Document:

Exhibit 10.1

 

 

 

CREDIT AGREEMENT

 

Dated as of January 31, 2005

 

among

 

QUIDEL CORPORATION

as Borrower,

 

BANK OF AMERICA, N.A.,

as Agent

and

L/C Issuer,

and

The Other Lenders Party from time to time
hereto

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS AND ACCOUNTING TERMS

  	
  1

  
	
  1.1

  	
  Defined
  Terms

  	
  1

  
	
  1.2

  	
  Other
  Interpretive Provisions

  	
  22

  
	
  1.3

  	
  Accounting
  Terms

  	
  23

  
	
  1.4

  	
  Rounding

  	
  23

  
	
  1.5

  	
  References
  to Agreements and Laws

  	
  23

  
	
  1.6

  	
  Times of Day

  	
  24

  
	
  1.7

  	
  Letter of
  Credit Amounts

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  THE COMMITMENTS AND CREDIT EXTENSIONS

  	
  24

  
	
  2.1

  	
  Loans

  	
  24

  
	
  2.2

  	
  Borrowings,
  Conversions and Continuations of Loans

  	
  24

  
	
  2.3

  	
  Letters of
  Credit

  	
  26

  
	
  2.4

  	
  Intentionally
  Deleted

  	
  34

  
	
  2.5

  	
  Prepayments

  	
  35

  
	
  2.6

  	
  Termination
  or Reduction of Commitments

  	
  37

  
	
  2.7

  	
  Repayment of
  Loans

  	
  38

  
	
  2.8

  	
  Interest

  	
  38

  
	
  2.9

  	
  Fees

  	
  38

  
	
  2.10

  	
  Computation
  of Interest and Fees

  	
  39

  
	
  2.11

  	
  Evidence of
  Debt

  	
  39

  
	
  2.12

  	
  Payments
  Generally

  	
  40

  
	
  2.13

  	
  Sharing of
  Payments

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
  42

  
	
  3.1

  	
  Taxes

  	
  42

  
	
  3.2

  	
  Illegality

  	
  43

  
	
  3.3

  	
  Inability to
  Determine Rates

  	
  43

  
	
  3.4

  	
  Increased
  Cost and Reduced Return; Capital Adequacy

  	
  44

  
	
  3.5

  	
  Compensation
  for Losses

  	
  45

  
	
  3.6

  	
  Matters
  Applicable to all Requests for Compensation

  	
  45

  
	
  3.7

  	
  Survival

  	
  45

  

 

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  ARTICLE IV.

  	
  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  	
  45

  
	
  4.1

  	
  Conditions
  of Initial Credit Extension

  	
  45

  
	
  4.2

  	
  Conditions
  to all Credit Extensions

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  48

  
	
  5.1

  	
  Existence,
  Qualification and Power; Compliance with Laws

  	
  48

  
	
  5.2

  	
  Authorization;
  No Contravention

  	
  48

  
	
  5.3

  	
  Governmental
  Authorization; Other Consents

  	
  48

  
	
  5.4

  	
  Binding
  Effect

  	
  48

  
	
  5.5

  	
  Financial
  Statements; No Material Adverse Effect

  	
  49

  
	
  5.6

  	
  Litigation

  	
  49

  
	
  5.7

  	
  No Default

  	
  49

  
	
  5.8

  	
  Ownership of
  Property; Liens

  	
  49

  
	
  5.9

  	
  Environmental
  Compliance

  	
  49

  
	
  5.10

  	
  Insurance

  	
  50

  
	
  5.11

  	
  Taxes

  	
  50

  
	
  5.12

  	
  ERISA
  Compliance

  	
  50

  
	
  5.13

  	
  Subsidiaries

  	
  51

  
	
  5.14

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

  	
  51

  
	
  5.15

  	
  Disclosure

  	
  51

  
	
  5.16

  	
  Compliance
  with Laws

  	
  51

  
	
  5.17

  	
  Intellectual
  Property; Licenses, Etc.

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  AFFIRMATIVE COVENANTS

  	
  52

  
	
  6.1

  	
  Financial
  Statements

  	
  52

  
	
  6.2

  	
  Certificates;
  Other Information

  	
  53

  
	
  6.3

  	
  Notices

  	
  53

  
	
  6.4

  	
  Payment of
  Obligations

  	
  54

  
	
  6.5

  	
  Preservation
  of Existence, Etc

  	
  54

  
	
  6.6

  	
  Maintenance
  of Properties; Application of Net Insurance/Condemnation Proceeds

  	
  54

  
	
  6.7

  	
  Maintenance
  of Insurance

  	
  56

  

 

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  6.8

  	
  Compliance
  with Laws and Contractual Obligations

  	
  56

  
	
  6.9

  	
  Books and
  Records

  	
  56

  
	
  6.10

  	
  Inspection
  Rights

  	
  56

  
	
  6.11

  	
  Use of
  Proceeds

  	
  57

  
	
  6.12

  	
  Financial
  Covenants

  	
  57

  
	
  6.13

  	
  Additional
  Guarantors

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  NEGATIVE COVENANTS

  	
  58

  
	
  7.1

  	
  Liens

  	
  58

  
	
  7.2

  	
  Investments

  	
  59

  
	
  7.3

  	
  Indebtedness

  	
  60

  
	
  7.4

  	
  Fundamental
  Changes

  	
  61

  
	
  7.5

  	
  Dispositions

  	
  61

  
	
  7.6

  	
  Restricted
  Payments

  	
  62

  
	
  7.7

  	
  Change in
  Nature of Business

  	
  62

  
	
  7.8

  	
  Transactions
  with Affiliates

  	
  63

  
	
  7.9

  	
  Burdensome
  Agreements

  	
  63

  
	
  7.10

  	
  Use of
  Proceeds

  	
  63

  
	
  7.11

  	
  Foreign
  Subsidiaries; OSC

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII.

  	
  EVENTS OF DEFAULT AND REMEDIES

  	
  64

  
	
  8.1

  	
  Events of
  Default

  	
  64

  
	
  8.2

  	
  Remedies
  Upon Event of Default

  	
  66

  
	
  8.3

  	
  Application
  of Funds

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  AGENT

  	
  67

  
	
  9.1

  	
  Appointment
  and Authorization Agent

  	
  67

  
	
  9.2

  	
  Delegation
  of Duties

  	
  68

  
	
  9.3

  	
  Liability of
  Agent

  	
  68

  
	
  9.4

  	
  Reliance by
  Agent

  	
  68

  
	
  9.5

  	
  Notice of
  Default

  	
  69

  
	
  9.6

  	
  Credit
  Decision; Disclosure of Information by Agent

  	
  69

  
	
  9.7

  	
  Indemnification
  of Agent

  	
  70

  

 

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  9.8

  	
  Agent in its
  Individual Capacity

  	
  70

  
	
  9.9

  	
  Successor
  Agent

  	
  70

  
	
  9.10

  	
  Agent May
  File Proofs of Claim

  	
  71

  
	
  9.11

  	
  Guaranty
  Matters

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MISCELLANEOUS

  	
  72

  
	
  10.1

  	
  Amendments,
  Etc

  	
  72

  
	
  10.2

  	
  Notices and
  Other Communications; Facsimile Copies

  	
  73

  
	
  10.3

  	
  No Waiver;
  Cumulative Remedies

  	
  74

  
	
  10.4

  	
  Attorney
  Costs, Expenses and Taxes

  	
  74

  
	
  10.5

  	
  Indemnification
  by Borrower

  	
  75

  
	
  10.6

  	
  Payments Set
  Aside

  	
  75

  
	
  10.7

  	
  Successors
  and Assigns

  	
  76

  
	
  10.8

  	
  Confidentiality

  	
  78

  
	
  10.9

  	
  Set-off

  	
  79

  
	
  10.10

  	
  Interest
  Rate Limitation

  	
  79

  
	
  10.11

  	
  Counterparts

  	
  79

  
	
  10.12

  	
  Integration

  	
  79

  
	
  10.13

  	
  Survival of
  Representations and Warranties

  	
  80

  
	
  10.14

  	
  Severability

  	
  80

  
	
  10.15

  	
  Governing
  Law; Submission to Jurisdiction

  	
  80

  
	
  10.16

  	
  Waiver of
  Right to Trial by Jury

  	
  81

  
	
  10.17

  	
  USA Patriot
  Act Notice.

  	
  81

  
	
  10.18

  	
  Time of the
  Essence

  	
  81

  
	
  10.19

  	
  Foreign
  Lenders

  	
  81

  

 

iv

 

	
  SCHEDULES

  	
   

  	
   

  
	
  1.1

  	
   

  	
  IP Rights
  and Other Assets to be Sold in the Permitted Sale

  
	
  2.1

  	
   

  	
  Commitments
  and Pro Rata Shares

  
	
  5.5

  	
   

  	
  Material
  Adverse Effect

  
	
  5.9

  	
   

  	
  Environmental
  Matters

  
	
  5.13

  	
   

  	
  Subsidiaries
  and Other Equity Investments

  
	
  5.18

  	
   

  	
  Intentionally
  Deleted

  
	
  6.15(b)

  	
   

  	
  Deposit
  Accounts and Securities Accounts

  
	
  7.1

  	
   

  	
  Existing
  Liens

  
	
  7.3

  	
   

  	
  Existing
  Indebtedness

  
	
  10.2

  	
   

  	
  Agent’s
  Office, Certain Addresses for Notices

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Loan
  Notice

  
	
  B

  	
   

  	
  Form of Note

  
	
  C

  	
   

  	
  Form of
  Guaranty

  
	
  D

  	
   

  	
  Form of
  Compliance Certificate

  
	
  E

  	
   

  	
  Form of
  Assignment and Assumption

  
	
  F

  	
   

  	
  Intentionally
  Deleted

  
	
  G

  	
   

  	
  Form of
  Landlord Waiver

  
	
  H

  	
   

  	
  Reserved

  
	
  I

  	
   

  	
  Reserved

  
	
  J

  	
   

  	
  Form of
  Solvency Certificate

  
	
  K-1

  	
   

  	
  Form of
  Opinion of Counsel to Loan Parties

  
	
  K-2

  	
   

  	
  Form of
  Opinion of Oregon Counsel to Loan Parties

  

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT
(this “Agreement”) is entered into as of
January 31, 2005 among QUIDEL CORPORATION, a Delaware corporation (“Borrower”), each lender from time
to time party hereto (collectively, “Lenders”
and individually, a “Lender”),
and BANK OF AMERICA, N.A., as Agent and L/C Issuer.

 

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

 

ARTICLE I.           DEFINITIONS AND ACCOUNTING TERMS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Aggregate Commitments”
means the Commitments of all Lenders.

 

 

“Agreement”
means this Credit Agreement.

 

“Applicable Rate”
means from time to time, the following percentages per annum, based upon the
Funded Debt to EBITDA Ratio in Section 6.12(b) as set forth in the most recent
Compliance Certificate received by the Agent pursuant to Section 6.2(b).

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
  Funded Debt to EBITDA

  Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Eurodollar Rate or

  IBOR Rate Margin

  or Standby

  Letters of Credit

  	
   

  	
  Base Rate

  Margin

  	
   

  
	
  1

  	
   

  	
  Greater than or equal to 2.00:1.00

  	
   

  	
  0.250

  	
  %

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  
	
  2

  	
   

  	
  Less than 2.00:1.00 but greater than or equal to 1.50:1.00

  	
   

  	
  0.250

  	
  %

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  
	
  3

  	
   

  	
  Less than 1.50:1.00 but greater than or equal to 1.00:1.00

  	
   

  	
  0.225

  	
  %

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  
	
  4

  	
   

  	
  Less than 1.00:1.00 but greater than or equal to 0.50:1.00

  	
   

  	
  0.200

  	
  %

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  
	
  5

  	
   

  	
  Less than 0.50

  	
   

  	
  0.175

  	
  %

  	
  0.75

  	
  %

  	
  0.00

  	
  %

  

 

Any increase or
decrease in the Applicable Rate resulting from a change in the Financial
Covenant shall become effective commencing on the 5th Business Day
immediately following the date a Compliance Certificate is delivered pursuant
to Section 6.2(b); provided, however, that if no
Compliance Certificate is delivered when due in accordance with such Section,
then Pricing Level 1 shall apply commencing on the 5th Business Day
following the date such Compliance Certificate was required to have been
delivered to but excluding the date such Compliance Certificate is received by
Agent and, thereafter, the pricing level indicated by such Compliance
Certificate until such pricing level is required to be adjusted pursuant to the
terms of this definition.  The Applicable
Rate in effect from the Closing Date through the date a Compliance Certificate
is delivered pursuant to Section 6.2(b) for the reporting period ending on
December 31, 2005 shall be determined based upon Pricing Level 1.

