Exhibit 10.2

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (this “Agreement”) is dated as of January 31, 2005 and
entered into by and among QUIDEL CORPORATION, a Delaware corporation
(“Borrower”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of
Borrower (each of such undersigned Subsidiaries being a “Subsidiary Grantor” and
collectively “Subsidiary Grantors”) and each ADDITIONAL GRANTOR that may become
a party hereto after the date hereof in accordance with Section 21 hereof (each
of Borrower, each Subsidiary Grantor, and each Additional Grantor being a
“Grantor” and collectively the “Grantors”) and BANK OF AMERICA, N.A., as Agent
for and representative of (in such capacity herein called “Secured Party”) the
Beneficiaries (as hereinafter defined).

 

PRELIMINARY STATEMENTS

 

A.            Pursuant to the Credit Agreement dated as of January 31, 2005 (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Credit Agreement;” the terms defined therein and not
otherwise defined in Section 31, the UCC or elsewhere herein being used herein
as therein defined), by and among Borrower, the financial institutions listed
therein as Lenders and Bank of America, N.A., as Agent (in such capacity,
“Agent”), Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Borrower.

 

B.            Borrower may from time to time enter, or may from time to time
have entered, into one or more Lender Swap Contracts with one or more Swap
Counterparties in accordance with the terms of the Credit Agreement, and it is
desired that the obligations of Borrower under the Lender Swap Contracts,
including, without limitation, the obligation of Borrower to make payments
thereunder in the event of early termination thereof, together with all
obligations of Borrower under the Credit Agreement and the other Loan Documents,
be secured hereunder.

 

C.            Subsidiary Grantors have executed and delivered the Subsidiary
Guaranty, in each case in favor of Secured Party for the benefit of Lenders and
any Swap Counterparties, pursuant to which each Subsidiary Grantor has
guarantied the prompt payment and performance when due of all obligations of
Borrower under the Credit Agreement and all obligations of Borrower under the
Lender Swap Contracts.

 

D.            It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantors listed on the signature pages
hereof shall have granted the security interests and undertaken the obligations
contemplated by this Agreement.

 

NOW, THEREFORE, in consideration of the agreements set forth herein and in the
Credit Agreement and in order to induce Lenders to make Loans and other
extensions of credit under the Credit Agreement and to induce Swap
Counterparties to enter into the Lender Swap Contracts, each Grantor hereby
agrees with Secured Party as follows:

 

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SECTION 1.         Grant of Security.

 

Each Grantor hereby assigns to Secured Party, and hereby grants to Secured Party
a security interest in, all of such Grantor’s right, title and interest in and
to all of the personal property of such Grantor, in each case whether now or
hereafter existing, whether tangible or intangible, whether now owned or
hereafter acquired, wherever the same may be located and whether or not subject
to the Uniform Commercial Code as it exists on the date of this Agreement, or as
it may hereafter be amended in the State of California (the “UCC”), including
the following (the “Collateral”):

 

(a)           all Accounts;

 

(b)           all Chattel Paper;

 

(c)           all Money and all Deposit Accounts, together with all amounts on
deposit from time to time in such Deposit Accounts;

 

(d)           all Documents;

 

(e)           all General Intangibles, including all intellectual property,
Payment Intangibles and Software;

 

(f)            all Goods, including Inventory, Equipment and Fixtures;

 

(g)           all Instruments;

 

(h)           all Investment Property;

 

(i)            all Letter-of-Credit Rights and other Supporting Obligations;

 

(j)            all Records;

 

(k)           all Commercial Tort Claims, including those set forth on Schedule
1  annexed hereto; and

 

(l)            all Proceeds and Accessions with respect to any of the foregoing
Collateral.

 

Each category of Collateral set forth above shall have the meaning set forth in
the UCC (to the extent such term is defined in the UCC), it being the intention
of Grantors that the description of the Collateral set forth above be construed
to include the broadest possible range of assets.

 

Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in, any of such Grantor’s rights or interests in or under, any license,
contract, permit, Instrument, Security or franchise to which such Grantor is a
party or any of its rights or interests thereunder to the extent, but only to
the extent, that such a grant would, under the terms of such license, contract,
permit, Instrument, Security or franchise, result in a breach of the terms of,
or constitute a default under, such license, contract, permit, Instrument,
Security or franchise (other than to the extent that any

 

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such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity);
provided, that immediately upon the ineffectiveness, lapse or termination of any
such provision the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such rights and interests as if such
provision had never been in effect.

 

Notwithstanding the foregoing, the Collateral shall not include (a) any equity
interests issued by a Person if such Person is a controlled foreign corporation
(used hereinafter as such term is defined in Section 957(a) or any successor
provision of the Internal Revenue Code), in excess of the amount of such equity
interests possessing up to but not exceeding 65% of the voting power of all
classes of such equity interests entitled to vote of such Person, and (b) assets
subject to any Lien permitted under Section 7.1(j) of the Credit Agreement where
the security agreement or other instrument creating such purchase money Lien
prohibits the granting of a security interest in such assets to Secured Party or
results in an event of default under such security agreement or instrument
(other than to the extent that such term would be rendered ineffective pursuant
to the UCC or any other applicable law (including the Bankruptcy Code));
provided that the security interest in any such assets shall automatically
attach hereunder when and after any such Liens are discharged or released or
when the assets encumbered by such Liens is no longer subject to such
restrictions; provided further, that in any event any Account or any money or
other amounts due or to become due under any such contract, agreement,
instrument or indenture shall not be excluded from the definition of Collateral
to the extent that any of the foregoing is (or if it contained a provision
limiting the transferability or pledge thereof would be) subject to Section 9406
of the UCC.

 

SECTION 2.         Security for Obligations.

 

This Agreement secures, and the Collateral is collateral security for, the
prompt payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise, of all
Secured Obligations of each Grantor.  “Secured Obligations” means:

 

(a)           with respect to Borrower, all obligations and liabilities of every
nature of Borrower now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and any Lender
Swap Contract (including all Obligations (as defined in the Credit Agreement));
and

 

(b)           with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of such Subsidiary Grantor now
or hereafter existing under or arising out of or in connection with the
Subsidiary Guaranty (including all Guarantied Obligations (as defined in the
Subsidiary Guaranty));

 

in each case together with all extensions or renewals thereof, whether for
principal, interest, reimbursement of amounts drawn under Letters of Credit,
payments for early termination of Lender Swap Contracts, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that

 

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are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender or Swap Counterparty as
a preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement (including,
without limitation, interest and other amounts that, but for the filing of a
petition in bankruptcy with respect to Borrower or any other Grantor, would
accrue on such obligations, whether or not a claim is allowed against Borrower
or such Grantor for such amounts in the related bankruptcy proceeding).

 

SECTION 3.         Grantors Remain Liable.

