Document:

Exhibit 10.3

 

Execution Version

 

FIFTH AMENDMENT AND CONSENT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT

 

THIS FIFTH
AMENDMENT AND CONSENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of March 31, 2006 (this “Amendment”), to the Third Amended and
Restated Credit Agreement, dated as of June 30, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among General Electric Capital Corporation (in its individual capacity, “GE
Capital”), as Agent (in such capacity, “Agent”), Inverness Medical
Innovations, Inc. (“Innovations”), Wampole Laboratories, LLC and
Inverness Medical (UK) Holdings Limited, as borrowers (“Borrowers”), the
other Credit Parties signatory thereto, Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services Inc., as documentation agent,
co-syndication agent and lender, UBS Securities LLC, as co-syndication agent,
and the lenders signatory thereto from time to time (collectively, the “Lenders”).

 

W  I
T  N  E  S  S  E  T  H

 

WHEREAS,
Borrowers have notified Agent that Innovations, through its wholly owned
subsidiaries Innovacon, Inc., formerly known as Alpha US Acquisition Corp.
(“Innovacon”), and Inverness Medical Switzerland GmbH (“Swissco”),
desires to acquire (the “Acon Purchase”) (i) certain assets from
LBI, Inc. (“LBI”), Acon Biotech (Hangzhou) Co., Ltd., Acon
Laboratories, Inc., AZURE Institute, Inc. and Oakville Hong Kong Co.,
Ltd. (collectively, the “Sellers”) and (ii) the equity of Rich
Horizons International, Ltd. (“Rich Horizons”) from LBI, pursuant to
that certain Acquisition Agreement dated February 24, 2006 by and among
Innovations, the Sellers and Karsson Overseas Ltd. (the “Acon Acquisition
Agreement”);

 

WHEREAS, the
Acon Purchase shall be conducted in a series of purchases, including but
not limited to, (i) the purchase of the First Territory Business, the
First Territory Products and the Transferred Assets (each used herein as
defined in the Acon Acquisition Agreement) (including the assumption of the
Assumed Liabilities (used herein as defined in the Acon Acquisition Agreement))
on the Fifth Amendment Effective Date (as hereinafter defined) (“First
Territory Purchase”) and (ii) the purchase (“New Facility Purchase”)
of 100% of the outstanding stock of Rich Horizons from LBI on the New Facility
Closing Date (used herein as defined in the Acon Acquisition Agreement);

 

WHEREAS, the Acon
Purchase is not a Permitted Acquisition and therefore is prohibited under Section 6.1
of the Credit Agreement;

 

WHEREAS,
Borrowers have requested that Agent and Requisite Lenders consent to the First
Territory Purchase and the New Facility Purchase on the terms and subject to
the conditions set forth herein;

 

WHEREAS, Agent
and Lenders have agreed to consent to the First Territory Purchase and the New
Facility Purchase and to amend the Credit Agreement in the manner, and on the
terms and conditions, provided for herein;

 

 

WHEREAS, Agent
and Requisite Lenders have agreed to consent to the name change of Alpha US
Acquisition Corp. to Innovacon, Inc. in the manner, and on the terms and
conditions, provided for herein;

 

WHEREAS, Agent
and Lenders have agreed to consent to the release of the pledge under the US
Pledge Agreement of Inverness Medical Investments, LLC in the manner, and on
the terms and conditions, provided for herein;

 

WHEREAS, Agent
and Lenders have agreed to consent to the release of the pledge of Inverness
Medical France SAS under the Pledge of Receivables Agreement dated February 4,
2005, as amended by the First Amendment to the Pledge of Receivables Agreement
dated June 30, 2005 (the “Pledge of Receivables”), in the manner,
and on the terms and conditions, provided for herein; and

 

WHEREAS, Agent
and Lenders have agreed to consent, if applicable, to the dissolution of
Orgenics International Holdings BV in the manner, and on the terms and
conditions, provided for herein.

 

NOW THEREFORE,
in consideration of the premises and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.                                       Definitions.
Capitalized terms not otherwise defined herein (including the Recitals) shall
have the meanings ascribed to them in the Credit Agreement.

 

2.                                       Amendments to
Credit Agreement.

 

(a)                                  Amendment
to Section 1.1(c)(i) and (ii) of the Credit Agreement. As of
the Fifth Amendment Effective Date (as hereinafter defined), Sections 1.1(c)(i)
and (ii) of the Credit Agreement are hereby amended by deleting such
Sections in their entireties and replacing them with the following:

 

“(i)                               Subject
to the terms and conditions hereof, each of the US Term Lenders agrees to make
a term loan in Dollars (collectively, the “US Term Loan”) on the Fifth
Amendment Effective Date to US Borrower in the amount of such US Term Lender’s
US Term Loan Commitment. The obligations of such US Term Lender hereunder shall
be several and not joint. Each such US Term Loan shall be evidenced by a
promissory note substantially in the form of Exhibit 1.1(c)(i)
(each a “US Term Note” and collectively the “US Term Notes”),
and, except as provided in Section 1.12, the US Borrower shall
execute and deliver the US Term Note to the applicable US Term Lender. Each US
Term Note shall represent the obligation of the US Borrower to pay the applicable
US Term Lender’s US Term Loan Commitment, together with interest thereon as
prescribed in Section 1.5.

 

(ii)                                  The
US Borrower shall repay the US Term Loan in seven (7) consecutive
quarterly installments on the last day of December, March, June and September of
each year, commencing September 30, 2006, in an amount equal to .25% of
the US Term Loan Commitment, as in effect on the Fifth Amendment Effective
Date.

 

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The final
installment shall be due on March 31, 2008 and shall be in the amount of
the remaining principal balance of the US Term Loan.”

 

(b)                                 Amendment
to Section 1.3(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.3(a) of the Credit Agreement is
hereby amended by deleting the sentence beginning with the clause “Upon any
such reduction or termination of the US Revolving Loan Commitment” in such Section in
its entirety and replacing it with the following:

 

“Upon any such
reduction or termination of the US Revolving Loan Commitment, US Borrower’s
right to request US Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request US Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be,
and, other than in connection with any commitment reduction on the Fifth
Amendment Effective Date, there shall be a corresponding pro rata reduction in
the L/C Sublimit.”

 

(c)                                  Amendment
to Section 1.3(b)(iv) of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 1.3(b)(iv) of the Credit Agreement is
hereby amended by deleting such Section in its entirety and replacing it
with the following:

 

“If any Credit
Party issues Stock (other than any issuance of Stock to any other Credit Party
permitted by Section 6.5(b) or any issuance of Stock by Innovations
and paid to Acon Sellers in accordance with the Acon Acquisition), no later
than the Business Day following the date of receipt of the proceeds thereof,
Borrowers shall prepay the Loans in an amount equal to fifty percent (50%) of
the cash proceeds for any such issuance, net of underwriting discounts and
commissions and other reasonable fees, costs and expenses paid to
non-Affiliates in connection therewith (in each case, the “Equity Prepayment
Amount”). Any such prepayment shall be applied in accordance with Section 1.3(c)(iii).”

 

(d)                                 Amendment
to Section 1.3(b)(v) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.3(b)(v) of the Credit Agreement
is hereby amended by deleting the section reference “Section 1.3(c)(v)”
where it appears therein and replacing it with “Section 1.3(c)(iv)”

 

(e)                                  Amendment
to Section 1.3(b)(vii) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.3(b)(vii) of the Credit
Agreement is hereby amended by deleting the section reference “Section 1.3(c)(vii)”
where it appears therein and replacing it with “Section 1.3(c)(iv)”

 

(f)                                    Amendment
to Section 1.3(c) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.3(c) of the Credit Agreement is
hereby amended by deleting such Section in its entirety and replacing it
with the following:

 

“(c)                            Application
of Certain Mandatory Prepayments.

 

3

 

(i)                                     Any
prepayments pursuant to Section 1.3(b)(ii) above arising from any
asset disposition by any US Credit Party and any prepayments pursuant to Section 5.4(c)
arising from any casualty or condemnation proceeds with respect to property of
any US Credit Party shall be paid and applied in an amount equal to 100% of
such proceeds as follows:  first,
by US Borrower to pay interest then due and payable on the US Term Loan until
paid in full; second, by US Borrower to prepay the scheduled principal
installments of the US Term Loan in inverse order of maturity until prepaid in
full; third, by US Borrower to pay interest then due and payable on the
US Swing Line Loan until paid in full; fourth, by US Borrower to prepay
the principal balance of the US Swing Line Loan until paid in full; fifth,
by US Borrower to pay interest then due and payable on US Revolving Credit
Advances until paid in full; sixth, by US Borrower to prepay the US
Revolving Credit Advances and Swap Obligations on a ratable basis based on the
amount of such US Revolving Credit Advances then outstanding and such Eligible
Swap Obligations then due and payable until paid in full; seventh, by US
Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; eighth,
by European Borrower to pay interest then due and payable on the European Swing
Line Loan until paid in full; ninth, by European Borrower to prepay the
principal balance of the European Swing Line Loan until paid in full, tenth,
by European Borrower to pay interest then due and payable on European Revolving
Credit Advances until paid in full; eleventh, by European Borrower to
prepay European Revolving Credit Advances until paid in full; twelfth,
by European Borrower to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on its behalf, until all such
Letter of Credit Obligations have been fully cash collateralized; and any
excess shall be returned to Borrowers or to any other Person entitled thereto
under applicable law. If, when and to the extent Innovations and/or any of its
Subsidiaries is required to use the proceeds of Asset Sales (as such term is
defined in the Indenture) to repay the Revolving Loans and permanently reduce
the availability of the Revolving Loan Commitments, the European Revolving Loan
Commitment shall be so reduced to the extent the proceeds of such Asset Sale
were applied to the European Revolving Loan and the US Revolving Loan
Commitment shall be so reduced to the extent the proceeds of such Asset Sale
were applied to the US Revolving Loan. Otherwise, none of the US Revolving Loan
Commitment or the European Revolving Loan Commitment shall be permanently
reduced by the amount of any such prepayment.

 

(ii)                                  Any
prepayments pursuant to Section 1.3(b)(iii) above arising from any
asset disposition by any European Credit Party and any prepayments pursuant to Section 5.4(c)
arising from any casualty or condemnation proceeds with respect to property of
any European Credit Party shall be paid and applied in an amount equal to 100%
of such proceeds as follows:  first,
by US Borrower to pay any interest then due and payable on the US Term Loan
until paid in full; second, by US Borrower to prepay the scheduled
principal installments of the US Term Loan in inverse order of maturity until
prepaid in full; third, by European Borrower to

 

4

 

pay interest then due and
payable on the European Swing Line Loan until paid in full; fourth, by
European Borrower to prepay the principal balance of the European Swing Line
Loan until paid in full; fifth, by European Borrower to pay interest
then due and payable on European Revolving Credit Advances until paid in full; sixth,
by European Borrower to prepay the principal balance of the European Revolving
Credit Advances until paid in full; seventh, by European Borrower to
provide cash collateral in the manner set forth in Annex B for any
Letter of Credit Obligations incurred on its behalf until all such Letter of
Credit Obligations have been fully cash collateralized; eighth, by US
Borrower to pay interest then due and payable on the US Swing Line Loan until
paid in full; ninth, by US Borrower to prepay the principal balance of
the Swing Line Loan until paid in full; tenth, by US Borrower to pay
interest then due and payable on US Revolving Credit Advances until paid in
full; eleventh, by US Borrower to prepay the US Revolving Credit
Advances and Swap Obligations on a ratable basis based on the amount of such US
Revolving Credit Advances then outstanding and such Eligible Swap Obligations
then due and payable until paid in full; twelfth, by US Borrower to
provide cash collateral in the manner set forth in Annex B for any
Letter of Credit Obligations incurred on its behalf, until all such Letter of
Credit Obligations have been fully cash collateralized; and any excess shall be
returned to Borrowers or to any other Person entitled thereto under applicable
law. None of the European Revolving Loan Commitments or US Revolving Loan
Commitments shall be permanently reduced by the amount of any such prepayments
except as otherwise provided in the penultimate sentence of clause (i).

 

(iii)                               Any
prepayments of any Equity Prepayment Amount pursuant to Section 1.3(b)(iv)
shall be paid and applied as follows: (A) an amount equal to 33 1/3% of
such Equity Prepayment Amount shall be paid and applied first, by US
Borrower to pay interest then due and payable on the US Term Loan; second,
by US Borrower to prepay the scheduled principal installments of the US Term
Loan in inverse order of maturity until prepaid in full; third, by US
Borrower in respect of any Eligible Swap Obligations to the extent such
Eligible Swap Obligations are due and payable; and any excess shall be returned
to Borrowers or to any other Person entitled thereto under applicable law; and (B) an
amount equal to 66 2/3% of such Equity Prepayment Amount shall be paid and
applied first, by US Borrower and European Borrower, as applicable, to
pay interest then due and payable on the US Swing Line Loan and the European
Swing Line Loan, such amount to be payable on a ratable basis to the US Swing
Line Loan interest and the European Swing Line Loan interest based on the
amount of each such interest then outstanding until paid in full; second,
by US Borrower and European Borrower, as applicable, to prepay the principal
balance of the US Swing Line Loan and the European Swing Line Loan, such amount
to be payable on a ratable basis to the principal balance of the US Swing Line
Loan and the principal balance of the European Swing Line Loan based on the
amount of each such principal amount then outstanding until paid in full; third,
by US Borrower and European Borrower, as applicable, to pay interest then due
and payable on the US Revolving Credit Advances and the European Revolving
Credit Advances, such

 

5

 

amount to be payable on a
ratable basis to the US Revolving Loan interest and the European Revolving Loan
interest based on the amount of each such interest then outstanding until paid
in full; fourth, by US Borrower and European Borrower, as applicable, to
prepay the US Revolving Credit Advances and the European Revolving Credit
Advances, such amount to be payable on a ratable basis to the principal balance
of the US Revolving Credit Advances and the principal balance of the European
Revolving Credit Advances based on the amount of each such principal amount
then outstanding until paid in full; fifth, by US Borrower and European
Borrower, as applicable, to provide cash collateral in the manner set forth in Annex B
for any Letter of Credit Obligations incurred on behalf of each such Borrower,
such amount to be provided on a ratable basis based on the Letter of Credit
Obligations incurred on behalf of each such Borrower then outstanding until all
such Letter of Credit Obligations have been fully cash collateralized; and any
excess shall be returned to Borrowers or to any other Person entitled thereto
under applicable law. None of the US Revolving Loan Commitments or the European
Revolving Loan Commitments shall be permanently reduced by the amount of any
such prepayments.

