EX-10.1






EXHIBIT 10.1




Execution Version




 

 






Published CUSIP Number: 74839TAA6




CREDIT AGREEMENT




Dated as of October 8, 2008



among



QUIDEL CORPORATION

as Borrower,




BANK OF AMERICA, N.A.,

as Agent, Swing Line Lender

and
 L/C
Issuer,




U.S. BANK N.A., as Syndication Agent




and




The Other Lenders Party from time to time hereto




BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager




 

 








 









 














	 	 	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	 
	 	1.1	 	Defined Terms	 	 	1	 
	 
	 	1.2	 	Other Interpretive Provisions	 	 	27	 
	 
	 	1.3	 	Accounting Terms 	 	 	28	 
	 
	 	1.4	 	Rounding	 	 	28	 
	 
	 	1.5	 	Times of Day	 	 	28	 
	 
	 	1.6	 	Letter of Credit Amounts	 	 	28	 
	ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS	 	 	29	 
	 
	 	2.1	 	Committed Loans	 	 	29	 
	 
	 	2.2	 	Borrowings, Conversions and Continuations of Committed Loans	 	 	29	 
	 
	 	2.3	 	Letters of Credit	 	 	31	 
	 
	 	2.4	 	Swing Line Loans	 	 	40	 
	 
	 	2.5	 	Prepayments	 	 	43	 
	 
	 	2.6	 	Termination or Reduction of Commitments	 	 	46	 
	 
	 	2.7	 	Repayment of Loans	 	 	46	 
	 
	 	2.8	 	Interest	 	 	46	 
	 
	 	2.9	 	Fees	 	 	47	 
	 
	 	2.10	 	Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate	 	 	48	 
	 
	 	2.11	 	Evidence of Debt	 	 	48	 
	 
	 	2.12	 	Payments Generally	 	 	49	 
	 
	 	2.13	 	Sharing of Payments	 	 	51	 
	 
	 	2.14	 	Increase in Commitments	 	 	52	 
	ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	53	 
	 
	 	3.1	 	Taxes	 	 	53	 
	 
	 	3.2	 	Illegality	 	 	55	 
	 
	 	3.3	 	Inability to Determine Rates	 	 	56	 
	 
	 	3.4	 	Increased Costs	 	 	56	 
	 
	 	3.5	 	Compensation for Losses	 	 	58	 
	 
	 	3.6	 	Mitigation Obligations; Replacement of Lenders	 	 	58	 
	 
	 	3.7	 	Survival	 	 	59	 
	ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS	 	 	59	 
	 
	 	4.1	 	Conditions of Initial Credit Extension	 	 	59	 






 









 






	 	 	 	 	 	 	 	 	 
	 
	 	4.2	 	Conditions to all Credit Extensions	 	 	63	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	 	 	63	 
	 
	 	5.1	 	Existence, Qualification and Power; Compliance with Laws	 	 	63	 
	 
	 	5.2	 	Authorization; No Contravention	 	 	64	 
	 
	 	5.3	 	Governmental Authorization; Other Consents	 	 	64	 
	 
	 	5.4	 	Binding Effect	 	 	64	 
	 
	 	5.5	 	Financial Statements; No Material Adverse Effect	 	 	64	 
	 
	 	5.6	 	Litigation	 	 	65	 
	 
	 	5.7	 	No Default	 	 	65	 
	 
	 	5.8	 	Ownership of Property; Liens	 	 	65	 
	 
	 	5.9	 	Environmental Compliance	 	 	65	 
	 
	 	5.10	 	Insurance	 	 	66	 
	 
	 	5.11	 	Taxes	 	 	66	 
	 
	 	5.12	 	ERISA Compliance	 	 	66	 
	 
	 	5.13	 	Subsidiaries; Equity Interests	 	 	67	 
	 
	 	5.14	 	Margin Regulations; Investment Company Act; Public Utility Holding Company Act	 	 	67	 
	 
	 	5.15	 	Disclosure	 	 	67	 
	 
	 	5.16	 	Compliance with Laws	 	 	68	 
	 
	 	5.17	 	Intellectual Property; Licenses, Etc.	 	 	68	 
	 
	 	5.18	 	Rights in Collateral; Priority of Liens	 	 	69	 
	 
	 	5.19	 	Solvency	 	 	70	 
	 
	 	5.20	 	Casualty, Etc.	 	 	70	 
	 
	 	5.21	 	No Medicare/Medicaid Receivables	 	 	70	 
	ARTICLE VI AFFIRMATIVE COVENANTS	 	 	70	 
	 
	 	6.1	 	Financial Statements 	 	 	70	 
	 
	 	6.2	 	Certificates; Other Information	 	 	71	 
	 
	 	6.3	 	Notices	 	 	73	 
	 
	 	6.4	 	Payment of Obligations	 	 	74	 
	 
	 	6.5	 	Preservation of Existence, Etc.	 	 	74	 
	 
	 	6.6	 	Maintenance of Properties; Application of Net Insurance/Condemnation Proceeds	 	 	74	 
	 
	 	6.7	 	Maintenance of Insurance	 	 	77	 






 









 






	 	 	 	 	 	 	 	 	 
	 
	 	6.8	 	Compliance with Laws and Contractual Obligations	 	 	77	 
	 
	 	6.9	 	Books and Records	 	 	77	 
	 
	 	6.10	 	Inspection Rights	 	 	77	 
	 
	 	6.11	 	Use of Proceeds	 	 	78	 
	 
	 	6.12	 	Financial Covenants	 	 	78	 
	 
	 	6.13	 	Additional Guarantors	 	 	78	 
	 
	 	6.14	 	Collateral Records	 	 	78	 
	 
	 	6.15	 	Cash Management System	 	 	79	 
	 
	 	6.16	 	Security Interests	 	 	79	 
	 
	 	6.17	 	Compliance with Environmental Laws	 	 	80	 
	 
	 	6.18	 	Further Assurances	 	 	80	 
	 
	 	6.19	 	Material Contracts	 	 	80	 
	 
	 	6.20	 	Medicare/Medicaid Receivables	 	 	80	 
	ARTICLE VII NEGATIVE COVENANTS	 	 	81	 
	 
	 	7.1	 	Liens	 	 	81	 
	 
	 	7.2	 	Investments	 	 	82	 
	 
	 	7.3	 	Indebtedness	 	 	82	 
	 
	 	7.4	 	Fundamental Changes	 	 	83	 
	 
	 	7.5	 	Dispositions	 	 	84	 
	 
	 	7.6	 	Restricted Payments	 	 	85	 
	 
	 	7.7	 	Change in Nature of Business	 	 	85	 
	 
	 	7.8	 	Transactions with Affiliates	 	 	85	 
	 
	 	7.9	 	Burdensome Agreements	 	 	86	 
	 
	 	7.10	 	Use of Proceeds	 	 	86	 
	 
	 	7.11	 	Foreign Subsidiaries; OSC	 	 	86	 
	 
	 	7.12	 	Capital Expenditures	 	 	87	 
	 
	 	7.13	 	Amendments of Organization Documents	 	 	87	 
	 
	 	7.14	 	Accounting Changes	 	 	87	 
	ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES	 	 	87	 
	 
	 	8.1	 	Events of Default	 	 	87	 
	 
	 	8.2	 	Remedies Upon Event of Default	 	 	90	 
	 
	 	8.3	 	Application of Funds	 	 	90	 
	ARTICLE IX AGENT	 	 	91	 






 









 






	 	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Appointment and Authority	 	 	91	 
	 
	 	9.2	 	Rights as a Lender	 	 	92	 
	 
	 	9.3	 	Exculpatory Provisions	 	 	92	 
	 
	 	9.4	 	Reliance by Agent	 	 	93	 
	 
	 	9.5	 	Delegation of Duties	 	 	93	 
	 
	 	9.6	 	Resignation of Agent	 	 	93	 
	 
	 	9.7	 	Non-Reliance on Agent and Other Lenders	 	 	94	 
	 
	 	9.8	 	No Other Duties, Etc.	 	 	94	 
	 
	 	9.9	 	Agent May File Proofs of Claim	 	 	94	 
	 
	 	9.10	 	Collateral and Guaranty Matters	 	 	95	 
	 
	 	9.11	 	Secured Cash Management Agreements and Secured Hedge Agreements	 	 	96	 
	ARTICLE X MISCELLANEOUS	 	 	96	 
	 
	 	10.1	 	Amendments, Etc.	 	 	96	 
	 
	 	10.2	 	Notices and Other Communications; Facsimile Copies	 	 	98	 
	 
	 	10.3	 	No Waiver; Cumulative Remedies	 	 	100	 
	 
	 	10.4	 	Expenses; Indemnity; Damage Waiver	 	 	100	 
	 
	 	10.5	 	Payments Set Aside	 	 	102	 
	 
	 	10.6	 	Successors and Assigns	 	 	102	 
	 
	 	10.7	 	Treatment of Certain Information; Confidentiality	 	 	106	 
	 
	 	10.8	 	Right of Set-off	 	 	107	 
	 
	 	10.9	 	Interest Rate Limitation	 	 	107	 
	 
	 	10.10	 	Counterparts; Integration; Effectiveness	 	 	108	 
	 
	 	10.11	 	Survival of Representations and Warranties	 	 	108	 
	 
	 	10.12	 	Severability	 	 	108	 
	 
	 	10.13	 	Replacement of Lenders	 	 	108	 
	 
	 	10.14	 	Governing Law; Jurisdiction; Etc.	 	 	109	 
	 
	 	10.15	 	Waiver of Right to Trial by Jury	 	 	110	 
	 
	 	10.16	 	California Judicial Reference	 	 	110	 
	 
	 	10.17	 	No Advisory or Fiduciary Responsibility	 	 	111	 
	 
	 	10.18	 	Electronic Execution of Assignments and Certain Other Documents	 	 	111	 
	 
	 	10.19	 	USA PATRIOT Act	 	 	111	 






 









 






	 	 	 
	SCHEDULES
	 
	 	 
	2.1

	 	Commitments and Pro Rata Shares
	4.1

	 	Deposit Accounts and Securities Accounts
	5.5

	 	Material Indebtedness and Other Liabilities
	5.9

	 	Environmental Matters
	5.13

	 	Subsidiaries and Other Equity Investments
	5.17(a)

	 	IP Rights
	5.17(b)

	 	Material Intellectual Property Licenses
	5.18

	 	Existing UCC and IP Filings
	7.1

	 	Existing Liens
	7.3

	 	Existing Indebtedness
	10.2

	 	Agent’s Office, Certain Addresses for Notices
	 
	 	 
	EXHIBITS
	 
	 	 
	A-1

	 	Form of Committed Loan Notice
	A-2

	 	Form of Swing Line Loan Notice
	B

	 	Form of Note
	C

	 	Form of Guaranty
	D

	 	Form of Compliance Certificate
	E

	 	Form of Assignment and Assumption
	F

	 	Form of Security Agreement
	G

	 	Form of Landlord Waiver
	H

	 	Form of Deposit Account Control Agreement
	I

	 	Form of Securities Account Control Agreement
	J

	 	Form of Solvency Certificate
	K

	 	Form of Opinion of Counsel to Loan Parties







 











 





CREDIT AGREEMENT




     THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of
October 8, 2008 among QUIDEL CORPORATION, a Delaware corporation
(“Borrower”), each lender from time to time party hereto (collectively,
“Lenders” and individually, a “Lender”), U.S. BANK N.A., as
Syndication Agent, and BANK OF AMERICA, N.A., as Agent, Swing Line Lender and
L/C Issuer.



     Borrower has requested that the Lenders provide a revolving credit
facility, and the Lenders are willing to do so on the terms and conditions set
forth herein. In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:



ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.




     1.1 Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:



     “Acquisition” means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business unit or division of a Person, or of any significant portion of any
business unit or division if such portion exceeds $5,000,000 in the aggregate,
(b) the acquisition of all of the Equity Interests of any Person, or otherwise
causing any Person to become a wholly-owned Subsidiary, or (c) a merger or
consolidation or any other combination with another Person.



     “Administrative Questionnaire” means an Administrative
Questionnaire in a form supplied by Agent.



     “Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
“Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative
thereto. Without limiting the generality of the foregoing, a Person shall be
deemed to be Controlled by another Person if such other Person possesses,
directly or indirectly, power to vote 10% or more of the securities having
ordinary voting power for the election of directors, managing general partners
or the equivalent.



     “Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.



     “Agent’s Office” means Agent’s address and, as appropriate,
account as set forth on Schedule 10.2, or such other address or account
as Agent may from time to time notify Borrower and Lenders.



     “Agent-Related Persons” means Agent, together with its Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.



					
	 	 	 	 	 
	 
	 	1
	 	(Credit Agreement)






 









 






     “Aggregate Commitments” means the Commitments of
all Lenders.



     “Agreement” means this Credit Agreement.



     “Applicable Rate” means from time to time, the following
percentages per annum, based
upon the Funded Debt to EBITDA Ratio (the “Financial Covenant”) as
set forth in the most recent Compliance Certificate received by the Agent
pursuant to Section 6.2(b).








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Rate
	 	 	 	 	 	 	 	 	Eurodollar Rate	 	 
	 	 	 	 	 	 	 	 	Margin	 	 
	Pricing	 	Funded Debt to EBITDA	 	Commitment	 	or Standby	 	Base Rate
	Level	 	Ratio	 	Fee	 	Letters of Credit	 	Margin
	1

	 	Greater than 2.50:1.00
	 	 	0.50	%	 	 	2.75	%	 	 	1.75	%
	2

	 	Less than or equal to

2.50:1.00 but greater than or

equal to 2.00:1.00
	 	 	0.45	%	 	 	2.50	%	 	 	1.50	%
	3

	 	Less than 2.00:1.00 but

greater than or equal to 

1.50:1.00
	 	 	0.40	%	 	 	2.25	%	 	 	1.25	%
	4

	 	Less than 1.50:1.00 but

greater than or equal to

1.00:1.00
	 	 	0.35	%	 	 	1.75	%	 	 	0.75	%
	5

	 	Less than 1.00:1.00
	 	 	0.30	%	 	 	1.50	%	 	 	0.50	%





Any increase or decrease in the Applicable Rate resulting from a change in the
Financial Covenant shall become effective commencing on the 5th
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.2(b); provided,
however, that if no Compliance Certificate is delivered when due in
accordance with such Section, then, upon the request of the Required Lenders,
Pricing Level 1 shall apply commencing on the 5th Business Day following the
date such Compliance Certificate was required to have been delivered to but
excluding the date such Compliance Certificate is received by Agent and,
thereafter, the pricing level indicated by such Compliance Certificate until
such pricing level is required to be adjusted pursuant to the terms of this
definition. The Applicable Rate in effect from the Closing Date through the
date a Compliance Certificate is delivered pursuant to Section 6.2(b)
for the reporting period ending on September 30, 2008 shall be determined based
upon Pricing Level 5.




     “Approved Fund” means any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.



     “Arranger” means Banc of America Securities LLC, in its capacity
as sole lead arranger and sole book manager.



2









 





     “Asset Sale” means the sale by Borrower or any of its Subsidiaries
to any Person other than Borrower or its wholly-owned Guarantors of (i) any of
the stock of any of Borrower’s Subsidiaries (other than directors’ qualifying
shares to the extent required by law), (ii) substantially all of the assets of
any division or line of business of Borrower or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of Borrower or any of
its Subsidiaries (other than (a) inventory and Cash Equivalents sold in the
ordinary course of business, (b) sales, assignments, transfers or dispositions
of accounts in the ordinary course of business for purposes of collection, (c)
subleases of real property leases no longer necessary to the business of
Borrower and its Subsidiaries, (d) non-exclusive licenses of immaterial IP
Rights in the ordinary course of business for not less than fair market value,
(e) non-exclusive licenses of IP Rights in the ordinary course of business
solely in connection with cooperative agreements with third parties for further
development of such IP Rights, (f) dispositions for fair value of equipment
that is obsolete, worn-out or no longer used or useful in the business of
Borrower or any of its Subsidiaries, (g) dispositions by means of trade-in, of
equipment used in the ordinary course of business, so long as such equipment is
replaced, substantially concurrently, by like-kind equipment and (h) any such
other assets to the extent that the aggregate value of such assets sold in any
single transaction or related series of transactions is equal to $100,000 or
less).



     “Assignee Group” means two or more Eligible Assignees that are
Affiliates of one another or two or more Approved Funds managed by the same
investment advisor.



     “Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of any
party whose consent is required by Section 10.6(b)), and accepted by
Agent, in substantially the form of Exhibit E or any other form
approved by Agent.



     “Attorney Costs” means and includes all reasonable fees, expenses
and disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and
disbursements of internal counsel.



     “Attributable Indebtedness” means, on any date, (a) in respect of
any capital lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease payments under the relevant lease
that would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP if such lease were accounted for as a capital lease.



     “Audited Financial Statements” means the audited consolidated
balance sheet of Borrower and its Subsidiaries for the fiscal year ended
December 31, 2007 and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal year of
Borrower and its Subsidiaries, including the notes thereto.



     “Availability Period” means the period from and including the
Closing Date to the earliest of (a) the Maturity Date, (b) the date of
termination of the Aggregate Commitments pursuant to Section 2.6, and
(c) the date of termination of the Commitment of each Lender to make Loans and
of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 8.2.



3









 





     “Bank of America” means Bank of America, N.A. and its successors.



     “Base Rate” means for any day a fluctuating rate per annum equal
to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its “prime rate.” The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate. Any change in such rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.



     “Base Rate Committed Loan” means a Committed Loan that is a
Base Rate Loan. 


     “Base Rate Loan” means a Loan that bears
interest based on the Base Rate. 


     “Borrower” has the meaning
specified in the introductory paragraph hereto.



     “Borrowing” means a Committed Borrowing or a Swing Line Borrowing,
as the context requires.



     “Business Day” means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the State of California or the state where Agent’s Office is
located and, if such day relates to any Eurodollar Rate Loan, means any such day
on which dealings in Dollar deposits are conducted by and between banks in the
London interbank Eurodollar market.



     “Capital Expenditures” means, with respect to any period, the
aggregate of all expenditures of Borrower and its Subsidiaries during such
period determined on a consolidated basis that, in accordance with GAAP, are or
should be included in “acquisition of property and equipment” or similar items
reflected in the consolidated statement of cash flows of Borrower and its
Subsidiaries; provided that Capital Expenditures shall not include any
expenditures (i) to the extent made with Net Insurance/Condemnation Proceeds in
accordance with Section 2.5(d)(ii) or with Net Asset Sale Proceeds in accordance
with Section 2.5(d)(i), (ii) constituting tenant improvements under leases to
the extent reimbursed or required to be reimbursed by the landlord with respect
thereto within one year of expenditure (and, if required to be reimbursed, which
are in fact so reimbursed within such period), or (iii) which constitute a
Permitted Acquisition permitted under Section 7.2(f) or an Investment permitted
under Section 7.2(h) or (i).



     “Cash” means money, currency or a credit balance in a Deposit Account.



     “Cash Collateral” means the Cash deposited with the Agent as
collateral when Borrower Cash Collateralizes L/C Obligations.



     “Cash Collateralize” has the meaning specified in Section 2.3(g).



     “Cash Equivalents” means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United



4









 




States government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time of
the acquisition thereof, one of the two highest ratings obtainable from either
Standard & Poor’s (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”); (iii) commercial paper maturing no more than one year from
the date of creation thereof and having, at the time of the acquisition thereof,
a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv)
certificates of deposit or bankers’ acceptances maturing within one year after
such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least “adequately capitalized” (as
defined in the regulations of its primary Federal banking regulator) and (b) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and/or (v) shares of any money market mutual fund that (a) has at least 90% of
its assets invested continuously in the types of investments referred to in
clauses (i) through (iv) above and (b) has net assets of not less than
$500,000,000.




     “Cash Management Agreement” means any agreement to provide cash
management services, including treasury, depository, overdraft, credit or debit
card, electronic funds transfer and other cash management arrangements.



     “Cash Management Bank” means any Person that, at the time it
enters into a Cash Management Agreement, is a Lender or an Affiliate of a
Lender, in its capacity as a party to such Cash Management Agreement.



     “Change in Law” means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, guideline
or directive (whether or not having the force of law) by any Governmental
Authority.



     “Change of Control” means, with respect to any Person, an event or
series of events by which:



          (a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity
acting in its capacity as trustee, agent or other fiduciary or administrator of
any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934, except that a person or group
shall be deemed to have “beneficial ownership” of all securities that such
person or group has the right to acquire (such right, an “option right”),
whether such right is exercisable immediately or only after the passage of
time) directly or indirectly, of 30% or more of the equity securities of such
Person entitled to vote for members of the board of directors or equivalent
governing body of such Person on a fully diluted basis (and taking into account
all such securities that such person or group has the right to acquire pursuant
to any option right); or




5









 








          (b) during any period of 24 consecutive months, a majority of the members
of the
board of directors or other equivalent governing body of such Person cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other
equivalent governing body was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body (excluding, in the
case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors).




     “Closing Date” means the first date all the conditions
precedent in Section 4.1 are satisfied or waived in accordance with
Section 10.1.



     “Code” means the Internal Revenue Code of 1986.



     “Collateral” shall mean any and all assets and rights and
interests in or to property of Borrower and each of the other Loan Parties,
whether real or personal, tangible or intangible, in which a Lien is granted or
purported to be granted to Agent for the benefit of the Secured Parties
pursuant to the Collateral Documents.



     “Collateral Documents” means the Security Agreement, the Control
Agreements, the Landlord Waivers, and all agreements, instruments and documents
now or hereafter executed and delivered in connection with this Agreement
pursuant to which Liens are granted or purported to be granted to Agent for the
benefit of the Secured Parties in Collateral securing all or part of the
Obligations each in form and substance satisfactory to Agent.



     “Commitment” means, as to each Lender, its obligation to (a) make
Committed Loans to Borrower pursuant to Section 2.1, (b) purchase
participations in L/C Obligations and (c) purchase participations in Swing Line
Loans, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Lender’s name on Schedule 2.1
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time
in accordance with this Agreement.



     “Committed Borrowing” means borrowing consisting of
simultaneous Committed Loans of the same Type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by each of the
Lenders pursuant to Section 2.1.



     “Committed Loan” has the meaning specified in Section 2.1.



     “Committed Loan Notice” means a notice of (a) a Committed
Borrowing, (b) a conversion of Committed Loans from one Type to the other, or
(c) a continuation of Eurodollar



6









 




Rate Loans, pursuant to Section 2.2(a), which, if in writing, shall be
substantially in the form of Exhibit A-1.




     “Compliance Certificate” means a certificate substantially in the form of
Exhibit D.



     “Contractual Obligation” means, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.



     “Control” has the meaning specified in the definition of “Affiliate.”



     “Control Agreement” means an agreement, satisfactory in form and
substance to Agent substantially in the form of Exhibit H or Exhibit
I, as applicable, (with such changes that are reasonably acceptable to
Agent) and executed by the financial institution or securities intermediary at
which a Deposit Account or Securities Account, as the case may be, is
maintained, pursuant to which such financial institution or securities
intermediary confirms and acknowledges Agent’s security interest in such account
and agrees that the financial institution or securities intermediary, as the
case may be, will comply with instructions originated by Agent as to disposition
of funds in such account, without further consent by Borrower or the applicable
Subsidiary, as the case may be.



     “Credit Extension” means each of the following: (a) a Borrowing and
(b) an L/C Credit Extension.



     “Debtor Relief Laws” means the Bankruptcy Code of the United
States, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.



     “Default” means any event or condition that constitutes an Event
of Default or that, with the giving of any notice, the passage of time, or
both, would be an Event of Default.



     “Default Rate” means (a) when used with respect to Obligations
other than L/C Fees, Secured Hedge Agreements and Secured Cash Management
Agreements, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurodollar Rate Loan,
the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus 2% per
annum, and (b) when used with respect to L/C Fees, a rate equal to the
Applicable Rate plus 2% per annum, in all cases to the fullest extent permitted
by applicable Laws.



     “Defaulting Lender” means any Lender that (a) has failed to fund
any portion of the Committed Loans, participations in L/C Obligations or
participations in Swing Line Loans required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder unless such
failure has been cured, (b) has otherwise failed to pay over to Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute
or unless such failure has



7









 




been cured, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.




     “Deposit Account” means a demand, time, savings, passbook or
similar account maintained with a Person engaged in the business of banking,
including a savings bank, savings and loan association, credit union or trust
company.



     “Disposition” or “Dispose” means the sale, transfer,
license, lease or other disposition (including any sale and leaseback
transaction) of any property by any Person, including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith.



     “Dollar” and “$” mean lawful money of the United States.



     “Domestic Subsidiary” means any Subsidiary that is organized or
existing under the laws of the United States, any state thereof or the District
of Columbia.



     “Dormant Foreign Subsidiary” means Quidel Deutschland, GmbH, Metra
Biosystems, GMBH, Metra Biosystems, Limited (UK) and Metra Biosystems, Quidel
Limited (Italy).



     “EBITDA” means for any period, an amount determined for Borrower
and its Subsidiaries on a consolidated basis equal to: net income, less income
or plus loss from discontinued operations and extraordinary items, plus income
taxes, plus interest expense and debt issuance costs and commissions, discounts
and other fees and charges associated with initial incurrence of any
Indebtedness, plus non-cash stock compensation expenses, plus depreciation, plus
amortization (including amortization of inventory write-ups and deferred revenue
adjustments), plus transaction expenses or other initial non cash or fair value
adjustments related to any merger, acquisition or joint venture, and
non-recurring and non-cash charges associated with any impairment analysis
required under Financial Accounting Standards No. 142 and 144; provided
that EBITDA shall be determined after giving effect on a pro forma basis to any
Permitted Acquisitions that have been consummated to the extent either Agent has
approved the financial statements of the applicable acquired Persons or assets
or such financial statements are audited by a national accounting firm
reasonably acceptable to Agent (and in either case giving effect to pro forma
adjustments as determined by the Board of Directors of Borrower in good faith
and approved by Agent).



     “Eligible Assignee” means any Person that meets the requirements
to be an assignee under Section 10.6(b)(iii), (v) and (vi)
(subject to such consents, if any, as may be required under Section
10.6(b)(iii)).



     “Environmental Laws” means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
those related to hazardous substances or wastes, air emissions and discharges
to waste or public systems.



8









 





     “Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of Borrower, any other Loan
Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.



     “Environmental Permit” means any permit, approval, identification
number, license or
other authorization required under any Environmental Law.



     “Equity Interests” means, with respect to any Person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests
are outstanding on any date of determination.



     “ERISA” means the Employee Retirement Income Security Act of 1974.



     “ERISA Affiliate” means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code). Any former ERISA Affiliate
of Borrower or its Subsidiaries shall continue to be considered an ERISA
Affiliate within the meaning of this definition with respect to the period such
entity was an ERISA Affiliate of Borrower or its Subsidiaries and with respect
to liabilities arising after such period for which Borrower or its Subsidiaries
could be liable under the Code or ERISA.



     “ERISA Event” means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or
any ERISA Affiliate; (g) the occurrence of an act or omission which could give
rise to the imposition on Borrower, its Subsidiaries or any of their ERISA



9









 



Affiliates of material fines, penalties, taxes or related charges under Chapter
43 of the Code or under Sections 409, 502(c), (i) or(l) or 4071 of ERISA in
respect of any Plan; (h) the assertion of a material claim (other than routine
claims for benefits) against any Plan other than a Multiemployer Plan or the
assets thereof, or against Borrower, its Subsidiaries or any of their ERISA
Affiliates in connection with any Plan; (i) receipt from the Internal Revenue
Service of notice of failure of any Plan to qualify under Section 401 (a) of the
Code, or the failure of any trust forming part of a Plan to qualify for
exemption from taxation under Section 501 (a) of the Code; or (j) a
determination that any Pension Plan is, or is expected to be, in “at-risk”
status (within the meaning of Section 303(i)(4)(A) of ERISA or Section
430(i)(4)(A) of the Code).




     “Eurodollar Base Rate” has the meaning specified in the definition of Eurodollar Rate.



     “Eurodollar Rate” means for any Interest Period with respect to a
Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:



	 	 	 	 	 
	Eurodollar Rate = 
	 	Eurodollar Base Rate	 	 
	 
	 	 	 	 
	
	 	1.00 - Eurodollar Reserve Percentage
	 	 






     Where,



     “Eurodollar
Base Rate” means, for such Interest Period, the rate
 per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”). as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period. If such rate is not available at such time for any reason, then the
“Eurodollar Base Rate” for such Interest Period shall be the rate per annum
determined by Agent to be the rate at which deposits in Dollars for delivery on
the first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Rate Loan being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be offered by
Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period.



     “Eurodollar Reserve Percentage” means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal, carried out to
five decimal places) in effect on such day, whether or not applicable to any
Lender, under regulations issued from time to time by the FRB for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.



     “Eurodollar Rate Loan” means a Committed Loan that bears interest
at a rate based on the Eurodollar Rate.



     “Event of Default” has the meaning specified in Section 8.1.



10









 





     “Excluded Accounts” means, collectively, (i) that certain Deposit
Account of Borrower numbered IBAN DE22533400240395549900 maintained with
Commerzbank AG, and (ii) that certain Deposit Account of Borrower numbered IBAN
03204 20501 000000046037 maintained with Banca di Legnano.



     “Excluded Taxes” means, with respect to Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any
obligation of Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in
which its principal
office is located or, in the case of any Lender, in which its applicable
Lending Office is located,
(b) any branch profits taxes imposed by the United States or any similar tax
imposed by any
other jurisdiction in which Borrower is located, and (c) in the case of a
Foreign Lender (other
than an assignee pursuant to a request by Borrower under Section
10.13), any United States
withholding tax that (i) is required to be imposed on amounts payable to such
Foreign Lender
pursuant to the Laws in force at the time such Foreign Lender becomes a party
hereto (or
designates a new Lending Office) or (ii) is attributable to such Foreign
Lender’s failure (other
than as a result of a Change in Law) to comply with Section 3.1(e)(ii),
except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new
Lending Office (or assignment), to receive additional amounts from Borrower
with respect to
such withholding tax pursuant to Section 3.1(c).



     “Existing Credit Agreement” has the meaning specified in Section 4.1(a)(x).



     “Facilities” means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Borrower or any of its
Subsidiaries or any of their respective predecessors or Affiliates.



     “Federal Funds Rate” means, for any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by
Agent.



     “Fee Letter” means the letter agreement, dated September 24, 2008,
among Borrower, Agent and the Arranger.



     “First Priority Lien” means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that (i) such
Lien is perfected and has priority over any other Lien on such Collateral and
(ii) such Lien is the only Lien (other than Liens permitted pursuant to
Section 7.1) to which such Collateral is subject.



11









 





     “Foreign Lender” means any Lender that is organized under the Laws
of a jurisdiction other than that in which Borrower is resident for tax
purposes (including such a Lender when acting in the capacity of the L/C
Issuer). For purposes of this definition, the United States, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.



     “FRB” means the Board of Governors of the Federal Reserve System of
the United States.



     “Fund” means any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
activities.



     “Funded Debt” means all outstanding Indebtedness for borrowed
money and other interest-bearing Indebtedness, including current and long term
Indebtedness, less the non-current portion of Subordinated
Indebtedness.



     “Funded Debt to EBITDA Ratio” means, as at any date of
determination, the ratio of Funded Debt as at such date to EBITDA for the
consecutive four fiscal quarters ending on the last day of the most recently
ended fiscal quarter.



     “GAAP” means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.



     “Governing Body” means the board of directors or other body having
the power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.



     “Governmental Authority” means the government of the United States
or any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).



     “Governmental Authorization” means any permit, license,
registration, authorization, plan, directive, accreditation, consent, order or
consent decree of or from, or notice to, any Governmental Authority.



     “Guarantee” means, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the



12









 





purpose of assuring the obligee in respect of such Indebtedness or other
obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien). The amount of any Guarantee shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning.




     “Guarantor” or “Subsidiary Guarantor” means, collectively,
Pacific Biotech, Inc., a
California corporation, Metra Biosystems, Inc., a California corporation,
Osteo Sciences Corporation, an Oregon corporation and Litmus Concepts, Inc., a
California corporation, and any other Subsidiary of Borrower that executes and
delivers a counterpart of the Guaranty from time to time after the Closing Date
in accordance with Section 6.13.



     “Guaranty” or “Subsidiary Guaranty” means the Subsidiary
Guaranty made by the Guarantor in favor of Agent and for the benefit of the
Lenders, substantially in the form of Exhibit C.



     “Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.



     “Hedge Bank” means any Person that, at the time it enters into
Swap Contract permitted under Article VII, is a Lender or an Affiliate
of a Lender, in its capacity as a party to such Swap Contract.



     “Hostile Acquisition” means the acquisition of the capital stock
or other Equity Interests of a Person through a tender offer or similar
solicitation of the owners of such capital stock or other Equity Interests
which has not been approved (prior to such acquisition and which approval
remains in effect) by resolutions of the Governing Body of such Person.



     “Indebtedness” means, as to any Person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:



          (a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;




13









 








          (b) all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;




          (c) net obligations of such Person under any Swap Contract;




          (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary
course of business)
including any purchase price adjustments with respect to any Permitted
Acquisition and any
earn-out obligations when and upon the time at which the earn-out becomes
certain and non-contingent as to payment obligation;




          (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have
been assumed by such Person or is limited in recourse;




          (f) capital leases and Synthetic Lease Obligations;




          (g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such
Person or any other
Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid
dividends; provided that this clause
(g) shall not include obligations of Borrower to purchase, redeem, retire,
defease or otherwise
acquire for value Equity Interests upon the exercise of any stock options
of Borrower to the
extent (and only to the extent) that such purchase, redemption or
acquisition for value would be
permitted under Section 7.6(d)(ii); and




          (h) all Guarantees of such Person in respect of any of the foregoing.




     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.



     “Indemnified Taxes” means Taxes other than
Excluded Taxes.



     “Information” has the meaning
specified in Section 10.7.



     “Interest Charges” means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of Borrower and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to
the extent treated as interest in accordance with GAAP and (b) the portion of
rent



14









 





expense of Borrower and its Subsidiaries under capital leases that is
treated as interest in accordance with GAAP.




     “Interest Coverage Ratio” means, as of any date of
determination, the ratio of (a) EBITDA for the period of the four prior
fiscal quarters ending on such date to (b) Interest Charges for such
period.



     “Interest Payment Date” means, (a) as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to such Loan
and the Maturity Date; provided, however, that if any Interest
Period for a Eurodollar Rate Loan exceeds three months, the respective dates
that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a
Swing Line Loan), the last Business Day of each March, June, September and
December and the Maturity Date.



     “Interest Period” means, as to each Eurodollar Rate Loan, the
period commencing on the date such Eurodollar Rate Loan is disbursed or
converted to or continued as a Eurodollar Rate Loan and ending on the date one,
two, three or six months thereafter, in each case as selected by Borrower in
its Committed Loan Notice; provided that:



               (i) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day;




               (ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and




               (iii) no Interest Period shall extend beyond the Maturity Date.




     “Investment” means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the Person
Guarantees Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment. Without limiting the generality of the foregoing, the term
“Investment” shall include, without limitation, any Acquisition.



     “IP Collateral” means, collectively, the IP Rights that constitute
Collateral under the Security Agreement.



15









 





     “IP Filing Office” means the United States Patent and Trademark
Office, the United States Copyright Office or any successor or substitute
office in which filings are necessary or, in the opinion of Agent, desirable in
order to create or perfect Liens on any IP Collateral.



     “IP Rights” has the meaning specified in
Section 5.17.


      “IRS” means the
United States Internal Revenue Service.



     “ISP” means, with respect to any Letter of Credit, the
“International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance).



     “Issuer Documents” means with respect to any Letter of Credit, the
L/C Application, and any other document, agreement and instrument entered into
by the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C
Issuer and relating to any such Letter of Credit.



     “Landlord Waiver” means any landlord waiver, mortgagee waiver,
bailee letter or any similar acknowledgement agreement of any landlord in
respect of any Real Property Asset or other location where any Collateral is
located, substantially in the form of Exhibit G annexed hereto, with
such changes thereto as may be agreed to by Agent in the reasonable exercise of
its discretion.



     “Laws” means, collectively, all international, foreign, Federal,
state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.



     “L/C Advance” means, with respect to each Lender, such Lender’s
funding of its participation in any L/C Borrowing in accordance with its Pro
Rata Share.



     “L/C Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in
use by the L/C Issuer.



     “L/C Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Borrowing.



     “L/C Credit Extension” means, with respect to any Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
increase of the amount thereof.



     “L/C Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next
preceding Business Day).



     “L/C Fee” has the meaning specified in Section 2.3(i).



16









 





     “L/C Issuer” means Bank of America in its capacity as issuer
of Letters of Credit hereunder, or any successor issuer of Letters of
Credit hereunder.



     “L/C Obligations” means, as at any date of determination, the
aggregate amount available to be drawn under all outstanding Letters of Credit
plus the aggregate of all Unreimbursed Amounts, including all L/C
Borrowings. For purposes of computing the amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined
in accordance with Section 1.6. For all purposes of this Agreement, if
on any date of determination a Letter of Credit has expired by its terms but
any amount may still be drawn thereunder by reason of the operation of Rule
3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in
the amount so remaining available to be drawn.



     “L/C Sublimit” means an amount equal to $25,000,000. The L/C
Sublimit is part of, and not in addition to, the Aggregate Commitments.



     “Leasehold Property” means any leasehold interest of any Loan
Party as lessee under any lease of real property.



     “Lender” has the meaning specified in the introductory
paragraph hereto and, as the context requires, includes the Swing Line
Lender and the L/C Issuer.



     “Lending Office” means, as to any Lender, the office or offices of
such Lender described as such in such Lender’s Administrative Questionnaire, or
such other office or offices as a Lender
may from time to time notify Borrower and Agent.



     “Letter of Credit” means any letter of credit issued hereunder. A
Letter of Credit may be a commercial letter of credit or a standby letter of
credit.



     “Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in
the nature of a security interest of any kind or nature whatsoever (including
any conditional sale or other title retention agreement, any easement, right of
way or other encumbrance on title to real property, and any financing lease
having substantially the same economic effect as any of the foregoing).



     “Loan” means an extension of credit by a Lender to Borrower
under Article II in the form of a Committed Loan or a Swing Line
Loan.



     “Loan Documents” means this Agreement, each Note, each Issuer
Document, the Fee Letter, each Collateral Document and the Guaranty.



     “Loan Parties” means, collectively, Borrower and each Person
(other than Agent, the L/C Issuer or any Lender) executing a Loan Document
including, without limitation, each Guarantor and each Person executing a
Collateral Document.



     “Material Adverse Effect” means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent), or condition (financial or otherwise) of
Borrower and its Subsidiaries, taken as a whole; (b) a material



17









 





impairment of the rights and remedies of Agent or any Lender under the Loan
Documents, or of the ability of any Loan Party to perform its obligations under
any Loan Document to which it is a party; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against any Loan Party
of any Loan Document to which it is a party.




     “Material Contract” means any agreement or arrangement to which any
Loan Party is a party (other than the Loan Documents) with respect to which
breach, termination, nonperformance or failure to renew could reasonably be
expected to result in the loss of 5% or more of revenue for Borrower and its
Subsidiaries in any twelve month period or could reasonably be expected to have
any other Material Adverse Effect; provided that the term “Material
Contract” shall not include any ordinary course distribution agreement that does
not include material defined purchase requirements.



     “Material Intellectual Property License” means any Material
Contract that is a license relating to intellectual property owned, held or used
by any Loan Party.



     “Material Subsidiary” means each Subsidiary of Borrower now
existing or hereafter acquired or formed by Company which has total assets of
greater than $250,000.



     “Maturity Date” means October 8, 2013; provided,
however, that if such date is not a Business Day, the Maturity
Date
shall be the next preceding Business Day.



     “Medicaid” means that government-sponsored entitlement program
under Title XIX, P.L.
89-97 of the Social Security Act, which provides federal grants to states
for medical assistance based on specific eligibility criteria, as set forth on
Section 1396, et seq. of Title 42 of the United States Code.



     “Medicare” means that government-sponsored insurance program under
Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health
insurance system for eligible elderly and disabled individuals, as set forth
at Section 1395, et seq. of Title 42 of the United States Code.



     “Multiemployer Plan” means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.



     “Net Asset Sale Proceeds,” with respect to any Asset Sale, means
Cash payments (including any Cash received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when
so received) received from such Asset Sale, net of any bona fide direct costs
and expenses incurred in connection with such Asset Sale, including
(i)sale, use
or other transaction taxes and income taxes paid or payable by Borrower or any
of its Subsidiaries as a direct result thereof (provided that with
respect to income taxes that are payable by Borrower or such Subsidiary, the
amount shall be limited to income taxes reasonably estimated to be actually
payable by Borrower or such Subsidiary within two years of the date of such Asset
Sale as a result of any gain recognized in connection with such Asset Sale) and
(ii) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans) that is (a) secured by a
Lien on the stock or assets in




18











 




question and that is required to be repaid under the terms thereof as a result
of such Asset Sale and (b) actually paid at the time of receipt of such Cash
payment to a Person that is not an Affiliate of any Loan Party or of any
Affiliate of a Loan Party.




     “Net Insurance/Condemnation Proceeds” means any Cash payments or
proceeds received by Borrower or any of its Subsidiaries (i) under any business
interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Borrower or any of
its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
bona fide direct costs and expenses incurred by Borrower or any of its
Subsidiaries in connection with any such event described in clause (i) or (ii)
above, including (a) any actual third party costs and expenses (including
reasonable legal fees and expenses) incurred in connection with the adjustment
or settlement of any claims of Borrower or such Subsidiary in respect thereof,
(b) sale, use or other transaction taxes and income taxes paid or payable by
Borrower or any of its Subsidiaries as a direct result thereof (provided
that with respect to income taxes that are payable by Borrower or such
Subsidiary, the amount shall be limited to income taxes reasonably estimated to
be actually payable by Borrower or such Subsidiary within two years of the date
of such event as a result of any gain recognized in connection with such event)
and (c) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is (A) secured
by a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such event and (B) actually paid at the
time of receipt of such Cash payment to a Person that is not an Affiliate of any
Loan Party or of any Affiliate of a Loan Party.



     “Note” means a promissory note made by Borrower in favor of a
Lender evidencing Loans made by such Lender, substantially in the form of
Exhibit B.



     “Obligations” means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or arising under any Secured Hedge Agreements, Secured Cash Management
Agreements or otherwise with respect to any Loan or Letter of Credit, in each
case, whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.



     “Organization Documents” means, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or



19









 






organization and, if applicable, any certificate or articles of formation or
organization of such entity.



     “OSC” means Osteo Sciences Corporation, an Oregon corporation.



     “Other Taxes” means all present or future stamp or documentary
Taxes or any other excise or property Taxes arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.



     “Outstanding Amount” means (i) with respect to Committed Loans and
Swing Line Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any borrowings and prepayments or repayments of Committed
Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii)
with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions in the
maximum amount available for drawing under Letters of Credit taking effect on
such date.



     “Participant” has the meaning specified in Section 10.6(d).



     “PBGC”means the Pension Benefit Guaranty Corporation.



     “Pension Plan” means any “employee
pension benefit plan” (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that
is subject to Title IV of ERISA and is sponsored or maintained by Borrower or
any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.



     “Permitted Acquisition” means an
Acquisition with respect to which
all of the following conditions shall have been satisfied (or Requisite Lenders
shall have otherwise approved such Acquisition):



          (a) the Person, division or business being
acquired (the “Target”)
shall be in such lines of business such that Borrower will be in compliance with
Section 7.7 after giving effect to such Acquisition; provided
that this clause (a) shall not apply to the extent no Person, division or
business is being acquired in connection with such Acquisition;




          (b) such Acquisition shall not be a
Hostile Acquisition;




          (c) the assets so acquired shall be transferred free and clear of any Liens
(except to the extent permitted by Section 7.1), no Indebtedness shall
be incurred, guaranteed, assumed or consolidated in connection with such
Acquisition (except to the extent permitted by Section 7.3), and, if
assets so acquired shall be owned by a Subsidiary (after giving effect to such
Acquisition), Agent shall have received Lien searches reasonably satisfactory to
Agent with respect to the assets of, and Equity Interests in, any business being
acquired





20









 








          (d) the Total Consideration paid or payable with respect to such
Acquisition (excluding consideration paid or payable with Equity Interests of
Borrower) shall not exceed $50,000,000;




          (e) before and after giving effect to such Acquisition, (i) all
representations and warranties contained in the Loan Documents shall be true and correct
on and as of the date of consummation of such Acquisition and (ii) no Default or Event of
Default shall exist, including with respect to the covenants contained in Section 6.12,
before and after giving effect to such Acquisition, based on the financial statements most recently
delivered to Agent pursuant to Sections 6.1 (a) or 6.1(b) as adjusted on a pro forma
basis including the Target based on pro forma assumptions reasonably acceptable to Agent;




          (f) Agent shall have received a First Priority Lien in substantially all
of the personal property and mixed property assets being acquired (except for
Liens securing Indebtedness permitted under Section 7.3(e)) and all filings,
recordings and other actions with respect thereto shall be reasonably satisfactory in form and substance to
Agent and, in the case of an Acquisition of the type described in clauses (b) or (c) of the
definition thereof, Agent shall have received an opinion of counsel in each applicable jurisdiction
reasonably satisfactory to it to the effect that Agent has been granted a perfected security interest in
such assets and as to such other matters as Agent may reasonably require;




          (g) to the extent any representation or warranty herein makes reference to
one or more of the Schedules to this Agreement, Borrower shall make revisions
to such Schedules, in each case as of the date of the consummation of such Acquisition and
notwithstanding that such representation or warranty may expressly state that it is made as of an
earlier date, reasonably acceptable to Agent, solely to take into account the consummation of such
Acquisition;




          (h) Borrower and its Subsidiaries shall have obtained all material
permits, licenses, authorizations or consents from all Governmental Authorities
and all material consents of other Persons, in each case that are necessary in
connection with such proposed Acquisition or the continued operation of the
business being acquired in such proposed Acquisition, prior to or concurrently
with the consummation thereof, and each of the foregoing shall be in full force
and effect;




          (i) subject to the waiver by Required Lenders in their reasonable
discretion, all applicable waiting periods with respect to such proposed
Acquisition shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on such Acquisition (including the
Pre-Merger/Hart-Scott-Rodino Act, as amended), and no action, request for stay,
petition for review or rehearing, reconsideration or appeal with respect to any
of the foregoing shall be pending, and the time for any applicable Governmental
Authority to take action to set aside its consent on its own motion shall have
expired;




          (j) Agent shall have received a certificate from Borrower’s insurance
broker or other evidence satisfactory to it that all insurance required to be
maintained pursuant to Section 6.7 is in full force and effect with
respect to any tangible assets being acquired in such



21









 






Acquisition and that Agent on behalf of the Lenders has been named as
additional insured, mortgagee and loss payee thereunder to the extent
required under Section 6.7;




          (k) after giving effect to such Acquisition, the sum of (i) the amount by
which the Aggregate Commitments exceeds Total Outstandings plus (ii) the amount
of cash held by Borrower and its Subsidiaries, shall equal at least $25,000,000;




          (l) such Acquisition shall be made by Borrower or a wholly-owned Subsidiary
of Borrower and if such Acquisition involves acquisition of the Equity Interests
of any Person, such Acquisition shall be for 100% of the outstanding Equity
Interests of such Person and such Person shall be a Person incorporated or
organized under the laws of the United States of America or any state thereof;




          (m) to the extent that the Target has rights to any Medicare or Medicaid
receivables, prior to the closing of such Acquisition, (i) Borrower shall have
given prior written notice of such to Agent and Lenders and (ii) Borrower shall
have complied with Section 6.20 with respect to such Acquisition and
Target; and




          (n) (i) at least ten Business Days prior to the closing of such
Acquisition, Borrower shall have delivered to Agent and each Lender all
available financial statements of the Target (provided that this clause (i)
shall not apply to the extent no Person, division or business is being acquired
in connection with such Acquisition (whether directly or pursuant to a merger,
consolidation or other combination)) and, if requested by Agent or any Lender,
(ii) within five Business Days prior to the closing of such Acquisition,
Borrower shall have delivered to Agent and any Lender, such other documents and
agreements relating to such Acquisition as Agent or such Lender may reasonably
request, and (iii) on or prior to the closing date of such Acquisition, Borrower
shall have delivered to Agent and each Lender (1) a copy of the purchase
agreement pursuant to which such Acquisition will be consummated, (2) unless
waived by Agent in its reasonable discretion, a consent to the assignment of
such purchase agreement to Agent for collateral purposes, which consent shall be
in form and substance satisfactory to Agent; (3) a copy of each material
services agreement, consulting agreement, lease, credit or financing agreement
or other material agreement relating to such Acquisition to be in effect after
the consummation of such Acquisition, (4) unless waived by Agent in its
reasonable discretion, if an opinion of counsel to the sellers is obtained by
any Loan Party in connection with such Acquisition, the same opinion also
addressed to Agent and the Lenders or a letter permitting them to rely thereon,
(5) such other information or reports as Agent may reasonably request with
respect to such Acquisition, and (6) an executed officer’s certificate in form
and substance reasonably satisfactory to Agent and Requisite Lenders certifying
that such Acquisition satisfies all of the conditions set forth in this
definition and attaching thereto a Compliance Certificate.