 

Anything contained herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

 

SECTION 4.         Representations and Warranties.

 

Each Grantor represents and warrants as follows:

 

(a)           Ownership of Collateral.  Except as expressly permitted by the
Credit Agreement, such Grantor owns its interests in the Collateral free and
clear of any Lien and no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
filing or recording office, including any IP Filing Office.

 

(b)           Perfection.  The security interests in the Collateral granted to
Secured Party for the ratable benefit of Lenders and Swap Counterparties
hereunder constitute valid security interests in the Collateral, securing the
payment of the Secured Obligations.  Upon (i) the filing of UCC financing
statements naming each Grantor as “debtor”, naming Secured Party as “secured
party” and describing the Collateral in the filing offices with respect to such
Grantor set forth on Schedule 2 annexed hereto, (ii) in the case of the
Securities Collateral consisting of certificated Securities or evidenced by
Instruments, in addition to filing of such UCC financing statements, delivery of
the certificates representing such certificated Securities and delivery of such
Instruments to Secured Party, and in the case of Securities Collateral issued by
a foreign issuer, any actions required under foreign law to perfect a security
interest in such Securities Collateral), in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank,
(iii) in the case of the Intellectual Property Collateral described in clause
(a) of the definition thereof, in addition to the filing of such UCC financing
statements, the recordation of a Grant with the applicable IP Filing Office,
(iv) in the case of Equipment that is covered by a certificate of title, the
filing with the registrar of motor vehicles or other appropriate authority in
the applicable jurisdiction of an application requesting the notation of the
security interest created hereunder on such certificate of title, and (v), in
the case

 

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of any Deposit Account and any Investment Property constituting a Security
Entitlement, Securities Account, Commodity Contract or Commodity Account, the
execution and delivery to Secured Party of an agreement providing for control by
Secured Party thereof, the security interests in the Collateral (except for
security interests in Collateral that cannot be perfected by the filing of
financing statements and are not material to the Company) granted to Secured
Party for the ratable benefit of Lenders and Swap Counterparties will constitute
perfected security interests therein prior to all other Liens (except for Liens
permitted by clauses (b) through (i) of subsection 7.1 of the Credit Agreement),
and all filings and other actions necessary or desirable to perfect and protect
such security interests have been duly made or taken.

 

(c)           Office Locations; Type and Jurisdiction of Organization; Locations
of Equipment and Inventory.  Such Grantor’s name as it appears in official
filings in the jurisdiction of its organization, type of organization (i.e.
corporation, limited partnership, etc.), jurisdiction of organization, principal
place of business, chief executive office, office where such Grantor keeps its
Records regarding the Accounts, Intellectual Property and originals of Chattel
Paper, and organization number provided by the applicable Government Authority
of the jurisdiction of organization are set forth on Schedule 3 annexed hereto. 
All of the Equipment and Inventory is located at the places set forth on
Schedule 4 annexed hereto, except for Inventory which, in the ordinary course of
business, is in transit either (i) from a supplier to a Grantor, (ii) between
the locations set forth on Schedule 4 annexed hereto, or (iii) to customers of a
Grantor.

 

(d)           Names.  No Grantor (or predecessor by merger or otherwise of such
Grantor) has, within the five year period preceding the date hereof, or, in the
case of an Additional Grantor, the date of the applicable Counterpart, had a
different name from the name of such Grantor listed on the signature pages
hereof, except the names set forth on Schedule 5 annexed hereto.

 

(e)           Delivery of Certain Collateral.  All certificates or Instruments
(excluding checks) evidencing, comprising or representing the Collateral having
a value or face amount in excess of $25,000 have been delivered to Secured Party
duly endorsed or accompanied by duly executed instruments of transfer or
assignment in blank.

 

(f)            Securities Collateral.  All of the Pledged Subsidiary Equity set
forth on Schedule 6 annexed hereto has been duly authorized and validly issued
and is fully paid and non-assessable; all of the Pledged Subsidiary Debt set
forth on Schedule 7 annexed hereto has been duly authorized and is the legally
valid and binding obligation of the issuers thereof and is not in default; there
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged
Subsidiary Equity; Schedule 6 annexed hereto sets forth all of the Equity
Interests and the Pledged Equity owned by each Grantor, and the percentage
ownership in each issuer thereof; and Schedule 7 annexed hereto sets forth all
of the Pledged Debt owned by such Grantor.

 

(g)           Intellectual Property Collateral.  A true and complete list of all
Trademark Registrations and applications for any Trademark owned, held (whether
pursuant to a license or otherwise) or used by such Grantor, in whole or in
part, is set forth on Schedule 8

 

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annexed hereto; a true and complete list of all Patents owned, held (whether
pursuant to a license or otherwise) or used by such Grantor, in whole or in
part, is set forth on Schedule 9 annexed hereto; a true and complete list of all
Copyright Registrations and applications for Copyright Registrations held
(whether pursuant to a license or otherwise) by such Grantor, in whole or in
part (other than non-exclusive licenses obtained in the ordinary course of
business), is set forth on Schedule 10 annexed hereto; and such Grantor is not
aware of any pending or threatened claim by any third party that any of the
Intellectual Property Collateral owned, held or used by such Grantor is invalid
or unenforceable.

 

(h)           Deposit Accounts, Securities Accounts, Commodity Accounts. 
Schedule 11 annexed hereto lists all Deposit Accounts, Securities Accounts and
Commodity Accounts owned by each Grantor, and indicates the institution or
intermediary at which the account is held and the account number.

 

(i)            Chattel Paper.  Such Grantor has no interest in any Chattel
Paper, except as set forth in Schedule 12 annexed hereto.

 

(j)            Letter-of-Credit Rights.  Such Grantor has no interest in any
Letter-of-Credit Rights, except as set forth on Schedule 13 annexed hereto.

 

(k)           Documents.  No negotiable Documents are outstanding with respect
to any of the Inventory, except as set forth on Schedule 14 annexed hereto.

 

The representations and warranties as to the information set forth in Schedules
referred to herein are made as to each Grantor (other than Additional Grantors)
as of the date hereof and as to each Additional Grantor as of the date of the
applicable Counterpart, except that, in the case of a Pledge Supplement, IP
Supplement or notice delivered pursuant to Section 5(d) hereof, such
representations and warranties are made as of the date of such supplement or
notice.

 

SECTION 5.         Further Assurances.

