<PAGE>
REVOLVING NOTE
<TABLE>
<S><C>
-------------------------------------------------------------------------------
Debtor's Name: Specialty Laboratories, Inc.
-------------------------------------------------------------------------------
Debtor's Address: Office: #210 Loan Number
2211 Michigan Avenue
Santa Monica, California 90404
------------------------------------
Termination Date: Amount
September 3, 2002 $15,000,000
-------------------------------------------------------------------------------
</TABLE>
Santa Monica, California $15,000,000 Date: August 30, 1999
FOR VALUE RECEIVED, on September 3, 2002 (the "Termination Date"), the
undersigned ("Debtor") promises to pay to the order of UNION BANK OF CALIFORNIA,
N.A. ("Bank"), as indicated below, the principal sum of Fifteen Million Dollars
($15,000,000), or so much thereof as is disbursed, together with interest on the
balance of such principal from time to time outstanding, at the per annum rate
or rates and at the times set forth below. This Revolving Note (this "Note") is
governed by the terms and conditions of the Amended and Restated Loan Agreement
(as such term is defined hereinbelow).
1. INTEREST PAYMENTS. Debtor shall pay interest on the last day of each month
(commencing August 31, 1999). Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this Note shall be made on the basis of a year of
360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding
hereunder in increments of at least One Hundred Thousand Dollars
($100,000) shall bear interest at a rate, based on an index selected by
Debtor, equal to Bank's LIBOR Rate for the Interest Period selected by
Debtor plus the LIBOR Rate Margin.
Any Base Interest Rate may not be changed, altered or otherwise
modified until the expiration of the Interest Period selected by
Debtor. The exercise of interest rate options by Debtor shall be as
recorded in Bank's records, which records shall be prima facie evidence
of the amount borrowed as a Base Interest Rate Loan and the interest
rate; provided, however, that failure of Bank to make any such notation
in its records shall not discharge Debtor from its obligation to repay
in full with interest all amounts borrowed. In no event shall any
Interest Period extend beyond the Termination Date.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which the Base Interest Rate is not accruing,
and on the expiration of any Interest Period with respect to principal
outstanding on which the Base Interest Rate has been accruing, select
an index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 10:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected index,
the Interest Period and the Origination Date selected (which
Origination Date shall follow the date of such selection by no more
than two (2) Business Days).
1
<PAGE>
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index is
unavailable for any reason, the selection shall be void. Bank reserves
the right to fund the principal from any source of funds.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum equal to the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
At any time prior to the Termination Date, subject to the provisions of
paragraph 4, below, of this Note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed
the principal amount of this Note. Debtor shall pay all amounts due
under this Note in lawful money of the United States at Bank's Los
Angeles Headquarters Commercial Banking Office, or such other office as
may be designated by Bank, from time to time.
2. LATE PAYMENTS. If any payment required by the terms of this Note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this Note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above,
calculated from the date of default until all amounts payable under this Note
are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this Note bearing interest at a rate based
on the Reference Rate may be prepaid in whole or in part at any time,
without penalty or premium. Amounts outstanding under this Note bearing
interest at the Base Interest Rate may only be prepaid, in whole or in
part, provided that Bank has received not less than five (5) Business
Days' prior written notice of an intention to make such prepayment and
Debtor pays a prepayment fee to Bank in an amount equal to the present
value of the product of: (i) the difference (but not less than zero)
between (a) the Base Interest Rate applicable to the principal amount
which Debtor intends to prepay and (b) the return which Bank could
obtain if it used the amount of such prepayment of principal to
purchase at bid price regularly quoted securities issued by the United
States having a maturity date most closely coinciding with the relevant
Base Rate Maturity Date and such securities were held by Bank until the
relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the
numerator of which is the number of days in the period between the date
of prepayment and the relevant Base Rate Maturity Date and the
denominator of which is 360; and (iii) the amount of the principal so
prepaid. Present value under this Note is determined by discounting the
above product to present value using the Yield Rate as the annual
discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim
against Bank, should the return which Bank could obtain under the above
prepayment formula exceed the interest that Bank would have received if
no prepayment had occurred. All prepayments shall include payment of
accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal. A
determination by Bank as to the prepayment fee amount, if any, shall be
conclusive.