     “Permitted Stock Repurchase” means Borrower’s purchase, redemption
or other acquisition of the shares of its common stock for solely cash
consideration (a “Stock Repurchase”) with respect to which all of the
following conditions shall have been satisfied:



          (a) both before and after giving effect to such Stock Repurchase, no
Default or Event of Default shall exist or shall be caused thereby;




22









 








          (b) Borrower and its Subsidiaries shall be in actual and pro forma
compliance with the covenants contained in Section 6.12 before and after
giving effect to such Stock Repurchase, and upon the request of Agent, Borrower shall have delivered to
Agent a Compliance Certificate demonstrating such compliance and a certificate
executed by a Responsible Officer of Borrower certifying as to compliance with clauses
(a) and (c) of this definition; and




          (c) after giving effect to such Stock Repurchase, the sum of (i) the amount
by which the Aggregate Commitments exceeds Total Outstandings plus (ii) the
amount of cash held by Borrower and its Subsidiaries shall equal at least $25,000,000.




     “Person” means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.



     “Plan” means any “employee benefit plan” (as such term is defined
in Section 3(3) of ERISA) established by Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.



     “Pledged Collateral” has the meaning given such term in the Security
Agreement.



     “Pro Rata Share” means, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Commitment of such Lender at such
time and the denominator of which is the amount of the Aggregate Commitments at
such time; provided that if the commitment of each Lender to make Loans
and the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 8.2 or the Aggregate Commitments have
expired, then the Pro Rata Share of each Lender shall be determined based on the
Pro Rata Share of such Lender immediately prior to such termination and after
giving effect to any subsequent assignments made pursuant to the terms hereof.
The initial Pro Rata Share of each Lender is set forth opposite the name of such
Lender on Schedule 2.1 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.



     “Real Property Asset” means, at any time of determination, any
interest then owned by any Loan Party in any real property.



     “Register” has the meaning specified in Section 10.6(c).



     “Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents, trustees
and advisors of such Person and of such Person’s Affiliates.



     “Reportable Event” means any of the events set forth in Section
4043(c) of ERISA, other than events for which the 30 day notice period has been
waived.



     “Request for Credit Extension” means (a) with respect to a
Borrowing, conversion or continuation of Committed Loans, a Committed Loan
Notice, (b) with respect to an L/C Credit Extension, a L/C Application, and (c)
with respect to a Swing Line Loan, a Swing Line Loan Notice.



23









 





     “Required Lenders” means, as of any date of determination, Lenders
having more than 50% of the Aggregate Commitments or, if the commitment of each
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.2, Lenders
holding in the aggregate more than 50% of the Total Outstandings (with the
aggregate amount of each Lender’s risk participation and funded participation
in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that the Commitment of, and the
portion of the Total Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Lenders;
provided further that (i) if at any time there are only two Lenders,
then Required Lenders must comprise both of such Lenders and (ii) if at any
time there are three or more Lenders, then Required Lenders must comprise at
least three Lenders.



     “Responsible Officer” means the chief executive officer,
president, chief financial officer, treasurer or assistant treasurer of a Loan
Party. Any document delivered hereunder that is signed by a Responsible Officer
of a Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Loan
Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.



     “Restricted Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interest of Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest or on account of any return of capital to Borrower’s
stockholders, partners or members (or the equivalent Person thereof) or any
payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to any Subordinated
Indebtedness.



     “Secured Cash Management Agreement” means any Cash Management
Agreement that is entered into by and between any Loan Party and any Cash
Management Bank.



     “Secured Hedge Agreement” means any Swap Contract permitted under
Article VII that is entered into by and between any Loan Party and any Hedge
Bank.



     “Secured Parties” means, collectively, Agent, the Lenders, the L/C
Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent
appointed by the Agent from time to time pursuant to Section 9.5, and
the other Persons the Obligations owing to which are or are purported to be
secured by the Collateral under the terms of the Collateral Documents.



     “Securities Account” means an account to which a financial asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the financial
asset.



     “Security Agreement” means the Security Agreement by and among
Borrower, Guarantors, the Agent and each of the other grantors party thereto
executed and delivered on the



24









 







Closing Date, substantially in the form of Exhibit F annexed hereto, as
such Security Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.



     “Solvency Certificate” means an officer’s certificate of each Loan
Party substantially in the form of Exhibit J with appropriate
attachments.



     “Solvent”, with respect to any Person, means that as of the date
of determination both (i)(a) the then fair saleable value of the tangible and
intangible property of such Person, including Equity Interests owned by such
Person, is (1) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (2) not less than the amount that
will be required to pay the probable liabilities on such Person’s then existing
debts as they become absolute and due considering all financing alternatives
and potential asset sales reasonably available to such Person; (b) such
Person’s capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or reasonably believe that it will incur, debts beyond its ability to
pay such debts as they become due; and (ii) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.



     “Stock Repurchase” has the meaning set forth in the definition
of “Permitted Stock Repurchase”.



     “Subordinated Indebtedness” means unsecured Indebtedness incurred
by Borrower or any Subsidiary, the terms of which Indebtedness (including the
covenants, events of default and subordination provisions thereof) and all
documentation relating thereto shall be in form and substance satisfactory to
Agent and Required Lenders, it being understood that there shall be no payments
of any kind thereunder (other than payment of scheduled interest, the amounts
and frequency of which are acceptable to Agent and other Required Lenders and
other payments (if any) acceptable to Agent and Required Lenders) prior to the
seventeen month anniversary after the Maturity Date then in effect and all
payments thereunder shall be subordinated in right of payment to the
Obligations pursuant to subordination provisions acceptable to Agent and
Required Lenders in their sole discretion.



     “Subordinated Liabilities” means liabilities subordinated to the
Obligations in a manner acceptable to Agent in its sole discretion.



     “Subsidiary” of a Person means a corporation, partnership, joint
venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for
the election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of Borrower.



25









 





     “Subsidiary Guarantor” or “Guarantor” means, collectively,
Pacific Biotech, Inc., a California corporation, Metra Biosystems, Inc., a
California corporation, Osteo Sciences Corporation, an Oregon corporation and
Litmus Concepts, Inc., a California corporation, and any other Subsidiary of
Borrower that executes and delivers a counterpart of the Guaranty from time to
time after the Closing Date in accordance with Section 6.13.



     “Swap Contract” means (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related confirmations,
which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related
schedules, a “Master Agreement”), including any such obligations or
liabilities under any Master Agreement.



     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).



     “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.4.




     “Swing Line Lender” means Bank of America in its capacity as
provider of Swing Line Loans, or any successor swing line lender hereunder.



     “Swing Line Loan” has the meaning specified in Section 2.4(a).



     “Swing Line Loan Notice” means a notice of a Swing Line
Borrowing pursuant to Section 2.4(b), which, if in writing, shall
be substantially in the form of Exhibit A-2.



     “Swing Line Sublimit” means an amount equal to the lesser of (a)
$15,000,000 and (b) the Aggregate Commitments. The Swing Line Sublimit is part
of, and not in addition to, the Aggregate Commitments.



     “Synthetic Lease Obligation” means the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or



26









 







possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).



     “Taxes” means all present or future taxes, levies, imposts,
duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.



     “Total Consideration” means, with respect to any Acquisition,
(without duplication) the sum of (a) the total amount of cash paid in
connection with such Acquisition, (b) all Indebtedness incurred in connection
with such Acquisition, (c) the amount of direct and contingent liabilities
assumed in connection with such Acquisition (excluding normal trade payables,
accruals and indemnities), (d) the amount of Indebtedness payable to the seller
in connection with such Acquisition and (e) the amounts paid or to be paid
under any covenant not to compete, consulting agreements, “earn-up” or
“earn-out” agreements and other deferred or contingent payment obligations in
connection with such Acquisition, as reasonably estimated by Borrower and
satisfactory to the Agent in its reasonable discretion.



     “Total Outstandings” means the aggregate Outstanding Amount of all
Loans and all L/C Obligations.



     “Type” means, with respect to a Committed Loan, its character as a
Base Rate Loan or a Eurodollar Rate Loan.



     “UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.



     “Unfunded Pension Liability” means the excess of a Pension Plan’s
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan’s assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.



     “United States” and “U.S.” mean the United
States of America.



     “Unreimbursed Amount” has the meaning specified in Section 2.3(c)(i).



     1.2 Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:



          (a) The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the
word “shall.” Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any





27









 







reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references in a
Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset”
and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.




          (b) In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and
including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means
“to and including,”




          (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation
of this Agreement or any other Loan Document.




     1.3 Accounting Terms.



          (a) All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from
time to time, applied in a manner consistent with that used in preparing the Audited Financial
Statements, except as otherwise specifically prescribed herein.




          (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) Borrower shall provide to
Agent and Lenders financial statements and other documents required under this Agreement or
as reasonably requested hereunder setting forth a reconciliation between calculations
of such ratio or requirement made before and after giving effect to such change in GAAP.




     1.4 Rounding. Any financial ratios required to be maintained by Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate component
by the other component, carrying the result to one place more than the number of places
by which such ratio is expressed herein and rounding the result up or down to the nearest
number (with a rounding-up if there is no nearest number).



28









 





     1.5 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as applicable).



     1.6 Letter of Credit Amounts. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however, that with respect
to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or
more automatic increases in the stated amount thereof, the amount of such Letter of
Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to
all such increases, whether or not such maximum stated amount is in effect at such time.



ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS.




     2.1 Committed Loans. Subject to the terms and conditions set forth herein,
each Lender severally agrees to make loans (each such loan, a “Committed
Loan”) to Borrower from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment;
provided, however, that after giving effect to any Committed Borrowing, (i) the Total
Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of
the Committed Loans of any Lender, plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment. Within the limits of each
Lender’s Commitment, and subject to the other terms and conditions hereof, Borrower
may borrow under this Section 2.1, prepay under Section 2.5, and reborrow
under this Section 2.1. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.



     The amount of each Lender’s Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the original Aggregate Commitment is
$120,000,000; provided that the amount of the Commitments of each Lender shall
be adjusted to give effect to any assignments of such Commitments pursuant to
Section 10.6 and shall be reduced from time to time by the amount of
any reductions thereto made pursuant to Section 2.5 or Section
2.6. Each Lender’s Commitment shall expire immediately and without further
action on the Maturity Date and all Loans and all other amounts owed hereunder
with respect to the Loans and the Commitments shall be paid in full no later
than that date.



     2.2 Borrowings, Conversions and Continuations of Committed Loans.



          (a) Each Committed Borrowing, each conversion of Committed Loans from one
Type to the other, and each continuation of Eurodollar Rate Loans shall be
made upon Borrower’s irrevocable notice to Agent, which may be given by
telephone. Each such notice must be received by Agent not later than 8:00 a.m.
(i) three Business Days (in the case of Eurodollar Rate Loans) prior to the
requested date of any Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base
Rate Committed Loans. Each telephonic notice by Borrower pursuant to this
Section 2.2(a) must be confirmed promptly by delivery to Agent of a
written Committed Loan Notice, appropriately completed and signed by a
Responsible Officer of Borrower. Each Borrowing of, conversion




29









 







to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Sections 2.3(c) and 2.4(c), each Borrowing of or
conversion to Base Rate Committed Loans shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof. Each Committed
Loan Notice (whether telephonic or written) shall specify (i) whether Borrower
is requesting a Committed Borrowing, a conversion of Committed Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may
be (which shall be a Business Day), (iii) the principal amount of Committed
Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans
to be borrowed or to which existing Committed Loans are to be converted, and
(v) if applicable, the duration of the Interest Period with respect thereto.
If Borrower fails to specify a Type of Committed Loan in a Committed Loan
Notice or if Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Committed Loans shall be made as, or
converted to, Base Rate Loans. Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate
Loans in any such Committed Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.




          (b) Following receipt of a Committed Loan Notice, Agent shall promptly
notify each Lender of the amount of its Pro Rata Share of the applicable
Committed Loans, and if no timely notice of a conversion or continuation is provided by
Borrower, Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans
described in the preceding subsection. In the case of a Committed Borrowing, each Lender
shall make the amount of its Committed Loan available to Agent in immediately available
funds at Agent’s Office not later than 10:00 a.m. on the Business Day specified in the
applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in
Section 4.2 (and, if such Borrowing is the initial Credit Extension, Section 4.1),
Agent shall make all funds so received available to Borrower in like funds as received by Agent either
by (i) crediting the account of Borrower on the books of Bank of America with the amount of
such funds or (ii) wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) Agent by Borrower;
provided, however, that if, on the date the Committed Loan
Notice with respect to such Borrowing is given by Borrower, there are L/C
Borrowings outstanding, then the proceeds of such Borrowing first,
shall be applied, to the payment in full of any such L/C Borrowings, and
second, shall be made available to Borrower as provided above.




          (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for
such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the Required
Lenders, and during the existence of an Event of Default, the Required Lenders may demand
that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base
Rate Loans and Borrower agrees to pay all amounts due under Section 3.5 in
accordance with the terms thereof due to any such conversion.





30











 





          (d) Agent shall promptly notify Borrower and Lenders of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest
rate. The determination of the Eurodollar Rate by Agent shall be
conclusive in the absence of
manifest error. At any time that Base Rate Loans are outstanding, Agent
shall notify Borrower
and the Lenders of any change in Bank of America’s prime rate used in
determining the Base
Rate promptly following the public announcement of such change.




          (e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of
Committed Loans as the
same Type, there shall not be more than 6 Interest Periods in effect with
respect to Committed
Loans.




     2.3 Letters of Credit.



          (a) The Letter of Credit Commitment.





     (i) Subject to the terms and conditions set forth herein, (A)
the L/C Issuer agrees, in reliance upon the agreements of the
Lenders set forth in this Section 2.3, (1) from time to
time on any Business Day during the period from the Closing Date
until the L/C Expiration Date, to issue Letters of Credit for the
account of Borrower or its Subsidiaries, and to amend or extend
Letters of Credit previously issued by it, in accordance with
subsection (b) below, and (2) to honor drawings under the Letters
of Credit; and (B) the Lenders severally agree to participate in
Letters of Credit issued for the account of Borrower or its
Subsidiaries and any drawings thereunder; provided that
after giving effect to any L/C Credit Extension with respect to any
Letter of Credit, (x) the Total Outstandings shall not exceed the
Aggregate Commitments, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender’s Pro Rata
Share of the Outstanding Amount of all L/C Obligations,
plus such Lender’s Pro Rata Share of the Outstanding Amount
of all Swing Line Loans shall not exceed such Lender’s Commitment,
and (z) the Outstanding Amount of the L/C Obligations shall not
exceed the L/C Sublimit. Each request by Borrower for the issuance
or amendment of a Letter of Credit shall be deemed to be a
representation by Borrower that the L/C Credit Extension so
requested complies with the conditions set forth in the proviso to
the preceding sentence. Within the foregoing limits, and subject to
the terms and conditions hereof, Borrower’s ability to obtain
Letters of Credit shall be fully revolving, and accordingly
Borrower may, during the foregoing period, obtain Letters of Credit
to replace Letters of Credit that have expired or that have been
drawn upon and reimbursed.




     (ii) The L/C Issuer shall not issue any Letter of Credit, if:




     (A) subject to Section 2.3(b)(iv), the expiry
date of such requested commercial Letter of Credit would
occur more than twelve months after the date of issuance or
last extension or such standby Letter of Credit would occur
more than twenty-four months after the date of



31









 







issuance or last extension, unless the Required Lenders
have approved such expiry date; or




     (B) the expiry date of such requested Letter of Credit
would
occur after the L/C Expiration Date, unless all the
Lenders have approved
such expiry date.




     (C) the expiry date of such requested Letter of Credit
would
occur after the Maturity Date, unless Borrower shall
have Cash
Collateralized 105% of the maximum aggregate L/C
Obligations of such
Letter of Credit upon the issuance of such Letter of
Credit.




     (iii) The L/C Issuer shall be under no obligation to issue any
Letter of Credit if:




     (A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to
enjoin or restrain the
L/C Issuer from issuing such Letter of Credit, or any
Law applicable to the
L/C Issuer or any request or directive (whether or not
having the force of
law) from any Governmental Authority with jurisdiction
over the L/C
Issuer shall prohibit, or request that the L/C Issuer
refrain from, the
issuance of letters of credit generally or such Letter
of Credit in particular
or shall impose upon the L/C Issuer with respect to such
Letter of Credit
any restriction, reserve or capital requirement (for
which the L/C Issuer is
not otherwise compensated hereunder) not in effect on
the Closing Date,
or shall impose upon the L/C Issuer any unreimbursed
loss, cost or
expense which was not applicable on the Closing Date and
which the L/C
Issuer in good faith deems material to it;




     (B) the issuance of such Letter of Credit would
violate any
Laws or one or more policies of the L/C Issuer;




     (C) except as otherwise agreed by Agent and the L/C
Issuer,
such Letter of Credit is in an initial stated amount
less than $100,000, in
the case of a commercial Letter of Credit, or $500,000,
in the case of a
standby Letter of Credit;




     (D) such Letter of Credit is to be denominated in a
currency
other than Dollars; or




     (E) a default of any Lender’s obligations to fund under
Section 2.3(c) exists or any Lender is at such time a
Defaulting Lender hereunder,
unless the L/C Issuer has entered into satisfactory
arrangements with
Borrower or such Lender to eliminate the L/C Issuer’s
risk with respect to
such Lender.



32









 






     (iv) The L/C Issuer shall not amend any Letter of Credit
if the L/C Issuer would not be permitted at such time to issue
such Letter of Credit in its amended form under the terms
hereof.




     (v) The L/C Issuer shall be under no obligation to amend any
Letter of Credit if (A) the L/C Issuer would have no obligation at
such time to issue such Letter of Credit in its amended form under
the terms hereof, or (B) the beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of Credit.




     (vi) The L/C Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith, and the L/C Issuer shall have all of the
benefits and immunities (A) provided to Agent in Article IX
with respect to any acts taken or omissions suffered by the L/C
Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such
Letters of Credit as fully as if the term “Agent” as used in
Article IX included the L/C Issuer with respect to such
acts or omissions, and (B) as additionally provided herein with
respect to the L/C Issuer.



          (b) Procedures for Issuance and Amendment of Letters of Credit; Extension
of Letters of Credit.





     (i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of Borrower delivered to the L/C
Issuer (with a copy to Agent) in the form of a L/C Application,
appropriately completed and signed by a Responsible Officer of
Borrower. Such L/C Application must be received by the L/C Issuer
and Agent not later than 8:00 a.m. at least two Business Days (or
such later date and time as Agent and the L/C Issuer may agree in a
particular instance in their sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be. In the case
of a request for an initial issuance of a Letter of Credit, such
L/C Application shall specify in form and detail satisfactory to
the L/C Issuer: (A) the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of
the beneficiary thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of
any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) the purpose and nature of the requested
Letter of Credit; and (H) such other matters as the L/C Issuer may
require. In the case of a request for an amendment of any
outstanding Letter of Credit, such L/C Application shall specify in
form and detail satisfactory to the L/C Issuer (A) the Letter of
Credit to be amended; (B) the proposed date of amendment thereof
(which shall be a Business Day); (C) the nature of the proposed
amendment; and (D) such other matters as the L/C Issuer may
require. Additionally, Borrower shall furnish to the L/C Issuer and
Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any
Issuer Documents, as the L/C Issuer or Agent may require.




33












 






     (ii) Promptly after receipt of any L/C Application at the
address set forth in Section 10.2 for receiving L/C
Applications and related correspondence, the L/C Issuer will
confirm with Agent (by telephone or in writing) that Agent has
received a copy of such L/C Application from Borrower and, if not,
the L/C Issuer will provide Agent with a copy thereof. Unless the
L/C Issuer has received written notice from any Lender, Agent or
any Loan Party, at least one Business Day prior to the requested
date of issuance or amendment of the applicable Letter of Credit,
that one or more applicable conditions contained in Article IV
shall not then be satisfied, then, subject to the terms and
conditions hereof, the L/C Issuer shall, on the requested date,
issue a Letter of Credit for the account of Borrower (or the
applicable Subsidiary) or enter into the applicable amendment, as
the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from
the L/C Issuer a risk participation in such Letter of Credit in an
amount equal to the product of such Lender’s Pro Rata Share
times the amount of such Letter of Credit.




     (iii) Promptly after its delivery of any Letter of Credit or
any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the L/C Issuer will
also deliver to Borrower and Agent a true and complete copy of such
Letter of Credit or amendment.




     (iv) If Borrower so requests in any applicable L/C
Application, the L/C Issuer may, in its sole and absolute
discretion, agree to issue a standby Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter
of Credit”); provided that any such Auto-Extension Letter of
Credit must permit the L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of
issuance of such Letter of Credit) by giving prior notice to the
beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise
directed by the L/C Issuer, Borrower shall not be required to make
a specific request to the L/C Issuer for any such extension. Once
an Auto-Extension Letter of Credit has been issued, the Lenders
shall be deemed to have authorized (but may not require) the L/C
Issuer to permit the extension of such Letter of Credit at any time
to an expiry date not later than the L/C Expiration Date; provided,
however, that the L/C Issuer shall not permit any such extension if
(A) the L/C Issuer has determined that it would not be permitted,
or would have no obligation, at such time to issue such Letter of
Credit in its revised form (as extended) under the terms hereof (by
reason of the provisions of clause (ii) or (iii) of Section
2.3(a) or otherwise), or (B) it has received notice (which may
be by telephone or in writing) on or before the day that is seven
Business Days before the Non-Extension Notice Date (1) from Agent
that the Required Lenders have elected not to permit such extension
or (2) from Agent, any Lender or any Loan Party that one or more of
the applicable conditions specified in Section 4.2 is not
then satisfied, and in each such case directing the L/C Issuer not
to permit such extension.



34









 






     (v) If Borrower so requests in any applicable L/C Application,
the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that permits
the automatic reinstatement of all or a portion of the stated
amount thereof after any drawing thereunder (each, an
“Auto-Reinstatement Letter of Credit”). Unless otherwise
directed by the L/C Issuer, Borrower shall not be required to make
a specific request to the L/C Issuer to permit such reinstatement.
Once an Auto-Reinstatement Letter of Credit has been issued, except
as provided in the following sentence, the Lenders shall be deemed
to have authorized (but may not require) the L/C Issuer to
reinstate all or a portion of the stated amount thereof in
accordance with the provisions of such Letter of Credit.
Notwithstanding the foregoing, if such Auto-Reinstatement Letter of
Credit permits the L/C Issuer to decline to reinstate all or any
portion of the stated amount thereof after a drawing thereunder by
giving notice of such non-reinstatement within a specified number
of days after such drawing (the “Non-Reinstatement
Deadline”), the L/C Issuer shall not permit such reinstatement
if it has received a notice (which may be by telephone or in
writing) on or before the day that is seven Business Days before
the Non-Reinstatement Deadline (A) from Agent that the Required
Lenders have elected not to permit such reinstatement or (B) from
Agent, any Lender or Borrower that one or more of the applicable
conditions specified in Section 4.2 is not then satisfied
(treating such reinstatement as an L/C Credit Extension for
purposes of this clause) and, in each case, directing the L/C
Issuer not to permit such reinstatement.



     (c) Drawings and Reimbursements; Funding of Participations.




     (i) Upon receipt from the beneficiary of any Letter of Credit
of any notice of a drawing under such Letter of Credit, the L/C
Issuer shall notify Borrower and Agent thereof. Not later than
11:00 a.m. on the Business Day after the date of any payment by the
L/C Issuer under a Letter of Credit (each such date of payment, an
“Honor Date”), Borrower shall reimburse the L/C Issuer
through Agent in an amount equal to the amount of such drawing plus
accrued interest on the amount of such drawing (which interest
shall accrue from the Honor Date to the time of reimbursement as if
the amount of such drawing were a Base Rate Loan). If Borrower
fails to so reimburse the L/C Issuer by such time, Agent shall
promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the
amount of such Lender’s Pro Rata Share thereof. In such event,
Borrower shall be deemed to have requested a Committed Borrowing of
Base Rate Loans to be disbursed on the Business Day after the Honor
Date in an amount equal to the Unreimbursed Amount, without regard
to the minimum and multiples specified in Section 2.2 for
the principal amount of Base Rate Loans, but subject to the amount
of the unutilized portion of the Aggregate Commitments and the
conditions set forth in Section 4.2 (other than the
delivery of a Committed Loan Notice). Any notice given by the L/C
Issuer or Agent pursuant to this Section 2.3(c)(i) may be
given by telephone if immediately confirmed in writing;
provided that the lack of such an immediate confirmation
shall not affect the conclusiveness or binding effect of such
notice.



35









 







     (ii) Each Lender (including a Lender acting as L/C Issuer)
shall upon any notice pursuant to Section 2.3(c)(i) make
funds available to Agent for the account of the L/C Issuer at the
Agent’s Office in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 11:00 a.m. on the Business
Day specified in such notice by Agent, whereupon, subject to the
provisions of Section 2.3(c)(iii), each Lender that so
makes funds available shall be deemed to have made a Base Rate
Committed Loan to Borrower in such amount. Agent shall remit the
funds so received to the L/C Issuer.




     (iii) With respect to any Unreimbursed Amount that is not
fully refinanced by a Committed Borrowing of Base Rate Loans
because the conditions set forth in Section 4.2 cannot be
satisfied or for any other reason, Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on demand (together with interest) and
shall bear interest at the Default Rate. In such event, each
Lender’s payment to Agent for the account of the L/C Issuer
pursuant to Section 2.3(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.3.




     (iv) Until each Lender funds its Committed Loan or L/C Advance
pursuant to this Section 2.3(c) to reimburse the L/C Issuer
for any amount drawn under any Letter of Credit, interest in
respect of such Lender’s Pro Rata Share of such amount shall be
solely for the account of the L/C Issuer.




     (v) Each Lender’s obligation to make Committed Loans or L/C
Advances to reimburse the L/C Issuer for amounts drawn under
Letters of Credit, as contemplated by this Section 2.3(c),
shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have
against the L/C Issuer, Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C)
any other occurrence, event or condition, whether or not similar to
any of the foregoing; provided, however, that each
Lender’s obligation to make Committed Loans pursuant to this
Section 2.3(c) is subject to the conditions set forth in
Section 4.2 (other than delivery by Borrower of a Committed
Loan Notice). No such making of an L/C Advance shall relieve or
otherwise impair the obligation of Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under
any Letter of Credit, together with interest as provided herein.




     (vi) If any Lender fails to make available to Agent for the
account of the L/C Issuer any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section
2.3(c) by the time specified in Section 2.3(c)(ii), the
L/C Issuer shall be entitled to recover from such Lender (acting
through Agent), on demand, such amount with interest thereon for
the period from the date such payment is required to the date on
which such payment is




36












 






immediately available to the L/C Issuer at a rate per annum equal
to the greater of the Federal Funds Rate and a rate determined by
the L/C Issuer in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or
similar fees customarily charged by the L/C Issuer in connection
with the foregoing. If such Lender pays such amount (with interest
and fees as aforesaid), the amount so paid shall constitute such
Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing,
as the case may be. A certificate of the L/C Issuer submitted to any
Lender (through Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.



          (d) Repayment of Participations.





     (i) At any time after the L/C Issuer has made a payment under
any Letter of Credit and has received from any Lender such Lender’s
L/C Advance in respect of such payment in accordance with
Section 2.3(c), if Agent receives for the account of the
L/C Issuer any payment in respect of the related Unreimbursed
Amount or interest thereon (whether directly from Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by
Agent), Agent will distribute to such Lender its Pro Rata Share
thereof in the same funds as those received by Agent.




     (ii) If any payment received by Agent for the account of the
L/C Issuer pursuant to Section 2.3(c)(i) is required to be
returned under any of the circumstances described in Section
10.5 (including pursuant to any settlement entered into by the
L/C Issuer in its discretion), each Lender shall pay to Agent for
the account of the L/C Issuer its Pro Rata Share thereof on demand
of Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The
obligations of the Lenders under this clause shall survive payment
in full of the Obligations and the termination of this Agreement.



          (e) Obligations Absolute. The obligation of Borrower to reimburse
the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be
absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms
of this Agreement under all circumstances, including the following:





     (i) any lack of validity or enforceability of such Letter of
Credit, this Agreement, or any other Loan Document;




     (ii) the existence of any claim, counterclaim, set-off,
defense or other right that Borrower or any Subsidiary may have at
any time against any beneficiary or any transferee of such Letter
of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person,
whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;



37









 







     (iii) any draft, demand, certificate or other document
presented under such
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make
a drawing under such Letter of Credit;




     (iv) any payment by the L/C Issuer under such Letter of Credit
against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit; or any
payment made by the L/C Issuer under such Letter of Credit to any
Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including
any arising in connection with any proceeding under any Debtor
Relief Law; or




     (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, Borrower or any Subsidiary.


Borrower shall promptly examine a copy of each Letter of Credit and each,
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower’s instructions or other irregularity, Borrower will
immediately notify the L/C Issuer. Borrower shall be conclusively deemed to
have waived any such claim against the L/C Issuer and its correspondents unless
such notice is given as aforesaid.




          (f) Role of L/C Issuer. Each Lender and Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or
the authority of the Person executing or delivering any such document. None of
the L/C Issuer, Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to
any Lender for (i) any action taken or omitted in connection herewith at the
request or with the approval of Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is
not intended to, and shall not, preclude Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. None of the L/C Issuer, Agent, any of their respective
Related Parties nor any correspondent, participant or assignee of the L/C
Issuer, shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.3(e); provided,
however, that anything in such clauses to the contrary
notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by
Borrower which Borrower proves were




38









 








caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C
Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the
contrary, and the L/C Issuer shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason.




          (g) Cash Collateral. Upon the request of Agent, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of
the L/C Expiration Date, any L/C Obligation for any reason remains
outstanding, Borrower shall, in each case, immediately Cash Collateralize the
then Outstanding Amount of all L/C Obligations. Sections 2.3(a),
2.5 and 8.2(c) set forth certain additional requirements to
deliver Cash Collateral hereunder. For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to Agent, for
the benefit of the L/C Issuer and the Lenders, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to documentation in
form and substance satisfactory to Agent and the L/C Issuer (which documents
are hereby consented to by Lenders). Derivatives of such term have
corresponding meanings. Borrower hereby grants to Agent, for the benefit of
the L/C Issuer and Lenders, a security interest in all such cash, deposit
accounts and all balances therein and all proceeds of the foregoing. Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America. If at any time Agent determines that any funds
held as Cash Collateral are subject to any right or claim of any Person other
than Agent or that the total amount of such funds is less than the aggregate
Outstanding Amount of all L/C Obligations, Borrower will, forthwith upon
demand by Agent, pay to Agent, as additional funds to be deposited as Cash
Collateral, an amount equal to the excess of (x) such aggregate Outstanding
Amount over (y) the total amount of funds, if any, then held as Cash
Collateral that Agent determines to be free and clear of any such right and
claim. Upon the drawing of any Letter of Credit for which funds are on deposit
as Cash Collateral, such funds shall be applied, to the extent permitted under
applicable Laws, to reimburse the L/C Issuer.




          (h) Applicability of ISP and UCP. Unless otherwise expressly
agreed by the L/C Issuer and Borrower when a Letter of Credit is issued, (i)
the rules of the ISP shall apply to each standby Letter of Credit, and (ii)
the rules of the Uniform Customs and Practice for Documentary Credits, as most
recently published by the International Chamber of Commerce at the time of
issuance shall apply to each commercial Letter of Credit.




          (i) L/C Fees. Borrower shall pay to Agent for the account of each
Lender in accordance with its Pro Rata Share an L/C fee (the “L/C
Fee”) (i) for each commercial Letter of Credit equal to the then
applicable commercial letter of credit fees of the L/C Issuer then in effect,
and (ii) for each standby Letter of Credit equal to the Applicable Rate
times the daily maximum amount available to be drawn under such Letter
of Credit (whether or not such maximum amount is then in effect under such
Letter of Credit). For purposes of computing the daily amount available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 1.6. L/C Fees shall be (i)
computed on a





39












 




quarterly basis in arrears and (ii) due and payable on the first Business Day
after the end of each March, June, September and December, commencing with the
first such date to occur after the issuance of such Letter of Credit, on the
L/C Expiration Date and thereafter on demand. If there is any change in the
Applicable Rate during any quarter, the daily maximum amount available to be
drawn under each standby Letter of Credit shall be computed and multiplied by
the Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect. Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of
Default exists, all L/C Fees shall accrue at the Default Rate.




          (j)
Fronting Fee and Documentary and Processing Charges Payable to
L/C Issuer. Borrower shall pay directly to the L/C Issuer for its own
account a fronting fee with respect to (i) each commercial Letter of Credit,
at the rate specified in the Fee Letter, computed on the amount of such Letter
of Credit, and payable upon the issuance thereof, (ii) with respect to any
amendment of a commercial Letter of Credit increasing the amount of such
Letter of Credit, at a rate separately agreed between Borrower and the L/C
Issuer, computed on the amount of such increase, and payable upon the
effectiveness of such amendment, and (iii) with respect to each standby Letter
of Credit, at the rate per annum specified in the Fee Letter, computed on the
daily amount available to be drawn under such Letter of Credit on a quarterly
basis in arrears. Such fronting fee shall be due and payable on the tenth
Business Day after the end of each March, June, September and December in
respect of the most recently-ended quarterly period (or portion thereof, in
the case of the first payment), commencing with the first such date to occur
after the issuance of such Letter of Credit, on the L/C Expiration Date and
thereafter on demand. For purposes of computing the daily amount available to
be drawn under any Letter of Credit, the amount of such Letter of Credit shall
be determined in accordance with Section 1.6. In addition, Borrower
shall pay directly to the L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other
standard costs and charges, of the L/C Issuer relating to letters of credit as
from time to time in effect. Such individual customary fees and standard costs
and charges are due and payable on demand and are nonrefundable.




          (k) Conflict with Issuer Documents. In the event of any conflict
between the terms hereof and the terms of any Issuer Document, the terms
hereof shall control.




          (l) Letters of Credit Issued for Subsidiaries. Notwithstanding
that a Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, Borrower shall be
obligated to reimburse the L/C Issuer hereunder for any and all drawings under
such Letter of Credit. Borrower hereby acknowledges that the issuance of
Letters of Credit for the account of Subsidiaries inures to the benefit of
Borrower, and that Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.




     2.4 Swing Line Loans.



          (a) The Swing Line. Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.4, to make loans (each such
loan, a “Swing Line Loan”) to Borrower from time




40









 







to time on any Business Day during the Availability Period in an aggregate
amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Pro Rata Share of the Outstanding Amount of
Committed Loans and L/C Obligations of the Lender acting as Swing Line Lender,
may exceed the amount of such Lender’s Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the
Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the
aggregate Outstanding Amount of the Committed Loans of any Lender,
plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and
provided, further, that Borrower shall not use the proceeds of
any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the
foregoing limits, and subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.4, prepay under Section
2.5, and reborrow under this Section 2.4. Each Swing Line Loan
shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Swing Line Lender a risk participation in such
Swing Line Loan in an amount equal to the product of such Lender’s Pro Rata
Share times the amount of such Swing Line Loan.




          (b) Borrowing Procedures. Each Swing Line Borrowing shall be made
upon
Borrower’s irrevocable notice to the Swing Line Lender and Agent, which
may be given by
telephone. Each such notice must be received by the Swing Line Lender and
Agent not later
than 10:00 a.m. on the requested borrowing date, and shall specify (i)
the amount to be
borrowed, which shall be a minimum of $500,000, and (ii) the requested
borrowing date,
which shall be a Business Day. Each such telephonic notice must be
confirmed promptly by
delivery to the Swing Line Lender and Agent of a written Swing Line Loan
Notice,
appropriately completed and signed by a Responsible Officer of Borrower.
Promptly after
receipt by the Swing Line Lender of any telephonic Swing Line Loan
Notice, the Swing Line
Lender will confirm with Agent (by telephone or in writing) that Agent
has also received such
Swing Line Loan Notice and, if not, the Swing Line Lender will notify
Agent (by telephone or
in writing) of the contents thereof. Unless the Swing Line Lender has
received notice (by
telephone or in writing) from Agent (including at the request of any
Lender) prior to 11:00 a.m.
on the date of the proposed Swing Line Borrowing (A) directing the Swing
Line Lender not to
make such Swing Line Loan as a result of the limitations set forth in the
first proviso to the
first sentence of Section 2.4(a), or (B) that one or more of the
applicable conditions specified in
Article IV is not then satisfied, then, subject to the terms and
conditions hereof, the Swing Line
Lender will, not later than 12:00 noon on the borrowing date specified in
such Swing Line
Loan Notice, make the amount of its Swing Line Loan available to
Borrower.




          (c) Refinancing of Swing Line Loans.





     (i) The Swing Line Lender at any time in its sole and absolute
discretion may request, on behalf of Borrower (which hereby
irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Base Rate Committed Loan in an
amount equal to such Lender’s Pro Rata Share of the amount of Swing
Line Loans then outstanding. Such request shall be made in writing
(which written request shall be deemed to be a Committed Loan



41









 







Notice for purposes hereof) and in accordance with the requirements
of Section 2.2, without regard to the minimum and multiples
specified therein for the principal amount of Base Rate Loans, but
subject to the unutilized portion of the Aggregate Commitments and
the conditions set forth in Section 4.2. The Swing Line
Lender
shall furnish Borrower with a copy of the applicable Committed Loan
Notice promptly after delivering such notice to Agent. Each Lender
shall make an amount equal to its Pro Rata Share of the amount
specified in such Committed Loan Notice available to Agent in
immediately available funds for the account of the Swing Line
Lender at Agent’s Office not later than 10:00 a.m. on the day
specified in such Committed Loan Notice, whereupon, subject to
Section 2.4(c)(ii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan
to Borrower in such amount. Agent shall remit the funds so received
to the Swing Line Lender.




     (ii) If for any reason any Swing Line Loan cannot be refinanced
by such a Committed Borrowing in accordance with Section
2.4(c)(i), the request for Base Rate Committed Loans submitted
by the Swing Line Lender as set forth herein shall be deemed to be a
request by the Swing Line Lender that each of the Lenders fund its
risk participation in the relevant Swing Line Loan and each Lender’s
payment to Agent for the account of the Swing Line Lender pursuant
to Section 2.4(c)(i) shall be deemed payment in respect of
such participation.




     (iii) If any Lender fails to make available to Agent for the
account of the Swing Line Lender any amount required to be paid by
such Lender pursuant to the foregoing provisions of this
Section 2.4(c) by the time specified in Section
2.4(c)(i), the Swing Line Lender shall be entitled to recover
from such Lender (acting through Agent), on demand, such amount
with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available
to the Swing Line Lender at a rate per annum equal to the greater
of the Federal Funds Rate and a rate determined by the Swing Line
Lender in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees
customarily charged by the Swing Line Lender in connection with the
foregoing. If such Lender pays such amount (with interest and fees
as aforesaid), the amount so paid shall constitute such Lender’s
Committed Loan included in the relevant Committed Borrowing or
funded participation in the relevant Swing Line Loan, as the case
may be. A certificate of the Swing Line Lender submitted to any
Lender (through Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.




     (iv) Each Lender’s obligation to make Committed Loans or to
purchase and fund risk participations in Swing Line Loans pursuant
to this Section 2.4(c) shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such
Lender may have against the Swing Line Lender, Borrower or any
other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of




42












 





the foregoing; provided, however, that
each Lender’s obligation to make Committed Loans pursuant
to this Section 2.4(c) is subject to the
conditions set forth in Section 4.2. No such
funding of risk participations shall relieve or otherwise
impair the obligation of Borrower to repay Swing Line
Loans, together with interest as provided herein.




          (d) Repayment of Participations.





     (i) At any time after any Lender has purchased and
funded a risk participation in a Swing Line Loan, if the
Swing Line Lender receives any payment on account of such
Swing Line Loan, the Swing Line Lender will distribute to
such Lender its Pro Rata Share thereof in the same funds
as those received by the Swing Line Lender.




     (ii) If any payment received by the Swing Line
Lender in respect of principal or interest on any Swing
Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in
Section 10.5 (including pursuant to any
settlement entered into by the Swing Line Lender in its
discretion), each Lender shall pay to the Swing Line
Lender its Pro Rata Share thereof on demand of Agent,
plus interest thereon from the date of such demand to the
date such amount is returned, at a rate per annum equal
to the Federal Funds Rate. Agent will make such demand
upon the request of the Swing Line Lender. The
obligations of the Lenders under this clause shall
survive the payment in full of the Obligations and the
termination of this Agreement.



          (e) Interest for Account of Swing Line Lender. The Swing
Line Lender shall be responsible for invoicing Borrower for interest on the
Swing Line Loans. Until each Lender funds its Base Rate Committed Loan or risk participation
pursuant to this Section 2.4 to
refinance such Lender’s Pro Rata Share of any Swing Line Loan,
interest in respect of such Pro
Rata Share shall be solely for the account of the Swing Line
Lender.




          (f) Payments Directly to Swing Line Lender. Borrower shall
make all payments of principal and interest in respect of the Swing
Line Loans directly to the Swing Line Lender.




     2.5 Prepayments.



          (a) Voluntary Prepayments. Borrower may, upon notice to
Agent, at any time or from time to time voluntarily prepay Committed
Loans in whole or in part without premium or penalty; but with accrued
interest thereon and any amounts due under Section 3.5,
provided that (i) such notice must be received by Agent not
later than 11:00 a.m. (A) three Business Days prior to any date of
prepayment of Eurodollar Rate Loans and (B) on the date of prepayment
of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple
of $500,000 in excess thereof; and (iii) any prepayment of Base Rate
Committed Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $100,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount



43









 





of such prepayment and the Type(s) of Committed Loans to be prepaid
and, if Eurodollar Rate Loans are to be prepaid, the Interest
Period(s) of such Loans. Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s Pro
Rata Share of such prepayment. If such notice is given by Borrower,
Borrower shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein.
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts
required pursuant to Section 3.5. Each such prepayment shall
be applied to the Committed Loans of Lenders in accordance with their
respective Pro Rata Shares.




          (b) Borrower may, upon notice to the Swing Line Lender (with a
copy to
Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in
part without premium or penalty; provided that (i) such
notice must be received by the Swing
Line Lender and Agent not later than 1:00 p.m. on the date of the
prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $100,000.
Each such notice shall
specify the date and amount of such prepayment. If such notice is
given by Borrower,
Borrower shall make such prepayment and the payment amount
specified in such notice shall
be due and payable on the date specified therein.




          (c) Mandatory Prepayments from Excess Utilization. If for
any reason the
Total Outstandings at any time exceed the Aggregate Commitments
then in effect, Borrower
shall immediately prepay Loans but with accrued interest thereon
and any amounts due under
Section 3.5, and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to
such excess; provided, however, that Borrower
shall not be required to Cash Collateralize the
L/C Obligations pursuant to this Section 2.5(c) unless
after the prepayment in full of the Loans
the Total Outstandings exceed the Aggregate Commitments then in
effect.




          (d) Mandatory Prepayments and Mandatory Reductions of
Commitments.
The Loans shall be prepaid and/or the Aggregate Commitments shall
be permanently reduced
in the amounts and under the circumstances set forth below, and
all such prepayments and/or
reductions to be applied as set forth below or as more
specifically provided in Section
2.5(e)(ii):





     (i) Mandatory Prepayments and Reductions From
Net Asset Sale Proceeds. No later than the date of
receipt by Borrower or any of its Subsidiaries of any
Net Asset Sale Proceeds in respect of any Asset Sale,
Borrower shall either (1) prepay Loans and/or
permanently reduce the Aggregate Commitments in
accordance with Section 2.5(e)(ii), in each case,
in an aggregate amount equal to such Net Asset Sale
Proceeds or (2), so long as no Default or Event of
Default shall have occurred and be continuing and to the
extent that the aggregate Net Asset Sale Proceeds from
the Closing Date through the date of determination that
are so reinvested or proposed to be so reinvested under
this Section 2.5(d)(i) do not exceed $3,000,000,
deliver to Agent an officer’s certificate setting forth
(x) that portion of such Net Asset Sale Proceeds that
Borrower or such Subsidiary intends to reinvest in
equipment or other productive assets of the general type
used in the business of Borrower and its Subsidiaries
within 180 days of such date of receipt and (y) the
proposed use of such
portion of the Net Asset Sale Proceeds



44









 





and such other information with respect to such
reinvestment as Agent may reasonably request, and
Borrower shall, or shall cause one or more of its
Subsidiaries to, promptly and diligently apply such
portion to such reinvestment purposes; provided, however,
that, pending such reinvestment, such portion of the Net
Asset Sale Proceeds shall be applied to prepay
outstanding Loans (without a reduction in the Aggregate
Commitments) to the full extent thereof, In addition,
Borrower shall, no later than 180 days after receipt of
such Net Asset Sale Proceeds that have not theretofore
been applied to the Obligations hereunder or that have
not been so reinvested as provided above, make an
additional prepayment of the Loans (and/or the Aggregate
Commitments shall be permanently reduced) as set forth
above in the full amount of all such Net Asset Sale
Proceeds.