 

(a)           Generally.  Each Grantor agrees that from time to time, at the
expense of Grantors, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral.  Without limiting the generality of the
foregoing, each Grantor will:  (i) notify Secured Party in writing of receipt by
such Grantor of any interest in Chattel Paper having a value or face amount in
excess of $25,000 and at the request of Secured Party, mark conspicuously each
item of Chattel Paper and each of its records pertaining to the Collateral, with
a legend, in form and substance satisfactory to Secured Party, indicating that
such Collateral is subject to the security interest granted hereby, (ii) deliver
to Secured Party all promissory notes and other Instruments having a value or
face amount in excess of $25,000 and, at the request of Secured Party, all
original counterparts of Chattel Paper, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) (A) execute (if necessary) and file such
financing or continuation statements, or amendments thereto, (B) execute and
deliver, and cause to be

 

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executed and delivered, agreements establishing that Secured Party has control
of Deposit Accounts and Investment Property of such Grantor, (C) deliver such
documents, instruments, notices, records and consents, and take such other
actions, necessary to establish that secured party has control over electronic
Chattel Paper and Letter-of-Credit Rights of such Grantor and (D) deliver such
other instruments or notices, in each case, as may be necessary or desirable, or
as Secured Party may request, in order to perfect and preserve the security
interests granted or purported to be granted hereby, (iv) furnish to Secured
Party from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Secured Party may reasonably request, all in reasonable detail,
(v) at any reasonable time, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, (vi) at Secured Party’s request, appear in
and defend any action or proceeding that may affect such Grantor’s title to or
Secured Party’s security interest in all or any part of the Collateral, and
(vii) use commercially reasonable efforts to obtain any necessary consents of
third parties to the creation and perfection of a security interest in favor of
Secured Party with respect to any Collateral.  Each Grantor hereby authorizes
Secured Party to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral (including any
financing statement indicating that it covers “all assets” or “all personal
property” of such Grantor) without the signature of any Grantor.

 

(b)           Securities Collateral.  Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that (i) all certificates or
Instruments representing or evidencing the Securities Collateral having a value
or face amount in excess of $25,000 shall be delivered to and held by or on
behalf of Secured Party pursuant hereto and shall be in suitable form for
transfer by delivery or, as applicable, shall be accompanied by such Grantor’s
endorsement, where necessary, or duly executed instruments of transfer or
assignments in blank, all in form and substance satisfactory to Secured Party
and (ii) it will, upon obtaining any additional Equity Interests or Indebtedness
having a value or face amount in excess of $25,000, promptly (and in any event
within five Business Days) deliver to Secured Party a Pledge Supplement, duly
executed by such Grantor, in respect of such additional Pledged Equity or
Pledged Debt; provided, that the failure of any Grantor to execute a Pledge
Supplement with respect to any additional Pledged Equity or Pledged Debt shall
not impair the security interest of Secured Party therein or otherwise adversely
affect the rights and remedies of Secured Party hereunder with respect thereto. 
Upon each such acquisition, the representations and warranties contained in
Section 4(f) hereof shall be deemed to have been made by such Grantor as to such
Pledged Equity or Pledged Debt, whether or not such Pledge Supplement is
delivered.

 

(c)           Intellectual Property Collateral.  At least quarterly, within 15
days after the end of each calendar quarter, each Grantor shall notify Secured
Party in writing of any rights to registered Intellectual Property Collateral
having a value in excess of $25,000 acquired by such Grantor after the date
hereof.  At least quarterly, within 15 days after the end of each calendar
quarter in which the Grantor has acquired any such registered IP Collateral,
each Grantor shall execute and deliver to Secured Party an IP Supplement, and
submit a Grant for recordation with respect thereto in the applicable IP Filing
Office; provided, the failure of any Grantor to execute an IP Supplement or
submit a Grant for recordation with respect to any additional Intellectual
Property Collateral shall not impair the security interest of Secured Party
therein or otherwise adversely affect the rights and remedies of Secured Party
hereunder with

 

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respect thereto.  Upon delivery to Secured Party of an IP Supplement, Schedules
8, 9 and 10 annexed hereto and Schedule A to each Grant, as applicable, shall be
deemed modified to include a reference to any right, title or interest in any
existing Intellectual Property Collateral or any Intellectual Property
Collateral set forth on Schedule A to such IP Supplement.  Upon each such
acquisition, the representations and warranties contained in Section 4(g) hereof
shall be deemed to have been made by such Grantor as to such Intellectual
Property Collateral, whether or not such IP Supplement is delivered.

 

(d)           Commercial Tort Claims.  Grantors have no Commercial Tort Claims
asserted in any judicial action as of the date hereof, except as set forth on
Schedule 1 annexed hereto.  In the event that a Grantor shall at any time after
the date hereof have any Commercial Tort Claims asserted in any judicial action,
such Grantor shall promptly notify Secured Party thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
Commercial Tort Claim and (ii) constitute an amendment to this Agreement by
which such Commercial Tort Claim shall constitute part of the Collateral.

 

SECTION 6.         Certain Covenants of Grantors.

 

Each Grantor shall:

 

(a)           not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;

 

(b)           give Secured Party at least 30 days’ prior written notice of
(i) any change in such Grantor’s name, identity or corporate structure and
(ii) any reincorporation, reorganization or other action that results in a
change of the jurisdiction of organization of such Grantor;

 

(c)           if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes;

 

(d)           keep correct and accurate Records of Collateral at the locations
described in Schedule 3 annexed hereto; and

 

(e)           permit representatives of Secured Party at any time during normal
business hours to inspect and make abstracts from such Records, and each Grantor
agrees to render to Secured Party, at such Grantor’s cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto.

 

SECTION 7.         Special Covenants With Respect to Equipment and Inventory.

 

Each Grantor shall:

 

(a)           if any Inventory is in possession or control of any of such
Grantor’s agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured Party;

 

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(b)           subject to Section 6.16(c) of the Credit Agreement, if any
Inventory is located on premises leased by such Grantor, deliver to Secured
Party a fully executed Landlord Waiver; and

 

(c)           promptly upon the issuance and delivery to such Grantor of any
negotiable Document having a value or face amount in excess of $25,000, deliver
such Document to Secured Party.

 

SECTION 8.         Special Covenants with respect to Accounts.

 

(a)           Each Grantor shall, for not less than three years from the date on
which each Account of such Grantor arose, maintain (i) complete Records of such
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.

 

(b)           Except as otherwise provided in this subsection (b), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Accounts.  In connection with such collections, each
Grantor may take (and, upon the occurrence and during the continuance of an
Event of Default at Secured Party’s direction, shall take) such action as such
Grantor or Secured Party may deem necessary or advisable to enforce collection
of amounts due or to become due under the Accounts; provided, however, that
Secured Party shall have the right at any time, upon the occurrence and during
the continuation of an Event of Default and upon written notice to such Grantor
of its intention to do so, to (i) notify the account debtors or obligors under
any Accounts of the assignment of such Accounts to Secured Party and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to such Grantor thereunder directly to Secured Party, (ii) notify each
Person maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party, (iii) enforce collection of any such Accounts at the expense of
Grantors, and (iv) adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done. 
After receipt by such Grantor of the notice from Secured Party referred to in
the proviso to the preceding sentence, (A) all amounts and proceeds (including
checks and other Instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of Secured Party hereunder,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over or delivered to Secured Party in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 17 hereof, and (B) such Grantor shall not, without the written consent
of Secured Party, adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.

