<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________________
Commission file number 1-7928
BIO-RAD LABORATORIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 94-1381833
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1000 Alfred Nobel Drive, Hercules, CA 94547
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (510) 724-7000
<TABLE>
Securities registered pursuant to Section 12(b) of the Act:
<CAPTION>
Market Value on
Name of Each Exchange Shares Outstanding March 1, 1999 of Stocks
Title of Each Class on Which Registered March 1, 1999 Held by Non-Affiliates
------------------- --------------------- ------------------ ------------------------
<S> <S> <C> <C>
Class A Common Stock
Par Value $1.00 per share American Stock Exchange 9,977,862 $242,363,239
Class B Common Stock
Par Value $1.00 per share American Stock Exchange 2,500,266 $ 10,215,330
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
Documents Incorporated by Reference
Document Form 10-K Parts
_________________________________________ ____________________
(1) Annual Report to Stockholders for the
fiscal year ended December 31, 1999
(specified portions) I, II, IV
(2) Definitive Proxy Statement to be mailed
to stockholders in connection with the
registrant's 2000 Annual Meeting of
Stockholders (specified portions) III
<PAGE>
P A R T I
ITEM 1. BUSINESS
General
Founded in 1957, Bio-Rad Laboratories, Inc. ("Bio-Rad" or the
"Company") was initially engaged in the development and
production of specialty chemicals used in biochemical,
pharmaceutical and other life science research applications. In
1967, the Company entered the field of clinical diagnostics with
the development of its first test kit based on separation
techniques and materials developed for life science research.
Recognizing that the fields of clinical diagnostics and life
science research were evolving toward more automated techniques,
Bio-Rad expanded into the field of analytical and measuring
instrument systems through internal research and development
efforts and acquisitions in the late 1970's and 1980's.
As Bio-Rad broadened its product lines, it also expanded its
geographical market. The Company controls its distribution
channels in thirty countries outside the U.S.A. through
subsidiaries whose primary focus is customer service and
product distribution.
During 1996 and 1997, the Company made five acquisitions. The
assets acquired from Chiron Diagnostics Corporation and Chiron
Corporation on December 5, 1997, enhanced the product line
offering for diagnostic controls. The remaining acquisitions
broadened product line offerings within the Analytical
Instruments and Life Science segments.
On October 1, 1999 Bio-Rad acquired the stock of Pasteur Sanofi
Diagnostics ("PSD") and the rights to certain ancillary assets
for $210 million. PSD was founded by the Institut Pasteur to
commercialize its diagnostic research, and holds certain
exclusive licenses from the Institut Pasteur in the HIV and
infectious disease diagnostic product market. PSD also expanded
the geographic reach and market penetration for the Company's
product particularly in Latin America, Africa and France.
Bio-Rad manufactures and supplies the life science research,
healthcare, analytical chemistry, semiconductor and other markets
with a broad range of products and systems used to separate
complex chemical and biological materials and to identify,
analyze and purify their components.
Description of Business
Business Segments
The Company operates in three industry segments designated Life
Science, Clinical Diagnostics and Analytical Instruments. Each
operates in both the U.S. and international markets. For a
description of business and financial information on industry and
geographic segments, see Note 13 on pages 19 through 22 of
Exhibit 13.1, which is incorporated herein by reference.
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Life Science Segment.
Life science is the study of the characteristics, behavior, and
structure of living organisms and their component systems. Life
science researchers use a variety of products and systems--
including reagents, instruments, software and apparatus-- to
advance the study of life processes, drug discovery and
biotechnology, primarily within a laboratory setting.
We focus on selected segments of the life science market--
laboratory devices, biomaterials, imaging products and microscopy
systems-- for which we estimate 1999 worldwide sales totaled
approximately $1.6 billion. The primary technological
applications that we supply to these segments are diverse and
consist of electrophoresis, image analysis and microplate
readers, chromatography, gene transfer and sample preparation and
amplification. The primary end-users in our sectors of the
market are universities and medical schools, industrial research
organizations, government agencies, pharmaceutical manufacturers
and biotechnology researchers.
Clinical Diagnostics Segment.
The clinical diagnostics industry encompasses a broad array of
technologies incorporated into a variety of tests used to detect,
identify and quantify substances in blood or other bodily fluids
and tissues. The test results are used as aids for medical
diagnosis, detection, evaluation, monitoring and treatment of
diseases and other medical conditions. The bulk of tests are
performed in vitro (literally, "in glass"), while the remainder
consists of in vivo ("in the body") tests. The most common type
of in vitro tests are routine chemistry tests that measure
important health parameters, such as glucose, cholesterol or
sodium, as part of routine blood checks. A second type of
diagnostic tests, on which we focus, are more specialized and
require more sophisticated equipment and materials than do
routine tests. These specialized tests are also lower-volume and
higher-priced than routine tests. We estimate that in 1999,
sales to the global clinical diagnostics industry totaled
approximately $20 billion.
The primary end-users in the areas of the clinical diagnostics
industry we target are hospital laboratories, reference
laboratories, physician office laboratories, government agencies
and other diagnostics manufacturers.
Analytical Instruments Segment.
The analytical instruments segment develops, manufacturers, sells
and services FT-IR spectroscopy systems, semiconductor tests and
manufacturing instruments, spectral reference publications and
software.
Spectrometers measure the infrared spectra of materials,
providing quantitative and qualitative information about their
chemical composition. The primary end-users for spectrometers
are scientists and researchers in a wide range of industries,
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including chemicals, pharmaceuticals, biotechnology and food.
Applications for the products are varied but range from general
analytical purposes to research and development and quality
control.
Our semiconductor division designs, manufactures, and sells
instruments and systems that measure the critical dimensions of
integrated circuits ("ICs") and the characterization of silicon
wafers and compound semiconductor materials. The primary end-
users for these instruments and systems include IC, silicon
substrate and compound semiconductor manufacturers, as well as
universities and research institutes.
The primary end-users for spectral databases, chemists and
spectroscopists, use them to identify a sample through the
spectrum it produces against a spectra of known compounds. A
variety of market segments use these products, including the
chemical, pharmaceutical, biotechnology, forensic and
environmental chemistry industries, as well as academic
researchers.
Raw Materials and Components
The Company utilizes a wide variety of chemicals, biological
materials, electronic components, machined metal parts, optical
parts, minicomputers and peripheral devices. Most of these
materials and components are available from numerous sources and
the Company has not experienced difficulty in securing adequate
supplies.
Patents and Trademarks
We own numerous U.S. and international patents and patent
licenses. We believe, however, that our ability to develop and
manufacture our products depends primarily on our knowledge,
technology and special skills. Under several patent license
agreements, we pay royalties on the sales of certain products.
We view these patents and license agreements as valuable assets.
The clinical diagnostics segment has a broad portfolio of
intellectual property which it uses to advance and promote its
competitive position within the market of blood viruses,
bacteriology, immuno-hematology, infectious diseases and
cardiovascular testing. Its portfolio is comprised of owned
patents, patent rights licensed from Institut Pasteur and other
rights secured under third-party licensing agreements.
Additionally, this segment has a wide array of patents and patent
applications which are owned and licensed in the area of HIV
testing. These include patents on purified virus proteins,
antigens used for detection of HIV, monoclonal antibodies, cloned
DNA sequences, primers and probes.
Seasonal Operations and Backlog
The Company's business is not inherently seasonal, however, the
European custom of concentrating vacation during the summer
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months usually has had a negative impact on third quarter sales
volume and operating income.
For the most part, the Company operates in markets characterized
by short lead times and the absence of significant backlogs. The
Company produces several analytical instruments against an order
backlog. Management has concluded that backlog information is
not material to the Company's business as a whole.
Sales and Marketing
Each of Bio-Rad's segments maintains a sales force to sell its
products on a direct basis. Each sales force is technically
trained in the disciplines associated with its products. Sales
are also generated through direct mail advertising, exhibits at
trade shows and technical meetings, telemarketing, and by
extensive advertising in technical and trade publications. Sales
and marketing efforts are augmented by technical service
departments that assist customers in effective product
utilization and in new product applications. Bio-Rad also
produces and distributes technical literature and holds seminars
for customers on the use of its products.