c. Such prepayment fee, if any, shall also be payable if prepayment
occurs as the result of the acceleration of the principal of this Note
by Bank because of any default hereunder. If,
2
<PAGE>
following such acceleration, all or any portion of a Base Interest Rate
Loan is satisfied, whether through sale of property encumbered by any
security agreement or other agreement securing this Note, at a
foreclosure sale held thereunder or through the tender of payment at
any time following such acceleration, but prior to such a foreclosure
sale, then such satisfaction shall be deemed an evasion of the
prepayment conditions set forth above, and Bank shall, automatically
and without notice or demand, be entitled to receive, concurrently with
such satisfaction the prepayment fee set forth above, and the amount of
such prepayment fee shall be added to the principal. DEBTOR HEREBY
ACKNOWLEDGES AND AGREES THAT BANK WOULD NOT EXTEND THE CREDIT TO DEBTOR
EVIDENCED BY THIS NOTE WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE,
TO PAY BANK A PREPAYMENT FEE UPON THE SATISFACTION OF ALL OR ANY
PORTION OF THE PRINCIPAL BEARING INTEREST AT THE BASE INTEREST RATE
FOLLOWING THE ACCELERATION OF THE TERMINATION DATE HEREOF BY REASON OF
A DEFAULT. DEBTOR HAS CAUSED THOSE PERSONS SIGNING THIS NOTE ON ITS
BEHALF TO SEPARATELY INITIAL THE AGREEMENT CONTAINED IN THIS PARAGRAPH
BY PLACING THEIR INITIALS BELOW:
INITIALS: /s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
--------------- ----------------
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this Note when due and, in the case of any interest
payment only, such failure shall continue for five (5) days; (b) any breach,
misrepresentation or other default by Debtor, any guarantor, co-maker, endorser,
or any person or entity other than Debtor providing security for this Note
(hereinafter individually and collectively referred to as the "Obligor") under
any security agreement, guaranty or other agreement between Bank and any
Obligor, and such breach, misrepresentation or other default, if in respect of a
financial covenant which is capable of being cured, is not cured within thirty
(30) days after its occurrence; (c) the insolvency of any Obligor or the failure
of any Obligor generally to pay such Obligor's debts as such debts become due;
(d) the commencement as to any Obligor of any voluntary or involuntary
proceeding under any laws relating to bankruptcy, insolvency, reorganization,
arrangement, debt adjustment or debtor relief and in the case of any
involuntary proceeding, the same shall not be dismissed or discharged within
sixty (60) days after commencement; (e) the assignment by any Obligor for the
benefit of such Obligor's creditors of any substantial part of such Obligor's
property; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this Note; (j) the
failure of any Obligor to comply with any order, judgment, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this Note
immediately due and payable; however, upon the occurrence of an event of
default under subsection (d), (e), (f) or (g) hereof, all principal and interest
shall automatically become immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this Note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this Note. Debtor and any endorsers of this Note, for the maximum period of time
and the full extent permitted by law, (a) waive diligence, presentment,
3
<PAGE>
demand, notice of nonpayment, protest, notice of protest, and notice of every
kind; (b) waive the right to assert the defense of any statute of limitations to
any debt or obligation hereunder; and (c) consent to renewals and extensions of
time for the payment of any amounts due under this Note. The receipt of any
check or other item of payment by Bank, at its option, shall not be considered a
payment on account until such check or other item of payment is honored when
presented for payment at the drawee bank. Bank may delay the credit of such
payment based upon Bank's schedule of funds availability, and interest under
this Note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this Note, Debtor and any Obligor, including
their successors and assigns, hereby consent to the jurisdiction of any
competent court within the State of California, as provided in any alternative
dispute resolution agreement executed between Debtor and Bank, and consent to
service of process by any means authorized by said state's law. The term "Bank"
includes, without limitation, any holder of this Note. This Note shall be
construed in accordance with and governed by the laws of the State of
California. This Note hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Debtor and
Bank.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "AMENDED AND RESTATED LOAN AGREEMENT" shall
mean that certain Amended and Restated Loan Agreement dated as of April 7,