 

SECTION 9.         Special Covenants With Respect to the Securities Collateral.

 

(a)           Form of Securities Collateral.  Secured Party shall have the right
at any time to exchange certificates or instruments representing or evidencing
Securities Collateral for certificates or instruments of smaller or larger
denominations.  If any Securities Collateral is not

 

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a security pursuant to Section 8-103 of the UCC, no Grantor shall take any
action that, under such Section, converts such Securities Collateral into a
security without causing the issuer thereof to issue to it certificates or
instruments evidencing such Securities Collateral, which it shall promptly
deliver to Secured Party as provided in this Section 9(a).

 

(b)           Covenants.  Each Grantor shall (i) not, except as expressly
permitted by the Credit Agreement, permit any issuer of Pledged Subsidiary
Equity to merge or consolidate unless all the outstanding Equity Interests of
the surviving or resulting Person are, upon such merger or consolidation,
pledged and become Collateral hereunder and no cash, securities or other
property is distributed in respect of the outstanding Equity Interests of any
other constituent corporation; (ii) cause each issuer of Pledged Subsidiary
Equity not to issue Equity Interests in addition to or in substitution for the
Pledged Subsidiary Equity issued by such issuer, except to such Grantor;
(iii) immediately upon its acquisition (directly or indirectly) of any Equity
Interests, including additional Equity Interests in each issuer of Pledged
Equity, comply with Section 5(b); (iv) immediately upon issuance of any and all
Instruments or other evidences of additional Indebtedness from time to time owed
to such Grantor by any obligor on the Pledged Debt, comply with Section 5;
(v) promptly deliver to Secured Party all written notices received by it with
respect to the Securities Collateral; (vi) at its expense (A) perform and comply
in all material respects with all terms and provisions of any agreement related
to the Securities Collateral required to be performed or complied with by it,
(B) maintain all such agreements in full force and effect and (C) enforce all
such agreements in accordance with their terms; and (vii), at the request of
Secured Party, promptly execute and deliver to Secured Party an agreement
providing for control by Secured Party of all Securities Entitlements,
Securities Accounts, Commodity Contracts and Commodity Accounts of such Grantor.

 

(c)           Voting and Distributions.  So long as no Event of Default shall
have occurred and be continuing, (i) each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not prohibited by the terms of
this Agreement or the Credit Agreement; provided, no Grantor shall exercise or
refrain from exercising any such right if Secured Party shall have notified such
Grantor that, in Secured Party’s judgment, such action would have a material
adverse effect on the value of the Securities Collateral or any part thereof;
and (ii) each Grantor shall be entitled to receive and retain any and all
dividends, other distributions, principal and interest paid in respect of the
Securities Collateral.

 

Upon the occurrence and during the continuation of an Event of Default, (x) upon
written notice from Secured Party to any Grantor, all rights of such Grantor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant hereto shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to exercise such voting and other consensual rights; (y) except as otherwise
specified in the Credit Agreement, upon written notice from Secured Party to any
Grantor of any exercise of remedies under Section 8.2 of the Credit Agreement,
all rights of such Grantor to receive the dividends, other distributions,
principal and interest payments which it would otherwise be authorized to
receive and retain pursuant hereto shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive and hold as Collateral such dividends, other distributions, principal
and interest payments; and (z) all dividends, principal, interest payments and
other distributions which are

 

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received by such Grantor contrary to the provisions of clause (y) above shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of such Grantor and shall forthwith be paid over to Secured Party as
Collateral in the same form as so received (with any necessary endorsements).

 

In order to permit Secured Party to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be entitled to receive hereunder,
(I) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request, and (II)
without limiting the effect of clause (I) above, each Grantor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Equity and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Equity would be entitled (including giving or withholding written
consents of holders of Equity Interests, calling special meetings of holders of
Equity Interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Equity on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Equity or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations, the cure of such
Event of Default or waiver thereof as evidenced by a writing executed by Secured
Party.

 

SECTION 10.                                             Special Covenants With
Respect to the Intellectual Property Collateral.

 

(a)           Each Grantor shall:

 

(i)            use reasonable efforts so as not to permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could or
might in any way impair or prevent the creation of a security interest in, or
the assignment of, such Grantor’s rights and interests in any property included
within the definitions of any Intellectual Property Collateral acquired under
such contracts;

 

(ii)           take any and all reasonable steps to protect the secrecy of all
trade secrets relating to the products and services sold or delivered under or
in connection with the Intellectual Property Collateral, including, without
limitation, where appropriate entering into confidentiality agreements with
employees and labeling and restricting access to secret information and
documents;

 

(iii)          use proper statutory notice in connection with its use of any of
the Intellectual Property Collateral and products and services covered by the
registered Intellectual Property Collateral; and

 

(iv)          use a commercially appropriate standard of quality (which may be
consistent with such Grantor’s past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection with
the Trademarks.

 

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(b)           Except as otherwise provided in this Section 10, each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor in respect of the Intellectual Property Collateral or any
portion thereof.  In connection with such collections, each Grantor may take
(and, after the occurrence and during the continuance of any Event of Default at
Secured Party’s reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, Secured Party shall have the right at any time, upon
the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created hereby and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done.  After receipt by any Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence
and upon the occurrence and during the continuance of any Event of Default,
(i) all amounts and proceeds (including checks and Instruments) received by each
Grantor in respect of amounts due to such Grantor in respect of the Intellectual
Property Collateral or any portion thereof shall be received in trust for the
benefit of Secured Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured Party in the
same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 17 hereof, and (ii) such Grantor
shall not adjust, settle or compromise the amount or payment of any such amount
or release wholly or partly any obligor with respect thereto or allow any credit
or discount thereon.

 

(c)           Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to Secured Party, to prosecute, file and/or make, unless
and until such Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application for registration relating to any of the
Intellectual Property Collateral owned, held or used by such Grantor and set
forth on Schedules 8, 9 or 10 annexed hereto, as applicable, that is pending as
of the date of this Agreement, (ii) any Copyright Registration on any existing
or future unregistered but copyrightable works (except for works of nominal
commercial value or with respect to which such Grantor has determined in the
exercise of its commercially reasonable judgment that it shall not seek
registration), (iii) any application on any future patentable but unpatented
innovation or invention comprising Intellectual Property Collateral, and
(iv) any Trademark opposition and cancellation proceedings, renew Trademark
Registrations and Copyright Registrations and do any and all acts which are
necessary or desirable to preserve and maintain all rights in all Intellectual
Property Collateral.  Any expenses incurred in connection therewith shall be
borne solely by Grantors.  Subject to the foregoing, each Grantor shall give
Secured Party prior written notice of any abandonment of any material
Intellectual Property Collateral.