Our customer base is broad and diversified. In 1999, no single
customer accounted for more than 2% of our total net sales. Our
sales are affected by certain external factors. For example, a
number of our customers, particularly in the life science
segment, are substantially dependent on government grants and
research contracts for their funding, and a portion of the
analytical instruments segment depends on contracts with large
semiconductor manufacturers. Thus, the loss of government
funding or a large contract or a severe downturn in the
semiconductor market would have a detrimental effect on the
results of these segments.
Most of the Company's international sales are generated by
wholly-owned subsidiaries and their branch offices in Australia,
Austria, Belgium, Canada, Denmark, England, Finland, France,
Germany, Hong Kong, Hungary, India, Israel, Italy, Japan, Korea,
Mexico, the Netherlands, New Zealand, Norway, People's Republic
of China, Poland, Portugal, Russia, Singapore, South Africa,
Spain, Sweden, Switzerland and Thailand. Certain of these
subsidiaries also have manufacturing facilities. While Bio-Rad's
international operations are subject to certain risks common to
foreign operations in general, such as changes in governmental
regulations, import restrictions and foreign exchange
fluctuations, the Company's international operations are
principally in developed nations, which the Company regards as
presenting no significantly greater risks to its operations than
are present in the United States.
Competition
Most markets served by our product groups are competitive. Our
competitors range in size from start-ups to large multinational
corporations. Reliable independent information on sales and
market share of products produced by our competitors is not
4
<PAGE>
generally available. We believe, however, based on our on
marketing information, that while some competitors are dominant
with respect to certain individual products, no one company,
including us, is dominant with respect to a material portion of
any segment of our business.
Life Science Segment. Because of the breadth of its product
lines, Life Science does not face the same competitor for all of
its products. Competitors in this market include Amersham
Pharmacia Biotech, Life Technologies, Qiagen, Zeiss and PE
Applied Biosystems. We compete primarily on meeting performance
specifications.
Clinical Diagnostics Segment. Competitors in this segment range
in size from small private companies to large multinational
corporations. We compete only in very specific market niches and
do not attempt to pursue the most competitive general diagnostics
markets. We compete based on our technological ability to
provide customers with very specific tests and believe we are
usually a significant competitor within our market niche.
Competitors include Abbott Laboratories, bioMerieux, Inc., Roche
Diagnostics, BioChem Pharma, Inova, diaSorin and Medical Analysis
Systems.
Analytical Instruments Segment. We compete in the high-end
analytical instruments market primarily on the basis of
technology and features. Competitors in this segment include
Nicolet Instruments (a division of Thermo Instruments) and EG&G
(formerly Perkin-Elmer) in spectroscopy; and Hitachi and KLA-
Tencor in semiconductor measurement instruments.
Product Research and Development
The Company conducts extensive product research and development
activities in all areas of our business, employing approximately
475 people worldwide in these activities. Research and
development have played a major role in Bio-Rad's growth and are
expected to continue to do so in the future. Our research teams
are continuously developing new products and new applications for
existing products. In our development and testing of new
products and applications, we consult with scientific and medical
professionals at universities, hospitals and medical schools, and
in industry, most notably with the Institut Pasteur. We spent
approximately $51.2 million (excluding $15.5 million of purchased
in-process research and development expense), $41.4 million and
$46.4 million on research and development activities during the
years ended December 31, 1999, 1998 and 1997, respectively.
Regulatory Matters
The manufacturing, marketing and labeling of certain of our
products (primarily diagnostic products) are subject to
regulation in the United States by the Center for Devices and
Radiological Health of the United States Food and Drug
Administration ("FDA") and in other jurisdictions by state and
foreign government authorities. FDA regulations require that
some new products have pre-marketing approval by the FDA and
5
<PAGE>
require certain products to be manufactured in accordance with
"good manufacturing practices," to be extensively tested and to
be properly labeled to disclose test results and performance
claims and limitations.
As a multinational manufacturer and distributor of sophisticated
instrumentation equipment, we must meet a wide array of
electromagnetic compatibility and safety compliance requirements
to satisfy regulations in the United States, the European
Community and other jurisdictions. The FDA must approve an
export permit application before companies can market products
outside the U.S. prior to the products' receipts of FDA approval.
The requirements relating to testing and trials, product
licensing, pricing and reimbursement vary widely among countries.
Our operations are subject to federal, state, local and foreign
environmental laws and regulations that govern such activities as
emissions to air and discharges to water, as well as handling and
disposal practices for solid, hazardous and medical wastes. In
addition to environmental laws that regulate our operations, we
are also subject to environmental laws and regulations that
create liabilities and clean-up responsibility for spills,
disposals or other releases of hazardous substances into the
environment as a result of our operations or otherwise impacting
real property that we own or operate. The environmental laws and
regulations also subject us to claims by third parties for
damages resulting from any spills, disposals or releases
resulting from our operations or at any of our properties.
Employees
At December 31, 1999, Bio-Rad had approximately 4,100 full-time
employees. Fewer than 7% of Bio-Rad's 1,900 U. S. employees are
covered by a collective bargaining agreement which will expire on
November 7, 2002. Many of Bio-Rad's non-U.S. full-time
employees, especially in France, are covered by collective
bargaining agreements. The Company is currently working with the
representative unions of these employees to achieve workforce
reductions where duplication or redundancies exist as a result of
the PSD acquisition. Bio-Rad considers its employee relations
in general to be good.
ITEM 2. PROPERTIES
We own our Corporate headquarters located in Hercules,
California. The principal manufacturing and research locations
for each segment are as follows:
Approximate
Segment Location Square Ftg. Owned/Leased
Life Science Richmond, California 191,000 Owned/Leased
Hercules, California 95,400 Owned
Hemel Hempstead, England 102,000 Leased
Milan, Italy 50,000 Leased
6
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Clinical
Diagnostics Hercules, California 112,000 Owned/Leased
Irvine, California 137,000 Leased
Greater Seattle,
Washington 127,600 Owned/Leased
Lille, France 182,000 Owned
Paris, France 162,000 Leased
Munich, Germany 55,000 Leased
Nazareth-Eke, Belgium 30,000 Leased
Analytical
Instruments Cambridge, Massachusetts 76,000 Owned
York, England 144,000 Owned
Philadelphia, Pennsylvania 28,000 Owned
Most manufacturing and research facilities also house
administration, sales and distribution activities. In addition,
we lease office and warehouse facilities in a variety of
locations around the world. The facilities are used principally
for sales, service, distribution and administration for all three
segments.
The Life Science segment's Richmond, California distribution and
instrument manufacturing facility lease expires in November 2000.
While we are currently negotiating a renewal, the lease is not
automatically renewable. The Marnes la Coquette facility near
Paris, France which served as the corporate headquarters for PSD,
as well as a significant manufacturing and research facility is
currently being renegotiated as the lease expired December 31,
1999. In the interim, the space is being occupied on a month to
month basis.
We believe all of our other facilities are adequate to support
our current and anticipated production requirements.
Historically, adequate space to expand sales and distribution
channels has been available and we have leased space as needed.
We have received several offers to purchase our facility located
in Cambridge, Massachusetts. This facility houses a portion of
the manufacturing and distribution for the analytical instruments
segment, which we will relocate if the building is sold.
ITEM 3. LEGAL PROCEEDINGS
Note 12, "Legal Proceedings," appearing on page 19 of Exhibit
13.1 is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's
security holders during the fourth quarter of the fiscal year
covered by this report.
7
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P A R T II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Note 16, "Information Concerning Common Stock," appearing on page
23 of Exhibit 13.1 is incorporated herein by reference.
The Company subsequent to year-end, effective February 17, 2000
has sold $150 million of 11-5/8% Senior Subordinated Notes
("Notes") due February 15, 2007. The initial purchasers for the
Notes were Warburg Dillon Read LLC and ABN Amro Incorporated.
The offering price was 98.832% and the initial purchaser's
discount was 3%. Proceeds before expenses were $143.8 million
and were used to repay the $100 million Senior Subordinated
Credit Agreement, retire $20 million of the $100 million term
loan and with substantially all of the residual proceeds, reduce
the amount outstanding under the revolving facility. The
obligations under the notes are not secured, rank junior to all
of our existing and future senior debt, rank equally with all of
our existing and future senior subordinated debt and rank senior
to all our existing and future subordinated indebtedness. Our
current and future domestic subsidiaries that are material to our
business guarantee the notes, but our foreign subsidiaries do
not.