1997, by and between Debtor and Bank, as amended by that certain First
Amendment dated as of January 23, 1998, that certain Second Amendment and
Waiver dated as of February 17, 1999, and that certain Third Amendment dated
as of even date herewith, and as at any time further amended, supplemented or
otherwise modified or further restated. "BASE INTEREST RATE" shall mean a
rate of interest based on the LIBOR Rate. "BASE INTEREST RATE LOAN" shall
mean amounts outstanding under this Note that bear interest at the Base
Interest Rate. "BASE RATE MATURITY DATE" shall mean the last day of the
Interest Period with respect to principal outstanding under a Base Interest
Rate Loan. "BUSINESS DAY" shall mean a day which is not a Saturday or Sunday
on which Bank is open for business in the state identified in paragraph 6
above, and with the respect to the rate of interest based on the LIBOR Rate,
on which dealings in U.S. dollar deposits outside of the United States may be
carried on by Bank. "INTEREST PERIOD" shall mean any calendar period of one
(1), three (3), six (6), nine (9) or, subject to availability, twelve (12)
months. In determining an Interest Period, a month means a period that starts
on one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there
is no such numerically corresponding day, then as to that month, such day
shall be deemed to be the last calendar day of such month. Any Interest
Period which would otherwise end on a non-Business Day shall end on the next
succeeding Business Day unless that is the first day of a month, in which
event such Interest Period shall end on the next preceding Business Day. In
no event shall any Interest Period extend beyond the Termination Date. "LIBOR
RATE" shall mean a per annum rate of interest (rounded upward, if necessary,
to the nearest 1/100 of 1%) at which dollar deposits, in immediately
available funds and in lawful money of the United States would be offered to
Bank, outside of the United States, for a term coinciding with the Interest
Period selected by Debtor and for an amount equal to the amount of principal
covered by Debtor's interest rate selection, plus Bank's costs, including the
cost, if any of reserve requirements. "LIBOR RATE MARGIN" shall mean, (i) two
and one-half percent (2-1/2%) per annum, effective on the first day of the
month following the month in which Bank receives a Financial Statement (as
such term is defined in the Amended and Restated Loan Agreement) from Debtor
demonstrating that the ratio of Debtor's Funded Indebtedness to EBITDA for
the fiscal period covered thereby was greater than 2.25 to 1.00, (ii) two and
one-fifth percent (2-1/5%) per annum, effective on the first day of the
month following the month in which Bank receives a Financial Statement from
Debtor demonstrating that the ratio of Debtor's Funded Indebtedness to EBITDA
for the fiscal period covered thereby was less than or equal to 2.25 to 1.00
but greater than 1.50 to 1.00 and (iii) one and three-quarters percent
(1-3/4%) per annum, effective on the first day of the month following the
month in which Bank receives a Financial Statement from Debtor demonstrating
that the ratio of Debtor's Funded Indebtedness to EBITDA for the fiscal
period covered thereby was less than or equal to 1.50 to 1.00; provided,
however, that (x) if at any time there
4
<PAGE>
exists an Event of Default under the Amended and Restated Loan Agreement, or any
event which, with notice or the lapse of time, or both, would become an Event of
Default under the Amended and Restated Loan Agreement or (y) if Debtor fails to
deliver any Financial Statement to Bank within the required time period set
forth in the Amended and Restated Loan Agreement, then the ratio of Debtor's
Funded Indebtedness to EBITDA shall be deemed to be greater than 2.25 to 1.00
until such Event of Default or unmatured Event of Default is cured or otherwise
waived by Bank or such Financial Statement is delivered to Bank, as the case may
be; and provided further, however, that the LIBOR Rate Margin shall never be a
negative number. "ORIGINATION DATE" shall mean the Business Day on which funds
are made available to Debtor relating to Debtor's selection of the Base Interest
Rate. "REFERENCE RATE" shall mean the rate announced by Bank from time to time
at its corporate headquarters as its Reference Rate. The Reference Rate is an
index rate determined by Bank from time to time as a means of pricing certain
extensions of credit and is neither directly tied to any external rate of
interest or index nor necessarily the lowest rate of interest charged by Bank at
any given time.
SPECIALTY LABORATORIES, INC.
By /s/ [ILLEGIBLE]
------------------------------
Title Chairman and CEO
------------------------------
By /s/ [ILLEGIBLE]
------------------------------
Title V.P. Finance and Treasurer
------------------------------
5
