agreement.  All references to "Exhibits"
and "Schedules" contained herein are references to exhibits and schedules
attached hereto, all of which are made a part hereof for all purposes, the same
as if set forth herein verbatim.  If any exhibit or schedule attached hereto
which is to be executed and delivered contains blanks or is otherwise required
to be updated from time to time, it shall be completed correctly and in
accordance with the terms and provisions contained and as contemplated herein
prior to, at the time of or after the execution and delivery thereof.

         8.4     Notices and Deliveries.

         (a)     Manner of Delivery.  All notices, communications and materials
(including all Information) to be given or delivered pursuant to this Agreement
shall, except in those cases where giving notice by telephone is expressly
permitted, be given or delivered in writing.  All written notices,
communications and materials shall be sent by registered or certified mail,
postage prepaid, return receipt requested, by telecopier, or delivered by hand.
In the event of





                                      -46-
<PAGE>   52
a discrepancy between any telephonic notice and any written confirmation
thereof, such written confirmation shall be deemed the effective notice except
to the extent Lender or Borrower has acted in reliance on such telephonic
notice.

         (b)     Addresses.  All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or delivered at
the following respective addresses and telecopier and telephone numbers and to
the attention of the following individuals or departments:

         (i)     if to Borrower, to it at:

                 Quest Medical, Inc.
                 One Allentown Parkway
                 Allen, Texas  75002

                 Telephone No: (214) 390-9800
                 Telecopier No: (214) 390-9687

                 Attention:  F. Robert Merrill III

         (ii)    if to Lender, to it at:

                 NationsBank of Texas, N.A.
                 NationsBank Plaza
                 901 Main Street
                 7th Floor
                 Dallas, Texas 75202

                 Telephone No: (214) 508-1389
                 Telecopier No: (214) 508-3139

                 Attention:  Commercial Banking

or at such other address, telecopier or telephone number or to the attention of
such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".

         (c)     Effectiveness.  Each notice, communication and any material to
be given or delivered to Lender or Borrower pursuant to this Agreement shall be
effective or deemed delivered or furnished (i) if sent by certified mail,
return receipt requested, on the fifth Business Day after such notice,
communication or material is deposited in the mail, addressed as above
provided, (ii) if sent by telecopier, when such notice, communication or
material is transmitted to the appropriate number determined as above provided
in this Section 8.4 and the appropriate receipt is received or acknowledged,
(iii) if sent by hand delivery or overnight courier, when





                                      -47-
<PAGE>   53
left at the address of the addressee addressed as above provided and the
appropriate receipt is received or acknowledged, and (iv) if given by
telephone, when communicated to the individual or any member of the department
specified as the individual or department to whose attention notices,
communications and materials are to be given or delivered except that notices
of a change of address, telecopier or telephone number or individual or
department to whose attention notices, communications and materials are to be
given or delivered shall not be effective until received.

         8.5     Place of Payment.  All sums payable to Lender hereunder shall
be paid to Lender at either Lender's Principal Office or at a branch of Lender
within Dallas or Collin Counties, Texas, not later than noon, Dallas time, on
the date due, in immediately available funds.  If any payment falls due on
other than a Business Day, then such due date shall be extended to the next
succeeding Business Day, and such amount shall be payable in respect to such
extension.

         8.6     Survival of Agreements.  All covenants, agreements,
representations and warranties made herein shall survive the execution and the
delivery of this Agreement, the Notes and the other Loan Papers.

         8.7     Parties in Interest.  All covenants and agreements contained
in the Loan Papers shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto, except that Borrower may not
assign its rights hereunder without the prior written consent of Lender.

         8.8     Expenses.  Borrower agrees (a) to pay all out-of-pocket
expenses of Lender in connection with the negotiation and preparation of this
Agreement, including exhibits and amendments, consents and waivers to any of
the other Loan Papers as may from time to time hereafter be requested or
required, and the reasonable fees and expenses of Special Counsel from time to
time in connection with the negotiation, preparation and execution of the Loan
Papers, and (b) to pay or reimburse Lender for all reasonable costs and
expenses, including reasonable fees and expenses of counsel to Lender, incurred
in connection with the enforcement or preservation of any rights under or the
collection of any amounts due pursuant to any of the Loan Papers.  The
obligations of Borrower under this Section 8.8 shall survive any termination of
this Agreement.

         8.9     Governing Law.  This Agreement and all other Loan Papers shall
be deemed contracts made under the Laws of Texas and shall be construed and
enforced in accordance with and governed by the Laws of Texas, except to the
extent federal Laws govern the validity, construction, enforcement and
interpretation of all or any part of the Loan Papers.  Without excluding any
other jurisdiction, Borrower agrees that the courts of Texas will have
jurisdiction over proceedings in connection herewith.  Borrower and Lender
hereby agree that the provisions of Art. 5069-15.01 et seq. of the Revised
Civil Statutes of Texas, 1925, as amended, shall not apply to this Agreement
and the Notes.