 

(iv)                              Any
prepayments pursuant to Section 1.3(b)(v) and Section 1.3(b)(vii) above
shall be paid and applied as follows: first, by US Borrower to pay
interest then due and payable on the US Term Loan until paid in full; second,
by US Borrower to prepay the scheduled principal installments of the US Term
Loan in inverse order of maturity until prepaid in full; third, by US
Borrower and European Borrower, as applicable, to pay interest then due and
payable on the US Swing Line Loan and the European Swing Line Loan, such amount
to be payable on a ratable basis to the US Swing Line Loan interest and the
European Swing Line Loan interest based on the amount of each such interest
then outstanding until paid in full; fourth, by US Borrower and European
Borrower, as applicable, to prepay the principal balance of the US Swing Line
Loan and the European Swing Line Loan, such amount to be payable on a ratable
basis to the principal balance of the US Swing Line Loan and the principal
balance of the European Swing Line Loan based on the amount of each such
principal amount then outstanding until paid in full; fifth, by US
Borrower and European Borrower, as applicable, to pay interest then due and
payable on the US Revolving Credit Advances and the European Revolving Credit
Advances, such amount to be payable on a ratable basis to the US Revolving Loan
interest and the European Revolving Loan interest based on the amount of each
such interest then outstanding until paid in full; sixth, by US Borrower
and European Borrower, as applicable, to prepay the European Revolving Credit
Advances and prepay (or pay in the case of the Eligible Swap Obligations then
due and payable) the US Revolving Credit Advances and Swap Obligations, such
payment to be allocated as follows: (1) to the European Revolving Credit
Advances in an amount equal to the product of (x) 100% of the applicable
prepayment amount being made at such time pursuant to this item sixth
and (y) a fraction, the numerator of which is equal to the amount of the
European Revolving Credit Advances then outstanding and the denominator of
which is equal to the sum of the European Revolving Credit Advances then
outstanding and the US Revolving Credit Advances and Swap

 

6

 

Obligations; and (2) the
remainder of such prepayment being made at such time pursuant to this item sixth
to the US Revolving Credit Advances then outstanding and the Eligible Swap
Obligations then due and payable, such amount to be paid on a ratable basis
based on the amount of such US Revolving Credit Advances then outstanding and
Eligible Swap Obligations then due and payable until paid in full; seventh,
by US Borrower and European Borrower, as applicable, to provide cash collateral
in the manner set forth in Annex B for any Letter of Credit Obligations
incurred on behalf of each such Borrower, such amount to be provided on a
ratable basis based on the Letter of Credit Obligations incurred on behalf of
each such Borrower then outstanding until all such Letter of Credit Obligations
have been fully cash collateralized; and any excess shall be returned to
Borrowers or to any other Person entitled thereto under applicable law. None of
the US Revolving Loan Commitments or the European Revolving Loan Commitments
shall be permanently reduced by the amount of any such prepayments.

 

(v)                                 [Intentionally
Omitted.]

 

(vi)                              [Intentionally
Omitted.]

 

(vii)                           [Intentionally
Omitted.]

 

(viii)                        Any
prepayments required in this Section 1.3(c) shall be applied
first to the repayment of Index Rate Loans of the type of Loan required to be
prepaid and then to LIBOR Rate Loans. In the event any LIBOR Rate Loans are
required to be prepaid pursuant to this Section 1.3(c), payments may be
made to a cash collateral account held by Agent and applied to the Loans at the
end of the applicable LIBOR Period. Loans repaid with proceeds held in the cash
collateral account shall not be deemed repaid until such amounts are actually
applied to the payment of the Loans.”

 

(g)                                 Amendment
to Section 1.4 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 1.4 of the Credit Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

 

“1.4                           Use
of Proceeds. Borrowers shall utilize the proceeds of the Term Loans, the
Revolving Loans and the Swing Line Advances solely for the Acquisition, the
Acon Acquisition, Permitted Acquisitions, other acquisitions consented to by
Requisite Lenders pursuant to Section 6.1, and for the financing of
Borrowers’ ordinary working capital and general corporate needs. Disclosure Schedule (1.4)
contains a description of Borrowers’ sources and uses of funds as of the
Closing Date, including Loans and Letter of Credit Obligations to be made or
incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.”

 

7

 

(h)                                 Amendment
to Section 1.5(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.5(a) of the Credit
Agreement is hereby amended by deleting clause (iii) in the first
paragraph therein and replacing it with the following:

 

“(iii) with
respect to the US Term Loan, the Index Rate plus 2.75% per annum or, at
the election of US Borrower, the applicable LIBOR Rate plus 4.00%;”

 

(i)                                     Amendment
to Section 1.5(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.5(a) of the Credit
Agreement is hereby further amended by deleting “June 30, 2005” each place
it appears therein and replacing it with “June 30, 2006” in each instance.

 

(j)                                     Amendment
to Section 1.9(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.9(a) of the Credit
Agreement is hereby amended by deleting such Section in its entirety and
replacing it with the following:

 

“(a)                            Borrowers
or Innovations, as applicable, shall pay to GE Capital the Fees specified in
the GE Capital Fee Letter and the Fifth Amendment Effective Date Fee Letter in
the amounts, and at the times, specified for payment therein.”

 

(k)                                  Amendment
to Section 1.11(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.11(a) of the Credit
Agreement is hereby amended by deleting clauses “(3)” and “(5)” where they
appear therein in their entireties and replacing them with the following, as
applicable:

 

“(3) to
principal payments on the US Swing Line Loan and European Swing Line Loan
ratably in proportion to the outstanding principal amount of each such Loan;”
and

 

“(5) to
principal payments on the other Loans ratably in proportion to the outstanding
principal amount of each such Loan;”

 

(l)                                     Amendment
to Section 1.18(b) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 1.18(b) of the Credit
Agreement is hereby amended by deleting such Section in its entirety and
replacing it with the following:

 

“(b)                           The
Lenders acknowledge the terms and conditions of that certain Pledge of Shares,
dated November 22, 2005, among Innovations Inc., Orgenics International
Holdings B.V. and Agent.”

 

(m)                               Amendment
to Section 3.6 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 3.6 of the Credit Agreement is hereby
amended by inserting the following new clause at the end of the sentence
beginning “Each Credit Party has received all deeds, assignment, waivers”:

 

“other than in
respect of any personal property or assets where failure to so receive or
effect could not reasonably be expected to result in a Material Adverse Effect”

 

8

 

(n)                                 Amendment
to Section 3.26 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 3.26 of the Credit Agreement is hereby
amended by deleting the fourth sentence therein in its entirety and replacing
it with the following:

 

“All
Obligations, including the Loans and the Letter of Credit Obligations,
constitute senior Indebtedness entitled to the benefits of the subordination
provisions contained in the Subordinated Notes and the Intercreditor Agreement
subject to any limitation set forth therein as of the Fifth Amendment Effective
Date.”

 

(o)                                 Amendment
to Article 3 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Article 3 of the Credit Agreement is hereby amended
by inserting a new Section 3.29 at the end of such Article as
follows:

 

“No Credit
Party and, to the Credit Parties’ knowledge, no other Person party thereto is
in default in any material respect in the performance or compliance with any
material provisions of the Acon Acquisition Agreement. The Acon Acquisition
Agreement complies with, and the Acon Acquisition has been consummated in
accordance with, all applicable laws in all material respects. The Acon
Acquisition Agreement is in full force and effect as of the date hereof and has
not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities having jurisdiction over the Acon Sellers, any Credit
Party and other Persons referenced therein with respect to the consummation of
the First Territory Purchase have been obtained (it being understood and agreed
that approvals required from the requisite Governmental Authorities in Spain
and Portugal are not required to be obtained in such jurisdictions prior to
Innovacon’s acquisition of the assets with respect to such jurisdictions
pursuant to the First Territory Purchase), and no such approvals impose any
conditions to the consummation of the Acon Acquisition or, other than as
described in the Acon Acquisition Agreement, to the conduct by any Credit Party
of its business thereafter. To the best of each Credit Party’s knowledge, none
of the Acon Seller’s representations or warranties in the Acon Acquisition
Agreement contain any untrue statement of a material fact or omit any fact
necessary to make the statements therein not materially misleading. Each of the
representations and warranties given by each applicable Credit Party in the
Acon Acquisition Agreement is true and correct in all material respects, and,
notwithstanding anything contained in the Acon Acquisition Agreement to the
contrary, such representations and warranties of the Credit Parties are
incorporated herein and shall, solely for purposes herein and the benefit of
Agent and Lenders, survive the consummation of the Acon Acquisition; provided,
that a breach by any of the Credit Parties of any such representations and
warranties so incorporated and as to which a similar representation and
warranty is not independently made herein shall not constitute a breach of the
Credit Agreement unless such breach causes any such representation and warranty
to be materially inaccurate.”

 

9

 

(p)                                 Amendment
to Section 5.9 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 5.9 of the Credit Agreement is hereby
amended by deleting the first sentence therein in its entirety and replacing it
with the following:

 

“Subject to
the penultimate sentence of Section 6.15 hereof, except as
otherwise agreed to by Agent in its sole discretion, each Credit Party shall
obtain a landlord’s agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property, mortgagee of owned
property or bailee with respect to any warehouse, processor or converter
facility or other location where Collateral is stored or located, which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee or bailee may assert against the
Collateral at that location, and shall otherwise be reasonably satisfactory in form and
substance to Agent.”

 

(q)                                 Amendment
to Section 5.15 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 5.15 of the Credit Agreement is hereby
amended by inserting a new paragraph “(c)” at the end of such Section as
follows:

 

“(c)                            A
Credit Party shall at all times own and control at least 100% of the economic
and voting rights of Abon on and after the Acon New Facility Closing Date.”

 

(r)                                    Amendment
to Section 6.1 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.1(xiii) of the Credit Agreement is hereby
amended by deleting clause “(A)” of such Section in its entirety and
replacing it with the following:

 

“(A) the
Credit Parties taken as a whole (after taking into consideration all rights of
contribution and indemnity the Credit Parties have against Innovations and each
other Subsidiary of Innovations) are Solvent immediately prior to and will be
Solvent upon the consummation of the Permitted Acquisition;”

 

(s)                                  Amendment
to Section 6.2 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.2 of the Credit Agreement is hereby
amended by deleting from and including clause “(i)” through the end of such Section in
its entirety and replacing it as follows:

 

“(i) the
Credit Parties may make investments in and/or loans to (A) Inverness
Medical Investments for the purpose of making investments or loans in Inverness
Medical (Shanghai) Co., Ltd. and (B) Inverness Medical (Shanghai) Co.,
Ltd., in each case to the extent contemplated by Section 5.15(b);
(j) any Credit Party may make capital contributions to any other Credit
Party it holds an interest in and any Credit Party may make any other
investment in any other Credit Parties to the extent permitted under Section 6.5(b);
(k) the Credit Parties may make investments in or loans to IDT Acquisition
in an amount necessary to permit IDT Acquisition to make payments required
under that certain Share Sale and Purchase Agreement between Innogenetics NV
and Swissco in connection with the purchase by IDT Acquisition, as assignee of
Swissco under such agreement,

 

10

 

of Inverness
Iberica; and (l) on or after the Acon New Facility Closing Date, the Credit
Parties may make investments in and/or loans to Abon in an amount not to
exceed $5,000,000 at any one time outstanding.”

 

(t)                                    Amendment
to Section 6.3(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 6.3(a) of the Credit
Agreement is hereby amended by deleting the word “and” before clause “(xiii)”
where it appears therein and inserting a new clause “(xiv)” and a new clause “(xv)”
at the end of such Section as follows:

 

“(xiv) in the
case of Rich Horizons on and after the Acon New Facility Closing Date, the NF
Indebtedness incurred by Rich Horizons; and (xv) the obligations of the
applicable Credit Parties pursuant to Sections 3.1 and 3.2 of the
Acon Acquisition Agreement.”

 

(u)                                 Amendment
to Section 6.6 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.6 of the Credit Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

 

“6.6                           Guaranteed
Indebtedness. No Credit Party shall create, incur, assume or permit to
exceed any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any
Credit Party, (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement; provided that in no event shall any Credit Party guaranty any
obligations under the Subordinated Notes, and (c) Innovations may guaranty
obligations of Inverness Medical (Shanghai) Co., Ltd. to suppliers in the
ordinary course of business; provided that all such guaranties are
unsecured and the obligations guarantied by all such guaranties do not exceed (i) $4,000,0000
in the aggregate at any time less (ii) the value of all assets at
such time, other than the value of Inverness Medical (Shanghai) Co., Ltd. and,
on or after the Acon New Facility Closing Date, other than the value of Abon,
owned by the Credit Parties or any of the Excluded Subsidiaries (other than
Inverness Medical (Shanghai) Co., Ltd. and, on or after the Acon New Facility
Closing Date, Abon) and located in China.”

 

(v)                                 Amendment
to Section 6.8 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.8 of the Credit Agreement is hereby
amended by deleting the Section reference “Section 6.3” where
it appears therein and replacing it with “Section 6.2”.

 

(w)                               Amendment
to Section 6.14 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.14 of the Credit Agreement is hereby
amended by deleting the word “and” before clause “(g)” where it appears therein
and deleting clause “(g)” where it appears therein in its entirety and
replacing it with the following:

 

“(g) the
Credit Parties may make payments with respect of the Additional
Acquisition Consideration to the extent permitted by Section 6.22
hereof; and (h) on or after the Acon New Facility Closing Date, Rich
Horizons may make

 

11

 

payments
pursuant to its guaranty of the NF Indebtedness; provided, that after
giving effect to such payment, the sum of (i) such payment (together with
any previous payments under such guaranty to the extent not calculated in
clause (ii) hereof or not reimbursed by Abon) and (ii) the amount of
Investments made by the Credit Parties in Abon then outstanding as contemplated
in Section 6.2(l) shall not exceed $5,000,000 in the aggregate.”

 

(x)                                   Amendment
to Section 6.20 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.20 of the Credit Agreement is hereby
amended by inserting the following new sentences immediately after the end
clause “(x)” where it appears therein:

 

“Cambridge
Diagnostics Ireland Limited shall not engage in any business (other than in
connection with its dissolution) or have any assets (other than assets owned by
it on the Fifth Amendment Effective Date and disposed of in accordance with Section 6.8
hereof) or incur any Indebtedness or Guaranteed Indebtedness and shall dissolve
as soon as legally practical in accordance with local law. Inverness Medical
Eurasia Limited shall not engage in any business (other than in connection with
its dissolution) or have any assets (other than any assets owned by it on the
Fifth Amendment Effective Date and disposed of in accordance with Section 6.8
hereof) or incur any Indebtedness or Guaranteed Indebtedness and shall dissolve
as soon as legally practical in accordance with local law. Inverness Medical
Investments, LLC shall not engage in any business or have any assets (other
than assets owned by it on the Fifth Amendment Effective Date and cash
distributed to it solely in accordance with the requirements of Section 5
of the Consent and Waiver to Third Amended and Restated Credit Agreement dated
as of March 21, 2006) or incur any Indebtedness or Guaranteed
Indebtedness.”

 

(y)                                 Amendment
to Section 6.21 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 6.21 of the Credit Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following:

 

“6.21                     Collateral
in China. At no time shall the aggregate value of all assets, other than
the value of Inverness Medical (Shanghai) Co., Ltd. and, on or after the Acon
New Facility Closing Date, other than the value of Abon, owned by the Credit
Parties or any of the Excluded Subsidiaries (other than Inverness Medical
(Shanghai) Co., Ltd. and, on or after the Acon New Facility Closing Date, Abon)
and located in China exceed (a) $4,000,000 in the aggregate at any time less
(b) the aggregate value of any guaranties issued by Innovations pursuant
to Section 6.6 hereof.”

 

(z)                                   Amendment
to Article 6 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Article 6 of the Credit Agreement is hereby amended
by inserting a new Section 6.22 at the end of such Article as
follows:

 

12

 

“6.22                     Payment of
Additional Acquisition Consideration. The Credit Parties shall not make any
payments in respect of the Additional Acquisition Consideration either if (a) an
Event of Default under Section 8.1(h) or Section 8.1(i) shall
have occurred, or (b) after giving effect to such payment, the Borrowers do
not have aggregate US Revolving Borrowing Availability and European Revolving
Borrowing Availability and available cash in Blocked Accounts and Foreign Bank
Accounts of at least $20 million in the aggregate. Prior to the payment of any
amount contemplated above, Borrower Representative shall deliver a certificate
executed by the Chief Financial Officer, Treasurer or Vice President of Finance
of Innovations to Agent (on behalf of Innovations and not in his individual
capacity) certifying that the applicable conditions set forth above have been
satisfied.”