The Notes have not been registered under the Securities Act.
Accordingly the initial purchasers will offer the Notes only to
"Qualified Institutional Buyers" as defined under Rule 144A of
the Securities Act and non-U.S. persons outside the United States
in reliance upon Regulation S of the Securities Act.
ITEM 6. SELECTED FINANCIAL DATA
The table headed "Summary of Operations" appearing on page 1 of
Exhibit 13.1 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The section headed "Management's Discussion and Analysis of
Results of Operations and Financial Condition" appearing on pages
25 through 33 of Exhibit 13.1 is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The section headed "Financial Risk Management" appearing on page
32 of Exhibit 13.1 is incorporated herein by reference.
8
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes thereto and the
Report of Independent Public Accountants appearing on pages 1
through 33 of Exhibit 13.1 are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
P A R T III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections labeled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" of the definitive
Proxy Statement mailed to stockholders in connection with the
2000 Annual Meeting of Stockholders ("the 2000 Proxy Statement")
are incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The sections labeled "Executive Compensation and Other
Information," "Compensation of Directors," "Compensation
Committee Interlocks and Insider Participation," "Report of the
Compensation Committee of the Board of Directors" and "Stock
Performance Graph" of the 2000 Proxy Statement are incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The section labeled "Principal and Management Stockholders" of
the 2000 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section labeled "Compensation of Directors" of the 2000 Proxy
Statement is incorporated herein by reference.
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P A R T IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Index to Financial Statements
The following Consolidated Financial Statements are
included in the 1999 Annual Report and are incorporated
herein by reference pursuant to Item 8:
Page in
Exhibit 13.1
Consolidated Balance Sheets
at December 31, 1999 and 1998 2-3
Consolidated Statements of Income
for each of the three years in the
period ended December 31, 1999 4
Consolidated Statements of Cash Flows
for each of the three years in the period
ended December 31, 1999 5
Consolidated Statements of Changes in
Stockholders' Equity for each of the three
years in the period ended December 31, 1999 6
Notes to Consolidated Financial Statements 7-23
Report of Independent Public Accountants 24
2. Index to Financial Statement Schedule
Page in
Form 10-K
Schedule II Valuation and Qualifying Accounts 12
Report of Independent Public Accountants
on Schedule II 13
All other financial statement schedules are omitted because
they are not required or because the required information is
included in the Consolidated Financial Statements or the Notes
thereto.
3. Index to Exhibits
The exhibits listed in the accompanying Index to Exhibits on
pages 15 and 16 of this report are filed or incorporated by
reference as part of this report.
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(b) Reports on Form 8-K
Bio-Rad filed Form 8-K dated October 1, 1999, announcing that Bio-Rad
completed the acquisition of 100% of the capital stock of Pasteur
Sanofi Diagnostics from Sanofi-Synthelabo S.A. and Institut Pasteur
pursuant to the terms of the Purchase Agreement (previously filed as
Exhibit 2.1 to Form 8-K dated July 15, 1999).
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BIO-RAD LABORATORIES, INC,.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
(In thousands)
<TABLE>
Reserve for doubtful accounts receivable
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Year Expenses Deductions Other of Year
<S> <C> <C> <C> <C> <C>
1999 . . . $3,629 $3,123 $(2,449) $5,279(A) $9,582
1998 . . . $3,374 $1,616 $(1,361) $ - $3,629
1997 . . . $3,688 $1,088 $(1,402) $ - $3,374
</TABLE>
<TABLE>
Valuation allowance for deferred tax assets
<CAPTION>
Deductions
Balance at Charged to Balance
Beginning Costs and at End
of Year Additions Expenses Other of Year
<S> <C> <C> <C> <C> <C>
1999 . . . . $5,342 $ -- $ (553) $19,342(A) $24,131
1998 . . . . $3,285 $2,057 $ -- $ -- $5,342
1997 . . . . $5,572 $ -- $(2,287) $ -- $3,285
</TABLE>
(A) Valuation arising from the acquisition of PSD.
12
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE II
To Bio-Rad Laboratories, Inc.
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in
Bio-Rad Laboratories, Inc.'s annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 9, 2000. Our audit was made for
the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the index, Item 14(a)2, is the
responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Francisco, California
February 9, 2000
13
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BIO-RAD LABORATORIES, INC.
By: /s/ Sanford S. Wadler
Sanford S. Wadler
Secretary
Date: March 28, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
/s/ David Schwartz President and Director March 28, 2000
(David Schwartz)
Principal Financial Officer:
/s/ T. C. Chesterman Vice President, March 28, 2000
(Thomas C. Chesterman) Chief Financial Officer
Principal Accounting Officer:
/s/ James R. Stark Corporate Controller March 28, 2000
(James R. Stark)
Other Directors:
/s/ James J. Bennett Director March 28, 2000
(James J. Bennett)
/s/ Albert J. Hillman Director March 28, 2000
(Albert J. Hillman)
/s/ Philip L. Padou Director March 28, 2000
(Philip L. Padou)
/s/ Alice N. Schwartz Director March 28, 2000
(Alice N. Schwartz)
/s/ Norman Schwartz Director March 28, 2000
(Norman Schwartz)
/s/ Burton A. Zabin Director March 28, 2000
(Burton A. Zabin)
14
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BIO-RAD LABORATORIES, INC.
INDEX TO EXHIBITS
ITEM 14(a)3
The following documents are filed as part of this report:
Exhibit No.
3.1 Restated Certificate of Incorporation, as of
September 15, 1988. (1)
3.2 Bylaws of the Registrant, as amended February 19,
1980. (2)
4.1 Credit Agreement dated as of September 30, 1999 among
Bio-Rad Laboratories, Inc., the lenders named therein,
Bank One, N.A., as Administrative Agent, ABN Amro Bank
N.V. as Syndication Agent and Union Bank of California,
N.A. as Documentation Agent. (3)
4.1.1 Amendment dated as of January 31, 2000, to the Credit
Agreement dated as of September 30, 1999, by and among
Bio-Rad Laboratories, Inc. the lenders named therein,
and Bank One, N.A. as Agent.
4.2 Senior Subordinated Credit Agreement dated as of
September 30, 1999 among Bio-Rad Laboratories, Inc.,
the lenders named therein and Bank One Capital Markets,
Inc., as agent. (3)
4.4 Senior Subordinated Credit Agreement dated as of
January 31, 2000 among Bio-Rad Laboratories, Inc., the
lenders names therein and UBS AG, Stamford Branch, as
Agent.
4.5 The Indenture dated as of February 17, 2000 for 11.625%
Senior Subordinated Notes due 2007 among Bio-Rad
Laboratories, Inc., as Issuer, and Norwest Bank
Minnesota, N.A., as Trustee.
4.6 The Registration Rights Agreement dated as of February
17, 2000 by and among Bio-Rad Laboratories, Inc. and
Warburg Dillon Reed LLC and ABN AMRO Incorporated.
10.4 1994 Stock Option Plan. (4)
10.5 Amended and Restated 1988 Employee Stock Purchase Plan.
(5)
10.6 Employees' Deferred Profit Sharing Retirement Plan
(Amended and Restated effective January 1, 1997). (6)
10.10 Non-competition and employment continuation agreement
with James J. Bennett. (7)
10.11 Employment and non-compete agreement with Dr. Burton A.
Zabin. (8)
15
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10.12 Split Dollar Life Insurance Agreement dated
September 17, 1999 between the Schwartz Irrevocable
Descendants Trust and Bio-Rad Laboratories, Inc.
13.1 Excerpt from Annual Report to Stockholders' for the
fiscal year ended December 31, 1999, (to be deemed
filed only to the extent required by the instructions
to exhibits for reports on Form 10-K).
21.1 Listing of Subsidiaries.
23.1 Consent of Independent Public Accountants.
27.1 Financial Data Schedule.
________________________________________________________________
(1) Incorporated by reference from the Exhibits to the
Company's Form 10-K filing for the fiscal year ended
December 31, 1992, dated March 26, 1993.