 

“Asset Sale”
means the sale by Borrower or any of its Subsidiaries to any Person other than
Borrower or its wholly-owned Guarantors of (i) any of the stock of any of
Borrower’s Subsidiaries (other than directors’ qualifying shares to the extent
required by law). 
(ii) substantially all of the assets of any division or line of
business of Borrower or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Borrower or any of its Subsidiaries (other
than (a) inventory and cash equivalents sold in the ordinary course of
business, (b) sales, assignments, transfers or dispositions of accounts in
the ordinary course of

 

2

 

business for
purposes of collection, (c) subleases of real property leases no longer
necessary to the business of Borrower and its Subsidiaries, (d) non-exclusive
licenses of immaterial IP Rights in the ordinary course of business for not
less than fair market value, (e) non-exclusive licenses of IP Rights in
the ordinary course of business solely in connection with cooperative
agreements with third parties for further development of such IP Rights, (f)
dispositions for fair value of equipment that is obsolete, worn-out or no
longer used or useful in the business of Borrower or any of its Subsidiaries,
(g) dispositions by means of trade-in, of equipment used in the ordinary course
of business, so long as such equipment is replaced, substantially concurrently,
by like-kind equipment in an effort to upgrade the equipment of the Borrower or
any of its Subsidiaries and (h) any such other assets to the extent that
the aggregate value of such assets sold in any single transaction or related
series of transactions is equal to $100,000 or less).

 

“Assignment and Assumption”
means an Assignment and Assumption substantially in the form of Exhibit E.

 

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

 

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

 

“Audited Financial
Statements” means the audited consolidated balance sheet of
Borrower and its Subsidiaries for the fiscal year ended December 31, 2006 and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal year
of Borrower and its Subsidiaries, including the notes thereto.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

“Capital Stock”
means the capital stock or other equity interests of a Person.

 

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

 

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

 

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

 

“Cash Equivalents”
means, as at any date of determination, (i) marketable securities
(a) issued or directly and unconditionally guaranteed as to interest and
principal by the United States Government or (b) issued by any agency of
the United States the obligations of which are backed by the full faith and
credit of the United States, in each case maturing within one year after such
date; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor’s (“S&P”)
or Moody’s Investors Service, Inc. (“Moody’s”);
(iii) commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody’s;
(iv) certificates of deposit or bankers’ acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of
not less than $100,000,000; and/or (v) shares of any money market mutual
fund that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i) and (ii) above,
(b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from either S&P or Moody’s.

 

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

 

(a)           any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, but excluding any employee benefit plan of such

 

4

 

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

 

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

 

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

 

“Code” means
the Internal Revenue Code of 1986.

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Loans or
participations in L/C Obligations required to be funded by it hereunder within
one Business Day of the date required to be funded by it hereunder,
(b) has otherwise failed to pay over to Agent or any other Lender any
other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding.

 

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

 

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

 

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

 

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

 

“EBITDA”
means net income, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense and debt issuance
costs and commissions, discounts and other fees and charges associated with
initial incurrence of any Indebtedness, plus non-cash stock compensation
expenses, plus depreciation, and amortization; provided that EBITDA shall be
determined after giving effect on a pro forma basis to any Permitted
Acquisitions that have been consummated to the extent either Agent has approved
the financial statements of the applicable acquired Persons or assets or such
financial statements are audited by a national accounting firm reasonably
acceptable to Agent (and in either case giving effect to pro forma adjustments
as determined by the Board of Directors of Borrower in good faith and approved
by Agent).

 

6

 

“Eligible Assignee”
has the meaning specified in Section 10.7(g).

 

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

 

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

 

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

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

 

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

 

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

 

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

 

	
  Eurodollar Rate

  	
  =

  	
  Eurodollar Base Rate

  	
   

  
	
   

  	
   

  	
  1.00 – Eurodollar Reserve Percentage

  	
   

  

 

Where,

 

7

 

“Eurodollar Base Rate” means, for
such Interest Period (rounded upwards, as necessary, to the nearest 1/100 of
1%) the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA
LIBOR as designated by Agent from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period.  If such rate is not available at such time
for any reason, then the “Eurodollar Base Rate” for such Interest Period shall
be the rate per annum determined by Agent to be the rate at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the Eurodollar Rate Loan being made, continued or
converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the
London interbank Eurodollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such Interest
Period.

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

“Fixed Charge Coverage
Ratio” means the ratio of (a) EBITDA, minus income
tax paid in cash, minus cash dividends paid, minus capital expenditures
(excluding any Permitted Acquisitions constituting capital expenditures), to
(b) the sum (without duplication) of (i) interest expense,
(ii) an amount equal to 15% of the aggregate principal amount of Funded
Debt that bears interest (other than the current portion of Funded Debt to the extent
included in clause (iii) below) and (iii) the current portion of long term
liabilities.

 

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

 

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

 

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

 

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

 

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

 

“Governmental Authority”
means any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, administrative
tribunal, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

 

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

 

“Guarantee”
means, as to any Person, any (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such Indebtedness
or other obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or

 

9

 

other
obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligee in respect of such Indebtedness or other obligation of the
payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of
such Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such
Person.  The amount of any Guarantee
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.  The term “Guarantee”
as a verb has a corresponding meaning.

 

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

 

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

 

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

 

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

 

“IBOR Rate”
means for any Interest Period with respect to any IBOR Rate Loan, a rate per
annum determined by Agent as of the first day of such Interest Period pursuant
to the following formula:

 

	
  IBOR Rate  =

  	
   

  	
  IBOR Base Rate

  
	
   

  	
   

  	
  1.00 – Reserve Percentage

  

 

Where,

 

(a)           “IBOR Base Rate”
means, for such Interest Period, the interest rate at which Bank of America’s
Grand Cayman Banking Center, Grand Cayman, British West Indies, would offer
Dollar deposits for such Interest Period to other major banks in the offshore
Dollar interbank market.

 

10

 

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

 

“IBOR Rate Loans”
means Loans that bear interest at a rate based on the IBOR Rate.

 

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

 

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

 

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

 

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

 

(f)            all obligations of such Person
to pay the deferred purchase price of property or services (other than trade
accounts payable in the ordinary course of business);

 

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

 

(h)           capital leases and Synthetic
Lease Obligations; and

 

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

 

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

 

“Indemnified Liabilities”
has the meaning specified in Section 10.5.

 

“Indemnitees”
has the meaning specified in Section 10.5.

 

11

 

“Information”
has the meaning specified in Section 10.8.

 

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

 

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

 

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

 

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

 

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

 

“Inverness”
has the meaning specified in Section 5.5.

 

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

 

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

 

“IRS” means
the United States Internal Revenue Service.

 

“ISP” means,
with respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
later version

 

12

 

thereof as may
be in effect at the time of issuance).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“L/C Sublimit”
means an amount equal to $6,000,000.  The L/C Sublimit is part of, and not in
addition to, the Aggregate Commitments.

 

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

 

13

 

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

 

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

 

“Lender Swap Contracts”
means any obligations of the Borrower or any other Loan Party under Swap
Contracts to which a Lender or its Affiliate is a party.

 

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

 

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

 

“Loan” has
the meaning specified in Section 2.1.

 

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

 

“Loan Notice”
means a notice of (a) a Borrowing, (b) a conversion of Loans from one
Type to the other, or (c) a continuation of Eurodollar Rate Loans or IBOR
Rate Loans, pursuant to Section 2.2(a), which, if in writing, shall be
substantially in the form of Exhibit A.

 

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

 

“Material Adverse Effect”
means (a) a material adverse change in, or a material adverse effect upon,
the business operations, properties, liabilities (actual or contingent),
condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries, taken as a whole; (b) a material impairment of the ability
of any Loan Party to perform its obligations under any Loan Document to which
it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.

 

“Maturity Date”
means June 30, 2009.

 

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

 

“Net Asset Sale Proceeds,”
with respect to any Asset Sale, means Cash payments

 

14

 

(including any
Cash received by way of deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) received from
such Asset Sale, net of any bona fide direct costs and expenses incurred in
connection with such Asset Sale, including (i) sale, use or other
transaction taxes and income taxes paid or payable by Borrower or any of its
Subsidiaries as a direct result thereof (provided that with respect to
income taxes that are payable by Borrower or such Subsidiary, the amount shall
be limited to income taxes reasonably estimated to be actually payable by
Borrower or such Subsidiary within two years of the date of such Asset Sale as
a result of any gain recognized in connection with such Asset Sale) and
(ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than the Loans) that is
(a) secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such Asset Sale
and (b) actually paid at the time of receipt of such Cash payment to a
Person that is not an Affiliate of any Loan Party or of any Affiliate of a Loan
Party.

 

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

 

“Net Worth”
means, as of any date of determination with respect to Borrower and its
Subsidiaries, net worth of Borrower and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.

 

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

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or arising under any
Lender Swap Contracts or otherwise with respect to any Loan or Letter of Credit,
in each case, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the

 

15

 

commencement
by or against any Loan Party or any Affiliate thereof of any proceeding under
any Debtor Relief Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding.

 

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

 

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

 

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

 

“Participant”
has the meaning specified in Section 10.7(d).

 

“PBGC” means
the Pension Benefit Guaranty Corporation.

 

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

 

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

 

(a)           the Person, division or
business being acquired (the “Target”)
shall (i) be in such lines of business such that Borrower will be in
compliance with Section 7.7 after giving effect to such Acquisition, and
(ii) have EBITDA (calculated utilizing the definition of EBITDA as if
Target were a Subsidiary) for the most recent consecutive four fiscal quarter
period exceeding zero; provided that this clause (a) shall not apply to the
extent no Person, division or business is being acquired in connection with
such Acquisition;

 

16

 

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

 

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

 

(d)           the Total Consideration paid or
payable with respect to such Acquisition (excluding consideration paid or
payable with Capital Stock of Borrower) shall not exceed $35,000,000 and, after
giving effect to such Acquisition, the aggregate amount of the Total
Consideration paid or payable for all such Acquisitions consummated during the
term of this Agreement commencing on the Closing Date (excluding consideration
paid or payable with Capital Stock of Borrower) shall not exceed $70,000,000 in
the aggregate;

 

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

 

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

 

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

 

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

 

17

 

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

 

(j)            after giving effect to such
Acquisition, the sum of (i) the amount by which the Aggregate Commitments
exceeds Total Outstandings plus (ii) the amount of cash held by Borrower
and its Subsidiaries, shall exceed $15,000,000;

 

(k)           after giving effect to such
Acquisition, the ratio of Funded Debt as at the date of such Acquisition to
EBITDA for the consecutive four fiscal quarters ending on the last day of the
most recently ended fiscal quarter for which this Agreement requires Borrower
to deliver financial statements is at or below the applicable maximum Funded
Debt to EBITDA Ratio covenant level for the most recently ended fiscal quarter
set forth in Section 6.12(b);

 

(l)            such Acquisition shall be made
by Borrower or a wholly-owned Subsidiary of Borrower; and

 

(m)          (i) at least ten Business Days
prior to the closing of such Acquisition, Borrower shall have delivered to
Agent and each Lender all available financial statements of the Target and, if
requested by Agent or any Lender, (ii) within five Business Days prior to
the closing of such Acquisition, Borrower shall have delivered to Agent and any
Lender, such other documents and agreements relating to such Acquisition as
Agent or such Lender may reasonably request, and (iii) on or prior to the
closing date of such Acquisition, Borrower shall have delivered to Agent and
each Lender (1) a copy of the purchase agreement pursuant to which such
Acquisition will be consummated, (2)  a copy of each material
services agreement, consulting agreement, lease, credit or financing agreement
or other material agreement relating to such Acquisition to be in effect after
the consummation of such Acquisition, (3) unless waived by Agent in its
reasonable discretion, an opinion of counsel to the sellers addressed to Agent
and the Lenders or permitting them to rely thereon, (4) such other
information or reports as Agent may reasonably request with respect to such
Acquisition, and (5) an executed officer’s certificate in form and
substance reasonably satisfactory to Agent and Requisite Lenders certifying
that such Acquisition satisfies all of the conditions set forth in this
definition and attaching thereto a Compliance Certificate.

 

“Permitted
Sale” means the sale by Borrower on or before December 31,
2005 of (i) all of the Capital Stock of Quidel Deutschland, a wholly-owned
Subsidiary of Borrower, and (ii) certain IP Rights and certain other
assets described in Schedule 1.1, for an aggregate total consideration (for
both clauses (i) and (ii)) of approximately $500,000.

 

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

 

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

 

“Pro Rata Share”
means, with respect to each Lender at any time, a fraction (expressed

 

18

 

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

 

“Quidel
Deutschland” means Quidel Deutschland GmbH, a German company.

 

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

 

“Register”
has the meaning specified in Section 10.7(c).

 

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

 

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

 

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

 

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

 

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other equity interest of
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such capital stock or other equity interest or of any option, warrant or
other right to acquire any such capital stock or other equity interest or any
payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement,

 

19

 

defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to any Subordinated Indebtedness.

 

“Senior Debt”
means, as of any date of determination, all outstanding Indebtedness for
borrowed money and other interest-bearing Indebtedness, including current and
long term Indebtedness, less Subordinated Indebtedness as at such date.