     (ii) Prepayments and Reductions from Net
Insurance/Condemnation Proceeds. No later than three
(3) Business Days following the date of receipt by Agent,
Borrower or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be
applied to prepay the Loans and/or reduce the Aggregate
Commitments pursuant to Section 6.6(b), Borrower
shall either (1) prepay Loans and/or permanently reduce
the Aggregate Commitments in accordance with Section
2.5(e)(ii). in each case, in an aggregate amount equal
to such Net Insurance/Condemnation Proceeds or (2), so
long as no Default or Event of Default shall have
occurred and be continuing and to the extent that the
aggregate Net Insurance/Condemnation Proceeds from the
Closing Date through the date of determination that are
so reinvested or proposed to be so reinvested under this
Section 2.5(d)(ii) or under Section
6.6(b)(ii) do not exceed $10,000,000, deliver to
Agent an officer’s certificate setting forth (x) that
portion of such Net Insurance/Condemnation Proceeds that
Borrower or such Subsidiary intends to reinvest in
equipment or other productive assets of the general type
used in the business of Borrower and
its Subsidiaries within 180 days of such date of
receipt and (y) the proposed use of such portion of the
Net Insurance/Condemnation Proceeds and such other
information with respect to such reinvestment as Agent
may reasonably request, and Borrower shall, or shall
cause one or more of its Subsidiaries to, promptly and
diligently apply such portion to such reinvestment
purposes; provided, however, that, pending such
reinvestment, such portion of the Net
Insurance/Condemnation Proceeds shall be applied to
prepay outstanding Loans (without a reduction in the
Aggregate Commitments) to the full extent thereof. In
addition, Borrower shall, no later than 180 days after
receipt of such Net Insurance/Condemnation Proceeds that
have not theretofore been applied to the Obligations
hereunder or that have not been so reinvested as provided
above, make an additional prepayment of the Loans (and/or
the Aggregate Commitments shall be permanently reduced)
as set forth above in the full amount of all such Net
Insurance/Condemnation Proceeds.



          (e) Application of Prepayments and Reductions of
Aggregate Commitments.





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     (i) Application of Voluntary Prepayments by Type
of Loans. Any voluntary prepayments pursuant to
Section 2.5(a) shall be applied as specified by
Borrower in the applicable notice of prepayment; provided
that in the event Borrower fails to specify the Type of
Loans to which any such prepayment shall be applied, such
prepayment shall be applied to repay Base Rate Loans to
the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner that minimizes the
amount of any payment required to be made by Borrower
pursuant to Section 3.5.




     (ii) Application of Mandatory Prepayments by
Type of Loans. Except as provided in Section
2.5(c), any amount required to be applied as a
mandatory prepayment of the Loans and/or a reduction of
the Aggregate Commitments shall be applied first to
prepay the Loans to the full extent thereof and to
permanently reduce the Aggregate Commitments by the
amount of such prepayment, and second, to the extent of
any remaining portion of such amount, to further
permanently reduce the Aggregate Commitments to the full
extent thereof. Any mandatory prepayments pursuant to
this Section 2.5 shall be applied as specified by
Borrower in written notice to Agent; provided that in the
event Borrower fails to specify the Type of Loan to which
any such prepayment shall be applied, such prepayment
shall be applied to repay Base Rate Loans to the full
extent thereof before application to Eurodollar Rate
Loans, in each case in a manner that minimizes the amount
of any payment required to be made by Borrower pursuant
to Section 3.5. Any mandatory reduction of the
Aggregate Commitments pursuant to this Section
2.5(e) shall be in proportion to each Lender’s Pro
Rata Share.



     2.6 Termination or Reduction of Commitments. Borrower may, upon
notice to Agent, terminate the Aggregate Commitments, or from time to
time permanently reduce the Aggregate Commitments; provided that
(i) any such notice shall be received by Agent not later than 8:00 a.m.
five Business Days prior to the date of termination or reduction, (ii)
any such partial reduction shall be in an aggregate amount of $10,000,000
or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower
shall not terminate or reduce the Aggregate Commitments if, after giving
effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Aggregate Commitments, and
(iv) if, after giving effect to any reduction of the Aggregate
Commitments, the L/C Sublimit or the Swing Line Sublimit exceeds the
amount of the Aggregate Commitments, such Sublimit shall be automatically
reduced by the amount of such excess. Agent will promptly notify the
Lenders of any such notice of termination or reduction of the Aggregate
Commitments. Any reduction of the Aggregate Commitments shall be applied
to the Commitment of each Lender according to its Pro Rata Share. All
fees accrued until the effective date of any termination of the Aggregate
Commitments shall be paid on the effective date of such termination.



     2.7 Repayment of Loans.



          (a) Borrower shall repay to Lenders on the Maturity Date the
aggregate principal amount of Committed Loans outstanding on such
date.




46









 








          (b) Borrower shall repay each Swing Line Loan on the earlier to
occur of (i) the date ten Business Days after such Loan is made and
(ii) the Maturity Date.




     2.8 Interest.



          (a) Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to
the Eurodollar Rate for such Interest Period plus the
Applicable Rate; (ii) each Base Rate Committed Loan shall bear interest
on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate; and (iii) each Swing Line Loan shall bear interest
on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate.




          (b) (i) If any amount of principal of any Loan is not paid when
due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable
Laws.





     (ii) If any amount (other than principal of any
Loan) payable by Borrower under any Loan Document is not
paid when due (without regard to any
applicable grace periods), whether at stated
maturity, by acceleration or otherwise, then upon the
request of the Required Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate to the
fullest extent permitted by applicable Laws.




     (iii) Upon the request of the Required Lenders,
while any Event of Default exists, Borrower shall pay
interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per
annum at all times equal to the Default Rate to the
fullest extent permitted by applicable Laws.




     (iv) Accrued and unpaid interest on past due
amounts (including interest on past due interest)
shall be due and payable upon demand.



          (c) Interest on each Loan shall be due and payable in arrears on
each Interest Payment Date applicable thereto and at such other times
as may be specified herein. Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and
before and after the commencement of any proceeding under any Debtor
Relief Law.




     2.9 Fees. In addition to certain fees described in subsections (i) and (j) of
Section 2.3:



          (a) Commitment Fee. Borrower shall pay to Agent for the
account of each Lender in accordance with its Pro Rata Share, a
commitment fee equal to the Applicable Rate times the actual
daily amount by which the Aggregate Commitments exceed the sum of (i)
the Outstanding Amount of Committed Loans and (ii) the Outstanding
Amount of L/C Obligations. The commitment fee shall accrue at all times
during the Availability Period,




47









 







including at any time during which one or more of the conditions in
Article IV is not met, and shall be due and payable quarterly
in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the
Closing Date, and on the Maturity Date. The commitment fee shall be
calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be
computed and multiplied by the Applicable Rate separately for each
period during such quarter that such
Applicable Rate was in effect.




          (b) Other Fees.




     (i) Borrower shall pay to the Arranger and Agent
for their own respective accounts fees in the amounts
and at the times specified in the Fee Letter. Such fees
shall be fully earned when paid and shall not be
refundable for any reason whatsoever.




     (ii) Borrower shall pay to the Lenders such fees as
shall have been separately agreed upon in writing in the
amounts and at the times so specified. Such fees shall
be fully earned when paid and shall not be refundable
for any reason whatsoever.



     2.10 Computation of Interest and Fees; Retroactive Adjustments of
Applicable Rate.



          (a) All computations of interest for Base Rate Loans when the
Base Rate is determined by Bank of America’s “prime rate” shall be
made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid
than if computed on the basis of a 365-day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall
not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to
Section 2.12(a), bear interest for one day. Each determination
by Agent of an interest rate or fee hereunder shall be conclusive and
binding for all purposes, absent manifest error.




          (b) If, as a result of any restatement of or other adjustment to the financial statements of
Borrower or for any other reason, Borrower or the Lenders determine that (i) the Funded Debt to
EBITDA Ratio as calculated by Borrower as of any applicable date was inaccurate and (ii) a proper
calculation of the Funded Debt to EBITDA Ratio would have resulted in higher pricing for such
period, Borrower shall immediately and retroactively be obligated to pay to Agent for the account
of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by Agent (or,
after the occurrence of an actual or deemed entry of an order for relief with respect to Borrower
under the Bankruptcy Code of the United States, automatically and without further action by Agent,
any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest and fees
that should have been paid for such period over the amount of interest and fees actually paid for
such period. This paragraph shall not limit the rights of Agent, any Lender or the L/C Issuer, as
the case may be, under Section 2.3(c)(iii), 2.3(i) or 2.8(b) or under
Article VIII. Borrower’s obligations under this





48












 




paragraph shall survive the termination of the Aggregate Commitments and the
repayment of all other Obligations hereunder.




     2.11 Evidence of Debt.



          (a) The Credit Extensions made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by Agent in the
ordinary course of business. The accounts or records maintained by Agent and
each Lender shall be conclusive absent manifest error of the amount of the
Credit Extensions made by Lenders to Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of Borrower hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and
records of Agent in respect of such matters, the accounts and records of Agent
shall control in the absence of manifest error. Upon the request of any Lender
made through Agent, Borrower shall execute and deliver to such Lender (through
Agent) a Note, which shall evidence such Lender’s Loans in addition to such
accounts or records. Each Lender may attach schedules to its Note and endorse
thereon the date, Type (if applicable), amount and maturity of its Loans and
payments with respect thereto.




          (b) In addition to the accounts and records referred to in subsection
(a), each Lender and Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between
the accounts and records maintained by Agent and the accounts and records of
any Lender in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error.




     2.12 Payments Generally.



          (a) (i) General. All payments to be made by Borrower shall be
made without condition or deduction for any counterclaim, defense, recoupment
or setoff. Except as otherwise expressly provided herein, all payments by
Borrower hereunder shall be made to Agent, for the account of the respective
Lenders to which such payment is owed, at the Agent’s Office in Dollars and in
immediately available funds not later than 11:00 a.m. on the date specified
herein. Agent will promptly distribute to each Lender its Pro Rata Share (or
other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office. All payments
received by Agent after 11:00 a.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue. If any payment to be made by Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected in computing interest or fees,
as the case may be.





     (ii) Borrower Account. On each date when the payment of
any principal, interest or fees are due hereunder or under any Note,
Borrower agrees to maintain on deposit in an ordinary checking
account maintained by Borrower with Agent (as such account shall be
designated by Borrower in a written notice to Agent from time to
time, the “Borrower Account”) an amount sufficient to pay
such principal, interest or fees in full on such date. Borrower
hereby authorizes



49









 






Agent (A) to deduct automatically all principal, interest or fees
when due hereunder or under any Note from Borrower Account, and (B)
if and to the extent any payment of principal, interest or fees
under this Agreement or any Note is not made when due to deduct any
such amount from any or all of the accounts of Borrower maintained
at Agent. Agent agrees to provide written notice to Borrower of any
automatic deduction made pursuant to this Section 2.12(a)(ii)
showing in reasonable detail the amounts of such deduction.
Lenders agree to reimburse Borrower based on their Pro Rata Share
for any amounts deducted from such accounts in excess of amount due
hereunder and under any other Loan Documents.



          (b) (i) Funding by Lenders; Presumption by Agent. Unless Agent
shall have received notice from a Lender prior to the proposed date of any
Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed
Borrowing of Base Rate Loans, prior to 9:00 a.m. on the date of such Committed
Borrowing) that such Lender will not make available to Agent such Lender’s
share of such Committed Borrowing, Agent may assume that such Lender has made
such share available on such date in accordance with Section 2.2 (or,
in the case of a Committed Borrowing of Base Rate Loans, that such Lender has
made such share available in accordance with and at the time required by
Section 2.2) and may, in reliance upon such assumption, make available
to Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Committed Borrowing available to Agent, then
the applicable Lender and Borrower severally agree to pay to Agent forthwith
on demand such corresponding amount in immediately available funds with
interest thereon, for each day from and including the date such amount is made
available to Borrower to but excluding the date of payment to Agent, at (A) in
the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by Agent in accordance with banking industry
rules on interbank compensation, plus any administrative, processing or
similar fees customarily charged by Agent in connection with the foregoing,
and (B) in the case of a payment to be made by Borrower, the interest rate
applicable to Base Rate Loans. If Borrower and such Lender shall pay such
interest to Agent for the same or an overlapping period, Agent shall promptly
remit to Borrower the amount of such interest paid by Borrower for such
period. If such Lender pays its share of the applicable Committed Borrowing to
Agent, then the amount so paid shall constitute such Lender’s Committed Loan
included in such Committed Borrowing. Any payment by Borrower shall be without
prejudice to any claim Borrower may have against a Lender that shall have
failed to make such payment to Agent.





     (ii) Payments by Borrower; Presumptions by Agent.
Unless Agent shall have received notice from Borrower prior to the
date on which any payment is due to Agent for the account of the
Lenders or the L/C Issuer hereunder that Borrower will not make
such payment, Agent may assume that Borrower has made such payment
on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the
case may be, the amount due. In such event, if Borrower has not in
fact made such payment, then each of the Lenders or the L/C Issuer,
as the case may be, severally agrees to repay to Agent forthwith on
demand the amount so distributed to such Lender or the L/C Issuer,
in immediately available funds with interest thereon, for



50









 






each day from and including the date such amount is distributed to
it to but excluding the date of payment to Agent, at the greater of
the Federal Funds Rate and a rate determined by Agent in accordance
with banking industry rules on interbank compensation.



     A notice of Agent to any Lender or Borrower with respect to any amount
owing under this subsection (b) shall be conclusive, absent manifest error.



          (c) Failure to Satisfy Conditions Precedent. If any Lender makes
available to Agent funds for any Loan to be made by such Lender as provided in
the foregoing provisions of this Article II, and such funds are not
made available to Borrower by Agent because the conditions to the applicable
Credit Extension set forth in Article IV are not satisfied or waived
in accordance with the terms hereof, Agent shall return such funds (in like
funds as received from such Lender) to such Lender, without interest.




          (d) Obligations of Lenders Several. The obligations of the
Lenders hereunder to make Committed Loans, to fund participations in Letters
of Credit and Swing Line Loans and to make payments pursuant to Section
10.4(c) are several and not joint. The failure of any Lender to make any
Committed Loan, to fund any such participation or to make any payment under
Section 10.4(c) on any date required hereunder shall not relieve any
other Lender of its corresponding obligation to do so on such date, and no
Lender shall be responsible for the failure of any other Lender to so make its
Loan or purchase its participation.




          (e) Funding Source. Nothing herein shall be deemed to obligate
any Lender to obtain the funds for any Loan in any particular place or manner
or to constitute a representation by any Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.




     2.13 Sharing of Payments. If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of the Committed Loans made by it, or the participations
in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Committed
Loans or participations and accrued interest thereon greater than its pro
rata share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify Agent of such fact, and (b) purchase (for
cash at face value) participations in the Committed Loans and subparticipations
in L/C Obligations and Swing Line Loans of the other Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Committed Loans and other amounts owing them, provided that:




     (i) if any such participations or subparticipations are
purchased and all or any portion of the payment giving rise thereto
is recovered, such participations or subparticipations shall be
rescinded and the purchase price restored to the extent of such
recovery, without interest; and



51









 






     (ii) the provisions of this Section shall not be construed to
apply to (x) any payment made by Borrower pursuant to and in
accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of
or sale of a participation in any of its Committed Loans or
subparticipations in L/C Obligations or Swing Line Loans to any
assignee or participant, other than to Borrower or any Subsidiary
thereof (as to which the provisions of this Section shall apply).


Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against Borrower rights of setoff
and counterclaim with respect to such participation as fully as if such Lender
were a direct creditor of Borrower in the amount of such participation.




     2.14 Increase in Commitments.



          (a) Request for Increase. Provided there exists no Default, upon
notice to Agent (which shall promptly notify the Lenders), Borrower may from
time to time, request an increase in the Aggregate Commitments by an amount
(for all such requests) not exceeding $75,000,000; provided that (i)
any such request for an increase shall be in a minimum amount of $10,000,000,
and (ii) Borrower may make a maximum of three such requests. At the time of
sending such notice, Borrower (in consultation with Agent) shall specify the
time period within which each Lender is requested to respond (which shall in
no event be less than ten Business Days from the date of delivery of such
notice to the Lenders).




          (b) Lender Elections to Increase. Each Lender shall notify Agent
within such time period whether or not it agrees to increase its Commitment
and, if so, whether by an amount equal to, greater than, or less than its Pro
Rata Share of such requested increase. Any Lender not responding within such
time period shall be deemed to have declined to increase its Commitment.




          (c) Notification by Agent; Additional Lenders. Agent shall notify
Borrower and each Lender of the Lenders’ responses to each request made
hereunder. To achieve the full amount of a requested increase and subject to
the approval of Agent, the L/C Issuer and the Swing Line Lender (which
approvals shall not be unreasonably withheld), Borrower may also invite
additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to Agent and its counsel.




          (d) Effective Date and Allocations. If the Aggregate Commitments
are increased in accordance with this Section, Agent and Borrower shall
determine the effective date (the “Increase Effective Date”) and the
final allocation of such increase. Agent shall promptly notify Borrower and
the Lenders of the final allocation of such increase and the Increase
Effective Date.




          (e) Conditions to Effectiveness of Increase. As a condition
precedent to such increase, Borrower shall deliver to Agent a certificate of
each Loan Party dated as of the Increase Effective Date (in sufficient copies
for each Lender) signed by a Responsible Officer




52









 







of such Loan Party (i) certifying and attaching the resolutions adopted by
such Loan Party approving or consenting to such increase, and (ii) in the case
of Borrower, certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in Article V and the
other Loan Documents are true and correct on and as of the Increase Effective
Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Section
2.14, the representations and warranties contained in subsections (a) and
(b) of Section 5.5 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.1, and (B) no Default exists. Borrower shall prepay any
Committed Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.5) to the extent
necessary to keep the outstanding Committed Loans ratable with any revised Pro
Rata Shares arising from any nonratable increase in the Commitments under this
Section.




          (f) Conflicting Provisions. This Section shall supersede any
provisions in Section 2.13 or 10.1 to the contrary.




ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.




     3.1 Taxes.



          (a) Payments Free of Taxes; Obligation to Withhold; Payments on
Account of Taxes.





     (i) Any and all payments by or on account of any obligation of
Borrower hereunder or under any other Loan Document shall to the
extent permitted by applicable Laws be made free and clear of and
without reduction or withholding for any Indemnified Taxes. If,
however, applicable Laws require Borrower or Agent to withhold or
deduct any Tax, such Tax shall be withheld or deducted in
accordance with such Laws as determined by Borrower or Agent, as
the case may be, upon the basis of the information and
documentation to be delivered pursuant to subsection (e) below.




     (ii) If Borrower or Agent shall be required by the Code to
withhold or deduct any Taxes, including both United States Federal
backup withholding and withholding taxes, from any payment, then
(A) Agent shall withhold or make such deductions as are determined
by Agent to be required based upon the information and
documentation it has received pursuant to subsection (e) below, (B)
Agent shall timely pay the full amount withheld or deducted to the
relevant Governmental Authority in accordance with the Code, and
(C) to the extent that the withholding or deduction is made on
account of Indemnified Taxes or Other Taxes, the sum payable by
Borrower shall be increased as necessary so that after any required
withholding or the making of all required deductions (including
deductions applicable to additional sums payable under this
Section) Agent, Lender or L/C Issuer, as the case may be, receives
an amount equal to the sum it would have received had no such
withholding or deduction been made.



53









 





          (b) Payment of Other Taxes by Borrower. Without limiting the
provisions of subsection (a) above, Borrower shall timely pay any Other Taxes
to the relevant Governmental Authority in accordance with applicable Laws.




          (c) Tax Indemnifications. Without limiting the provisions of
subsection (a) or (b) above, Borrower shall, and does hereby, indemnify Agent,
each Lender and the L/C Issuer, and shall make payment in respect thereof
within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) withheld or
deducted by Borrower or Agent or paid by Agent, such Lender or the L/C Issuer,
as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of any such
payment or liability delivered to Borrower by a Lender or the L/C Issuer (with
a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or
the L/C Issuer, shall be conclusive absent manifest error.




          (d) Evidence of Payments. Upon request by Borrower or Agent, as
the case may be, after any payment of Taxes by Borrower or by Agent to a
Governmental Authority as provided in this Section 3.1, Borrower shall
deliver to Agent or Agent shall deliver to Borrower, as the case may be, the
original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of any return required by Laws to
report such payment or other evidence of such payment reasonably satisfactory
to Borrower or Agent, as the case may be.




          (e) Status of Lenders; Tax Documentation.





     (i) Each Lender shall deliver to Borrower and to Agent, at the
time or times prescribed by applicable Laws or when reasonably
requested by Borrower or Agent, such properly completed and
executed documentation prescribed by applicable Laws or by the
taxing authorities of any jurisdiction and such other reasonably
requested information that would entitle such Lender to an
exemption from, or reduction of, applicable Taxes in respect of all
payments to be made to such Lender by Borrower pursuant to this
Agreement or otherwise to establish such Lender’s status for
withholding tax purposes in the applicable jurisdiction;
provided, however, that such Lender is legally entitled to
complete, execute and deliver such documentation and in such
Lender’s reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of
such Lender.




     (ii) Each Foreign Lender that is entitled under the Code or
any applicable treaty to an exemption from or reduction of
withholding tax with respect to payments hereunder or under any
other Loan Document shall deliver to Borrower and Agent (in such
number of copies as shall be reasonably requested by the recipient)
on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon
the request



54









 






of Borrower or Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:




          (I) executed originals of Internal Revenue Service Form
W-8BEN claiming eligibility for benefits of an income tax
treaty to which the United States is a party,




          (II) executed originals of Internal Revenue Service
Form W-8ECI,




          (III) executed originals of Internal Revenue Service
Form W-8IMY and all required supporting documentation,




          (IV) in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under
section 881(c) of the Code, (x) a certificate to the effect
that such Foreign Lender is not (A) a “bank” within the
meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of Borrower within the meaning of
section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the
Code and (y) executed originals of Internal Revenue Service
Form W-8BEN, or




          (V) executed originals of any other form prescribed by
applicable Laws as a basis for claiming exemption from or a
reduction in United States Federal withholding tax together
with such supplementary documentation as may be prescribed by
applicable Laws to permit Borrower or Agent to determine the
withholding or deduction required to be made.




     (iii) Each Lender shall promptly (A) notify Borrower and Agent
of any change in circumstances which would modify or render invalid
any claimed exemption or reduction, and (B) take such steps as
shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any
requirement of applicable Laws of any jurisdiction that Borrower or
Agent make any withholding or deduction for taxes from amounts
payable to such Lender.



          (f) Treatment of Certain Refunds. Unless required by applicable
Laws, at no time shall Agent have any obligation to file for or otherwise
pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay
to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from
funds paid for the account of such Lender or the L/C Issuer, as the case may
be. If Agent, any Lender or the L/C Issuer determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by Borrower or with respect to which Borrower has paid
additional amounts pursuant to this Section, it shall pay to Borrower an
amount equal to such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by Borrower under this Section with





55









 







respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by Agent, such Lender or the L/C Issuer, as
the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund),
provided that Borrower, upon the request of Agent, such Lender or the
L/C Issuer, agrees to repay the amount paid over to Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such
Lender or the L/C Issuer is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require Agent, any Lender
or the L/C Issuer to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to Borrower or any other
Person.




     3.2 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, Dollars in the London interbank market, then, on notice thereof by
such Lender to Borrower through Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies Agent and
Borrower that the circumstances giving rise to such determination no longer
exist. Upon receipt of such notice, Borrower shall, upon demand from such
Lender (with a copy to Agent), prepay or, if applicable, convert all Eurodollar
Rate Loans of such Lender to Base Rate Loans, either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the
amount so prepaid or converted and all amounts due under Section 3.5 in
accordance with the terms thereof due to such prepayment or conversion.



     3.3 Inability to Determine Rates. If the Required Lenders determine that
for any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Base Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Base Rate for any requested Interest Period with respect to
a proposed Eurodollar Rate Loan, does not adequately and fairly reflect the
cost to such Lenders of funding such Loan, Agent will promptly so notify
Borrower and each Lender. Thereafter, the obligation of Lenders to make or
maintain Eurodollar Rate Loans shall be suspended until Agent (upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such
notice, Borrower may revoke any pending request for a Borrowing of, conversion
to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to
have converted such request into a request for a Committed Borrowing of Base
Rate Loans in the amount specified therein.



56









 





     3.4 Increased Costs.



          (a) Increased Costs Generally. If any Change in Law shall:





     (i) impose, modify or deem applicable any reserve, special
deposit, compulsory loan, insurance charge or similar requirement
against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve
requirement reflected in the Eurodollar Rate) or the L/C Issuer;




     (ii) subject any Lender or the L/C Issuer to any tax of any
kind whatsoever with respect to this Agreement, any Letter of
Credit, any participation in a Letter of Credit or any Eurodollar
Rate Loan made by it, or change the basis of taxation of payments
to such Lender or the L/C Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.1 and
any change in the rate of any Excluded Tax payable by such Lender
or the L/C Issuer); or




     (iii) impose on any Lender or the L/C Issuer or the London
interbank market any other condition, cost or expense affecting
this Agreement or Eurodollar Rate Loans made by such Lender or any
Letter of Credit or participation therein;


and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
the L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or the L/C Issuer, Borrower will pay
to such Lender or the L/C Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.




          (b) Capital Requirements. If any Lender or the L/C Issuer
determines that any Change in Law affecting such Lender or the L/C Issuer or
any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding
company, if any, regarding capital requirements has or would have the effect
of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or
on the capital of such Lender’s or the L/C Issuer’s holding company, if any,
as a consequence of this Agreement, the Commitments of such Lender or the
Loans made by, or participations in Letters of Credit held by, such Lender, or
the Letters of Credit issued by the L/C Issuer, to a level below that which
such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the L/C Issuer’s policies and the policies of
such Lender’s or the L/C Issuer’s holding company with respect to capital
adequacy), then from time to time Borrower will pay to such Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s
holding company for any such reduction suffered.





57











 





          (c) Certificates for Reimbursement. A certificate of a Lender or
the L/C Issuer setting forth the reason for such claim in reasonable detail
and the amount or amounts necessary to compensate such Lender or the L/C
Issuer or its holding company, as the case may be, as specified in subsection
(a) or (b) of this Section and delivered to Borrower shall be conclusive
absent manifest error. Borrower shall pay such Lender or the L/C Issuer, as
the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof.




          (d) Delay in Requests. Failure or delay on the part of any Lender
or the L/C Issuer to demand compensation pursuant to the foregoing provisions
of this Section shall not constitute a waiver of such Lender’s or the L/C
Issuer’s right to demand such compensation, provided that Borrower
shall not be required to compensate a Lender or the L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender
or the L/C Issuer, as the case may be, notifies Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
L/C Issuer’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).




     3.5 Compensation for Losses. Upon demand of any Lender (with a copy to
Agent) from time to time, Borrower shall promptly compensate such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:



          (a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);




          (b) any failure by Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by Borrower; or




          (c) any assignment of a Eurodollar Rate Loan on a day other than the last
day of the Interest Period thereof as a result of a request by Borrower
pursuant to Section 10.13;



including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were
obtained. Borrower shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing. For purposes of calculating
amounts payable by Borrower to Lenders under this Section 3.5, each
Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at
the Eurodollar Base Rate used in determining the Eurodollar Rate, as
applicable, for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Loan was in fact so
funded.




58









 








     3.6 Mitigation Obligations; Replacement of Lenders.



          (a) Designation of a Different Lending Office. If any Lender
requests compensation under Section 3.4, or Borrower is required to
pay any additional amount to any Lender, the L/C Issuer, or any Governmental
Authority for the account of any Lender or the L/C Issuer pursuant to
Section 3.1, or if any Lender gives a notice pursuant to Section
3.2, then such Lender or the L/C Issuer shall, as applicable, use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender or the L/C Issuer, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 3.1 or 3.4, as the case
may be, in the future, or eliminate the need for the notice pursuant to
Section 3.2, as applicable, and (ii) in each case, would not subject
such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender or the L/C
Issuer, as the case may be. Borrower hereby agrees to pay all reasonable costs
and expenses incurred by any Lender or the L/C Issuer in connection with any
such designation or assignment.




          (b) Replacement of Lenders. If any Lender requests compensation
under Section 3.4, or if Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 3.1, Borrower may replace such Lender in
accordance with Section 10.13.




     3.7 Survival. All of Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder, and resignation of Agent.



ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS.




     4.1 Conditions of Initial Credit Extension. The obligation of the L/C
Issuer and each Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:



          (a) Closing Documents. Agent’s receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to Agent and each of the Lenders:





     (i) executed counterparts of this Agreement and the other
Loan Documents, sufficient in number for distribution to Agent,
each Lender and Borrower;




     (ii) a Note executed by Borrower in favor of each Lender
requesting a Note;




     (iii) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as Agent may require evidencing the
identity, authority and capacity of each




59









 







Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;




     (iv) such documents and certifications as Agent may reasonably
require to evidence that each Loan Party is duly organized or
formed (including copies of Organization Documents of each Loan
Party certified by the Secretary of State of its jurisdiction of
incorporation), and that each Loan Party is validly existing, in
good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect;




     (v) a favorable opinion of counsel to the Loan Parties
substantially in the form of Exhibits K annexed hereto
acceptable to Agent addressed to Agent and each Lender, as to the
matters set forth in such Exhibits and such other matters
concerning the Loan Parties and the Loan Documents as the Required
Lenders may reasonably request;




     (vi) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance
by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses
and approvals shall be in full force and effect, or (B) stating
that no such consents, licenses or approvals are so required;




     (vii) a certificate signed by a Responsible Officer of
Borrower certifying (A) that the conditions specified in
Sections 4.2(a) and (b) have been satisfied, and (B) that
there has been no event or circumstance since June 30, 2008 that
has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;




     (viii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect
and that Agent on behalf of Lenders has been named as additional
insured and/or loss payee thereunder to the extent required under
Section 6.7;




     (ix) a duly completed Compliance Certificate as of June
30, 2008, signed by a Responsible Officer of Borrower;




     (x) evidence that (A) all commitments under the Credit
Agreement dated as of January 31, 2005 among Borrower, Bank of
America, as agent and 1/c issuer and the lenders from time to time
party thereto (as amended, the “Existing Credit Agreement”)
have been or concurrently with the Closing Date are being
terminated pursuant to a payoff letter in form and substance
satisfactory to Agent, (B) all outstanding amounts thereunder have been or concurrently
with the Closing Date are being paid in full, (C) any Liens
securing obligations under the




60











 






Existing Credit Agreement have been or concurrently with the
Closing Date are being released, and (D) arrangements satisfactory
to Agent have been made with respect to any letters of credit
outstanding thereunder;




     (xi) an officers’ certificate of each Loan Party dated the
Closing Date, substantially in the form of Exhibit J annexed hereto
and with appropriate attachments, in each case demonstrating that,
after giving effect to the consummation of the transactions
contemplated by the Loan Documents, such Loan Party on a
consolidated basis will be Solvent; and




     (xii) such other assurances, certificates, documents,
consents or opinions as Agent, the L/C Issuer, the Swing
Line Lender or the Required Lenders reasonably may require.



          (b) Fees, Any fees required to be paid on or before the
Closing Date (whether pursuant to the terms hereof, the Fee Letter or
otherwise) shall have been paid.




          (c) Attorneys’ Fees. Unless waived by Agent, Borrower shall have
paid all Attorney Costs of Agent to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between Borrower
and Agent).




          (d) Closing Date. The Closing Date shall have occurred on or
before October 8, 2008.




          (e) No Litigation. No action, suit, investigation or proceeding
shall be pending or threatened in any court or before any arbitrator or
Governmental Authority that purports or could reasonably be expected to (i)
have a Material Adverse Effect on Borrower, or (ii) affect any transaction
contemplated hereunder or the ability of Borrower or any other Loan Party to
perform their respective obligations under the Loan Documents to which they
are a party.




          (f) Security Interests in Personal and Mixed Property. Agent
shall have received evidence satisfactory to it that each Loan Party shall
have taken or caused to be taken all such actions, executed and delivered or
caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Agent, desirable in
order to create in favor of Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority Lien (except for
Liens permitted under clauses (b) through (i) of Section 7.1) on the
entire personal and mixed property Collateral. Such actions shall include the
following:





     (i) Delivery to Agent of each Collateral Document,
including the Security Agreement, duly executed by each Loan
Party;




     (ii) Stock Certificates; Instruments. Delivery to
Agent of (a) certificates (which certificates shall be accompanied
by irrevocable undated



61









 






stock power, duly endorsed in blank and otherwise satisfactory in
form and substance to Agent) representing all Equity Interests
pledged pursuant to the Security Agreement, and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Agent) evidencing any Collateral;




     (iii) Lien Searches and UCC Termination Statements.
Delivery to Agent of (a) the results of a recent search, by a
Person satisfactory to Agent, of all effective UCC financing
statements and all judgment and tax lien filings (or similar
filings in the applicable foreign jurisdictions) which may have
been made with respect to any personal or mixed property of
Borrower or any Subsidiary that is a Loan Party, together with
copies of all such filings disclosed by such search, and (b) UCC
termination statements (or similar terminations in the applicable
foreign jurisdictions) duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements (or similar
filings in the applicable foreign jurisdictions) disclosed in such
search (other than any such financing statements in respect of
Liens permitted to remain outstanding pursuant to the terms of this
Agreement).




     (iv) UCC Financing Statements. Delivery to Agent of
UCC financing statements, with respect to all personal and mixed
property Collateral of such Loan Party, for filing in all
jurisdictions as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests created in the
Collateral pursuant to the Collateral Documents;




     (v) Cover Sheets, Etc. Delivery to Agent of all cover
sheets or other documents or instruments required to be filed with
any IP Filing Office in order to create or perfect Liens in respect
of any IP Collateral, together with releases duly executed (if
necessary) of security interests by all applicable Persons for filing
in all applicable jurisdictions as may be necessary to terminate any
effective filings in any IP Filing Office in respect of any IP
Collateral (other than any such filings in respect of Liens permitted
to remain outstanding pursuant to the terms of this Agreement); and




     (vi) Delivery to Agent of evidence that all other action that
Agent may deem necessary or desirable in order to perfect the Liens
created under the Security Agreement has been taken (including
receipt of any payoff letters, Landlord Waivers to the extent
obtained prior to the Closing Date and Control Agreements to the
extent obtained prior to the Closing Date).



          (g) [Reserved].




          (h) Financial Statements; Business Plan. On or before the Closing
Date, Agent shall have received copies of (i) the Audited Financial
Statements, (ii) the unaudited consolidated balance sheet of Borrower and its
Subsidiaries dated June 30,2008, and the related consolidated statements of
income or operations and cash flows for the fiscal quarter ended on such date,
and (iii) a business plan and budget of Borrower and its Subsidiaries on a





62












 




consolidated basis, including forecasts prepared by management of Borrower, of
consolidated balance sheets and statements of income or operations and cash
flows of Borrower and its Subsidiaries on an annual basis for the five years
following the Closing Date.




          (i) Material Intellectual Property Licenses. On or before the
Closing Date, Agent shall have received copies of all documentation evidencing
Material Intellectual Property Licenses.




          (j) Other Information and Certifications. Agent shall have
received, in form and substance reasonably satisfactory to it, all such
reports, audits or certifications as it may reasonably request.




     Without limiting the generality of the provisions of the last paragraph of
Section 9.3, for purposes of determining compliance with the conditions
specified in this Section 4.1, each Lender that has signed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless
Agent shall have received notice from such Lender prior to the proposed Closing
Date specifying its objection thereto.



     4.2 Conditions to all Credit Extensions. The obligation of each Lender to
honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Committed Loans to the other Type, or a
continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:



          (a) The representations and warranties of Borrower and each other Loan
Party contained in Article V or any other Loan Document, or which are
contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and correct on and as of the date of such
Credit Extension, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and except that for purposes of this
Section 4.2, the representations and warranties contained in
subsections (a) and (b) of Section 5.5 shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.1.




          (b) No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.




          (c) After giving effect to the proposed Credit Extension, (i) Total
Outstandings shall not exceed the Aggregate Commitments then in effect, (ii)
if the proposed Credit Extension is a Swing Line Loan, the Outstanding Amount
of Swing Line Loans shall not exceed the Swing Line Sublimit, and (iii) if the
proposed Credit Extension is a Letter of Credit, the Outstanding Amount of L/C
Obligations shall not exceed the L/C Sublimit.




          (d) Agent and, if applicable, the L/C Issuer or the Swing Line Lender
shall have received a Request for Credit Extension in accordance with the
requirements hereof.




63









 







Each Request for Credit Extension (other than a Committed Loan Notice
requesting a conversion of Committed Loans to the other Type, or a continuation
of Eurodollar Rate Loans) submitted by Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 4.2(a), (b) and (c) have been satisfied on and as of the date of
the applicable Credit Extension.




ARTICLE V REPRESENTATIONS AND WARRANTIES.




     Borrower represents and warrants to Agent and the Lenders that:



     5.1 Existence, Qualification and Power; Compliance with Laws. Each Loan
Party and each Material Subsidiary thereof (a) is duly organized or formed,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, authorizations, consents and approvals to
(i) own or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party,
(c) is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance with all Laws; except in each case referred to in clauses (a) (as to
the good standing of Loan Parties other than Borrower) (b)(i), (c) or (d) of
this Section 5.1, to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.



     5.2 Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b)
conflict with in any material respect or result in any material breach or
contravention of, or the creation of any material Lien under, or require any
payment to be made under (i) any Contractual Obligation to which such Person is
a party or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law applicable to any Loan Party.



     5.3 Governmental Authorization; Other Consents. Except for filings
necessary to perfect Liens granted under the Loan Documents and other
immaterial filings with any Governmental Authority, no approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by any Loan Party of
this Agreement or any other Loan Document.



     5.4 Binding Effect. This Agreement has been, and each other Loan Document,
when delivered hereunder, will have been, duly executed and delivered by each
Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally or by equitable principles.



64









 





     5.5 Financial Statements; No Material Adverse Effect.



          (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present, in all material
respects, the financial condition of Borrower and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all
material indebtedness and other liabilities, direct or contingent, of Borrower
and its Subsidiaries as of the date thereof required to be disclosed under
GAAP, including material liabilities for taxes, commitments and Indebtedness.




          (b) The unaudited consolidated balance sheet of Borrower and its
Subsidiaries dated June 30, 2008, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present, in all
material respects, the financial condition of Borrower and its
Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii),
to the absence of footnotes and to normal year-end audit adjustments.
Schedule 5.5 sets forth all material indebtedness and other
liabilities, direct or contingent, of Borrower and its consolidated
Subsidiaries as of the date of such financial statements, including
material liabilities for taxes, commitments and Indebtedness.




          (c) Since the date of the Audited Financial Statements, there has been no
event or circumstance, in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.




          (d) The consolidated forecasted balance sheets, statements of income and
cash flows of Borrower and its Subsidiaries delivered pursuant to Section
4.1 or Section 6.1 were prepared in good faith on the basis of
assumptions which Borrower believed were fair in light of the conditions
existing at the time of delivery of such forecasts, and represented, at the
time of delivery, Borrower’s best estimate of its future financial condition
and performance (it being understood that projections are subject to
significant uncertainties and contingencies, many of which are beyond
Borrower’s control, and that no assurance can be given that projections will
be realized).




     5.6 Litigation. There are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of Borrower, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against Borrower or any of its Subsidiaries or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby, or (b)
either individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.



     5.7 No Default. Neither any Loan Party nor any Subsidiary thereof is in
default under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred




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and is continuing or is reasonably likely to result from the
consummation of the transactions contemplated by this Agreement or
any other Loan Document.



     5.8 Ownership of Property; Liens. Each of Borrower and each
Subsidiary has good record and marketable title in fee simple to, or
valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The property of Borrower and its
Subsidiaries is subject to no Liens, other than Liens permitted by
Section 7.1.



     5.9 Environmental Compliance. Borrower and its Subsidiaries conduct
in the ordinary course of business a review of the effect of existing
Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof Borrower
has reasonably concluded that, except as specifically disclosed in
Schedule 5.9, such Environmental Laws and claims could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.



     5.10 Insurance. The properties of Borrower and its Subsidiaries are
insured with reputable insurance companies not Affiliates of Borrower, in
such amounts (after giving effect to any self-insurance compatible with
the following standards), with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where Borrower or the applicable
Subsidiary operates.



     5.11 Taxes. Borrower and its Subsidiaries have filed all Federal,
state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except (a) those
which are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided
in accordance with GAAP and (b) immaterial taxes. There is no proposed
tax assessment against Borrower or any Subsidiary that would, if made,
have a Material Adverse Effect.



     5.12 ERISA Compliance.



          (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and
other Federal or state Laws. Each Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto or the
remedial amendment period to file such application has not expired and,
to the best knowledge of Borrower, nothing has occurred which would
prevent, or cause the loss of, such qualification. Borrower and each
ERISA Affiliate have made all required contributions to each Plan
subject to Section 412 of the Code in all material respects, and no
application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect
to any Plan.



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          (b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected
to have a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected
to result in a Material Adverse Effect.




          (c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
neither Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any material liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any
material liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in
a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.




     5.13 Subsidiaries; Equity Interests. As of the Closing Date, no
Loan Party has any Subsidiaries other than those specifically disclosed
in Part (a) of Schedule 5.13, and all of the outstanding Equity
Interests in such Subsidiaries have been validly issued, are fully paid
and nonassessable and are owned by a Loan Party in the amounts specified
on Part (a) of Schedule 5.13 free and clear of all Liens except
those created under the Collateral Documents. No Loan Party has any
equity investments or owns any Equity Interests in any other corporation
or entity other than those specifically disclosed in Part (b) of
Schedule 5.13 (and those not yet required to be set forth on an
update to Schedule 5.13 pursuant to Section 6.2(g)). Set
forth on Part (c) of Schedule 5.13 is a complete
and accurate list of all Loan Parties (other than those not yet
required to be set forth on an update to Schedule 5.13 pursuant
to Section 6.2(g)), showing as of the Closing Date (as to each
Loan Party) the jurisdiction of its incorporation, the address of its
principal place of business and its U.S. taxpayer identification number
or, in the case of any non-U.S. Loan Party that does not have a U.S.
taxpayer identification number, its unique identification number issued
to it by the jurisdiction of its incorporation. The copy of the charter
of each Loan Party and each amendment thereto provided pursuant to
Section 4.1(a)(iv) or any amendments or modifications thereto
delivered after the Closing Date (which amendments or modifications
comply with Section 7.13) is a true and correct copy of each
such document, each of which is valid and in full force and effect.
Neither the book value nor the fair market value of the total assets of
OSC (without netting against its liabilities and without taking into
account any intercompany loan (if any) receivable by OSC as of the
Closing Date and described in Schedule 7 of the Security Agreement)
exceeds $10,000 and OSC does not and will not engage in any operations
or business other than owning its IP Rights. Neither the book value nor
the fair market value of the total assets of any Dormant Foreign
Subsidiary (without netting against its liabilities and without taking
into account any intercompany loan (if any) receivable by such Dormant
Foreign Subsidiary as of the Closing Date and described in Schedule 7 of
the Security Agreement) exceeds $100,000 and none of the Dormant Foreign
Subsidiaries engages in or will engage in any operations or business.



     5.14 Margin Regulations; Investment Company Act; Public
Utility Holding Company Act.



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          (a) Borrower is not engaged and will not engage, principally or as
one of its important activities, in the business of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the
FRB), or extending credit for the purpose of purchasing or carrying
margin stock. No part of the proceeds of any Credit Extensions
hereunder will be used for “purchasing” or “carrying” “margin stock” as
so defined or for any purpose which violates, or which would be
inconsistent with, the provisions of Regulations U or X of the FRB.




          (b) None of Borrower, any Person Controlling Borrower, or any
Subsidiary (i) is a “holding company,” or a “subsidiary company” of a
“holding company,” or an “affiliate” of a “holding company” or of a
“subsidiary company” of a “holding company,” within the meaning of the
Public Utility Holding Company Act of 1935, or (ii) is or is required
to be registered as an “investment company” under the Investment
Company Act of 1940.




     5.15 Disclosure. Borrower has disclosed to Agent and Lenders all
agreements, instruments and corporate or other restrictions to which it
or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally)
by or on behalf of any Loan Party to Agent or any Lender in connection
with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder or under any other Loan Document (in
each case, as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that, with respect to projected financial information,
Borrower represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time.



     5.16 Compliance with Laws. Each Loan Party and each Subsidiary
thereof is in compliance in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to
it or to its properties, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted
or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.



     5.17 Intellectual Property; Licenses, Etc.



          (a) Borrower and its Subsidiaries own, or possess the right to
use in all material respects, all of the trademarks, service marks,
trade names, copyrights, patents, patent rights, franchises, licenses
and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other
Person, and Schedule 5.17(a) sets forth a complete and
accurate list of all such IP Rights owned or used by Borrower and each
of its Subsidiaries (other than those held or used pursuant to a
license and those not yet required to be set forth on an update to
Schedule 5.17 pursuant to Section 6.2(g));





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          (b) To the best knowledge of Borrower, no slogan or other
advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by Borrower
or any Subsidiary infringes in any material respect upon any rights
held by any other Person; and




          (c) Borrower has provided to Agent documentation evidencing all
Material Intellectual Property Licenses (except those not yet required
to be delivered pursuant to Section 6.2(h)) and each such
Material Intellectual Property License is in full force and effect in
all material respects and no Loan Party is in breach of any such
Material Intellectual Property License or any provision of such
documentation in any material respect. Schedule 5.17(b) sets
forth a complete and accurate list of all Material Intellectual
Property Licenses (other than those not yet required to be set forth on
an update to Schedule 5.17 pursuant to
Section 6.2(g) or (h)).




          (d) No claim or litigation regarding any of the foregoing is
pending or, to the best knowledge of Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.




     5.18 Rights in Collateral; Priority of Liens.



          (a) Borrower and each other Loan Party own the property (or rights
or interest therein) granted by it as Collateral under the Collateral
Documents, free and clear of any and all Liens in favor of third
parties, except for Liens permitted under Section 7.1. The
execution and delivery of the Collateral Documents by Loan Parties and
the delivery to Agent of the Pledged Collateral (all of which Pledged
Collateral has been so delivered) are effective to create in favor of
Agent for the benefit of Lenders, as security for the respective
Obligations (as defined in the applicable Collateral Document in
respect of any Collateral), a valid and perfected First Priority Lien
on all of the Collateral, subject to Liens permitted under clauses (b)
through (i) of Section 7.1, and all filings and other actions
necessary or desirable to perfect and maintain the perfection and first
priority status of such Liens have been duly made or taken and remain
in full force and effect, subject to Liens permitted under clauses (b)
through (i) of Section 7.1, other than the filing of any UCC
financing statements delivered to Agent for filing (but not yet filed),
the periodic filing of UCC continuation statements in respect of UCC
financing statements filed by or on behalf of Agent and other action
described in Section 4(b) of the Security Agreement. Upon the proper
filing of UCC financing statements, and the taking of the other actions
required by the Required Lenders as described in
Section 4(b) of the Security Agreement, the Liens granted pursuant
to the Collateral Documents will constitute, subject to Liens permitted
under clauses (b) through (i) of Section 7.1, valid and
enforceable first, prior and perfected Liens on the Collateral in favor
of Agent, for the ratable benefit of Agent and Lenders.




          (b) No Governmental Authorization is required for either (i) the
pledge or grant by any Loan Party of the Liens purported to be created
in favor of Agent pursuant to any of the Collateral Documents, or (ii)
the exercise by Agent of any rights or remedies in respect of any
Collateral (whether specifically granted or created pursuant to any of
the Collateral Documents or created or provided for by applicable law),
except for filings or recordings contemplated by Section
5.18(a) and except as may be required, in connection with the



69









 






disposition of any Pledged Collateral, by laws generally affecting the
offering and sale of securities and in connection with the disposition
of any government receivables. As of the Closing Date, Borrower and its
Subsidiaries have received no written notice of any pending or
threatened condemnation proceeding, exercise of the power of eminent
domain by any Governmental Authority, or any similar proceeding
affecting any Facility or any interest therein. As of the Closing Date,
to the best of Borrower’s knowledge, after due investigation and
inquiry, no such proceeding is pending, contemplated or threatened.