(2) Incorporated by reference from the Exhibits to the
Company's Registration Statement on Form S-7
Registration No. 2-66797, which became effective
April 22, 1980.
(3) Incorporated by reference from Exhibits to the
Company's Form 8-K dated October 1, 1999.
(4) Incorporated by reference from the Exhibits to the
Company's Form S-8 filing, dated April 28, 1994.
(5) Incorporated by reference from the Exhibits to the
Company's September 30, 1998, Form 10-Q filing dated
November 10, 1998.
(6) Incorporated by reference from the Exhibits to the
Company's September 30, 1997, Form 10-Q filing dated
November 13, 1997.
(7) Incorporated by reference from the Exhibits to the
Company's Form 10-K filing for the fiscal year ended
December 31, 1996, dated March 26, 1997.
(8) Incorporated by reference from the Exhibits to the
Company's June 30, 1998, Form 10-Q filing dated
August 6, 1998.
16
<PAGE>
Exhibit 4.1.1
EXECUTION COPY
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Amendment No. 1 (this "Amendment") is entered into as
of January 31, 2000 by and among BIO-RAD LABORATORIES, INC., a
Delaware corporation (the "Borrower"), the undersigned lenders
(collectively, the "Lenders") and BANK ONE, NA, having its
principal office in Chicago, Illinois, as one of the Lenders and
in its capacity as contractual representative (the "Agent") on
behalf of itself and the other Lenders.
RECITALS:
WHEREAS, the Borrower, the Lenders and the Agent have
entered into that certain Credit Agreement dated as of September
30, 1999 (the "Credit Agreement");
WHEREAS, the Borrower seeks to amend the Credit Agreement to
permit the refinancing of the Bridge Loan (as defined in the
Credit Agreement); and
WHEREAS, the Lenders and the Agent are willing to amend the
Credit Agreement on the terms and conditions herein set forth;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to
such terms in the Credit Agreement.
2. Amendments to Credit Agreement. Upon the effectiveness
of this Amendment in accordance with the provisions of Section 4
below, the Credit Agreement is hereby amended as follows:
(a) Article I of the Credit Agreement is amended by adding
thereto the following new definitions:
"New Bridge Loan" means the bridge loan in the initial
principal amount of $100,000,000 made to the Borrower on or
about January 31, 2000 pursuant to the New Bridge Loan
Agreement to refinance the Bridge Loan in its entirety,
including any increase in such principal amount as a result
of the capitalization of interest thereon and including any
Rollover Bridge Notes and Exchange Notes, as defined in the
New Bridge Loan Agreement; provided that the Exchange Notes
shall be issued pursuant to an indenture all of the terms
and conditions of which are reasonably acceptable to the
Agent and the Required Lenders, and provided further that
terms and conditions substantially
<PAGE>
similar to those contained in the Description of Notes shall
be deemed to be reasonably acceptable.
"New Bridge Loan Agreement" means the Senior
Subordinated Credit Agreement dated as of January 31, 2000
among the Borrower, the lenders named therein and UBS AG,
Stamford Branch, as agent for such lenders, together with
any notes issued pursuant thereto.
(b) Article I of the Credit Agreement is further amended by
amending and restating in their entirety the following
definitions as follows:
"Consolidated EBITDA" means, with reference to any
period, Consolidated Net Income for such period plus, to
the extent deducted from revenues in determining
Consolidated Net Income (without duplication), (i)
Consolidated Interest Expense and all non-cash interest
expense, (ii) expense for income taxes paid or accrued,
(iii) depreciation, (iv) amortization, (v) extraordinary
losses incurred other than in the ordinary course of
business and losses from discontinued operations, (vi) any
extraordinary, unusual or non-recurring non-cash expenses or
non-cash losses, and (vii) non-recurring cash charges,
including any capitalized non-recurring cash charges, taken
on or prior to March 31, 2000 resulting from severance,
integration and other adjustments made as a result of the
PSD Acquisition (provided that the amounts referred to in
this clause (vii) shall not, in the aggregate, exceed
$25,000,000), and minus, to the extent included in
Consolidated Net Income, extraordinary gains and gains from
discontinued operations, all net of tax, realized other than
in the ordinary course of business, all calculated for the
Borrower and its Subsidiaries on a consolidated basis for
such period; provided that the items to be added to and
subtracted from Consolidated Net Income with respect to any
Subsidiary shall be added or subtracted only to the extent
and in the same proportions that (a) the net income of such
Subsidiary was included in the calculation of Consolidated
Net Income, if such Subsidiary is not a Wholly-Owned
Subsidiary and (b) the Consolidated EBITDA of such
Subsidiary (calculated as if such Subsidiary were the
"Borrower") is permitted to be paid or distributed as a
dividend, advance, loan or other distribution to the
Borrower.
"Consolidated Net Income" means, with reference to any
period, the net income (or loss) of the Borrower and its
Subsidiaries calculated on a consolidated basis for such
period, provided that Consolidated Net Income shall exclude
the net income, if positive, of any of the Borrower's
consolidated Subsidiaries to the extent that the declaration
or payment of dividends of similar distributions is not at
the time permitted by operation of the terms of its charter
or by-laws or any other agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation
applicable to such Subsidiary.
"Description of Notes" means the Description of Notes
attached hereto as Exhibit D, provided that the amount "$155
million" in clause (3) of the description of "Limitation on
Incurrence of Additional Indebtedness and Disqualified
Capital Stock" in such Description
<PAGE>
of Notes shall be deleted
and the amount "$180 million" substituted therefor.
"Financing" means, with respect to any Person, the
issuance or sale by such Person of any Equity Interests of
such Person or any Indebtedness consisting of debt
securities of such Person pursuant to a registered offering
or private placement, but excluding the issuance or sale of
(i) any Indebtedness permitted to be incurred pursuant to
Section 6.11, including, without limitation, the
Subordinated Indebtedness, except that the first $20,000,000
of Permitted Subordinated Indebtedness incurred in excess of
the amount required to refinance the New Bridge Loan shall
be deemed to be a Financing, (ii) Equity Interests by the
Borrower to the extent that the proceeds thereof are used to
refinance the New Bridge Loan in its entirety, (iii) Equity
Interests by the Borrower to any officer, director or
employee of the Borrower or any of its Subsidiaries pursuant
to any incentive compensation plan or program and (iv)
Equity Interests or Indebtedness by any Subsidiary of the
Borrower to the Borrower or any Wholly-Owned Subsidiary of
the Borrower.
"Permitted Subordinated Indebtedness" means
Indebtedness of the Borrower, the payment of which is
subordinated to payment of the Secured Obligations and all
of the terms and conditions of which are reasonably
acceptable to the Agent and the Required Lenders, issued in
an aggregate principal amount not to exceed $150,000,000,
the proceeds of which are used, in whole or in part, to
refinance the New Bridge Loan in its entirety; provided that
terms and conditions substantially similar to those
contained in the Description of Notes shall be deemed to be
reasonably acceptable.
"Subordinated Indebtedness" means the Bridge Loan, the
New Bridge Loan and the Permitted Subordinated Indebtedness.
(c) Section 6.1 of the Credit Agreement is amended by
deleting the figure "100" in Section 6.1(i) and substituting
the figure "90" therefor, by deleting the figure "60" in
Section 6.1(ii) and substituting the figure "45" therefor,
and by deleting the phrase "Together with the financial
statements required under Sections 6.1(i) and (ii)," in
Section 6.1(iv) and substituting the following phrase
therefor:
Within 10 days after the delivery of the financial
statements required under Section 6.1(i) and within 15 days
after the delivery of the financial statements required
under Section 6.1(ii),
(d) Section 6.21 of the Credit Agreement is amended by
deleting the term "Bridge Loan Agreement" both places it
appears in clause (i) thereof and substituting the term "New
Bridge Loan Agreement" therefor and by deleting the term
"Bridge Loan" in clause (ii) thereof and substituting the
term "New Bridge Loan" therefor.
<PAGE>
(e) Section 6.22 of the Credit Agreement is amended by
adding to the last sentence thereof after the phrase "the
Bridge Loan" the phrase "and the New Bridge Loan".