                                      -48-
<PAGE>   54
         8.10    MANDATORY ARBITRATION.  (a)  ANY CONTROVERSY OR CLAIM BETWEEN
OR AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS,
INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION
AND MEDIATION SERVICES, INC. ("JAMS"), AND THE "SPECIAL RULES" SET FORTH BELOW.
IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.  JUDGMENT
UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

         (b)     Special Rules.  The arbitration shall be conducted in Dallas,
Texas and administered by JAMS who will appoint an arbitrator; if JAMS is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve.  All arbitration hearings will be
commenced within ninety days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional sixty days.

         (c)     Reservations of Rights.  Nothing in this Agreement or any
other Loan Paper shall be deemed to (i) limit the applicability of any
otherwise applicable statutes of limitation or repose and any waivers contained
in this Agreement; or (ii) be a waiver by Lender of the protection afforded to
it by 12 U.S.C. Section  91 or any substantially equivalent state law; or (iii)
limit the right of Lender hereto (A) to exercise self help remedies such as
(but not limited to) setoff, or (B) to foreclose against any real or personal
property collateral, or (C) to obtain from a court provisional or ancillary
remedies such as (but not limited to) injunctive relief or the appointment of a
receiver.  Lender may exercise such self help rights, foreclose upon such
property, or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to this
Agreement.  At Lender's option, foreclosure under a deed of trust or mortgage
may be accomplished by any of the following:  the exercise of a power of sale
under the deed of trust or mortgage, or by judicial sale under the deed of
trust or mortgage, or by judicial foreclosure.  Neither this exercise of self
help remedies nor the institution or maintenance of an action for foreclosure
or provisional or ancillary remedies shall constitute a waiver of the right of
any party, including the claimant in any such action, to arbitrate the merits
of the controversy or claim occasioning resort to such remedies.

         8.11    WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT PERMITTED BY LAW,
BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,





                                      -49-
<PAGE>   55
EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER
LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

         8.12    Maximum Amount Limitation.  It is not the intention of any of
the parties to this Agreement to make an agreement violative of the Laws of any
applicable jurisdiction relating to usury. Regardless of any provision in this
Agreement, the Notes or any other Loan Paper, Lender shall never be entitled to
receive, collect or apply, as interest on the Obligation, any amount in excess
of the Maximum Amount. If Lender ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and
if principal is paid in full, any remaining excess shall be paid to Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, Borrower and Lender shall, to the
maximum extent permitted under Applicable Laws, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligation so that the interest
rate is uniform throughout the entire term of the Obligation; provided that if
the Obligation is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Amount, Lender shall refund to
Borrower the amount of such excess or credit the amount of such excess against
the total principal amount owing, and, in such event, Lender shall not be
subject to any penalties provided by any Laws for contracting for, charging or
receiving interest in excess of the Maximum Amount.  This Section 8.12 shall
control every other provision of all agreements among the parties to this
Agreement pertaining to the transactions contemplated by or contained in the
Notes and the other Loan Papers.

         8.13    Severability.  If any provision of this Agreement or any other
Loan Paper is held to be illegal, invalid or unenforceable under present or
future Laws during the term thereof, such provision shall be fully severable,
the appropriate agreement or instrument shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
thereof, and the remaining provisions thereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom.  Furthermore, in lieu of such illegal,
invalid or unenforceable provision there shall be added automatically as a part
of such agreement or instrument a provision as similar in terms to the illegal,
invalid or unenforceable provision as may be possible and legal, valid and
enforceable.

         8.14    Amendment.  The provisions of this Agreement and each other
Loan Paper may not be amended, modified or waived except by the written
agreement of Borrower and Lender.  This Agreement embodies the entire agreement
among the parties, supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof, and may be amended only as provided
above.





                                      -50-
<PAGE>   56
         8.15    Exceptions to Covenants.  Borrower shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as
an exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.

         8.16    Counterparts.  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.

         8.17    ENTIRE AGREEMENT.  THIS AGREEMENT AND THE LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY (A) EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES, OR (B) THE COMMITMENT LETTER, DATED MARCH 7, 1995 FROM LENDER TO
BORROWER (ALL THE TERMS AND CONDITIONS OF WHICH ARE SUPERSEDED BY THE LOAN
PAPERS).  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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


                                 QUEST MEDICAL, INC.


                                 By:  /s/ F. Robert Merrill III      
                                      -------------------------------------
                                      F. Robert Merrill III, Vice President


                                 NATIONSBANK OF TEXAS, N.A.


                                 By:  /s/ Jay C. Henry                    
                                      -------------------------------------
                                      Jay C. Henry, Vice President





                                      -51-
<PAGE>   57
                        "EXHIBITS F, H AND I OMMITTED"
                                      
                             "SCHEDULES OMITTED"

                    "EXHIBITS A,B,C,D,E AND G ARE FILED AS
                   EXHIBITS 10.22 - 10.30 TO THIS FORM 8-K"