 

(d)           Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral.  Each Grantor shall promptly, following its
becoming aware thereof, notify Secured Party of the institution of, or of any
adverse determination in, any proceeding (whether in an IP Filing Office or any
federal, state, local or foreign court) or

 

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regarding such Grantor’s ownership, right to use, or interest in any material
Intellectual Property Collateral.  Each Grantor shall provide to Secured Party
any information with respect thereto requested by Secured Party.

 

(e)           In addition to, and not by way of limitation of, the granting of a
security interest in the Collateral pursuant hereto, each Grantor, effective
upon the occurrence and during the continuance of an Event of Default, hereby
assigns, transfers and conveys to Secured Party the nonexclusive right and
license to use all Trademarks, tradenames, Copyrights, Patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral, together with any
goodwill associated therewith, all to the extent necessary to enable Secured
Party to realize on the Collateral in accordance with this Agreement and to
enable any transferee or assignee of the Collateral to enjoy the benefits of the
Collateral.  This right shall inure to the benefit of all successors, assigns
and transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise.  Such right and license
shall be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor.

 

SECTION 11.       Collateral Account.

 

(a)           Secured Party is hereby authorized to establish and maintain as a
blocked account under the sole dominion and control of Secured Party, a
restricted Deposit Account designated as “Quidel Corporation Collateral
Account”.  All amounts at any time held in the Collateral Account shall be
beneficially owned by Grantors but shall be held in the name of Secured Party
hereunder, for the benefit of Beneficiaries, as collateral security for the
Secured Obligations upon the terms and conditions set forth herein.  Grantors
shall have no right to withdraw, transfer or, except as expressly set forth
herein or in the Credit Agreement, otherwise receive any funds deposited into
the Collateral Account.  Anything contained herein to the contrary
notwithstanding, the Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or Government Authority, as
may now or hereafter be in effect.  All deposits of funds in the Collateral
Account shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of a Grantor) of immediately available funds, in
each case addressed in accordance with instructions of Secured Party.  Each
Grantor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile or E-mail (if and when
confirmed by telephone) of the date, amount and method of delivery of such
deposit.  Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement or in the Credit Agreement.  To the extent permitted under Regulation
Q of the Board of Governors of the Federal Reserve System, any cash held in the
Collateral Account shall bear interest at the standard rate paid by Secured
Party to its customers for deposits of like amounts and terms.  Subject to
Secured Party’s rights hereunder, any interest earned on deposits of cash in the
Collateral Account shall be deposited directly in, and held in, the Collateral
Account.

 

(b)           In the event that Borrower is required to cash collateralize any
Letter of Credit or Letters of Credit pursuant to the Credit Agreement, other
than pursuant to Section 8 of the Credit

 

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Agreement, in which case the provisions of Section 15(c) of this Agreement shall
apply, subject to the provisions of the Credit Agreement, such cash collateral
shall be retained by Secured Party until such time as such Letter of Credit or
Letters of Credit shall have expired or been surrendered and any drawings under
such Letter of Credit or Letters of Credit paid in full, whether by reason of
application of funds in the Collateral Account or otherwise.  Secured Party is
authorized to apply any amount in the Collateral Account to pay any drawing on a
Letter of Credit.  Subject to the provisions of Section 15(c) of this Agreement
and the Credit Agreement, if any such cash collateral is no longer required to
be retained in the Collateral Account, it shall be paid by Secured Party to
Borrower or at Borrower’s direction.

 

SECTION 12.       Secured Party Appointed Attorney-in-Fact.

 

Each Grantor hereby irrevocably appoints Secured Party as such Grantor’s
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, Secured Party or otherwise, from time to time in
Secured Party’s discretion to take any action and to execute any instrument that
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

 

(a)           upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to the Credit Agreement;

 

(b)           upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

 

(c)           upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other Instruments,
Documents, Chattel Paper and other documents in connection with clauses (a) and
(b) above;

 

(d)           upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce or protect the rights of Secured Party with
respect to any of the Collateral;

 

(e)           to pay or discharge taxes or Liens (other than taxes not required
to be discharged pursuant to the Credit Agreement and Liens permitted under this
Agreement or the Credit Agreement) levied or placed upon or threatened against
the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in its sole discretion, any
such payments made by Secured Party to become obligations of such Grantor to
Secured Party, due and payable immediately without demand;

 

(f)            upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and

 

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(g)           upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party’s option and Grantors’ expense, at any time or from time to time,
all acts and things that Secured Party deems necessary to protect, preserve or
realize upon the Collateral and Secured Party’s security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.

 

SECTION 13.       Termination Statements.

 

Each Grantor hereby authorizes Secured Party to file a termination statement
with respect to all UCC financing statements (including financing statement
number 0229560538) filed by Comerica Bank against such Grantor.

 

SECTION 14.       Secured Party May Perform.

 

If any Grantor fails to perform any agreement contained herein, Secured Party
may itself perform, or cause performance of, such agreement, and the expenses of
Secured Party incurred in connection therewith shall be payable by Grantors
under Section 18(b) hereof.

 

SECTION 15.       Standard of Care.

 

The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers.  Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Secured Party shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.  Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property.

 

SECTION 16.       Remedies.

 

(a)           Generally.  If any Event of Default shall have occurred and be
continuing, Secured Party may, subject to Section 20 hereof,  exercise in
respect of the Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the UCC (whether or not the UCC applies to the
affected Collateral), and also may (i) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured Party
and make it available to Secured Party at a place to be designated by Secured
Party that is reasonably convenient to both parties, (ii) enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process, (iii) prior to the disposition of the Collateral,
store, process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (iv) take possession of any Grantor’s premises or place custodians
in exclusive control thereof, remain on such premises and use the same and any
of such Grantor’s equipment for the purpose of completing any work in process,
taking any actions described in the

 

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preceding clause (iii) and collecting any Secured Obligation, (v) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of Secured Party’s offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, (vi) exercise dominion and control over and refuse to
permit further withdrawals from any Deposit Account maintained with Secured
Party or any Lender and provide instructions directing the disposition of funds
in Deposit Accounts not maintained with Secured Party or any Lender and
(vii) provide entitlement orders with respect to Security Entitlements and other
Investment Property constituting a part of the Collateral and, without notice to
any Grantor, transfer to or register in the name of Secured Party or any of its
nominees any or all of the Securities Collateral.  Secured Party or any Lender
or Swap Counterparty may be the purchaser of any or all of the Collateral at any
such sale and Secured Party, as agent for and representative of Lenders and Swap
Counterparties (but not any Lender or Swap Counterparty in its individual
capacity unless Requisite Obligees shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on account of
the purchase price for any Collateral payable by Secured Party at such sale. 
Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by applicable law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.  Each
Grantor agrees that, to the extent notice of sale shall be required by law, at
least ten days’ notice to such Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.  Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.  Each Grantor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree.  If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantors shall be jointly
and severally liable for the deficiency and the fees of any attorneys employed
by Secured Party to collect such deficiency.  Each Grantor further agrees that a
breach of any of the covenants contained in this Section 15 will cause
irreparable injury to Secured Party, that Secured Party has no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section shall be specifically enforceable against
such Grantor, and each Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except for
a defense that no default has occurred giving rise to the Secured Obligations
becoming due and payable prior to their stated maturities.