          (c) Except such (i) as may have been filed in favor of Agent as
contemplated by Section 5.18(a), (ii) as set forth on
Schedule 5.18 annexed hereto or (iii) financing statements
related to Liens permitted by Section 7.1(b), (h) or (i), (A) no
effective UCC financing statement, fixture filing or other instrument
similar in effect covering all or any part of the Collateral is on file
in any filing or recording office, and (B) no effective filing granting
Liens covering all or any part of the IP Collateral is on file in any
IP Filing Office.




          (d) The pledge of the Pledged Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System; provided that the
foregoing does not address Agent’s obtaining a Form U-l from Borrower.




          (e) All information supplied to Agent by or on behalf of any Loan
Party with respect to any of the Collateral (in each case taken as a
whole with respect to any particular Collateral) is accurate and
complete in all material respects. All representations and warranties
of the Loan Parties set forth in the Collateral Documents are true and
correct.




     5.19 Solvency. As of the Closing Date, the Loan Parties,
together with their Subsidiaries on a consolidated basis, are
Solvent.



     5.20 Casualty, Etc. Neither the businesses nor the properties of any
Loan Party or any of its Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.



     5.21 No Medicare/Medicaid Receivables. As of the Closing Date,
neither Borrower nor any of its Subsidiaries has rights to any Medicare
or Medicaid receivables. After the Closing Date, neither Borrower nor any
of its Subsidiaries has rights to any Medicare or Medicaid receivables
other than Medicare or Medicaid receivables not exceeding at any time
$5,000,000 in the aggregate, provided that Loan Parties shall be
in compliance with the requirements of Section 6.20 at any time
that any Loan Party has any rights to any Medicare or Medicaid
receivables.



ARTICLE VI AFFIRMATIVE COVENANTS.




     So long as any Lender shall have any Commitment hereunder, any Loan
or other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, Borrower shall, and shall
(except in the case of the covenants set forth in Sections 6.1,
6.2, 6.3 and 6.11) cause each Subsidiary to:



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     6.1 Financial Statements. Deliver to Agent and each Lender, in
form and detail satisfactory to Agent and the Required Lenders:



          (a) as soon as available, but in any event within 90 days after
the end of each fiscal year of Borrower, a consolidated balance sheet
of Borrower and its Subsidiaries as at the end of such fiscal year, and
the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth
in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP,
audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing
reasonably acceptable to the Required Lenders, which report and opinion
shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like
qualification or
exception or any qualification or exception as to the scope of
such audit;




          (b) as soon as available, but in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year
of Borrower, a consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income or operations and cash flows for such
fiscal quarter and for the portion of Borrower’s fiscal year then
ended, setting forth in each case in comparative form the figures for
the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable
detail and certified by a Responsible Officer of Borrower as fairly
presenting the financial condition, results of operations and cash
flows of Borrower and its Subsidiaries in accordance with GAAP, subject
only to normal year-end audit adjustments and the absence of footnotes;
and




          (c) as soon as available, but in any event not more than 30 days
after the end of each fiscal year of Borrower, forecasts prepared by
management of Borrower, in substantially the form provided at closing,
of consolidated balance sheets and statements of income or operations
and cash flows of Borrower and its Subsidiaries on a quarterly basis
for the immediately following fiscal year.



As to any information contained in materials furnished pursuant to
Section 6.2(d), Borrower shall not be separately required to
furnish such information under Section 6.1(a) or (b)
above, but the foregoing shall not be in derogation of the obligation of
Borrower to furnish the information and materials described in
Sections 6.1(a) and (b) above at the times specified therein.




     6.2 Certificates; Other Information. Deliver to Agent and each
Lender, in form and detail satisfactory to Agent and the Required
Lenders:



          (a) concurrently with the delivery of the financial statements
referred to in Section 6.1 (a), a certificate of its
independent certified public accountants certifying such financial
statements and stating that in making the examination necessary
therefor no knowledge was obtained of any Default under the financial
covenants set forth herein or, if any such Default shall exist, stating
the nature and status of such event;





71












 





          (b) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and (b), a duly completed
Compliance Certificate signed by a Responsible Officer of Borrower;




          (c) promptly after any request by Agent or any Lender, copies of
any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the
board of directors) of Borrower by independent accountants in
connection with the accounts or books of Borrower or any Subsidiary, or
any audit of any of them;




          (d) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication
sent to the stockholders of Borrower, and copies of all annual,
regular, periodic and special reports and registration statements which
Borrower may file or be required to file with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, and not otherwise required to be delivered to
Agent pursuant hereto;




          (e) promptly upon request by Agent, but no more than once per
fiscal year unless an Event of Default has occurred and is continuing,
a certificate from Borrower’s insurance broker(s) in form reasonably
satisfactory to Agent outlining all material insurance coverage
maintained as of the date of such certificate by Borrower and its
Subsidiaries;




          (f) promptly, and in any event within five Business Days after
receipt thereof by any Loan Party or any Subsidiary thereof, copies of
each notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning
any investigation or possible investigation or other inquiry by such
agency regarding financial or other operational results of any Loan
Party or any Subsidiary thereof;




          (g) as soon as available after the end of each fiscal year, but in
any event within 30 days after the end of each fiscal year of Borrower,
(i) a report supplementing Schedule 5.17(a), setting forth (A)
a list of registration numbers for all patents, trademarks, service
marks, trade names and copyrights awarded to Borrower or any Subsidiary
thereof during such fiscal year and (B) a list of all patent
applications, trademark applications, service mark applications, trade
name applications and copyright applications submitted by Borrower or
any Subsidiary thereof during such fiscal year and the status of each
such application; and (ii) a report supplementing Schedule 5.13
containing a description of all changes in the information included
in such Schedules as may be necessary for such Schedules to be
accurate and complete, each such report to be signed by a Responsible
Officer of Borrower and to be in a form reasonably satisfactory to
Agent;




          (h) concurrently with the delivery of the financial statements
referred to in Section 6.1(a) and (b), documentation evidencing any
Material Intellectual Property License entered into during the period
covered by such financial statements and a report supplementing
Schedule 5.17(b) with respect to each such license; and



72









 







          (i) promptly, such additional information regarding the
business, financial or corporate affairs of Borrower or any
Subsidiary, or compliance with the terms of the Loan Documents, as
Agent or any Lender may from time to time reasonably request.




     Documents required to be delivered pursuant to
Section 6.1(a) or (b) or Section 6.2(d) (to the extent any such
documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which Borrower posts such documents, or
provides a link thereto on Borrower’s website on the Internet at the
website address listed on Schedule 10.2; or (ii) on which such
documents are posted on Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and Agent have access (whether a
commercial, third-party website or whether sponsored by Agent);
provided that: (i) Borrower shall deliver paper copies of such
documents to Agent or any Lender that requests Borrower to deliver such
paper copies until a written request to cease delivering paper copies is
given by Agent or such Lender and (ii) Borrower shall notify Agent and
each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained
herein, in every instance Borrower shall be required to provide paper
copies of the Compliance Certificates required by Section 6.2(b)
to Agent. Except for such Compliance Certificates, Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to
monitor compliance by Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.



     Borrower hereby acknowledges that (a) Agent and/or the Arranger will
make available to the Lenders and the L/C Issuer materials and/or
information provided by or on behalf of Borrower
hereunder (collectively, “Borrower Materials”) by posting
Borrower Materials on IntraLinks or another similar electronic system
(the “Platform”) and (b) certain of the Lenders (each, a
“Public Lender”) may have personnel who do not wish to receive
material non-public information with respect to Borrower or its
Affiliates, or the respective securities of any of the foregoing, and who
may be engaged in investment and other market-related activities with
respect to such Persons’ securities. Borrower hereby agrees that it will
use commercially reasonable efforts to identify that portion of Borrower
Materials that may be distributed to the Public Lenders and that (w) all
such Borrower Materials shall be clearly and conspicuously marked
“PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower
Materials “PUBLIC,” Borrower shall be deemed to have authorized Agent,
the Arranger, the L/C Issuer and the Lenders to treat such Borrower
Materials as not containing any material non-public information (although
it may be sensitive and proprietary) with respect to Borrower or its
securities for purposes of United States Federal and state securities
laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in
Section 10.7); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform
designated “Public Side Information;” and (z) Agent and the Arranger
shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform
not designated “Public Side Information.”



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     6.3 Notices. Promptly after any Responsible Officer or any other
officer (including without limitation any senior vice president,
executive vice president or any other vice president) of any Loan Party
obtains knowledge or receives notice thereof, notify Agent and each
Lender:



          (a) of the occurrence of any Default;




          (b) of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) any
breach or non-performance of, or any default under, a Contractual
Obligation of Borrower or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between Borrower
or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any development in, any litigation or proceeding
affecting Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws, that has resulted or could reasonably
be expected to result in a Material Adverse Effect;




          (c) of the occurrence of any ERISA Event;




          (d) of any material change in accounting policies or financial
reporting practices by Borrower or any Subsidiary, including any
determination by Borrower referred to in Section 2.10(b); and




          (e) of any loss or termination of any Material Intellectual Property
License.



Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer of Borrower setting forth details of the
occurrence referred to therein and stating what action Borrower has
taken and proposes to take with respect thereto. Each notice pursuant to
Section 6.3(a) shall describe with particularity any provisions
of this Agreement and any other Loan Document that have been breached.




     6.4 Payment of Obligations. Pay and discharge as the same shall
become due and payable, all its obligations and liabilities, including
(a) all Tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by
Borrower or such Subsidiary; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property, except for Liens permitted
under Section 7.1; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness, except to the
extent that (i) such unpaid claims, obligations and liabilities under
clauses (a), (b) and (c) do not exceed $500,000 individually or in the
aggregate and (ii) in the case of such claims under clause (b), such
claims, if unpaid, would not become a Lien that is not permitted under
Section 7.1.



     6.5 Preservation of Existence, Etc. (a) Preserve, renew and
maintain in full force and effect its legal existence and good standing
under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.4 or 7.5; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses
and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered




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patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.




     6.6 Maintenance of Properties; Application of Net
Insurance/Condemnation Proceeds.



          (a) Maintenance of Properties, (i) Maintain, preserve and protect
all of its
material properties and equipment necessary in the operation of its
business in good working
order and condition, ordinary wear and tear excepted; (ii) make all
necessary repairs thereto
and renewals and replacements thereof except where the failure to do so
could not reasonably
be expected to have a Material Adverse Effect; and (iii) use the standard
of care typical in the
industry in the operation and maintenance of its facilities.




          (b) Application of Net Insurance/Condemnation Proceeds.





     (i) Business Interruption Insurance. Upon receipt by
Borrower or any of its Subsidiaries of any business interruption
insurance proceeds constituting Net Insurance/Condemnation
Proceeds, (a) so long as no Event of Default or Default shall have
occurred and be continuing, Borrower or such Subsidiary may retain
and apply such Net Insurance/Condemnation Proceeds for working
capital purposes, and (b) if an Event of Default or Default shall
have occurred and be continuing, Borrower shall apply an amount
equal to such Net Insurance/ Condemnation Proceeds to prepay the
Loans (and/or the Aggregate Commitments shall be reduced) as
provided in Section 2.5(d)(ii); provided that if
Borrower makes a written request to Lenders through Agent
requesting that it not be required to apply such an amount to
prepay the Loans (and/or to reduce the Aggregate Commitments), then
Borrower shall not be required to apply such an amount to prepay
the Loans (and/or to reduce the Aggregate Commitments) so long as
Required Lenders in their sole discretion consent to such request
in writing within 30 days of such request (and Lenders hereby agree
to respond to such request in a timely fashion).




     (ii) Net Insurance/Condemnation Proceeds Received by
Borrower. Upon receipt by Borrower or any of its Subsidiaries
of any Net Insurance/Condemnation Proceeds other than from business
interruption insurance, (a) so long as no Event of Default or
Default shall have occurred and be continuing, Borrower shall, or
shall cause one or more of its Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets
in respect of which such Net Insurance/Condemnation Proceeds were
received or, to the extent not so applied, to either (1) prepay the
Loans (and/or the Aggregate Commitments shall be reduced) as
provided in Section 2.5(d)(ii), or (2) so long as no
Default or Event of Default shall have occurred and be continuing
and to the extent that aggregate Net Insurance/Condemnation
Proceeds so reinvested or proposed to be reinvested under this
Section 6.6(b)(ii) or Section 2.5(d)(ii) from the
Closing Date through the date of determination do not exceed
$10,000,000, deliver to Agent an officer’s certificate setting
forth (x) that portion of such Net



75









 







Insurance/Condemnation Proceeds that Borrower or such Subsidiary
intends to
reinvest in equipment or other productive assets of the general
type used in the business of Borrower and its Subsidiaries within
180 days of such date of receipt and (y) the proposed use of such
portion of the Net Insurance/Condemnation Proceeds and such other
information with respect to such reinvestment as Agent may
reasonably request, and Borrower shall, or shall cause one or more
of its Subsidiaries to, promptly and diligently apply such portion
to such reinvestment purposes; provided, however, that, pending
such reinvestment, such portion of the Net Insurance/Condemnation
Proceeds shall be applied to prepay outstanding Loans (without a
reduction in the Aggregate Commitments) to the full extent thereof,
and (b) if an Event of Default or Default shall have occurred and
be continuing, Borrower shall apply an amount equal to such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the
Aggregate Commitments shall be reduced) as provided in Section
2.5(d)(ii); provided that if Borrower makes a written
request to Lenders through Agent requesting that it not be required
to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments), then Borrower shall not be required to
apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments) so long as Required Lenders in their sole
discretion consent to such request in writing within 30 days of
such request (and Lenders hereby agree to respond to such request
in a timely fashion).




     (iii) Net Insurance/Condemnation Proceeds Received by
Agent. Upon receipt by Agent of any Net Insurance/Condemnation
Proceeds as loss payee, (a) if and to the extent Borrower would
have been required to apply such Net Insurance/Condemnation
Proceeds (if it had received them directly) to prepay the Loans
and/or reduce the Aggregate Commitments, Agent shall, and Borrower
hereby authorizes Agent to, apply such Net Insurance/Condemnation
Proceeds to prepay the Loans (and/or the Aggregate Commitments
shall be reduced) as provided in Section 6.6(b)(ii);
provided that if Borrower makes a written request to
Lenders through Agent requesting that it not be required to apply
such an amount to prepay the Loans (and/or to reduce the Aggregate
Commitments), then Borrower shall not be required to, and Agent
shall not, apply such an amount to prepay the Loans (and/or to
reduce the Aggregate Commitments) so long as Required Lenders in
their sole discretion consent to such request in writing within 30
days of such request (and Lenders hereby agree to respond to such
request in a timely fashion) and (b) to the extent the foregoing
clause (a) does not apply (or does not require prepayment of the
Loans and/or reduction of the Aggregate Commitments) and (1) the
aggregate amount of such Net Insurance/Condemnation Proceeds
received (and reasonably expected to be received) by Agent in
respect of any covered loss does not exceed $10,000,000, Agent
shall deliver such Net Insurance/Condemnation Proceeds to Borrower,
and Borrower shall, or shall cause one or more of its Subsidiaries
to, promptly apply such Net Insurance/ Condemnation Proceeds to the
costs of repairing, restoring, or replacing the assets in respect
of which such Net Insurance/Condemnation Proceeds were received or
to reinvest such proceeds in productive assets of the general type
used in the business of Borrower and its Subsidiaries within 180 days



76









 







of such date of receipt in accordance with the requirements of
clause (ii) above, and (2) if the aggregate amount of Net
Insurance/Condemnation Proceeds received (and reasonably expected to
be received) by Agent in respect of any covered loss exceeds
$10,000,000, Agent shall hold such Net Insurance/Condemnation
Proceeds as Collateral under the Security Agreement and, so long as
Borrower or any of its Subsidiaries proceeds diligently to repair,
restore or replace the assets of Borrower or such Subsidiary in
respect of which such Net Insurance/Condemnation Proceeds were
received or to reinvest such proceeds in productive assets, Agent
shall from time to time disburse to Borrower or such Subsidiary from
the Collateral Account, to the extent of any such Net
Insurance/Condemnation Proceeds remaining therein in respect of the
applicable covered loss, amounts necessary to pay the cost of such
repair, restoration, replacement or reinvestment after, where
applicable the receipt by Agent of invoices or other documentation
reasonably satisfactory to Agent relating to the amount of costs so
incurred and the work performed (including, if required by Agent,
lien releases and architects’ certificates); provided, however that
if at any time Agent reasonably determines (A) that Borrower or such
Subsidiary is not proceeding diligently with such repair,
restoration or replacement or (B) that such repair, restoration,
replacement or reinvestment cannot be completed with the Net
Insurance/Condemnation Proceeds then held by Agent for such purpose,
together with funds otherwise available to Borrower for such
purpose, or that such repair, restoration, replacement or
reinvestment cannot be completed within 180 days after the receipt
by Agent of such Net Insurance/Condemnation Proceeds, Agent shall,
and Borrower hereby authorizes Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the
Aggregate Commitments shall be reduced) as provided in Section 2.5(d)(ii).



     6.7 Maintenance of Insurance. Maintain with reputable insurance companies
not
Affiliates of Borrower, insurance with respect to its properties and
business against loss or
damage of the kinds customarily insured against by Persons engaged in the
same or similar
business, of such types and in such amounts (after giving effect to any
self-insurance compatible
with the following standards) as are customarily carried under similar
circumstances by such
other Persons and providing for not less than 30 days’ prior notice to
Agent of termination, lapse
or cancellation of such insurance. Each such insurance policy shall (a) in
the case of each such
insurance policy other than each business interruption and casualty
insurance policy, name Agent
for the benefit of Lenders as an additional insured thereunder as its
interests may appear and
(b) in the case of each business interruption and casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to Agent, that names Agent for the benefit of Lenders as the loss payee
thereunder for any covered loss and provides for at least 30 days prior written
notice to Agent of any modification or cancellation of such policy.



     6.8 Compliance with Laws and Contractual Obligations.



          (a) Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (i) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (ii) the





77












 




failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.




          (b) Comply in all material respects with all Contractual Obligations,
except in such instances in which the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.




     6.9 Books and Records. (a) Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of Borrower or such Subsidiary, as the case may be; and (b)
maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower or such Subsidiary, as the case may be. Borrower
shall maintain at all times books and records pertaining to the Collateral in
such detail, form and scope as Agent or any Lender shall reasonably require.



     6.10 Inspection Rights. Permit representatives and independent contractors
of Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants and to conduct up to
two collateral audits during any twelve month period, all at the expense of
Borrower and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Borrower;
provided, however, that when an Event of Default exists Agent
or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of Borrower at any time
during normal business hours and without advance notice.



     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions (i) on the
Closing Date, to refinance certain existing Indebtedness, and (ii) for working
capital and other general corporate purposes (including, without limitation,
Capital Expenditures and Permitted Acquisitions) not in contravention of any
Law or of any Loan Document.



     6.12 Financial Covenants.



          (a) Funded Debt to EBITDA Ratio. Maintain on a consolidated basis
a Funded Debt to EBITDA Ratio not exceeding 3.00:1.00 as of the end of each
fiscal quarter of Borrower. This ratio will be calculated at the end of each
reporting period for which this Agreement requires Borrower to deliver
financial statements, using the results of the four-fiscal quarter period
ending with that reporting period.




          (b) Interest Coverage Ratio. Maintain on a consolidated basis an
Interest Coverage Ratio not less than 3.50:1.00 as of the end of each fiscal
quarter of Borrower. This ratio will be calculated at the end of each
reporting period for which this Agreement requires Borrower to deliver
financial statements, using the results of the four-fiscal quarter period
ending with that reporting period.




     6.13 Additional Guarantors. Notify Agent at the time that any Person
becomes a Material Subsidiary that is a Domestic Subsidiary, and promptly
thereafter (and in any event



78









 







within 30 days), cause such Person to (a) become a Guarantor by executing and
delivering to Agent a counterpart of the Guaranty or such other document as
Agent shall deem appropriate for such purpose, and (b) execute and deliver to
Agent a counterpart of the Security Agreement and take such further actions and
execute all such further documents and instruments as may be necessary or, in
the opinion of the Agent, for the benefit of the Lenders, except for Liens
permitted under clause (b) through (i) of Section 7.1, a valid
perfected First Priority Lien on all of the personal and mixed property assets
of such Material Subsidiary described in the applicable forms of Collateral
Documents. In addition, Borrower shall, or shall cause the Subsidiary that owns
the Equity Interests of such Person to, execute and deliver to Agent a
supplement to the Security Agreement and to deliver to Agent all certificates
representing such Equity Interests of such Person (accompanied by irrevocable
undated stock powers, duly endorsed in blank) and deliver to Agent documents of
the types referred to in clauses (iii) and (iv) of Section 4.1 (a) and
favorable opinions of counsel to the Loan Parties and such Person addressed to
Agent and Lenders (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
this Section 6.13), all in form, content and scope reasonably
satisfactory to Agent.



     6.14 Collateral Records. To execute and deliver promptly, and to cause
each other Loan Party to execute and deliver promptly, to Agent, from time to
time, solely for Agent’s convenience in maintaining a record of the Collateral,
such written statements and schedules as Agent may reasonably require
designating, identifying or describing the Collateral. The failure by Borrower
or any other Loan Party, however, to promptly give Agent such statements or
schedules shall not affect, diminish, modify or otherwise limit the Liens on
the Collateral granted pursuant to the Collateral Documents.



     6.15 Cash Management System. Borrower shall, and shall cause each of its
Domestic Subsidiaries to, at all times after the 180th day after the
Closing Date use commercially reasonable efforts to maintain all of their
respective Deposit Accounts, Securities Accounts and their respective treasury
management arrangements, depository and other cash management arrangements with
Bank of America, N.A. or other institutions providing a Control Agreement in
form attached hereto or otherwise acceptable to Agent. Borrower shall not
establish or maintain, and shall not permit any of its Domestic Subsidiaries to
establish or maintain, any Deposit Account or Securities Account (other than
Deposit Accounts maintained at Bank of America, N.A. and other than Excluded
Accounts) unless Borrower or such Subsidiary, as the case may be, has (i)
executed and delivered to Agent a Control Agreement with respect to such
Deposit Account or Securities Account and (ii) taken all other steps necessary
or, in the opinion of Agent, desirable to ensure that Agent has a perfected
security interest in such account.



     6.16 Security Interests.



          (a) General Covenant. To, and to cause each other Loan Party to,
(i) in the exercise of Borrower’s commercial reasonable judgment, defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein, (ii) comply with the requirements of all
state and federal laws in order to grant to Agent and Lenders valid and
perfected first priority security interests in the Collateral (except for
Liens permitted under clauses (b) through (i) of Section 7.1), with
perfection, in the case of any investment property or deposit account (other
than Excluded Accounts), being effected by




79









 







giving Agent control of such investment property or deposit account, rather
than by the filing of
a UCC financing statement with respect to such investment property, and (iii)
do whatever Agent may reasonably request, from time to time, to effect the
purposes of this Agreement and the other Loan Documents, including filing
notices of liens, UCC financing statements, fixture filings and amendments,
renewals and continuations thereof; cooperating with Agent’s representatives;
keeping stock records; obtaining waivers from landlords and mortgagees and
from warehousemen and their landlords and mortgages; and, paying claims which
might, if unpaid, become a Lien on the Collateral. Agent is hereby authorized
by Borrower to file any UCC financing statements covering the Collateral
whether or not Borrower’s signatures appear thereon.




          (b) Landlord Waivers, (i) On or before January 6, 2009 or such
later date as Agent may agree in its sole discretion, deliver to Agent a fully
executed Landlord Waiver with respect to each Leasehold Property of any Loan
Party and (ii) on or before the date that any Loan Party enters into any lease
with respect to any Leasehold Property after the Closing Date, deliver to
Agent a fully executed Landlord Waiver with respect to such Leasehold Property
of such Loan Party.




          (c) Cash Management Documentation. On or before the date that is
30 days after the Closing Date or such later date as Agent may agree in its
sole discretion, deliver to Agent fully executed Control Agreements with
respect to each Loan Party’s Deposit Accounts and Securities Accounts (other
than such Deposit Accounts maintained with Bank of America, N.A. and other
than Excluded Accounts), each of which Deposit Accounts and Securities
Accounts as of the Closing Date are set forth on Schedule 4.1;
provided that if the form of the Control Agreement materially differs
from Exhibit H or I, as the case may be, then at the reasonable request of
Agent, Borrower shall concurrently deliver with such Control Agreement an
opinion of counsel in form and substance reasonably satisfactory to Agent.




     6.17 Compliance with Environmental Laws. Each Loan Party shall at all
times use all commercially reasonable efforts to remain in compliance with all
applicable Environmental Laws. Each Loan Party shall promptly take, and shall
cause each of its Subsidiaries promptly to take, any and all actions necessary
to (i) cure any violation of applicable Environmental Laws by such Loan Party
or its Subsidiaries that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, and (ii) make an appropriate
response to any Environmental Liability of such Loan Party or any of its
Subsidiaries and discharge any obligations it may have to any Person thereunder
where failure to do so could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.



     6.18 Further Assurances. At any time or from time to time upon the request
of Agent, each Loan Party will, at its expense, promptly execute, acknowledge
and deliver such further documents and do such other acts and things as Agent
may reasonably request in order to effect fully the purposes of the Loan
Documents. In furtherance and not in limitation of the foregoing, each Loan
Party shall take such actions as Agent may reasonably request from time to time
to ensure that the Obligations are guarantied by the Guarantors and are secured
by a First Priority Lien (subject to the Liens permitted by Section
7.1) on substantially all of the assets of Borrower and its Domestic
Subsidiaries and all of the outstanding Equity Interests of Borrower




80












 




and its Subsidiaries (subject to the express limitations contained in the
Loan Documents, including with respect to foreign Subsidiaries).




     6.19 Material Contracts. Except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, perform and
observe all the terms and provisions of each Material Contract to be performed
or observed by it, maintain each such Material Contract in full force and
effect, enforce each such Material Contract in accordance with its terms, and
cause each of its Subsidiaries to do so.



     6.20 Medicare/Medicaid Receivables. Conduct its business so as not to
obtain any rights to any Medicare or Medicaid receivables; provided
that Loan Parties may obtain and hold rights to Medicare or Medicaid
receivables not exceeding at any time $5,000,000 in the aggregate, so long as
(i) at least 30 days prior to obtaining any rights to Medicare or Medicaid
receivables, such Loan Party shall have given prior written notice to Agent and
Lenders of the fact that it is planning to obtain such rights and in such
notice describe the proposed transaction pursuant to which such Loan Party will
receive rights to such receivables (whether pursuant to an Acquisition or
otherwise) and (ii) prior to the earlier of such Loan Party obtaining any such
rights to Medicare or Medicaid receivables or the consummation of such
transaction, (A) Borrower shall have put into place collateral arrangements
with respect to such receivables, including control agreements and segregation
of proceeds, as may be required by Agent and, in each case, in form and
substance satisfactory to Agent and (B) any representations, covenants,
defaults and associated definitions related to such receivables and matters
related thereto as may be required by Agent shall have been added to this
Agreement pursuant to documentation in form and substance satisfactory to Agent
(and Agent and the Lenders shall have received such certificates and opinions
of counsel as may be required by Agent in connection therewith). Each Lender,
Agent and Borrower hereby agree that notwithstanding anything to the contrary
in Section 10.1 or any other provision of the Loan Documents, any such
additions to this Agreement may be added by Agent and Borrower pursuant to such
documentation without obtaining the consent of Required Lenders or any other
Lender so long as such additions do not reduce the obligations of Borrower
under this Agreement.



ARTICLE VII NEGATIVE COVENANTS.




     So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, Borrower shall not, nor shall it
permit any Subsidiary to, directly or indirectly:



     7.1 Liens. Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
other than the following:



          (a) Liens pursuant to any Loan Document;




          (b) Liens existing on the date hereof and listed on Schedule 7.1
and any renewals or extensions thereof, provided that the property
covered thereby is not increased and any renewal or extension of the
obligations secured or benefited thereby is permitted by Section
7.3(b);




81









 








          (c) Liens for Taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;




          (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;




          (e) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by any Plan or the PBGC under ERISA;




          (f) deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;




          (g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the applicable Person;




          (h) Liens securing judgments for the payment of money not constituting
an Event of Default under Section 8.1(h) or securing appeal or other
surety bonds related to such judgments; and




          (i) Liens securing Indebtedness permitted under Section 7.3(e);
provided that (i) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired, constructed or improved on
the date of acquisition.




     7.2 Investments. Make or own any Investments, except:



          (a) Investments held by Borrower or such Subsidiary in the form of Cash
Equivalents or short-term marketable debt securities;




          (b) advances to officers, directors and employees of Borrower and
Subsidiary Guarantors in an aggregate amount not to exceed $250,000 at any
time outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;




          (c) Investments owned by Borrower as of the Closing Date in the Equity
Interests of any wholly-owned Subsidiary as described on Schedule
5.13;




          (d) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of




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business, and Investments received in satisfaction or partial satisfaction
thereof from financially
troubled account debtors to the extent reasonably necessary in order to
prevent or limit loss; and




          (e) Guarantees permitted by Section 7.3;




          (f) Permitted Acquisitions by Borrower or any wholly-owned Subsidiary
Guarantor;




          (g) Investments consisting of extensions of credit or capital
contributions by Borrower to wholly-owned Subsidiary Guarantors so long as
such Investments consisting of extensions of credit are evidenced by
promissory notes pledged to Agent under the Collateral Documents;




          (h) Investments in Persons other than Subsidiaries not exceeding at any
time an aggregate outstanding amount of $5,000,000; and




          (i) additional Investments not exceeding at any time an aggregate
outstanding amount of $10,000,000.




     7.3 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:



          (a) Indebtedness under the Loan Documents;




          (b) Indebtedness outstanding on the date hereof and listed on
Schedule 7.3 and any refinancings, refundings, renewals or extensions
thereof; provided that the amount of such Indebtedness is not
increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder;




          (c) Guarantees of Borrower or any Subsidiary in respect of Indebtedness
otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary
Guarantor;




          (d) obligations (contingent or otherwise) of Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such
obligations are (or were) entered into by such Person in the ordinary course
of business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person, and not for purposes of speculation or taking a “market view;”
and (ii) such Swap Contract does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;




          (e) Indebtedness in respect of capital leases, Synthetic Lease
Obligations and purchase money obligations for fixed or capital assets
(including equipment) within the limitations set forth in Section 7.1(i); provided, however, that the aggregate amount of all
such Indebtedness at any one time outstanding shall not exceed $5,000,000;





83












 





          (f) Indebtedness incurred by Borrower or any of its Subsidiaries arising
from agreements providing for indemnification, adjustment of purchase
price or similar
obligations in connection with Permitted Acquisitions or permitted
Dispositions of any
business, assets or Subsidiary of Borrower or any of its Subsidiaries;




          (g) Indebtedness of any wholly-owned Subsidiary Guarantor to Borrower or
to any other wholly-owned Subsidiary Guarantor so long as such
Indebtedness is evidenced by
promissory notes pledged to Agent under the Collateral Documents; and




          (h) other unsecured Indebtedness not exceeding $10,000,000 in the
aggregate at any time outstanding.




     7.4 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series
of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired)
to or in favor of any
Person, except that, so long as no Default exists or would result
therefrom:



          (a) any Subsidiary may merge with (i) Borrower, provided that
Borrower
shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries, provided
that when any wholly-owned Subsidiary is merging with another Subsidiary,
the wholly-owned
Subsidiary shall be the continuing or surviving Person, and, provided
further that if a
Guarantor is merging with another Subsidiary, the Guarantor shall be the
surviving Person; and




          (b) any Subsidiary may Dispose of all or substantially all of its assets
(upon
voluntary liquidation or otherwise) to Borrower or to another Subsidiary;
provided that if the
transferor in such a transaction is a wholly-owned Subsidiary, then the
transferee must either
be Borrower or a wholly-owned Subsidiary and, provided further that if
the transferor of such
assets is a Guarantor, the transferee thereof must either be Borrower or
a Guarantor.




     7.5 Dispositions. Make any Disposition or enter into any agreement to make
any Disposition, except:



          (a) Dispositions of obsolete or worn out property, or immaterial property
no longer useful or necessary to the business of Borrower and its
Subsidiaries, whether now
owned or hereafter acquired, in the ordinary course of business;




          (b) Dispositions of inventory and Cash Equivalents in the ordinary course
of business and sales, assignments, transfers or dispositions of accounts in
the ordinary course of business for purposes of collection;




          (c) Dispositions of equipment or real property to the extent that (i)
such property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to
the purchase price of such replacement property;




          (d) Dispositions of property by Borrower to any of its wholly-owned
Subsidiary Guarantors or by any Subsidiary to Borrower or to a
wholly-owned Subsidiary





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Guarantor; provided that if the transferor of such property is
Borrower or a Guarantor, the transferee thereof must either be Borrower
or a wholly-owned Guarantor;




          (e) Dispositions permitted by Section 7.4 and
Dispositions of Cash
Equivalents permitted by Section 7.2;




          (f) licenses of IP Rights in the ordinary course of business;




          (g) subleases of leased properties no longer needed by Borrower and its
Subsidiaries and not material to the operation of Borrower and its
Subsidiaries; and




          (h) Dispositions not otherwise permitted hereunder if (i) at the time of
any Disposition, no Event of Default or Default shall exist or shall result
from such Disposition, (ii) the aggregate sales price of such Disposition
shall be paid in cash, and (iii) the proceeds from Dispositions under this
clause (h) since the Closing Date shall not exceed $500,000 in the aggregate.



provided, however, that any Disposition pursuant to clauses (a)
through (h) (other than clause (d)) shall be for fair market value.




     7.6 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:



          (a) each Subsidiary may make Restricted Payments to Borrower and to
wholly-owned Subsidiary Guarantors (and, in the case of a Restricted
Payment by a non-
wholly-owned Subsidiary, to Borrower and any Subsidiary and to each other
owner of capital
stock or other Equity Interests of such Subsidiary on a pro rata basis
based on their relative
ownership interests) and any Subsidiary that is not a Guarantor may make
Restricted Payments
to any other Subsidiary and to each other owner of capital stock or other
Equity Interests of
such Subsidiary on a pro rata basis based on their relative ownership
interests;




          (b) Borrower and each Subsidiary Guarantor may declare and make
dividend payments or other distributions payable solely in the common
stock or other common
equity interests of such Person;




          (c) Borrower and each Subsidiary Guarantor may purchase, redeem or
otherwise acquire shares of its common stock or other common equity
interests or warrants or
options to acquire any such shares with the proceeds received from the
substantially concurrent
issue of new shares of its common stock or other common equity interests;




          (d) Borrower may (i) repurchase or redeem for value Equity Interests of
Borrower held by present or former officers, directors or employees (or
their transferees,
estates or beneficiaries under their estates) upon their death,
disability, retirement, severance or
termination of employment or service or pursuant to any management equity
plan or stock
option plan or any other management or employee benefit plan, agreement
or arrangement,
provided that the aggregate amount of all such repurchases or
redemptions for value under this
clause (i) shall not exceed $2,000,000 in any one fiscal year, and (ii)
make repurchases of
Equity Interests deemed to occur upon the exercise of stock options if
the Equity Interests





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represent a portion of the exercise price thereof or upon the vesting
of restricted stock, restricted stock units or performance share units to the extent
necessary to satisfy tax withholding obligations attributable to such
vesting; and




          (e) Borrower may make any Permitted Stock Repurchase; provided
that, after giving effect to such Permitted Stock Repurchase, the aggregate
amount of cash paid or payable for all Permitted Stock Repurchases consummated
during the term of this Agreement commencing on the Closing Date shall not
exceed $50,000,000.




     7.7 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by Borrower
and its Subsidiaries
on the date hereof or any business substantially related or incidental
thereto. Notwithstanding
anything in this Agreement to the contrary, OSC shall not at any time
engage in any business
other than owning its IP Rights and none of the Dormant Foreign
Subsidiaries shall engage in
any business.



     7.8 Transactions with Affiliates. Enter into any transaction of any kind with any
Affiliate of Borrower, whether or not in the ordinary course of business,
other than on fair and
reasonable terms substantially as favorable to Borrower or such Subsidiary
as would be
obtainable by Borrower or such Subsidiary at the time in a comparable
arm’s length transaction
with a Person other than an Affiliate, provided that the foregoing
restriction shall not apply to
(i) transactions between or among Borrower and any of its wholly-owned
Subsidiary Guarantors
or between and among any wholly-owned Subsidiary Guarantors or between and
among
Subsidiaries that are not Guarantors, (ii) customary fees, indemnification
and reimbursement of
directors, officers and employees of Borrower and its Subsidiaries, (iii)
any Investment permitted
by Section 7.2(b), (c), (e) or (g), (iv) Restricted Payments
permitted by Section 7.6, (v) officer
and employee compensation (including bonuses) and other benefits
(including retirement, health,
stock option and other benefit plans) and indemnification and
reimbursement arrangements with
respect to such Persons, in each case, in the ordinary course of business
or (vi) ordinary course
expenses not exceeding $250,000 in any fiscal year in connection with
continuing the non-
operational status of and/or dissolution of the Dormant Foreign
Subsidiaries.



     7.9 Burdensome Agreements. Enter into any Contractual Obligation (other
than this
Agreement or any other Loan Document) that (a) limits the ability (i) of
any Subsidiary to make
Restricted Payments to Borrower or any Guarantor or to otherwise transfer
property to Borrower
or any Guarantor, (ii) of any Subsidiary to Guarantee the Indebtedness of
Borrower or (iii) of
Borrower or any Subsidiary to create, incur, assume or suffer to exist
Liens on property of such
Person; provided, however, that clause (i) and clause
(iii) shall not prohibit any restriction on
transfer or negative pledge incurred or provided in favor of any holder of
Indebtedness permitted
under Section 7.3(e) solely to the extent any such restriction on
transfer or negative pledge
relates to the property financed by or the subject of such Indebtedness;
or (b) requires the grant
of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation
of such Person. Notwithstanding the forgoing, the Borrower and its
Subsidiaries may enter into
a Contractual Obligation (a) that has restrictions described in clause (a)
above by reason of customary provisions restricting assignments, subletting or
other transfers contained in leases, licenses, joint venture agreements and
similar agreements entered into in the ordinary course of business, in each
case, relating solely to the assets subject to such lease or license or assets





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relating solely to the assets of such joint venture, (b) that has restrictions
described in clause (a)(i) above to the extent such restriction only restricts
assignments of such contracts entered into in the ordinary course of business,
(c) that has restrictions described in clause (a) above by virtue of customary
provisions in asset sale and stock sale agreements and other similar agreements
entered into in the ordinary course of business permitted under the terms of
this Agreement to the extent such restriction only restricts the transfer of
ownership interests in the assets or stock that is to be sold pursuant thereto,
pending the sale of such assets and (d) that has restrictions described in
clause (a) above by virtue of restrictions on cash or deposits or net worth
imposed by suppliers or landlords under contracts entered into in the ordinary
course of business.




     7.10 Use of Proceeds. Use the proceeds of any Credit Extension, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry margin stock (within the meaning of Regulation U of the FRB)
or to extend credit to others for the purpose of purchasing or carrying margin
stock or to refund indebtedness originally incurred for such purpose or for any
Hostile Acquisition.



     7.11 Foreign Subsidiaries; OSC. Make any Investments in OSC, any Dormant
Foreign Subsidiary or any other foreign Subsidiary after the Closing Date,
Guarantee any obligations of OSC, any Dormant Foreign Subsidiary or any other
foreign Subsidiary after the Closing Date, or otherwise transfer any assets
(including the repayment of any intercompany payables) to OSC, any Dormant
Foreign Subsidiary or any other foreign Subsidiary after the Closing Date.



     7.12 Capital Expenditures. Make or become legally obligated to make any
Capital Expenditure, except for Capital Expenditures not exceeding, in the
aggregate for Borrower and it Subsidiaries during each fiscal year set forth
below, the amount (the “Base Amount”) set forth opposite such fiscal
year:



	 	 	 	 	 
	Fiscal Year	 	Amount
	2008
	 	$	6,000,000	 
	2009
	 	$	7,000,000	 
	2010
	 	$	7,500,000	 
	2011
	 	$	8,500,000	 
	2012
	 	$	9,000,000	 
	2013
	 	$	9,500,000	 






     provided that the Base Amount for any fiscal year shall be
increased by an amount equal to the excess, if any, (but in no event more than
50%) of the Base Amount for the immediately preceding fiscal year (prior to any
adjustments in accordance with this proviso) over the actual amount of Capital
Expenditures for such previous fiscal year.



     7.13 Amendments of Organization Documents. No Loan Party shall nor shall it
permit any of its Subsidiaries to, agree to any amendment, restatement,
supplement or other modification to, or waiver of, any of its Organization
Documents after the Closing Date without in each case obtaining the prior
written consent of Requisite Lenders to such amendment, restatement, supplement
or other modification or waiver, other than an amendment, restatement,



87









 




supplement or other modification or waiver that is not adverse in any
material respect to the
interests of the Lenders.




     7.14 Accounting Changes. Make (a) any material change in accounting
policies or reporting practices, except as permitted by GAAP, or (b) any change
in fiscal year.



     7.15 Excluded Accounts. Maintain a collective balance of more than $275,000
in the aggregate in the Excluded Accounts at any time.



ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.




     8.1 Events of Default. Any of the following shall constitute an “Event of Default”:



          (a) Non-Payment. Borrower or any other Loan Party fails to pay
(i) when and as required to be paid herein, any amount of principal of any
Loan or any L/C Obligation, or (ii) within three days after the same becomes
due, any interest on any Loan or on any L/C Obligation, or any fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or




          (b) Specific Covenants. Borrower fails to perform or observe
any term, covenant or agreement contained in any of Section 6.1.
6.2, 6.3, 6.5 (as to existence), 6.10,
6.11. 6.12, 6.13. 6.15 or 6.16 or Article
VII; or




          (c) Other Defaults. Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in any other subsection of this
Section 8) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days after the earlier of (i) any
Responsible Officer or any other officer (including without limitation any
senior vice president, executive vice president or any other vice president)
of any Loan Party becoming aware of such failure or (ii) receipt by Borrower
or any other Loan Party of notice from Agent or any Lender of such failure; or




          (d) Representations and Warranties. Any representation, warranty
or certification made or deemed made by or on behalf of Borrower or any other
Loan Party herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be incorrect or misleading when made or
deemed made; or




          (e) Cross-Default, (i) Borrower or any Subsidiary (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or
Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000, or (B)
fails to observe or perform any other agreement or condition relating to any
such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the
effect of which default or other event is to cause, or to permit the holder or
holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded



88









 






or to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded (except
for due on sale clauses in Indebtedness relating to capital leases permitted
under Section 7.3(b) or 7.3(e)); or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which
Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which Borrower or any Subsidiary is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by Borrower or
such Subsidiary as a result thereof is greater than $10,000,000 and, in the
case of clause (B) above, such amount is not paid within 10 days; or




          (f) Insolvency Proceedings. Etc. Any Loan Party or any of its
Subsidiaries institutes or consents to the institution of any proceeding under
any Debtor Relief Law, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property; or any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all
or any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or




          (g) Inability to Pay Debts; Attachment, (i) Borrower or any
Subsidiary becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or




          (h) Judgments. There is entered against Borrower or any
Subsidiary (i) a judgment or order for the payment of money in an aggregate
amount exceeding $1,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary judgments that have, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 30 days during which
a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or




          (i) ERISA. (i) An ERISA Event occurs with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected
to result in liability of Borrower under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$2,500,000, or (ii) Borrower or any ERISA Affiliate fails to pay when due,
after the expiration of any applicable grace period, any installment payment
with respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $2,500,000; or





89












 





          (j)
Invalidity of Loan Documents; Failure of Security. (i) Any
Loan Document, at any time after its execution and delivery and for any reason
other than as expressly permitted hereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any Loan
Document; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or
rescind any Loan Document or (ii) the Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral (other than
Liens permitted under clauses (b) through (i) of Section 7.1 and items
of Collateral deemed immaterial by Agent in its sole discretion) purported to
be covered by the Collateral Documents, in each case for any reason other than
failure of Agent or any Lender to take any action within its control; or




          (k) Change of Control. There occurs any Change of Control with
respect to Borrower; or




          (1) Material Adverse Effect. There occurs any event or
circumstance that has a Material Adverse Effect; or




          (m) Loss of ISO 9001 Certifications. Borrower or any of its
Subsidiaries shall have ceased to have maintained in full force and effect
each of their respective International Organization for Standardization
(“ISO”) 9001 and ISO 13485:2003 certifications (other than due to the sale of
any such ISO 9001 or ISO 13485:2003 certification pursuant to a Disposition
permitted under this Agreement and other than due to any voluntary shutdown of
plants by any Loan Party for reasons other than the loss of the applicable ISO
9001 or ISO 13485:2003 certification).




     8.2 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, Agent shall, at the request of, or may, with the consent of, the
Required Lenders, take any or all of the following actions:



          (a) declare the commitment of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;




          (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower;




          (c) require that Borrower Cash Collateralize the L/C Obligations (in
an amount equal to the then Outstanding Amount thereof); and




          (d) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or
applicable law;



provided, however, that upon the occurrence of an actual or
deemed entry of an order for relief with respect to Borrower under the
Bankruptcy Code of the United States, the obligation of each Lender to make
Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall



90









 






automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, and the obligation of Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case
without further act of Agent or any Lender.




     8.3 Application of Funds. After the exercise of remedies provided for in
Section 8.2 (or after the Loans have automatically become immediately
due and payable and the L/C Obligations have automatically been required to be
Cash Collateralized as set forth in the proviso to
Section 8.2), any
amounts received on account of the Obligations shall be applied by Agent in the
following order:



     First, to payment of that portion of the Obligations constituting
fees, indemnities, expenses and other amounts (including Attorney Costs and
amounts payable under Article III) payable to Agent in its capacity as
such;



     Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
to the Lenders and their Affiliates (including Attorney Costs and amounts
payable under Article III), ratably among them in proportion to the
amounts described in this clause Second payable to them;



     Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans, L/C Borrowings and
other Obligations, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;



     Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Borrowings and the Swap Termination Value
and other amounts owing to Lenders and their Affiliates under Secured Hedge
Agreements and Secured Cash Management Agreements, ratably among the Lenders
and their Affiliates in proportion to the respective amounts described in this
clause Fourth held by them;



     Fifth, to Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and



     Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to Borrower or as otherwise required by Law.



     Subject
to Section 2.3(c), amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth
above shall be applied to satisfy drawings under such Letters of Credit as they
occur. If any amount remains on deposit as Cash Collateral after all Letters of
Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.



     Notwithstanding the foregoing, Obligations arising under Secured Cash
Management Agreements and Secured Hedge Agreements shall be excluded from the
application described above if Agent has not received written notice thereof,
together with such supporting documentation as Agent may request, from the
applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash
Management Bank or Hedge Bank not a party to the Credit Agreement that has
given the notice contemplated by the preceding sentence shall, by such



91









 




notice, be deemed to have acknowledged and accepted the appointment of Agent
pursuant to the terms of Article IX hereof for itself and its
Affiliates as if a “Lender” party hereto.




ARTICLE IX AGENT.



     9.1 Appointment and Authority.



          (a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints
Bank of America to act on its behalf as Agent hereunder and under the other
Loan Documents and authorizes Agent to take such actions on its behalf and to
exercise such powers as are delegated to Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto.
The provisions of this Article are solely for the benefit of Agent, the
Lenders and the L/C Issuer, and Borrower shall not have rights as a third
party beneficiary of any of such provisions.