 

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

 

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

 

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

 

“Subordinated Indebtedness”
means unsecured Indebtedness incurred by Borrower or any Subsidiary to the
sellers in connection with any Permitted Acquisition or otherwise in accordance
with Section 7.3(e), the terms of which Indebtedness (including the
covenants, events of default and subordination provisions thereof) and all
documentation relating thereto shall be in form and substance satisfactory to
Agent and Required Lenders, it being understood that there shall be no payments
of any kind thereunder (other than payment of scheduled interest, the amounts
and frequency of which are acceptable to Agent and other Required Lenders and
other payments (if any) acceptable to Agent and Required Lenders)  prior to the seventeen month anniversary
after the Maturity Date then in effect and all payments thereunder shall be
subordinated in right of payment to the Obligations pursuant to subordination
provisions acceptable to Agent and Required Lenders in their sole discretion.

 

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

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than

 

20

 

securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person.  Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of Borrower.

 

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

 

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

 

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

 

“Synthetic Lease Obligation”
means the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use
or possession of property creating obligations that do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).

 

“Taxes” has
the meaning specified in Section 3.1(a).

 

“Threshold Amount”
means $1,000,000.

 

21

 

“Total Liabilities”
means the sum of current liabilities plus long term liabilities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.

 

(b)           The words “herein,” “hereto,”
“hereof” and “hereunder” and words of similar import when used in
any Loan Document shall refer to such Loan Document as a whole and not to any
particular provision thereof.

 

(i)            Article, Section, Exhibit and
Schedule references are to the Loan Document in which such reference appears.

 

(ii)           The term “including” is by way of example and not
limitation.

 

(iii)          The term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form.

 

22

 

(iv)          any reference in this Agreement or any other Loan Document
to any law, statute, regulation, rule or other legislative action shall mean
such law, statute, regulation, rule or other legislative action as amended,
supplemented, restated or otherwise modified from time to time and any
successor thereto, and shall include any rule or regulation promulgated
thereunder

 

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

 

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

 

1.3          Accounting Terms.

 

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

 

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

 

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

 

1.5          References to Agreements and Laws.  Unless otherwise expressly provided herein,
(a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments, restatements,
extensions, supplements and other modifications are not prohibited by any Loan
Document; and (b) references to any Law shall include all statutory and

 

23

 

regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

 

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

 

1.7          Letter of Credit Amounts.  Unless otherwise specified, all references
herein to the amount of a Letter of Credit at any time shall be deemed to mean
the maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the Issuer Documents
related thereto, whether or not such maximum face amount is in effect at such
time.

 

ARTICLE II.         THE COMMITMENTS AND CREDIT EXTENSIONS

 

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

 

The amount of
each Lender’s Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the original Aggregate Commitment is $30,000,000; provided that the
amount of the Commitments of each Lender shall be adjusted to give effect to
any assignments of such Commitments pursuant to Section 10.7 and shall be
reduced from time to time by the amount of any reductions thereto made pursuant
to Section 2.5.  Each Lender’s Commitment
shall expire immediately and without further action on the Maturity Date and
all Loans and all other amounts owed hereunder with respect to the Loans and
the Commitments shall be paid in full no later than that date.

 

2.2          Borrowings, Conversions and
Continuations of Loans.

 

(a)           Each Borrowing, each conversion
of Loans from one Type to the other, and each continuation of Eurodollar Rate
Loans or IBOR Rate Loans shall be made upon Borrower’s irrevocable notice to
Agent, which may be given by telephone. 
Each such notice must be received by Agent not later than 11:00 a.m.
(i) three Business Days (in the case of Eurodollar Rate Loans) or one
Business Day (in the case of IBOR Rate Loans) prior to the requested date of
any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or
IBOR Rate Loans or of any conversion of Eurodollar Rate Loans or IBOR Rate
Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing
of Base Rate Loans.  Borrower shall have
the option to borrow or continue IBOR Rate Loans or convert Loans into IBOR
Rate Loans only so long as Bank of America, N.A. is the sole Lender under this
Agreement.  Each

 

24

 

telephonic notice by Borrower pursuant to
this Section 2.2(a) must be confirmed promptly by delivery to Agent of a
written Loan Notice, appropriately completed and signed by a Responsible
Officer of Borrower.  Each Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or IBOR Rate Loans shall
be in a principal amount of $2,000,000 or a whole multiple of $500,000 in
excess thereof.  Except as provided in Sections
2.3(c) and 2.4(c), each Borrowing of or conversion to Base Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof.  Each Loan
Notice (whether telephonic or written) shall specify (i) whether Borrower
is requesting a Borrowing, a conversion of Loans from one Type to the other, or
a continuation of Eurodollar Rate Loans or IBOR Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or
to which existing Loans are to be converted, and (v) if applicable, the
duration of the Interest Period with respect thereto.  If Borrower fails to specify a Type of Loan
in a Loan Notice or if Borrower fails to give a timely notice requesting a
conversion or continuation, then the applicable Loans shall be made as, or
converted to, Base Rate Loans.  Any such
automatic conversion to Base Rate Loans shall be effective as of the last day
of the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans or IBOR Rate Loans.  If
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans or IBOR Rate Loans in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.

 

(b)           Following receipt of a Loan
Notice, Agent shall promptly notify each Lender of the amount of its Pro Rata
Share of the applicable Loans, and if no timely notice of a conversion or
continuation is provided by Borrower, Agent shall notify each Lender of the
details of any automatic conversion to Base Rate Loans described in the
preceding subsection.  In the case of a
Borrowing, each Lender shall make the amount of its Loan available to Agent in
immediately available funds at Agent’s Office not later than 1:00 p.m. on the
Business Day specified in the applicable Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.2 (and, if such Borrowing is the
initial Credit Extension, Section 4.1), Agent shall make all funds so
received available to Borrower in like funds as received by Agent either by
(i) crediting the account of Borrower on the books of Bank of America with
the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to (and reasonably acceptable to)
Agent by Borrower; provided, however, that if, on the date the
Loan Notice with respect to such Borrowing is given by Borrower, there are L/C
Borrowings outstanding, then the proceeds of such Borrowing first, shall
be applied, to the payment in full of any such L/C Borrowings, and second,
shall be made available to Borrower as provided above.

 

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

 

25

 

(d)           Agent shall promptly notify
Borrower and Lenders of the interest rate applicable to any Interest Period for
Eurodollar Rate Loans or IBOR Rate Loans upon determination of such interest
rate.  The determination of the
Eurodollar Rate or the IBOR Rate by Agent shall be conclusive in the absence of
manifest error.

 

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

 

2.3          Letters of Credit.

 

(a)           The Letter of Credit
Commitment.

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(F)           such Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder.

 

27

 

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

 

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

 

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

 

(i)            Each Letter of Credit shall be
issued or amended, as the case may be, upon the request of Borrower delivered
to the L/C Issuer (with a copy to Agent) in the form of a L/C Application,
appropriately completed and signed by a Responsible Officer of Borrower.  Such L/C Application must be received by the
L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or
such later date and time as Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such L/C
Application shall specify in form and detail satisfactory to the L/C Issuer:  (A) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary
in case of any drawing thereunder; (F) the full text of any certificate to
be presented by such beneficiary in case of any drawing thereunder; and
(G) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of
any outstanding Letter of Credit, such L/C Application shall specify in form
and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a
Business Day); (C) the nature of the proposed amendment; and (D) such
other matters as the L/C Issuer may require. 
Additionally, Borrower shall furnish to the L/C Issuer and
Agent such other documents and information pertaining to such requested
Letter of Credit issuance or amendment, including any Issuer Documents, as the
L/C Issuer or Agent may require.

 

(ii)           Promptly after receipt of any L/C Application at the address
set forth in Section 10.2 for receiving L/C Applications and related
correspondence, the L/C Issuer will confirm with Agent (by telephone or in
writing) that Agent has received a copy of such L/C Application from Borrower
and, if not, the L/C Issuer will provide Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Lender, Agent or any Loan Party, at least one Business Day
prior to the requested date of issuance or amendment of the applicable Letter
of Credit, that one or more applicable conditions in Article IV shall not then
be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer
shall, on

 

28

 

the requested date, issue a Letter of Credit for the account of
Borrower (or the applicable Subsidiary)
or enter into the applicable amendment, as the case may be, in each case in
accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter
of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s Pro
Rata Share times the amount of such Letter of Credit.

 

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

 

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

 

(v)           If any Letter of Credit contains provisions providing for
automatic reinstatement of the stated amount after any drawing thereunder,
(A) unless otherwise directed by the L/C Issuer, Borrower shall not be
required to make a specific request to the L/C Issuer to permit such
reinstatement, and (B) Agent and the Lenders hereby authorize and direct
the L/C Issuer to permit such automatic reinstatement, whether or not a Default
then exists, unless the L/C Issuer has received a notice (which may be by
telephone or in writing) on or before the day that is two Business Days before
the reinstatement date from Agent, the Required

 

29

 

Lenders or any Loan Party that one or more of the applicable conditions
specified in Section 4.2 is not then satisfied and directing the L/C
Issuer to cease permitting such automatic reinstatement of such Letter of
Credit.

 

(c)           Drawings and Reimbursements;
Funding of Participations.

 

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

 

(ii)           Each Lender (including Lender acting as L/C Issuer) shall
upon any notice pursuant to Section 2.3(c)(i) make funds available to
Agent for the account of the L/C Issuer at the Agent’s Office in an amount
equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m.
on the Business Day specified in such notice by Agent, whereupon, subject to
the provisions of Section 2.3(c)(iii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to Borrower in such
amount.  Agent shall remit the funds so
received to the L/C Issuer.

 

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

 

30

 

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

 

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

 

(vi)          If any Lender fails to make available to Agent for the
account of the L/C Issuer any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.3(c) by the time
specified in Section 2.3(c)(ii), the L/C Issuer shall be entitled to
recover from such Lender (acting through Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the Federal Funds Rate from time to time in effect.  A certificate of the L/C Issuer submitted to
any Lender (through Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.

 

(d)          Repayment of Participations.

 

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

 

(ii)           If any payment received by Agent for the account of the L/C
Issuer pursuant to Section 2.3(c)(i) is required to be returned under
any of the circumstances described in Section 10.6 (including pursuant
to any settlement entered into by the L/C Issuer in its discretion), each
Lender shall pay to Agent

 

31

 

for the account of the L/C Issuer its Pro Rata Share thereof on demand
of Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

(f)            Role of L/C Issuer.  Each Lender and Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or inquire as to the validity or accuracy of any such document
or the authority of the Person executing or delivering any such document.  None of the L/C Issuer, any Agent-Related
Person nor any of the respective correspondents, participants or assignees of
the L/C Issuer shall be liable to any Lender for (i) any action taken or
omitted in connection herewith at the request or with the approval of Lenders
or the Required Lenders, as applicable; (ii) any action taken or omitted
in the absence of gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or L/C Application.  Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement.  None of the L/C
Issuer, any Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the L/C Issuer, shall be liable or responsible for
any of the matters described in clauses (i) through (v) of Section 2.3(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by Borrower
which Borrower proves were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit.  In furtherance and not in limitation of the
foregoing, the L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral.  Upon the request of Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as
of the day that is thirty days prior to the Maturity Date, any Letter of Credit
for any reason remains outstanding and partially or wholly undrawn, Borrower
shall immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations (in an amount equal to such Outstanding Amount determined as of the
date of such L/C Borrowing or the day that is thirty days prior to the Maturity
Date, as the case may be).  Sections
2.3(a), 2.5 and 8.2(c) set forth certain additional requirements to
deliver Cash Collateral hereunder.  For
purposes hereof, “Cash Collateralize”
means to pledge and deposit with or deliver to Agent, for the benefit of the
L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to Agent and the L/C Issuer (which documents are hereby consented
to by Lenders).  Derivatives of such term
have corresponding meanings.  Borrower
hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America.

 

33

 

(h)           Applicability of ISP98 and UCP.  Unless otherwise expressly
agreed by the L/C Issuer and Borrower when a Letter of Credit is issued,
(i) the rules of the ISP shall apply to each standby Letter of Credit, and
(ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce
(the “ICC”) at the time of issuance shall
apply to each commercial Letter of Credit.

 

(i)            L/C Fees.  Borrower shall pay to Agent for the account
of each Lender in accordance with its Pro Rata Share an L/C fee (the “L/C Fee”) (i) for each
commercial Letter of Credit equal to the then applicable commercial letter of
credit fees of the L/C Issuer then in effect, and (ii) for each standby
Letter of Credit equal to the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit).  L/C Fees shall be (i) computed on a
quarterly basis in arrears and (ii) due and payable on the first Business
Day after the end of each March, June, September and December, commencing with
the first such date to occur after the issuance of such Letter of Credit, on
the L/C Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily maximum amount of each standby Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of
Default exists, all L/C Fees shall accrue at the Default Rate.