 

(b)           Securities Collateral.  Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, Secured Party may be compelled, with respect to any sale of all
or any part of the Securities Collateral conducted without prior registration or
qualification of such Securities Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree,

 

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among other things, to acquire the Securities Collateral for their own account,
for investment and not with a view to the distribution or resale thereof.  Each
Grantor acknowledges that any such private placement may be at prices and on
terms less favorable than those obtainable through a sale without such
restrictions (including an offering made pursuant to a registration statement
under the Securities Act) and, notwithstanding such circumstances, each Grantor
agrees that any such private placement shall not be deemed, in and of itself, to
be commercially unreasonable and that Secured Party shall have no obligation to
delay the sale of any Securities Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it.  If Secured Party
determines to exercise its right to sell any or all of the Securities
Collateral, upon written request, each Grantor shall and shall cause each issuer
of any Securities Collateral to be sold hereunder from time to time to furnish
to Secured Party all such information as Secured Party may request in order to
determine the amount of Securities Collateral which may be sold by Secured Party
in exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.

 

(c)           Collateral Account.  If an Event of Default has occurred and is
continuing, any amounts on deposit in the Collateral Account, except for funds
deposited in the Collateral Account as described in the next sentence, shall be
held by Agent and applied as Obligations become due.  If, in accordance with
Section 8 of the Credit Agreement, Borrower is required to pay to Secured Party
an amount (the “Aggregate Available Amount”) equal to the maximum amount that
may at any time be drawn under all Letters of Credit then outstanding under the
Credit Agreement, Borrower shall deliver funds in such an amount for deposit in
the Collateral Account.  Following such deposit in the Collateral Account,
(i) upon any drawing under any outstanding Letter of Credit, Secured Party shall
apply any amount in the Collateral Account to reimburse the Issuing Lender for
the amount of such drawing and (ii) in the event of cancellation or expiration
of any Letter of Credit, or in the event of any reduction in the maximum
available amount under any Letter of Credit, Secured Party shall apply the
amount then on deposit in the Collateral Account in excess of the Aggregate
Available Amount (calculated giving effect to such cancellation, expiration or
reduction) as provided in Section 17.

 

SECTION 17.       Additional Remedies for Intellectual Property Collateral.

 

(a)           Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in subsections 10.4 and 10.5
of the Credit Agreement and Section 18 hereof, as applicable, in connection with
the exercise of its rights under this Section 16, and, to the extent that
Secured Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the material Intellectual Property Collateral
by others and for that purpose agrees to use its commercially reasonable
judgment in maintaining any action, suit or proceeding

 

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against any Person so infringing reasonably necessary to prevent such
infringement; (ii) upon written demand from Secured Party, each Grantor shall
execute and deliver to Secured Party an assignment or assignments of the
Intellectual Property Collateral and such other documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement; (iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that Secured Party
(or any Lender) receives cash proceeds in respect of the sale of, or other
realization upon, the Intellectual Property Collateral; and (iv) within five
Business Days after written notice from Secured Party, each Grantor shall make
available to Secured Party, to the extent within such Grantor’s power and
authority, such personnel in such Grantor’s employ as Secured Party may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Registrations and Trademark Rights, such persons
to be available to perform their prior functions on Secured Party’s behalf and
to be compensated by Secured Party at such Grantor’s expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default.

 

(b)           If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Secured Party shall promptly execute and deliver
to such Grantor such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
Party’s security interest granted pursuant hereto, as well as all other rights
and remedies of Secured Party granted hereunder, shall continue to be in full
force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
Secured Party and Liens permitted under Section 7.1 of the Credit Agreement.

 

SECTION 18.       Application of Proceeds.

 

Except as expressly provided elsewhere in this Agreement, all proceeds received
by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in Section 8.3 of the Credit Agreement.

 

SECTION 19.       Indemnity and Expenses.

 

(a)           Grantors jointly and severally agree to indemnify Secured Party,
each Lender and each Swap Counterparty from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting from
this Agreement and the transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the extent such claims,
losses or liabilities result from Secured Party’s or such Lender’s or Swap
Counterparty’s gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.

 

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(b)           Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses in accordance with
subsection 10.4 of the Credit Agreement.

 

(c)           The obligations of Grantors in this Section 18 shall (i) survive
the termination of this Agreement and the discharge of Grantors’ other
obligations under this Agreement, the Lender Swap Contracts, the Credit
Agreement and the other Loan Documents and (ii), as to any Grantor that is a
party to a Subsidiary Guaranty, be subject to the provisions of Section 1(b)
thereof.

 

SECTION
20.                                                                          
Continuing Security Interest; Transfer of Loans; Termination and Release.

 

(a)           This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit (or the securing of reimbursement Obligations in respect thereof with
cash collateral or letters of credit in a manner satisfactory to Secured Party),
(ii) be binding upon Grantors and their respective successors and assigns, and
(iii) inure, together with the rights and remedies of Secured Party hereunder,
to the benefit of Secured Party and its successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (iii), (A) but subject
to the provisions of subsection 10.7 of the Credit Agreement, any Lender may
assign or otherwise transfer any Loans held by it to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise and (B) any Swap Counterparty may
assign or otherwise transfer any Lender Swap Contract to which it is a party to
any other Person in accordance with the terms of such Lender Swap Contract, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Swap Counterparties herein or otherwise.

 

(b)           Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit (or the securing of
reimbursement Obligations in respect thereof with cash collateral or letters of
credit in a manner satisfactory to Secured Party), the security interest granted
hereby (other than with respect to any cash collateral in respect of Letters of
Credit) shall terminate and all rights to the Collateral shall revert to the
applicable Grantors.  Upon any such termination Secured Party will, at Grantors’
expense, execute and deliver to Grantors such documents as Grantors shall
reasonably request to evidence such termination.  In addition, upon the proposed
sale or other disposition of any Collateral by a Grantor in accordance with the
Credit Agreement for which such Grantor desires a security interest release from
Secured Party, such a release may be obtained pursuant to the provisions of
subsection 9.12 of the Credit Agreement.

 

SECTION 21.       Secured Party as Agent.