          (b) Agent
shall also act as the “collateral agent” under the
Loan Documents, and each of the Lenders (including in its capacities as a
potential Hedge Bank and a potential Cash Management Bank) and the L/C Issuer
hereby irrevocably appoints and authorizes Agent to act as the agent of such
Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any
and all Liens on Collateral granted by any of the Loan Parties to secure any
of the Obligations, together with such powers and discretion as are reasonably
incidental thereto. In this connection, Agent, as “collateral agent” and any
co-agents, sub-agents and attorneys-in-fact appointed by Agent pursuant to
Section 9.5 for purposes of holding or enforcing any Lien on the
Collateral (or any portion thereof) granted under the Collateral Documents, or
for exercising any rights and remedies thereunder at the direction of Agent),
shall be entitled to the benefits of all provisions of this Article IX
and Article X (including Section 10.4(c), as though such
co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under
the Loan Documents) as if set forth in full herein with respect thereto.




     9.2 Rights as a Lender. The Person serving as Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with Borrower or any Subsidiary
or other Affiliate thereof as if such Person were not Agent hereunder and
without any duty to account therefor to the Lenders.



     9.3 Exculpatory Provisions. Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, Agent:



          (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;




          (b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the





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Required Lenders (or such other number or percentage of the Lenders as shall
be expressly provided for herein or in the other Loan Documents),
provided that Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose Agent to liability or
that is contrary to any Loan Document or applicable law; and




          (c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to Borrower or any of its Affiliates
that is communicated to or obtained by the Person serving as Agent or any of
its Affiliates in any capacity.




          (d) Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary, or as Agent shall
believe in good faith shall be necessary, under the circumstances as provided
in Sections 10.1 and 8.2) or (ii) in the absence of its own gross
negligence or willful misconduct. Agent shall be deemed not to have knowledge
of any Default unless and until notice describing such Default is given to
Agent by Borrower, a Lender or the L/C Issuer.




          (e) Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents
of any certificate, report or other document delivered hereunder or thereunder
or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to Agent.




     9.4 Reliance by Agent. Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person. Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon, in determining compliance with any
condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the L/C Issuer, Agent may presume that such condition is satisfactory to such
Lender or the L/C Issuer unless Agent shall have received notice to the contrary
from such Lender or the L/C Issuer prior to the making of such Loan or the
issuance of such Letter of Credit. Agent may consult with legal counsel (who may
be counsel for Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.



     9.5 Delegation of Duties. Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or



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more sub-agents appointed by Agent. Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through
their respective Related Parties. The exculpatory provisions of this Article
shall apply to any such sub-agent and to the Related Parties of Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Agent.




     9.6 Resignation of Agent. Agent may at any time give notice of its
resignation to the Lenders, the L/C Issuer and Borrower. Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, with, at
all times other than during the existence of an Event of Default, the consent
of Borrower (which consent of Borrower shall not be unreasonably withheld or
delayed), to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may on
behalf of the Lenders and the L/C Issuer, appoint a successor Agent meeting the
qualifications set forth above; provided that if Agent shall notify
Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (a) the retiring Agent shall be discharged from
its duties and obligations hereunder and under the other Loan Documents (except
that in the case of any collateral security held by Agent on behalf of the
Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent
shall continue to hold such collateral security until such time as a successor
Agent is appointed) and (b) all payments, communications and determinations
provided to be made by, to or through Agent shall instead be made by or to each
Lender and the L/C Issuer directly, until such time as the Required Lenders
appoint a successor Agent as provided for above in this Section. Upon the
acceptance of a successor’s appointment as Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Agent, and the retiring Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by Borrower to a successor Agent shall be the same
as those payable to its predecessor unless otherwise agreed between Borrower
and such successor. After the retiring Agent’s resignation hereunder and under
the other Loan Documents, the provisions of this Article and Section 10.4
shall continue in effect for the benefit of such retiring Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Agent was acting as
Agent.



     Any resignation by Bank of America as Agent pursuant to this Section shall
also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the
acceptance of a successor’s appointment as Agent hereunder, (i) such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring L/C Issuer and Swing Line Lender, (ii) the retiring
L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (iii) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.



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     9.7 Non-Reliance on Agent and Other Lenders. Each Lender and the L/C
Issuer acknowledges that it has, independently and without reliance upon Agent
or any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and the L/C Issuer also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.



     9.8 No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the Bookrunners or Arrangers listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as Agent, a Lender or the
L/C Issuer hereunder.



     9.9 Agent May File Proofs of Claim. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative
to any Loan Party, Agent (irrespective of whether the principal of any Loan or
L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether Agent shall have made any
demand on Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise



          (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, L/C Obligations and all
other Obligations that are owing and unpaid and to file such other documents as
may be necessary or advisable in order to have the claims of the Lenders, the
L/C Issuer and Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders, the L/C Issuer and Agent
and their respective agents and counsel and all other amounts due the Lenders,
the L/C Issuer and Agent under Sections 2.3(i) and
(j), 2.9 and
10.4) allowed in such judicial proceeding; and




          (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;



and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to Agent and, if Agent
shall consent to the making of such payments directly to the Lenders and the
L/C Issuer, to pay to Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of Agent and its agents and counsel, and
any other amounts due Agent under Sections 2.9 and 10.4.




     Nothing contained herein shall be deemed to authorize Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or the L/C Issuer to authorize Agent to
vote in respect of the claim of any Lender or the L/C Issuer or in any such
proceeding.




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     9.10 Collateral and Guaranty Matters. Each of the Lenders (including in
its capacities as a potential Cash Management Bank and a potential Hedge Bank)
and the L/C Issuer irrevocably authorize Agent, at its option and in its
discretion,



          (a) to release any Lien on any property granted to or held by Agent under
any Loan Document (i) upon termination of the Aggregate Commitments and
payment in full of all Obligations (other than (A) contingent indemnification
obligations and (B) obligations and liabilities under Secured Cash Management
Agreements and Secured Hedge Agreements as to which arrangements satisfactory
to the applicable Cash Management Bank of Hedge Bank shall have been made) and
the expiration or termination of all Letters of Credit (other than Letters of
Credit as to which other arrangements satisfactory to Agent and the L/C Issuer
shall have been made), (ii) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan Document,
or (iii) if approved, authorized or ratified in writing in accordance with
Section 10.1;




          (b) to release any Guarantor from its obligations under the Guaranty if
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder; and




          (c) to subordinate any Lien on any property granted to or held by Agent
under any Loan Document to the holder of any Lien on such property that is
permitted by Section 7.1(i).




     Upon request by Agent at any time, the Required Lenders will confirm in
writing Agent’s authority to release or subordinate its interest in particular
types or items of property, or to release any Guarantor from its obligations
under the Guaranty pursuant to this Section 9.10. In each case as
specified in this Section 9.10, Agent will, at Borrower’s expense,
execute and deliver to the applicable Loan Party such documents as such Loan
Party may reasonably request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Collateral
Documents or to subordinate its interest in such item, or to release such
Guarantor from its obligations under the Guaranty, in each case in accordance
with the terms of the Loan Documents and this Section 9.10.



     9.11 Secured Cash Management Agreements and Secured Hedge Agreements. No
Cash Management Bank or Hedge Bank that obtains the benefits of Section
8.3, any Guaranty or any Collateral by virtue of the provisions hereof or
of any Guaranty or any Collateral Document shall have any right to notice of
any action or to consent to, direct or object to any action hereunder or under
any other Loan Document or otherwise in respect of the Collateral (including
the release or impairment of any Collateral) other than in its capacity as a
Lender and, in such case, only to the extent expressly provided in the Loan
Documents. Notwithstanding any other provision of this Article IX to
the contrary, Agent shall not be required to verify the payment of, or that
other satisfactory arrangements have been made with respect to, Obligations
arising under Secured Cash Management Agreements and Secured Hedge Agreements
unless Agent has received written notice of such Obligations, together with
such supporting documentation as Agent may request, from the applicable Cash
Management Bank or Hedge Bank, as the case may be.



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ARTICLE X MISCELLANEOUS.




     10.1 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and Borrower or the applicable Loan
Party, as the case may be, and acknowledged by Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such
amendment, waiver or consent shall:



          (a) waive any condition set forth in Section 4.1 (a) without
the written consent of each Lender;




          (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.2) without the written
consent of such Lender;




          (c) postpone any date fixed by this Agreement or any other Loan Document
for any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document without the written consent of each Lender directly
affected thereby;




          (d) reduce the principal of, or the rate of interest specified herein on,
any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to
this Section 10.1) any fees or other amounts payable hereunder or
under any other Loan Document, or change the manner of computation of any
financial ratio (including any change in any applicable defined term) used in
determining the Applicable Rate that would result in a reduction of any
interest rate on any Loan or any fee payable hereunder, without the written
consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of Borrower to pay interest or L/C Fees at the Default Rate or (ii)
to amend any financial covenant hereunder (or any defined term used therein)
even if the effect of such amendment would be to reduce the rate of interest
on any Loan or L/C Borrowing or to reduce any fee payable hereunder;




          (e) change Section 2.13 or Section 8.3 in a manner that
would alter the pro rata sharing of payments required thereby without the
written consent of each Lender;




          (f) change any provision of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or




          (g) release any Guarantor from the Guaranty or release the Liens on all
or substantially all of the Collateral except in accordance with the terms of
any Loan Document without the written consent of each Lender; and,



provided further, that (i) no amendment, waiver or consent shall,
unless in writing and signed by the L/C Issuer in addition to the Lenders
required above, affect the rights or duties of the L/C Issuer under this
Agreement or any Issuer Document relating to any Letter of Credit issued or to




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be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above,
affect the rights or duties of the Swing Line Lender under this Agreement or any
other Loan Document; (iii) no amendment, waiver or consent shall, unless in
writing and signed by Agent in addition to the Lenders required above, affect
the rights or duties of Agent under this Agreement or any other Loan Document;
and (iv) the Fee Letter may be amended, or rights or privileges thereunder
waived, in a writing executed only by the parties thereto. Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.




     If any Lender does not consent to a proposed amendment, waiver, consent or
release with respect to any Loan Document that requires the consent of each
Lender and that has been approved by the Required Lenders, Borrower may replace
such non-consenting Lender in accordance with Section 10.13;
provided that such amendment, waiver, consent or release can be effected
as a result of the assignment contemplated by such Section (together with all
other such assignments required by Borrower to be made pursuant to this
paragraph).



     10.2 Notices and Other Communications; Facsimile Copies.



          (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:





     (i) if to Borrower, Agent, the L/C Issuer or the Swing Line
Lender, to the address, telecopier number, electronic mail address
or telephone number specified for such Person on Schedule
10.2; and




     (ii) if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its
Administrative Questionnaire.


Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by telecopier shall be deemed
to have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).




          (b) Electronic Communications. Notices and other communications to
the Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by Agent, provided that the foregoing
shall not apply to notices to any Lender or the




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L/C Issuer pursuant to Article II if such Lender or the L/C Issuer,
as applicable, has notified
Agent that it is incapable of receiving notices under such Article by
electronic communication. Agent or Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.




     Unless Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication
is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.



          (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY
OR COMPLETENESS OF BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM BORROWER
MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH BORROWER MATERIALS OR
THE PLATFORM. In no event shall Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to Borrower,
any Lender, the L/C Issuer or any other Person for losses, claims, damages,
liabilities or expenses of any kind (whether in tort, contract or otherwise)
arising out of Borrower’s or Agent’s transmission of Borrower Materials
through the Internet, except to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by
a final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to Borrower, any
Lender, the L/C Issuer or any other Person for indirect, special, incidental,
consequential or punitive damages (as opposed to direct or actual damages).




          (d) Change of Address, Etc. Each of Borrower, Agent, the L/C
Issuer and the Swing Line Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to
the other parties hereto. Each other Lender may change its address, telecopier
or telephone number for notices and other communications hereunder by notice
to Borrower, Agent, the L/C Issuer and the Swing Line Lender. In addition,
each Lender agrees to notify Agent from time to time to ensure that Agent has
on record (i) an effective address, contact name, telephone number, telecopier
number and electronic mail address to which notices and other communications
may be sent and (ii) accurate wire instructions for such Lender. Furthermore,
each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the






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“Private Side Information” or similar designation on the content declaration
screen of the Platform in order to enable such Public Lender or its delegate,
in accordance with such Public Lender’s compliance procedures and applicable
Law, including United States Federal and state securities Laws, to make
reference to Borrower Materials that are not made available through the
“Public Side Information” portion of the Platform and that may contain
material non-public information with respect to Borrower or its securities for
purposes of United States Federal or state securities laws.




          (e) Reliance by Agent, L/C Issuer and Lenders. Agent, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Committed Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of Borrower even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
Borrower shall indemnify Agent, the L/C Issuer, each Lender and the Related
Parties of each of them from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by
or on behalf of Borrower. All telephonic notices to and other telephonic
communications with Agent maybe recorded by Agent, and each of the parties
hereto hereby consents to such recording.




     10.3 No Waiver; Cumulative Remedies. No failure by any Lender, the L/C
Issuer or Agent to exercise, and no delay by any such Person in exercising, any
right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.



     Notwithstanding anything to the contrary contained herein or in any other
Loan Document, the authority to enforce rights and remedies hereunder and under
the other Loan Documents against the Loan Parties or any of them shall be
vested exclusively in, and all actions and proceedings at law in connection
with such enforcement shall be instituted and maintained exclusively by, Agent
in accordance with Section 8.2 for the benefit of all the Lenders and
the L/C Issuer; provided, however, that the foregoing shall not
prohibit (a) Agent from exercising on its own behalf the rights and remedies
that inure to its benefit (solely in its capacity as Agent) hereunder and under
the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from
exercising the rights and remedies that inure to its benefit (solely in its
capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and
under the other Loan Documents, (c) any Lender from exercising setoff rights in
accordance with Section 10.8 (subject to the terms of Section
2.13), or (d) any Lender from filing proofs of claim or appearing and
filing pleadings on its own behalf during the pendency of a proceeding relative
to any Loan Party under any Debtor Relief Law; and provided,
further, that if at any time there is no Person acting as Agent
hereunder and under the other Loan Documents, then (i) the Required Lenders
shall have the rights otherwise ascribed to Agent pursuant to Section
8.2 and (ii) in addition to the matters set forth in clauses (b), (c) and
(d) of the preceding proviso and subject to Section



100









 







2.13, any Lender may, with the consent of the Required Lenders,
enforce any rights and remedies available to it and as authorized by the
Required Lenders.



     10.4 Expenses; Indemnity; Damage Waiver.



          (a) Costs and Expenses. Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for Agent), in
connection with the syndication of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the L/C Issuer in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all out-of-pocket expenses incurred by
Agent, any Lender or the L/C Issuer (including the fees, charges and
disbursements of any counsel for Agent, any Lender or the L/C Issuer), and
shall pay all fees and time charges for attorneys who may be employees of
Agent, any Lender or the L/C Issuer, in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other
Loan Documents, including its rights under this Section, or (B) in connection
with Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.




          (b) Indemnification by Borrower. Borrower shall indemnify Agent
(and any sub-agent thereof), the Arranger, each Lender and the L/C Issuer, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses
(including the fees, charges and disbursements of any counsel for any
Indemnitee), and shall indemnify and hold harmless each Indemnitee from all
fees and time charges and disbursements for attorneys who may be employees of
any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by Borrower or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, or, in the case of Agent (and any sub-agent
thereof) and its Related Parties only, the administration of this Agreement
and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C
Issuer to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a
third party or by Borrower or any other Loan Party or any of Borrower’s or
such Loan Party’s directors, shareholders or creditors, and regardless of
whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or





101









 








related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by
Borrower or any other Loan Party against an Indemnitee for material breach of
such Indemnitee’s obligations hereunder or under any other Loan Document, if
Borrower or such Loan Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.




          (c) Reimbursement by Lenders. To the extent that Borrower for any
reason fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to Agent (or any sub-agent thereof), the
L/C Issuer or any Related Party of any of the foregoing, each Lender severally
agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related
Party, as the case may be, such Lender’s Pro Rata Share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against Agent (or any such sub-agent) or the
L/C Issuer in its capacity as such, or against any Related Party of any of the
foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection
with such capacity. The obligations of the Lenders under this subsection (c)
are subject to the provisions of Section 2.12(d),




          (d) Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable law, Borrower shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed to
such unintended recipients by such Indemnitee through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnitee as determined by a final
and nonappealable judgment of a court of competent jurisdiction.




          (e) Payments. All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.




          (f) Survival. The agreements in this Section shall survive the
resignation of Agent, the L/C Issuer and the Swing Line Lender, the
replacement of any Lender, the termination of the Aggregate Commitments and
the repayment, satisfaction or discharge of all the other Obligations.




     10.5 Payments Set Aside. To the extent that any payment by or on behalf of
Borrower is made to Agent, the L/C Issuer or any Lender, or Agent, the L/C
Issuer or any Lender exercises its right of set-off, and such payment or the
proceeds of such set-off or any part thereof



102









 




is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by Agent,
the L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Lender and the L/C Issuer severally
agrees to pay to Agent upon demand its applicable share (without duplication)
of any amount so recovered from or repaid by Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect. The obligations of
the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall
survive the payment in full of the Obligations and the termination of this
Agreement.




     10.6
Successors and Assigns. (a) Generally. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of Agent and each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of
subsection (f) of this Section (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of Agent,
the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.



          (b) Assignments by Lenders. Any Lender may at any time assign to
one or more assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans
(including for purposes of this subsection (b), participations in L/C
Obligations and in Swing Line Loans) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:





     (i) Minimum Amounts.




     (A) in the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and




     (B)
in any case not described in subsection (b)(i)(A)
of this Section, the aggregate amount of the Commitment
(which for this purpose includes Loans outstanding
thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the
date the Assignment and Assumption with respect to such
assignment is delivered



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to Agent or, if “Trade Date” is specified in the Assignment
and Assumption, as of the Trade Date, shall not be less than
$5,000,000 unless each of Agent and, so long as no Event of
Default has occurred and is continuing, Borrower otherwise
consents (each such consent not to be unreasonably withheld
or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a
single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum
amount has been met.




     (ii) Proportionate Amounts. Each partial assignment
shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to the Swing Line Lender’s rights and
obligations in respect of Swing Line Loans;




     (iii) Required Consents. No consent shall be required
for any assignment except to the extent required by subsection
(b)(i)(B) of this Section and, in addition:




     (A) the consent of Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless
(1) an Event of Default has occurred and is continuing at the
time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund;




     (B) the consent of Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such
assignment is to a Person that is not a Lender, an Affiliate
of such Lender or an Approved Fund with respect to such
Lender;




     (C) the consent of the L/C Issuer (such consent not to
be unreasonably withheld or delayed) shall be required for
any assignment that increases the obligation of the assignee
to participate in exposure under one or more Letters of
Credit (whether or not then outstanding); and




     (D) the consent of the Swing Line Lender (such consent
not to be unreasonably withheld or delayed) shall be required
for any assignment.




     (iv) Assignment and Assumption. The parties to each
assignment shall execute and deliver to Agent an Assignment and
Assumption, together with a processing and recordation fee in the
amount of $3,500; provided, however, that Agent
may, in its sole discretion, elect to waive such processing and
recordation fee in the case of any assignment. The assignee, if it
is not a Lender, shall deliver to Agent an Administrative
Questionnaire.



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     (v) No Assignment to Borrower, No such assignment
shall be made to Borrower or any of Borrower’s Affiliates or
Subsidiaries.




     (vi) No Assignment to Natural Persons. No such
assignment shall be made to a natural person.



     Subject to acceptance and recording thereof by Agent pursuant to subsection
(c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 3.1, 3.4, 3.5, and 10.4
with respect to facts and circumstances occurring prior to the effective date of
such assignment. Upon request, Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.



          (c) Register. Agent, acting solely for this purpose as an agent
of Borrower, shall maintain at Agent’s Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the
Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall
be conclusive, and Borrower, Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.




          (d) Participations. Any Lender may at any time, without the
consent of, or notice to, Borrower or Agent, sell participations to any Person
(other than a natural person or Borrower or any of Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii)
Borrower, Agent, the Lenders and the L/C Issuer shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or
other modification described in the first proviso to Section 10.1




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that affects such Participant. Subject to subsection (e) of this Section,
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.1, 3.4 and 3.5 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b)
of this Section. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 10.8 as though it were a
Lender, provided such Participant agrees to be subject to Section
2.13 as though it were a Lender.




          (e) Limitations upon Participant Rights. A Participant shall not
be entitled to receive any greater payment under Section 3.1 or 3.4
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 3.1 unless Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of Borrower, to comply with Section 3.1(e) as
though it were a Lender.




          (f) Certain Pledges. Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.




          (g) Resignation as L/C Issuer or Swing Line Lender after
Assignment. Notwithstanding anything to the contrary contained herein, if
at any time Bank of America assigns all of its Commitment and Loans pursuant
to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to
Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’
notice to Borrower, resign as Swing Line Lender. In the event of any such
resignation as L/C Issuer or Swing Line Lender, Borrower shall be entitled to
appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by Borrower to
appoint any such successor shall affect the resignation of Bank of America as
L/C Issuer or Swing Line Lender, as the case may be. If Bank of America
resigns as L/C Issuer, it shall retain all the rights, powers, privileges and
duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Committed Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.3(c)). If Bank of America
resigns as Swing Line Lender, it shall retain all the rights of the Swing Line
Lender provided for hereunder with respect to Swing Line Loans made by it and
outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Committed Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section
2.4(c). Upon the appointment of a successor L/C Issuer and/or Swing Line
Lender, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line
Lender, as the case may be, and (b) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit.





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     10.7 Treatment of Certain Information; Confidentiality. Each of Agent, the
Lenders and the L/C Issuer agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, trustees, advisors and representatives (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement or any Eligible
Assignee invited to be a Lender pursuant to Section 2.15(c) or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to Borrower and its obligations, (g) with the consent of
Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than Borrower.



     For purposes of this Section, “Information” means all information
received from Borrower or any Subsidiary relating to Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to Agent, any Lender or the L/C Issuer on a nonconfidential basis
prior to disclosure by Borrower or any Subsidiary, provided that, in the
case of information received from Borrower or any Subsidiary after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.



     Each of Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning Borrower or a
Subsidiary, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
United States Federal and state securities Laws.



     10.8 Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, the L/C Issuer or any such Affiliate to or for the credit or the account
of Borrower against any and all of the obligations of Borrower now or hereafter
existing under this Agreement or any other Loan Document to such Lender or the
L/C Issuer, irrespective of




107











 





whether or not such Lender or the L/C Issuer shall have made any demand
under this Agreement or any other Loan Document and although such
obligations of Borrower may be contingent or unmatured or are owed to a
branch or office of such Lender or the L/C Issuer different from the
branch or office holding such deposit or obligated on such indebtedness.
The rights of each Lender, the L/C Issuer and their respective Affiliates
under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the L/C Issuer or
their respective Affiliates may have. Each Lender and the L/C Issuer
agrees to notify Borrower and Agent promptly after any such setoff and
application, provided that the failure to give such notice shall
not affect the validity of such setoff and application. Notwithstanding
the provisions of this Section 10.8, if at any time any Lender,
the L/C Issuer or any of their respective Affiliates maintains one or
more deposit accounts for Borrower into which Medicare and/or Medicaid
receivables are deposited, such Person shall waive the right of setoff
set forth herein.




     10.9 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to
be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum
Rate”). If Agent or any Lender shall receive interest in an amount
that exceeds the Maximum Rate, the excess interest shall be applied to
the principal of the Loans or, if it exceeds such unpaid principal,
refunded to Borrower. In determining whether the interest contracted for,
charged, or received by Agent or a Lender exceeds the Maximum Rate, such
Person may, to the extent permitted by applicable Law, (a) characterize
any payment that is not principal as an expense, fee, or premium rather
than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts
the total amount of interest throughout the contemplated term of the
Obligations hereunder.



     10.10 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This
Agreement and the other Loan Documents constitute the entire contract
among the parties relating to the subject matter hereof and supersede any
and all previous agreements and understandings, oral or written, relating
to the subject matter hereof. Except as provided in Section 4.1,
this Agreement shall become effective when it shall have been executed by
Agent and when Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.
Delivery of an executed counterpart of a signature page of this Agreement
by telecopy or other electronic imaging means shall be effective as
delivery of a manually executed counterpart of this Agreement.



     10.11 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof. Such representations and warranties have been or will
be relied upon by Agent and each Lender, regardless of any investigation
made by Agent or any Lender or on their behalf and notwithstanding that
Agent or any Lender may have had notice or knowledge of any Default at
the time of any Credit Extension, and shall continue in full force and
effect as long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied or any Letter of Credit shall remain outstanding.



108









 





     10.12
Severability. If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be
affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as
close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.



     10.13 Replacement of Lenders. If any Lender requests compensation
under Section 3.4, or if Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.1, if any Lender is
a Defaulting Lender or if any other circumstance exists hereunder that
gives Borrower the right to replace a Lender as a party hereto, then
Borrower may, at its sole expense and effort, upon notice to such Lender
and Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and
consents required by, Section 10.6), all of its interests,
rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment),
provided that:



          (a) Borrower shall have paid to Agent the assignment fee
specified in Section 10.6(b);




          (b) such Lender shall have received payment of an amount equal to
the outstanding principal of its Loans and L/C Advances, accrued
interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents (including any amounts
under Section 3.5) from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or Borrower (in
the case of all other amounts);




          (c) in the case of any such assignment resulting from a claim for
compensation under Section 3.4 or payments required to be made
pursuant to Section 3.1, such assignment will result in a
reduction in such compensation or payments thereafter; and




          (d) such assignment does not conflict with applicable Laws.



A Lender shall not be required to make any such assignment or
delegation if, prior thereto, as a result of a waiver by such Lender
or otherwise, the circumstances entitling Borrower to require such
assignment and delegation cease to apply.




     10.14 Governing Law; Jurisdiction; Etc.



          (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.




          (b) SUBMISSION TO JURISDICTION. BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA



109









 






AND OF THE UNITED STATES DISTRICT COURT OF THE CENTRAL DISTRICT OF SUCH
STATE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT
SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR THE L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ITS PROPERTIES
IN THE COURTS OF ANY JURISDICTION.




          (c) WAIVER OF VENUE. BORROWER IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.




          (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 10.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.




     10.15 Waiver of Right to Trial by Jury. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN




110












 




DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.




     10.16 California Judicial Reference. If any action or proceeding is
filed in a court of the State of California by or against any party
hereto in connection with any of the transactions contemplated by this
Agreement or any other Loan Document, (a) the court shall, and is hereby
directed to, make a general reference pursuant to California Code of
Civil Procedure Section 638 to a referee (who shall be a single active or
retired judge) to hear and determine all of the issues in such action or
proceeding (whether of fact or of law) and to report a statement of
decision, provided that at the option of any party to such
proceeding, any such issues pertaining to a “provisional remedy” as
defined in California Code of Civil Procedure Section 1281.8 shall be
heard and determined by the court, and (b) notwithstanding any contrary
provision hereof, the non-prevailing party shall be solely responsible to
pay all fees and expenses of any referee appointed in such action or
proceeding.



     10.17 No Advisory or Fiduciary Responsibility. In connection with
all aspects of each transaction contemplated hereby (including in
connection with any amendment, waiver or other modification hereof or of
any other Loan Document), Borrower acknowledges and agrees, and
acknowledges its Affiliates’ understanding, that: (i) (A) the arranging
and other services regarding this Agreement provided by Agent and the
Arranger are arm’s-length commercial transactions between Borrower and
its Affiliates, on the one hand, and Agent and the Arranger, on the other
hand, (B) Borrower has consulted its own legal, accounting, regulatory
and tax advisors to the extent it has deemed appropriate, and (C)
Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and
by the other Loan Documents; (ii) (A) Agent and the Arranger each is and
has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be
acting as an advisor, agent or fiduciary for Borrower or any of its
Affiliates, or any other Person and (B) neither Agent nor the Arranger
has any obligation to Borrower or any of its Affiliates with respect to
the transactions contemplated hereby except those obligations expressly
set forth herein and in the other Loan Documents; and (iii) Agent and the
Arranger and their respective Affiliates may be engaged in a broad range
of transactions that involve interests that differ from those of Borrower
and its Affiliates, and neither Agent nor the Arranger has any obligation
to disclose any of such interests to Borrower or its Affiliates. To the
fullest extent permitted by law, Borrower hereby waives and releases any
claims that it may have against Agent and the Arranger with respect to
any breach or alleged breach of agency or
fiduciary duty in connection with any aspect of any transaction
contemplated hereby.



     10.18 Electronic Execution of Assignments and Certain Other Documents. The
words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption or in any amendment or other modification
hereof (including waivers and consents) shall be deemed to include
electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping
system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.



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     10.19 USA PATRIOT Act. Each Lender that is subject to the Act (as
hereinafter defined) and Agent (for itself and not on behalf of any
Lender) hereby notifies Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow such Lender
or Agent, as applicable, to identify Borrower in accordance with the Act.
Borrower shall, promptly following a request by Agent or any Lender,
provide all documentation and other information that Agent or such Lender
requests in order to comply with its ongoing obligations under applicable
“know your customer” and anti-money laundering rules and regulations,
including the Act.



112









 





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



	 	 	 	 	 
	 	QUIDEL CORPORATION

 	 
	 	By:  	/s/ John M. Radak
 	 
	 	 	Name:  	John M. Radak 	 
	 	 	Title:  	Chief Financial Officer 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Agent

 	 
	 	By:  	/s/ Tiffany Shin
 	 
	 	 	Name; Tiffany Shin  	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	BANK OF AMERICA, N.A., as a Lender,

L/C Issuer and Swing Line Lender

 	 
	 	By:  	 	 
	 	 	Name:  	Geoffrey C. Wilson 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	Tiffany Shin 	 
	 	 	Title:  	Assistant Vice President 	 
	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender,

L/C Issuer and Swing Line Lender

 	 
	 	By:  	/s/ Geoffery C. Wilson
 	 
	 	 	Name:  	Geoffery C. Wilson 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	U.S. BANK N.A., as Syndication Agent and a Lender

 	 
	 	By:  	/s/ Maureen Sullivan
 	 
	 	 	Name:  	Maureen Sullivan 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A. as a Lender

 	 
	 	By:  	/s/ Camille Farnsworth-Schrader
 	 
	 	 	Name:  	Camille Farnsworth-Schrader 	 
	 	 	Title:  	Vice President 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	UNION BANK OF CALIFORNIA, N.A., as a Lender

 	 
	 	By:  	/s/ Glen Fortin
 	 
	 	 	Name:  	Glen Fortin 	 
	 	 	Title:  	Vice President 	 
	 




 












 





SCHEDULE 2.1

TO

CREDIT AGREEMENT




COMMITMENTS

AND PRO RATA SHARES




	 	 	 	 	 	 	 	 	 
	Lender	 	Commitment	 	 	Pro Rata Share	 
	 
	 
	 	 	 	 	 	 	 	 
	Bank of America, N. A.
	 	$	50,000,000	 	 	 	41.666666667	%
	 
	 	 	 	 	 	 	 	 
	U.S. Bank N.A.
	 	$	30,000,000	 	 	 	25.000000000	%
	 
	 	 	 	 	 	 	 	 
	JPMorgan Chase Bank, N.A.
	 	$	20,000,000	 	 	 	16.666666667	%
	 
	 	 	 	 	 	 	 	 
	Union Bank of California, N.A.
	 	$	20,000,000	 	 	 	16.666666667	%
	 
	 	 	 	 	 	 	 	 
	Total
	 	$	120.000.000	 	 	 	100.000000000	%






 









 






SCHEDULE 4.1

TO

CREDIT AGREEMENT




DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS




	 	 	 	 	 	 	 	 	 	 	 
	Account Holder	 	Bank	 	Type of Account	 	Description	 	Address of Depository Bank	 	Account Number
	Quidel Corporation

	 	Bank of America
	 	Deposit
	 	Operating General
	 	450 B Street., Ste 1500,
 San Diego Ca. 92101
	 	1459528992
	Quidel Corporation
	 	Bank of America
	 	Deposit
	 	Operating General (Santa Clara)
	 	450 B Street., Ste 1500,
 San Diego Ca. 92101
	 	1459528997
	Quidel Corporation

	 	Bank of America
	 	Deposit
	 	Payroll
	 	450 B Street, Ste 1500,
 San Diego Ca. 92101
	 	1459529000
	Quidel Corporation

	 	Bank of America
	 	Deposit
	 	Automated overnight investment
	 	450 B Street., Ste 1500,
 San Diego Ca. 92101
	 	1459528992
	Quidel Corporation

	 	Banc of America
Securities LLC
	 	Securities
	 	Securities
	 	300 S. Grand Ave.,
 Los Angeles Ca. 90071
	 	223-30824-1-7-GVS

	Quidel Corporation

	 	Commerzbank AG
	 	Deposit
	 	Germany Checking Account
	 	Marburg, DE
	 	IBAN DE22533400240395549900

	Quidel Corporation

	 	Banca di Legnano
	 	Deposit
	 	Italy Checking Account
	 	Via Gandhi, 1 20017 Mazzo Di Rho(MI)
	 	IBAN 03204 20501 000000046037







 









 






SCHEDULE 5.5

TO

CREDIT AGREEMENT




MATERIAL INDEBTEDNESS AND OTHER LIABILITIES




     None




 











 





SCHEDULE 5.9

TO

CREDIT AGREEMENT




ENVIRONMENTAL MATTERS




None




4









 








SCHEDULE 5.13

TO

CREDIT AGREEMENT




SUBSIDIARIES AND OTHER EQUITY INVESTMENTS




(a)




	 	 	 	 	 	 	 
	 	 	 	 	Office	 	 
	Name of Subsidiary	 	Ownership	 	Locations	 	Jurisdiction of Organization
	 
	 	 	 	 	 	 
	Metra Biosystems, Inc.

	 	Wholly-owned by

Quidel Corporation
	 	2981 Copper Road

Santa Clara, CA 95051
	 	California Corporation
	 
	 	 	 	 	 	 
	Litmus Concepts, Inc.

	 	Wholly-owned by

Quidel Corporation
	 	2981 Copper Road

Santa Clara, CA 95051
	 	California Corporation
	 
	 	 	 	 	 	 
	Pacific Biotech, Inc.

	 	Wholly-owned by

Quidel Corporation
	 	10165 McKellar

Court San Diego, CA 92121
	 	California Corporation
	 
	 	 	 	 	 	 
	Osteo Sciences Corporation

	 	Wholly-owned by

Metra Biosystems, Inc.
	 	10165 McKellar

Court San Diego, CA 92121
	 	Oregon Corporation
	 
	 	 	 	 	 	 
	Quidel Deutchland, GMBH

	 	Wholly-owned by

Quidel Corporation
	 	Emil von Behringstrausse

76 Building 213 35041

Marburg Germany
	 	Germany
	 
	 	 	 	 	 	 
	Metra Biosystems, GMBH

	 	Wholly-owned by

Quidel Corporation
	 	Emil von Behringstrausse

76 Building 213 35041

Marburg Germany
	 	Germany
	 
	 	 	 	 	 	 
	Metra Biosystems, Quidel 

Limited (UK)

	 	Wholly-owned by

Quidel Corporation
	 	Registered Office

41 Charlton Street

London NW1 1JO
	 	England
	 
	 	 	 	 	 	 
	Metra Biosystems, Quidel 

Limited (Italy)

	 	Wholly-owned by

Quidel Corporation
	 	Via Fermi 8
20100 Pogliano Milanese

MI Italy
	 	Italy






 (b)




None.




5









 








 (c)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Taxpayer
	 	 	Type of	 	Principal Place of	 	Jurisdiction of	 	Identification
	Name of Loan Party	 	Organization	 	Business	 	Organization	 	Number
	Quidel Corporation

	 	Corporation
	 	10165 McKellar Court

San Diego, CA 92121
	 	Delaware Corporation
	 	94-2573850
	Metra Biosystems, Inc.

	 	Corporation
	 	2981 Copper Road

Santa Clara, CA 95051
	 	California Corporation
	 	33-0408436
	Litmus Concepts, Inc.

	 	Corporation
	 	2981 Copper Road

Santa Clara, CA 95051
	 	California Corporation
	 	77-0073946
	Pacific Biotech, Inc.

	 	California
	 	10165 McKellar Court

San Diego, CA 92121
	 	California Corporation
	 	95-3628592
	Osteo Sciences 

Corporation

	 	Corporation
	 	10165 McKellar Court

San Diego, CA 92121
	 	Oregon Corporation
	 	N/A







6












 





SCHEDULE 5.17

TO

CREDIT AGREEMENT




IP RIGHTS





	(a)	 	 See Schedules 8, 9 and 10 to the Security Agreement
	 
	(b)	 	 Settlement Agreement dated April 27, 2005 between Quidel Corporation and Inverness Medical Innovations Inc.




7









 











SCHEDULE 5.18

TO

CREDIT AGREEMENT




EXISTING UCC AND IP FILINGS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	File	 	File	 	Collateral
	Debtor Name	 	Jurisdiction	 	Secured Party	 	Date	 	Number	 	Description
	QUIDEL CORPORATION 

10165 MCKELLAR CT 

SAN DIEGO, CA 

92121-4201

	 	DE
	 	IOS CAPITAL 1738

BASS RD MACON, GA

31210-1043
	 	02/15/07
	 	 	2007 0596162	 	 	Business Machinery/Equipment

(Lease)
	QUIDEL CORPORATION 

10165 MCKELLAR CT 

SAN DIEGO, CA 

92121-4201

	 	DE
	 	CIT TECHNOLOGY
FINANCING SERVICES,
INC. 4600 TOUCHTON
RD E BLDG 100
JACKSONVILLE, FL
32246-8299
	 	08/03/04
	 	 	42173617	 	 	Business Machinery/Equipment

(Lease)
	QUIDEL CORPORATION 

10165 MCKELLAR CT 

SAN DIEGO, CA 

92121-4201

	 	IN
	 	STATE OF INDIANA
	 	04/21/08
	 	 	06834061	 	 	State Tax Warrant

($683)
	QUIDEL CORPORATION 

10165 MCKELLAR CT 

SAN DIEGO, CA 

92121-4201

	 	MD
	 	STATE OF MARYLAND
	 	02/28/06
	 	 	06-1500	 	 	State Tax Lien
($2,513.39)
	QUIDEL CORPORATION 

10165 MCKELLAR CT 

SAN DIEGO, CA 

92121-4201

	 	NJ
	 	STATE OF NEW JERSEY
	 	10/18/01
	 	DJ-265757-2001
	 	State Tax Lien
($1,328.23)






 









 






SCHEDULE 7.1

TO

CREDIT AGREEMENT



EXISTING LIENS




None





9









 








SCHEDULE 7.3

TO

CREDIT AGREEMENT




EXISTING INDEBTEDNESS




	 	 	 
	Obligation on capital lease for 10165 McKellar Ct., San Diego CA 92121
	 	$7,261,700







10











 





SCHEDULE 10.2

TO

CREDIT AGREEMENT




AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES




QUIDEL CORPORATION:




10165 McKellar Court

San Diego, CA 92121

Attention: Don Roe

Telephone: (858) 552-1100

Facsimile: (858) 552-2101

Electronic Mail: droe@quidel.com

Website Address: www.quidel.com




with a copy to:




10165 McKellar Court

San Diego, CA 92121

Attention: Legal Department

Telephone: (858) 552-1100

Facsimile: (858) 646-8028

Electronic Mail: rbujarski@quidel.com




AGENT:




Agent‘s Office

(for payments and Requests for Credit Extensions):




Bank of America, N.A.

Credit Services West




11









 





CA4-702-02-25

2001 Clayton Road, Bldg. B

Concord, CA 94520

Attn: Sue Pfohl

Telephone: 925-675-8783

Telecopier: 888-969-9267

Electronic Mail: sue.pfohl@bankofamerica.com




Wire Instructions:

Bank of America, N.A.

New York, NY

ABA# 026009593

Account Name: Corporate FTA

Account No.: 3750836479

Attn: Sue Pfohl

Ref: Quidel Corporation




Other Notices as Agent:




Bank of America, N.A.

Agency Management

Global Product Solutions

WA1-501-17-32

800 Fifth Avenue, Floor 17

Seattle WA 98104

Attn: Tiffany Shin, Assistant Vice President

Telephone: 206-358-0078

Telecopier: 415-343-0561

Electronic Mail: tiffany.shin@bankofamerica.com




L/C ISSUER:

Standby Letters of Credit:




12









 





Bank of America, N.A.

Trade Operations-Los Angeles #22621

1000 W. Temple Street, 7th Floor

CA9-705-07-05

Los Angeles, CA 90012-1514




Attention: Tai Anh Lu

Officer

Telephone: 213-481-7840

Telecopier: 213-457-8841

Electronic Mail: tai_anh.lu@bankofamerica.com





Commercial Letters of Credit




Bank of America, N.A.

Trade Operations-Los Angeles

1000 W. Temple Street, 7th Floor

CA9-705-07-05

Los Angeles, CA 90012-1514




Attention: Frantz Bellevue

Vice President

Telephone: 213-580-8476

Telecopier: 213-457-8841

Electronic Mail: frantz.bellevue@bankofamerica.com





SWING LINE LENDER:




Bank of America, N.A.

Credit Services West

CA4-702-02-25

2001 Clayton Road, Bldg. B

Concord, CA 94520

Attn: Sue Pfohl

Telephone: 925-675-8783




13









 





Telecopier: 888-969-9267

Electronic Mail: sue.pfohl@bankofamerica.com




Wire Instructions:

Bank of America, N.A.

New York, NY

ABA# 026009593

Account Name: Corporate FTA

Account No.: 3750836479

Attn: Sue Pfohl

Ref: Quidel Corporation




LENDERS:




Bank of America, N.A.

315 Montgomery Street, 13th Floor

Mail Code: CA5-704-13-11

San Francisco, CA 94104

Attention: Geoffrey C. Wilson, Vice President

Telephone: (415) 622-1101

Facsimile: (415) 622-3377

Email: geoffrey.c.wilson@bankofamerica.com




U.S. Bank N.A.

4180 La Jolla Village Drive

Suite 125

La Jolla, CA 92037

Attention: Maureen K. Sullivan, Vice President

Telephone: (858) 597-7099

Facsimile: (858) 597-1055

Email: Maureen.sullivan@usbank.com




14









 





JPMorgan Chase Bank, N.A.

Avenue of the Stars

Los Angeles, CA 90067

Attention: Camille Farnsworth, Senior Underwriter

Telephone: (310) 860-7279

Facsimile: (310) 860-7110

Email: camille.x.famsworth@jpmorgan.com

Union Bank of California, N.A.

530 B Street, Mailcode: S-420

San Diego, CA 92101

Attention: Glenn Fortin, Vice President

Telephone: (619) 230-3380

Facsimile: (619) 230-3766

Email: Glenn.Fortin@uboc.com




15









 





EXHIBIT A-1




FORM OF COMMITTED LOAN NOTICE




Date:                                         , ____




To: Bank of America, N. A., as Agent




Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of October 8, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Quidel Corporation, a Delaware corporation (the “Borrower”), the
Lenders from time to time party thereto, U.S. Bank N.A., as Syndication Agent, and Bank of America,
N.A., as Agent, Swing Line Lender and L/C Issuer.



     The undersigned hereby requests (select one):



	 	 	 	 	 
	 

	 	o A Borrowing of Committed Loans
	 	o A conversion or continuation of Loans






	 	1.	 	On                                          (a Business Day).
	 
	 	2.	 	In the amount of
$                                        .
	 
	 	3.	 	Comprised
of                                        .
	 
	 	 	 	[Type of Committed Loan requested]
	 
	 	4.	 	Eurodollar Rate Loans: with an Interest Period of                      months.





     The Committed Borrowing requested herein complies with the proviso to the first sentence
of Section 2.1 of the Agreement.



	 	 	 	 	 
	 	QUIDEL CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 











 





EXHIBIT A-2




FORM OF SWING LINE LOAN NOTICE




Date:                ,           





			
	To:	 	Bank of America, N.A., as Swing Line Lender

Bank of America, N.A., as Agent




Ladies and Gentlemen:




     Reference is made to that certain Credit Agreement, dated as of October 8, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Quidel Corporation, a Delaware
corporation (the “Borrower”), the
Lenders from time to time party thereto, U.S. Bank N.A., as Syndication Agent, and Bank of America,
N.A., as Agent, Swing Line Lender and L/C Issuer.



     The undersigned hereby requests a Swing Line Loan:




	 	1.	 	On                                     (a Business Day).
	 
	 	2.	 	In the amount of $                    .





     The Swing Line Borrowing requested herein complies with the requirements of the provisos to
the first sentence of Section 2.4(a) of the Agreement.



	 	 	 	 	 
	 	QUIDEL CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



EXHIBIT B




FORM OF NOTE




			
	 	 	 
	$___________________
	 	___________________






     FOR
VALUE RECEIVED, the undersigned (“Borrower”), hereby promises to pay to
                                        
or its registered assigns (“Lender”), in accordance with the provisions of the
Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the
Lender to Borrower under that certain Credit Agreement, dated as of October 8, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein and not otherwise defined herein being used herein as
therein defined), among Borrower, each lender from time to time party thereto, U.S. Bank N.A., as
Syndication Agent, and Bank of America, N.A., as Agent, Swing Line Lender and L/C Issuer.



     Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of
such Loan until such principal amount is paid in full, at such interest rates and at such times as
provided in the Agreement. Except as otherwise provided in Section 2.4(f) of the Agreement with
respect to Swing Line Loans, all payments of principal and interest shall be made to Agent for the
account of the Lender in Dollars in immediately available funds at the Agent’s Office. If any
amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.



     This Note is one of the Notes referred to in the Agreement, is entitled to the benefits
thereof and may be prepaid in whole or in part subject to the terms and conditions provided
therein. This Note is also entitled to the benefits of the Subsidiary Guaranty and is secured by
the Collateral. Upon the occurrence and continuation of one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable all as provided in the Agreement. Loans made by the
Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the
ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon
the date, amount and maturity of its Loans and payments with respect thereto.



     Borrower, for itself, its successors and assigns, hereby waives diligence, presentment,
protest and demand and notice of protest, demand, dishonor and non-payment of this Note.



     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.



B-1

Form of Note





 









 








	 	 	 	 	 
	 	QUIDEL CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



B-2

Form of Note





 









 








LOANS AND PAYMENTS WITH RESPECT THERETO




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Amount of	 	 	 	 
	 	 	 	 	 	 	 	 	Principal or	 	Outstanding	 	 
	 	 	 	 	 	 	End of	 	Interest	 	Principal	 	 
	 	 	Type of	 	Amount of	 	Interest	 	Paid This	 	Balance	 	Notation
	Date	 	Loan Made	 	Loan Made	 	Period	 	Date	 	This Date	 	Made By
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 





B-3

Form of Note





 











 





EXHIBIT C




FORM OF SUBSIDIARY GUARANTY




          This SUBSIDIARY GUARANTY is entered into as of October 8, 2008 by the undersigned (each a
“Guarantor”, and together with any future Subsidiaries executing this Guaranty, being collectively
referred to herein as the “Guarantors”) in favor of and for the benefit of BANK OF AMERICA, N.A.,
as agent for and representative of (in such capacity herein called
“Guarantied Party”) the
financial institutions (“Lenders”) party to the Credit Agreement referred to below, any Hedge Banks
(as hereinafter defined) and any Cash Management Banks (as hereinafter defined), and in favor of
and for the benefit of the other Beneficiaries (as hereinafter defined).




RECITALS.




          A. Quidel Corporation, a Delaware corporation (“Borrower”), has entered into that certain
Credit Agreement dated as of October 8, 2008 with Lenders, U.S. Bank N.A., as Syndication Agent,
and Guarantied Party, as Agent for Lenders (said Credit Agreement, as it may hereafter be amended,
restated, extended, supplemented or otherwise modified in writing from time to time, being the
“Credit Agreement;” capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined).




