Exhibit 10.3


Execution Copy


QUIDEL CORPORATION


SECOND AMENDMENT TO
CREDIT AGREEMENT


This SECOND
AMENDMENT TO CREDIT AGREEMENT (this “Amendment”)
is dated as of September 1, 2005 and entered into by and among QUIDEL
CORPORATION, a Delaware corporation (“Borrower”), the
financial institutions listed on the signature pages hereof (“Lenders”),
and BANK OF AMERICA, N.A., a national banking association, as agent for Lenders
(in such capacity, “Agent”), and,
for purposes of Section 5 hereof, each of the Guarantors listed on the
signature pages hereof (“Guarantors”),
and is made with reference to that certain Credit Agreement dated as of January 31,
2005, as amended to the date hereof by that certain Limited Waiver of Credit
Agreement dated as of May 10, 2005 and that certain First Amendment to
Credit Agreement dated as of June 24, 2005 (as so amended, the “Credit
Agreement”), by and
among Borrower, Lenders and Agent. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.


RECITALS


WHEREAS, Borrower and Lenders desire to amend the
Credit Agreement as set forth below;


NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:


Section 1.             AMENDMENTS
TO THE CREDIT AGREEMENT


1.1                        Amendments
to Article VI: Affirmative Covenants


A.          Section 6.15
of the Credit Agreement is hereby amended by adding the following at the
beginning of the second sentence of such Section:


“Other than the last Deposit Account set forth in
Schedule 11 of the Security Account (which Deposit Account shall not have
deposits exceeding $170,000 before December 31, 2005 and which Deposit
Account shall be closed thereafter),”


B.          Section 6.16
of the Credit Agreement is hereby amended by deleting clause (b) in its
entirety and substituting the following therefor:


“(b) (i) Other than the leases listed under
third item on Schedule 6.16(b) annexed hereto, on or before November 30,
2005, 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.          Section 6.16
of the Credit Agreement is hereby amended by deleting the word “On” at the
beginning of clause (c) and substituting the following therefor:


“Other than the last Deposit Account set forth in
Schedule 11 of the Security Account (which Deposit Account shall not have
deposits exceeding $170,000 before December 31, 2005 and which Deposit
Account shall be closed thereafter), on”


1.2                        Amendment
to Article VII: Negative Covenants


Section 7.3 of the
Credit Agreement is hereby amended by replacing “$2,500,000” with “$5,000,000”
in paragraph (g) thereof.



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Section 2.             CONDITIONS
TO EFFECTIVENESS


Section 1 of this Amendment shall become
effective only upon the satisfaction of all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein
as the “Second  Amendment
Effective Date”):


A.          On or before
the Second Amendment Effective Date, Borrower shall deliver to Lenders (or to
Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) executed copies of this Amendment
executed by Borrower and each Guarantor.


B.          On or before
the Second Amendment Effective Date, all corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting
on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents
as Agent may reasonably request.


Section 3.             BORROWER’S
REPRESENTATIONS AND WARRANTIES


In order to induce Lenders to enter into this
Amendment and to amend the Credit Agreement in the manner provided herein,
Borrower represents and warrants to each Lender that the following statements
are true, correct and complete:


A.          Corporate Power and Authority.   Each
Loan Party has all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and perform its
obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”) and the other Loan Documents.


B.          Authorization of Agreements.   The
execution and delivery of this Amendment and the performance of the Amended
Agreement have been duly authorized by all necessary corporate action on the
part of each Loan Party.


C.          No Conflict.   The execution
and delivery by each Loan Party of this Amendment and the performance by such
Loan Party of the Amended Agreement and the other Loan Documents do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to such Loan Party or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of such Loan Party or any of
its Subsidiaries or any order, judgment or decree of any court or other agency
of government binding on such Loan Party or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of such Loan Party or any of
its Subsidiaries, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of such Loan Party or any of its
Subsidiaries (other than Liens created under any of the Loan Documents in favor
of Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of such Loan Party or any of its Subsidiaries.


D.         Governmental Consents.   The
execution and delivery by Borrower and Guarantors of this Amendment and the
performance by Borrower and Guarantors of the Amended Agreement and the other
Loan Documents do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.


E.          Binding Obligation.   This
Amendment has been duly executed and delivered by each Loan Party and this
Amendment and the Amended Agreement are the legally valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms, except as 



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may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability.