(f) Section 7.5 of the Credit Agreement is amended by
amending and restating the parenthetical phrase in the third
clause thereof in its entirety to read as follows:
(other than by a regularly scheduled payment and other than
in connection with the refinancing of the Bridge Loan with
the proceeds of the New Bridge Loan and the refinancing of
the New Bridge Loan with the proceeds of Permitted
Subordinated Indebtedness or Equity Interests of the
Borrower)
(g) The Credit Agreement is amended by adding a new Exhibit
D thereto in the form of Exhibit D attached to this
Amendment.
3. Consent. The Lenders hereby consent to the terms of
the Senior Subordinated Credit Agreement dated as of January 31,
2000 among the Borrower, the lenders named therein and UBS AG,
Stamford Branch, as agent for such lenders (the "New Bridge Loan
Agreement"), provided that such terms are substantially the same
as those contained in the draft dated January 26, 2000 (12:50
P.M.) of such Senior Subordinated Credit Agreement furnished to
the Lenders, and consent to the refinancing of the Bridge Loan
with the proceeds of the loans made pursuant to the New Bridge
Loan Agreement.
4. Conditions of Effectiveness. This Amendment shall
become effective and be deemed effective as of the date hereof
(the "Effective Date") if, and only if, the Agent shall have
received duly executed originals of this Amendment from the
Borrower and the Required Lenders.
5. Representations and Warranties of the Borrower. The
Borrower represents and warrants to the Lenders that, as of the
Effective Date:
(a) there exists no Default or Unmatured Default; and
(b) the representations and warranties contained in
Article V of the Credit Agreement are true and correct as of
the Effective Date except to the extent any such
representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty
was true and correct on and as of such earlier date.
6. Reference to and Effect on the Credit Agreement.
6.1 Upon the effectiveness of this Amendment pursuant to
Section 4 hereof, on and after the Effective Date each reference
in the Credit Agreement to "this Agreement," "hereunder,"
<PAGE>
"hereof," "herein" or words of like import and each reference to
the Credit Agreement in each Loan Document shall mean and be a
reference to the Credit Agreement as modified hereby.
6.2 Except as specifically waived or amended herein, all of
the terms, conditions and covenants of the Credit Agreement and
the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
6.3 The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of (a) any right, power or remedy of any Lender or
the Agent under the Credit Agreement or any of the Loan
Documents, or (b) any Default or Unmatured Default under the
Credit Agreement.
7. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET
SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
8. Counterparts. This Amendment may be executed in any
number of counterparts, each of which when so executed shall be
deemed an original and all of which taken together shall
constitute one and the same agreement.
9. Headings. Section 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.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders
have executed this Amendment No. 1 as of the date first above
written.
BIO-RAD LABORATORIES, INC.
By: /s/ Ronald W. Hutton
Name: Ronald W. Hutton
Title: Treasurer
BANK ONE, NA, as a Lender and as Agent
By: /s/ Kandis A. Jaffrey
Name: Kandis A. Jaffrey
Title: Vice President
ABN AMRO BANK N.V., as a Lender
By: /s/ Amanda C. Cox
Name: Amanda C. Cox
Title: Vice President
By: /s/ Gina M. Brusatori
Name: Gina M. Brusatori
Title: Group Vice President
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By: /s/ Michael E. Cooper
Name: Michael E. Cooper
Title: Vice President
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ M. Van Otterloo
Name: M. Van Otterloo
Title: Managing Director, Corporate
BANQUE NATIONALE DE PARIS,
as a Lender
By: /s/ Debra Wright
Name: Debra Wright
Title:Vice President
By: /s/ Sandra Bertram
Name: Sandra Bertram
Title:Assistant Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH,
as a Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
WELLS FARGO BANK,
as a Lender
By: /s/ Brian S. O'Melveny
Name: Brian S. O'Melveny
Title: Vice President
<PAGE>
COMERICA BANK-CALIFORNIA,
as a Lender
By: /s/ R. Michael Law
Name: R. Michael Law
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as a Lender
By: /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
LLOYDS TSB BANK PLC, as a Lender
By:/s/ Ian Dimmock
Name: Ian Dimmock
Title: Vice President
By: /s/ Daivd Rodway
Name: David Rodway
Title: Assistant Director
THE NORTHERN TRUST COMPANY,
as a Lender
By: /s/ Candelario Martinez
Name: Candelario Martinez
Title: Vice President
<PAGE>
U.S. BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ Meredith N. Davis
Name: Meredith N. Davis
Title:Assistant Vice President
<PAGE>
EXHIBIT 4.4
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
January 31, 2000
among
BIO-RAD LABORATORIES, INC.,
as Company,
THE LENDERS named herein
and
UBS AG, STAMFORD BRANCH, as Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
1.1 Certain Defined Terms 1
1.2 Accounting Terms 28
1.3 Other Definitional Provisions; Anniversaries 28
SECTION 2.AMOUNT AND TERMS OF LOAN COMMITMENT AND
LOANS; NOTES 28
2.1 Bridge Loan and Bridge Note 28
2.2 Rollover Bridge Loan and Rollover Bridge Note 30
2.3 Interest on the Notes 32
2.4 Fees 33
2.5 Prepayments and Payments 33
2.6 Use of Proceeds 37
2.7 Interest Rate Unascertainable, Increased Costs,
Illegality 37
2.8 Funding Losses. 39
2.9 Increased Capital 39
2.10 Taxes 40
SECTION 3. CONDITIONS 42
3.1 Conditions to Bridge Loan 42
3.2 Conditions to Rollover Bridge Loan 47
SECTION 4. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY 48
4.1 Existence and Standing 48
4.2 Authorization and Validity 49
4.3 No Conflict; Government Consent 49
4.4 Financial Statements 50
4.5 Material Adverse Change 51
4.6 Taxes 51
4.7 Litigation and Contingent Obligations 51
4.8 Subsidiaries 51
4.9 ERISA 52
4.10 Accuracy of Information 52
4.11 Regulation U 52
i
<PAGE>
4.12 Material Agreements 52
4.13 Compliance With Laws 52
4.14 Ownership of Properties 53
4.15 Plan Assets; Prohibited Transactions 53
4.16 Environmental Matters 53
4.17 Investment Company Act 54
4.18 Public Utility Holding Company Act 54
4.19 Year 2000 54
4.20 Post-Retirement Benefits 54
4.21 Insurance 54
4.22 Solvency 55
4.23 Termination of June 1999 Engagement Letter 55
SECTION 4A. REPRESENTATIONS AND WARRANTIES
OF THE LENDERS 55
4A.1 Accredited Investor 56
4A.2 Knowledge and Experience 56
4A.3 Source of Funds 56
SECTION 5. AFFIRMATIVE COVENANTS 56
5.1 Financial Reporting 56
5.2 Use of Proceeds 58
5.3 Notice of Default 58
5.4 Conduct of Business 58
5.5 Taxes 59
5.6 Insurance 59
5.7 Compliance with Laws 59
5.8 Maintenance of Properties 60
5.9 Inspection 60
5.10 Year 2000 60
5.11 Additional Guarantors 60
5.12 Exchange of Rollover Bridge Notes 61
5.13 Permanent Securities 62
5.14 Lenders Meeting 62
5.15 Note Documents 63
5.16 Syndication 63
ii
<PAGE>
SECTION 6. NEGATIVE COVENANTS 64
6.1 Dividends 64
6.2 Indebtedness 64
6.3 Merger 66
6.4 Sale of Assets 66
6.5 Investments and Acquisitions 66
6.6 Liens 67
6.7 Capital Expenditures 69
6.8 Limitation on Dividend and Other Payment
Restrictions
Affecting Subsidiaries 70
6.9 Affiliates 71
6.10 Unfunded Liabilities 72
6.11 Intentionally Omitted. 72
6.12 Sale and Leaseback Transactions 72
6.13 Contingent Obligations 72
6.14 Financial Contracts 72
6.15 Refinancing of the Loans in Part 73
6.16 Senior Subordinated Indebtedness 73
6.17 Leverage Ratio 73
SECTION 7. EVENTS OF DEFAULT 73
7.1 Events of Default 74
7.2 Acceleration 77
SECTION 8. SUBORDINATION 77
8.1 Obligations Subordinated to Senior Debt of the
Company 77
8.2 Priority and Payment Over of Proceeds in
Certain Events 78
8.3 Payments May Be Paid Prior to Dissolution 80
8.4 Rights of Holders of Senior Debt of the Company