          B. Any Loan Party may from time to time enter, or may from time to time have entered, into one
or more Secured Hedge Agreements with one or more Persons that are Lenders or Affiliates of Lenders
at the time such Secured Hedge Agreements are entered into (in such capacity, collectively, “Hedge
Banks”) in accordance with the terms of the Credit Agreement, and it is desired that the
obligations of Loan Parties under the Secured Hedge Agreements, including without limitation the
obligation of Loan Parties 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 guarantied hereunder.




          C. Any Loan Party may from time to time enter, or may from time to time have entered, into one
or more Secured Cash Management Agreements with one or more Persons that are Lenders or Affiliates
of Lenders at the time such Secured Cash Management Agreements are entered into (in such capacity,
collectively, “Cash Management Banks”) in accordance with the terms of the Credit Agreement, and it
is desired that the obligations of Loan Parties under the Secured Cash Management Agreements,
together with all obligations of Borrower under the Credit Agreement and the other Loan Documents,
be guarantied hereunder.




          D. Guarantied Party, Lenders, each Hedge Bank and each Cash Management Bank for which
Guarantied Party has received the notice required by Section 18 hereof are sometimes referred to
herein as “Beneficiaries”.




          E. A portion of the proceeds of the Loans may be advanced to other Guarantors that are
Subsidiaries of Borrower, and thus the Guarantied Obligations (as hereinafter defined) are being
incurred for and will inure to the benefit of Guarantors (which benefits are hereby acknowledged).




C-1

Form of Subsidiary Guaranty





 









 








          F. It is a condition precedent to the making of the initial Loans under the Credit Agreement
that Borrower’s obligations thereunder be guarantied by Guarantors.




          G. Guarantors are willing irrevocably and unconditionally to guaranty such obligations of
Borrower.




          NOW, THEREFORE, based upon the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to induce Lenders and
Guarantied Party to enter into the Credit Agreement and to make Loans and other extensions of
credit thereunder, to induce Hedge Banks to enter into Secured Hedge Agreements and to induce Cash
Management Banks to enter into Secured Cash Management Agreements, Guarantors hereby agree as
follows:




          1. Guaranty. (a) Guarantors jointly and severally irrevocably and unconditionally guaranty, as
primary obligors and not merely as sureties, the due and punctual payment in full of all Guarantied
Obligations (as hereinafter defined) when the same shall become due, whether at stated maturity, by
acceleration, demand or otherwise (including amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code). The term “Guarantied Obligations”
is used herein in its most comprehensive sense and includes any and all Obligations of the Loan
Parties including all obligations of any Loan Party under Secured Hedge Agreements and Secured Cash
Management Agreements, now or hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, whether due or not due, and however arising under or in connection with
the Credit Agreement, the Secured Hedge Agreements, the Secured Cash Management Agreements, this
Guaranty and the other Loan Documents, including those arising under successive borrowing
transactions under the Credit Agreement which shall either continue such obligations of the Loan
Parties or from time to time renew them after they have been satisfied.




          Each Guarantor acknowledges that a portion of the Loans may be advanced to it, that Letters of
Credit may be issued for the benefit of its business and that the Guarantied Obligations are being
incurred for and will inure to its benefit.




          Any interest on any portion of the Guarantied Obligations that accrues after the commencement
of any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Borrower (or, if interest on any portion of the
Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said
proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if
said proceeding had not been commenced) shall be included in the Guarantied Obligations because it
is the intention of each Guarantor and Guarantied Party that the Guarantied Obligations should be
determined without regard to any rule of law or order that may relieve Borrower of any portion of
such Guarantied Obligations.




          In the event that all or any portion of the Guarantied Obligations is paid by Borrower, the
obligations of each Guarantor hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such payment(s) is rescinded
or recovered directly or indirectly from Guarantied Party or any other Beneficiary as




C-2

Form of Subsidiary Guaranty





 









 







a preference, fraudulent transfer or otherwise, and any such payments that are so rescinded or
recovered shall constitute Guarantied Obligations.




          Subject to the other provisions of this Section 1, upon the failure of Borrower to pay any of
the Guarantied Obligations when and as the same shall become due, each Guarantor will upon demand
pay, or cause to be paid, in cash, to Guarantied Party for the ratable benefit of Beneficiaries, an
amount equal to the aggregate of the unpaid Guarantied Obligations.




          (b) Anything contained in this Guaranty to the contrary notwithstanding, the obligations of
each Guarantor under this Guaranty and the other Loan Documents shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the
United States Code or any applicable provisions of comparable state law (collectively, the
“Fraudulent Transfer Laws”), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of such Guarantor (x) in respect of intercompany
indebtedness to Borrower or other affiliates of Borrower to the extent that such indebtedness would
be discharged in an amount equal to the amount paid by such Guarantor hereunder and (y) under any
guaranty of Subordinated Indebtedness which guaranty contains a limitation as to maximum amount
similar to that set forth in this Section 1(b), pursuant to which the liability of such Guarantor
hereunder is included in the liabilities taken into account in determining such maximum amount) and
after giving effect as assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of such Guarantor pursuant to applicable law or pursuant to the terms of any
agreement.




          (c) Each Guarantor under this Guaranty, and each guarantor under other guaranties, if any,
relating to the Credit Agreement (the “Related Guaranties”) that contain a contribution provision
similar to that set forth in this Section 1(c), together desire to allocate among themselves
(collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty and the Related Guaranties. Accordingly, in the event any payment or
distribution is made on any date by a Guarantor under this Guaranty or a guarantor under a Related
Guaranty, each such Guarantor or such other guarantor shall be entitled to a contribution from each
of the other Contributing Guarantors in the maximum amount permitted by law so as to maximize the
aggregate amount of the Guarantied Obligations paid to Beneficiaries.




          2. Guaranty Absolute; Continuing Guaranty. The obligations of each Guarantor hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other than payment in
full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the
generality thereof, each Guarantor agrees that: (a) this Guaranty is a guaranty of payment when due
and not of collectibility; (b) Guarantied Party may enforce this Guaranty upon the occurrence and
during the continuance of an Event of Default under 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




C-3

Form of Subsidiary Guaranty





 









 







of the Commitments, the occurrence of a payment default under any Secured Hedge Agreement or a
default under any Secured Cash Management Agreement, in each case, notwithstanding the existence of
any dispute between any Loan Party and any Beneficiary with respect to the existence of such event;
(c) the obligations of each Guarantor hereunder are independent of the obligations of Loan Parties
under the Loan Documents, the Secured Hedge Agreements or the Secured Cash Management Agreements
and the obligations of any other guarantor of obligations of Loan Parties and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not any action is brought
against any Loan Party or any of such other guarantors and whether or not any Loan Party is joined
in any such action or actions; and (d) a payment of a portion, but not all, of the Guarantied
Obligations by one or more Guarantors shall in no way limit, affect, modify or abridge the
liability of such or any other Guarantor for any portion of the Guarantied Obligations that has not
been paid. This Guaranty is a continuing guaranty and shall be binding upon each Guarantor and its
successors and assigns, and each Guarantor irrevocably waives any right (including without
limitation any such right arising under California Civil Code Section 2815) to revoke this Guaranty
as to future transactions giving rise to any Guarantied Obligations.




          3. Actions by Beneficiaries. Any Beneficiary may from time to time, without notice or demand
and without affecting the validity or enforceability of this Guaranty or giving rise to any
limitation, impairment or discharge of any Guarantor’s liability hereunder, (a) renew, extend,
accelerate or otherwise change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Guarantied Obligations or any agreement
relating thereto and/or subordinate the payment of the same to the payment of any other
obligations, (c) request and accept other guaranties of the Guarantied Obligations and take and
hold security for the payment of this Guaranty or the Guarantied Obligations, (d) release,
exchange, compromise, subordinate or modify, with or without consideration, any security for
payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any
other obligation of any Person with respect to the Guarantied Obligations, (e) enforce and apply
any security now or hereafter held by or for the benefit of any Beneficiary in respect of this
Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise
any other right or remedy that Guarantied Party or the other Beneficiaries, or any of them, may
have against any such security, as Guarantied Party in its discretion may determine consistent with
the Credit Agreement, the Secured Hedge Agreements, the Secured Cash Management Agreements and any
applicable security agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and (f) exercise any other rights available to Guarantied Party or the other
Beneficiaries, or any of them, under the Loan Documents, the Secured Hedge Agreements or the
Secured Cash Management Agreements.




          4. No Discharge. This Guaranty and the obligations of Guarantors hereunder shall be valid and
enforceable and shall not be subject to any limitation, impairment or discharge for any reason
(other than payment in full of the Guarantied Obligations), including without limitation the
occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge
of any of them: (a) any failure to assert or enforce or agreement not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law or




C-4

Form of Subsidiary Guaranty





 









 







otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy
with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to
any other guaranty of or security for the payment of the Guarantied Obligations, (b) any waiver or
modification of, or any consent to departure from, any of the terms or provisions of the Credit
Agreement, any of the other Loan Documents, the Secured Hedge Agreements, the Secured Cash
Management Agreements or any agreement or instrument executed pursuant thereto, or of any other
guaranty or security for the Guarantied Obligations, (c) the Guarantied Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any
respect, (d) the application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even though Guarantied Party or the other Beneficiaries, or
any of them, might have elected to apply such payment to any part or all of the Guarantied
Obligations, (e) any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (f) any defenses, set-offs or
counterclaims which Borrower or any other Loan Party may assert against Guarantied Party or any
Beneficiary in respect of the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury, and (g) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of a Guarantor as an obligor
in respect of the Guarantied Obligations.




          5. Waivers. Each Guarantor waives, for the benefit of Beneficiaries: (a) any right to require
Guarantied Party or the other Beneficiaries, as a condition of payment or performance by such
Guarantor, to (i) proceed against Borrower, any other Loan Party, any other guarantor of the
Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from
Borrower, any other Loan Party, any other guarantor of the Guarantied Obligations or any other
Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the
books of any Beneficiary in favor of Borrower, any other Loan Party or any other Person, or (iv)
pursue any other remedy in the power of any Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of Borrower or any other Loan
Party including, without limitation, any defense based on or arising out of the lack of validity or
the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto
or by reason of the cessation of the liability of Borrower or any other Loan Party from any cause
other than payment in full of the Guarantied Obligations; (c) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (d) any defense based upon Guarantied
Party’s or any other Beneficiary’s errors or omissions in the administration of the Guarantied
Obligations, except behavior that amounts to bad faith; (e) (i) any principles or provisions of
law, statutory or otherwise, that are or might be in conflict with the terms of this Guaranty and
any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any
statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any
requirement that any Beneficiary protect, secure, perfect or insure any Lien or any property
subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of
dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of
default under the Credit Agreement, notices of default under any Secured Hedge Agreement or Secured
Cash




C-5

Form of Subsidiary Guaranty





 









 







Management Agreement or any agreement or instrument related thereto, notices of early termination
under any Secured Hedge Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guarantied Obligations or any agreement related thereto,
notices of any extension of credit to Borrower or any Loan Party and notices of any of the matters
referred to in Sections 3 and 4 and any right to consent to any thereof; and (g) to the fullest
extent permitted by law, any defenses or benefits that may be derived from or afforded by law which
limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of
this Guaranty.




          As used in this paragraph, any reference to “the principal” includes Borrower or any other
Loan Party, and any reference to “the creditor” includes Guarantied Party and each other
Beneficiary. In accordance with Section 2856 of the California Civil Code (a) each Guarantor waives
any and all rights and defenses available to it by reason of Sections 2787 to 2855, inclusive, of
the California Civil Code. No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this paragraph.




          6. Guarantors’ Rights of Subrogation, Contribution, Etc.; Subordination of Other Obligations.
Until the Guarantied Obligations shall have been paid in full and the Commitments shall have
terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall
withhold exercise of (a) any claim, right or remedy, direct or indirect, that such Guarantor now
has or may hereafter have against Borrower or any other Loan Party or any of its assets in
connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract, by statute
(including without limitation under California Civil Code Section 2847, 2848 or 2849), under common
law or otherwise and including without limitation (i) any right of subrogation, reimbursement or
indemnification that such Guarantor now has or may hereafter have against Borrower or any other
Loan Party, (ii) any right to enforce, or to participate in, any claim, right or remedy that any
Beneficiary now has or may hereafter have against Borrower or any other Loan Party, and (iii) any
benefit of, and any right to participate in, any collateral or security now or hereafter held by
any Beneficiary and (b) any right of contribution such Guarantor now has or may hereafter have
against any other guarantor of any of the Guarantied Obligations. Each Guarantor further agrees
that, to the extent the agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Guarantor may have against Borrower or any other Loan Party
or against any collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights Guarantied Party or
the other Beneficiaries may have against Borrower or any other Loan Party, to all right, title and
interest Guarantied Party or the other Beneficiaries may have in any such collateral or security,
and to any right Guarantied Party or the other Beneficiaries may have against such other guarantor.




          Any indebtedness of Borrower or any other Loan Party now or hereafter held by any Guarantor is
subordinated in right of payment to the Guarantied Obligations, and any such indebtedness of
Borrower or any other Loan Party to a Guarantor collected or received by such




C-6

Form of Subsidiary Guaranty





 









 







Guarantor after an Event of Default has occurred and is continuing, and any amount paid to a
Guarantor on account of any subrogation, reimbursement, indemnification or contribution rights
referred to in the preceding paragraph when all Guarantied Obligations have not been paid in full,
shall be held in trust for Guarantied Party on behalf of Beneficiaries and shall forthwith be paid
over to Guarantied Party for the benefit of Beneficiaries to be credited and applied against the
Guarantied Obligations.




          7. Expenses. Guarantors jointly and severally agree to pay, or cause to be paid, on demand,
and to save Guarantied Party and the other Beneficiaries harmless against liability for, (i) any
and all costs and expenses (including fees, costs of settlement, and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by Guarantied Party or any other
Beneficiary in connection with the enforcement of or preservation of any rights under this Guaranty
and (ii) any and all costs and expenses (including those arising from rights of indemnification)
required to be paid by Guarantors under the provisions of any other Loan Document.




          8. Financial Condition of Borrower and Loan Parties. No Beneficiary shall have any obligation,
and each Guarantor waives any duty on the part of any Beneficiary, to disclose or discuss with such
Guarantor its assessment, or such Guarantor’s assessment, of the financial condition of Borrower or
any other Loan Party or any matter or fact relating to the business, operations or condition of
Borrower or any other Loan Party. Each Guarantor has adequate means to obtain information from
Borrower or any other Loan Party on a continuing basis concerning the financial condition of
Borrower or any other Loan Party and its ability to perform its obligations under the Loan
Documents, the Secured Hedge Agreements and the Secured Cash Management Agreements, and each
Guarantor assumes the responsibility for being and keeping informed of the financial condition of
Borrower or any other Loan Party and of all circumstances bearing upon the risk of nonpayment of
the Guarantied Obligations.




          9. Representations and Warranties. Each Guarantor makes, for the benefit of Beneficiaries,
each of the representations and warranties made in the Credit Agreement by Borrower as to such
Guarantor, its assets, financial condition, operations, organization, legal status, business and
the Loan Documents to which it is a party.




          10. Covenants. Each Guarantor agrees that, so long as any part of the Guarantied Obligations
shall remain unpaid, any Letter of Credit shall be outstanding, any Lender shall have any
Commitment, any Hedge Bank shall have any obligation under any Secured Hedge Agreement or any Cash
Management Bank shall have any obligation under any Secured Cash Management Agreement, such
Guarantor will, unless Requisite Obligees (as such term is defined in Section 17(a)) shall
otherwise consent in writing, perform or observe, and cause its Subsidiaries to perform or observe,
all of the terms, covenants and agreements that the Loan Documents state that Borrower is to cause
a Guarantor and such Subsidiaries to perform or observe.




          11. Set Off. In addition to any other rights any Beneficiary may have under law or in equity,
if any amount shall at any time be due and owing by a Guarantor to any Beneficiary under this
Guaranty, such Beneficiary is authorized at any time or from time to time,




C-7

Form of Subsidiary Guaranty





 









 







without notice (any such notice being expressly waived), to set off and to appropriate and to apply
any and all deposits (general or special, including but not limited to indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to a Guarantor and any other property of such Guarantor held by a Beneficiary to
or for the credit or the account of such Guarantor against and on account of the Guarantied
Obligations and liabilities of such Guarantor to any Beneficiary under this Guaranty.
Notwithstanding the provisions of this Section 11, if at any time any Beneficiary maintains one or
more deposit accounts for a Guarantor under this Guaranty into which Medicare and/or Medicaid
receivables are deposited, such Beneficiary shall waive the right of setoff set forth herein.




          12. Discharge of Guaranty Upon Sale of Guarantor. If all of the stock of a Guarantor or any of
its successors in interest under this Guaranty shall be sold or otherwise disposed of (including by
merger or consolidation) in a sale or other disposition not prohibited by the Credit Agreement or
otherwise consented to by Requisite Obligees (as such term is defined in Section 17(a)), such
Guarantor or such successor in interest, as the case may be, may request Guarantied Party to
execute and deliver documents or instruments necessary to evidence the release and discharge of
this Guaranty as provided in subsection 9.10 of the Credit Agreement.




          13. Amendments and Waivers. No amendment, modification, termination or waiver of any provision
of this Guaranty, and no consent to any departure by any Guarantor therefrom, shall in any event be
effective without the written concurrence of Guarantied Party and, in the case of any such
amendment or modification, Guarantors. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.




          14. Miscellaneous. It is not necessary for Beneficiaries to inquire into the capacity or
powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting
to act on behalf of any of them.




          The rights, powers and remedies given to Beneficiaries by this Guaranty are cumulative and
shall be in addition to and independent of all rights, powers and remedies given to Beneficiaries
by virtue of any statute or rule of law or in any of the Loan Documents or the Secured Hedge
Agreements or the Secured Cash Management Agreements or any agreement between one or more
Guarantors and one or more Beneficiaries or between Borrower and one or more Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in exercising, any right,
power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a
waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.




          In case any provision in or obligation under this Guaranty 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.




C-8

Form of Subsidiary Guaranty





 









 








          THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS, GUARANTIED PARTY AND THE OTHER
BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.




          This Guaranty shall inure to the benefit of Beneficiaries and their respective successors and
assigns.




          ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS
GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY EACH GUARANTOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY. Each Guarantor 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 Guarantor at its address set forth below its
signature hereto, such service being acknowledged by such Guarantor to be sufficient for personal
jurisdiction in any action against such Guarantor in any such court and to be otherwise effective
and binding service in every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Guarantied Party or any Beneficiary to
bring proceedings against such Guarantor in the courts of any other jurisdiction.




          EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, GUARANTIED PARTY EACH AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS GUARANTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES 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 GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
GUARANTIED PARTY EACH (I) ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR SUCH GUARANTOR
AND GUARANTIED PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT SUCH GUARANTOR AND GUARANTIED
PARTY HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS GUARANTY OR ACCEPTING THE BENEFITS
THEREOF, AS THE CASE MAY BE, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS, AND (II) FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS




C-9

Form of Subsidiary Guaranty





 









 







FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY. In the event of litigation, this Guaranty
may be filed as a written consent to a trial by the court.




          15. Additional Guarantors. The initial Guarantor(s) hereunder shall be such of the
Subsidiaries of Borrower as are signatories hereto on the date hereof. From time to time subsequent
to the date hereof, Subsidiaries of Borrower may become parties hereto, as additional Guarantors
(each an “Additional Guarantor”), by executing a counterpart of this Guaranty. A form of such a
counterpart is attached as Exhibit A. Upon delivery of any such counterpart to Guarantied Party,
notice of which is hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor
and shall be as fully a party hereto as if such Additional Guarantor were an original signatory
hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Guarantor hereunder, nor by any
election of the Guarantied Party not to cause any Subsidiary of Borrower to become an Additional
Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor that is or becomes
a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a
Guarantor hereunder.




          16. Counterparts; Effectiveness. This Guaranty may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original for all purposes; but all such counterparts together
shall constitute but one and the same instrument. This Guaranty shall become effective as to each
Guarantor upon the execution of a counterpart hereof by such Guarantor (whether or not a
counterpart hereof shall have been executed by any other Guarantor) and receipt by the Guaranteed
Party of written or telephonic notification of such execution and authorization of delivery
thereof.




          17. Guarantied Party as Agent.




          (a) Guarantied Party has been appointed to act as Guarantied Party hereunder by Lenders.
Guarantied 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, solely in accordance with this Guaranty and the Credit Agreement; provided that
Guarantied Party shall exercise, or refrain from exercising, any remedies under or with respect to
this Guaranty in accordance with the instructions of (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 the aggregate amount then due and payable (exclusive of expenses and similar payments
but, in the case of Secured Hedge Agreements, including any early termination payments then due)
under the Secured Hedge Agreements and Secured Cash Management Agreements (Required Lenders or, if
applicable, such holders being referred to herein as “Requisite Obligees”).




C-10

Form of Subsidiary Guaranty





 









 








          (b) Guarantied 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 9.6 of the Credit
Agreement shall also constitute notice of resignation as Guarantied Party under this Guaranty; and
appointment of a successor Agent pursuant to subsection 9.6 of the Credit Agreement shall also
constitute appointment of a successor Guarantied Party under this Guaranty. Upon the acceptance of
any appointment as Agent under subsection 9.6 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 Guarantied Party under this Guaranty, and the retiring
Guarantied Party under this Guaranty shall promptly (i) transfer to such successor Guarantied Party
all sums held hereunder, together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate in connection with
the assignment to such successor Guarantied Party of the rights created hereunder, whereupon such
retiring Guarantied Party shall be discharged from its duties and obligations under this Guaranty.
After any retiring Guarantied Party’s resignation hereunder as Guarantied Party, the provisions of
this Guaranty shall inure to its benefits as to any actions taken or omitted to be taken by it
under this Guaranty while it was Guarantied Party hereunder.




          18. Notice of Secured Hedge Agreements and Secured Cash Management Agreements. Guarantied
Party shall not be deemed to have any duty whatsoever with respect to any Hedge Bank or Cash
Management Bank until it shall have received written notice in form and substance satisfactory to
Guarantied Party from Borrower, a Guarantor or the Hedge Bank or the Cash Management Bank as to the
existence and terms of the applicable Secured Hedge Agreement or Secured Cash Management Agreement.




[Remainder of page intentionally left blank.]




C-11

Form of Subsidiary Guaranty





 









 








          IN WITNESS WHEREOF, each Guarantor and Guarantied Party, solely for the purposes of the waiver
of the right to jury trial contained in Section 14, have caused this Guaranty to be duly executed
and delivered by their respective officers thereunto duly authorized as of the date first written
above.




	 	 	 	 	 
	 	PACIFIC BIOTECH, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	METRA BIOSYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	OSTEO SCIENCES CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LITMUS CONCEPTS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



C-S-1

Form of Subsidiary Guaranty





 











 





	 	 	 	 	 
	 	Notice Address for each Guarantor:



10165 McKellar Court

San Diego, CA 92121

Attention: Chief Financial Officer

Telephone: (858) 552-1100

Facsimile: (858) 646-8028

Electronic Mail: jradak@quidel.com



with a copy to:



10165 McKellar Court

San Diego, CA 92121

Attention: Legal Department

Telephone: (858) 552-1100

Facsimile: (858) 646-8028

Electronic Mail: rbujarski@quidel.com

 	 
	 	 	 
	 	 	 
	 	 	 
	 



C-S-2

Form of Subsidiary Guaranty





 









 








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

Guarantied Party

 	 
	 	By:  	 	 
	 	 	Name:  	Tiffany Shin 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	Notice Address:



Bank of America, N.A.

Agency Management

Global Product Solutions

WA1-501-17-32

800 Fifth Avenue, Floor 17

Seattle WA 98104

Attn: Tiffany Shin, Assistant Vice President

Telephone: 206-358-0078

Telecopier: 415-343-0561

Electronic Mail: tiffany.shin@bankofamerica.com

 	 
	 	 	 
	 	 	 
	 	 	 
	 



C-S-3

Form of Subsidiary Guaranty





 









 








EXHIBIT A TO 

SUBSIDIARY GUARANTY




FORM OF COUNTERPART FOR ADDITIONAL GUARANTORS




          This COUNTERPART (this “Counterpart”), dated                     , 20___, is delivered pursuant to Section
15 of the Guaranty referred to below. The undersigned hereby agrees that this Counterpart may be
attached to the Guaranty, dated as of October 8, 2008 (as it may be from time to time amended,
modified or supplemented, the “Guaranty”; capitalized terms used herein not otherwise defined
herein shall have the meanings ascribed therein), among the Guarantors named therein and Bank of
America, N.A., as Guarantied Party. The undersigned, by executing and delivering this Counterpart,
hereby becomes an Additional Guarantor under the Guaranty in accordance with Section 15 thereof and
agrees to be bound by all of the terms thereof.




          IN WITNESS WHEREOF, the undersigned has caused this Counterpart to be duly executed and
delivered by its officer thereunto duly authorized as of                     , 20__.




	 	 	 	 	 
	 	[NAME OF ADDITIONAL GUARANTOR]

 	 
	 	By:  	 	 
	 	 	[Title: 	 ]	 
	 	 	Address: 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 



C-A

Form of Subsidiary Guaranty





 









 








EXHIBIT D




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date: ________,




To:    Bank of America, N.A., as Agent




Ladies and Gentlemen:





     Reference is made to that certain Credit Agreement, dated as of October 8, 2008 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein and not otherwise defined herein being used herein as
therein defined), among Quidel Corporation, a Delaware corporation (“Borrower”), the Lenders from
time to time party thereto, U.S. Bank N.A., as Syndication Agent, and Bank of America, N.A., as
Agent, Swing Line Lender and L/C Issuer.



     The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the
                                                             of Borrower, and that, as such, he/she is authorized to execute and deliver
this Certificate to Agent on the behalf of Borrower, and that:



     [Use following paragraph 1 for fiscal year-end financial statements]



     1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.1 (a) of the Agreement for the fiscal year of Borrower ended as of
the above date, together with the report and opinion of an independent certified public accountant
required by such section.



     [Use following paragraph 1 for fiscal quarter-end financial statements]



     1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.1(b) of the Agreement for the fiscal quarter of Borrower ended as of the above
date. Such financial statements fairly present the financial condition, results of operations and
cash flows of Borrower and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of footnotes.



     2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made,
or has caused to be made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements.



     3. A review of the activities of Borrower and its Subsidiaries during such fiscal period has
been made under the supervision of the undersigned with a view to determining whether during such
fiscal period Borrower and its Subsidiaries performed and observed all their respective Obligations
under the Loan Documents, and



     [select one:]



D-1

Form of Compliance Certificate




 









 





     [to the best knowledge of the undersigned during such fiscal period, Borrower and its
Subsidiaries have performed and observed each covenant and condition of the Loan Documents
applicable to it.]



     —or—



     [the following covenants or conditions have not been performed or observed and the following
is a list of each such Default and its nature and status:]



     4. The financial covenant analyses and information set forth on Schedule 2 attached
hereto are true and accurate on and as of the date of this Certificate.



     [Include the following paragraph 5 if any Stock Repurchase has been consummated during the
preceding 4 fiscal quarter period]



     [5. At the time of each Stock Repurchase consummated during the preceding four fiscal quarter
period, the conditions set forth in clauses (a), (b) and (c) of the definition of “Permitted Stock
Repurchase” set forth in the Agreement were satisfied.]



[Remainder of page left intentionally blank]



D-2

Form of Compliance Certificate




 









 





     IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                                         ,
                    .



	 	 	 	 	 
	 	QUIDEL CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



D-1

Form of Compliance Certificate





 











 





For the Quarter/Year ended ______________________ (“Statement Date”)




SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 	 	 	 	 
	I.	 	Section 6.12(a) — Funded Debt to EBITDA Ratio.	 	 	 	 
	 

	 	A.
	 	Funded Debt:	 	 	 	 
	 

	 	 	 	1.     all outstanding Indebtedness for borrowed money plus other interest-bearing Indebtedness:

	 	$	 	 
	 

	 	 	 	2.     less the non-current portion of Subordinated Indebtedness:

	 	$	 	 
	 

	 	 	 	3.     Funded Debt (Line I.A.1 less Line I.A.2):

	 	$	 	 
	 

	 	B.
	 	EBITDA:	 	 	 	 
	 

	 	 	 	1.     net income:

	 	$	 	 
	 

	 	 	 	2.     less income or plus loss from discontinued operations and extraordinary items:

	 	$	 	 
	 

	 	 	 	3.     plus income taxes:

	 	$	 	 
	 

	 	 	 	4.     plus interest expense and debt issuance costs and commissions, discounts and other fees and
charges associated with initial occurrence of any Indebtedness:

	 	$	 	 
	 

	 	 	 	5.     plus non-cash stock compensation expenses
	 	 	 	 
	 

	 	 	 	6.     plus depreciation

	 	$	 	 
	 

	 	 	 	7.     plus amortization (including amortization of inventory write-ups and deferred revenue adjustments)

	 	$	 	 
	 

	 	 	 	8.     plus transaction expenses or other initial non cash or fair value adjustments related to any
merger, acquisition or joint venture and non-recurring and non-cash charges associated with any
impairment analysis required under Financial Accounting Standards No. 142 and 144

	 	$	 	 
	 

	 	 	 	9.     EBITDA (Lines I.B.l±2+3+4+5+6+7+8)1:

	 	$	 	 
	 

	 	C.
	 	Ratio (Line I.A.3 ÷ Line I.B.9)2:
	 	 	___: 1.00	 
	 

	 	D.
	 	Maximum Permitted:
	 	 	3.00:1.00	 
	 
	 	 	 	 	 	 	 	 
	II.	 	Section 6.12(b) — Interest Coverage Ratio.	 	 	 	 
	 

	 	A.
	 	EBITDA (amount from Line I.B.9):
	 	$	 	 
	 

	 	B.
	 	Interest Charges:	 	 	 	 






 




			
	1	 	The amount of EBITDA shall be determined after giving effect on a pro forma basis to
any Permitted Acquisitions that have been consummated to the extent either Agent has approved
the financial statements of the applicable acquired Persons or assets or such financial
statements are audited by a national accounting firm reasonably acceptable to Agent (and in
either case giving effect to pro forma adjustments as determined by the Board of Directors of
Borrower in good faith and approved by Agent).
	 
	2	 	This ratio shall be calculated at the end of each reporting period for which the
Credit Agreement requires Borrower to deliver financial statements, using the results of the
four-fiscal quarter period ending with that reporting period.





D-Schedule 2-2

Form of Compliance Certificate













 






	 	 	 	 	 	 	 	 	 
	 

	 	 	 	1.     all interest, premium payments, debt discount, fees, charges and related expenses of Borrower
and its Subsidiaries in connection with borrowed money (including capitalized interest) or in
connection with the deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP

	 	$	 	 
	 

	 	 	 	2.     plus the portion of rent expense of Borrower and its Subsidiaries under capital leases that is
treated as interest in accordance with GAAP

	 	$	 	 
	 

	 	 	 	3.     Interest Charges (Line II.B.l plus Line II.B.2):

	 	$	 	 
	 

	 	C.
	 	Ratio (Line II.A ÷ Line II.B.3)2:
	 	 	___: 1.00	 
	 

	 	D.
	 	Minimum Required:
	 	 	3.50:1.00	 
	 
	 	 	 	 	 	 	 	 
	III.	 	Section 7.2(b) — Investments.	 	 	 	 
	 

	 	A.
	 	Advances to officers, directors and employees of Borrower and Subsidiary Guarantors for travel,
entertainment, relocation and analogous ordinary business purposes
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.2(b):
	 	$	250,000	 
	 
	 	 	 	 	 	 	 	 
	IV.	 	Section 7.2(h) — Investments.	 	 	 	 
	 

	 	A.
	 	Investments in Persons other than Subsidiaries
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.2(h):
	 	$	5,000,000	 
	 
	 	 	 	 	 	 	 	 
	V.	 	Section 7.2(i) — Investments.	 	 	 	 
	 

	 	A.
	 	Additional Investments
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.2(i):
	 	$	10,000,000	 
	 
	 	 	 	 	 	 	 	 
	VI.	 	Section 7.3 (e) — Indebtedness.	 	 	 	 
	 

	 	A.
	 	Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets (including equipment) within the limitations set forth in
Section 7. l(i) of the Agreement
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.3(e):
	 	$	5,000,000	 
	 
	 	 	 	 	 	 	 	 
	VII.	 	Section 7.3(h) — Indebtedness.	 	 	 	 
	 

	 	A.
	 	Other unsecured Indebtedness
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.3(h):
	 	$	10,000,000	 
	 
	 	 	 	 	 	 	 	 
	VIII.	 	Section 7.5(h) — Dispositions.	 	 	 	 
	 

	 	A.
	 	Proceeds from Dispositions under clause 7.5(h) since the Closing Date
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.5(h):
	 	$	500,000	 
	 
	 	 	 	 	 	 	 	 
	IX.	 	Section 7.6(d) — Restricted Payments.	 	 	 	 






D-Schedule 2-3

Form of Compliance Certificate













 






	 	 	 	 	 	 	 	 	 
	 

	 	A.
	 	Repurchase or redemptions for value of Equity Interests of
Borrower held by present or former officers, directors or employees (or their
transferees, estates or beneficiaries under their estates) under Section 7.6(d)(i)
in the current fiscal year
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.6(d)(i):
	 	$	2,000,000	 
	 
	 	 	 	 	 	 	 	 
	X.	 	Section 7.6(e) — Restricted Payments.	 	 	 	 
	 

	 	A.
	 	Cash paid or payable for all Permitted Stock Repurchases consummated during the
term of the Credit Agreement
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.6(e):
	 	$	50,000,000	 
	 
	 	 	 	 	 	 	 	 
	XI.	 	Section 7.8(vi) — Transactions with Affiliates.	 	 	 	 
	 

	 	A.
	 	Ordinary course expenses in connection with continuing the non-operational
status of and/or dissolution of the Dormant Foreign Subsidiaries under Section
7.8(vi) during the current fiscal year
	 	$	 	 
	 

	 	B.
	 	Maximum permitted under Section 7.8(vi):
	 	$	250,000	 
	 
	 	 	 	 	 	 	 	 
	XII.	 	Section 7.12 — Capital Expenditures.	 	 	 	 
	 

	 	A.
	 	Capital Expenditures made during the current fiscal year
	 	$	 	 
	 

	 	B.
	 	Maximum amount of Capital Expenditures for such fiscal year permitted under
Section 7.12:3
	 	$	 	 








 




			
	3	 	This shall be the Base Amount for the current fiscal year as set forth in Section 7.12
plus an amount equal to the excess, if any, (but in no event more than 50%) of the
Base Amount for the immediately preceding fiscal year (prior to any adjustments for such year)
over the actual amount of Capital Expenditures for such previous fiscal year.







D-Schedule 2-4

Form of Compliance Certificate

















 





EXHIBIT E




FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT




     This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [the] [each]1 Assignor
identified in item 1 below ([the] [each, an] “Assignor”) and [the] [each]2
Assignee identified in item 2 below ([the] [each, an] “Assignee”). [It is understood and
agreed that the rights and obligations of [the Assignors] [the Assignees]3 hereunder are
several and not joint.]4 Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by [the] [each] Assignee. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth herein in full.



     For an agreed consideration, [the] [each] Assignor hereby irrevocably sells and assigns to
[the Assignee] [the respective Assignees], and [the] [each] Assignee hereby irrevocably purchases
and assumes from [the Assignor] [the respective Assignors], subject to and in accordance with the
Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Agent
as contemplated below (i) all of [the Assignor’s] [the respective Assignors’] rights and
obligations in [its capacity as a Lender] [their respective capacities as Lenders] under the Credit
Agreement and any other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such outstanding rights and
obligations of [the Assignor] [the respective Assignors] under the respective facilities identified
below (including, without limitation, the Letters of Credit and the Swing Line Loans included in
such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)] [the
respective Assignors (in their respective capacities as Lenders)] against any Person, whether known
or unknown, arising under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed thereby or in any way
based on or related to any of the foregoing, including, but not limited to, contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned by [the] [any] Assignor to [the] [any] Assignee pursuant to clauses
(i) and (ii) above being referred to herein collectively as [the] [an] “Assigned
Interest”). Each such sale and assignment is without recourse to [the] [any] Assignor and,
except as expressly provided in this Assignment and Assumption, without representation or warranty
by [the] [any] Assignor.




	1.	 	Assignor[s]:                                         
	 
	2.	 	Assignee[s]:                                          [and is an [Affiliate][Approved Fund] of [identify Lender]







 




			
	1	 	For bracketed language here and elsewhere in this form relating to the Assignor(s), if
the assignment is from a single Assignor, choose the first bracketed language. If the
assignment is from multiple Assignors, choose the second bracketed language.
	 
	2	 	For bracketed language here and elsewhere in this form relating to the Assignee(s), if
the assignment is to a single Assignee, choose the first bracketed language. If the assignment
is to multiple Assignees, choose the second bracketed language.
	 
	3	 	Select as appropriate.
	 
	4	 	Include bracketed language if there are either multiple Assignors or multiple
Assignees.





E-l

Form of Assignment and Assumption Agreement






 









 









	3.	 	Borrower: Quidel Corporation
	 
	4.	 	Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement
	 
	5.	 	Credit Agreement: Credit Agreement, dated as of October 8, 2008, among Quidel Corporation,
the Lenders from time to time party thereto, U.S. Bank N.A., as Syndication Agent, and Bank of
America, N.A., as Agent, Swing Line Lender and L/C Issuer.
	 
	6.	 	Assigned Interest[s]:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Aggregate Amount of	 	 	 	 	 	 
	 	 	 	 	 	 	Commitment/Loans	 	Amount of	 	Percentage Assigned	 	 
	 	 	 	 	 	 	for all	 	Commitment/ Loans	 	of Commitment/	 	 
	Assignor[s]5	 	Assignee[s]6	 	Lenders7	 	Assigned8	 	Loans8	 	CUSIP Number
	 
	 	 	 	 	 	$	  	 	 	$	  	 	 	 	  	%	 	 	 	 
	 
	 	 	 	 	 	$	  	 	 	$	  	 	 	 	  	%	 	 	 	 
	 
	 	 	 	 	 	$	  	 	 	$	  	 	 	 	  	%	 	 	 	 







	[7. Trade
Date:	 	                                  ]




Effective Date:                     , 20      [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE
OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]



The terms set forth in this Assignment and Assumption are hereby agreed to:




	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	
 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	
 	 
	 	 	Title: 	 
	 	 	 	 
	 





 




			
	5	 	List each Assignor, as appropriate.
	 
	6	 	List each Assignee, as appropriate.
	 
	7	 	Amount to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.
	 
	8	 	Set forth, to at least 9 decimals, as a percentage of the Commitment of all Lenders
thereunder.





E-2

Form of Assignment and Assumption Agreement





 









 








	 	 	 	 	 
	[Consented to and] Accepted:

Bank of America, N.A., as Agent

 	 
	By:  	
 	 
	 	Title: 	 
	 	 	 



	 	 	 	 	 
	[Consented to:]

QUIDEL CORPORATION

 	 
	By:  	
 	 
	 	Title: 	 
	 	 	 
	 



E-3

Form of Assignment and Assumption Agreement





 









 








ANNEX 1 TO ASSIGNMENT AND ASSUMPTION




STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ASSUMPTION





     1. Representations and Warranties.



     1.1. Assignor[s]. [The] [Each] Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of [the] [the relevant] Assigned Interest, (ii) [the] [such] Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full
power and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or
any other Person obligated in respect of any Loan Document or (iv) the performance or observance by
the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.



     1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.6(b)(iii),
(v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under
Section 10.6(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the]
[the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type represented by [the] [such]
Assigned Interest and either it, or the Person exercising discretion in making its decision to
acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received
a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive
copies of the most recent financial statements delivered pursuant to Section 6.1 thereof, as
applicable, and such other documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such]
Assigned Interest, (vi) it has, independently and without reliance upon Agent or any other Lender
and based on such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such]
Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and
executed by [the] [such] Assignee; and (b) agrees that (i) it will, independently and without
reliance upon Agent, [the] [any] Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.



E-Annex 1-4

Form of Assignment and Assumption Agreement





 









 








     2. Payments. From and after the Effective Date, Agent shall make all payments in
respect of [the] [each] Assigned Interest (including payments of principal, interest, fees and
other amounts) to [the] [the relevant] Assignor for amounts which have accrued to but excluding the
Effective Date and to [the] [the relevant] Assignee for amounts which have accrued from and after
the Effective Date.



     3. General Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the laws of the State of California.



E-Annex 1-5

Form of Assignment and Assumption Agreement





 









 








EXHIBIT F




SECURITY AGREEMENT




          This SECURITY AGREEMENT (this “Agreement”) is dated as of October 8, 2008 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 October 8, 2008 (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, U.S. Bank N.A., as Syndication Agent, 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. Any Loan Party may from time to time enter, or may from time to time have entered, into one
or more Secured Hedge Agreements with one or more Hedge Banks in accordance with the terms of the
Credit Agreement, and it is desired that the obligations of Loan Parties under the Secured Hedge
Agreements, including, without limitation, the obligation of Loan Parties 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. Any Loan Party may from time to time enter, or may from time to time have entered, into one
or more Secured Cash Management Agreements with one or more Cash Management Banks in accordance
with the terms of the Credit Agreement, and it is desired that the obligations of Loan Parties
under the Secured Cash Management Agreements, together with all obligations of Borrower under the
Credit Agreement and the other Loan Documents, be secured hereunder.




          D. Subsidiary Grantors have executed and delivered the Subsidiary Guaranty, in each case in
favor of Secured Party for the benefit of Lenders, any Hedge Banks and any Cash Management Banks,
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 Loan Parties
under the Secured Hedge Agreements and Secured Cash Management Agreements.




Security Agreement





1









 








          E. 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, to induce Hedge Banks to enter into the Secured Hedge Agreements and to induce
Cash Management Banks to enter into the Secured Cash Management Agreements, each Grantor hereby
agrees with Secured Party as follows:




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.






2









 








          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
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(i) 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 are 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 Secured Hedge Agreement and any Cash Management Agreement (including
all Obligations (as defined in the Credit Agreement)); and





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          (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 Secured
Hedge Agreements, 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 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 Hedge Bank or Cash Management Bank 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, Hedge Banks and Cash Management Banks 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






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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, (v), in the
case 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, (vi) in the case of
Letter-of-Credit Rights (other than Letter-of-Credit Rights consisting of Supporting Obligations
for Collateral as to which Secured Party otherwise has a perfected security interest), the issuer
of the applicable letter of credit has consented to the assignment of proceeds thereof under
Section 5114(c) of the UCC, and (vii) in the case of commercial tort claims, the sufficient
identification thereof in filed UCC financing statements, 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, Hedge Banks and Cash Management Banks 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 required under this Agreement and
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







5









 







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 or used by such Grantor, in whole or in part (other
than those held or used pursuant to a license and those not yet required to be set forth on an
update to Schedule 5.17(a) to the Credit Agreement pursuant to Section 6.2(g) of the Credit
Agreement), is set forth on Schedule 8 annexed hereto; a true and complete list of all
Patents owned, held or used by such Grantor, in whole or in part (other than those held or used
pursuant to a license and those not yet required to be set forth on an update to Schedule
5.17(a) to the Credit Agreement pursuant to Section 6.2(g) of the Credit Agreement), is set
forth on Schedule 9 annexed hereto; a true and complete list of all Copyright Registrations
and applications for Copyright Registrations held by such Grantor, in whole or in part (other than
those held pursuant to a license and those not yet required to be set forth on an update to
Schedule 5.17(a) to the Credit Agreement pursuant to Section 6.2(g) of the Credit
Agreement), is set forth on Schedule 10 annexed hereto; and such Grantor is not aware of
any material 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







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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 executed and delivered, agreements establishing
that Secured Party has control of Deposit Accounts other than Excluded 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,







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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. As soon as available but in any event within 30 days
after the end of each fiscal year, Borrower shall deliver any update to Schedule 5.17(a) to
the Credit Agreement required by Section 6.2(g) of the Credit Agreement and, together therewith,
with respect to any registered Intellectual Property Collateral acquired by a Grantor during the
fiscal year covered by such update, such 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 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.




          (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 material 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,






8









 







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;




          (b) subject to Section 6.16(b) 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







9









 







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 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, subject to the provisions of the last paragraph of Section 1 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) subject to the provisions of the last
paragraph of Section 1; (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.





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          (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 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.





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          (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 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.



          (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.





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          (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 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







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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
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;





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          (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




          (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. 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 14. 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







15









 







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 15. 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 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 apart 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, Hedge Bank or Cash Management Bank 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, Hedge Banks and Cash Management Banks (but not any Lender, Hedge Bank or Cash Management
Bank 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







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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, 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 Article VIII 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 L/C Issuer for the amount of such
drawing and (ii) in the event of





17









 







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 16. 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 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





18









 







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 17. 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 18. Indemnity and Expenses.




          (a) Grantors jointly and severally agree to indemnify Secured Party, each Lender, each Hedge
Bank and each Cash Management Bank 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, Hedge
Bank’s or Cash Management Bank’s gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.




          (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 Secured Hedge
Agreements, the Secured Cash Management Agreements, 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 19. 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 10.6 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, (B)
any Hedge Bank may assign or otherwise transfer any Secured Hedge Agreement to which it is a party
to any other Person in accordance with the terms of such Secured Hedge




19









 






19



Agreement, and such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Hedge Banks herein or otherwise and (C) any Cash Management Bank may assign or
otherwise transfer any Secured Cash Management Agreement to which it is a party to any other Person
in accordance with the terms of such Secured Cash Management Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to Cash Management Banks
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 9.10 of the Credit Agreement.




SECTION 20. 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, Hedge Banks and Cash Management Banks. 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 (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 Hedge
Bank and each Cash Management Bank, 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 Hedge Bank that all rights and remedies hereunder may be exercised solely by Secured
Party for the benefit of Lenders, Hedge Banks and Cash Management Banks 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 9.6 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 9.6 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 9.6 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







20









 







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 Hedge
Bank or any Cash Management Bank until it shall have received written notice in form and substance
satisfactory to Secured Party from a Grantor or the Hedge Bank or the Cash Management Bank as to
the existence and terms of the applicable Secured Hedge Agreement or Secured Cash Management
Agreement.




SECTION 21. 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 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 22. 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 23. 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







21









 







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 24. 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 25. 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 26. 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.




SECTION 27. 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 28. 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






22









 







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 29. 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 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.






23









 








SECTION 30. 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 31. 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 Divisions 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, each Hedge Bank and each Cash Management Bank.



     “Cash Management Bank” means any Person that, at the time it enters into a Cash Management
Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement.



     “Cash Management Agreement” means any agreement to provide cash management services, including
treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash
management arrangements.



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



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



     “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



24









 







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 Secured Hedge Agreement or the occurrence of a default under a Cash Management
Agreement.



     “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.



     “Hedge Bank” means any Person that, at the time it enters into a Swap Contract permitted under
Article VII of the Credit Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a
party to such Swap Contract.



     “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



          (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;




          
25









 









          (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.



     “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
reissues, 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 but excluding any Equity
Interests that would be excluded from the Collateral on the basis of clause (a) of the last
paragraph of Section 1 hereof.



     “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.



26









 





     “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 the
aggregate amount then due and payable (exclusive of expenses and similar payments but including,
with respect to Secured Hedge Agreements, any early termination payments then due) under the
Secured Hedge Agreements and Secured Cash Management Agreements.