 

(j)            Fronting Fee and Documentary
and Processing Charges Payable to L/C Issuer.  During the time that there are two or more
Lenders party to this Agreement, Borrower shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter of Credit
in the amounts equal to 1/8 of 1% per annum, payable on the actual daily
maximum amount available to be drawn under such Letter of Credit (whether or
not such maximum amount is then in effect under such Letter of Credit).  Such fronting fee shall be due and payable on
the first Business Day after the end of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, on the L/C
Expiration Date and thereafter on demand. 
In addition, without regard to the number of Lenders party to this
Agreement, Borrower shall pay directly to the L/C Issuer for its own account
the customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of credit
as from time to time in effect.  Such
individual customary fees and standard costs and charges are due and payable on
demand and are nonrefundable.

 

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

 

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

 

2.4          Intentionally Deleted.

 

34

 

2.5          Prepayments.

 

(a)           Voluntary
Prepayments.  Borrower may, upon
notice to Agent, at any time or from time to time voluntarily prepay Loans in
whole or in part without premium or penalty; but with accrued interest thereon
and any amounts due under Section 3.5, provided that (i) such
notice must be received by Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans or IBOR
Rate Loans and (B) on the date of prepayment of Base Rate Loans;
(ii) any prepayment of Eurodollar Rate Loans or IBOR Rate Loans shall be
in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess
thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid.  Agent will promptly notify each
Lender of its receipt of each such notice, and of the amount of such Lender’s
Pro Rata Share of such prepayment.  If
such notice is given by Borrower, Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.  Any prepayment of a
Eurodollar Rate Loan or IBOR Rate Loan shall be accompanied by all accrued
interest thereon, together with any additional amounts required pursuant to Section
3.5.  Each such prepayment shall be
applied to the Loans of Lenders in accordance with their respective Pro Rata
Shares.

 

(b)           Intentionally Deleted.

 

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

 

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

 

(i)            Mandatory
Prepayments and Reductions From Net Asset Sale Proceeds.  No later than the date of receipt by Borrower
or any of its Subsidiaries of any Net Asset Sale Proceeds in respect of any
Asset Sale, Borrower shall either (1) prepay Loans and/or permanently
reduce the Aggregate Commitments in accordance with Section 2.5(e)(ii),
in each case, in an aggregate amount equal to such Net Asset Sale Proceeds or
(2), so long as no Default or Event of Default shall have occurred and be
continuing and to the extent that the aggregate Net Asset Sale Proceeds from
the Closing Date through the date of determination that are so reinvested or
proposed to be so reinvested under this Section 2.5(d)(i) (together
with the aggregate Net Insurance/Condemnation Proceeds similarly applied from
the Closing Date through the date of determination under

 

35

 

Section 2.5(d)(ii) or Section 6.6(b)(ii))
do not exceed $1,500,000, deliver to Agent an officer’s certificate setting
forth (x) that portion of such Net Asset Sale Proceeds that Borrower or
such Subsidiary intends to reinvest in equipment or other productive assets of
the general type used in the business of Borrower and its Subsidiaries within
180 days of such date of receipt and (y) the proposed use of such portion
of the Net Asset Sale Proceeds and such other information with respect to such
reinvestment as Agent may reasonably request, and Borrower shall, or shall
cause one or more of its Subsidiaries to, promptly and diligently apply such
portion to such reinvestment purposes; provided, however, that, pending such
reinvestment, such portion of the Net Asset Sale Proceeds shall be applied to
prepay outstanding Loans (without a reduction in the Aggregate Commitments) to
the full extent thereof.  In addition,
Borrower shall, no later than 180 days after receipt of such Net Asset Sale
Proceeds that have not theretofore been applied to the Obligations hereunder or
that have not been so reinvested as provided above, make an additional
prepayment of the Loans (and/or the Aggregate Commitments shall be permanently
reduced) as set forth above in the full amount of all such Net Asset Sale
Proceeds.

 

(ii)           Prepayments
and Reductions from Net Insurance/Condemnation Proceeds.  No later than three (3) Business Days
following the date of receipt by Agent, Borrower or any of its Subsidiaries of
any Net Insurance/Condemnation Proceeds that are required to be applied to
prepay the Loans and/or reduce the Aggregate Commitments pursuant to Section
6.6(b), Borrower shall either (1) prepay Loans and/or permanently
reduce the Aggregate Commitments in accordance with Section 2.5(e)(ii),
in each case, in an aggregate amount equal to such Net Insurance/Condemnation
Proceeds or (2), so long as no Default or Event of Default shall have occurred
and be continuing and to the extent that the aggregate Net
Insurance/Condemnation Proceeds from the Closing Date through the date of
determination that are so reinvested or proposed to be so reinvested under this
Section 2.5(d)(ii) or under Section 6.6(b)(ii)
(together with the aggregate Net Asset Sale Proceeds similarly applied from the
Closing Date through the date of determination under Section 2.5(d)(i))
do not exceed $1,500,000, deliver to Agent an officer’s certificate setting
forth (x) that portion of such Net Insurance/Condemnation Proceeds that
Borrower or such Subsidiary intends to reinvest in equipment or other
productive assets of the general type used in the business of Borrower and its
Subsidiaries within 180 days of such date of receipt and (y) the proposed
use of such portion of the Net Insurance/Condemnation Proceeds and such other
information with respect to such reinvestment as Agent may reasonably request,
and Borrower shall, or shall cause one or more of its Subsidiaries to, promptly
and diligently apply such portion to such reinvestment purposes; provided,
however, that, pending such reinvestment, such portion of the Net
Insurance/Condemnation Proceeds shall be applied to prepay outstanding Loans
(without a reduction in the Aggregate Commitments) to the full extent
thereof.  In addition, Borrower shall, no
later than 180 days after receipt of such Net Insurance/Condemnation Proceeds
that have not theretofore been applied to the Obligations hereunder or that
have not been so reinvested as provided above, make an additional prepayment of
the Loans

 

36

 

(and/or the
Aggregate Commitments shall be permanently reduced) as set forth above in the
full amount of all such Net Insurance/Condemnation Proceeds.

 

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

 

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

 

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

 

2.6          Termination
or Reduction of Commitments. 
Borrower may, upon notice to Agent, terminate the Aggregate Commitments,
or from time to time permanently reduce the Aggregate Commitments; provided
that (i) any such notice shall be received by Agent not later than 11:00
a.m. five Business Days prior to the date of termination or reduction,
(ii) any such partial reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof,
(iii) Borrower shall not terminate or reduce the Aggregate Commitments if,
after giving effect thereto and to any concurrent prepayments hereunder, the Total
Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving
effect to any reduction of the Aggregate Commitments, the L/C Sublimit exceeds
the amount of the Aggregate Commitments, such Sublimit shall be automatically
reduced by the amount of such excess. 
Agent will promptly notify the Lenders of any such notice of termination
or reduction of the Aggregate Commitments. 
Any reduction of the Aggregate Commitments shall be applied to the
Commitment of each Lender according to its Pro Rata Share.  All fees accrued until the effective date of
any termination of the Aggregate Commitments shall be paid on the effective
date of such termination.

 

37

 

2.7          Repayment
of Loans.  Borrower shall repay to
Lenders on the Maturity Date the aggregate principal amount of Loans
outstanding on such date.

 

2.8          Interest.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

(b)           Agent’s Fees.  Borrower shall pay to Agent for Agent’s own
account, fees in the amounts and at the times specified in the letter
agreement, dated as of January 31, 2005 (the “Agent Fee
Letter”), between Borrower and Agent.  Such fees shall be fully earned when paid and
shall be nonrefundable for any reason whatsoever.

 

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

 

2.11        Evidence
of Debt.

 

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

 

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

 

39

 

2.12        Payments
Generally.

 

(a)(i)        All payments to be made by
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall
be made to Agent, for the account of the respective Lenders to which such
payment is owed, at the Agent’s Office in Dollars and in immediately available
funds not later than 12:00 noon on the date specified herein.  Agent will promptly distribute to each Lender
its Pro Rata Share (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending
Office.  All payments received by Agent after
12:00 noon shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue.

 

(a)(ii)On each
date when the payment of any principal, interest or fees are due hereunder or
under any Note, Borrower agrees to maintain on deposit in an ordinary checking
account maintained by Borrower with Agent (as such account shall be designated
by Borrower in a written notice to Agent from time to time, the “Borrower Account”) an amount
sufficient to pay such principal, interest or fees in full on such date.  Borrower hereby authorizes Agent (A) to
deduct automatically all principal, interest or fees when due hereunder or
under any Note from the Borrower Account, and (B) if and to the extent any
payment of principal, interest or fees under this Agreement or any Note is not
made when due to deduct any such amount from any or all of the accounts of
Borrower maintained at Agent.  Agent
agrees to provide written notice to Borrower of any automatic deduction made
pursuant to this Section 2.12(a)(ii) showing in reasonable detail the
amounts of such deduction.  Lenders agree
to reimburse Borrower based on their Pro Rata Share for any amounts deducted
from such accounts in excess of amount due hereunder and under any other Loan
Documents.

 

(a)           If any payment to be
made by Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

 

(b)           Unless Borrower or any
Lender has notified Agent, prior to the date any payment is required to be made
by it to Agent hereunder, that Borrower or such Lender, as the case may be,
will not make such payment, Agent may assume that Borrower or such Lender, as
the case may be, has timely made such payment and may (but shall not be so
required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto.  If and to the
extent that such payment was not in fact made to Agent in immediately available
funds, then:

 

(i)            if
Borrower failed to make such payment, each Lender shall forthwith on demand
repay to Agent the portion of such assumed payment that was made available to
such Lender in immediately available funds, together with interest thereon in
respect of each day from and including the date such amount was made available
by Agent to such Lender to the date such amount is repaid to Agent in
immediately available funds at the Federal Funds Rate from time to time in effect;
and

 

(ii)           if
any Lender failed to make such payment, such Lender shall forthwith on demand
pay to Agent the amount thereof in immediately available funds, together with
interest thereon for the period from the date such amount was made available by
Agent to Borrower to the date such amount is recovered by

 

40

 

Agent (the “Compensation Period”) at a rate per
annum equal to the Federal Funds Rate from time to time in effect. If such
Lender pays such amount to Agent, then such amount shall constitute such Lender’s
Loan included in the applicable Borrowing. 
If such Lender does not pay such amount forthwith upon Agent’s demand
therefor, Agent may make a demand therefor upon Borrower, and Borrower shall
pay such amount to Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing.  Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment or to prejudice any rights which Agent or Borrower may have against
any Lender as a result of any default by such Lender hereunder.

 

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

 

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

 

(d)           The obligations of the
Lenders hereunder to make Loans and to fund participations in Letters of Credit
are several and not joint.  The failure
of any Lender to make any Loan or to fund any such participation on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan or purchase its participation.

 

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

 

2.13        Sharing
of Payments.  If, other than as
expressly provided elsewhere herein, any Lender shall obtain on account of the
Loans made by it, or the participations in L/C Obligations held by it, any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify
Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them and/or such subparticipations in the
participations in L/C Obligations held by them, as the case may be, as shall be
necessary to cause such purchasing Lender to share the excess payment in
respect of such Loans or such participations, as the case may be, pro rata with
each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from the purchasing Lender under
any of the circumstances described in Section 10.6 (including pursuant
to any settlement entered into by the purchasing Lender in its discretion),
such purchase shall to that extent be rescinded and each other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together with
an amount equal to such paying Lender’s ratable share (according to the
proportion of (i) the amount of such paying Lender’s required repayment to
(ii) the total amount so

 

41

 

recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered, without further interest
thereon.  Borrower agrees that any Lender
so purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.9) with respect to such participation
as fully as if such Lender were the direct creditor of Borrower in the amount
of such participation.  Agent will keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section and will in each case
notify the Lenders following any such purchases or repayments.  Each Lender that purchases a participation
pursuant to this Section shall from and after such purchase have the right to
give all notices, requests, demands, directions and other communications under
this Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Lender were the original owner of the
Obligations purchased.

 

ARTICLE III.        TAXES, YIELD PROTECTION
AND ILLEGALITY

 

3.1          Taxes.

 

(a)           Any and all payments by
Borrower to or for the account of Agent or any Lender under any Loan Document
shall be made free and clear of and without deduction for any and all present
or future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto,
excluding, in the case of Agent and each Lender, taxes imposed on or measured
by its overall net income, and franchise taxes imposed on it (in lieu of net
income taxes), by the jurisdiction (or any political subdivision thereof) under
the Laws of which Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”).  If Borrower shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Loan Document
to Agent or any Lender, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), each of Agent and
such Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions,
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable Laws, and (iv)
within 30 days after the date of such payment, Borrower shall furnish to Agent
(which shall forward the same to such Lender) the original or a certified copy
of a receipt evidencing payment thereof.

 

(b)           In addition, Borrower
agrees to pay any and all present or future stamp, court or documentary taxes
and any other excise or property taxes or charges or similar levies which arise
from any payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as “Other Taxes”).