Not To Be Impaired 81
8.5 Subrogation 81
8.6 Obligations of the Company Unconditional 82
8.7 Lenders Authorize Agent To Effectuate
Subordination 83
SECTION 9. THE AGENT 83
9.1 Appointment 83
9.2 Delegation of Duties 84
iii
<PAGE>
9.3 Exculpatory Provisions 84
9.4 Reliance by Agent 85
9.5 Notice of Default 85
9.6 Non-Reliance on Agent and Other Lenders 86
9.7 Indemnification 86
9.8 Agent in Its Individual Capacity 87
9.9 Resignation of the Agent; Successor Agent 87
SECTION 10. GUARANTEE 88
10.1 Unconditional Guarantee 88
10.2 Subordination of Guarantee 89
10.3 Severability 89
10.4 Release of a Guarantor 89
10.5 Limitation of Guarantor's Liability 90
10.6 Guarantors May Consolidate, etc., on Certain
Terms 90
10.7 Contribution 91
10.8 Waiver of Subrogation 91
10.9 Evidence of Guarantee 92
10.10 Waiver of Stay, Extension or Usury Laws 92
SECTION 11. SUBORDINATION OF GUARANTEE OBLIGATIONS 93
11.1 Guarantee Obligations Subordinated to Guarantor
Senior Debt 93
11.2 Priority and Payment Over of Proceeds in
Certain Events 93
11.3 Payments May Be Paid Prior to Dissolution 96
11.4 Rights of Holders of Guarantor Senior Debt Not
To Be Impaired 96
11.5 Subrogation 97
11.6 Obligations of the Guarantors Unconditional 98
11.7 Lenders Authorize Agent To Effectuate
Subordination 98
SECTION 12. MISCELLANEOUS 99
12.1 Participations in and Assignments of Loans and
Notes 99
12.2 Expenses 100
12.3 Indemnity 101
12.4 Setoff 102
12.5 Amendments and Waivers 102
12.6 Independence of Covenants 103
12.7 Entirety 104
iv
<PAGE>
12.8 Notices 104
12.9 Survival of Warranties and Certain Agreements 104
12.10 Failure or Indulgence Not Waiver;
Remedies Cumulative 105
12.11 Severability 105
12.12 Headings 105
12.13 Applicable Law 105
12.14 Successors and Assigns; Subsequent
Holders of Notes 105
12.15 Counterparts; Effectiveness 106
12.16 Consent to Jurisdiction; Venue; Waiver of
Jury Trial 106
12.17 Payments Pro Rata 107
12.18 Waiver of Stay, Extension or Usury Laws 108
12.19 Confidentiality 108
12.20 Register 109
v
<PAGE>
ANNEX I Lending Offices
SCHEDULES
Schedule 4.4 Pro Forma Financial Statements
Schedule 4.7 Litigation
Schedule 4.8 Subsidiaries
Schedule 4.21 Insurance
Schedule 6.2 Indebtedness
Schedule 6.5 Investments
Schedule 6.6 Liens
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF ROLLOVER BRIDGE NOTE
III FORM OF COMPLIANCE CERTIFICATE
IV-A FORM OF NOTICE OF BORROWING
IV-B FORM OF ROLLOVER NOTICE
V FORM OF OPINION OF LATHAM & WATKINS - COUNSEL FOR
THE COMPANY
VI FORM OF NOTATION ON NOTE RELATING TO GUARANTEES
vi
<PAGE>
This Senior Subordinated Credit Agreement is
dated as of January 31, 2000, and entered into by and
between Bio-Rad Laboratories, Inc., a Delaware
corporation (the "Company"), the Lenders named on the
signature pages hereto (the "Lenders"), and UBS AG,
Stamford Branch ("UBS"), as agent for the Lenders (in
such capacity, the "Agent").
RECITALS
WHEREAS, the Company has entered into that
certain Senior Subordinated Credit Agreement dated as of
September 30, 1999, among the Company, the lenders party
thereto and Banc One Capital Markets, Inc., as agent for
the lenders (as amended to date, the "Existing Bridge
Agreement");
WHEREAS, the Company desires to refinance the
Existing Bridge Agreement with the proceeds of borrowings
under a new senior subordinated credit facility;
WHEREAS, the Lenders have agreed to extend
credit to the Company under the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the
premises and the agreements, provisions and covenants
herein contained, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms. The following terms used in
this Agreement shall have the following meanings:
"AAI" means ABN AMRO INCORPORATED.
"Acquired Business" is defined in the
definition of "PSD Acquisition."
1
<PAGE>
"Acquired Indebtedness" means Indebtedness of a
Person existing at the time such Person becomes a
Subsidiary or is merged or consolidated into the Company
or one of its Subsidiaries.
"Acquisition" means any transaction, or any
series of related transactions, consummated on or after
the date of this Agreement, by which the Company or any
of its Subsidiaries (i) acquires any going business or
all or substantially all of the assets of any firm,
corporation or limited liability company, or division
thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series
of transactions) at least a majority (in number of votes)
of the securities of a corporation which have ordinary
voting power for the election of directors (other than
securities having such power only by reason of the
happening of a contingency) or a majority (by percentage
of voting power) of the outstanding ownership interests
of a partnership or limited liability company.
"Adjusted Net Assets" shall have the meaning
provided in Section 10.7.
"Affiliate" of any Person means any other
Person directly or indirectly controlling, controlled by
or under common control with such Person. A Person shall
be deemed to control another Person if the controlling
Person owns 20% or more of any class of voting securities
(or other ownership interests) of the controlled Person
or possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of
the controlled Person, whether through ownership of
stock, by contract or otherwise. Any member of the
Schwartz Group shall be deemed to be an Affiliate of the
Company.
"Agent" has the meaning ascribed to such term
in the introduction to this Agreement.
"Agreement" means this Senior Subordinated
Credit Agreement dated as of January 31, 2000, as it may
be amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms hereof.
"Agreement Accounting Principles" means
generally accepted accounting principles as in effect
from time to time.
2
<PAGE>
"Applicable Margin" means, with respect to the
Bridge Loan, 7% for the period from and including the
Closing Date and to but excluding July 31, 2000, and for
each Interest Period beginning on or after July 31, 2000,
the Applicable Margin in effect for the immediately
preceding Interest Period plus 0.50%.
"Applicable Treasury Rate" means, with respect
to the date to which such Applicable Treasury Rate
relates, the average of the annual yield rate of the
three most actively traded U.S. Treasury securities
having a remaining duration to maturity closest to
maturity of the Rollover Bridge Loan as such rate is
published under "Treasury Constant Maturities" in Federal
Reserve Statistical Release H.15(519).
"Asset Sale" means, with respect to any Person,
the sale, conveyance, disposition or other transfer by
such Person of any of its assets (including by way of a
sale-leaseback transaction and including the sale or
other transfer of any of the Equity Interests of any
Subsidiary of such Person), other than the sale of
inventory in the ordinary course of business and of
obsolete or worn-out property in the ordinary course of
business, the exchange or trade-in of equipment and other
assets for replacement assets and the granting of a
nonexclusive license. "Asset Sale" shall not include (i)
any casualty to or condemnation of Property to which
Section 6.6 of the Senior Secured Credit Agreement
applies, whether the proceeds thereof are Excluded
Proceeds (as defined in the Senior Secured Credit
Agreement) or otherwise, or (ii) the sale, conveyance,
disposition or other transfer by a Foreign Subsidiary of
any of its assets to the extent that the Net Cash
Proceeds thereof are invested in assets or Property
(other than Cash Equivalent Investments) in any Foreign
Subsidiary's business within twelve months after such
sale, conveyance disposition or other transfer.
"Bankruptcy Law" means Title 11 of the United
States Code entitled "Bankruptcy", as now and hereafter
in effect, or any successor statute or any other United
States federal, state or local law or the law of any
other jurisdiction relating to bankruptcy, insolvency,
winding up, liquidation, reorganization or relief of
debtors, whether in effect on the date hereof or
hereafter.