     “Secured Cash Management Agreement” means any Cash Management Agreement that is entered into
by and between any Loan Party and any Cash Management Bank.



     “Secured Hedge Agreement” means any Swap Contract permitted under Article VII of the Credit
Agreement that is entered into by and between any Loan Party and any Hedge Bank.



     “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.



     “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 8 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 8 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.




27









 








     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:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PACIFIC BIOTECH, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	METRA BIOSYSTEMS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	OSTEO SCIENCES CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LITMUS CONCEPTS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



S-1









 






	 	 	 	 	 



	 	 	 
	 

	 	Notice Address for each Grantor:
	 
	 	 
	 

	 	10165 McKellar Court

San Diego, CA 92121

Attention: Chief Financial Officer

Telephone: (858) 552-1100

Facsimile: (858) 646-8028

Electronic Mail: jradak@quidel.com
	 
	 	 
	 

	 	with a copy to:

	 
	 	 
	 

	 	10165 McKellar Court

San Diego, CA 92121

Attention: Legal Department

Telephone: (858) 552-1100

Facsimile: (858) 646-8028

Electronic Mail: rbujarski@quidel.com






S-2









 






	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

as Agent and Secured Party

 	 
	 	By:  	
 	 
	 	 	Name:  	Tiffany Shin 	 
	 	 	Title:  	Assistant Vice President 	 
	 
	 	Notice Address:



Bank of America, N.A.

Agency Management

Global Product Solutions

WA1-501-17-32

800 Fifth Avenue, Floor 17

Seattle WA 98104

Attn: Tiffany Shin, Assistant Vice President

Telephone: 206-358-0078

Telecopier: 415-343-0561

Electronic Mail: tiffany.shin@bankofamerica.com

 	 
	 	
 	 




S-3











 





SCHEDULE 1

TO

SECURITY AGREEMENT




Commercial Tort Claims




Schedule 1-1





 









 








SCHEDULE 2

TO

SECURITY AGREEMENT




Filing Offices




	 	 	 	 	 
	Grantor	 	Filing Offices	 
	 
	 	 	 	 





Schedule 2-1





 









 








SCHEDULE 3

TO

SECURITY AGREEMENT




Office Locations, Type and Jurisdiction of Organization




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name of	 	Type of	 	 	Office	 	 	Jurisdiction of	 	 	Organization	 
	Grantor	 	Organization	 	 	Locations	 	 	Organization	 	 	Number	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 3-1





 









 








SCHEDULE 4

TO

SECURITY AGREEMENT




Locations of Equipment and Inventory




	 	 	 	 	 
	Name of Grantor	 	 	Locations of Equipment and Inventory	 
	 
	 	 	 	 





Schedule 4-1





 









 








SCHEDULE 5

TO

SECURITY AGREEMENT




Other Names




	 	 	 	 	 
	Name of Grantor	 	Other Names	 
	 
	 	 	 	 





Schedule 5-1





 









 








SCHEDULE 6

TO

SECURITY AGREEMENT




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Amount of	 	 	Percentage of	 
	 	 	Class of	 	 	Equity	 	 	Par	 	 	Equity	 	 	Outstanding	 
	Equity Issuer	 	Equity	 	 	Certificate Nos.	 	 	Value	 	 	Interests	 	 	Equity Pledged	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 6-1





 









 








SCHEDULE 7

TO

SECURITY AGREEMENT




	 	 	 	 	 
	 	 	Amount of	 
	Debt Issuer	 	Indebtedness	 
	 
	 	 	 	 





Schedule 7-1





 









 








SCHEDULE 8

TO

SECURITY AGREEMENT




U.S. Trademarks:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Trademark	 	 	Registration	 	 	Registration	 
	Registered Owner	 	Description	 	 	Number	 	 	Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Foreign Trademarks:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Trademark	 	 	Registration	 	 	Registration	 
	Registered Owner	 	Description	 	 	Number	 	 	Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 8-1




 









 








SCHEDULE 9

TO

SECURITY AGREEMENT




U.S. Patents Issued:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Patent No.	 	Issue Date	 	 	Title	 	 	Inventor(s)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





U.S. Patents Pending:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Application	 	 	 	 	 	 	 
	Date Filed	 	Number	 	 	Title	 	 	Inventor(s)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Foreign Patents Issued:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country	 	Patent No.	 	 	Issue Date	 	 	Title	 	 	Inventor(s)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Foreign Patents Pending:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Applicant’s	 	 	Date	 	 	Application	 	 	 	 	 	 	 
	Country	 	Name	 	 	Filed	 	 	Number	 	 	Title	 	 	Inventor(s)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 9-1




 









 








SCHEDULE 10

TO

SECURITY AGREEMENT




U.S. Copyright Registrations: 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title	 	Registration No.	 	 	Date of Issue	 	 	Registered Owner	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Foreign Copyright Registrations:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country	 	Title	 	 	Registration No.	 	 	Date of Issue	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Pending U.S. Copyright Registration Applications:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title	 	Appl. No.	 	 	Date of Application	 	 	Copyright Claimant	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Pending Foreign Copyright Registration Applications:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country	 	Title	 	 	Appl. No.	 	 	Date of Application	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 10-1




 









 








SCHEDULE 11

TO

SECURITY AGREEMENT




Deposit Accounts, Securities Accounts, Commodity Accounts




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Depository Bank or	 	 	Address of Depository Bank	 	 	 	 
	Type of Account	 	Securities Intermediary	 	 	or Securities Intermediary	 	 	Account Number	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





Schedule 11-1




 









 








SCHEDULE 12

TO

SECURITY AGREEMENT




Chattel Paper




Schedule 12-1




 









 








SCHEDULE 13

TO

SECURITY AGREEMENT




Letter-of-Credit Rights




Schedule 13-1




 









 








SCHEDULE 14

TO

SECURITY AGREEMENT




Documents




Schedule 14-1





 











 





EXHIBIT I TO

SECURITY AGREEMENT




FORM OF GRANT OF TRADEMARK SECURITY INTEREST




          WHEREAS, [NAME OF GRANTOR], a                      corporation (“Grantor”), owns and uses in its
business, and will in the future adopt and so use, various intangible assets, including the
Trademark Collateral (as defined below); and




          WHEREAS, Quidel Corporation, a Delaware corporation (“Borrower”), has entered into a Credit
Agreement dated as of October 8, 2008 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, being the “Credit Agreement”) with the financial
institutions named therein (collectively, together with their respective successors and assigns
party to the Credit Agreement from time to time, the “Lenders”), U.S. Bank N.A., as Syndication
Agent, and Bank of America, N.A., as Agent for the Lenders (in such capacity, “Secured Party”)
pursuant to which Lenders have made certain commitments, subject to the terms and conditions set
forth in the Credit Agreement, to extend certain credit facilities to Borrower; and




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more swap agreements (collectively, the “Secured
Hedge Agreements”) with one or more Persons that are Lenders or Affiliates of Lenders at the time
such Secured Hedge Agreements are entered into (in such capacity, collectively, “Hedge Banks”);




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more cash management agreement (collectively, the
“Secured Cash Management Agreements”) with one or more Persons that are Lenders or Affiliates of
Lenders at the time such Secured Cash Management Agreements are entered into (in such capacity,
collectively, “Cash Management Banks”); and




          [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered that certain
Subsidiary Guaranty dated as of October 8, 2008 (said Subsidiary Guaranty, as it may heretofore
have been and as it may hereafter be further amended, restated, supplemented or otherwise modified
from time to time, being the “Guaranty”) in favor of Secured Party for the benefit of Lenders, any
Hedge Banks and any Cash Management Banks, pursuant to which Grantor has guarantied the prompt
payment and performance when due of all obligations of Borrower under the Credit Agreement and the
other Loan Documents (as defined in the Credit Agreement) and all obligations of Loan Parties (as
defined in the Credit Agreement) under the Secured Hedge Agreements and the Secured Cash Management
Agreements, including, without limitation, the obligation of Loan Parties to make payments under
the Secured Hedge Agreements in the event of early termination thereof; and]




          WHEREAS, pursuant to the terms of a Security Agreement dated as of October 8, 2008 (said
Security Agreement, as it may heretofore have been and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the (“Security Agreement”),
among Grantor, Secured Party and the other grantors named therein,






I-1









 







Grantor has created in favor of Secured Party a security interest in, and Secured Party has become
a secured creditor with respect to, the Trademark Collateral;




          NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence
further the security interest granted by Grantor to Secured Party pursuant to the Security
Agreement, Grantor hereby grants to Secured Party a security interest in all of Grantor’s right,
title and interest in and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the same may be located (the
“Trademark Collateral”) to secure the Secured Obligations (as defined in the Security Agreement):





          (i) all rights, 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 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 such
Grantor, or hereafter adopted and used, in its business (including, without limitation, the
trademarks set forth on Schedule A annexed hereto) (collectively, the “Trademarks”), 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 A annexed hereto), 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, and all goodwill of such
Grantor’s business symbolized by the Trademarks and associated therewith; and




          (ii) all proceeds, products, rents and profits of or from any and all of the foregoing
Trademark Collateral and, to the extent not otherwise included, all payments under insurance
(whether or not Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Trademark Collateral. For purposes of this Grant of Trademark Security Interest, the
term “proceeds” includes whatever is receivable or received when Trademark Collateral or
proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.



          Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the Trademark Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.




[The remainder of this page is intentionally left blank.]








I-2









 








          IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security Interest to be duly
executed and delivered by its officer thereunto duly authorized as of the ___ day of                     , ______.




	 	 	 	 	 
	 	[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 



I-3









 






	 	 	 	 	 



SCHEDULE A

TO

GRANT OF TRADEMARK SECURITY INTEREST




	 	 	 	 	 	 	 
	 	 	Trademark	 	Registration/	 	Registration/
	Owner	 	Description	 	Appl. Number	 	Appl. Date
	 	 	 	 	 	 	 





I - Schedule A-1









 






EXHIBIT II TO

SECURITY AGREEMENT




FORM OF GRANT OF PATENT SECURITY INTEREST




          WHEREAS, [NAME OF GRANTOR], a                      corporation (“Grantor”), owns and uses in its
business, and will in the future adopt and so use, various intangible assets, including the Patent
Collateral (as defined below); and




          WHEREAS, Quidel Corporation, a Delaware corporation (“Borrower”), has entered into a Credit
Agreement dated as of October 8, 2008 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”) with the financial institutions
named therein (collectively, together with their respective successors and assigns party to the
Credit Agreement from time to time, the “Lenders”), U.S. Bank N.A., as Syndication Agent, and Bank
of America, N.A., as Agent for the Lenders (in such capacity, “Secured Party”), pursuant to which
Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Borrower; and




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more swap agreements (collectively, the “Secured
Hedge Agreements”) with one or more Persons that are Lenders or Affiliates of Lenders at the time
such Secured Hedge Agreements are entered into (in such capacity, collectively, “Hedge Banks”);




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more cash management agreement (collectively, the
“Secured Cash Management Agreements”) with one or more Persons that are Lenders or Affiliates of
Lenders at the time such Secured Cash Management Agreements are entered into (in such capacity,
collectively, “Cash Management Banks”); and




          [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered that certain
Subsidiary Guaranty dated as of October 8, 2008 (said Subsidiary Guaranty, as it may heretofore
have been and as it may hereafter be further amended, restated, supplemented or otherwise modified
from time to time, being the “Guaranty”) in favor of Secured Party for the benefit of Lenders, any
Hedge Banks and any Cash Management Banks, pursuant to which Grantor has guarantied the prompt
payment and performance when due of all obligations of Borrower under the Credit Agreement and the
other Loan Documents (as defined in the Credit Agreement) and all obligations of Loan Parties (as
defined in the Credit Agreement) under the Secured Hedge Agreements and Secured Cash Management
Agreements, including, without limitation, the obligation of Loan Parties to make payments under
the Secured Hedge Agreements in the event of early termination thereof; and]




          WHEREAS, pursuant to the terms of a Security Agreement dated as of October 8, 2008 (said
Security Agreement, as it may heretofore have been and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the “Security Agreement”),
among Grantor, Secured Party and the other grantors named therein,





II-1









 







Grantor created in favor of Secured Party a security interest in, and Secured Party has become a
secured creditor with respect to, the Patent Collateral;




          NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence
further the security interest granted by Grantor to Secured Party pursuant to the Security
Agreement, Grantor hereby grants to Secured Party a security interest in all of Grantor’s right,
title and interest in and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the same may be located (the
“Patent Collateral”) to secure the Secured Obligations (as defined in the Security Agreement):





          (i) all rights, 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 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 such 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 A 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; and




          (ii) all proceeds, products, rents and profits of or from any and all of the foregoing
Patent Collateral and, to the extent not otherwise included, all payments under insurance
(whether or not Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Patent Collateral. For purposes of this Grant of Patent Security Interest, the term
“proceeds” includes whatever is receivable or received when Patent Collateral or proceeds are
sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.



          Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the Patent Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.




[The remainder of this page intentionally left blank.]






II-2









 








          IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security Interest to be duly
executed and delivered by its officer thereunto duly authorized as of the                      day of
                    ,      .




	 	 	 	 	 
	 	[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 



II-3









 






	 	 	 	 	 



SCHEDULE A

TO

GRANT OF PATENT SECURITY INTEREST




Patents Issued:




	 	 	 	 	 	 	 
	Patent No.	 	Issue Date	 	Invention	 	Inventor(s)
	 	 	 	 	 	 	 





Patents Pending:




	 	 	 	 	 	 	 	 	 
	Applicant’s	 	Date	 	Application	 	 	 	 
	Name	 	Filed	 	Number	 	Invention	 	Inventor(s)
	 	 	 	 	 	 	 	 	 





II - Schedule A-1









 






EXHIBIT III TO

SECURITY AGREEMENT




FORM OF GRANT OF COPYRIGHT SECURITY INTEREST




          WHEREAS, [NAME OF GRANTOR], a                      corporation (“Grantor”), owns and uses in its business,
and will in the future adopt and so use, various intangible assets, including the Copyright
Collateral (as defined below); and




          WHEREAS, Quidel Corporation, a Delaware corporation (“Borrower”), has entered into a Credit
Agreement dated as of October 8, 2008 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement”) with the financial institutions
named therein (collectively, together with their respective successors and assigns party to the
Credit Agreement from time to time, the “Lenders”), U.S. Bank N.A., as Syndication Agent, and Bank
of America, N.A., as Agent for the Lenders (in such capacity, “Secured Party”), pursuant to which
Lenders have made certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Borrower; and




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more swap agreements (collectively, the “Secured
Hedge Agreements”) with one or more Persons that are Lenders or Affiliates of Lenders at the time
such Secured Hedge Agreements are entered into (in such capacity, collectively, “Hedge Banks”);




          WHEREAS, any Loan Party (as defined in the Credit Agreement) may from time to time enter, or
may from time to time have entered, into one or more cash management agreement (collectively, the
“Secured Cash Management Agreements”) with one or more Persons that are Lenders or Affiliates of
Lenders at the time such Secured Cash Management Agreements are entered into (in such capacity,
collectively, “Cash Management Banks”); and




          [Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed and delivered that certain
Subsidiary Guaranty dated as of October 8, 2008 (said Subsidiary Guaranty, as it may heretofore
have been and as it may hereafter be further amended, restated, supplemented or otherwise modified
from time to time, being the “Guaranty”) in favor of Secured Party for the benefit of Lenders, any
Hedge Banks and any Cash Management Banks pursuant to which Grantor has guarantied the prompt
payment and performance when due of all obligations of Borrower under the Credit Agreement and the
other Loan Documents (as defined in the Credit Agreement) and all obligations of Loan Parties (as
defined in the Credit Agreement) under the Secured Hedge Agreements and the Secured Cash Management
Agreements, including, without limitation, the obligation of Loan Parties to make payments under
the Secured Hedge Agreements in the event of early termination thereof; and]




          WHEREAS, pursuant to the terms of a Security Agreement dated as of October 8, 2008 (said
Security Agreement, as it may heretofore have been and as it may hereafter be further amended,
restated, supplemented or otherwise modified from time to time, being the “Security Agreement”),
among Grantor, Secured Party and the other grantors named therein,








III-1









 







Grantor created in favor of Secured Party a security interest in, and Secured Party has become a
secured creditor with respect to, the Copyright Collateral;




          NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence
further the security interest granted by Grantor to Secured Party pursuant to the Security
Agreement, Grantor hereby grants to Secured Party a security interest in all of Grantor’s right,
title and interest in and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the same may be located (the
“Copyright Collateral”) to secure the Secured Obligations (as defined in the Security Agreement):





     (i) all rights, 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)
under copyright in various published and unpublished works of authorship including, without
limitation, computer programs, computer data bases, other computer software layouts, drawings,
designs, writings, and formulas (including, without limitation, the works set forth on
Schedule A annexed hereto, as the same may be amended pursuant hereto from time to
time) (collectively, the “Copyrights”), all copyright registrations issued to Grantor and
applications for copyright registration 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 set forth on Schedule A annexed hereto, as the
same may be amended pursuant hereto from time to time) (collectively, the “Copyright
Registrations”), 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 “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 Grantor), authored (as a work for hire for the benefit of
Grantor), or acquired by 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, including all proceeds
thereof (such as, by way of example and not by limitation, license royalties and proceeds of
infringement suits), the right (but not the obligation) to renew and extend such Copyright
Registrations and Copyright Rights and to register works protectable by copyright and the
right (but not the obligation) to sue in the name of such Grantor or in the name of Secured
Party or Lenders for past, present and future infringements of the Copyrights and Copyright
Rights; and




     (ii) all proceeds, products, rents and profits of or from any and all of the foregoing
Copyright Collateral and, to the extent not otherwise included, all payments under insurance
(whether or not Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Copyright Collateral. For purposes of this Grant of Copyright Security Interest, the
term “proceeds” includes whatever is receivable or



III-2









 






received when Copyright Collateral or proceeds are sold, licensed, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.



          Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured
Party with respect to the security interest in the Copyright Collateral granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.





III-3









 








          IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright Security Interest to be duly
executed and delivered by its officer thereunto duly authorized as of the ___ day of                     ,           .




	 	 	 	 	 
	 	[NAME OF GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name: 	 	 
	 	 	Title: 	 	 



III-4









 






	 	 	 	 	 



SCHEDULE A

TO

GRANT OF COPYRIGHT SECURITY INTEREST




U.S. Copyright Registrations:




	 	 	 	 	 	 	 
	Title	 	Registration No.	 	Date of Issue	 	Registered Owner
	 	 	 	 	 	 	 





Foreign Copyright Registrations:




	 	 	 	 	 	 	 
	Country	 	Title	 	Registration No.	 	Date of Issue
	 	 	 	 	 	 	 





Pending U.S. Copyright Registration Applications:




	 	 	 	 	 	 	 
	Title	 	Appl. No.	 	Date of Application	 	Copyright Claimant
	 	 	 	 	 	 	 





Pending Foreign Copyright Registration Applications:




	 	 	 	 	 	 	 
	Country	 	Title	 	Appl. No.	 	Date of Application
	 	 	 	 	 	 	 





III - Schedule A-1









 






EXHIBIT IV TO

SECURITY AGREEMENT




PLEDGE SUPPLEMENT




          This Pledge Supplement, dated as of                     , is delivered pursuant to the Security
Agreement, dated as of October 8, 2008 between                                         , a                                 
         (“Grantor”), the other
Grantors named therein, and Bank of America, N.A., as Secured Party (said Security Agreement, as it
may heretofore have been and as it may hereafter be further amended, restated, supplemented or
otherwise modified from time to time, being the “Security Agreement”). Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in the Security
Agreement.




          Grantor hereby agrees that the [Pledged Equity] [Pledged Debt] set forth on Schedule A annexed
hereto shall be deemed to be part of the [Pledged Equity] [Pledged Debt] and shall become part of
the Securities Collateral and shall secure all Secured Obligations.




          IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and
delivered by its duly authorized officer as of                     .




	 	 	 	 	 
	 	[GRANTOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 



IV-1









 






	 	 	 	 	 



SCHEDULE A

TO

PLEDGE SUPPLEMENT





IV - Schedule A-1











 





EXHIBIT V TO

SECURITY AGREEMENT




IP SUPPLEMENT




          This IP SUPPLEMENT, dated as of ______, is delivered pursuant to and supplements (i) the
Security Agreement, dated as of October 8, 2008 (said Security Agreement, as it may heretofore have
been and as it may hereafter be further amended, restated, supplemented or otherwise modified from
time to time, being the “Security Agreement”), among Quidel Corporation, [Insert Name of Grantor]
(“Grantor”), the other grantors named therein, and Bank of America, N.A., as Secured Party, and
(ii) the [Grant of Trademark Security Interest] [Grant of Patent Security Interest] [Grant of
Copyright Security Interest] dated as of _________, ___ (the “Grant”) executed by Grantor.
Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto
in the Grant.




          Grantor grants to Secured Party a security interest in all of Grantor’s right, title and
interest in and to the [Trademark Collateral] [Patent Collateral] [Copyright Collateral] set forth
on Schedule A annexed hereto. All such [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] shall be deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions of the Security
Agreement and the Grant.




          IN WITNESS WHEREOF, Grantor has caused this IP Supplement to be duly executed and delivered by
its duly authorized officer as of ____________.




	 	 	 	 	 
	 	[GRANTOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 



V-1









 







EXHIBIT VI TO

SECURITY AGREEMENT




FORM OF COUNTERPART




          COUNTERPART
(this “Counterpart”), dated as of ______, is delivered pursuant to Section 21
of the Security Agreement referred to below. The undersigned hereby agrees that this Counterpart
may be attached to the Security Agreement, dated as of October 8, 2008 (said Security Agreement, as
it may heretofore have been and as it may hereafter be further amended, restated, supplemented or
otherwise modified from time to time being the “Security Agreement”; capitalized terms used herein
not otherwise defined herein shall have the meanings ascribed therein), among Quidel Corporation,
the other Grantors named therein, and Bank of America, N.A., as Secured Party. The undersigned by
executing and delivering this Counterpart hereby becomes a Grantor under the Security Agreement in
accordance with Section 21 thereof and agrees to be bound by all of the terms thereof. Without
limiting the generality of the foregoing, the undersigned hereby:






     (i) authorizes the Secured Party to add the information set forth on the Schedules to
this Agreement to the correlative Schedules attached to the Security Agreement;




     (ii) agrees that all Collateral of the undersigned, including the items of property
described on the Schedules hereto, shall become part of the Collateral and shall secure all
Secured Obligations; and




     (iii) makes the representations and warranties set forth in the Security Agreement, as
amended hereby, to the extent relating to the undersigned.



	 	 	 	 	 
	 	[NAME OF ADDITIONAL GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



VI-1









 






	 	 	 	 	 



EXHIBIT G




FORM OF LANDLORD WAIVER




	 	 	 
	RECORDING REQUESTED BY:

O’Melveny & Myers LLP

	 	 
	 
	 	 
	AND WHEN RECORDED MAIL TO:
	 	 
	 
	 	 
	O’Melveny & Myers LLP

400 South Hope Street,

Los Angeles, CA 90071

Attn: _________________________________
	 	 
	 
	 	 
	Re: Quidel Corporation
	 	 






Space above this line for recorder’s use only




REAL PROPERTY HOLDER’S WAIVER AND CONSENT AGREEMENT




          This REAL PROPERTY HOLDER’S WAIVER AND CONSENT AGREEMENT (this “Agreement”) is dated as of
_________, 20___ and entered into by _______________, a ____________
(“Real Property Holder”), to and for the benefit of Bank of America, N.A. having offices a
______________________________________________________________________________ (“Agent”), as agent for the financial institutions (“Lenders”) which
are or may hereafter become parties to the Credit Agreement (as hereinafter defined).




RECITALS




          [_____________________] (“Company”), has possession of and occupies all or a portion of the property
described on Exhibit A annexed hereto (the “Premises”).




          Company’s interest in the Premises arises under the lease agreement (the “Lease”) more
particularly described on Exhibit A annexed hereto, pursuant to which Real Property Holder
has rights, upon the terms and conditions set forth therein, to take possession of, and otherwise
assert control over, the Premises.




          Agent and Lenders have entered into that certain Credit Agreement dated as of October 8, 2008
(as amended, restated, extended, supplemented or otherwise modified in writing from time to time,
the “Credit Agreement”) with [Company] [Quidel Corporation, a Delaware corporation of which Company
is a subsidiary (“Borrower”)], and Company has executed [a guaranty,] a security agreement and
other collateral documents in relation to the Credit Agreement.




G-l

Form Landlord Waiver




Credit Agreement





 









 








     [Company’s guaranty of] the extensions of credit made by Lenders to [Company] [Borrower] under
the Credit Agreement will be secured, in part, by all books and records of Company (including all
books and records of Company now or hereafter located on the Premises (the “Books”), all raw
materials, work-in-process and finished goods inventory of Company (including all inventory of
Company now or hereafter located on the Premises (the “Inventory”)), all equipment, machinery and
other goods used in Company’s business (including all equipment of Company now or hereafter located
on the Premises (the “Equipment”)), and other Collateral as described and defined in that certain
Security Agreement dated as of October 8, 2008 by and among [Company][Borrower], Agent and certain
other parties (as amended, supplemented or otherwise modified from time to time, the “Security
Agreement”) (including all such Collateral of Company now or hereafter located on the Premises (the
“Other Collateral” and, together with the Books, Inventory, and Equipment, the “Collateral”)).



     Agent has requested that Real Property Holder execute this Agreement as a condition to the
extension of credit to [Company] [Borrower] under the Credit Agreement.



          NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Real Property Holder
hereby represents and warrants to, and covenants and agrees with, Agent as follows:




          1. Real Property Holder hereby (a) waives and releases unto Agent and its successors and
assigns any and all rights granted by or under any present or future laws to levy or distraint for
rent or any other charges which may be due to Real Property Holder against the Collateral, and any
and all other claims, liens and demands of every kind which it now has or may hereafter have
against the Collateral, and (b) agrees that any rights it may have in or to the Collateral, no
matter how arising (to the extent not effectively waived pursuant to clause (a) of this paragraph
1), shall be second and subordinate to the rights of Agent in respect thereof. Real Property Holder
acknowledges that the Collateral is and will remain personal property and not fixtures even though
it may be affixed to or placed on the Premises.




          2. Real Property Holder certifies that (a) Real Property Holder is the landlord under the
Lease, (b) the Lease is in full force and effect and has not been amended, modified, or
supplemented except as set forth on Exhibit B annexed hereto, and (c) no notice of default
has been given under or in connection with the Lease which has not been cured, and Real Property
Holder has no knowledge of the occurrence of any other default under or in connection with the
Lease.




          3. Real Property Holder consents to the installation or placement of the Collateral on the
Premises, and Real Property Holder grants to Agent a license to enter upon and into the Premises to
do any or all of the following with respect to the Collateral: assemble, have appraised, display,
remove, maintain, prepare for sale or lease, repair, transfer, or sell (at public or private sale).
In entering upon or into the Premises, Agent hereby agrees to indemnify, defend and hold Real
Property Holder harmless from and against any and all claims, judgments, liabilities, costs and
expenses incurred by Real Property Holder caused solely by Agent’s




G-2

Form Landlord Waiver





 









 







entering upon or into the Premises and taking any of the foregoing actions with respect to the
Collateral. Such costs shall include any damage to the Premises made by Agent in severing and/or
removing the Collateral therefrom.




          4. Real Property Holder agrees that it will not prevent Agent or its designee from entering
upon the Premises at all reasonable times to inspect or remove the Collateral. In the event that
Real Property Holder has the right to, and desires to, obtain possession of the Premises (either
through expiration of the Lease or termination thereof due to the default of Company thereunder),
Real Property Holder will deliver notice (the “Real Property Holder’s Notice”) to Agent to that
effect. Within the 45 day period after Agent receives the Real Property Holder’s Notice, Agent
shall have the right, but not the obligation, to cause the Collateral to be removed from the
Premises. During such 45 day period, Real Property Holder will not remove the Collateral from the
Premises nor interfere with Agent’s actions in removing the Collateral from the Premises or Agent’s
actions in otherwise enforcing its security interest in the Collateral. Notwithstanding anything to
the contrary in this paragraph, Agent shall at no time have any obligation to remove the Collateral
from the Premises.




          5. Real Property Holder shall send to Agent a copy of any notice of default under the Lease
sent by Real Property Holder to Company.




          6. All notices to Agent under this Agreement shall be in writing and sent to Agent at its
address set forth on the signature page hereof by telefacsimile, by United States mail, or by
overnight delivery service.




          7. The provisions of this Agreement shall continue in effect until Real Property Holder shall
have received Agent’s written certification that all amounts advanced under the Credit Agreement
have been paid in full.




          8. 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
_________, without regard to conflicts of laws principles.




          IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and
delivered as of the day and year first set forth above.




	 	 	 	 	 
	 	[NAME OF REAL PROPERTY HOLDER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



G-3

Form Landlord Waiver





 









 





          By its acceptance hereof, as of the day and year first set forth above, Agent agrees to be
bound by the provisions hereof.




	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



G-4

Form Landlord Waiver








 









 








EXHIBIT A




LEGAL DESCRIPTION OF PREMISES




G-A-1

Form Landlord Waiver





 









 








EXHIBIT B




DESCRIPTION OF LEASE




G-B-1

Form Landlord Waiver





 









 








EXHIBIT H




FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT





     This DEPOSIT ACCOUNT CONTROL AGREEMENT (this
 “Agreement”) is dated as of
_________, 20___ and
entered into by and among [QUIDEL CORPORATION, a Delaware corporation] [NAME OF SUBSIDIARY]
(“Customer”),
________________________,
as Depository Bank (“Depository Bank”), and BANK OF AMERICA, N.A., as Agent (“Secured
Party”), for the lenders referred to in the Security Agreement referred to below.



PRELIMINARY STATEMENTS




          A. [Quidel Corporation, a Delaware corporation (“Borrower”)] [Customer] is a party to that
certain Credit Agreement dated as of October 8, 2008, by and among [Borrower] [Grantor], each
lender from time to time party hereto (collectively, “Lenders” and individually, a “Lender”), U.S.
Bank N.A., as Syndication Agent, and Bank of America, N.A., as Agent, Swing Line Lender and L/C
Issuer (as amended, restated, extended, supplemented or otherwise modified in writing from time to
time, the “Credit Agreement”).




          B. [Pursuant to a Subsidiary Guaranty dated as of October 8, 2008, Customer has guaranteed the
obligations of Borrower under the Credit Agreement.]




          C. Pursuant to the Credit Agreement, Customer, the other grantors named therein, and Secured
Party entered into that certain Security Agreement dated of even date with the Credit Agreement (as
amended, supplemented or otherwise modified from time to time, the “Security Agreement”).




          D. Pursuant to the Security Agreement, Customer, among other things, granted to Secured Party,
for the benefit of Secured Party, the lenders, Hedge Banks and Cash Management Banks referred to in
the Security Agreement, a continuing security interest in all of Customer’s right, title and
interest in and to all deposit accounts (including the deposit accounts identified on Schedule
I annexed hereto (individually and collectively, the “Specified Deposit Account”)).




          E. Customer, Depository Bank and Secured Party are entering into this Agreement to perfect the
security interest of Secured Party in, and to evidence that Secured Party has control of, the
Specified Deposit Account.




AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing and the agreements set forth herein, the
parties agree as follows:



     SECTION 1. Notice and Acknowledgement of Security Interest. Depository Bank confirms
that Depository Bank has established the Specified Deposit Account in the name of Customer.
Customer and Secured Party hereby notify Depository Bank of, and Depository Bank



H-1

Form of Deposit Account Control Agreement





 









 







hereby acknowledges, the security interest granted by Customer to Secured Party pursuant to the
Security Agreement in all of Customer’s right, title and interest in the Specified Deposit Account
and the funds on deposit therein.




     SECTION 2. Control of Specified Deposit Account. (a) Depository Bank shall, if and as
directed by Secured Party following the occurrence and during the continuance of an Event of
Default by Customer under the Credit Agreement and without further consent of Customer, (i) comply
with all instructions originated by Secured Party with respect to the disposition of funds in the
Specified Deposit Account (the “Instructions”) and disregard any instructions from Customer with
respect to the Specified Deposit Account and dispositions of funds therein, and (ii) otherwise deal
with the Specified Deposit Account as directed by Secured Party.



          (a) Prior to the date on which the Instructions are received by Depository Bank from Secured
Party, Depository Bank may permit Customer to operate and transact business through the Specified
Deposit Account, including the directing of the disposition of funds from the Specified Deposit
Account; provided, however, that Customer may not, without Secured Party’s prior
written consent, close the Specified Deposit Account.




          (b) Secured Party’s power under this Agreement to give Depository Bank Instructions, includes,
without limitation, the power to give stop payment orders for any items being presented to the
Specified Deposit Account for payment. Customer confirms that Depository Bank should follow the
Instructions even if the result of following the Instructions is that Depository Bank dishonors
items presented for payment from the Specified Deposit Account. Customer further confirms that
Depository Bank will have no liability to Customer for the wrongful dishonor of such items in
following the Instructions.




     SECTION 3. Certain Other Agreements.



          (a) Secured Party agrees that copies of all Instructions given hereunder or in connection
herewith by Secured Party to Depository Bank shall be delivered substantially simultaneously to
Customer, and Customer agrees that the failure of Secured Party to provide any such copy shall not
affect the validity or effectiveness of such notice.




          (b) Depository Bank has not received notice regarding, and has not entered into any agreement
with respect to, any security interest in or other claim on the Specified Deposit Account, except
as set forth herein. Depository Bank will not agree with any third party that Depository Bank will
comply with instructions originated by such third party regarding the disposition of funds in the
Specified Deposit Account, except as required by law.




          (c) Depository Bank will not be liable to Secured Party for complying with instructions from
Customer that are received by Depository Bank before Depository Bank receives and has a reasonable
opportunity to act on a contrary Instruction from Secured Party.




          (d) Depository Bank will not be liable to Customer for complying with the Instructions even if
Customer notifies Depository Bank that Secured Party is not legally entitled to issue the
Instructions, unless Depository Bank takes the action after it is served with an




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injunction, restraining order, or other legal process enjoining it from doing so, issued by a court
of competent jurisdiction. Depository Bank need not investigate whether Secured Party is entitled,
under the Credit Agreement, the Security Agreement or any other agreement between Secured Party and
Customer, to give the Instructions.




          (e) Depository Bank shall have no responsibility or liability to Secured Party for complying
with any order or instruction, whether oral or written, concerning the Specified Deposit Account,
except to the extent such compliance would violate (i) Section 2(a) hereof, or (ii) written
instructions or orders previously received from Secured Party, but only to the extent Depository
Bank had a reasonable opportunity to act thereon. Depository Bank shall not have any liability to
Customer or Secured Party for losses or liabilities resulting from any failure to comply with
instructions relating to the Specified Deposit Account or delay in complying with such instructions
if (x) compliance with such instructions would require Bank to violate any then-existing injunction
or order of any court of competent jurisdiction, including, without limitation, in any bankruptcy
case under title 11 of the United States Code, or (y) the failure or delay is due to circumstances
beyond Depository Bank’s reasonable control. In no event shall Depository Bank be liable for any
special, indirect, exemplary or consequential damages.




          (f) In the event of any conflict between this Agreement and any other agreement between
Depository Bank and Customer, the terms of this Agreement shall prevail.




     SECTION 4. Account Information. Following the occurrence and during the continuance of
an Event of Default by Customer under the Credit Agreement, Customer hereby instructs Depository
Bank, and Depository Bank agrees (a) to furnish to Secured Party, upon request of Secured Party,
bank statements with respect to the Specified Deposit Account that are customarily provided to
customers of Depository Bank at the times such statements are normally provided to customers of
Depository Bank, through the normal method of transmission, including United States mail, with a
copy to Customer, at Customer’s expense, and (b) to make available to Secured Party and Customer,
upon request of Secured Party, copies of all daily debit and credit advices of the Specified
Deposit Account and any other item reasonably requested by Secured Party. If Depository Bank
receives any notice of a claim of a third party in respect of the Specified Deposit Account or
legal process of any kind relating to Customer, Depository Bank shall make a reasonable effort to
give notice to Secured Party and Customer of such legal process.



     SECTION 5. Additional Agreements and Documents. Customer agrees to execute and deliver
such other agreements and documents as Secured Party or Depository Bank may reasonably request, in
form and substance reasonably satisfactory to Secured Party or Depository Bank, to carry out or to
confirm the provisions of this Agreement.



     SECTION 6. 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, the Security Agreement, the Credit Agreement and



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the other documents related thereto are cumulative to, and not exclusive of, any rights or remedies
otherwise available.




     SECTION 7. Modification. No amendment, modification or waiver of any provision of this
Agreement, and no consent to any departure by Customer therefrom, shall in any event be effective
unless the same shall be in writing and signed by Secured Party and, if an amendment or
modification, Depository Bank and Customer and, if a waiver of rights of Depository Bank,
Depository Bank. Any such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.



     SECTION 8. 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 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. Depository Bank shall not incur any liability to
Customer or Secured Party in acting upon any written notice delivered in accordance with this
Section 8 that Depository Bank believes in good faith to be genuine and what it purports to
be.



     SECTION 9. Governing Law.



          (a) 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 THAT WOULD REQUIRE APPLICATION OF
ANOTHER LAW. THE PARTIES HERETO AGREE THAT THE “BANK’S JURISDICTION” FOR PURPOSES OF SECTION 9304
OF THE UNIFORM COMMERCIAL CODE WITH RESPECT TO THIS AGREEMENT, THE SPECIFIED DEPOSIT ACCOUNT AND
ANY AGREEMENTS BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SPECIFIED DEPOSIT ACCOUNT SHALL BE
THE STATE OF CALIFORNIA.




          (b) Depository Bank represents and warrants that the account agreement between Depository Bank
and Customer relating to the establishment and general operation of the Specified Deposit Account
expressly provides that such account agreement is governed by the law of the State of California
for purposes of the Uniform Commercial Code, Article 9 of the Uniform Commercial Code or Chapter 3
thereof. Depository Bank further represents and warrants that the “bank’s jurisdiction” for
purposes of Section 9304 of the Uniform Commercial Code with respect to the account agreement
between Depository Bank and Customer relating to the Specified Deposit Account and any agreements
between the parties thereto with respect to the Specified Deposit Account shall be the State of
California. Depository Bank will not,




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without Secured Party’s prior written consent, amend such account agreement to change its governing
law.




     SECTION 10. Successors and Assigns. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors and assigns of such
party, and all covenants, promises, and agreements by or on behalf of Customer or by and on behalf
of Depository Bank shall bind and inure to the benefit of the successors and assigns of Customer,
Depository Bank and Secured Party. 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 the Credit
Agreement shall also constitute notice of resignation as Secured Party under this Agreement. Upon
the acceptance of any appointment as Agent under 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 pursuant hereto. Customer may not assign or
delegate its rights and obligations hereunder without the written consent of Depository Bank and
Secured Party.



     SECTION 11. Execution in Counterparts. This Agreement may be executed in any number of
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 taken 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 12. Termination. This Agreement shall terminate upon the earliest to occur of
(i) Depository Bank’s receipt of written notice of termination from Secured Party, (ii) 30 days
following Secured Party’s and Customer’s written notice of termination from Depository Bank and
(iii) 5 days following Depository Bank’s receipt of written notice of termination from Customer and
a written consent to such termination by Secured Party.



     SECTION 13. Definitions; Rules of Construction. Unless otherwise defined herein, terms
used in Divisions 8 and 9 of the Uniform Commercial Code in the State of California as in effect on
the date hereof are used herein as therein defined. The section headings in this Agreement are
inserted for convenience of reference only and shall not be considered a part of this Agreement for
any other purpose or be given any substantive effect.



     SECTION 14. Returned Items; Fees and Expenses of Depository Bank. Depository Bank will
not charge or debit, or exercise any right of offset or banker’s lien against, the Specified
Deposit Account except as provided in this Section 14. The Depository Bank may charge the
Specified Deposit Account and may have a lien on the Specified Deposit Account solely for any items
deposited in the Specified Deposit Account that are returned for any reason or otherwise not
collected, overdrafts on the Specified Deposit Account and for all service charges, commissions,
expenses, and other items ordinarily chargeable to the Specified Deposit Account. Customer agrees
to pay the amount of any returned item immediately upon demand to the extent that there are not
sufficient funds in the Specified Deposit Account to cover such amount on the day of the debit.
Secured Party agrees to pay within a reasonable time following receipt of written notice from
Depository Bank any such amount that is not paid in full by



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Customer within 10 days after demand on Customer by Depository Bank up to the amount of the
proceeds received by Secured Party from the corresponding returned item. Depository Bank agrees
that any demand upon Secured Party for such amount shall be made within 60 days after the Secured
Party’s receipt of such proceeds. Customer and Secured Party acknowledge that Customer is obligated
to pay all customary and reasonable charges of Depository Bank resulting from the Specified Deposit
Account.




     SECTION 15. Indemnity.



          (a) Customer agrees to indemnify and hold Depository Bank and its officers, directors,
employees, and agents (each an “indemnified person”) harmless from and against any and all
liabilities, claims and expenses of any kind or nature whatsoever arising out of this Agreement
(including the reasonable fees and disbursements of counsel in connection with any investigative,
administrative, or judicial proceeding, whether or not any indemnified person shall be designated a
party thereto); provided that Customer shall not have any obligation to any . indemnified
person hereunder with respect to any such liabilities, claims or expenses arising from the gross
negligence or willful misconduct of such indemnified person.




          (b) Secured Party agrees to indemnify and hold Depository Bank and its officers, directors,
employees, and agents harmless from and against any and all liabilities, claims and expenses of any
kind or nature whatsoever arising out of Depository Bank’s acting on Instructions concerning the
Specified Deposit Account (including the reasonable fees and disbursements of counsel in connection
with any investigative, administrative, or judicial proceeding, whether or not any indemnified
person shall be designated a party thereto); provided that Secured Party shall not have any
obligation to any indemnified person hereunder with respect to any such liabilities, claims or
expenses arising from the gross negligence or willful misconduct of any such indemnified person.




          (c) The provisions of this Section 15 shall survive termination of this Agreement.




[Remainder of page intentionally left blank]




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




	 	 	 	 	 
	 	[_______________]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Notice Address:



[c/o _____________________]


[________________________]


[________________________]


[________________________]


Attn: [____________________]


Telephone No.: [____________________]


Facsimile No.: [_____________________]

 	 
	 	 	 



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	 	___________________________,

as Depository Bank

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:
  	 	 
	 	 	Notice Address:  	 	 
	 



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Form of Deposit Account Control Agreement





 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Secured Party

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Notice Address:



[_____________________]


[_____________________]


[_____________________]


Attn: [_________________]

 	 
	 	 	 



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SCHEDULE I




	 	 	 
	Deposit Account Number	 	Location






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EXHIBIT I




FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT




     This SECURITIES ACCOUNT CONTROL AGREEMENT (this “Agreement”) is entered into as of
____________,
20___ by and among [QUIDEL CORPORATION, a Delaware corporation][NAME OF SUBSIDIARY]
(“Grantor”), BANK OF AMERICA, N.A., as Agent under the Credit Agreement referred to below (in such
capacity, “Secured Party”), U.S. Bank N.A., as Syndication Agent, and [_______________] in its
capacity as securities intermediary (“Securities Intermediary”).




PRELIMINARY STATEMENTS




          1. [Quidel Corporation (“Borrower”)][Grantor] is a party to that certain Credit Agreement
dated as of October 8, 2008, by and among [Borrower][Grantor], each lender from time to time party
hereto (collectively, “Lenders” and individually, a “Lender”), U.S. Bank N.A., as Syndication
Agent, and Bank of America, N.A., as Agent, Swing Line Lender and L/C Issuer (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”).




          2. [Pursuant to Subsidiary Guaranty dated as of October 8, 2008, Grantor has guaranteed
obligations of Borrower under the Credit Agreement.]




          3. Pursuant to the Credit Agreement, Grantor, the other grantors named therein, and Secured
Party entered into that certain Security Agreement dated of even date with the Credit Agreement (as
amended, supplemented or otherwise modified from time to time, the “Security Agreement”).




          4. Pursuant to the Security Agreement, Grantor, among other things, granted to Secured Party,
for the benefit of Secured Party, Lenders, Hedge Banks (as defined in the Security Agreement) and
Cash Management Banks (as defined in the Security Agreement), a continuing security interest in all
of Grantor’s right, title and interest in and to all Securities Collateral (as such term is defined
therein) (including the Securities Accounts identified on Schedule I annexed hereto (such accounts
and any successor accounts, the “Securities Accounts”)).




          5. Grantor, Securities Intermediary and Secured Party are entering into this Agreement to
perfect the security interest of Secured Party in, and to evidence that Secured Party has control
of, the Securities Accounts.




AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing and the agreements set forth herein,
Grantor, Secured Party and Securities Intermediary agree as follows:



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     SECTION 1. Definitions. In addition to all other terms defined herein, all references
herein to the “UCC” shall mean the Uniform Commercial Code as in effect in the State of California,
as of the date hereof.



     SECTION 2. Establishment of Securities Accounts. Securities Intermediary confirms that
(i) Securities Intermediary has established the Securities Accounts, (ii) the Securities Accounts
are, and it shall treat each of the Securities Accounts as, a “securities account” within the
meaning of Section 8-501 of the UCC, (iii) each of the Securities Accounts is an account to which
financial assets are or may be credited, and Securities Intermediary shall, subject to the terms of
this Agreement, treat Secured Party as (A) entitled to exercise the rights that comprise any
financial asset or security entitlement credited to any of the Securities Accounts and (B) the
“entitlement holder” (within the meaning of Section 8-102 of the UCC) with respect to the
Securities Accounts on the books and records of Securities Intermediary, and (iv) all securities or
other property underlying any financial assets or security entitlement credited to any of the
Securities Accounts shall be registered in the name of Securities Intermediary or its nominee,
endorsed to Securities Intermediary or in blank or credited to another securities account
maintained in the name of Securities Intermediary or its nominee, and in no case will any financial
asset credited to any of the Securities Accounts be registered in the name of Grantor, payable to
the order of Grantor or specially endorsed to Grantor except to the extent the foregoing have been
specially endorsed to Securities Intermediary or in blank.



     SECTION 3. Financial Assets; Security Interest. Securities Intermediary agrees that
each item of property (whether investment property, financial asset, security, instrument or cash
or any other property of any kind) credited to any of the Securities Accounts shall be treated as a
“financial asset” within the meaning of Section 8-102(a)(9) of the UCC. Securities Intermediary
acknowledges the security interest granted by Grantor in favor of Secured Party in the Securities
Account and the property credited thereto.



     SECTION 4. Entitlement Orders. If, at any time Securities Intermediary shall receive
any entitlement order (as defined in Section 8-102(a)(8) of the UCC) (an “Entitlement Order”) from
Secured Party directing the transfer or redemption of any financial asset or security entitlement
relating to any of the Securities Accounts, Securities Intermediary shall comply with such
Entitlement Order without further consent by Grantor or any other person or entity. Securities
Intermediary shall have no obligation to act, and shall be fully protected in refraining from
acting, in respect of the financial assets and security entitlement credited to any of the
Securities Accounts in the absence of such Entitlement Order. In addition, prior to the receipt of
any Entitlement Order from Secured Party, Securities Intermediary may comply with instructions or
Entitlement Orders received from Grantor. In the event Secured Party issues an Entitlement Order
for the transfer, redemption or other disposition of any financial assets credited to any of the
Securities Accounts, (a) Securities Intermediary shall attempt to cancel promptly any open orders
which had been entered by Grantor but had not yet been executed at the time such Entitlement Order
became effective and (b) Securities Intermediary shall close each open transaction related to the
financial assets and shall forward any proceeds thereof, together with such accounting as
Securities Intermediary provides in the ordinary course of its business upon the liquidation of any
account, directly to Secured Party; provided, however that



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nothing contained herein shall require any action in violation of, or prevent any action necessary
for compliance with, any applicable law on the part of Securities Intermediary.