 

(aa)                            Amendment
to Section 8.2 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 8.2 of the Credit Agreement is hereby
amended by inserting a new paragraph (c) at the end of such Section as
follows:

 

“(c)                            On the
first day on which an Event of Default described in Sections 8.1(h) or
(i) shall occur in respect of any Credit Party or immediately upon
acceleration of all or part of the Obligations in accordance with Section 8.2(a),
Lenders shall automatically and without further act be deemed to have purchased
participations in each of the US Term Loan, the US Revolving Loan and the
European Revolving Loan such that as a result of such deemed purchases, such
Lender shall hold an interest in each of the Loans (including principal,
interest and fee obligations of each Borrower in respect of each such Loan),
whether or not such Lender shall previously have participated therein, equal to
such Lender’s Reallocation Percentage thereof. Each Lender, each Person
acquiring a participation from any Lender as contemplated by Section 9.1,
each Borrower and each other Credit Party hereby consents to the Reallocation
Exchange.”

 

(bb)                          Amendment
to Section 9.1 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 9.1 of the Credit Agreement is hereby
amended by inserting the subsection reference “(a)” before the first full
paragraph therein and re-lettering each following paragraph in a corresponding
manner through the end of such Section 9.1.

 

(cc)                            Amendment
to Section 9.1(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 9.1(a) of the Credit
Agreement is hereby further amended by deleting clause “(vi)” where it appears
therein in its entirety and replacing it with the following:

 

“(vi) so
long as no Event of Default has occurred and is continuing, require the consent
of Borrower Representative, which shall not be unreasonably withheld or
delayed; provided  that, such consent shall not be required (A) for
an assignment to any Lender, an Affiliate of a Lender or to an investment fund
that invests in commercial loans and that is managed or advised by a Lender, an
Affiliate of a Lender, the same investment advisor that manages a Lender or by
an Affiliate of such investment advisor or (B) with respect to any
assignment by GE Capital or

 

13

 

ML Capital
unless and until such entity has reduced its total Commitment hereunder to $55
million.”

 

(dd)                          Amendment
to Section 9.1(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 9.1(a) of the Credit
Agreement is hereby further amended by deleting the sentence beginning with “The
Lenders acknowledge and agree that in order for any assignee Lender or
participant to have the benefit of (i) that certain Second Amended and
Restated Guarantee between Swissco” where it appears therein and replacing it
with the following:

 

“The Lenders
acknowledge and agree that in order for any assignee Lender or participant to
have the benefit of (i) that certain Third Amended and Restated Guarantee
between Swissco, as Guarantor, and GE Capital, as Security Agent, dated as of March 31,
2006, as amended, restated, supplemented or otherwise modified from time to
time, and (ii) that certain Third Amended and Restated Security Assignment
between Swissco, as Assignor, and GE Capital, as Security Agent, dated March 31,
2006, as amended, restated, supplemented or otherwise modified from time to
time, the assigning Lender must take such actions as may be required under
the laws of Switzerland to ensure that such assignee Lender or participant
obtains the benefits of such Guarantee and Security Assignment.”

 

(ee)                            Amendment
to Section 9.1(a) of the Credit Agreement. As of the Fifth
Amendment Effective Date, Section 9.1(a) of the Credit
Agreement is hereby further amended by deleting the name “VIVA DIAGNOSTIKA -
DIAGNOSTISCHE PRODUKTE - GMBH” where it appears therein and replacing it with “Inverness
Medical Deutschland GmbH”.

 

(ff)                                Amendment
to Section 11.19 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 11.19 of the Credit Agreement is hereby
amended by deleting the word “and” before clause “(iv)” where it appears in subsection “(a)”
therein and inserting a new clause “(v)” at the end of subsection “(a)”
therein as follows:

 

“; and (v) in
the case of Abon only, on or after the Acon New Facility Closing Date, (A) Indebtedness
owing to the Credit Parties to the extent contemplated by Section 6.2(l)
and (B) the NF Indebtedness;”

 

(gg)                          Amendment
to Section 11.19 of the Credit Agreement. As of the Fifth Amendment
Effective Date, Section 11.19 of the Credit Agreement is hereby further
amended by deleting the word “and” before clause “(iv)” where it appears in subsection “(b)”
therein and inserting a new clause “(v)” at the end of subsection “(b)”
therein as follows:

 

“; and (v) in
the case of Abon only, Liens solely on the assets of Abon securing the NF
Indebtedness permitted by clause (a)(v) above.”

 

(hh)                          Amendments
to Annex A of the Credit Agreement.

 

(i)                                     As
of the Fifth Amendment Effective Date, Annex A of the Credit Agreement
is hereby amended by inserting the following new definitions in alphabetical
order therein:

 

14

 

‘“Abon”
means ABON Biopharm (Hangzhou) Co., Ltd.

 

“Acon
Acquisition” means the First Territory Purchase and (b) the
acquisition of the New Facility Equity Interests (as defined in the Acon
Acquisition Agreement), each pursuant to, and as more fully described in, the
Acon Acquisition Agreement.

 

“Acon
Acquisition Agreement” means the Acquisition Agreement entered into as of February 24,
2006 by and among Innovations, Acon Sellers, and Karsson Overseas Ltd., a
British Virgin Islands company and direct or indirect parent of the Seller
Entities and other affiliates of the Acon Sellers that are parties to
agreements entered into connection with the transactions contemplated thereby,
as amended by that certain letter agreement, dated as of March 31, 2006,
by and among the Acon Sellers and Innovations.

 

“Acon Bio”
means Acon Biotech (Hangzhou) Co., Ltd., a wholly foreign owned enterprise established
in the People’s Republic of China.

 

“Acon Labs”
means Acon Laboratories, Inc., a California corporation.

 

“Acon New
Facility” means the New Facility as defined in the Acon Acquisition
Agreement.

 

“Acon New
Facility Closing” means the New Facility Closing as defined in the Acon
Acquisition Agreement.

 

“Acon New
Facility Closing Date” means the New Facility Closing Date as defined in
the Acon Acquisition Agreement.

 

“Acon
Sellers” means Acon Labs, Azure, LBI, Oakville and Acon Bio.

 

“Additional
Acquisition Consideration” means any
payments required to be made in respect of the Acon Acquisition under the Acon
Acquisition Agreement following the Fifth Amendment Effective Date.

 

“Azure”
means Azure Institute, Inc., a California corporation.

 

“Equity
Prepayment Amount” has the meaning ascribed to it in Section 1.3(b)(iv).

 

“Fifth
Amendment” means the Fifth Amendment to Third Amended and Restated Credit Agreement
dated as of March 31, 2006 by and among Agent, Innovations, Borrowers, the
other Credit Parties signatory thereto and Lenders.

 

“Fifth
Amendment Effective Date” means March 31, 2006.

 

“Fifth
Amendment Effective Date Fee Letter” means that certain letter, dated as of
the Fifth Amendment Effective Date, among Agent and Borrowers with respect

 

15

 

to certain
Fees to be paid from time to time by Borrowers to Agent, for the benefit of the
Lenders named therein.

 

“First
Territory Purchase” means the purchase of the First Territory Business, the
First Territory Products and the Transferred Assets (each used herein as
defined in the Acon Acquisition Agreement) (including the assumption of the
Assumed Liabilities (used herein as defined in the Acon Acquisition Agreement))
on the Fifth Amendment Effective Date.

 

“Foreign
Bank Accounts” means foreign bank accounts in which the Credit Parties are
able to freely access 100% of the cash deposited therein (subject to any rights
of depository banks to collect ordinary fees, charges and the like).

 

“Innovacon”
means Innovacon, Inc., formerly known as Alpha US Acquisition Corp., a
Delaware corporation.

 

“LBI”
means LBI Inc., a British Virgin Islands company.

 

“NF
Indebtedness” shall have the meaning ascribed to it in Section 2.3
of the Acon Acquisition Agreement.

 

“Oakville”
means Oakville Hong Kong Co., Ltd., a Hong Kong company.

 

“Reallocation
Exchange” means the participations purchased by Lenders pursuant to Section 8.2.

 

“Reallocation
Percentage” means, as to each Lender, a fraction, expressed as a decimal,
of which (a) the numerator shall be the aggregate Obligations owed to such
Lender immediately prior to the date that any Event of Default as described in Section 8.1(h) or
(i) occurs or the date of acceleration of all or part of the
Obligations in accordance with Section 8.2(a) and (b) the
denominator shall be the aggregate Obligations owed to all of the Lenders
immediately prior to any such date. For purposes of computing each Lender’s
Reallocation Percentage, all Obligations which are denominated in an
Alternative Currency shall be the Equivalent Amount thereof in Dollars,
determined as of the date such Event of Default as described in Section 8.1(h) and
(i) or such acceleration occurs.

 

“Rich
Horizons” means Rich Horizons International, Ltd., a British Virgin Islands
company.

 

“US
Revolving Credit Advances and Swap Obligations” means as of any date of
determination the sum of (a) the principal balance of US Revolving Credit
Advances then outstanding and (b) the Eligible Swap Obligations then due
and payable.”

 

(ii)                                  As
of the Fifth Amendment Effective Date, Annex A of the Credit Agreement
is hereby amended by amending and restating the below definitions in their
entireties as follows:

 

16

 

‘“Commitments”
means (a) as to any Lender, the aggregate of such Lender’s US Revolving
Loan Commitment (including without duplication the Swing Line Lender’s US Swing
Line Commitment as a subset of its US Revolving Loan Commitment), European
Revolving Loan Commitment (including without duplication the Swing Line Lender’s
European Swing Line Commitment as a subset of its European Revolving Loan Commitment),
US Term Loan Commitment and European Term Loan Commitment as set forth on Annex I
to this Agreement or in the most recent Assignment Agreement executed by such
Lender, and (b) as to all Lenders, the aggregate of all Lenders’ US
Revolving Loan Commitments (including without duplication the Swing Line Lender’s
US Swing Line Commitment as a subset of its US Revolving Loan Commitment),
European Revolving Loan Commitments (including without duplication the Swing
Line Lender’s European Swing Line Commitment as a subset of its European
Revolving Loan Commitment), US Term Loan Commitments and European Term Loan
Commitments, which aggregate commitment shall be ONE HUNDRED FIFTY FIVE MILLION
DOLLARS ($155,000,000) as of the Fifth Amendment Effective Date, as to each of
clauses (a) and (b), as such Commitments may be
reduced, amortized or adjusted from time to time in accordance with the
Agreement.

 

“Credit
Parties” means Innovations, each Borrower and each of their respective
Subsidiaries (other than the Excluded Subsidiaries and any newly formed or
acquired Subsidiary which has not yet undertaken the obligations of a “Credit
Party” under the Credit Agreement in a manner satisfactory to Agent).

 

“European
Credit Party” means each of European Borrower, IMC, Swissco and each of
their respective Subsidiaries (other than the Excluded European Subsidiaries
and any newly formed or acquired Subsidiary which has not yet undertaken the
obligations of a “Credit Party” under the Credit Agreement in a manner
satisfactory to Agent).

 

“European
Revolving Loan Commitment” means (a) as to any Lender, the aggregate
commitment of such Lender to make European Revolving Credit Advances or incur
Letter of Credit Obligations at the request of European Borrower as set forth
on Annex I to this Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make European Revolving Credit Advances or incur
Letter of Credit Obligations at the request of European Borrower, which
aggregate commitment shall be SEVENTY MILLION DOLLARS ($70,000,000) as of the
Fifth Amendment Effective Date, as such amount may be adjusted, if at all,
from time to time in accordance with this Agreement.

 

“European
Term Loan Commitment” means (a) as to any Lender with a European Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of
the European Term Loan as set forth on Annex I to the Agreement or
in the most recent Assignment Agreement executed by such Lender, and (b) as
to all

 

17

 

Lenders with a
European Term Loan Commitment, the aggregate original commitment of all Lenders
to make the European Term Loan, which aggregate commitment is equal to ZERO
DOLLARS ($0) on the Fifth Amendment Effective Date. After advancing the
European Term Loan, each reference to a Lender’s European Term Loan Commitment
shall refer to that Lender’s Pro Rata Share of the outstanding European Term
Loan.

 

“Excess
Cash Flow” means, without duplication, with respect to the Credit Parties
and any Fiscal Year, consolidated net income plus (a) depreciation,
amortization and Interest Expense to the extent deducted in determining
consolidated net income, minus (b) Capital Expenditures during such Fiscal
Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount
permitted to be made in such Fiscal Year pursuant to clause (a) of
Annex F), minus (c) Interest Expense paid or accrued (excluding any
original issue discount, interest paid in kind or amortized debt discount, to
the extent included in determining Interest Expense) and scheduled principal
payments paid in respect of Funded Debt, plus or minus (as the case may be),
(d) extraordinary gains or losses which are cash items not included in the
calculation of net income, minus (e) mandatory prepayments paid in cash
pursuant to Section 1.3 other than mandatory prepayments made
pursuant to Sections 1.3(b)(i), 1.3(b)(ii), 1.3(b)(iii), 1.3(b)(iv),
1.3(b)(v) or 5.4(c), plus (f) taxes deducted in
determining consolidated net income to the extent not paid for in cash, plus
decreases or minus increases (as the case may be) (g) in
Working Capital (other than changes in Working Capital solely attributable to
acquisitions or dispositions of assets at the time of such acquisition or
disposition), minus (h) voluntary principal payments paid in
respect of the Term Loans, minus (i) cash consideration paid in
connection with Permitted Acquisitions, minus (j) prepayments of the
Subordinated Notes to the extent permitted to be repaid hereunder, plus
or minus (as the case may be), (k) losses or gains included in
consolidated net income as a result of asset dispositions.

 

“Excluded
European Subsidiaries” means, collectively (a) Unipath BV, an entity
organized under the laws of The Netherlands; (b) Unipath Management
Limited, a company organized under the laws of England and Wales; (c) Unipath
Scandinavia AB, an entity organized under the laws of Sweden; (d) Inverness
Medical Benelux Bvab, an entity organized under the laws of Belgium; (e) Orgenics
and each of the subsidiaries of Orgenics; (f) Inverness Medical Australia
Pty Ltd.; (g) Inverness Medical (Shanghai) Co., Ltd., (h) Pregymed GmbH,
(i) after the New Facility Closing Date, Abon, (j) Inverness Medical
Investments, LLC, (k) Orgenics International Holdings BV and (l) Clondiag
Chip Technologies GmbH (“Clondiag”) until such time as Clondiag becomes
a European Credit Party under the Credit Agreement.

 

“German
Credit Parties” means each of Inverness Medical Germany GmbH, DMD,
Dienstleistungen & Vertrieb für Medizin und Diagnostik GmbH, Inverness
Medical Deutschland GmbH, Unipath Diagnostics GmbH and any other

 

18

 

Subsidiary
incorporated or otherwise organized under the laws of Germany which becomes a
Credit Party under this Agreement after the date hereof.

 

“Obligations”
means all loans, advances, debts, liabilities and obligations for the performance
of covenants, tasks or duties or for payment of monetary amounts (whether or
not such performance is then required or contingent, or such amounts are
liquidated or determinable) owing by any Credit Party to Agent or any Lender,
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, arising under the Agreement or any of the other Loan Documents. This
term (i) includes all principal, interest (including all interest that
accrues after the commencement of any case or proceeding by or against any
Credit Party in bankruptcy, whether or not allowed in such case or proceeding),
Fees, Charges, expenses, attorneys’ fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents, including,
without limitation, the L/C Obligations, but (ii) excludes, in any event,
all Eligible Swap Obligations (except as otherwise provided in the last
sentence of this definition). Subject to Section 1.19 hereof,
solely for purposes of any collateral security for, or any guaranty of, the
Obligations provided by the US Credit Parties in any Collateral Document
entered into by the US Credit Parties (or any term or provisions in any other
Loan Document related thereto), the term “Obligations” as used therein shall
include the Eligible Swap Obligations unless otherwise expressly excluded
therein; provided, that, it is understood and agreed that,
notwithstanding the foregoing or any other provision to the contrary in any of
the Collateral Documents or other Loan Documents, in no event shall (i) any
European Credit Party be liable in any manner (whether pursuant to any guaranty
or otherwise) for any Eligible Swap Obligation, (ii) any assets of any
European Credit Party at any time serve directly or indirectly as security for
any Eligible Swap Obligations, or (iii) more than 65% (or in the case of
Swissco, 66%) of the total stock or other equity interests of any European
Credit Party secure any Eligible Swap Obligations.