"Board of Directors" means, as to any Person,
the board of directors of such Person or any duly
authorized committee of that Board.
3
<PAGE>
"Board Resolution" means, with respect to any
Person, a copy of a resolution certified by the Secretary
or an Assistant Secretary of such Person to have been
duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such
certification.
"Bridge Loan" means, collectively, the loans
made by the Lenders pursuant to Section 2.1(a) and shall
include any Junior Securities and PIK Interest Amount.
"Bridge Loan Commitment" means the commitment
of the Lenders to make the Bridge Loan as set forth in
Section 2.1(a).
"Bridge Notes" has the meaning ascribed to such
term in Section 2.1(d).
"Bridge Payment Date" has the meaning ascribed
to such term in Section 2.3(b).
"Business Day" means any day excluding
Saturday, Sunday and any day which is a legal holiday
under the laws of New York or is a day on which banking
institutions therein located are authorized or required
by law or other governmental action to close.
"Capital Expenditures" means, without
duplication, any expenditures for any purchase or other
acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of
the Company and its Subsidiaries prepared in accordance
with Agreement Accounting Principles, excluding (i) the
trade-in value of equipment or other assets exchanged for
replacement assets, (ii) expenditures of insurance
proceeds to rebuild or replace any asset after a casualty
loss and (iii) Permitted Acquisitions.
"Capitalized Lease" of a Person means any lease
of Property by such Person as lessee which would be
capitalized on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person
means the amount of the obligations of such Person under
Capitalized Leases which would be shown as a
4
<PAGE>
liability on
a balance sheet of such Person prepared in accordance
with Agreement Accounting Principles.
"Cash Equivalent Investments" means (i) direct
obligations issued or fully guaranteed by the United
States of America or issued by any agency thereof and
backed by the full faith and credit of the United States,
in each case maturing within one year from the date of
acquisition thereof, (ii) commercial paper rated A-1
or better by S&P or P-1 or better by Moody's, (iii) demand
deposit accounts maintained in the ordinary course of
business, (iv) certificates of deposit issued by and time
deposits with commercial banks (whether domestic or
foreign) having capital and surplus in excess of
$100,000,000 and (v) mutual funds that invest solely in
one or more of the types of investments described in
clauses (i)-(iv) above; provided in each case that the
same provides for payment of both principal and interest
(and not principal alone or interest alone) and is not
subject to any contingency regarding the payment of
principal or interest.
"Change in Control" means:
(i) any merger or consolidation of the Company
with or into any Person or any sale, transfer or other
conveyance, whether direct or indirect, of all or
substantially all of the Company's assets, on a
consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect
to such transaction(s), either (x) any "person" or
"group" (other than a member of the Schwartz Group) is or
becomes the "beneficial owner," directly or indirectly,
of more than 40% of the Voting Equity Interests of the
transferee(s) or surviving entity or entities, and the
Schwartz Group shall cease to own beneficially at least a
greater percentage of the Voting Equity Interests of the
transferee(s) or surviving entity or entities or (y) the
Schwartz Group shall cease to own beneficially (A) 30% of
the Voting Equity Interests of such transferee(s) or
surviving entity or entities or (B) a greater percentage
of the Voting Equity Interests of such transferee(s) or
surviving entity or entities than any other person or
group, whichever is less;
(ii) any "person" or "group" (other than a
member of the Schwartz Group) is or becomes the
"beneficial owner," directly or indirectly, of more than
40% of the Company's Voting Equity Interests, and the
Schwartz Group shall cease to own beneficially at least a
greater percentage of the Company's Voting Equity
Interests;
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<PAGE>
(iii) the Continuing Directors cease for any
reason to constitute a majority of the Company's Board of
Directors then in office; or
(iv) the Company adopts a plan of liquidation
or dissolution.
"Change of Control Offer" has the meaning
ascribed to such term in Section 2.5(d)(i).
"Closing Date" means the date on or before
January 31, 2000 on which the initial Bridge Loan is made
and the conditions set forth in Section 3.1 are satisfied
or waived in accordance with Section 12.5.
"Commitment Letter" means the letter agreement
dated January 24, 2000 among the Company, UBS, WDR and
ABN AMRO Bank N.V., as amended from time to time,
pursuant to which UBS and ABN AMRO Bank N.V. committed to
provide the Bridge Loan to the Company.
"Common Stock" of any Person means any and all
shares, interests or other participations in, and other
equivalents (however designated and whether voting or non-
voting) of, such Person's common stock, whether
outstanding on the Closing Date or issued after the
Closing Date, and includes, without limitation, all
series and classes of such common stock.
"Company" has the meaning ascribed to such term
in the introduction to this Agreement.
"Consolidated EBITDA" means, with reference to
any period, Consolidated Net Income for such period plus,
to the extent deducted from revenues in determining
Consolidated Net Income (without duplication), (i)
Consolidated Interest Expense and all non-cash interest
expense, (ii) expense for income taxes paid or accrued,
(iii) depreciation, (iv) amortization, (v) extraordinary
losses incurred other than in the ordinary course of
business and losses from discontinued operations, (vi)
any extraordinary, unusual or non-recurring non-cash
expenses or non-cash losses, and (vii) non-recurring cash
charges, including any capitalized non-recurring cash
charges, taken on or prior to March 31, 2000 resulting
from severance, integration and other adjustments made as
a result of the PSD Acquisition (provided
6
<PAGE>
that the
amounts referred to in this clause (vii) shall not, in
the aggregate, exceed $25,000,000), and minus, to the
extent included in Consolidated Net Income, extraordinary
gains and gains from discontinued operations, all net of
tax, realized other than in the ordinary course of
business, all calculated for the Company and its
Subsidiaries on a consolidated basis for such period;
provided, that the items to be added to and subtracted
from Consolidated Net Income with respect to any Subsid
iary shall be added or subtracted only to the extent and
in the same proportions that (a) the net income of such
Subsidiary was included in the calculation of
Consolidated Net Income, if such Subsidiary is not a
Wholly-Owned Subsidiary and (b) the Consolidated EBITDA
of such Subsidiary (calculated as if such Subsidiary were
the "Company") is permitted to be paid or distributed as
a dividend, advance, loan or other distribution to the
Company.
"Consolidated Funded Indebtedness" means at any
time, without duplication, the aggregate dollar amount of
(i) Indebtedness (other than Rate Management Obligations
and similar obligations under other Financial Contracts)
of the Company and its Subsidiaries which has actually
been funded and is outstandingat such time, whether or not
such amount is due and payable at such time, plus
(ii) undrawn amounts available under standby letters of
credit, all calculated on a consolidated basis as of such
time.
"Consolidated Interest Expense" means, with
reference to any period, the cash interest expense of the
Company and its Subsidiaries calculated on a consolidated
basis for such period.
"Consolidated Net Income" means, with reference
to any period, the net income (or loss) of the Company
and its Subsidiaries calculated on a consolidated basis
for such period, provided that Consolidated Net Income
shall exclude the net income, if positive, of any of the
Company's consolidated Subsidiaries to the extent that
the declaration or payment of dividends or similar
distributions is not at the time permitted by operation
of the terms of its charter or by-laws or any other
agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such
Subsidiary.
"Contingent Obligation" of a Person means any
agreement, undertaking or arrangement by which such
Person assumes, guarantees, endorses, contingently agrees
to purchase or provide funds for the payment of, or
otherwise
7
<PAGE>
becomes or is contingently liable upon, the
Indebtedness of any other Person, or agrees to maintain
the net worth or working capital or other financial
condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including,
without limitation, any comfort letter or material
take-or-pay contract.
"Continuing Directors" means, during any period
of 12 consecutive months after the Closing Date,
individuals who at the beginning of any such 12-month
period constituted the Company's Board of Directors
(together with any new directors whose election by such
Board of Directors or whose nomination for election by
the Company's shareholders was approved by a vote of a
majority of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved, including new directors designated in or
provided for in an agreement regarding the merger,
consolidation or sale, transfer or other conveyance, of
all or substantially all of the assets of the Company, if
such agreement was approved by a vote of such majority of
directors).