     SECTION 5. Control Agreement. Anything contained herein to the contrary
notwithstanding, Securities Intermediary shall, if and as directed by Secured Party, and without
further consent of Grantor, (i) comply with all instructions, directions, and Entitlement Orders
originated by Secured Party with respect to the Securities Accounts and any security entitlements
credited thereto, (ii) transfer, sell, redeem, liquidate or otherwise dispose of any of the
Securities Accounts, (iii) transfer any or all of the financial assets credited to any of the
Securities Accounts and all proceeds and other value therefrom to any account or accounts
designated by Secured Party, including an account established in Secured Party’s name (whether at
Securities Intermediary or otherwise), (iv) register title to the Securities Accounts in any name
specified by Secured Party, including the name of Secured Party or any of its nominees or agents,
without reference to any interest of Grantor, or (v) otherwise deal with the Securities Accounts as
directed by Secured Party.



     SECTION 6. Subordination of Lien; Waiver of Set-Off. In the event that Securities
Intermediary has or subsequently obtains by agreement, operation of law or otherwise, a security
interest in the Securities Accounts or any security entitlement credited thereto, Securities
Intermediary hereby agrees that such security interest shall be subordinate to the security
interest of Secured Party. The financial assets credited to the Securities Accounts will not be
subject to deduction, set-off, banker’s lien, or any other right in favor of any person or entity,
other than Secured Party (except that Securities Intermediary may set off (i) all amounts due to
Securities Intermediary in respect of Securities Intermediary’s customary fees and expenses for the
routine maintenance and operation of the Securities Account, (ii) the face amount of any checks
which have been credited to the Securities Account but are subsequently returned unpaid because of
uncollected or insufficient funds, and (iii) the purchase price of any securities purchased by
Securities Intermediary on behalf of Grantor for which payment has not been received by Securities
Intermediary).



     SECTION 7. Choice of Law. This Agreement and the Securities Accounts shall be governed
by the laws of the State of California. The parties hereto agree that the “bank’s jurisdiction” for
purposes of Section 9-304 of the Uniform Commercial Code with respect to this Agreement, the
Securities Accounts and any agreements between the parties hereto with respect to the Securities
Accounts shall be the State of California. Regardless of any provision in any other agreement, for
purposes of the UCC, the State of California shall be deemed to be the jurisdiction of Securities
Intermediary with respect to the Securities Accounts (as well as the securities entitlements
related thereto).



     SECTION 8. Conflict with other Agreements. In the event of any conflict between this
Agreement and any other agreement between Securities Intermediary and Grantor with respect to the
Securities Accounts now existing or hereafter entered into, the terms of this Agreement shall
prevail.



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     SECTION 9. Amendments. No amendment or modification of this Agreement or waiver of any
right hereunder shall be binding on any party hereto unless it is in writing and is signed by all
of the parties hereto.



     SECTION 10. Notice of Adverse Claims. Except for the claims and interest of Secured
Party and Grantor in the Securities Account, Securities Intermediary does not know of any claim to,
or interest in, the Securities Accounts or in any “financial asset” (as defined in Section 8-102(a)
of the UCC) credited thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or similar process)
against any of the Securities Accounts or in any financial asset carried therein, Securities
Intermediary will promptly notify Secured Party and Grantor thereof. Securities Intermediary has
not entered into, and until the termination of this Agreement will not enter into, any agreement
with any other person or entity relating to the Securities Accounts and/or any financial assets
credited thereto pursuant to which it has agreed to comply with Entitlement Orders of such person
or entity. Securities Intermediary has not entered into any other agreement with Secured Party or
Grantor purporting to limit or condition the obligation of Securities Intermediary to comply with
Entitlement Orders as set forth in Section 4 of this Agreement.



     SECTION 11. Maintenance of Securities Account. In addition to, and not in lieu of, the
obligation of Securities Intermediary to honor Entitlement Orders as agreed in Section 4 hereof,
Securities Intermediary agrees to maintain the Securities Accounts as follows:



          (a) Securities Intermediary will promptly send copies of all statements, confirmations and
other correspondence concerning the Securities Accounts and/or any financial assets credited
thereto simultaneously to each of Secured Party and Grantor at the addresses set forth in Section
14 of this Agreement;




          (b) All items of income, gain, expense and loss recognized in the Securities Accounts shall be
reported to the Internal Revenue Service and all state and local taxing authorities under the name
and taxpayer identification number of Grantor; and




          (c) Securities Intermediary will not change the name or account number of any of the
Securities Accounts without the prior written consent of Secured Party.




     SECTION 12. Successors; Termination.



          This Agreement shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. The rights and powers granted herein to Secured Party have been
granted in order to perfect its security interests in the Securities Accounts, are powers coupled
with an interest and will neither be affected by the bankruptcy of Grantor nor by the lapse of
time. 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 the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement. Upon the acceptance of any appointment
as Agent under 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 pursuant hereto. Grantor may not assign or




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delegate its rights and obligations hereunder without the written consent of Securities
Intermediary and Secured Party.




          The obligations of Securities Intermediary hereunder shall continue in effect until Secured
Party has notified Securities Intermediary in writing of the termination of this Agreement.




     SECTION 13. Further Actions. Securities Intermediary shall take such further actions
as Secured Party shall reasonably request as being necessary or desirable to maintain or achieve
perfection or priority of Secured Party’s security interest with respect to the Securities Accounts
and to permit Secured Party to exercise its rights with respect to the Securities Accounts.



     SECTION 14. Notices. Unless otherwise provided in this Agreement, all notices or other
communications by any party relating to this Agreement will be in writing and will be personally
delivered or sent by registered or certified mail or nationally-recognized overnight courier,
postage prepaid, or by facsimile, to Securities Intermediary, Grantor or Secured Party at its
respective address set forth below:



	 	 	 	 
	If to the Securities Intermediary:

	 	 
	 

	 	 
	 

	 	 
	 

	 	Attn.: __________________
	 

	 	Telephone No.: _____________________
	 

	 	Facsimile No.: _____________________
	 
	 	 
	If to Grantor:

	 	[c/o __________________]
	 

	 	[_____________________]
	 

	 	[_____________________]
	 

	 	[_____________________]
	 

	 	Attn: [_____________________]
	 

	 	Telephone No.: [_____________________]
	 

	 	Facsimile No.: [_____________________]
	 
	 	 
	If to Secured Party:

	 	BANK OF AMERICA, N.A., as Agent
	 

	 	[_____________________]
	 

	 	[_____________________]
	 

	 	[_____________________]
	 

	 	Attn: [_____________________]
	 

	 	Telephone No.: [_____________________]
	 

	 	Facsimile No.: [_____________________]






     The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other.



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     SECTION 15. Duties and Liabilities of Securities Intermediary Generally. The duties
and obligations of Securities Intermediary shall be determined solely by the express provisions of
this Agreement, and Securities Intermediary shall take such action with respect to this Agreement
as it shall be directed pursuant to Section 4 hereof. Securities Intermediary shall not be liable
except for the performance of such duties and obligations as are specifically set forth in this
Agreement and as are specifically directed by Secured Party, and no implied covenants or
obligations shall be read into this Agreement against Securities Intermediary.



          (a) Securities Intermediary shall not be liable for any error in judgment made in good faith
by an officer or officers of Securities Intermediary, except for its own gross negligence, willful
misconduct or bad faith.




          (b) Grantor covenants and agrees to pay to Securities Intermediary from time to time, and
Securities Intermediary shall be entitled to, the fees and expenses agreed in writing between
Grantor and Securities Intermediary, and Grantor will further pay or reimburse Securities
Intermediary upon its request for all reasonable expenses, disbursements and advances incurred or
made by Securities Intermediary in accordance with any of the provisions hereof or any other
documents executed in connection herewith (including the reasonable compensation and reasonable
expense and disbursement of its counsel, agents and all persons not regularly in its employ). The
obligations of Grantor under this Section 15 to compensate Securities Intermediary for reasonable
expenses, disbursement and advances shall survive the satisfactions and discharge of this Agreement
or the earlier resignation or removal of Securities Intermediary.




          (c) Grantor agrees to indemnify Securities Intermediary for, and hold Securities Intermediary,
its officers, directors, employees and agents (each an “indemnified person”) harmless against, any
and all liabilities, claims and expenses of any kind or nature whatsoever arising out of or in
connection with the acceptance or administration of this Agreement and the performance of its
duties under this Agreement (including the reasonable fees and disbursements of counsel in
connection with any investigative, administrative, or judicial proceeding, whether or not any
indemnified person shall be designated a party thereto); provided that Grantor shall not
have any obligation to any indemnified person hereunder with respect to any such liabilities,
claims or expenses arising from the gross negligence or willful misconduct of any such indemnified
person.




          (d) The obligations of Grantor under this Section 15 to indemnify Securities Intermediary
shall survive the satisfaction and discharge of this Agreement or the earlier resignation or
removal of Securities Intermediary.




     SECTION 16. Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed and delivered, will
be deemed to be an original, and all of which, when taken together, will constitute but one and the
same Agreement. Delivery of an executed counterpart of this Agreement by facsimile will be equally
as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering
an executed counterpart of this Agreement by facsimile also will deliver a manually executed
counterpart of this Agreement but the failure to deliver a



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manually executed counterpart will not affect the validity, enforceability, and binding effect of
this Agreement.




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     IN WITNESS WHEREOF, the parties hereto have executed this Securities Account Control Agreement
by their duly authorized officers as of the date first above written.



	 	 	 	 	 
	 	[_______________],

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



I-S-l

Form of Securities Account Control Agreement






 









 








	 	 	 	 	 
	 	[__________________________________],

as Securities Intermediary

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



I-S-2

Form of Securities Account Control Agreement





 









 








	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Secured Party

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



I-S-3

Form of Securities Account Control Agreement





 









 








SCHEDULE 1




Account




	 	 	 	 	 
	 	 	 	 	Institution
	Name	 	Number	 	and Location
	 	 	 	 	 
	 	 	 	 	 





I-S-4

Form of Securities Account Control Agreement





 









 








EXHIBIT J




FORM OF SOLVENCY CERTIFICATE




          This SOLVENCY CERTIFICATE (this “Certificate”) is delivered in connection with that certain
Credit Agreement dated as of October 8, 2008 (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 herein being used herein as therein defined) by and among Quidel
Corporation, a Delaware corporation (“Borrower” [or the “Company”]), the financial institutions
referred to therein as Lenders (“Lenders”), U.S. Bank N.A., as Syndication Agent, and Bank of
America, N.A., as Agent, Swing Line Lender and L/C Issuer (“Agent”).




          This Solvency Certificate is being delivered pursuant to subsection 4.1 (a)(xi) of the Credit
Agreement. The undersigned is the Chief Financial Officer of [Company] [Insert Subsidiary Name (the
“Company”)] and hereby further certifies as of the date hereof, in his capacity as an officer of
Company, and not individually, as follows:




          1. I have responsibility for (a) the management of the financial affairs of Company and the
preparation of financial statements of Company, and (b) reviewing the financial and other aspects
of the transactions contemplated by the Credit Agreement.




          2. I have carefully prepared and/or reviewed the contents of this Solvency Certificate and
have conferred with counsel for Company for the purpose of discussing the meaning of any provisions
hereof that I desired to have clarified.




          3. In preparation for the consummation of the transactions contemplated by the Credit
Agreement, I have prepared and/or reviewed a pro forma balance sheet as at October 8, 2008 and pro
forma income projections and pro forma cash flow projections for each fiscal year during the term
of the Credit Agreement for Company and its Subsidiaries on a consolidated basis, in each case
after giving effect to the consummation of the transactions contemplated by the Credit Agreement.
The pro forma balance sheet has been prepared utilizing what I believe are reasonable estimates of
the “fair value” and “present fair saleable value” of the assets of Company and its Subsidiaries.
Although any projections may by necessity involve uncertainties and approximations, the projections
are based on good faith estimates and assumptions believed by me to be reasonable.




          4. Based upon the foregoing and upon the best of my knowledge after due diligence, I have
concluded as follows:




          a. The “fair value” and “present fair saleable value” of the assets of Company on a
consolidated basis exceeds: (x) the total liabilities of Company (including its probable liability
in respect of contingent and unliquidated liabilities and its unmatured liabilities) on a
consolidated basis, and (y) the amount required to pay such liabilities as they become absolute and
matured in the normal course of business.




 









 





          b. Company on a consolidated basis has the ability to pay its debts and liabilities (including
its probable liability in respect of contingent and unliquidated liabilities and its unmatured
liabilities) as they become absolute and matured in the normal course of business.




          c. Company does not have an unreasonably small amount of capital with which to conduct its
business after giving due consideration to the industry in which it is engaged.




          d. Company has not executed the Loan Documents or made any transfer or incurred any
obligations thereunder, with actual intent to hinder, delay or defraud either present or future
creditors.




          In computing the amount of such contingent and unliquidated liabilities as of the date hereof,
such liabilities have been computed at the amount that, in the light of all the facts and
circumstances existing as of the date hereof, represents the amount that can reasonably be expected
to become an actual or matured liability.




          For the purpose of the above analysis, the values of Company’s assets have been computed by
considering Company as a going concern entity.




          I understand that Agent and Lenders are relying on this Solvency Certificate in extending
credit to Company pursuant to the Credit Agreement.




 









 





               The undersigned has executed this Solvency Certificate, in his capacity as an officer of
Company and not individually, as of the ___ day of ____________, 2008.




	 	 	 	 	 
	 	 	 
	 	  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 











 





EXHIBIT K




GIBSON, DUNN & CRUTCHER LLP




LAWYERS

A REGISTERED LIMITED LIABILITY PARTNERSHIP

INCLUDING PROFESSIONAL CORPORATIONS




 






333 South Grand Avenue Los Angeles, California 90071-3197

(213) 229-7000

www.gibsondunn.com




October 8, 2008




			
	 	 	 
	Direct Dial
	 	Client No.
	(213)229-7000
	 	C 73074-00104
	Fax No.	 	 
	(213)229-7520	 	 






The Lenders listed on Schedule I

hereto,

U.S. Bank N.A., as Syndication

Agent, and

Bank of America, N.A., as Agent

(collectively, the “Lender Parties”)




c/o Bank of America, N.A.

Agency Management

Global Product Solutions

Mail Code: WA1-501-17-32

800 Fifth Avenue, Floor 17

Seattle, WA 98104





			
	          Re:	 	Quidel Corporation — Credit Agreement

dated as of October 8, 2008





Ladies and Gentlemen:




     We have acted as counsel to Quidel Corporation, a Delaware corporation (the “Company”) and
Pacific Biotech, Inc., a California corporation (“Pacific Biotech”), Metra Biosystems, Inc., a
California corporation (“Metra Biosystems”), Osteo Sciences Corporation, an Oregon corporation
(“Osteo Sciences”), and Litmus Concepts, Inc., a California corporation (“Litmus Concepts” and
together with Pacific Biotech, Metra Biosystems and Osteo Sciences, collectively, the “Guarantors”
and each, a “Guarantor”) in connection with the Credit Agreement dated as of October 8, 2008 (the
“Credit Agreement”) by and among the Company, the lenders party thereto (the “Lenders”), U.S. Bank
N.A., as Syndication Agent, and Bank of



LOS ANGELES     NEW YORK     WASHINGTON, D.C.     SAN FRANCISCO     PALO ALTO

LONDON     PARIS     MUNICH     BRUSSELS     ORANGE COUNTY     CENTURY CITY     DALLAS     DENVER




 









 








GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 2



America, N.A., as L/C Issuer, Swing Line Lender and Agent (the “Agent”). Each capitalized term used
and not defined herein has the meaning assigned to that term in the Credit Agreement.




     In rendering this opinion, we have examined originals or copies, certified or otherwise
identified to our satisfaction as being true copies, of the following documents and instruments:




     (i) the Credit Agreement, including the Exhibits and Schedules thereto;




     (ii) the Notes dated as of October 8, 2008 (the “Notes”) made by the Company payable to
the order of the Lenders;




     (iii) the Subsidiary Guaranty dated as of October 8, 2008 (the “Guaranty”) executed by
each of the Guarantors




     (iv) the Security Agreement dated as of October 8, 2008 (the “Security Agreement”) by and
between the Company, the Guarantors and the Agent; and




     (v) the financing statements on Form UCC1 naming the Company and the Guarantors as
debtors, and the Agent as secured party, to be filed in the governmental offices listed on
Schedule A hereto (each a “Financing Statement”).


The Credit Agreement, the Notes, the Guaranty, the Security Agreement, and the Financing Statements
are collectively referred to herein as the “Financing Documents.” The Company and the Guarantors
are referred to herein collectively as the “Obligors.” “Specified Obligors” means the Obligors
other than Osteo Sciences. Each relevant Obligor’s right, title and interest in the personal
property and fixtures collateral described in the Security Agreement is referred to herein
collectively as the “UCC Collateral.” The Uniform Commercial Code as enacted and in effect in the
State of California is referred to herein as the “CUCC.” The Uniform Commercial Code as enacted and
in effect in the State of Delaware is referred to herein as the “DUCC”. The Uniform Commercial Code
as enacted and in effect in the State of Oregon is referred to herein as the “Oregon UCC.” The
States of California, Delaware and Oregon are referred to herein as the “Perfection States” The
CUCC, DUCC and Oregon UCC are each referred to herein as a “UCC.” All references or sections or
other subparts of the CUCC include references to the equivalent provisions of the DUCC and Oregon
UCC, unless the context otherwise requires. All terms defined in the CUCC are used herein as
defined therein.




     We have assumed without independent investigation that:




	 	a)	 	The signatures on all documents examined by us are genuine, all individuals
executing such documents had all requisite legal capacity and competency and (except in
the case of documents signed on behalf of the Specified Obligors) were duly authorized,
the documents submitted to us as originals are authentic and the




 









 











GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N. A., as Agent

October 8, 2008

Page 3





	 	 	 	documents submitted to us as certified or reproduction copies conform to the originals;
	 
	 	b)	 	Osteo Sciences is a validly existing corporation in good standing under the laws of
its state of formation, has all requisite power to execute and deliver each of the
Financing Documents to which it is a party and perform its obligations thereunder, the
execution and delivery of such Financing Documents by Osteo Sciences and performance of
its obligations thereunder have been duly authorized by all necessary corporate or other
action and except as specifically addressed in our opinions in paragraphs 4(i)(B) and 5
below, do not violate any law, regulation, order, judgment or decree applicable to Osteo
Sciences, and such Financing Documents have been duly executed and delivered by Osteo
Sciences;
	 
	 	c)	 	There are no agreements or understandings between or among any of the parties to
the Financing Documents or third parties that would expand, modify or otherwise affect
the terms of the Financing Documents or the respective rights or obligations of the
parties thereunder or that would modify, release, terminate, subordinate or delay the
attachment of the security interest and liens granted thereunder (see Trident Center
v. Connecticut General Life Insurance Company, 847 F.2d 564 (9th Cir. 1988));
	 
	 	d)	 	To the extent that the ability of the Agent to enforce remedies under the Financing
Documents with in respect of UCC Collateral comprised of inventory may be affected
thereby, each Obligor is in compliance with the Fair Labor Standards Act (see
Citicorp Industrial Credit. Inc. v. Brock. 483 U.S. 27, 107 S. Ct. 2694 (1987));
	 
	 	e)	 	Each Obligor has, and will have at all times relevant to this opinion, rights in
the UCC Collateral within the meaning of Section 9203(b)(2) of the CUCC; and
	 
	 	f)	 	With reference to the requirements for certain exemptions from the restrictions of
Section 1 of Article XV of the Constitution of the State of California relating to rates
of interest upon loans or forbearances, each Lender Party is (i) a national bank, (ii) a
California bank, (iii) a foreign (other state) bank, (iv) a foreign (other nation) bank
that has assets at least equal to $100 million, is licensed to maintain an office in
California, is licensed or otherwise authorized by another state to maintain an agency or
branch office in that state, or which maintains a federal agency or federal branch in any
state; (v) a subsidiary of a bank holding company within the meaning of Chapter 17 of
Title 12 of the United States Code, (vi) a finance lender licensed under Section 22000
et seq. of the Financial Code of the State of California or (vii) a person which,
for purposes of Section 25118 of the Corporations Code of the State of California, has
the capacity to protect its own




 









 











GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 4





	 	 	 	interests in connection with the transactions contemplated by the Financing Documents.





     In rendering this opinion, we have made such inquiries and examined, among other things,
originals or copies, certified or otherwise identified to our satisfaction, of such records,
agreements, certificates, instruments and other documents as we have considered necessary or
appropriate for purposes of this opinion. As to certain factual matters, we have relied to the
extent we deemed appropriate and without independent investigation upon the representations and
warranties of the Obligors in the Financing Documents, certificates of officers of the Obligors
delivered pursuant to the Credit Agreement or attached hereto (collectively, the “Officers’
Certificate”) or certificates obtained from public officials and others.



     Based on the foregoing and in reliance thereon, and subject to the assumptions, exceptions,
qualifications and limitations set forth herein, we are of the opinion that:



          1. Each Specified Obligor is a validly existing corporation in good standing under the laws of
its state of incorporation and has all requisite corporate power to execute and deliver the
Financing Documents to which it is a party and perform its obligations thereunder. The Company is
duly qualified as a foreign corporation under the laws of the State of California.




          2. The execution and delivery by each Specified Obligor of the Financing Documents to which it
is a party and the performance of its obligations thereunder have been duly authorized by all
necessary corporate action. Each Financing Document has been duly executed and delivered by each
Specified Obligor party thereto.




          3. Each Financing Document (other than the Financing Statements) constitutes a legal, valid
and binding obligation of each Obligor party thereto, enforceable against it in accordance with its
terms.




          4. The execution and delivery by each Obligor of the Financing Documents to which it is a
party, and performance of its obligations thereunder, do not and will not:





(i) violate (A) the certificate or articles of incorporation or bylaws of any such Obligor
that is a Specified Obligor, or (B) based solely upon review of the orders, judgments or
decrees identified to us in the Officers’ Certificate as constituting all orders, judgments or
decrees binding on such Obligor, which are listed in part I of Schedule B hereto (each, a
“Governmental Order”), any Governmental Order, or




(ii) based solely upon review of the Governmental Orders and the documents identified to us in
the Officers’ Certificate as constituting all material contracts of the Obligors, taken as a
whole, which are listed in part II of Schedule B hereto (each a “Material Contract”), (A)
result in a material breach of or default under



 









 





GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 5





any Material Contract or (B) result in or require the creation or imposition of any lien or
encumbrance upon any assets of such Obligor under any Material Contract or Governmental Order,
other than Liens permitted by Section 7.1 of the Credit Agreement.



          5. The execution and delivery by each Obligor of the Financing Documents to which it is a
party, and performance of its obligations thereunder, do not and will not (i) violate, or require
any filing with or approval of any governmental authority or regulatory body of the State of
California or the United States of America under, any law or regulation of the State of California
or the United States of America applicable to such Obligor that, in our experience, is generally
applicable to transactions in the nature of those contemplated by the Financing Documents or (ii)
violate, or require any filing with or approval of any governmental authority or regulatory body of
the State of Delaware under the Delaware General Corporation Law, except in each case for filings
required for the perfection of Liens.




          6. No Obligor is required to register as an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.




          7. Each Obligor has granted a valid security interest (the “Security Interest”) in favor of
the Agent, for the benefit of the secured parties, in the UCC Collateral described in the Security
Agreement to which such Obligor is a party, securing the performance of the obligations purported
to be secured thereby, to the extent a security interest can be created therein under Division 9 of
the CUCC. Upon the filing of the Financing Statements with the governmental offices indicated on
Schedule A, the Security Interest in the UCC Collateral of each Obligor listed on Schedule A will
be perfected to the extent security interests therein can be perfected by the filing of UCC1
financing statements under Division 9 or Article 9 of the UCC of the relevant Perfection States.




          8. Upon delivery to the Agent in the State of California of certificates representing the
Pledged Subsidiary Equity described in Schedule 6 to the Security Agreement in accordance with the
terms of the Security Agreement (the “Pledged Shares”), the security interest of the Agent in the
Pledged Shares will be perfected and will be prior in right to all other security interests therein
created under Division 9 of the CUCC.




          9. Upon delivery by the respective Obligor to the Agent in the State of California of the
instruments evidencing the Pledged Subsidiary Debt described in Schedule 7 to the Security
Agreement in accordance with the terms of the Security Agreement (the “Pledged Notes”), the
security interest of the Agent in the Pledged Notes will be perfected and will be prior in right to
all other security interests therein created under Division 9 of the CUCC.




          10. The execution and delivery by each Obligor of the Financing Documents to which it is a
party and the performance of its obligations thereunder do not result in a breach or violation of
Regulation U or X of the Board of Governors of the Federal Reserve System.




 









 








GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 6



Regulation T of the Board of Governors of the Federal Reserve System (“Regulation T”) does not
apply to any Lender that is not a “creditor” (as defined in Regulation T). Regulation T defines
“creditor” as any broker or dealer (as defined in sections 3(a)(4) and 3(a)(5) of the Securities
Exchange Act of 1934 (the “1934 Act”)), any member of a national securities exchange, or any person
associated with a broker or dealer (as defined in section 3(a)(l 8) of the 1934 Act), except for
business entities controlling or under common control with the creditor.




     The foregoing opinions are subject to the following exceptions, qualifications and
limitations:



          A. We render no opinion herein as to matters involving the laws of any jurisdiction other than
(i) the State of California, (ii) the United States of America, (iii) for purposes of paragraphs 1,
2, 4(i)(A) and 5 above, the Delaware General Corporation Law, (iv) for purposes of our perfection
opinion in paragraph 7, the DUCC and (v) and, to the limited extent set forth below, the Oregon
UCC. We are not engaged in practice in the State of Delaware; however, we are generally familiar
with the Delaware General Corporation Law and the DUCC as currently in effect and have made such
inquiries as we consider necessary to render the opinions contained in paragraphs 1, 2, 4(i)(A) and
5. Furthermore, we are not engaged in practice in the State of Oregon and have not obtained an
opinion of counsel admitted in that state with respect to the perfection of the security interest
in the UCC Collateral. We have, however, examined the applicable provisions of the Oregon UCC as
currently in effect, as those provisions appear in the Uniform Commercial Code Reporting
Service, Section Two State UCC Variations Binder, published by West Group (updated as of March
2008) (the “UCC Reporting Service”), and our opinions in paragraph 7 above, to the extent such
opinions involve conclusions as to the perfection of such security interest under the laws of the
State of Oregon, are based solely on such review. This opinion is limited to the effect of the
present state (or, to the extent relating to the State of Oregon, the state of such laws as
reflected in the UCC Reporting Service) of the laws of the State of California and the United
States of America and, to the limited extent set forth above, the laws of the State of Delaware and
the State of Oregon and the facts as they currently exist. We assume no obligation to revise or
supplement this opinion in the event of future changes in such laws (or reflected in updates of the
UCC Reporting Service after March 2008) or the interpretations thereof or such facts. Except as
expressly set forth in paragraphs 6 and 10 above, we express no opinion regarding the Securities
Act of 1933, as amended, or any other federal or state securities laws or regulations.




          B. Our opinions set forth in paragraphs 3,7, 8, and 9 are subject to (i) the effect of any
bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting the
rights and remedies of creditors generally (including, without limitation, the effect of statutory
or other laws regarding fraudulent transfers or preferential transfers) and (ii) general principles
of equity, including without limitation concepts of materiality, reasonableness, good faith and
fair dealing and the possible unavailability of specific performance, injunctive relief or other
equitable remedies, regardless of whether enforceability is considered in a proceeding in equity or
at law.





 









 








GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 7




          C. We express no opinion with respect to the legality, validity, binding nature or
enforceability of any provision of the Financing Documents (i) to the effect that rights or
remedies are not exclusive, that every right or remedy is cumulative and may be exercised in
addition to any other right or remedy, that the election of some particular remedy does not
preclude recourse to one or more others or that failure to exercise or delay in exercising rights
or remedies will not operate as a waiver of any such right or remedy or (ii) requiring written
amendments or waivers of such documents insofar as it suggests that oral or other modifications,
amendments or waivers could not be effectively agreed upon by the parties or that the doctrine of
promissory estoppel might not apply.




          D. We express no opinion as to the legality, validity, binding nature or enforceability (i) of
provisions relating to indemnification, exculpation or contribution, to the extent such provisions
may be held unenforceable as contrary to public policy or federal or state securities laws or due
to the negligence or willful misconduct of the indemnified party, (ii) of any provision of any
Financing Document insofar as it provides for the payment or reimbursement of costs and expenses or
for claims, losses or liabilities in excess of a reasonable amount determined by any court or other
tribunal or (iii) regarding any Lender Party’s ability to collect attorneys’ fees and costs in an
action involving the Financing Documents if the Lender Party is not the prevailing party in such
action (we call to your attention that, under California law, where a contract permits one party
thereto to recover attorneys’ fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys’ fees).




          E. We express no opinion regarding the effectiveness of (i) any waiver (whether or not stated
as such) under the Financing Documents of, or any consent thereunder relating to unknown future
rights, (ii) any waiver (whether or not stated as such) contained in the Financing Documents of
rights of any party, or duties owing to it, that is broadly or vaguely stated or does not describe
the right or duty purportedly waived with reasonable specificity, (iii) any waivers or consents
(whether or not characterized as a waiver or consent in the Financing Documents) relating to the
rights of any party or duties owing to it existing as a matter of law, including, without
limitation, waivers of the benefits of statutory or constitutional provisions, to the extent such
waivers or consents may be found by a court to be against public policy or which are ineffective
pursuant to California statutes and judicial decisions, (iv) any waivers of any statute of
limitations to the extent such waivers are in excess of four years beyond the statutory period, (v)
provisions in the Financing Documents that may be construed as imposing penalties or forfeitures,
(vi) the availability of damages or other remedies not specified in the Financing Documents in
respect of breach of any covenants (other than covenants relating to the payment of principal,
interest, indemnities and expenses), (vii) any power of attorney granted under the Financing
Documents, (viii) any rights of setoff under California law (other than such as are provided by
Section 3054 of the Civil Code of the State of California, as interpreted by applicable judicial
decisions, (ix) any provision purporting to establish evidentiary standards, (x) any provision in
any Financing Document waiving the right to object to venue in





 









 








GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 8



any court, (xi) any agreement to submit to the jurisdiction of any Federal Court, or (xii) any
waiver of the right to jury trial. In addition, we advise you that some of the provisions of the
Financing Documents may not be enforceable by a Lender acting individually (as opposed to the
Lenders acting through the Agent).




          F. We express no opinion regarding the effect on the enforceability of the Guaranty or other
Financing Documents against, or on the ability of a secured party to realize upon collateral
security pledged or granted by, any Guarantor of any facts or circumstances that would constitute a
defense to the obligation of a surety (including without limitation any defense that may arise out
of rights of a guarantor under California Civil Code Sections 2787 through 2855, inclusive), unless
such defense has been waived effectively by such Guarantor.




          G. We express no opinion as to (i) any waivers or variations of rights of a debtor, including
a guarantor, or duties of a secured party under provisions referred to in Section 9602 of the CUCC
or (ii) any provision in the Security Agreement (A) that may be deemed to permit the Agent or any
other person to sell or otherwise foreclose upon any UCC Collateral, or to apply the proceeds
thereof, except in compliance with the CUCC, applicable laws of the United States and other
applicable state and local laws, or (B) that may be deemed to impose on the Agent standards for the
care of the UCC Collateral in the possession or control of the Agent that would violate Section
9207 or 9208 of the CUCC or to render such standards inapplicable.




          H. Our opinion is subject to the effect of Section 552 of the United States Bankruptcy Code
(limiting security interests in property acquired after the commencement of a case under the United
States Bankruptcy Code). We call to your attention that under the provisions of the CUCC certain
third parties, such as buyers and lessees of goods in the ordinary course of business, licensees of
general intangibles (including software) in the ordinary course of business, holders in due course
of negotiable instruments, protected purchasers of securities or certain purchasers of security
entitlements or financial assets, could acquire an interest in the UCC Collateral free of the
security interests of the Lender Parties, even though such security interests are perfected.




          I. We express no opinion with respect to (i) the existence, non-existence or value of any UCC
Collateral, (ii) any part of the UCC Collateral that is or may be such that a security interest
therein is not covered by Division 9 of the CUCC by virtue of Section 9109 and (iii) except as
expressly provided in paragraphs 8 and 9 above, as to UCC Collateral in the form of deposit
accounts and letter-of-credit rights, the perfection of the Security Interests in any portion of
the UCC Collateral, including deposit accounts, goods covered by a certificate of title (such as
automobiles), patents, trademarks, copyrights, letter-of-credit rights, insurance policies (other
than health care insurance receivables), approved air contaminant emission reductions (Sections
40709 to 40713, inclusive of Health and Safety Code) and money, to the extent that filing of a
financing statement is not or may not be sufficient to perfect a security interest therein (whether
as a result of requirements for control or possession of such collateral, the applicability





 









 








GIBSON, DUNN & CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 9



of preemptive United States laws or of certificate of title statutes or otherwise) and (iv) the law
governing perfection of security interests by filing under Section 9-301 of the UCC. We further
express no opinion as to transfers of interests or rights in patents, trademarks or copyrights in
connection with the exercise of remedies against the UCC Collateral under the Security Agreement.




          J. We express no opinion with respect to (i) the sufficiency of the descriptions of the UCC
Collateral contained in the Security Agreement, in the Financing Statements or in any document
prepared in connection therewith, except for the legal adequacy of descriptions of UCC Collateral
(A) to the extent that such descriptions consist of the collateral types defined in the CUCC (other
than commercial tort claims) and (B) contained in Financing Statements to the extent such
descriptions consist of “all assets” or “all personal property,” (ii) the enforceability or
perfection of any security interest in the proceeds of any UCC Collateral other than pursuant to
Section 9315 of the CUCC or the UCC of the relevant Perfection State, (iii) any security interest
in consumer goods or commercial tort claims or (iv) perfection (or the law governing perfection) of
any security interest in timber to be cut or as-extracted collateral (including oil, gas and other
minerals). Further, we have assumed without investigation of any kind that those Financing
Statements that are to be filed in the State of Oregon will be adequate in form under the UCC of
the State of Oregon for acceptance by those offices for filing and perfection of the security
interests referenced in paragraph 7 above.




          K. We express no opinion with respect to the priority (and therefore no opinion as to the
respective rights of any creditor, encumbrancer or other third party as against the rights of the
Lender Parties) of any security interest in the UCC Collateral, except as expressly set forth in
paragraphs 8 and 9 above




          L. Perfection of the Security Interests generally will be terminated under the circumstances
described in Sections 9316, 9507, 9508 and 9515 of the CUCC, unless appropriate action is taken as
provided therein. Without limitation, (i) all the financing statements filed must be continued at
prescribed intervals by the timely filing of continuation statements and (ii) a new or amended
financing statement may be required to be filed to retain any perfected Security Interest in the
event any Obligor changes its name, identity or location (as determined under the CUCC).




          M. Our opinions set forth in paragraphs 3, 7 and 8 are subject to, in the case of the pledge
provisions of the Security Agreement, the following qualifications: (i) the Agent may not be
entitled to vote the Pledged Shares or to receive dividends or other distributions directly from
the issuer thereof prior to becoming the record holder of the Pledged Shares; (ii) none of the
Pledged Shares or any interest therein may be sold or further transferred by the Agent without
registration under the Securities Act, except pursuant to an exemption from registration contained
in such Act, and qualification or exemption from qualification under any applicable State
securities or Blue Sky laws; and (iii) compliance with the Hart-Scott-Rodino Antitrust




 









 








GIBSON, DUNN &.CRUTCHER LLP

The Lender Parties

c/o Bank of America, N.A., as Agent

October 8, 2008

Page 10



Improvements Act of 1976 may be required prior to the exercise of any remedies under the Security
Agreement with respect to the Pledged Shares,




          N. With reference to our opinion in paragraph 8 above, we have assumed without independent
investigation that (i) the certificates representing the Pledged Shares are indorsed to the Agent
or in blank by an effective indorsement (as such term is defined in the CUCC,) and (ii) the Agent
will at all times hereafter maintain possession of the certificates representing the Pledged Shares
in the State of California.




          O. With reference to our opinion in paragraph 9 above, we have assumed without independent
investigation that (i) the Pledged Notes are “instruments” (as such term is defined in the CUCC),
(ii) the Agent will at all times hereafter maintain possession of all Pledged Notes in the State of
California, and (iii) the Agent takes possession of the Pledged Notes in good faith and without any
knowledge that the grant of the Security Interests in the Pledged Notes created under the Security
Agreement violates the rights of any other holder of a security interest in the Pledged Notes.




          P. In rendering our opinions expressed in paragraph 4(ii) insofar as they require
interpretation of Material Contracts, we express no opinion with respect to the compliance by any
Obligor with any covenants included in any Material Contract to the extent compliance depends on
financial calculations or data.




          Q. For purposes of our opinion in paragraph 10 above, we have assumed without independent
investigation that the representation and warranty of the Company set forth in Section 5.14 of the
Credit Agreement is and will be true and correct at all relevant times. Our opinion in paragraph 10
is subject to (and we express no opinion in respect of) any requirement applicable to the Agent or
any Lender to obtain in good faith a Form FR U-l or FR G-3 signed by the Obligors. Except as
expressly set forth in paragraph 10 above, we express no opinion with respect to Regulation T of
the Board of Governors of the Federal Reserve System.




          R. We express no opinion as to the enforceability of the judicial reference provisions set
forth in the Financing Documents, or as to the enforceability of the judicial reference rules
incorporated by reference therein, and for purposes of our opinions in paragraphs 3,7,8, and 9, we
have assumed that if the Financing Documents become subject to judicial reference proceedings
pursuant to such provisions, the judicial referee or judicial referees appointed pursuant thereto
will interpret, apply and enforce the provisions of the Financing Documents in the same way as a
California court applying California law to the Financing Documents.




          S. We express no opinion as to the applicability to, or the effect of noncompliance by, any
Lender Party with any state or federal laws applicable to the transactions contemplated by the
Financing Documents because of the nature of the business of such Lender Party.





 












 





GIBSON, DUNN & CRUTCHER LLP




     This opinion is rendered as of the date hereof to the Lender Parties in connection with the
Financing Documents and may not be relied upon by any person other than the Lender Parties or by
the Lender Parties in any other context. The Lender Parties may not furnish this opinion or copies
hereof to any other person except: (i) to bank examiners and other regulatory authorities should
they so request in connection with their normal examinations, (ii) to the independent auditors and
attorneys of the Lender Parties, (iii) pursuant to order or legal process of any court or
governmental agency, (iv) in connection with any legal action to which any Lender Party is a party
arising out of the transactions contemplated by the Financing Documents, or (v) to the proposed
assignee of or participant in the interest of any Lender Party under the Financing Documents (and
proposed assignees who become Lenders may rely on this opinion as if it were addressed to them
(provided that such delivery shall not constitute a re-issue or reaffirmation of this opinion as of
any date after the date hereof)). This opinion may not be quoted without the prior written consent
of this Firm.



Very truly yours,










 









 








GIBSON, DUNN & CRUTCHER LLP




SCHEDULE I — LENDER PARTIES




Bank of America, N.A




U.S. Bank N.A.




JPMorgan Chase Bank, N.A.




Union Bank of California, N.A.




I-1









 








GIBSON, DUNN & CRUTCHER LLP




SCHEDULE A — FINANCING STATEMENTS




	 	 	 	 	 
	Obligor	 	Perfection State	 	Filing Office
	 
	 	 	 	 
	Quidel Corporation

	 	Delaware
	 	Secretary of State
	 
	 	 	 	 
	Pacific Biotech, Inc.

	 	California
	 	Secretary of State
	 
	 	 	 	 
	Metra Biosystems, Inc.

	 	California
	 	Secretary of State
	 
	 	 	 	 
	Litmus Concepts, Inc.

	 	California
	 	Secretary of State
	 
	 	 	 	 
	Osteo Sciences Corporation

	 	Oregon
	 	Secretary of State







A-1









 








GIBSON, DUNN & CRUTCHER LLP




SCHEDULE B — GOVERNMENTAL ORDERS AND MATERIAL CONTRACTS




I.




GOVERNMENTAL ORDERS




None




II.




MATERIAL CONTRACTS





	1.	 	Settlement Agreement effective April 1, 1997 between the Registrant and Becton, Dickinson and
Company.
	 
	2.	 	Rosenstein License Agreement effective April 1, 1997 between the Registrant and Becton,
Dickinson and Company.
	 
	3.	 	Settlement Agreement effective April 27, 2005 between the Registrant and Inverness Medical
Innovations, Inc.
	 
	4.	 	Form of Purchase and Sale Agreement and Escrow Instructions.
	 
	5.	 	Form of Single Tenant Absolute Net Lease.
	 
	6.	 	Amended and Restated Rights Agreement dated as of December 29, 2006 between Quidel
Corporation and American Stock Transfer and Trust Company, as Rights Agent.






B-1









 








GIBSON, DUNN & CRUTCHER LLP




QUIDEL CORPORATION




OFFICERS’ CERTIFICATE




     The undersigned, Caren L. Mason and John M. Radak, do hereby certify to Gibson, Dunn &
Crutcher LLP (“Gibson. Dunn & Crutcher”), in their capacities as officers of Quidel
Corporation, a Delaware corporation (the “Company”), and on behalf of each of the
subsidiaries of the Company (collectively, the “Company Subsidiaries”), in connection with
the Credit Agreement dated as of October 8, 2008 (the “Credit Agreement”) by and among the
Company, the lenders party thereto (the “Lenders”), U.S. Bank N.A. as Syndication Agent,
and Bank of America, N.A., as Agent (the “Agent”), Swing Line Lender and L/C Issuer, as
follows:



          1. We are the duly elected and incumbent President/Chief Executive Officer and Chief Financial
Officer, respectively, of the Company, are officers of each of the Company Subsidiaries and are
authorized to execute this Certificate on behalf of the Company and the Company Subsidiaries.




          2. We recognize and acknowledge that this Certificate is being furnished to Gibson, Dunn &
Crutcher in connection with their delivery of their legal opinion of even date herewith pursuant to
Section 4.1(a)(v) of the Credit Agreement (the “GDC Opinion”). We further understand that
Gibson, Dunn & Crutcher is relying to a material degree on this Certificate in rendering that
opinion. On behalf of the Company and the Company Subsidiaries, we hereby authorize such reliance.




          3. We have asked such questions regarding the meaning of any of the provisions of this
Certificate as we have considered necessary.




          4. Prior to the date hereof, the Company and each of the Company Subsidiaries have delivered
to Gibson, Dunn & Crutcher true and correct copies of the most-current formation documents and
by-laws for the Company and each of the Company Subsidiaries, including all amendments and
restatements, and such documents have not been amended or otherwise modified since the date shown
on the face of such documents or the most recent such amendment or restatement.




          5. Prior to the date hereof, the Company and each of the Company Subsidiaries have delivered
to Gibson, Dunn & Crutcher copies of all resolutions passed by the respective board of directors of
the Company and each of the Company Subsidiaries with respect to the Financing Documents.




          6. To the best of our knowledge, Part I of Schedule A attached hereto lists all
outstanding judgments, orders or decrees of any governmental authority or court having jurisdiction
over the Company or any of the Company Subsidiaries.




Officers’ Certificate — page 1





 









 








GIBSON, DUNN & CRUTCHER LLP




          7. To the best of our knowledge, Part II of Schedule A attached hereto lists each
agreement or other instrument binding upon the Company or any of the Company Subsidiaries that is
material to the Company and the Company Subsidiaries, taken as a whole, including all amendments
thereto.




          8. To the best of our knowledge, none of the Company and the Company Subsidiaries is an
“investment company” within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the “ICA”), on the basis that it is primarily
engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses
other than that of investing, reinvesting, owning, holding, or trading in securities, as provided
in Section 3(b)(l) of the ICA.




          9. To the best of our knowledge, each and all of the representations and warranties as to
factual matters relating to the Company and the Company Subsidiaries contained in the Financing
Documents are true and correct in all material respects as of the date of such agreement and as of
the date hereof.




     Capitalized terms used herein and not defined herein have the meanings given to such terms in
the Credit Agreement. This Certificate may be executed in two or more counterparts. A copy of this
Certificate executed and delivered by facsimile transmission shall be valid for all purposes.



     IN WITNESS WHEREOF, the undersigned have executed this Certificate as of October 8, 2008.



	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Name:  	Caren L. Mason 	 
	 	Title:  	President/Chief Executive Officer 	 
	 
	 	 	 
	 	
 	 
	 	Name:  	John M. Radak 	 
	 	Title:  	Chief Financial Officer 	 
	 



Officers’ Certificate — page 2





 









 





          7. To the best of our knowledge, Part II of Schedule A attached hereto lists each
agreement or other instrument binding upon the Company or any of the Company Subsidiaries that is
material to the Company and the Company Subsidiaries, taken as a whole, including all amendments
thereto.




          8. To the best of our knowledge, none of the Company and the Company Subsidiaries is an
“investment company” within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the “ICA”), on the basis that it is primarily
engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses
other than, that of investing, reinvesting, owning, holding, or trading in securities, as provided
in Section 3(b)(l) of the ICA.




          9. To the best of our knowledge, each and all of the representations and warranties as to
factual matters relating to the Company and the Company Subsidiaries contained in the Financing
Documents are true and correct in all material respects as of the date of such agreement and as of
the date hereof.




     Capitalized terms used herein and not defined herein have the meanings given to such terms in
the Credit Agreement. This Certificate may be executed in two or more counterparts. A copy of this
Certificate executed and delivered by facsimile transmission shall be valid for all purposes.



     IN WITNESS WHEREOF, the undersigned have executed this Certificate as of October      , 2008.



	 	 	 	 	 
	 	 	 
	 	/s/ Caren L. Mason
 	 
	 	Name:  	Caren L. Mason 	 
	 	Title:  	President/Chief Executive Officer 	 
	 
	 	 	 
	 	/s/ John M. Radak
 	 
	 	Name:  	John M. Radak 	 
	 	Title:  	Chief Financial Officer 	 
	 



Officers’ Certificate — page 2





 









 








GIBSON, DUNN & CRUTCHER LLP




SCHEDULE A — GOVERNMENTAL ORDERS AND MATERIAL

CONTRACTS




I.




GOVERNMENTAL ORDERS




None.




II.




MATERIAL CONTRACTS





	1.	 	Settlement Agreement effective April 1, 1997 between the Registrant and Becton, Dickinson and
Company.
	 
	2.	 	Rosenstein License Agreement effective April 1, 1997 between the Registrant and Becton,
Dickinson and Company.
	 
	3.	 	Settlement Agreement effective April 27, 2005 between the Registrant and Inverness Medical
Innovations, Inc.
	 
	4.	 	Form of Purchase and Sale Agreement and Escrow Instructions.
	 
	5.	 	Form of Single Tenant Absolute Net Lease.
	 
	6.	 	Amended and Restated Rights Agreement dated as of December 29, 2006 between Quidel
Corporation and American Stock Transfer and Trust Company, as Rights Agent.





Officers’ Certificate — A-l