 

(c)           If Borrower shall be
required to deduct or pay any Taxes or Other Taxes from or in respect of any
sum payable under any Loan Document to Agent or any Lender (excluding Taxes for
which Borrower is not responsible under Section 3.1(e)), Borrower
shall

 

42

 

also pay to Agent or to such
Lender, as the case may be, at the time interest is paid, such additional
amount that Agent or such Lender specifies is necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that Agent or such Lender would have received if such
Taxes or Other Taxes had not been imposed.

 

(d)           Borrower agrees to
indemnify Agent and each Lender for (i) the full amount of Taxes and Other
Taxes (including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section but excluding Taxes for
which Borrower is not responsible under Section 3.1(e)) paid by Agent
and such Lender, (ii) amounts payable under Section 3.1(c) and
(iii) any liability (including additions to tax, penalties, interest and
expenses) arising therefrom or with respect thereto, in each case whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. 
Payment under this subsection (d) shall be made within 30 days after the
date Lender or Agent makes a demand therefor.

 

(e)           For any period with
respect to which a Lender has failed to provide Borrower or Agent with the
appropriate form as required by Section 10.19 (whether or not such Lender is
lawfully able to do so, unless such failure is due to a change in treaty, law
or regulation occurring subsequent to the date on which such form originally
was required to be provided), such Lender shall not be entitled to
indemnification under this Section 3.1 with respect to Taxes imposed on such
Lender; provided that if a Lender, which is otherwise exempt from withholding
tax, becomes subject to Taxes because of its failure to deliver a form required
hereunder, Borrower shall take such steps as such Lender shall reasonably
request, at the Lender’s expense, to assist such Lender to recover such Taxes.

 

3.2          Illegality.  If any Lender determines that any Law has
made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans or IBOR Rate Loans, or to determine or charge
interest rates based upon the Eurodollar Rate or IBOR Rate, then, on notice
thereof by such Lender to Borrower through Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or IBOR Rate Loans or to convert Base
Rate Loans to Eurodollar Rate Loans or IBOR Rate Loans shall be suspended until
such Lender notifies Agent and Borrower that the circumstances giving rise to
such determination no longer exist.  Upon
receipt of such notice, Borrower shall, upon demand from such Lender (with a
copy to Agent), prepay or, if applicable, convert all Eurodollar Rate Loans or
IBOR Rate Loans of such Lender to Base Rate Loans, either on the last day of
the Interest Period therefor, if such Lender may lawfully continue to maintain
such Eurodollar Rate Loans or IBOR Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans or
IBOR Rate Loans.  Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the
amount so prepaid or converted and all amounts due under Section 3.5 in
accordance with the terms thereof due to such prepayment or conversion.  Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

 

3.3          Inability
to Determine Rates.  If Agent
determines in connection with any request for a Eurodollar Rate Loan or IBOR
Rate Loan or a conversion to or continuation thereof

 

43

 

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

 

3.4          Increased
Cost and Reduced Return; Capital Adequacy.

 

(a)           If any Lender
determines that as a result of the introduction of or any change in or in the
interpretation of any Law, or such Lender’s compliance therewith, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans or IBOR Rate Loans (as the case
may be) or issuing or participating in Letters of Credit, or a reduction in the
amount received or receivable by such Lender in connection with any of the
foregoing (excluding for purposes of this subsection (a) any such
increased costs or reduction in amount resulting from (i) Taxes or Other
Taxes (as to which Section 3.1 shall govern), (ii) changes in the
basis of taxation of overall net income or overall gross income by the United
States or any foreign jurisdiction or any political subdivision of either thereof
under the Laws of which such Lender is organized or has its Lending Office, and
(iii) reserve requirements utilized in the determination of the Eurodollar
Rate or IBOR Rate), then from time to time within 5 days after demand of such
Lender (with a copy of such demand to Agent), Borrower shall pay to such Lender
such additional amounts as will compensate such Lender for such increased cost
or reduction.  If as a result of the
foregoing, Borrower is required to pay to any Lender any additional amounts, such
Lender agrees to use commercially reasonable efforts to designate a different
Lending Office if such designation will avoid such increased cost or reduced
return and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender.

 

(b)           If any Lender
determines that the introduction of any Law regarding capital adequacy or any
change therein or in the interpretation thereof, or compliance by such Lender
(or its Lending Office) therewith, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender’s obligations hereunder (taking into
consideration its policies with respect to capital adequacy and such Lender’s
desired return on capital), then from time to time within 5 days after demand
of such Lender (with a copy of such demand to Agent), Borrower shall pay to
such Lender such additional amounts as will compensate such Lender for such
reduction.

 

44

 

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

 

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

 

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

 

3.6          Matters
Applicable to all Requests for Compensation.  A certificate of Agent or any Lender claiming
compensation under this Article III and setting forth the additional
amount or amounts to be paid to it hereunder and setting forth an explanation
therefor shall be conclusive in the absence of manifest error.  In determining such amount, Agent or such
Lender may use any reasonable averaging and attribution methods.

 

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

 

ARTICLE IV.        CONDITIONS PRECEDENT TO
CREDIT EXTENSIONS

 

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

 

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

 

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

 

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

 

45

 

(iii)          such
certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party as Agent may
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
this Agreement and the other Loan Documents to which such Loan Party is a
party;

 

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

 

(v)           a
favorable opinion of counsel to the Loan Parties substantially in the form of Exhibits
K-1 and K-2 annexed hereto acceptable to Agent addressed to Agent
and each Lender, as to the matters set forth concerning the Loan Parties and
the Loan Documents in form and substance satisfactory to Agent;

 

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

 

(vii)         a
certificate signed by a Responsible Officer of Borrower certifying
(A) that the conditions specified in Sections 4.2(a) and (b)
have been satisfied, and (B) other than the filing of the lawsuit
described in item number 1 in Schedule 5.6, that there has been no event
or circumstance since December 31, 2003 that has had or could be
reasonably expected to have, either individually or in the aggregate, a
Material Adverse Effect;

 

(viii)        evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect;

 

(ix)           a
duly completed Compliance Certificate as of the last day of the fiscal quarter
of Borrower most recently ended prior to the Closing Date, signed by a
Responsible Officer of Borrower, which Compliance Certificate shall show that
Borrower is in compliance with all of the covenants as of such last day;

 

(x)            evidence
that all commitments under the Business Loan Agreement dated August 29,
2002 among Borrower, Comerica Bank, as agent and a syndicate of lenders (the “Existing Credit Agreement”) have
been or concurrently with the Closing Date are being terminated, and all
outstanding

 

46

 

amounts
thereunder paid in full and all Liens securing obligations under the Existing
Credit Agreement have been or concurrently with the Closing Date are being
released;

 

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

 

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

 

(b)           Fees.  Any fees required to be paid on or before the
Closing Date shall have been paid.

 

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

 

(d)           Closing Date.  The Closing Date shall have occurred on or
before January 18, 2005.

 

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

 

4.2          Conditions
to all Credit Extensions.  The
obligation of each Lender to honor any Request for Credit Extension (other than
a conversion or continuation of Loans) is subject to the following conditions
precedent:

 

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

 

(b)           No Default shall exist,
or would result from such proposed Credit Extension.

 

47

 

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

 

(d)           Agent shall have
received, in form and substance satisfactory to it, such other assurances, certificates,
documents or consents related to the foregoing as Agent or the Required Lenders
reasonably may require.

 

Each Request for
Credit Extension submitted by Borrower shall be deemed to be a representation
and warranty that the conditions specified in Sections 4.2(a) and (b)
have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V.         REPRESENTATIONS AND
WARRANTIES

 

Borrower
represents and warrants to Agent and the Lenders that:

 

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

 

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

 

5.3          Governmental
Authorization; Other Consents.  No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by any Loan
Party of this Agreement or any other Loan Document.

 

5.4          Binding
Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.

 

48

 

5.5          Financial
Statements; No Material Adverse Effect.

 

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

 

(b)           The unaudited
consolidated balance sheet of Borrower and its Subsidiaries dated June 30,
2007, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for the fiscal quarter ended on that date
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.

 

(c)           Since December 31,
2006, there has been no event or circumstance, either individually or in the
aggregate, that has had or could reasonably be expected to have a Material
Adverse Effect.

 

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

 

5.7          No
Default.  Neither Borrower nor any
Subsidiary is in default under or with respect to any Contractual Obligation
that could, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

 

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

 

5.9          Environmental
Compliance.  Borrower and its
Subsidiaries conduct in the ordinary course of business a review of the effect
of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof Borrower has
reasonably concluded that, except as specifically disclosed in Schedule 5.9,
such Environmental Laws and

 

49

 

claims could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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

 

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

 

5.12        ERISA
Compliance.

 

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

 

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

 

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

 

50

 

5.13        Subsidiaries.  As of the Closing Date, Borrower has no Subsidiaries
other than those specifically disclosed in Part (a) of Schedule 5.13 and
has no equity investments in any other corporation or entity other than those
specifically disclosed in Part(b) of Schedule 5.13.  Neither the book value nor the fair market
value of the total assets of OSC (without netting against its liabilities and
without taking into account any intercompany loan (if any) receivable by OSC as
of the Closing Date) exceeds $10,000 and OSC does not and will not engage in
any operations or business other than owning its IP Rights. Neither the book
value nor the fair market value of the total assets of any Dormant Foreign
Subsidiary (without netting against its liabilities and without taking into
account any intercompany loan (if any) receivable by such Dormant Foreign
Subsidiary as of the Closing Date) exceeds $100,000 and none of the Dormant
Foreign Subsidiaries engages in or will engage in any operations or business.

 

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

 

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

 

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

 

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

 

5.16        Compliance
with Laws.  Each of Borrower and each
Subsidiary is in compliance in all material respects with the requirements of
all Laws and all orders, writs, injunctions and decrees applicable to it or to
its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either

 

51

 

individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17        Intellectual
Property; Licenses, Etc.

 

(a)           Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses
and other intellectual property rights (collectively, “IP Rights”)
that are reasonably necessary for the operation of their respective businesses,
without conflict with the rights of any other Person;

 

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

 

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

 

5.18        Permitted
Sale.  The Permitted Sale has
occurred.

 

ARTICLE VI.        AFFIRMATIVE COVENANTS

 

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

 

6.1          Financial
Statements.  Deliver to Agent a
sufficient number of copies for delivery by Agent to each Lender, in form and
detail satisfactory to Agent and the Required Lenders:

 

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

 

(b)           as soon as available,
but in any event within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Borrower, a consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations and cash flows for such
fiscal quarter and for the portion of Borrower’s fiscal year then ended,
setting forth in each case in comparative form the figures for

 

52

 

the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of Borrower as fairly presenting the financial condition, results of operations
and cash flows of Borrower and its Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes.

 

6.2          Certificates;
Other Information.  Deliver to Agent
a sufficient number of copies for delivery by Agent to each Lender, in form and
detail satisfactory to Agent and the Required Lenders:

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           of the occurrence of
any Default;

 

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

 

53

 

Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws, that has resulted or
could reasonably be expected to result in a Material Adverse Effect;

 

(c)           of the occurrence of
any ERISA Event; and

 

(d)           of any material change
in accounting policies or financial reporting practices by Borrower or any
Subsidiary.

 

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

 

6.4          Payment
of Obligations.  Pay and discharge as
the same shall become due and payable, all its obligations and liabilities,
including (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon
its property, except for Liens permitted under Section 7.1; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness, except to the extent that (i) such unpaid claims,
obligations and liabilities under clauses (a), (b) and (c) do not exceed
$1,000,000 individually or in the aggregate and (ii) in the case of such
claims under clause (b), such claims, if unpaid, would not become a Lien that
is not permitted under Section 7.1.

 

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

 

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

 

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

 

(b)           Application of Net
Insurance/Condemnation Proceeds.

 

54

 

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

 

(ii)           Net Insurance/Condemnation
Proceeds Received by Borrower.  Upon receipt by
Borrower or any of its Subsidiaries of any Net Insurance/Condemnation Proceeds
other than from business interruption insurance, (a) so long as no Event
of Default or Default shall have occurred and be continuing, Borrower shall, or
shall cause one or more of its Subsidiaries to, promptly and diligently apply
such Net Insurance/Condemnation Proceeds to pay or reimburse the costs of
repairing, restoring or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received or, to the extent not so applied,
to either (1) prepay the Loans (and/or the Aggregate Commitments shall be
reduced) as provided in Section 2.5(d)(ii), or (2) so long as no
Default or Event of Default shall have occurred and be continuing and to the
extent that aggregate Net Insurance/Condemnation Proceeds so reinvested or
proposed to be reinvested under this Section 6.6(b)(ii) or Section 2.5(d)(ii)
(together with Net Asset Sale Proceeds similarly applied from the Closing Date
through the date of determination under Section 2.5(d)(i)) from the
Closing Date through the date of determination do not exceed $1,500,000, deliver
to Agent an officer’s certificate setting forth (x) that portion of such
Net Insurance/Condemnation Proceeds that Borrower or such Subsidiary intends to
reinvest in equipment or other productive assets of the general type used in
the business of Borrower and its Subsidiaries within 180 days of such date of
receipt and (y) the proposed use of such portion of the Net
Insurance/Condemnation Proceeds and such other information with respect to such
reinvestment as Agent may reasonably request, and Borrower shall, or shall
cause one or more of its Subsidiaries to, promptly and diligently apply such
portion to such reinvestment purposes; provided, however, that, pending such
reinvestment, such portion of the Net Insurance/Condemnation Proceeds shall be
applied to prepay outstanding Loans (without a reduction in the Aggregate
Commitments) to the full extent thereof, and (b) if an Event of Default or
Default shall have occurred and be continuing, Borrower shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans (and/or
the Aggregate Commitments shall be reduced) as provided in Section
2.5(d)(ii); provided that if Borrower makes a written request to
Lenders through Agent

 

55

 

requesting that it not be required to apply such an amount to prepay
the Loans (and/or to reduce the Aggregate Commitments), then Borrower shall not
be required to apply such an amount to prepay the Loans (and/or to reduce the
Aggregate Commitments) so long as Required Lenders do not decline such a
request in writing within 30 days of such request.