 

“Permitted
Acquisition” has the meaning ascribed to it in Section 6.1; provided,
that, subject to satisfaction of the terms and conditions hereof and in the
Fifth Amendment related to the consent by Agent and Lenders of the Acon
Acquisition, the Acon Acquisition shall be deemed a Permitted Acquisition.

 

“Reporting
Credit Parties” means, collectively, Innovations and its Subsidiaries; provided
that, for purposes of calculating the Reporting Credit Parties’ EBITDA
on a consolidated basis for the fiscal period most recently ended as determined
by Agent by reference to the Financial Statements for such fiscal period, in no
event shall more than 5% of such EBITDA be attributable to the Excluded
Subsidiaries (other than Inverness Medical Investments, LLC).

 

“Restricted
Credit Parties” means, collectively (a) Inverness Japan, (b) Inverness
Medical France SAS (c) Inverness Iberica and (d) IDT Acquisition.

 

19

 

“Senior
Consolidated Leverage Ratio” means, with respect to the Reporting Credit
Parties on a consolidated basis, the ratio of (a) the sum of Funded Debt
as of any date of determination less Subordinated Debt as of such date less
available cash in excess of $5,000,000 in Blocked Accounts and Foreign Bank
Accounts on such date, to (b) LTM EBITDA for the twelve months ending on
that date of determination.

 

“Total
Leverage Ratio” means, with respect to the Reporting Credit Parties, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of
determination less available cash in excess of $5,000,000 in Blocked
Accounts and Foreign Bank Accounts on such date, to (b) LTM EBITDA for the
twelve months ending on that date of determination.

 

“US Credit
Party” means Innovations, US Borrower and each of their respective Domestic
Subsidiaries (other than the Excluded Subsidiaries and any newly formed or
acquired Subsidiary which has not yet undertaken the obligations of a “Credit
Party” under the Credit Agreement in a manner satisfactory to Agent).

 

“US
Revolving Loan Commitment” means (a) as to any Lender, the aggregate
commitment of such Lender to make US Revolving Credit Advances as set forth on Annex I
to this Agreement or in the most recent Assignment Agreement executed by such Lender
and (b) as to all Lenders, the aggregate commitment of all Lenders to make
US Revolving Credit Advances, which aggregate commitment shall be FORTY MILLION
DOLLARS ($40,000,000) as of the Fifth Amendment Effective Date, as such amount may be
adjusted, if at all, from time to time in accordance with this Agreement.

 

“US Term
Loan Commitment” means (a) as to any Lender with a US Term Loan
Commitment, the commitment of such Lender to make its Pro Rata Share of the US
Term Loan as set forth on Annex I to the Agreement or in the most
recent Assignment Agreement executed by such Lender, and (b) as to all
Lenders with a US Term Loan Commitment, the aggregate commitment of all Lenders
to make the US Term Loan, which aggregate commitment is equal to FORTY FIVE MILLION
DOLLARS ($45,000,000) on the Fifth Amendment Effective Date. After advancing
the US Term Loan, each reference to a Lender’s US Term Loan Commitment shall
refer to that Lender’s Pro Rata Share of the outstanding US Term Loan.”

 

(iii)                               As of the Fifth
Amendment Effective Date, Annex A of the Credit Agreement is hereby
amended by deleting clause (iii) in the definition of “EBITDA” where it
appears therein and replacing it with the following:

 

“(iii) loss
from extraordinary items for such period (including exit costs (including, but
not limited to, severance costs, lease termination costs and other contract
termination costs to the extent such contracts relate solely to the facilities
which are being exited during such period) under EITF 94-3 but only to the
extent incurred during the period (A) beginning on April 1, 2005 and
ending on

 

20

 

December 31,
2005 in an amount not to exceed $5,300,000 in the aggregate during such period
and (B) beginning on January 1, 2006 and ending on December 31,
2007 in an amount not to exceed $10,000,000 in the aggregate, but in no event
more than $5,000,000 in the aggregate in any twelve month period beginning and
ending between January 1, 2006 and December 31, 2007),”

 

(iv)                              As
of the Fifth Amendment Effective Date, Annex A of the Credit Agreement
is hereby amended by deleting the term “the Closing Date Fee Letter” in the
definition of “Loan Documents” where it appears therein and replacing it with “the
Fifth Amendment Effective Date Fee Letter”.

 

(v)                                 As
of the Fifth Amendment Effective Date, Annex A of the Credit Agreement
is hereby amended by deleting the word “and” before clause “(l)” where it
appears in the definition of “Permitted Encumbrances” and adding new clauses “(m)”,
“(n)” and “(o)” at the end of such definition as follows:

 

“; (m) with
respect to any assets or properties acquired in connection with the Acon
Acquisition, liens of the type described in clauses (viii) and (ix) in
the definition of “Permitted Liens” in the Acon Acquisition Agreement; (n)
liens on assets or properties of Abon securing any NF Indebtedness to the
extent contemplated by Section 11.19; and (o) liens securing
capital lease obligations owing to Hyster Capital with respect to a forklift to
be acquired in the First Territory Purchase.”

 

(vi)                              As
of the Fifth Amendment Effective Date, Annex A of the Credit Agreement
is hereby amended by deleting clause (c) in the definition of “Restricted
Payment” where it appears therein and replacing it with the following:

 

“(c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt or the NF Indebtedness;”

 

(vii)                           As of the Fifth Amendment
Effective Date, Annex A of the Credit Agreement is hereby amended by
deleting the definition “Closing Date Fee Letter” where it appears therein.

 

(ii)                                  Amendment
to Annex C of the Credit Agreement. As of the Fifth Amendment Effective
Date, Annex C of the Credit Agreement is hereby amended by inserting at
the end of paragraph “(b)” of Section II therein the following new
clause:

 

“, or, if such
notification and response is not customary practice in the applicable
jurisdiction, to take such other reasonable steps as may be required by
Agent to provide Agent with a perfected security interest in the applicable
European Operating Account).”

 

21

 

(jj)                                  Amendment
to Annex F of the Credit Agreement. As of the Fifth Amendment Effective
Date, Annex F of the Credit Agreement is hereby amended by deleting such
Annex F in its entirety and replacing it with a new Annex F
attached hereto as Exhibit B.

 

(kk)                            Amendment
to Annex I of the Credit Agreement. As of the Fifth Amendment Effective
Date, Annex I of the Credit Agreement is hereby amended by deleting such
Annex I in its entirety and replacing it with a new Annex I
attached hereto as Exhibit C.

 

3.                                       Acon Consent.
As of the Fifth Amendment Effective Date, Agent and Requisite Lenders, subject
to the terms and conditions hereof, hereby (a) consent (i) to the
consummation of the First Territory Purchase and the New Facility Purchase in
accordance with the terms of the Acon Acquisition Agreement and related
documentation previously provided to Agent, as such agreements and
documentation may be amended and/or supplemented after the Fifth Amendment
Effective Date to the extent permitted by Section 7 below (the “Acon
Acquisition Documents”) and (ii) the assignment by Innovations to
Innovacon and Swissco of Innovations’ rights, title and interests under the
Acon Acquisition Documents and the properties, assets and rights to be acquired
by Innovations thereunder (and the assumption by Innovacon and Swissco of
related obligations and liabilities (without relieving Innovations thereof)) (the
“Acquisition Assignment”), and (b) agree that the consummation of the
First Territory Purchase and the consummation of New Facility Purchase, in each
case in accordance with the Acon Acquisition Documents and the Acquisition
Assignment, shall not constitute a breach of the Credit Agreement or the other
Loan Documents, provided, however, (i) the purchase price
under the Acon Acquisition Agreement does not exceed in the aggregate $175,000,000
plus the sum of (A) the First Territory Working Capital Surplus (as
defined in the Acon Acquisition Agreement), (B) the New Facility Working
Capital Surplus (as defined in the Acon Acquisition Agreement) and (C) the
Net NF Indebtedness (as defined in the Acon Acquisition Agreement) as provided
in Section 2.3 of the Acon Acquisition Agreement (collectively, the “Acon
Purchase Price”), of which not more than $56,250,000 shall be payable in
cash on the Fifth Amendment Effective Date, (ii) a portion of the Acon
Purchase Price shall be paid in common stock of Innovations on the terms, and
valued in the manner, set forth in the Acon Acquisition Agreement as provided
to Agent and in effect as of the Fifth Amendment Effective Date, and (iii) the
Credit Parties do not make any payments in respect of the Acon Purchase
following the consummation of the First Territory Purchase on the Fifth
Amendment Effective Date unless and until the conditions set forth in Section 6.22
of the Credit Agreement have been satisfied.

 

4.                                       Agreement by
Borrowers and Other Credit Parties Regarding the First Territory Purchase. Borrowers
and each of the other Credit Parties hereby acknowledge and agree that, on or
prior to the Fifth Amendment Effective Date or such other later date as expressly
provided for below:

 

(a)                                  Satisfaction of
Conditions. Agent shall have received evidence satisfactory to Agent that
each of the conditions precedent to a Permitted Acquisition set forth in Section 6.1(ii) –
(xv) of the Credit Agreement have been satisfied in connection with the
First Territory Purchase (other than the conditions set forth in Sections
6.1(iv), (v), (viii), (ix), (x), (xi) and (xiii), which are hereby waived).

 

22

 

(b)                                 Sellers Searches
and Terminations. Agent shall have received copies of Code (or the foreign
equivalent thereof) search reports listing all effective financing statements
(or equivalent information) that name any Seller as debtor, together with
copies of such financing statements (or equivalent information), none of which
shall cover any assets (other than in respect of Permitted Encumbrances) of any
Seller acquired by Innovacon or Swissco pursuant to the First Territory
Purchase, or upon the delivery of a financing statement naming any Seller as
debtor with respect to any of the assets (other than in respect of Permitted
Encumbrances) acquired by Innovacon or Swissco pursuant to the First Territory
Purchase, a termination statement with respect to such asset releasing such
Seller as debtor thereunder.

 

(c)                                  Security. Agent,
for the benefit of the Lenders, shall have been granted perfected first
priority (subject to Permitted Encumbrances) security interests in all assets (other
than Intellectual Property) acquired in the First Territory Purchase in form and
substance reasonably satisfactory to Agent; provided, that, subject to
the completion of appropriate collateral security filings by Agent with respect
to Intellectual Property acquired pursuant to the First Territory Purchase,
Agent shall have been granted a perfected first priority security interest under
the laws of the United States and Switzerland in such Intellectual Property
within thirty (30) days of the Fifth Amendment Effective Date or such longer
period as Agent shall consent to in its sole discretion.

 

(d)                                 Waivers. Within
sixty (60) days of the Fifth Amendment Effective Date or such longer period as
Agent shall consent to in its sole discretion, Agent, on behalf of Lenders,
shall have received landlord waivers and consents, bailee letters and mortgagee
agreements, as applicable, in form and substance reasonably satisfactory
to Agent, in respect of Innovacon and its assets.

 

(e)                                  Cash Management.
Within sixty (60) days of the Fifth Amendment Effective Date or such longer
period as Agent shall consent to in its sole discretion, Agent shall have
received tri-party blocked account agreements, in form and substance
reasonably satisfactory to Agent, duly executed and delivered by Innovacon and
each bank where Innovacon has established a deposit or disbursement account
(other than payroll accounts) in accordance with the requirements set forth in Section 1.8
and Annex C of the Credit Agreement.

 

(f)                                    Schedules. Agent
shall have received updated Schedules with respect to Innovacon to (i) the
Credit Agreement (other than in respect of Intellectual Property acquired
pursuant to the First Territory Purchase), (ii) the US Security Agreement
(other than in respect of Intellectual Property acquired pursuant to the First
Territory Purchase), (iii) the US Pledge Agreement and (iv) such
other Loan Documents as may be required in connection with the acquisition
of the assets pursuant to the Acon Purchase in form and substance
satisfactory to Agent; provided, that within fifteen (15) days of the
Fifth Amendment Effective Date or such longer period as Agent shall consent to
in its sole discretion, Agent shall have received updated Schedules in form and
substance satisfactory to Agent with respect to the Credit Agreement, the US
Security Agreement and the US Intellectual Property Security Agreement, with
respect to Intellectual Property acquired pursuant to the First Territory
Purchase.

 

23

 

(g)                                 Organizational
Documents and Good Standing. Agent shall have received a copy of each Borrower’s
and Innovacon’s (i) organizational documents and all amendments thereto
and (ii) good standing certificates or the foreign equivalent in its
jurisdiction of organization, each dated a recent date and certified by the
applicable authorized Governmental Authority.

 

(h)                                 Bylaws and
Resolutions. Agent shall have received a copy of (i) each Borrower’s
and Innovacon’s bylaws (or foreign equivalent thereof) and all amendments
thereto, (ii) resolutions of (A) Innovations’ board of directors
approving and authorizing the Acon Purchase, (B) Innovacon’s board of
directors approving and authorizing the Acon Purchase, and (C) Swissco’s
board of directors approving and authorizing the Acon Purchase, and in each
case, the execution, delivery and performance of the transaction documents to
be executed in connection with the New Facility Purchase, and (iii) resolutions
of each Borrower’s board of directors approving and authorizing the execution,
delivery and performance of the Loan Documents to which such entity is, or will
be a party to in connection with the execution of this Amendment and the
transactions to be consummated in connection therewith, including, without
limitation, the increase in the Obligations resulting from the increase in the
European Revolving Loan and the US Term Loan and the other modifications to the
Credit Agreement provided for herein, as applicable, each certified by an
authorized officer of the respective entity (except with respect to Swissco) as
being in full force and effect without any modification or amendment as of the Fifth
Amendment Effective Date.

 

(i)                                     Incumbency
Certificates. Agent shall have received a signature and incumbency
certificate of the officers of each Borrower and Innovacon executing any Loan
Document, certified as of the Fifth Amendment Effective Date by the corporate
secretary or an assistant secretary (or equivalent representative) of each Borrower
and Innovacon, as applicable, as being true, accurate, correct and complete in
all respects.

 

(j)                                     Acon Acquisition
Documents. Agent shall have received (i) an executed copy of each of the
principal Acon Acquisition Documents and each other Acon Acquisition Document
specifically requested by Agent, together with all amendments thereto (all of
which shall be in form and substance reasonably satisfactory to Agent),
certified by an authorized officer of Innovations to be true and complete and
in full force and effect as of the Fifth Amendment Effective Date and (ii) a
certificate of an authorized officer of Innovations certifying as to the
matters set forth in Exhibit A hereto.