 

(a)           Secured Party has been appointed to act as Secured Party hereunder
by Lenders and, by their acceptance of the benefits hereof, Swap
Counterparties.  Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action

 

19

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(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement; provided that
Secured Party shall exercise, or refrain from exercising, any remedies provided
for in Section 15 hereof in accordance with the instructions of Requisite
Obligees.  In furtherance of the foregoing provisions of this Section 20(a),
each Swap Counterparty, by its acceptance of the benefits hereof, agrees that it
shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Swap Counterparty that all
rights and remedies hereunder may be exercised solely by Secured Party for the
benefit of Lenders and Swap Counterparties in accordance with the terms of this
Section 20(a).

 

(b)           Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement.  Written notice of resignation by Agent pursuant to
subsection 9.9 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; and appointment of a
successor Agent pursuant to subsection 9.9 of the Credit Agreement shall also
constitute appointment of a successor Secured Party under this Agreement.  Upon
the acceptance of any appointment as Agent under subsection 9.9 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Secured Party under this Agreement, and the retiring Secured Party
under this Agreement shall promptly (i) transfer to such successor Secured Party
all sums, securities and other items of Collateral held hereunder, together with
all records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this Agreement,
and (ii) execute (if necessary) and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring Secured Party shall be discharged from its duties and obligations under
this Agreement.  After any retiring Agent’s resignation hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.

 

(c)           Secured Party shall not be deemed to have any duty whatsoever with
respect to any Swap Counterparty until it shall have received written notice in
form and substance satisfactory to Secured Party from a Grantor or the Swap
Counterparty as to the existence and terms of the applicable Lender Swap
Contract.

 

SECTION 22.       Additional Grantors.

 

The initial Grantors hereunder shall be Borrower and such of the Subsidiaries of
Borrower as are signatories hereto on the date hereof.  From time to time
subsequent to the date hereof, additional Subsidiaries of Borrower may become
Additional Grantors, by executing a Counterpart.  Upon delivery of any such
Counterpart to Secured Party, notice of which is hereby waived by Grantors, each
such Additional Grantor shall be a Grantor and shall be as fully a party hereto
as if such Additional Grantor were an original signatory hereto.  Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Secured Party not to cause any Subsidiary of Borrower to become an
Additional Grantor hereunder.  This Agreement shall be

 

20

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fully effective as to any Grantor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.

 

SECTION 23.       Amendments; Etc.

 

No amendment, modification, termination or waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantors;
provided this Agreement may be modified by the execution of a Counterpart by an
Additional Grantor in accordance with Section 21 hereof and Grantors hereby
waive any requirement of notice of or consent to any such amendment.  Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.

 

SECTION 24.       Notices.

 

Any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile, or
three Business Days after depositing it in the United States mail, certified or
registered, with postage prepaid and properly addressed; provided that notices
to Secured Party shall not be effective until received.  For the purposes
hereof, the address of each party hereto shall be as provided in subsection 10.2
of the Credit Agreement or as set forth under such party’s name on the signature
pages hereof or such other address as shall be designated by such party in a
written notice delivered to the other parties hereto.

 

SECTION 25.       Failure or Indulgence Not Waiver; Remedies Cumulative.

 

No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. 
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

 

SECTION 26.       Severability.

 

In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

SECTION 27.       Headings.

 

Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

 

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SECTION 28.       Governing Law; Rules of Construction.

 

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING, WITHOUT LIMITATION, SECTION
1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT
THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF CALIFORNIA, IN WHICH CASE THE LAWS OF SUCH JURISDICTION
SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE SECURITY INTEREST IN, OR THE
REMEDIES WITH RESPECT TO, SUCH PARTICULAR COLLATERAL.  The rules of construction
set forth in subsection 1.2 of the Credit Agreement shall be applicable to this
Agreement mutatis mutandis.

 

SECTION 29.       Consent to Jurisdiction and Service of Process.

 

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA.  BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 23 HEREOF; (IV) AGREES THAT SERVICE AS
PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 28 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40 OR
OTHERWISE.

 

SECTION 30.       Waiver of Jury Trial.

 

GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
AND ALL DISPUTES

 

22

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THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH GRANTOR AND
SECURED PARTY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR GRANTORS
AND SECURED PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT GRANTORS AND
SECURED PARTY HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT
AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS.  EACH GRANTOR AND SECURED PARTY FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 29 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.  In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.

 

SECTION 31.       Counterparts.

 

This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.

 

SECTION 32.       Definitions.

 

(a)           Each capitalized term utilized in this Agreement that is not
defined in the Credit Agreement or in this Agreement, but that is defined in the
UCC, including the categories of Collateral listed in Section 1 hereof, shall
have the meaning set forth in Articles 1, 8 or 9 of the UCC.

 

(b)           In addition, the following terms used in this Agreement shall have
the following meanings:

 

“Additional Grantor” means a Subsidiary of Borrower that becomes a party hereto
after the date hereof as an additional Grantor by executing a Counterpart.

 

“Beneficiary” means Agent, each Lender and each Swap Counterparty.

 

“Collateral” has the meaning set forth in Section 1 hereof.

 

“Collateral Account” means the “Quidel Corporation Collateral Account”
established pursuant to Section 11.

 

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“Copyright Registrations” means all copyright registrations issued to any
Grantor and applications for copyright registration that have been or may
hereafter be issued to, or applied for thereon by, any Grantor in the United
States and any state thereof and in foreign countries (including, without
limitation, the registrations set forth on Schedule 10 annexed hereto, as the
same may be amended pursuant hereto from time to time).

 

“Copyright Rights” means all common law and other rights in and to the
Copyrights in the United States and any state thereof and in foreign countries
including all copyright licenses (but with respect to such copyright licenses,
only to the extent permitted by such licensing arrangements), the right (but not
the obligation) to renew and extend Copyright Registrations and any such rights
and to register works protectable by copyright and the right (but not the
obligation) to sue in the name of any Grantor or in the name of Secured Party or
Lenders for past, present and future infringements of the Copyrights and any
such rights.

 

“Copyrights” means all items under copyright in various published and
unpublished works of authorship including, without limitation, computer
programs, computer data bases, other computer software layouts, trade dress,
drawings, designs, writings, and formulas (including, without limitation, the
works set forth on Schedule 10 annexed hereto, as the same may be amended
pursuant hereto from time to time).

 

“Counterpart” means a counterpart to this Agreement entered into by a Subsidiary
of Borrower pursuant to Section 21 hereof.

 

“Credit Agreement” has the meaning set forth in the Preliminary Statements of
this Agreement.

 

“Equity Interests” means all shares of stock, partnership interests, interests
in Joint Ventures, limited liability company interests and all other equity
interests in a Person, whether such stock or interests are classified as
Investment Property or General Intangibles under the UCC.

 

“Event of Default” means any Event of Default as defined in the Credit Agreement
or, after payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the cancellation or expiration of all Letters of Credit
and the termination of the Commitments, the occurrence of an Early Termination
Date (as defined in a Master Agreement in the form prepared by the International
Swap and Derivatives Association, Inc. or a similar event under any similar swap
agreement) under any Lender Swap Contract.