 

6.7          Maintenance of Insurance.  Maintain with financially sound and reputable
insurance companies not Affiliates of Borrower, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and
in such amounts (after giving effect to any self-insurance compatible with the
following standards) as are customarily carried under similar circumstances by
such other Persons, in form and substance reasonably acceptable to the Lenders,
and providing for not less than 30 days’ prior notice to Agent of termination,
lapse or cancellation of such insurance.

 

6.8          Compliance with Laws and
Contractual Obligations.

 

(a)           Comply in all material respects
with the requirements of all Laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except in such
instances in which (i) such requirement of Law or order, write, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (ii) the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

 

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

 

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

 

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

 

56

 

6.11        Use of Proceeds.  Use the proceeds of the Credit Extensions for
general corporate purposes (including, without limitation, capital expenditures
and Permitted Acquisitions) not in contravention of any Law or of any Loan
Document.

 

6.12        Financial Covenants.

 

(a)           Net Worth.  Maintain on a consolidated basis Net Worth
equal to at least the sum of the following:

 

(i)            Eighty Million Dollars
($80,000,000); plus

 

(ii)           the sum of 50% of net income after income taxes (without
subtracting losses) earned in each fiscal year ending after December 31, 2006; plus

 

(iii)          the sum of 75% of the net proceeds from any equity
securities issued after December 31, 2006 and on or before the last day of the
most recently ended fiscal quarter; minus

 

(iv)          (A) up to an aggregate of $13,400,000 in Restricted Payments
made in cash in the fiscal years ending December 31, 2005 and December 31, 2006
to the extent allowed by Section 7.6(d)(i), and (B) up to an aggregate
of $36,600,000 in Restricted Payments made in cash in the period beginning on
January 1, 2007 and ending on the Maturity Date to the extent allowed by Section
7.6(d)(ii).

 

(b)           Funded Debt to EBITDA Ratio.  Maintain on a consolidated basis a Funded
Debt to EBITDA Ratio not exceeding the
ratios indicated for each period specified below:

 

	
  Fiscal quarter ending on

  	
   

  	
  Ratios

  	
   

  
	
  December 31, 2004

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  2.25:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  2.25:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  2.25:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  2.25:1.00

  	
   

  
	
  December 31, 2006 and each fiscal quarter
  thereafter

  	
   

  	
  2.00:1.00

  	
   

  

 

This ratio will be
calculated at the end of each reporting period for which this Agreement
requires Borrower to deliver financial statements, using the results of the
four-fiscal quarter period ending with that reporting period.  Notwithstanding the foregoing, if the
Borrower issues Subordinated Indebtedness on terms and conditions acceptable to
Agent and the Required

 

57

 

Lenders in their sole discretion in accordance with Section
7.3(e), (i) Borrower shall maintain on a consolidated basis a Senior
Debt to EBITDA Ratio not exceeding 2.00:1.00 for all periods thereafter and
(ii) Borrower shall maintain on a consolidated basis a Funded Debt to
EBITDA Ratio not exceeding the ratios indicated for each period specified below
occurring after such issuance (in lieu of the ratios specified above):

 

	
  Fiscal quarter ending on

  	
   

  	
  Ratios

  	
   

  
	
  December 31, 2004

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2005

  	
   

  	
  3.25:1.00

  	
   

  
	
  June 30, 2005

  	
   

  	
  3.25:1.00

  	
   

  
	
  September 30, 2005

  	
   

  	
  3.25:1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2006 and each fiscal quarter
  thereafter

  	
   

  	
  3.00:1.00

  	
   

  

 

(c)           Fixed Charge Coverage Ratio.  Commencing with the fiscal quarter ending on
December 31, 2005 and for each fiscal quarter thereafter, maintain on a
consolidated basis a Fixed Charge Coverage Ratio of at least level 1.50:1.00.
This ratio will be calculated at the end of each reporting period for which
this Agreement requires Borrower to deliver financial statements, using the
results of the four-fiscal quarter period ending with that reporting period.  The current portion of long-term liabilities
will be measured as of the last day of
the calculation period.

 

6.13        Additional Guarantors.  Notify Agent at the time that any Person
becomes a Subsidiary, and promptly thereafter (and in any event within 30
days), cause such Person to (a) become a Guarantor by executing and delivering
to Agent a counterpart of the Guaranty or such other document as Agent shall
deem appropriate for such purpose, (b) deliver to Agent documents of the types
referred to in clauses (iii) and (iv) of Section 4.1(a) and (c)
favorable opinions of counsel to the Loan Parties and such Person addressed to
Agent and Lenders (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
this Section 6.13) all in form, content and scope reasonably
satisfactory to the Agent.

 

ARTICLE VII.      NEGATIVE COVENANTS

 

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

 

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

 

(a)           Liens pursuant to any Loan
Document;

 

(b)           Liens existing on the date
hereof and listed on Schedule 7.1 and any renewals or extensions
thereof, provided that the property covered thereby is not increased and

 

58

 

any renewal or extension of the obligations
secured or benefited thereby is permitted by Section 7.3(b);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.2          Investments.  Make or own any Investments, except:

 

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

 

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

 

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

 

59

 

(d)           Investments consisting of
extensions of credit in the nature of accounts receivable or notes receivable
arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from
financially troubled account debtors to the extent reasonably necessary in
order to prevent or limit loss; and

 

(e)           Guarantees permitted by Section
7.3;

 

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

 

(g)           Investments consisting of
extensions of credit or capital contributions by Borrower to wholly-owned
Subsidiary Guarantors; and

 

(h)           additional Investments not
exceeding at any time an aggregate outstanding amount of $5,000,000.

 

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

 

(a)           Indebtedness under the Loan
Documents;

 

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

 

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

 

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

 

(e)           unsecured Subordinated
Indebtedness of Borrower or any wholly-owned Subsidiary Guarantor in an
aggregate amount not exceeding $5,000,000 so long as (i) after giving
effect thereto, Borrower shall be in pro forma compliance with all of the terms
of this Agreement and (ii) prior to the incurrence of such Subordinated
Indebtedness, Borrower shall have delivered to Agent and Lenders a Compliance
Certificate evidencing such pro forma compliance and Agent and Required Lenders
shall have approved all of the terms and conditions and documents relating to
such Subordinated Indebtedness (which shall include an intercreditor and
subordination agreement with Agent) in their sole discretion;

 

60

 

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

 

(g)           other unsecured Indebtedness
not exceeding $5,000,000 in the aggregate at any time outstanding.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           Dispositions of property by
Borrower to any of its wholly-owned Subsidiary Guarantors or by any Subsidiary
to Borrower or to a wholly-owned Subsidiary Guarantor; provided that if
the transferor of such property is Borrower or a Guarantor, the transferee
thereof must either be Borrower or a wholly-owned Guarantor;

 

(e)           Dispositions permitted by Section
7.4;

 

61

 

(f)            non-exclusive licenses of
immaterial IP Rights in the ordinary course of business and non-exclusive
licenses of IP Rights in the ordinary course of business solely in connection
with cooperative agreements with third parties for further development of such
IP Rights;

 

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

 

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

 

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

 

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

 

(a)           each Subsidiary may make
Restricted Payments to Borrower and to wholly-owned Subsidiary Guarantors (and,
in the case of a Restricted Payment by a non-wholly-owned Subsidiary, to
Borrower and any Subsidiary and to each other owner of capital stock or other
equity interests of such Subsidiary on a pro rata basis based on their relative
ownership interests);

 

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

 

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

 

(d)           so long as no Default or Event
of Default shall have occurred and is continuing or shall be caused thereby,
Borrower may purchase, redeem or otherwise acquire shares of its common stock
or other common equity interests for cash consideration (i) during the fiscal
years ending December 31, 2005 and December 31, 2006, so long as such cash
consideration does not exceed $13,400,000 in the aggregate, and (ii) during the
period beginning on January 1, 2007 and ending on the Maturity Date, so long as
(A) after giving effect to such purchase or redemption, the sum of (I) Borrower’s
Cash or Cash Equivalents plus (II) the sum of the Aggregate Commitments minus
the Total Outstandings is greater than or equal to $15,000,000, and (B) Agent
shall have received a certificate executed by a Responsible Officer of Borrower
as to the same.

 

7.7          Change in Nature of Business.  Engage in any material line of business
substantially different from those lines of business conducted by Borrower and
its Subsidiaries

 

62

 

on the date hereof or any business
substantially related or incidental thereto. 
Notwithstanding anything in this Agreement to the contrary, OSC shall
not at any time engage in any business other than owning its IP Rights and none
of the Dormant Foreign Subsidiaries shall engage in any business.

 

7.8          Transactions with Affiliates.  Enter into any transaction of any kind with
any Affiliate of Borrower, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to Borrower
or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate, provided that the foregoing restriction shall not apply to
(i) transactions between or among Borrower and any of its wholly-owned
Subsidiary Guarantors or between and among any wholly-owned Subsidiary
Guarantors, (ii) customary indemnification of directors, officers and
employees of Borrower and its Subsidiaries, (iii) loans and advances
permitted by Section 7.2(b), or (iv) Restricted Payments permitted by Section
7.6.

 

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

 

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

 

63

 

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

 

ARTICLE VIII.     EVENTS OF DEFAULT AND
REMEDIES

 

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

 

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

 

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

 

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

 

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

 

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

 

64

 

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

 

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

 

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

 

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

 

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

 

65

 

(j)            Invalidity of Loan Documents.  Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

provided,
however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation
of the L/C Issuer to make L/C Credit Extensions shall automatically terminate,
the unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case without further act of Agent
or any Lender.

 

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

 

First,
to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including Attorney Costs and amounts payable under Article
III) payable to

 

66

 

Agent in its capacity as such;

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IX.        AGENT

 

9.1          Appointment and Authorization
Agent.

 

(a)           Each Lender hereby irrevocably
appoints, designates and authorizes Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. 
Notwithstanding any provision to the contrary contained elsewhere herein
or in any other Loan Document, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender or participant,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent.  Without
limiting the generality of the foregoing sentence, the use of the term “agent”
herein and in the other Loan Documents with reference to Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable Law. 
Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

67

 

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

 

9.2          Delegation of Duties.  Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties.  Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.

 

9.3          Liability of Agent.  No Agent-Related Person shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein as determined by a
final non-appealable judgment by a court of competent jurisdiction), or
(b) be responsible in any manner to any Lender or Participant for any
recital, statement, representation or warranty made by any Loan Party or any
officer thereof, contained herein or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender or Participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties, books
or records of any Loan Party or any Affiliate thereof.

 

9.4          Reliance by Agent.

 

(a)           Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to any Loan Party), independent accountants and other experts selected by
Agent.  Agent shall be fully justified in
failing or refusing to take any action under any Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such
action.  Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Required Lenders (or such greater

 

68

 

number of Lenders as may be expressly
required hereby in any instance) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.

 

(b)           For purposes of determining
compliance with the conditions specified in Section 4.1, each Lender
that has signed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless Agent shall have received notice from such Lender prior to the
proposed Closing Date specifying its objection thereto.

 

9.5          Notice of Default.  Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default, except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for
the account of the Lenders, unless Agent shall have received written notice from
a Lender or Borrower referring to this Agreement, describing such Default and
stating that such notice is a “notice of default.”  Agent will notify the Lenders of its receipt
of any such notice.  Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article VIII; provided, however,
that unless and until Agent has received any such direction, Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable or in the best
interest of the Lenders.

 

9.6          Credit Decision; Disclosure of
Information by Agent.  Each Lender acknowledges that no
Agent-Related Person has made any representation or warranty to it, and that no
act by Agent hereafter taken, including any consent to and acceptance of any
assignment or review of the affairs of any Loan Party or any Affiliate thereof,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their
possession.  Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrower and the other Loan Parties hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and the other Loan Parties.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by Agent herein,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the
possession of any Agent-Related Person.