 

(k)                                  Opinions of
Counsel. Agent shall have received duly executed legal opinions of counsel
acceptable to Agent of each of:  (a) Foley
Hoag LLP, US counsel for the Credit Parties, (b) Paul T. Hempel, Esq.,
general counsel to the Credit Parties or Jay McNamara, Associate General
Counsel to the Credit Parties (it being understood that such opinion shall
provide that, among other things, the amendments contemplated by this Amendment
and any borrowings to be made under the Credit Agreement on the Fifth Amendment
Effective Date are not prohibited by the Indenture, the Subordinated Note
Documents or the Intercreditor Agreement), (c) Perkins Coie LLP, local
counsel to Ostex International, Inc. in the State of Washington, (d) Perkins
Coie LLP, local counsel to Applied Biotech, Inc. and Forefront Diagnostics, Inc.
in the State of California, (e) Allen and Overy LLP, English counsel for
the European Borrower, and (f) Lanter Attorneys-at-Law, Swiss counsel to

 

24

 

the Credit
Parties, with respect to any amendment to the Swiss security and guaranty documents
executed in connection with this Amendment, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the Fifth Amendment
Effective Date, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion. Agent
shall have received reliance letters (or equivalent reliance language) in form and
substance satisfactory to Agent from each United States counsel delivering an
opinion in connection with the Acon Purchase stating that Agent and Lenders may rely
on the opinions of each such United States counsel delivered in connection with
the Acon Acquisition Agreement as if such opinions were addressed to Agent and
the Lenders.

 

(l)                                     Notes. GE
Capital and ML Capital, as Lenders, shall have each received (i) amended
and restated notes reflecting the increased European Revolving Loan Commitment
and the decreased US Revolving Loan Commitment and (ii) a note reflecting the
US Term Loan Commitment.

 

(m)                               Collateral Assignment
of Acon Acquisition Documents. Agent shall have received (i) evidence
of the assignment of the rights and obligations of Innovations under the Acon
Acquisition Agreement to Innovacon and Swissco, as applicable, (ii) a
collateral assignment of the rights (but not the obligations) of Innovacon under
the Acon Acquisition Agreement and other documentation executed in connection
with the Acon Purchase, and (iii) a collateral assignment of the rights
(but not the obligations) of Swissco under the Acon Acquisition Agreement and
other documentation executed in connection with the Acon Purchase.

 

(n)                                 Amendments of Foreign
Collateral Documents. (i) Agent shall have received (or in respect of
Swissco will receive within five (5) Business Days of the Fifth Amendment
Effective Date) amendments to the applicable security, guaranty and pledge agreements (except with respect to amendments to
security agreements relating to Intellectual Property unless otherwise required
under the laws of Switzerland; provided, that Agent shall have received
such amendments within thirty (30) days of the Fifth Amendment Effective Date) (or
be satisfied that no such amendments are necessary) with respect to: (A) European
Borrower, (B) Unipath, Ltd., (C) Stirling Medical Innovations, Ltd., (D) Inverness
Medical Australia Pty Ltd. and (E) Swissco, (ii) within sixty
(60) days of the Fifth Amendment Effective Date or such longer period as Agent
shall consent to in its sole discretion, Agent, on behalf of Lenders, shall
have received amendments to the applicable security, guaranty and pledge agreements with respect to: (A) subject to Section 9
below, Inverness Medical France SAS, (B) Inverness Medical Germany GmbH, (C) DMD,
Dienstleistungen & Vertrieb Fur Medizin Und Diagnostik GmbH, (D) Inverness
Medical Deutschland GmbH, (E) Unipath Diagnostics GmbH, (F) Clondiag
Chip Technologies GmbH, (G) IVD Management Limited, (H) Inverness
Medical Japan Co., Ltd., (I) Inverness Medical Spain, SL and (J) Inverness
Medical Iberica, SA, (iii) within ninety (90) days of the Fifth
Amendment Effective Date or such longer period as Agent shall consent to in its
sole discretion, Agent, on behalf of Lenders, shall have received amendments to the guaranty of Scandinavian Micro Biodevices, ApS and
the pledge agreement with respect to
the pledge of the equity of Scandinavian Micro Biodevices, ApS and (iv) within
ninety (90) days of the Fifth Amendment Effective Date or such longer period as
Agent shall consent to in its sole discretion, Agent, on behalf of Lenders,
shall have received amendments
to the applicable pledge agreements
with respect to the pledge of the equity of: (A) Pregymed GmbH and (B) Orgenics

 

25

 

International Holdings BV, and, in each case, such other documents
(including opinions of counsel) as may be requested in connection with all
of the foregoing.

 

(o)                                 Insurance. Borrowers and the other Credit Parties shall provide Agent with
evidence of the public liability insurance, third party property damage
insurance, business interruption insurance and casualty and other insurance
maintained by them, which shall be such as is customarily carried or maintained
under similar circumstances by entities of established reputation engaged in
similar businesses, in each case in such amounts (giving effect to self-insurance),
with such deductibles, covering such risks and otherwise on such terms and
conditions as shall be customary for such entities and in any event
satisfactory to the Agent in its sole discretion. Borrowers and the other Credit
Parties shall furnish to Agent certificates naming Agent, on behalf of Lenders,
as additional insured, or loss payee, as the case may be, with respect to
such policies.

 

(p)                                 Notice of US
Revolving Credit Advance. Agent shall have received a duly executed
original of a Notice of US Revolving Credit Advance, dated the Fifth Amendment
Effective Date, with respect to the initial US Revolving Credit Advance, if
any, to be requested by US Borrower on the Fifth Amendment Effective Date.

 

(q)                                 Notice of European
Revolving Credit Advance. Agent shall have received a duly executed
original of a Notice of European Revolving Credit Advance, dated the Fifth
Amendment Effective Date, with respect to the initial European Revolving Credit
Advance, if any, to be requested by European Borrower on the Fifth Amendment
Effective Date.

 

(r)                                    Letter of
Direction. Agent shall have received duly executed originals of a letter of
direction from Innovations addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Fifth Amendment Effective Date of the
proceeds of any US Revolving Loan, any European Revolving Loan and the US Term
Loan.

 

(s)                                  Solvency
Certificate. Agent shall have received, for the benefit of Lenders, a
solvency certificate of the Chief Financial Officer, Treasurer or Vice President
of Finance of Innovations (on behalf of Innovations and not in such Person’s
individual capacity) reasonably satisfactory in form and substance to
Agent.

 

(t)                                    Fifth Amendment
Effective Date Fee Letter. Agent shall have received duly executed
originals of the Fifth Amendment Effective Date Fee Letter.

 

(u)                                 Officer’s Certificate. Agent shall have received duly executed
originals of a certificate of the Chief Financial Officer, Treasurer or Vice
President of Finance, of Innovations, dated the Fifth Amendment Effective Date,
(on behalf of the Credit Parties and not in such Person’s individual capacity)
stating that, with respect to the Credit Parties, there shall not have been (i) since
December 31, 2005, any adverse change, in or affecting the Acon Purchase,
or the business, results of operations, condition (financial or otherwise),
operations, assets, liabilities, contingent liabilities, performance,
properties, management or prospects of the Credit Parties taken as a whole,
which any Lender, in its reasonable judgment, deems material, or that calls
into question in any material respect the projections previously supplied to
Lenders or any of the material assumptions upon which such projections were
prepared and (ii) since

 

26

 

December 31, 2005, any litigation commenced which, if successful,
would have a material adverse impact on the Credit Parties taken as a whole,
their business, or their ability to repay the loans, or which would challenge
the Acon Purchase or the other transactions described herein.

 

(v)                                 Financials; Financial Condition. Agent shall have received (i) satisfactory
audited Financial Statements for the Credit Parties for the period ended December 31, 2005 (which shall have
been reviewed by the independent accountants for the Credit Parties as provided
in Statement on Auditing Standards No. 71), (ii) a satisfactory
balance sheet as of December 31,
2005 summarizing the assets to be acquired and liabilities to be assumed
in connection with the Acon Purchase, and (iii) satisfactory projections
prepared by Innovations on a pro forma basis for the transactions contemplated
hereby through December 31, 2008, beginning on January 1, 2006 on a
quarter-by-quarter basis for the first year and on a year-by-year basis
thereafter. Innovations represents that such projections are based upon
estimates and assumptions stated therein, all of which Innovations believes to
be reasonable and fair in light of current conditions and current facts known
to Innovations and, as of the Fifth Amendment Effective Date, reflect
Innovations’ good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set
forth therein.

 

(w)                               Second Territory
Letter Agreement. Agent shall have received an executed copy of the Second
Territory Letter Agreement (as defined in the Acon Acquisition Agreement),
including, without limitation, the form of Acquisition Agreement
referenced in Exhibit A thereto, certified by an authorized officer of
Innovations to be a true and complete copy thereof.

 

(x)                                   Sellers’
Financials. Within three (3) Business Days of receipt by Innovations,
Innovacon or Swissco, as applicable, from Sellers, Agent shall have received copies
of the financial information provided by Sellers to Innovations, Innovacon or
Swissco, as applicable, required to be delivered by Sellers to Innovations,
Innovacon or Swissco, as applicable, pursuant to (i) the first sentence of
Section 5.5(a), (ii) Section 5.5(d) and (iii) Section 5.5(f),
in each case of the Acon Acquisition Agreement (the “Seller Financial
Information”). If Agent receives the Seller Financial Information after
calculating the Financial Covenants for the Fiscal Quarter ending March 31,
2006 in accordance with the Credit Agreement, the parties hereto acknowledge
and agree that upon Agent’s receipt of such Seller Financial Information, Agent
and Lenders shall recalculate the Financial Covenants to determine compliance therewith
for the Fiscal Quarter ending March 31, 2006. An immediate Event of Default
shall be deemed to occur if such recalculation indicates that the Credit
Parties were not in compliance with any of such Financial Covenants.

 

The Borrowers and
each of the other Credit Parties hereby acknowledge and agree that the failure
to satisfy any of the deliveries or conditions set forth above in this Section 4
on or prior to the date required as set forth above in connection with each
such delivery or condition, as applicable, shall constitute an immediate Event
of Default under the Credit Agreement.

 

5.                                       Covenants
Relating to Consummation of the New Facility Purchase. The Borrowers and
each of the other Credit Parties hereby acknowledge and agree that, on or prior
to New Facility Closing Date:

 

27

 

(a)                                  Satisfaction of
Conditions. Agent shall have received evidence satisfactory to Agent that
each of the conditions precedent to a Permitted Acquisition set forth in Section 6.1(ii) —
(xv) of the Credit Agreement have been satisfied in connection with the New
Facility Purchase (other than the conditions set forth in Sections 6.1(iv),
(v), (vi), (viii), (ix), (x), (xi) and (xiii), which are hereby waived).

 

(b)                                 Joinder. Unless
otherwise agreed to by Agent in its sole discretion, Agent shall have received
a joinder agreement, in form and substance satisfactory to Agent, duly
executed by Rich Horizons pursuant to which, inter  alia, Rich
Horizons joins the Credit Agreement and the other Loan Documents as a European
Credit Party.

 

(c)                                  Guaranty. Unless
otherwise agreed to by Agent in its sole discretion, Agent shall have received
a guaranty, in form and substance satisfactory to Agent, duly executed by Rich
Horizons, pursuant to which Rich Horizons guaranties the Obligations of the
European Credit Parties under the Loan Documents.

 

(d)                                 Security Interest
and Code Filings.

 

(i)                                     Unless otherwise
agreed to by Agent in its sole discretion, Rich Horizons shall have granted a
valid first priority perfected security interest (subject to Permitted
Encumbrances) in all of its assets (other than the Stock of Abon) to secure the
Obligations of the European Credit Parties and shall have executed all
documents (including financing statements under the Code (or foreign equivalent)
and other applicable documents under the laws of any jurisdiction with respect
to the perfection of Liens in form and substance reasonably acceptable to
Agent) as Agent may request in order to perfect its security interest in
such assets.

 

(ii)                                  Unless otherwise
agreed to by Agent in its sole discretion, Rich Horizons and Abon shall provide
copies of Code (or the foreign equivalent thereof) search reports listing all
effective financing statements (or equivalent information) that name Rich
Horizons and Abon, as applicable, as debtor, together with copies of such
financing statements (or equivalent information), none of which shall cover the
assets of Rich Horizons or Abon, as applicable, except with respect to any
Permitted Encumbrance.

 

(e)                                  Pledge Agreement.
Unless otherwise agreed to by Agent in its sole discretion, Agent shall have
received a pledge of one hundred percent (100%) of the outstanding Stock of Rich
Horizons (the “Rich Horizons Stock”) pursuant to a pledge agreement, in form and
substance satisfactory to Agent, to be entered into between Swissco and Agent,
together with, to the extent such Stock is certificated, original certificates evidencing
the Rich Horizons Stock pledged by Swissco (with duly executed, undated stock
powers).

 

(f)                                    Cash Management.
Within thirty (30) days of the New Facility Closing Date or such longer period
as Agent shall consent to in its sole discretion, Agent shall have received
tri-party blocked account agreements (or such other similar arrangement as is
provided under local law), in form and substance reasonably satisfactory
to Agent, duly executed and delivered by Rich Horizons and each bank where Rich
Horizons has established a deposit or

 

28

 

disbursement account
(other than payroll accounts), in accordance with the requirements set forth in
Section 1.8 and Annex C of the Credit Agreement.

 

(g)                                 Schedules. Unless
otherwise agreed to by Agent in its sole discretion, Agent shall have received
updated Schedules with respect to Rich Horizons to the Credit Agreement and
such other Loan Documents as may be required in connection with the
joinder of Rich Horizons to reflect the joinder of Rich Horizons to such
agreements, in form and substance satisfactory to Agent.

 

(h)                                 Organizational
Documents and Good Standing. Unless otherwise agreed to by Agent in its
sole discretion, Agent shall have received a copy of Rich Horizons’ (i) organizational
documents and all amendments thereto and (ii) good standing certificates
or the foreign equivalent, to the extent available under local law, and
certificates of qualification to conduct business in each jurisdiction where
its ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date and certified by the applicable
authorized Governmental Authority.

 

(i)                                     Bylaws and
Resolutions. Unless otherwise agreed to by Agent in its sole discretion,
Agent shall have received a copy of (i) Rich Horizons’ bylaws (or foreign
equivalent thereof) and all amendments thereto, (ii) resolutions of
Swissco’s board of directors, and to the extent required under applicable law, stockholders,
approving and authorizing the New Facility Purchase and Swissco’s pledge of
stock of Rich Horizons to Agent and the execution, delivery and performance of
the Acon Acquisition Documents with respect to the New Facility Purchase, and (iii) resolutions
of Rich Horizons’ board of directors approving and authorizing the execution,
delivery and performance of the Loan Documents to which Rich Horizons is, or
will be a party to and the transactions to be consummated in connection
therewith, each certified by an authorized officer, director or other member of
management of Rich Horizons (or Swissco with respect to clause (ii) above
), after giving effect to the New Facility Purchase, as being in full force and
effect without any modification or amendment as of the date Rich Horizons joins
the Credit Agreement as a European Credit Party.

 

(j)                                     Incumbency.
Unless otherwise agreed to by Agent in its sole discretion, Agent shall have
received a signature and incumbency certificate of the officers of Rich
Horizons executing any Loan Document or joinder thereto, certified by an
officer, director or other member of management of Rich Horizons as being true,
accurate, correct and complete in all respects.

 

(k)                                  Acon Acquisition
Documents with Respect to the New Facility Purchase. Agent shall have
received an executed copy of the principal Acon Acquisition Documents not
previously provided to Agent on the Fifth Amendment Effective Date and each
other previously undelivered Acon Acquisition Document specifically requested
by Agent, together with all amendments thereto, and all documentation delivered
in connection therewith (all of which shall be in form and substance
reasonably satisfactory to Agent), certified by an authorized officer, director
or other member of management of Rich Horizons, Swissco or Innovations, as
applicable, to be true and complete and in full force and effect as of the New
Facility Closing Date.