 

“Grant” means a Grant of Trademark Security Interest, substantially in the form
of Exhibit I annexed hereto, and a Grant of Patent Security Interest,
substantially in the form of Exhibit II annexed hereto, and a Grant of Copyright
Security Interest, substantially in the form of Exhibit III annexed hereto.

 

“Intellectual Property Collateral” means, with respect to any Grantor all right,
title and interest (including rights acquired pursuant to a license or otherwise
but only to the extent permitted by agreements governing such license or other
use) in and to all

 

24

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(a)           Copyrights, Copyright Registrations and Copyright Rights,
including, without limitation, each of the Copyrights, rights, titles and
interests in and to the Copyrights, all derivative works and other works
protectable by copyright, which are presently, or in the future may be, owned,
created (as a work for hire for the benefit of such Grantor), authored (as a
work for hire for the benefit of such Grantor), or acquired by such Grantor, in
whole or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or applied
for, and all renewals and extensions thereof, throughout the world;

 

(b)           Patents;

 

(c)           Trademarks, Trademark Registrations, the Trademark Rights and
goodwill of such Grantor’s business symbolized by the Trademarks and associated
therewith;

 

(d)           all trade secrets, trade secret rights, know-how, customer lists,
processes of production, ideas, confidential business information, techniques,
processes, formulas, and all other proprietary information; and

 

(e)           all proceeds thereof (such as, by way of example and not by
limitation, license royalties and proceeds of infringement suits).

 

“IP Supplement” means an IP Supplement, substantially in the form of Exhibit V
annexed hereto.

 

“Lender Swap Contract” means a Swap Contract or other swap agreement between
Borrower or a Subsidiary of Borrower and a Swap Counterparty.

 

“Patents” means all patents and patent applications and rights and interests in
patents and patent applications under any domestic or foreign law that are
presently, or in the future may be, owned or held by a Grantor and all patents
and patent applications and rights, title and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned by such Grantor in whole or in part (including, without
limitation, the patents and patent applications set forth on Schedule 9 annexed
hereto), all rights (but not obligations) corresponding thereto to sue for past,
present and future infringements and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof.

 

“Pledged Debt” means the Indebtedness from time to time owed to a Grantor,
including the Indebtedness set forth on Schedule 7 annexed hereto and issued by
the obligors named therein, the Instruments and certificates evidencing such
Indebtedness and all interest, cash or other property received, receivable or
otherwise distributed in respect of or exchanged therefor.

 

“Pledged Equity” means all Equity Interests now or hereafter owned by a Grantor,
including all securities convertible into, and rights, warrants, options and
other rights to purchase or otherwise acquire, any of the foregoing, including
those owned on the date hereof and set forth on Schedule 6 annexed hereto, the
certificates or other instruments representing any of the foregoing and any
interest of such Grantor in the entries on the books of any securities
intermediary pertaining thereto and all distributions, dividends and other
property received, receivable or otherwise distributed in respect of or
exchanged therefor.

 

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“Pledged Subsidiary Debt” means Pledged Debt owed to a Grantor by any obligor
that is, or becomes, a direct or indirect Subsidiary of such Grantor, of which
such Grantor is a direct or indirect Subsidiary or that controls, is controlled
by or under common control with such Grantor.

 

“Pledged Subsidiary Equity” means Pledged Equity in a Person that is, or becomes
a direct Subsidiary of a Grantor.

 

“Pledge Supplement” means a Pledge Supplement, in substantially the form of
Exhibit IV annexed hereto, in respect of the additional Pledged Equity or
Pledged Debt pledged pursuant to this Agreement.

 

“Requisite Obligees” means either (i) Required Lenders or (ii), after payment in
full of all Obligations under the Credit Agreement and the other Loan Documents,
the cancellation or expiration of all Letters of Credit and the termination of
the Commitments, the holders of a majority of (A) the aggregate notional amount
under all Lender Swap Contracts (including Lender Swap Contracts that have been
terminated) or (B), if all Lender Swap Contracts have been terminated in
accordance with their terms, the aggregate amount then due and payable
(exclusive of expenses and similar payments but including any early termination
payments then due) under such Lender Swap Contracts.

 

“Secured Obligations” has the meaning set forth in Section 2 hereof.

 

“Securities Collateral” means, with respect to any Grantor, the Pledged Equity,
the Pledged Debt and any other Investment Property in which such Grantor has an
interest.

 

“Swap Counterparty” means a Person that enters into a swap agreement with
Borrower or a Subsidiary and is a Lender or an Affiliate of a Lender at the time
such agreement is entered into.

 

“Trademark Registrations” means all registrations that have been or may
hereafter be issued or applied for thereon in the United States and any state
thereof and in foreign countries (including, without limitation, the
registrations and applications set forth on Schedule 10 annexed hereto).

 

“Trademark Rights” means all common law and other rights (but in no event any of
the obligations) in and to the Trademarks in the United States and any state
thereof and in foreign countries.

 

“Trademarks” means all trademarks, service marks, designs, logos, indicia,
tradenames, trade dress, corporate names, company names, business names,
fictitious business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto, owned by a Grantor, or
hereafter adopted and used, in its business (including, without limitation, the
trademarks specifically set forth on Schedule 10 annexed hereto).

 

“UCC” means the Uniform Commercial Code, as it exists on the date of this
Agreement or as it may hereafter be amended, in the State of California.

 

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IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

 

 

 

QUIDEL CORPORATION

 

 

 

 

 

By:

/s/ Paul E. Landers

 

 

 

Name:

Paul E. Landers

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

Notice Address:

 

 

 

 

 

 

PACIFIC BIOTECH, INC.

 

 

 

 

 

By:

/s/ Paul E. Landers

 

 

 

Name:

Paul E. Landers

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

Notice Address:

 

 

S - 1

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METRA BIOSYSTEMS, INC.

 

 

 

 

 

By:

/s/ Paul E. Landers

 

 

 

Name:

Paul E. Landers

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

Notice Address:

 

 

 

 

 

 

OSTEO SCIENCES CORPORATION

 

 

 

 

 

By:

/s/ Paul E. Landers

 

 

 

Name:

Paul E. Landers

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

Notice Address:

 

 

 

 

 

 

 

 

 

 

LITMUS CONCEPTS, INC.

 

 

 

 

 

By:

/s/ Paul E. Landers

 

 

 

Name:

Paul E. Landers

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

Notice Address:

 

 

S - 2

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BANK OF AMERICA, N.A.
as Agent and Secured Party

 

 

 

 

 

By:

/s/ Robert W. Troutman

 

 

 

Name:

Robert W. Troutman

 

 

 

Title:

Senior Vice President

 

 

 

 

 

Notice Address:

 

 

S - 3

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