 

69

 

9.7          Indemnification of Agent.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand each
Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan
Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that
no Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities to the extent determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from such Agent-Related Person’s own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. 
Without limitation of the foregoing, each Lender shall reimburse Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower.  The undertaking in this
Section shall survive termination of the Aggregate Commitments, the payment of
all other Obligations and the resignation of Agent.

 

9.8          Agent in its Individual Capacity.  Bank of America and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with each of the Loan
Parties and their respective Affiliates as though Bank of America were not
Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders.  The Lenders acknowledge that,
pursuant to such activities, Bank of America or its Affiliates may receive
information regarding any Loan Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Loan Party
or such Affiliate) and acknowledge that Agent shall be under no obligation to
provide such information to them.  With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Lender and may exercise such rights and
powers as though it were not Agent or the L/C Issuer, and the terms “Lender”
and “Lenders” include Bank of America in its individual capacity.

 

9.9          Successor Agent.  Agent may resign as Agent upon 30 days’
notice to the Lenders; provided that any such resignation by Bank of America
shall also constitute its resignation as L/C Issuer.  If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent
shall be consented to by Borrower at all times other than during the existence
of an Event of Default (which consent of Borrower shall not be unreasonably
withheld or delayed).  If no successor
administrative agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with the Lenders and
Borrower, a successor administrative agent from among the Lenders.  Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Agent, L/C Issuer and the respective terms “Agent” and “L/C Issuer”
shall mean such successor administrative agent, Letter of Credit issuer, and
the retiring Agent’s appointment, powers and

 

70

 

duties as Agent shall be terminated and the
retiring L/C Issuer’s rights, powers and duties as such shall be terminated,
without any other or further act or deed on the part of such retiring L/C
Issuer or any other Lender, other than the obligation of the successor L/C
Issuer to issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or to make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations
of the retiring L/C Issuer with respect to such Letters of Credit.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Article IX and Sections 10.4
and 10.5 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.  If no successor administrative agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.

 

9.10        Agent May File Proofs of Claim.

 

(a)           In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan
Party, Agent (irrespective of whether the principal of any Loan or L/C
Obligation shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether Agent shall have made any demand on
Borrower) shall be entitled and empowered, by intervention in such proceeding
or otherwise

 

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

 

(c)           to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender to make such payments to Agent
and, in the event that Agent shall consent to the making of such payments
directly to the Lenders, to pay to Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Agent and its agents and
counsel, and any other amounts due Agent under Sections 2.9 and 10.4.  Nothing contained herein shall be deemed to
authorize Agent to authorize or consent to or accept or adopt on behalf of any
Lender any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or to authorize Agent to
vote in respect of the claim of any Lender in any such proceeding.

 

9.11        Guaranty Matters.  Each Lender hereby irrevocably authorizes
Agent, at its option and in its discretion, to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a
result of a transaction permitted hereunder. 
Upon

 

71

 

request by Agent at any time, each Lender
will confirm in writing Agent’s authority to release any Guarantor from its
obligations under the Guaranty pursuant to this Section 9.11.

 

ARTICLE X.         MISCELLANEOUS

 

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

 

(a)           waive any condition set forth
in Section 4.1(a) without the written consent of each Lender; provided,
however, in the sole discretion of Agent, only a waiver by Agent shall
be required with respect to immaterial matters or items specified in Section
4.1(a) (iii) or (iv)  with
respect to which Borrower has given assurances satisfactory to Agent that such
items shall be delivered promptly following the Closing Date;

 

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

 

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

 

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

 

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

 

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

 

(g)           release any Guarantor from the
Guaranty without the written consent of each Lender; and,

 

provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by

 

72

 

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

 

10.2        Notices and Other Communications;
Facsimile Copies.

 

(a)           General.  Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). 
All such written notices shall be mailed, certified or registered mail,
faxed or delivered to the applicable address, facsimile number or (subject to
subsection (c) below) electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i)            if to Borrower, Agent and the
L/C Issuer, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 10.2 or to such
other address, facsimile number, electronic mail address or telephone number as
shall be designated by such party in a notice to the other parties; and

 

(ii)           if to any other Lender, to the address, facsimile number,
electronic mail address or telephone number specified in its Administrative
Questionnaire or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such party in a notice to
Borrower, Agent and the L/C Issuer.

 

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

 

(b)           Electronic Communications.  Notices and other communications to Lenders
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent, provided that the foregoing shall not apply to notices to any Lender
pursuant to Article II if such Lender has notified the Agent that it is
incapable of receiving notices under such Article by electronic
communication.  Agent or Borrower may, in
its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved

 

73

 

by it, provided that approval of such
procedures may be limited to particular notices or communications.

 

(c)           Effectiveness of Facsimile
Documents and Signatures.  Loan Documents may be transmitted and/or
signed by facsimile.  The effectiveness
of any such documents and signatures shall, subject to applicable Law, have the
same force and effect as manually-signed originals and shall be binding on all
Loan Parties, Agent and the Lenders. 
Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however,
that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.

 

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

 

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

 

10.4        Attorney Costs, Expenses and
Taxes.  Borrower agrees (a) to pay or reimburse
Agent for all costs and expenses incurred in connection with the development,
preparation, negotiation and execution of this Agreement and the other Loan
Documents and any amendment, waiver, consent or other modification of the
provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse Agent and each Lender for all costs and
expenses incurred in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any “workout”
or restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any Debtor Relief Law), including all Attorney
Costs.  The foregoing costs and expenses
shall include all search, filing, recording, title insurance and appraisal
charges and fees and taxes related thereto, and other out-of-pocket expenses
incurred by Agent and the cost of independent public accountants and other
outside experts retained by Agent or any Lender.  All amounts due under this Section 10.4
shall be payable within ten Business Days after demand therefor.  The agreements in this Section shall survive
the termination of the Aggregate Commitments and repayment of all other Obligations.

 

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10.5        Indemnification by Borrower.  Whether or not the transactions contemplated
hereby are consummated, Borrower shall indemnify and hold harmless each
Agent-Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against any
and all liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (a) the execution,
delivery, enforcement, performance or administration of any Loan Document or
any other agreement, letter or instrument delivered in connection with the
transactions contemplated thereby or the consummation of the transactions
contemplated thereby, (b) any Commitment, Loan or Letter of Credit or the
use or proposed use of the proceeds therefrom (including any refusal by the L/C
Issuer to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (c) any actual or alleged presence or release
of Hazardous Materials on or from any property currently or formerly owned or
operated by Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to Borrower, any Subsidiary or any
other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation
or proceeding) and regardless of whether any Indemnitee is a party thereto (all
the foregoing, collectively, the “Indemnified Liabilities”),
in all cases, whether or not caused by or arising, in whole or in part, out of
the negligence of the Indemnitee; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.  No Indemnitee shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnitee have any liability for
any indirect or consequential damages relating to this Agreement or any other
Loan Document or arising out of its activities in connection herewith or
therewith (whether before or after the Closing Date).  All amounts due under this Section 10.5
shall be payable within ten Business Days after demand therefor.  The agreements in this Section shall survive
the resignation of Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the
other Obligations.

 

10.6        Payments Set Aside.  To the extent that any payment by or on
behalf of Borrower is made to Agent or any Lender, or Agent or any Lender
exercises its right of set-off, and such payment or the proceeds of such
set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by Agent or such Lender in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with any proceeding
under any Debtor Relief Law or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b) each Lender
severally agrees to pay to Agent upon demand its applicable share of any amount
so recovered from or repaid by Agent,

 

75

 

plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

 

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

 

(b)           Any Lender may at any time
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b), participations in
L/C Obligations) at the time owing to it); provided that (i) except
in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender , the aggregate amount of
the Commitment (which for this purpose includes Loans outstanding thereunder)
subject to each such assignment, determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to Agent or, if “Trade
Date” is specified in the Assignment and Assumption, as of the Trade Date,
shall not be less than $5,000,000 unless
each of Agent and, so long as no Event of Default has occurred and is
continuing, Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); (ii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loans or the
Commitment assigned; (iii) any assignment of a Commitment must be approved
by Agent and the L/C Issuer unless the Person that is the proposed assignee is
itself a Lender (whether or not the proposed assignee would otherwise qualify
as an Eligible Assignee); and (iv) the parties to each assignment shall
execute and deliver to Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500.  Subject
to acceptance and recording thereof by Agent pursuant to subsection (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption, the Eligible Assignee thereunder shall be a party to this Agreement
and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 3.1, 3.4, 3.5, 10.4 and 10.5
with respect to facts and circumstances occurring prior to the effective date
of such assignment).  Upon request,
Borrower (at its expense) shall execute and deliver a Note to the

 

76

 

assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

 

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

 

(d)           Any Lender may at any time,
without the consent of, or notice to, Borrower or Agent, sell participations to
any Person (other than a natural person or Borrower or any of Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) Borrower,
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.1 that
directly affects such Participant. 
Subject to subsection (e) of this Section, Borrower agrees that each
Participant shall be entitled to the benefits of Sections 3.1, 3.4
and 3.5 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.9
as though it were a Lender, provided such Participant agrees to be
subject to Section 2.13 as though it were a Lender.

 

(e)           A Participant shall not be
entitled to receive any greater payment under Section 3.1 or 3.4
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the participation
to such Participant is made with Borrower’s prior written consent.

 

(f)            Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal

 

77

 

Reserve Bank; provided that no such
pledge or assignment shall release such Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)           “Eligible
Assignee” as used herein, means (a) a Lender; (b) an
Affiliate of a Lender;  and (c) any
other Person (other than a natural person) approved by (i) Agent and the
L/C Issuer, and (ii) unless an Event of Default has occurred and is
continuing, Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include Borrower or any of Borrower’s Affiliates or
Subsidiaries.

 

(h)           If the consent of Borrower to
an assignment to an Eligible Assignee is required hereunder (including a
consent to an assignment which does not meet the minimum assignment threshold
specified in clause (i) of the proviso to the first sentence of Section
10.7(b)), Borrower shall be deemed to have given its consent five Business
Days after the date notice thereof has been delivered to Borrower by the
assigning Lender (through Agent) unless such consent is expressly refused by
Borrower prior to such fifth Business Day.

 

(i)            Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to subsection (b) above, Bank of America may,
upon 30 days’ notice to Borrower and the Lenders, resign as L/C Issuer.  In the event of any such resignation as L/C
Issuer, Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder; provided, however, that no
failure by Borrower to appoint any such successor shall affect the resignation
of Bank of America as L/C Issuer.  If
Bank of America resigns as L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.3(c)).

 

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

 

78

 

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

 

10.9        Set-off.  In addition to any rights and remedies of the
Lenders provided by law, upon the occurrence and during the continuance of any
Event of Default, each Lender is authorized at any time and from time to time,
without prior notice to Borrower or any other Loan Party, any such notice being
waived by Borrower (on its own behalf and on behalf of each Loan Party) to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit
or the account of the respective Loan Parties against any and all Obligations
owing to such Lender hereunder or under any other Loan Document, now or
hereafter existing, irrespective of whether or not Agent or such Lender shall
have made demand under this Agreement or any other Loan Document and although
such Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness.  Each Lender agrees promptly to notify
Borrower and Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the
validity of such set-off and application.

 

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

 

10.11      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.

 

10.12      Integration.  This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on
the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. 
In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document,

 

79

 

the provisions of this Agreement shall
control; provided that the inclusion of supplemental rights or remedies
in favor of Agent or the Lenders in any other Loan Document shall not be deemed
a conflict with this Agreement.  Each
Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.

 

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

 

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

 

10.15      Governing Law; Submission to
Jurisdiction.

 

(a)           THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE;  PROVIDED THAT
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER, AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  BORROWER, AGENT AND EACH LENDER IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY
LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.  BORROWER, AGENT AND EACH LENDER WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER

 

80

 

PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

 

10.16      Waiver of Right to Trial by Jury.

 

EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.17      USA Patriot Act Notice. Each Lender and Agent (for
itself and not on behalf of any Lender) hereby notifies Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies Borrower,
which information includes the name and address of Borrower and other
information that will allow such Lender or Agent, as applicable, to identify
Borrower in accordance with the Act.

 

10.18      Time of the
Essence.  Time is of the essence of the
Loan Documents.

 

10.19      Foreign Lenders.  Each Lender that is a “foreign corporation,
partnership or trust” within the meaning of the Code shall deliver to Agent,
prior to receipt of any payment subject to withholding under the Code (or after
accepting an assignment of an interest herein), two duly signed completed
copies of either Form W-8BEN or any successor thereto (relating to such Person
and entitling it to a complete exemption from withholding on all payments to be
made to such Person by Borrower pursuant to this Agreement) or Form W-8ECI or
any successor thereto (relating to all payments to be made to such Person by
Borrower pursuant to this Agreement) of the IRS or such other evidence
satisfactory to Borrower and Administrative Agent that no withholding under the
federal income tax laws is required with respect to such Person.  Thereafter and from time to time, each such
Person shall (a) promptly submit to Agent such additional duly completed
and signed copies of one of such forms (or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities) as
may then be available under then current United States laws and regulations to
avoid, or such evidence as is satisfactory to Borrower and Agent of any
available exemption from, United States withholding taxes in respect of all
payments to be made to such Person by Borrower pursuant to this Agreement, and
(b) take such steps as shall not be materially disadvantageous to it, in
the reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement
of applicable Laws that Borrower make any deduction or withholding for taxes
from amounts payable to such Person.  If
such

 

81

 

Persons fail to deliver the above forms or
other documentation, then Agent and Borrower may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.  If any Governmental Authority asserts that
Agent did not properly withhold any tax or other amount from payments made in
respect of such Person, such Person shall indemnify Agent therefor, including all
penalties and interest and costs and expenses (including Attorney Costs) of
Agent.  The obligation of Lenders under
this Section shall survive the payment of all Obligations and the resignation
or replacement of Agent.