 

29

 

(l)                                     Opinion of
Counsel. Unless otherwise agreed to by Agent in its sole discretion, Agent
shall have received legal opinions of counsel acceptable to Agent, which shall
provide (subject to customary qualifications) that (i) the Loan Documents
have been duly authorized, executed and delivered by, and are enforceable
against Rich Horizons (and, in respect of the pledge of Stock of Rich Horizons
by Swissco, Swissco), and (ii) such other opinions as Agent may reasonably
request, all in form and substance satisfactory to Agent.

 

(m)                               Insurance. Borrowers and the other Credit Parties shall provide Agent with
evidence of the public liability insurance, third party property damage insurance,
business interruption insurance and casualty and other insurance maintained by
them, which shall be such as is customarily carried or maintained under similar
circumstances by entities of established reputation engaged in similar
businesses, in each case in such amounts (giving effect to self-insurance),
with such deductibles, covering such risks and otherwise on such terms and
conditions as shall be customary for such entities and in any event
satisfactory to the Agent in its sole discretion. Borrowers and the other
Credit Parties shall furnish to Agent certificates naming Agent, on behalf of
Lenders, as additional insured, or loss payee, as the case may be, with
respect to such policies.

 

(n)                                 Appointment of
Agent for Service of Process. Within thirty (30) days of the New Facility
Closing Date or such longer period as Agent shall consent to in its sole
discretion, Agent shall have received evidence that the Connecticut office of
CT Corporation has been appointed as agent for service of process for Rich Horizons.

 

The Borrowers and
each of the other Credit Parties hereby acknowledge and agree that the failure
to satisfy any of the deliveries or conditions set forth above in this Section 5
on or prior to the date such documents are required to be delivered as set
forth above, shall constitute an immediate Event of Default under the Credit
Agreement.

 

6.                                       Loan under
Credit Agreement. On the Fifth Amendment Effective Date, Twenty Million
Dollars ($20,000,000) of the US Revolving Loan Commitment shall be converted
into a European Revolving Loan Commitment and the US Revolving Loan Commitment
and European Revolving Loan Commitment of each Revolving Lender shall be the
amount set forth on Annex I to the Credit Agreement, as in effect
following the Fifth Amendment Effective Date. Immediately upon the conversion
of such US Revolving Loan Commitment pursuant to the preceding sentence, the
converted Loans, if any, shall bear interest at the rate then applicable to European
Revolving Credit Advances as provided in Section 1.5(a)(ii) of
the Credit Agreement, and the aggregate US Revolving Loan Commitment shall be
permanently reduced to Forty Million Dollars ($40,000,000). Each of the
Borrowers, Agent and Lenders acknowledge and agree that after giving effect to
the conversion of a portion of the US Revolving Loan Commitment to the European
Revolving Loan Commitment contemplated by the previous sentence as well as
other adjustments to the US Revolving Loan Commitment and the European
Revolving Loan Commitment of certain Lenders, in each case as reflected on Annex
I to the Credit Agreement as of the Fifth Amendment Effective Date, certain
outstanding Loans of the Lenders may need to be reallocated among the
Lenders so that each principal amount of outstanding Loan of each Lender after
giving effect to such reallocation is in an amount equal to the percentage of
such Lender’s portion of the total European Revolving Loan Commitment or the US
Revolving Loan Commitment, as applicable (in each case, the

 

30

 

“Reallocated
Loan Amount”). The Lenders agree to effect such reallocation in a mutually
satisfactory manner. In furtherance of the foregoing, it is understood and
agreed that immediately after giving effect to such reallocation on the Fifth
Amendment Effective Date, the applicable Borrower’s Obligations in respect of
the principal amount of any Loan to any Lender shall equal such Lender’s applicable
Reallocated Loan Amount. The total outstanding amount of the Loans after
effecting such reallocation on the Fifth Amendment Effective Date (and
disregarding any new Loans to be made on the Fifth Amendment Effective Date)
shall be the same as the total outstanding amount of the Loans immediately
prior to such reallocation.

 

7.                                       Covenants.
The Credit Parties shall not amend, or enter into supplementary agreements with
respect to, the Acon Acquisition Documents in a manner which materially adversely
affects the Lenders without the prior written consent of Agent. The Credit
Parties agree to provide Agent with a copy of any such amendment or
supplementary agreement. Any failure of the Credit Parties to comply with this
covenant shall constitute an immediate Event of Default under the Credit
Agreement.

 

8.                                       Orgenics
International Holdings BV Dissolution. Subject to the immediately succeeding sentence, the Credit
Parties shall cause Orgenics International Holdings BV (“Orgenics”) to
preserve and keep in full force and effect its corporate existence. Notwithstanding
the foregoing, Agent and Lenders hereby consent to (i) the dissolution of
Orgenics and (ii) the release by Agent of (and Agent agrees to so release)
any guaranties by Orgenics or pledges of the outstanding equity of Orgenics, in
each case, so long as, on or prior to the date of such dissolution, all of the
assets of Orgenics (which shall include 51% of the outstanding equity of
Orgenics, Ltd.) are in a manner satisfactory to Agent distributed or
transferred to a US Credit Party other than Innovations.

 

9.                                       Release of Inverness
Medical France SAS Pledge of Receivables. Agent hereby releases (with the
consent and approval of each Lender as evidenced by the signature of such
Lender set forth below), as of the Fifth Amendment Effective Date, without
recourse, representation or warranty (express or implied), Inverness Medical
France SAS (“IM France”) from the security interests granted by it to
secure the Obligations of the European Credit Parties pursuant to the Pledge of
Receivables. Agent agrees (with the consent and approval of each Lender as evidenced
by the signature of such Lender set forth below) to execute any documentation
required under French law to evidence such release.

 

10.                                 Release of
Investments’ Pledge. Agent hereby releases (with the consent and approval
of each Lender as evidenced by the signature of such Lender set forth below),
as of the Fifth Amendment Effective Date (as hereinafter defined), without
recourse, representation or warranty (express or implied), Inverness Medical
Investments, LLC (“Investments”) from its pledge granted by it to secure
the Obligations of the European Credit Parties pursuant to the US Pledge
Agreement.

 

11.                                 Alpha US
Acquisition Corp. Name Change. Notwithstanding Section 6.15 of
the Credit Agreement or any other provision of the Loan Documents, Agent and Requisite
Lenders hereby consent to Alpha US Acquisition Corp. changing its name to “Innovacon, Inc.”
(“Innovacon Name Change”);
provided, that Borrowers promptly provide certified documentation of the
applicable Governmental Authority evidencing the Innovacon Name

 

31

 

Change in form and
substance satisfactory to Agent. In addition, Agent and Requisite Lenders
hereby waive, as of the Fifth Amendment Effective Date, any requirement that
Agent receive any prior written notice of the Innovacon Name Change.

 

12.                                 Representations and
Warranties. To induce Agent and Requisite Lenders to enter into this Amendment,
the Credit Parties hereby, jointly and severally, represent and warrant that:

 

(a)                                  The execution,
delivery and performance by each Credit Party of this Amendment and the
performance of the Credit Agreement, as amended by this Amendment (the “Amended
Credit Agreement”): (i) are within such Person’s corporate, company or
partnership power, as applicable; (ii) have been (or will be prior to
execution thereof) duly authorized by all necessary corporate, limited
liability company or limited partnership action; (iii) do not contravene
any provision of such Person’s charter, bylaws or equivalent constitutive
documents or partnership or operating agreement, as applicable; (iv) do
not violate any law or regulation, or any order or decree of any court or
Governmental Authority; (v) do not conflict with or result in the breach
or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (vi) do not result
in the creation or imposition of any Lien upon any of the property of such
Person, other than a Lien in favor of Agent; and (vii) do not require the
consent or approval of any Governmental Authority or any other Person except
those which will have been duly obtained, made or complied with prior to the Fifth
Amendment Effective Date.

 

(b)                                 This Amendment has
been duly executed and delivered by or on behalf of each of the Credit Parties.

 

(c)                                  This Amendment and
the Amended Credit Agreement constitutes a legal, valid and binding obligation
of each of the Credit Parties, enforceable against each of them in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, fraudulent conveyance or transfer or other laws affecting creditors’
rights generally or by equitable principals of general applicability.

 

(d)                                 No Default or Event of
Default has occurred and is continuing or would result after giving effect to
the provisions of this Amendment.

 

(e)                                  No action, claim or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against such Credit Party, at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any foreign, federal, state, or
local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, which (i) challenges any Credit Party’s
right or power to enter into or perform any of its obligations under this Amendment
or any other Loan Document to which it is or will be, a party, or the validity
or enforceability of this Amendment, the Amended Credit Agreement or any other Loan
Document or any action taken thereunder, or (ii) has a reasonable risk of
being determined adversely to any Credit Party and that, if so determined,
could reasonably be expected to have a Material Adverse Effect after giving
effect to this Amendment.

 

32

 

(f)                                    The representations
and warranties of the Credit Parties contained in the Amended Credit Agreement
and each other Loan Document shall, after giving effect hereto, be true and
correct on and as of (i) the date hereof, and (ii) the Fifth
Amendment Effective Date, in each case, with the same effect as if such
representations and warranties had been made on and as of such date, except
that any such representation or warranty which is expressly made only as of a
specified date need be true only as of such date.

 

(g)                                 Except for (i) the
NF Indebtedness, (ii) the Assumed Liabilities (as defined in the Acon
Acquisition Agreement), (iii) any claims by third parties that arise after
the Fifth Amendment Effective Date, (iv) the items set forth on Schedule 12(g) hereto,
(v) the Loans, (vi) trade payables and (vii) obligations of
Innovations and its Subsidiaries under the Acon Acquisition Documents, no
additional Indebtedness, Guaranteed Indebtedness, material contingent
obligations or other material liabilities have been or will be incurred or
assumed at the time of the First Closing (as defined in the Acon Acquisition Agreement)
or the Acon New Facility Closing, in each case, after giving effect to the Acon
Purchase. It is understood and agreed that the determination of the existence
of material contingent obligations or other material liabilities will be made
based on whether such obligations or other liabilities are material to
Innovations and its Subsidiaries taken as a whole on a consolidated basis.

 

(h)                                 The Subordinated Notes
are not guaranteed by any Subsidiary of Innovations and no Subsidiary has any
obligations with respect thereto.

 

13.                                 No
Amendments/Waivers/Consents. Except as expressly provided herein (a) the
Credit Agreement and the other Loan Documents shall be unmodified and shall
continue to be in full force and effect in accordance with their terms, (b) the
consents and agreements of the Agent and Requisite Lenders set forth herein
shall be limited strictly as written and shall not constitute a consent or
agreement to any transaction not specifically described in connection with any
such consent and/or agreement, and (c) this Amendment shall not be deemed
a waiver of any term or condition of any Loan Document and shall not be deemed
to prejudice any right or rights which Agent or any Lender may now have or
may have in the future under or in connection with any Loan Document or
any of the instruments or agreements referred to therein, as the same may be
amended from time to time.

 

14.                                 Affirmation of
Obligations. Each of the Credit Parties hereby acknowledges, agrees and
affirms (a) its obligations under the Credit Agreement and the other Loan
Documents, including, without limitation, its guaranty obligations thereunder,
if applicable, (b) that such guaranty shall apply to the Obligations in
accordance with the terms thereof, (c) the grant of the security interest
in all of its assets pursuant to the Loan Documents, if applicable, and (d) that
such liens and security interests created and granted are valid and continuing
and secure the Obligations in accordance with the terms thereof.

 

15.                                 Outstanding
Indebtedness; Waiver of Claims. Each of Borrowers and the other Credit
Parties hereby acknowledges and agrees that as of March 30, 2006, (a) the
outstanding balance of the European Revolving Loan is $28,000,000, (b) the
outstanding balance of the US Revolving Loan is $0, (c) the outstanding
balance of the US Term Loan is $0, and (d) the outstanding balance of the European
Term Loan is $0. Borrowers and each other Credit Party hereby waive, release,
remise and forever discharge Agent, Lenders and each other

 

33

 

Indemnified Person
from any and all claims, suits, actions, investigations, proceedings or demands
arising out of or in connection with the Credit Agreement (collectively, “Claims”),
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute or common law of any kind or character, known or
unknown, which any Borrower or any other Credit Party ever had, now has or
might hereafter have against Agent or Lenders which relates, directly or
indirectly, to any acts or omissions of Agent, Lenders or any other Indemnified
Person on or prior to the Fifth Amendment Effective Date, provided, that
no Borrower nor any other Credit Party waives any Claim solely to the extent
such Claim relates to Agent’s or any Lender’s gross negligence or willful
misconduct.

 

16.                                 Effectiveness. Upon
satisfaction in full in the judgment of Agent of each of the following
conditions, this Amendment shall be deemed effective as of March 31, 2006
(the “Fifth Amendment Effective Date”):

 

(a)                                  Amendment. Agent
shall have received four (4) original signature pages to this Amendment,
duly executed and delivered by Agent, Requisite Lenders, and each of the Credit
Parties.

 

(b)                                 Payment of Fees and
Expenses. Borrowers and Innovations, as applicable, shall have (i) paid
the Fees required to be paid on the Fifth Amendment Effective Date in the
respective amounts specified in Section 1.9 of the Credit Agreement
(including the Fees specified in the Fifth Amendment Effective Date Fee
Letter), and (ii) reimbursed Agent for all fees, costs and expenses
(including, without limitation, reasonable legal fees and expenses) presented
as of the Fifth Amendment Effective Date.

 

(c)                                  Representations
and Warranties. The representations and warranties of or on behalf of each
of the Credit Parties in this Amendment shall be true and correct on and as of
the Fifth Amendment Effective Date.

 

(d)                                 Loan Documents.
Agent shall have received such documents, instruments, agreements and legal
opinions as Agent shall reasonably request in connection with the transactions
contemplated by this Amendment and the other Loan Documents, each in form and
substance reasonably satisfactory to Agent.

 

(e)                                  Availability/Minimum
Cash. US Borrower and European Borrower shall have aggregate US Revolving
Borrowing Availability and European Revolving Borrowing Availability of at
least $65,000,000 (on a pro forma basis, after giving effect to the cash
payment to be made on the First Closing Date (as defined in the Acon
Acquisition Agreement) and with trade payables being paid currently, and
expenses and liabilities being paid in the ordinary course of business and
without acceleration of sales and without a deterioration of working capital)
and the Credit Parties, on a consolidated basis, shall have available cash of
at least $20,000,000 in Blocked Accounts and Foreign Bank Accounts, after
giving pro forma effect to the cash payment to be made on the First Closing
Date (as defined in the Acon Acquisition Agreement).

 

(f)                                    Approvals. Agent
shall have received (i) satisfactory evidence that the Credit Parties have
obtained all required consents and approvals of all Persons including all

 

34

 

requisite
Governmental Authorities, to the execution, delivery and performance of this Amendment
and the other Loan Documents and the consummation of the First Territory
Purchase (it being understood and agreed that approvals required from the
requisite Governmental Authorities in Spain and Portugal are not required to be
obtained in such jurisdictions prior to Innovacon’s acquisition of the assets
with respect to such jurisdictions pursuant to the First Territory Purchase) or
(ii) an officer’s certificate in form and substance reasonably satisfactory
to Agent affirming that no such consents or approvals are required.

 

(g)                                 Due Diligence. Agent shall have completed and be reasonably
satisfied with the results of its financial, legal, tax, regulatory and
environmental due diligence investigations of the Credit Parties and the Acon
Purchase, including but not limited to an analysis of the ownership and capital
structure of each of the Credit Parties and the tax effects of the increase in
the Obligations by Borrowers. In addition, a comprehensive financial review of
the Acon Purchase shall have been performed with results satisfactory to Agent
in its sole discretion. Since such completion, no new information shall have
come to Agent’s attention that is inconsistent with such results and which, in
the reasonable opinion of Agent has a material adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of any of the Credit Parties, or on Agent’s ability to obtain, for
the benefit of the Lenders, a perfected, enforceable security interest in all
of the Collateral unless otherwise agreed to by Agent.