F.          Incorporation of Representations and Warranties From Credit
Agreement.   The representations and warranties
contained in Section 5 of the Credit Agreement are and will be true,
correct and complete in all material respects on and as of the Second Amendment
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date.


G.         Absence of Default.   No event
has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute a Default or
an Event of Default.


Section 4.             MISCELLANEOUS


A.          Reference to and Effect on the Credit
Agreement and the Other Loan Documents.


(i)      On and after the Second Amendment
Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement shall mean
and be a reference to the Amended Agreement.


(ii)     Except as specifically amended by this
Amendment, the Credit Agreement and the other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.


(iii)   The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power or
remedy of Agent or any Lender under, the Credit Agreement or any of the other
Loan Documents.


B.          Fees and Expenses.   Borrower
acknowledges that all costs, fees and expenses as described in Section 10.4
of the Credit Agreement incurred by Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrower.


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


D.         Applicable Law.   THIS AMENDMENT 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.


E.          Counterparts; Effectiveness.   This
Amendment 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 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. This Amendment (other than the provisions of Section 1
hereof, the effectiveness of which is governed by Section 2 hereof) shall
become effective upon the execution of a counterpart hereof by Borrower and
Required Lenders and receipt by Borrower and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.



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Section 5.             ACKNOWLEDGEMENT
AND CONSENT BY GUARANTORS


Each Guarantor hereby acknowledges that it has read
this Amendment and consents to the terms thereof, and hereby confirms and
agrees that, notwithstanding the effectiveness of this Amendment, the
obligations of each Guarantor under its applicable Guaranty and the Collateral
Documents shall not be impaired or affected and the applicable Guaranty and the
Collateral Documents are, and shall continue to be, in full force and effect
and is hereby confirmed and ratified in all respects. Each Guarantor further
agrees that nothing in the Credit Agreement, this Amendment or any other Loan
Document shall be deemed to require the consent of such Guarantor to any future
amendment to the Credit Agreement.


 



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IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed and delivered
by their respective officers thereunto duly authorized as of the date first
written above.


	
  

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
  QUIDEL
  CORPORATION

  
	
   

  	
   

  	
  By:

  	
  /s/ PAUL E. LANDERS

  
	
   

  	
   

  	
  Title:

  	
  SVP/CFO

  
	
   

  	
   

  	
  Name:

  	
  Paul E. Landers

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
  PACIFIC
  BIOTECH, INC.

  
	
   

  	
   

  	
  By: 

  	
  /s/ PAUL E. LANDERS

  
	
   

  	
   

  	
  Title:

  	
  Secretary and Treasurer

  
	
   

  	
   

  	
  Name:

  	
  Paul E. Landers

  
	
   

  	
   

  	
  METRA
  BIOSYSTEMS, INC.

  
	
   

  	
   

  	
  By:

  	
  /s/ PAUL E. LANDERS

  
	
   

  	
   

  	
  Title: 

  	
  Secretary and Treasurer

  
	
   

  	
   

  	
  Name:

  	
  Paul E. Landers

  
	
   

  	
   

  	
  OSTEO
  SCIENCES CORPORATION

  
	
   

  	
   

  	
  By: 

  	
  /s/ PAUL E. LANDERS

  
	
   

  	
   

  	
  Title: 

  	
  Secretary and Treasurer

  
	
   

  	
   

  	
  Name:

  	
  Paul E. Landers

  
	
   

  	
   

  	
  LITMUS
  CONCEPTS, INC.

  
	
   

  	
   

  	
  By: 

  	
  /s/ PAUL E. LANDERS

  
	
   

  	
   

  	
  Title: 

  	
  Secretary and Treasurer

  
	
   

  	
   

  	
  Name:

  	
  Paul E. Landers

  
						



 



 [Signature Page to Second Amendment]


















	
  

  	
   

  	
  BANK OF AMERICA, N.A.,
  as Agent

  
	
   

  	
   

  	
  By:

  	
  /s/ RUTH Z. EDWARDS

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  	
  Name:

  	
  Ruth Z. Edwards

  
					






 



 [Signature Page to Second Amendment]
 








 




	
  

  	
   

  	
  BANK OF AMERICA, N.A.,
  as Lender

  
	
   

  	
   

  	
  By:

  	
  /s/ RUTH Z. EDWARDS

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  	
  Name:

  	
  Ruth Z. Edwards

  
					






 



 [Signature Page to Second Amendment]