 

82

 

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

 

 

	
   

  	
  QUIDEL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Radak

  	
   

  
	
   

  	
  Name: John M. Radak

  
	
   

  	
  Title: Chief Financial Officer

  

 

S-1

 

	
   

  	
  BANK OF AMERICA, N.A., as

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geoffrey C. Wilson

  	
   

  
	
   

  	
  Name: Geoffrey C. Wilson

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as a Lender, L/C

  
	
   

  	
  Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geoffrey C. Wilson

  	
   

  
	
   

  	
  Name: Geoffrey C. Wilson

  
	
   

  	
  Title: Vice President

  

 

S-2

 

SCHEDULE 2.1

 

COMMITMENTS

AND PRO RATA SHARES

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Pro Rata Share

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  100.00000000

  	
  %

  
							

 

 

SCHEDULE 10.2

 

AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES

 

QUIDEL CORPORATION:

 

10165
McKellar Court

San Diego, CA
92121

Attention: 
Bill Sommers

Telephone: 
(858) 552-1100

Facsimile:  (858) 453-4388

Electronic
Mail:  bsommers@quidel.com

Website Address:  www.quidel.com

 

AGENT:

 

 

San Francisco, CA 94104

 

Agent’s Office  

(for payments and Requests for Credit Extensions):

Bank of
America, N.A.

315 Montgomery Street, 13th
Floor

Mail Code:
CA5-704-13-11

San Francisco, CA 94104

Attention:  Geoffrey C. Wilson, Vice President

Telephone:  (415) 622-1101

Facsimile:
(415) 622-3377

Email:  geoffrey.c.wilson@bankofamerica.com

 

Bank of America, N.A.

275 Valencia Avenue

Mail Code: CA7-701-02-54

Brea, CA 92823-6340

Attention: Dorothy Verduzco,
Sr. Customer Service Rep

Telephone: (714) 223-8185

Facsimile: (877) 207-0781

Email:
dorothy.verduzco@bankofamerica.com

 

Wiring Instructions:

Bank of America, N.A.

San Francisco, California

ABA #121-000-358

Account No. 15921-83980

Account Name: CLSC Loan
Department #1592

 

1

 

Attention: Dorothy Verduzco

For the Benefit of: Quidel
Corporation

 

Other Notices as Agent:

Bank of
America, N.A.

315 Montgomery Street, 13th
Floor

Mail Code:
CA5-704-13-11

San Francisco, CA 94104

Attention:  Geoffrey C. Wilson, Vice President

Telephone:  (415) 622-1101

Facsimile:
(415) 622-3377

Email:  geoffrey.c.wilson@bankofamerica.com

 

Bank of America, N.A.

275 Valencia Avenue

Mail Code: CA7-701-02-54

Brea, CA 92823-6340

Attention: Dorothy Verduzco,
Sr. Customer Service Rep

Telephone: (714) 223-81875

Facsimile: (877) 207-0781

Email:
dorothy.verduzco@bankofamerica.com

 

 

LENDERS:

 

Bank of
America, N.A.

315 Montgomery Street, 13th
Floor

Mail Code:
CA5-704-13-11

San Francisco, CA 94104

Attention:  Geoffrey C. Wilson, Vice President

Telephone:  (415) 622-1101

Facsimile:
(415) 622-3377

Email:  geoffrey.c.wilson@bankofamerica.com

 

2

 

L/C ISSUER:

Standby
Letters of Credit:

	
  Bank of
  America, N.A.

  
	
  Trade
  Operations-Los Angeles #22621

  
	
  333 S.
  Beaudry Avenue, 19th Floor

  
	
  Mail Code:
  CA9-703-19-23

  
	
  Los Angeles,
  CA 90017-1466

  
	
  Attention:

  	
  Sandra Leon

  
	
   

  	
  Vice
  President

  
	
   

  	
  Telephone:
  213.345.5231

  
	
   

  	
  Facsimile:
  213.345.265

  
	
   

  	
  Electronic
  Mail: Sandra.Leon@bankofamerica.com

  
	
   

  	
   

  
	
  Commercial Letters of Credit

  
	
   

  
	
  Bank of
  America, N.A.

  
	
  Trade
  Operations-Los Angeles

  
	
  333 S.
  Beaudry Avenue, 19th Floor

  
	
  Mail Code:
  CA9-703-19-15

  
	
  Los Angeles,
  CA 90017-1466

  
	
  Attention:

  	
  Peter Hill

  
	
   

  	
  Assistant
  Vice President

  
	
   

  	
  Telephone:
  213.345.6621

  
	
   

  	
  Facsimile:
  213.345.9665

  
	
   

  	
  Electronic
  Mail: Peter.Hill@bankofamerica.com

  

 

3Exhibit 10.2

 

QUIDEL CORPORATION

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

This FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of September 27, 2007 and entered
into by and among QUIDEL CORPORATION, a Delaware corporation (“Borrower”), the financial institutions listed on the
signature pages hereof (“Lenders”), and BANK OF AMERICA, N.A., a
national banking association, as agent for Lenders (in such capacity,  “Agent”), and, for purposes of Section 5
hereof, each of the Guarantors listed on the signature pages hereof (“Guarantors”), and is made with reference to that certain
Credit Agreement dated as of January 31, 2005, as amended to the date hereof by
that certain Limited Waiver of Credit Agreement dated as of May 10, 2005, as
further amended by that certain First Amendment to Credit Agreement dated as of
June 24, 2005, as further amended by that certain Second Amendment to Credit
Agreement dated as of September 1, 2005, and as further amended by that certain
Third Amendment to Credit Agreement dated as of April 5, 2007 (as so
amended, the “Credit Agreement”), by and among
Borrower, Lenders and Agent.  Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.

 

RECITALS

 

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

 

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

 

Section 1.              AMENDMENT
TO THE CREDIT AGREEMENT

 

The
Credit Agreement is hereby amended in its entirety to read in full as set forth
on Exhibit A hereto.

 

Section 2.              CONDITIONS
TO EFFECTIVENESS

 

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

 

A.            On
or before the Fourth Amendment Effective Date, Borrower shall deliver to
Lenders (or to Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Fourth Amendment Effective Date:

 

(i)            A
good standing certificate of Borrower from the Secretary of State of the State
of Delaware, dated a recent date prior to the Fourth Amendment Effective Date;

 

 

(ii)           A
certificate, dated as of the Fourth Amendment Effective Date, of its corporate
secretary or an assistant secretary of Borrower, certifying that there have
been no changes in its Certificate of Incorporation and its Bylaws from the
form of Certificate of Incorporation and Bylaws previously delivered to
Lenders;

 

(iii)          Resolutions of its Board of Directors
approving and authorizing the execution, delivery, and performance of this
Amendment, certified as of the Fourth Amendment Effective Date by its corporate
secretary or an assistant secretary as being in full force and effect without
modification or amendment;

 

(iv)          Signature
and incumbency certificates of its officers executing this Amendment; and

 

(v)           Executed
copies of this Amendment executed by Borrower and each Guarantor.

 

B.            On
or before the Fourth Amendment Effective Date, Borrower shall pay to counsel to
Agent all outstanding Attorney Costs owing to counsel to Agent (including
Attorney Costs incurred in connection with this Amendment).

 

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

 

Section 3.              BORROWER’S
REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

C.            No
Conflict.  The execution and delivery
by each Loan Party of this Amendment and the performance by such Loan Party of
the Amended Agreement and the other Loan Documents do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to such Loan Party or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of such Loan Party or any of its
Subsidiaries or any order, judgment or 

 

2

 

decree of any
court or other agency of government binding on such Loan Party or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
such Loan Party or any of its Subsidiaries, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of such
Loan Party or any of its Subsidiaries, or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of such Loan Party or any of its Subsidiaries.

 

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

 

E.             Binding
Obligation.  This Amendment has been
duly executed and delivered by each Loan Party and this Amendment and the
Amended Agreement are the legally valid and binding obligations of such Loan
Party, enforceable against such Loan Party in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability.

 

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

 

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

 

Section 4.              COLLATERAL

 

A.            Termination.  As of the Fourth Amendment Effective Date, (i)
the Security Agreement, Control Agreements and any and all other agreements,
instruments and documents in effect as of the Fourth Amendment Effective Date pursuant
to which Liens are granted or purported to be granted to Agent in Collateral
securing all or part of the Obligations will be automatically terminated and of
no further force and effect and (ii) all Liens granted by the Loan Documents to
secure the Obligations under the Credit Agreement and other Loan Documents in
effect as of the Fourth Amendment Effective Date will be automatically
terminated and released and of no further force and effect without any further
action by Agent or Lenders.

 

B.            Deliveries
by Agent.  As soon as practicable
after the Fourth Amendment Effective Date, Agent (a) shall deliver to Borrower
(i) a UCC-3 termination statement with respect to each UCC-1 financing statement
filed in connection with Loan Documents (and Agent and each Lender hereby
authorize Borrower to file such UCC-3 termination statements on behalf 

 

3

 

of the Agent and
the Lenders), and (ii) each original certificate (or an affidavit of loss with
respect thereto) set forth on Schedule I hereto and (b) will execute terminations
of the Control Agreements and such other documents and instruments and take
such other actions, in each case as required under Law to release any remaining
Liens on the Collateral.

 

Section 5.              MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

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

 

D.            Applicable
Law.  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF
THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

E.             Counterparts;
Effectiveness.  This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 
This Amendment (other than the provisions of 

 

4

 

Section 1
hereof, the effectiveness of which is governed by Section 2 hereof) shall
become effective upon the execution of a counterpart hereof by Borrower and all
Lenders and receipt by Borrower and Agent of written or telephonic notification
of such execution and authorization of delivery thereof.  This Amendment is an amendment of the Credit
Agreement and is not an amendment and restatement of the Credit Agreement.

 

Section 6.              ACKNOWLEDGEMENT
AND CONSENT BY GUARANTORS

 

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

 

5

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  QUIDEL
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Radak

  	
   

  
	
   

  	
  Name: John M.
  Radak

  
	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  PACIFIC BIOTECH,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Radak

  	
   

  
	
   

  	
  Name: John M.
  Radak

  
	
   

  	
  Title: Secretary
  & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  METRA BIOSYSTEMS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Radak

  	
   

  
	
   

  	
  Name: John M.
  Radak

  
	
   

  	
  Title: Secretary
  & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OSTEO SCIENCES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Radak

  	
   

  
	
   

  	
  Name: John M.
  Radak

  
	
   

  	
  Title: Secretary
  & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LITMUS CONCEPTS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M.
  Radak

  	
   

  
	
   

  	
  Name: John M.
  Radak

  
	
   

  	
  Title: Secretary
  & Treasurer

  

 

[Signature Page to Fourth
Amendment]

 

 

	
   

  	
  BANK OF AMERICA, N.A., as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geoffrey C.
  Wilson

  	
   

  
	
   

  	
  Name: Geoffrey
  C. Wilson

  
	
   

  	
  Title: Vice
  President

  

 

[Signature Page to Fourth
Amendment]

 

 

	
   

  	
  BANK OF AMERICA, N.A., as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Geoffrey C.
  Wilson

  	
   

  
	
   

  	
  Name: Geoffrey
  C. Wilson

  
	
   

  	
  Title: Vice
  President

  

 

[Signature Page to Fourth
Amendment]

 

 

EXHIBIT A

 

CREDIT AGREEMENT

 

See
Attached

 

 

SCHEDULE I

 

ORIGINAL
CERTIFICATES

 

	
  COMPANY

  	
   

  	
  HOLDER

  	
   

  	
  CERTIFICATE

  NO.

  	
   

  	
  SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Litmus Concepts,
  Inc.

  	
   

  	
  Quidel Corporation

  	
   

  	
  C-1

  	
   

  	
  1,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Metra
  Biosystems, Inc.

  	
   

  	
  Quidel Corporation

  	
   

  	
  C-1

  	
   

  	
  1,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Osteo Sciences
  Corporation

  	
   

  	
  Metra Biosystems, Inc.

  	
   

  	
  C-1

  	
   

  	
  100

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pacific Biotech,
  Inc.

  	
   

  	
  Quidel Corporation

  	
   

  	
  C-1

  	
   

  	
  100

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