 

(h)                                 LTM EBITDA; Senior
Consolidated Leverage Ratio; Total Leverage Ratio. The Reporting Credit
Parties shall have (i) LTM EBITDA, after giving pro forma effect to the First
Territory Purchase and the other acquisitions of the Credit Parties completed
in Fiscal Years 2005 and 2006 prior to the date hereof as if the First
Territory Purchase and such other acquisitions had been consummated on the
first day of the twelve-month period ended December 31, 2005, calculated
on a consolidated basis for the twelve-month period ended December 31,
2005 of not less than $51,100,000, and (ii) after giving pro forma effect
to the application of net proceeds from Innovation’s February 2006 private
placement of common stock against outstanding Loans and the First Territory
Purchase cash purchase price amount payable on the Fifth Amendment Effective
Date and the borrowings as provided herein as if the First Territory Purchase
and the borrowings as provided herein had occurred on the first day of the
period, calculated on a consolidated basis for the twelve-month period ended December 31,
2005, (A) a Senior Consolidated Leverage Ratio (not taking into account
any cash of any Credit Party) of not greater than 1.80:1.00 and (B) a
Total Leverage Ratio (not taking into account any cash of any Credit Party) of
not greater than 5.40:1.00.

 

(i)                                     No Default. There shall not exist either before of after giving effect to the First
Territory Purchase and the transactions contemplated thereby or hereby any
Default or Event of Default under the Credit Agreement or the other Loan
Documents, or under any other material indebtedness or agreement of the Credit
Parties.

 

17.                                 GOVERNING LAW. THIS
AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.

 

35

 

18.                                 Counterparts. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

36

 

IN WITNESS
WHEREOF, this Amendment has been duly executed as of the date first written
above.

 

	
   

  	
  BORROWERS

  
	
   

  	
   

  	
   

  
	
   

  	
  WAMPOLE
  LABORATORIES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Teitel

  	
   

  
	
   

  	
  Name:

  	
  David Teitel

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INVERNESS
  MEDICAL (UK) HOLDINGS

  LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Teitel

  	
   

  
	
   

  	
  Name:

  	
  David Teitel

  
	
   

  	
  Title:

  	
  Authorized Signatory

  
					

 

37

 

	
   

  	
  AGENT AND LENDERS

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL

  
	
   

  	
  CORPORATION, as Agent and Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew Cosgrove

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH CAPITAL, a division of

  Merrill Lynch Business Financial Services Inc.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Illegible

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UBS AG, CAYMAN ISLANDS BRANCH, as a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard L. Tarrow

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
					

 

38

 

The following
Persons are signatories to this Amendment in their capacity as Credit Parties
and not as Borrowers.

 

	
   

  	
  APPLIED BIOTECH, INC.

  	
   

  
	
   

  	
  ADVANTAGE DIAGNOSTICS CORPORATION

  
	
   

  	
  FOREFRONT DIAGNOSTICS, INC.

  
	
   

  	
  INVERNESS MEDICAL INTERNATIONAL

  HOLDING CORP.

  
	
   

  	
  INVERNESS MEDICAL INTERNATIONAL

  HOLDING CORP. II

  
	
   

  	
  INVERNESS MEDICAL, INC.

  
	
   

  	
  INNOVATIONS RESEARCH, LLC

  
	
   

  	
  ISCHEMIA TECHNOLOGIES, INC.

  
	
   

  	
  IVC INDUSTRIES, INC.

  
	
   

  	
  INNOVACON, INC.

  
	
   

  	
  OSTEX INTERNATIONAL, INC.

  
	
   

  	
  SELFCARE TECHNOLOGY, INC.

  
	
   

  	
  BINAX, INC.

  	
   

  
	
   

  	
  INVERNESS MEDICAL – BIOSTAR, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Teitel

  	
   

  
	
   

  	
  Name:

  	
  David Teitel

  
	
   

  	
  Title:

  	
  Vice President – Finance, Vice President –

  
	
   

  	
   

  	
  Finance, Vice President – Finance,

  
	
   

  	
   

  	
  President, President, Vice President –

  
	
   

  	
   

  	
  Finance, Vice President – Finance, Vice

  
	
   

  	
   

  	
  President – Finance, Vice President –

  
	
   

  	
   

  	
  Finance, Vice President – Finance, Vice 

  
	
   

  	
   

  	
  President – Finance, Vice President –

  
	
   

  	
   

  	
  Finance, Vice President – Finance, Vice

  
	
   

  	
   

  	
  President – Finance, respectively

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNIPATH ONLINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay McNamara

  	
   

  
	
   

  	
  Name:

  	
  Jay McNamara

  
	
   

  	
  Title:

  	
  Assistant Clerk

  
							

 

 

	
   

  	
  CAMBRIDGE DIAGNOSTICS IRELAND

  LIMITED

  
	
   

  	
  DMD, DIENSTLEISTUNGEN & VERTRIEB FÜR

  MEDIZIN UND DIAGNOSTIK GMBH

  
	
   

  	
  INVERNESS MEDICAL CANADA, INC.

  
	
   

  	
  INVERNESS MEDICAL EURASIA LIMITED

  
	
   

  	
  INVERNESS MEDICAL FRANCE SAS

  
	
   

  	
  INVERNESS MEDICAL GERMANY GMBH

  
	
   

  	
  SCANDINAVIAN MICRO BIODEVICES APS

  
	
   

  	
  STIRLING MEDICAL INNOVATIONS LIMITED 

  
	
   

  	
  INVERNESS MEDICAL SWITZERLAND GMBH

  
	
   

  	
  UNIPATH DIAGNOSTICS GMBH

  
	
   

  	
  INVERNESS MEDICAL DEUTSCHLAND

  GMBH

  
	
   

  	
  INVERNESS MEDICAL JAPAN, LTD.

  
	
   

  	
  INVERNESS MEDICAL INNOVATIONS, INC.

  
	
   

  	
  INVERNESS MEDICAL IBERICA, S.A.

  
	
   

  	
  INVERNESS MEDICAL SPAIN,
  S.L.U.

  
	
   

  	
  UNIPATH LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duane L. James

  	
   

  
	
   

  	
  Name:

  	
  Duane L. James

  
	
   

  	
  Title:

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, Authorized Person,

  
	
   

  	
   

  	
  Authorized Person, respectively

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INVERNESS MEDICAL INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay McNamara

  	
   

  
	
   

  	
  Name:

  	
  Jay McNamara

  
	
   

  	
  Title:

  	
  Assistant
  Secretary

  
					

 

2

 

Schedule 12(g)

Indebtedness

 

None.

 

3

 

Exhibit A

 

No Credit Party and, to the Credit Parties’ knowledge, no other Person
party thereto is in default in any material respect in the performance or
compliance with any material provisions of the Acon Acquisition Agreement. The Acon
Acquisition Agreement complies with, and the Acon Purchase has been consummated
in accordance with, all applicable laws. The Acon Acquisition Agreement is in
full force and effect as of the date hereof and has not been terminated,
rescinded or withdrawn. All requisite approvals by Governmental Authorities
having jurisdiction over the Sellers, any Credit Party and other Persons
referenced therein with respect to the consummation of the First Territory Purchase
have been obtained (it being understood and agreed that approvals required from
the requisite Governmental Authorities in Spain and Portugal are not required
to be obtained in such jurisdictions prior to Innovacon’s acquisition of the assets
with respect to such jurisdictions pursuant to the First Territory Purchase),
and no such approvals impose any conditions to the consummation of the Acon
Purchase or, other than as described in the Acon Acquisition Agreement, to the
conduct by any Credit Party of its business thereafter. To the best of each
Credit Party’s knowledge, none of the Seller’s representations or warranties in
the Acon Acquisition Agreement contain any untrue statement of a material fact
or omit any fact necessary to make the statements therein not misleading. Each
of the representations and warranties given by each applicable Credit Party in
the Acon Acquisition Agreement is true and correct in all material respects,
and, notwithstanding anything contained in the Acon Acquisition Agreement to
the contrary, such representations and warranties of the Credit Parties are
incorporated into the Credit Agreement by delivery of this certificate and
shall, solely for purposes of the Credit Agreement and the benefit of Agent and
Lenders, survive the consummation of the Acon Purchase; provided, that a
breach by any of the Credit Parties of any such representations and warranties
so incorporated and as to which a similar representation and warranty is not
independently made in the Credit Agreement shall not constitute a breach of the
Credit Agreement unless such breach causes any such representation and warranty
to be materially inaccurate.

 

4

 

Exhibit B

 

ANNEX F (SECTION 6.10)

TO

CREDIT AGREEMENT

 

FINANCIAL COVENANTS

 

The Reporting
Credit Parties shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

 

(a)                                  Minimum
Fixed Charge Coverage Ratio. The Reporting Credit Parties shall have on a
consolidated basis at the end of each Fiscal Quarter set forth below, a Fixed
Charge Coverage Ratio for the 12-month period then ended of not less than the
following:

 

	
  Fiscal Quarter Ending:

  	
   

  	
  Fixed Charge Coverage Ratio:

  	
   

  
	
  March 31,
  2006

  	
   

  	
  .60:1.00

  	
   

  
	
  June 30,
  2006

  	
   

  	
  .60:1.00

  	
   

  
	
  September 30,
  2006

  	
   

  	
  .70:1.00

  	
   

  
	
  December 31,
  2006

  	
   

  	
  .90:1.00

  	
   

  
	
  March 31,
  2007

  	
   

  	
  .90:1.00

  	
   

  
	
  June 30,
  2007

  	
   

  	
  .90:1.00

  	
   

  
	
  September 30,
  2007

  	
   

  	
  1.00:1.00

  	
   

  
	
  December 31,
  2007

  	
   

  	
  1.00:1.00

  	
   

  

 

(b)                                 Minimum
EBITDA. The Reporting Credit Parties on a consolidated basis shall have, at
the end of each Fiscal Quarter set forth below, LTM EBITDA of not less than the
following:

 

	
  Fiscal Quarter Ending:

  	
   

  	
  EBITDA:

  	
   

  
	
  March 31,
  2006

  	
   

  	
  $

  	
  42,000,000

  	
   

  
	
  June 30,
  2006

  	
   

  	
  $

  	
  42,000,000

  	
   

  
	
  September 30,
  2006

  	
   

  	
  $

  	
  44,000,000

  	
   

  
	
  December 31,
  2006

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  March 31,
  2007

  	
   

  	
  $

  	
  52,500,000

  	
   

  
	
  June 30,
  2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  September 30,
  2007

  	
   

  	
  $

  	
  57,500,000

  	
   

  
	
  December 31,
  2007

  	
   

  	
  $

  	
  60,000,000

  	
   

  

 

(c)                                  Maximum
Senior Consolidated Leverage Ratio. The Reporting Credit Parties, on a
consolidated basis, shall have, at the end of each Fiscal Quarter set forth
below, a Senior Consolidated Leverage Ratio as of the last day of such Fiscal
Quarter and for the 12-month period then ended of not more than the following:

 

5

 

	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending March 31, 2006

  	
   

  
	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending June 30, 2006

  	
   

  
	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending September 30, 2006

  	
   

  
	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending December 31, 2006

  	
   

  
	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending March 31, 2007

  	
   

  
	
  2.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending June 30, 2007

  	
   

  
	
  2.25:1.00

  	
   

  	
  for the Fiscal
  Quarter ending September 30, 2007

  	
   

  
	
  2.25:1.00

  	
   

  	
  for the Fiscal
  Quarter ending December 31, 2007

  	
   

  

 

(d)                                 Maximum
Total Leverage Ratio. The Reporting Credit Parties, on a consolidated
basis, shall have, at the end of each Fiscal Quarter set forth below, a Total
Leverage Ratio as of the last day of such Fiscal Quarter and for the 12 month
period then ended of not more than the following:

 

	
  6.00:1.00

  	
   

  	
  for the Fiscal
  Quarter ending March 31, 2006

  	
   

  
	
  6.00:1.00

  	
   

  	
  for the Fiscal
  Quarter ending June 30, 2006

  	
   

  
	
  6.00:1.00

  	
   

  	
  for the Fiscal
  Quarter ending September 30, 2006

  	
   

  
	
  5.75:1.00

  	
   

  	
  for the Fiscal
  Quarter ending December 31, 2006

  	
   

  
	
  5.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending March 31, 2007

  	
   

  
	
  5.50:1.00

  	
   

  	
  for the Fiscal
  Quarter ending June 30, 2007

  	
   

  
	
  5.25:1.00

  	
   

  	
  for the Fiscal
  Quarter ending September 30, 2007

  	
   

  
	
  5.00:1.00

  	
   

  	
  for the Fiscal
  Quarter ending December 31, 2007

  	
   

  

 

Unless otherwise specifically provided herein, any accounting term used
in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase “in accordance with GAAP”
shall in no way be construed to limit the foregoing. If any “Accounting Changes”
(as defined below) occur and such changes result in a change in the calculation
of the financial covenants, standards or terms used in the Agreement or any
other Loan Document, then the Credit Parties, Agent and Lenders agree to enter
into negotiations in order to amend such provisions of the Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Credit Parties’ financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not been
made; provided, however, that the agreement of Requisite Lenders
to any required amendments of such provisions shall be sufficient to bind all
Lenders. “Accounting Changes” means (i) changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants (or successor thereto or any agency
with similar functions); (ii) changes in accounting principles concurred
in by Innovations’ certified public accountants; (iii) purchase accounting
adjustments under FASB 141 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a
result of purchase accounting adjustments. All such adjustments

 

6

 

resulting
from expenditures made subsequent to the Closing Date (including capitalization
of costs and expenses or payment of pre-Closing Date liabilities) shall be
treated as expenses in the period the expenditures are made and deducted as part of
the calculation of EBITDA in such period. If Agent, Credit Parties and
Requisite Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with respect
thereto has been implemented, any reference to GAAP contained in the Agreement
or in any other Loan Document shall, only to the extent of such Accounting
Change, refer to GAAP, consistently applied after giving effect to the
implementation of such Accounting Change. If Agent, Credit Parties and
Requisite Lenders cannot agree upon the required amendments within 30 days
following the date of implementation of any Accounting Change, then all
Financial Statements delivered and all calculations of financial covenants and
other standards and terms in accordance with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the
underlying Accounting Change. For purposes of Section 8.1, a breach
of a Financial Covenant contained in this Annex F shall be deemed to
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.

 

7

 

Exhibit C

 

ANNEX I (FROM ANNEX A
– COMMITMENTS DEFINITION)
TO

CREDIT AGREEMENT

 

Commitments as of
the Fifth Amendment Effective Date:

 

	
  GENERAL ELECTRIC CAPITAL CORPORATION:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment (including a US Swing Line Commitment of $5,000,000):

  	
   

  	
  $

  	
  17,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment (including a European Swing Line Commitment of
  $5,000,000):

  	
   

  	
  $

  	
  32,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  22,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European Term
  Loan Commitment:

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MERRILL
  LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Term Loan
  Commitment:

  	
   

  	
  $

  	
  22,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European Term
  Loan Commitment: :

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  UBS AG,
  CAYMAN ISLANDS BRANCH

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  US Revolving
  Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  European
  Revolving Loan Commitment:

  	
   

  	
  $

  	
  7,500,000

  	
   

  

 

8Exhibit 10.1

 

SEPARATION AND GENERAL RELEASE AGREEMENT

 

This Separation and General Release Agreement is made
and entered into by and between DynTek, Inc., a Delaware corporation (the “Company”),
and Robert I. Webber, an individual (“Executive”), as of the date set forth
below (the “Effective Date”).

 

RECITALS

 

WHEREAS, Executive has served as the Chief Financial
Officer of the Company since July 2004, a member of the Company’s Board of
Directors (the “Board”) since September 2004, and the President of the Company
since June 2005;

 

WHEREAS, Executive has resigned his Board position
with the Company effective as of March 8, 2006 (the “Board Resignation
Date”) and desires to resign his employment with the Company effective as of March 31,
2006 (the “Employment Resignation Date”);

 

WHEREAS, Executive and the Company are parties to an
Employment Agreement dated as of August 1, 2005 (the “Employment Agreement”),
which the parties intend to terminate as of the Employment Resignation Date;
and

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein, Executive and the
Company, intending to be legally bound, hereby agree as follows:

 

1.                                       Resignation
and Termination of Employment Agreement. Beginning on the Employment Resignation
Date, the Company and Executive hereby agree to terminate the Employment
Agreement and the Employment Agreement shall be of no further force and effect
as of such date. In addition, effective on the Employment Resignation Date,
Executive hereby resigns his positions as President and Chief Financial
Officer, and shall no longer be employed by the Company. The parties agree that
termination of the Employment Agreement is by mutual consent and that Executive
shall not be entitled to receive any benefits or compensation pursuant to the
termination provisions, or any other provisions, under the Employment Agreement
after the Employment Resignation Date, except as specifically identified in
this Agreement. Each of the parties agrees to use reasonable efforts up to the Employment
Resignation Date to transfer the positions of President and Chief Financial
Officer to a successor(s) without disruption to the operations of the Company’s
business. The foregoing shall not operate to preclude Executive from spending a
reasonable amount of time between the Effective Date and the Employment
Resignation Date seeking out employment opportunities or finalizing plans for
subsequent employment.

 

2.                                       Compensation.
In reliance upon Executive’s promises, representations and releases in this
Agreement, the Company shall pay Executive the following compensation.

 

(a)                                  Salary.
The Company shall pay Executive his base salary as of the Effective Date, less
legally required withholdings, on regularly scheduled paydays, up to and including
the Employment Resignation Date. After the Employment Resignation Date,
Executive shall not be entitled to any salary continuation payments.

 

 

(b)                                 Insurance
Benefits. After the Employment Resignation Date, the Company shall continue
to pay the premiums for medical and other insurance benefits currently in place
for the Executive, including continued health insurance coverage for Executive
and his currently insured dependents through the Execu-care program or
otherwise (provided that Executive makes a timely election to continue such
coverage under COBRA) until the earlier of 1) December 31, 2006, or 2) such
time as Executive’s coverage for medical and insurance benefits at a subsequent
employer become fully effective as to Executive and his currently insured
dependents.

 

(c)                                  Company
Equity. On the Employment Resignation Date, the Company shall issue to
Executive 2,500,000 shares of the Company’s Common Stock, subject to the representations
set forth in Section 3. The Common Stock will be issued as a private
placement pursuant to an exemption from registration under federal or state
securities laws, and will be deemed restricted securities subject to
restrictions on transfer pursuant to applicable federal and state securities
laws.

 

(d)                                 Additional
Payment. In lieu of additional amounts under the Employment Agreement, the
Company shall pay Executive $60,000, less required withholdings, in a single
lump-sum payment on the Employment Resignation Date.

 

(e)                                  Accrued
Vacation. On the Employment Resignation Date, the Company shall pay
Executive for all accrued vacation days, which calculation shall be determined
by the policies the Company has in place for such payments as of the Effective
Date.

 

(f)                                    Expenses.
The Company agrees to reimburse Executive within 15 days of the Employment Resignation
Date for all ordinary and necessary expenses incurred by Executive on behalf of
the Company in the normal course of performing his duties, provided that
Executive provides reasonable documentation to the Company of such expenses
consistent with the Company’s standard expense reimbursement policies.

 

3.                                       Representations
of Executive Regarding Investor Status. In consideration for Company granting
to Executive shares of the Company’s Common Stock pursuant to Section 2(c),
Executive makes the following representations:

 

(a)                                  Investment Purpose. The Company’s Common Stock is being
acquired for investment only and for the Executive’s own account and not with a
view to, or for sale in connection with, the distribution thereof, nor with any
present intention of distributing or selling any of the Company Common Stock.

 

(b)                                 Relationship; Access to Information. As a current officer and former director of
the Company, Executive has an existing business relationship with the Company. Executive
acknowledges that he has had an opportunity to discuss the Company’s business,
management and financial affairs with its management. Executive has received
and reviewed information about the Company which is pertinent to making an
informed investment decision and has had the opportunity to ask questions of,
and receive answers from, the Company and management regarding the terms and
conditions of the grant of Company Common Stock. In addition, Executive acknowledges
that he has the capacity to protect his own interests with respect to the grant
of Company Common Stock.

 

(c)                                  Reliance
on Exemptions. The Executive
understands that the Company Common Stock is being offered and sold to him in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is

 

2

 

relying upon the truth and accuracy of, and
the Executive’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Executive set forth herein in order
to determine the availability of such exemptions and the eligibility of the Executive
to acquire the Company Common Stock.

 

(d)                                 Accredited
Investor Status. The Executive is
an “accredited investor” within the meaning of SEC Rule 501 of Regulation
D, as presently in effect.

 

(e)                                  Transfer.
The Executive understands and agrees
that the Company Common Stock may not be offered or transferred in any
manner unless (a) the Company Common Stock is subsequently registered
under the Securities Act and any applicable state securities laws, (b) an
opinion of counsel reasonably satisfactory to the Company has been rendered
stating that such offer or transfer will not violate any applicable federal or
state securities laws, or (c) such sale is made in compliance with all of
the requirements of Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act.

 

(f)                                    Legends.
The Executive understands and agrees that in addition to any other restrictive
legend which may be imposed on the certificate, the certificate evidencing
the Company Common Stock will bear a legend in substantially the following form:

 

“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT
BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE
AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.”

 

(g)                                 Representations.
The representations which the Executive has made herein are true and correct on
the date hereof and the Executive understands that the Company will be relying
on representations made herein in determining whether the offering is exempt
from registration under the Securities Act and under applicable state
securities laws. Should any such information change prior to the issuance of
the Company Common Stock to the Executive, the Executive agrees immediately to
provide the Company with a written notice setting forth the corrected
information.

 

4.                                       Publicity.
The parties agree, as part of the Agreement, to mutual non-disparagement
provisions. Each party agrees that it or he will not disparage or talk
negatively about the other party to anyone. Neither party shall make any public
announcement relating to the transactions contemplated by this Agreement
without the prior written consent of the other party which shall not be
unreasonably withheld; provided, however, that the Company may make such
public disclosures concerning these matters as may be required under the
applicable securities laws, including without limitation, the filing of this
Agreement as an exhibit to the Company’s filings under the Securities
Exchange Act of 1934, as amended.

 

5.                                       General
Release.

 

(a)                                  Release
by Executive. In exchange for the consideration provided to Executive as
set forth above and except for the rights granted to Executive under this
Agreement or

 

3

 

rights as a stockholder of the Company, Executive agrees to waive and
release all claims, known and unknown, which he has or might otherwise have had
against the Company on behalf of itself and its parent, subsidiaries and
related entities and their past and present officers, directors, agents,
employees, stockholders, insurers, attorneys and successors, arising prior to
the Effective Date, including, without limitation, all claims relating in any
way to any aspect of his employment, compensation, or the cessation of his
employment with the Company, the Age Discrimination in Employment Act of 1967,
the Americans with Disabilities Act of 1990, Title VII of the Civil Rights
Act of 1964, 42 U.S.C. section 1981, the Fair Labor Standards Act, the
California Fair Employment and Housing Act, California Government Code section 12900,
et  seq., the Unruh Civil Rights Act, California Civil Code section 51,
all provisions of the California Labor Code; the Employee Retirement Income
Security Act, 29 U.S.C. section 1001, et  seq., all as
amended; any other federal, state or local law, regulation or ordinance or
public policy, contract, tort or property law theory, or any other cause of
action whatsoever that arose on or before the date Executive executes this
Agreement.

 

(b)                                 Release
by Company. The Company, on behalf of itself and its parent, subsidiaries,
and related entities and their past and present officers and directors, agrees
to waive and release all claims which it may have against Executive, whether
known or unknown, suspected or unsuspected, that arose on or before the
Effective Date, including without limitation, all claims regarding any aspect
of Executive’s employment, the cessation of his employment, any other federal,
state or local law, regulation or ordinance or public policy, contract, tort or
property law theory, or any other cause of action whatsoever.

 

(c)                                  Unknown
Claims. It is further understood and agreed that as a condition of this
Agreement, all rights under Section 1542 of the Civil Code of the State of
California are expressly waived by the Company and Executive. Such Section reads
as follows:

 

“A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially affected
his settlement with the debtor.”

 

Notwithstanding Section 1542,
and for the purpose of implementing a full and complete release and discharge
of each party, the other party expressly acknowledges that this general release
is intended to include and does include in its effect, without limitation, all
claims which the other party does not know or suspect to exist in his or its
favor at the time of execution hereof, and that this Agreement expressly contemplates
the extinguishment of all such claims.

 

(d)                                 Discrimination.
The release in this Agreement also includes, but is not limited to, claims
arising under federal, state or local law for age, race, sex or other forms of
employment discrimination and retaliation. In accordance with the Older Workers
Benefit Protection Act, Executive hereby knowingly and voluntarily waives and
releases all rights and claims, known or unknown, arising under the Age
Discrimination in Employment Act of 1967, as amended, which he might otherwise
have had against the Company. Executive is hereby advised that he should
consult with an attorney before signing this Agreement and that he has 21 days
in which to consider and accept this Agreement by signing and returning this
Agreement to the Company. In addition, Executive has a period of seven days
following his execution of this Agreement in which he may revoke this
Agreement. If Executive does not advise the Company by a writing received by
the

 

4

 

Company within such seven day period of his intent to revoke the
Agreement, the Agreement will become effective and enforceable.

 

6.                                       Confidential Information. Executive
shall hold all Confidential Information relating to the Company in strict
confidence and shall not use, disclose or otherwise communicate the
Confidential Information to anyone other than the Company without the prior
written consent of the Company. “Confidential Information” includes, without
limitation, financial information, trade secrets, business plans, business
methods or practices, market studies, customer lists, referral lists and other
proprietary business information of the Company. “Confidential Information”
shall not include information which is or becomes in the public domain through
no action by Executive or information which is generally disclosed by the
Company to third parties without restrictions on such third parties. Executive
shall return all Confidential Information to the Company upon the Employment Resignation
Date.

 

7.                                       Solicitation of Customers and Employees.
For a period after the Employment Resignation Date equal to one (1) year,
Executive shall not influence or attempt to influence, directly or indirectly,
any customer of the Company to divert its business away from the Company. In
connection with the foregoing, the parties acknowledge that the customer lists
of the Company and information retained by the Company regarding such customers
constitute Confidential Information and trade secrets of the Company that
provide the Company with independent economic value. In addition, for a period
after the Employment Resignation Date equal to one (1) year, Executive
shall not, directly or indirectly, solicit or encourage for hire any employee
of the Company; provided, that this restriction shall not apply to (i) general
advertisements or other general solicitations not specifically directed to
employees of the Company, (ii) employment resulting from unsolicited
contacts from employees of the Company, or (iii) employees who have been
terminated by the Company.

 

8.                                       Non-Competition. For any period of
time beyond the Employment Resignation Date that Executive continues to receive
any payments or benefits under this Agreement, Executive shall not, directly or
indirectly, in any capacity:

 

(a)                                  Engage,
own or have any interest in;

 

(b)                                 Manage,
operate, join, participate in, accept employment with, render advice to, or
become interested in or be connected with;

 

(c)                                  Furnish
consultation or advice to; or

 

(d)                                 Permit his name to be used in connection
with;

 

any person or entity that
competes with the business of the Company. Notwithstanding the foregoing,
holding five percent (5%) or less of an interest in the equity, stock options
or debt of any publicly traded company shall not be considered a violation of
this Section 8.

 

9.                                       Miscellaneous Provisions.

 

(a)                                  Notices. Any notice given hereunder to the Company or to Executive shall be
deemed sufficiently given if mailed by registered or certified mail, return
receipt requested, postage prepaid, or sent by overnight delivery service, by
facsimile or by Email as follows:

 

5

 

If to the Company:

 

DynTek, Inc.

19700 Fairchild Road, Suite 350

Irvine, CA  92612

Attention: Chief Executive
Officer

Facsimile number: (949) 271-0800

Email address: casper.zublin@dyntek.com

 

If to Executive:

 

Robert I. Webber

c/o Maui Land & Pineapple, Inc.

120 Kane Street

Kahului, Maui, Hawaii, 96733

Facsimile number: (808) 871-0953

Email address: riwebber@aol.com

 

(b)                                 Governing
Law. This Agreement is made under and shall be governed by and construed in
accordance with the laws of the State of California.

 

(c)                                  Assignment.
Neither this Agreement nor any duties or obligations under this Agreement may be
assigned by either party without the prior written consent of the other party;
provided, however, that the Company may assign this Agreement in
connection with any sale or transfer of the business to which it relates,
whether by merger, sale of assets, sale of stock or otherwise.

 

(d)                                 Attorneys’
Fees. If any action is brought to enforce or interpret the provisions of
this Agreement, the prevailing party in such action will be entitled to its
reasonable attorneys’ fees and costs incurred, in addition to any other relief
to which such party may be entitled.

 

(e)                                  Waiver
of Breach. The waiver of either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach of this Agreement.

 

(f)                                    Severability.
To the extent any provision of this Agreement shall be invalid or
unenforceable, it shall be considered deleted herefrom and the remainder of
such provision and of this Agreement shall be unaffected and shall continue in
full force and effect. In furtherance and not in limitation of the foregoing,
should the duration or scope of any provision covered by any provision of this
Agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only the maximum duration
or extent that may validly and enforceably be covered under applicable
law.

 

(g)                                 Authority.
Each of the Company and Executive warrants and represents that it or he is
authorized to execute and deliver this Agreement.

 

(h)                                 Further
Assurances. Each party agrees to execute such other and further instruments
and documents as may be necessary or proper in order to complete the
transactions contemplated by this Agreement.

 

6

 

(i)                                     Amendments.
No amendment or modification of this Agreement shall be deemed effective unless
made in writing signed by the parties hereto.

 

(j)                                     Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

(k)                                  Integration.
Executive and the Company agree that this Agreement is the sole agreement
between them regarding the subject matter herein and embodies all terms,
promises, representations, and understanding regarding the subject matter
herein, and that no representations, inducements, or promises have been made
except as expressly stated herein.

 

(l)                                     Interpretation.
This Agreement shall not be construed against any party merely because that
party drafted or revised the provision in question, and it shall not be
construed as an admission by the Company or Executive of any improper,
wrongful, or unlawful actions, or any other wrongdoing against the other, and
each party specifically disclaims any liability to or wrongful acts against the
other.

 

7

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year set forth below.

 

 

	
   

  	
  DYNTEK , INC.,
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 03/31/06

  	
   

  
	
   

  	
  By:

  	
  \s\ Casper
  Zublin, Jr.

  	
   

  
	
   

  	
   

  	
  Casper Zublin,
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROBERT I. WEBBER

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date: 03/31/06

  	
   

  
	
   

  	
   

  	
  \s\ Robert I.
  Webber

  	
   

  
						

 

8

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