"Controlled Group" means all members of a
controlled group of corporations or other business
entities and all trades or businesses (whether or not
incorporated) under common control which, together with
the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Internal Revenue
Code.
"Default" means an event or condition the
occurrence of which is, or with the lapse of time or the
giving of notice or both would be, an Event of Default.
"Dollars" or the sign "$" means the lawful
money of the United States of America.
"Domestic Lending Office" shall mean, as to any
Lender, the office of such Lender designated as such on
Annex I, or such other office designated by such Lender
from time to time by written notice to the Agent and the
Company.
"Domestic Subsidiary" means a Subsidiary
organized under the laws of the United States of America,
any State thereof or the District of Columbia.
8
<PAGE>
"Eligible Assignee" means (A) (i) a commercial
bank organized under the laws of the United States of
America or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of
the United States or any state thereof; (iii) a
commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that
(x) such bank is acting through a branch or agency
located in the United States or (y) such bank is
organized under the laws of a country that is a member of
the Organization for Economic Cooperation and Development
or a political subdivision of such country; and (iv) any
other entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act of 1933)
which extends credit or buys loans as one of its
businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies, in
each case (under clauses (i) through (iv) above) that is
reasonably acceptable to the Agent and, so long as no
Event of Default exists, the Company; and (B) any Lender
and any Affiliate of any Lender.
"Engagement Letter" means that engagement
letter, dated as of January 24, 2000, among the Company,
WDR and ABN AMRO Bank N.V.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the
environment on human health, (iii) emissions, discharges
or releases of pollutants, contaminants, hazardous
substances or wastes into surface water, ground water or
land, or (iv) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling
of pollutants,contaminants, hazardous substances or
hazardous wastes or the clean-up or other remediation
thereof.
"Equity Interests" means (i) in the case of a
corporation, common and preferred stock, (ii) in the case
of a limited liability company, association or business
entity, any and all shares, interests, participations,
ownership or voting rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a
partnership, partnership interests (whether general or
limited) and (iv) any other interest or participation
that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of,
the issuing Person, in each case regardless of
9
<PAGE>
class or designation, and all warrants, options, purchase
rights, conversion or exchange rights, voting rights, calls
or claims of any character with respect thereto.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and
any rule or regulation issued thereunder.
"Eurodollar Lending Office" shall mean, as to
any Lender, the office of such Lender designated as such
on Annex I, or such other office designated by such
Lender from time to time by written notice to the Agent
and the Company.
"Event of Default" means each of the events set
forth in Section 7.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended, and any successor statute or
statutes thereto.
"Exchange Notes" has the meaning ascribed to it
in Section 5.12(b).
"Exchange Request" has the meaning ascribed to
it in Section 5.12.
"Existing Bridge Agreement" means that certain
Senior Subordinated Credit Agreement dated as of
September 30, 1999, among the Company, the lenders party
thereto and Banc One Capital Markets, Inc., as agent for
the lenders, as amended to date.
"fair market value" means, with respect to any
asset or property, the price which could be negotiated in
an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to
complete the transaction. Fair market value shall
be determined by the Board of Directors of the Company
acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors
of the Company delivered to the Agent.
"Fee Letter" means that Fee Letter dated
January 24, 2000 among the Company, UBS, WDR and ABN AMRO
Bank N.V.
10
<PAGE>
"Financial Contract" of a Person means (i) any
exchange-traded or over-the-counter futures, forward,
swap or option contract or other financial instrument
with similar characteristics or (ii) any Rate Management
Transaction.
"Financing" means, with respect to any Person,
the issuance or sale by such Person of any Equity
Interests of such Person or any Indebtedness consisting
of debt securities of such Person pursuant to a
registered offering or private placement, but excluding
the issuance or sale of (i) any Indebtedness permitted to
be incurred pursuant to Section 6.2, (ii) Equity
Interests by the Borrower to any officer, director or
employee of the borrower or any of its Subsidiaries
pursuant to any incentive compensation plan or program
and (iii) Equity Interests or Indebtedness by any
Subsidiary of the Borrower to the Borrower or any Wholly-
Owned Subsidiary of the Borrower.
"Fiscal Year" means the fiscal year of the
Company and each Guarantor for accounting and tax
purposes, which for all years after the Closing Date
shall end on December 31.
"Foreign Subsidiary" means any Subsidiary that
is not a Domestic Subsidiary.
"fully diluted" means all the shares of Common
Stock of the Company then outstanding or to be issued,
calculated as if all shares of Common Stock of the
Company issuable upon conversion or exercise of any
outstanding warrants, options or similar rights
(including upon conversion or exchange of convertible or
exchangeable debt) are outstanding, and assuming that all
options that may be granted under employee benefit plans
for the benefit of the Company's employees are deemed to
have been granted and exercised, and assuming that any
other Common Stock of the Company issuable pursuant to
any security, plan or arrangement of the Company has been
issued.
"Funding Guarantor" shall have the meaning
provided in Section 10.7.
"GAAP" means generally accepted accounting
principles as in effect from time to time in the United
States of America.
11
<PAGE>
"Genetic Systems" means Genetic Systems
Corporation, a Delaware corporation.
"Governmental Authority" means any nation or
government, any federal, state, local or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligations" shall have the meaning
provided in Section 11.1.
"Guarantees" means, collectively, the
guarantees delivered to the Lenders by the Guarantors
pursuant to Section 10 which are evidenced by notations
of guarantee substantially in the form of Exhibit VI
hereto.
"Guarantor" means each of the Company's
Domestic Subsidiaries which constitutes a Material
Subsidiary that in the future executes a supplement or
amendment to this Agreement in which such Subsidiary
agrees to be bound by the terms of the Loan Documents as
a Guarantor; provided that any Person constituting a
Guarantor as described above shall cease to constitute a
Guarantor when its respective Guarantee is released in
accordance with the terms of the Loan Documents.
Notwithstanding the above, no direct or indirect Foreign
Subsidiary of the Company will be considered a Guarantor.
"Guarantor Junior Securities" means, with
respect to a Guarantor, securities of such Guarantor
subordinated to the Guarantor Senior Debt to the same
extent as the Guarantee Obligations and which, in any
case, do not mature or become subject to a mandatory
redemption obligation prior to the one-year anniversary
of the maturity of the Guarantor Senior Debt or of any
securities distributed in any proceeding on account of
the Guarantor Senior Debt.
"Guarantor Payment Blockage Period" shall have
the meaning provided in Section 11.2.
"Guarantor Senior Debt" means the Senior Debt
of a Guarantor.
12
<PAGE>
"Incur" means, with respect to any Indebtedness
or other obligation of any Person, to create, issue,
incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as
required pursuant to GAAP or otherwise, of any such
Indebtedness or other obligation on the balance sheet of
such Person (and "Incurrence," "Incurred," "Incurrable"
and "Incurring" shall have meanings correlative to the
foregoing); provided, however, that any amendment,
modification or waiver of any document pursuant to which
Indebtedness was previously Incurred shall only be deemed
to be an Incurrence of Indebtedness if and to the extent
such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable
thereon or (ii) changes to an earlier date the stated
maturity thereof or the date of any scheduled or required
principal payment thereon or the time or circumstances
under which such Indebtedness shall be redeemed;
provided, further, that any Indebtedness of a Person
existing at the time such Person becomes (after the
Closing Date) a Subsidiary of the Company (whether by
merger, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary of the Company.
"Indebtedness" of a Person means, without
duplication, such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred
purchase price of Property or services (other than
accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the
trade), (iii) obligations which are evidenced by notes,
acceptances, or other instruments, (iv) obligations of
such Person to purchase securities or other Property
arising out of or in connection with the sale of the same
or substantially similar securities or Property, (v)
Capitalized Lease Obligations, (vi) reimbursement
obligations with respect to standby letters of credit,
whether drawn or undrawn, (vii) Rate Management
Obligations, (viii) Off-Balance Sheet Liabilities, (ix)
all liabilities and obligations of the type described in
the preceding clauses (i) through (viii) of any other
Person that such Person has assumed or guaranteed or that
are secured by a Lien on any Property of such Person
(provided that if any such liability or obligation of
such other Person is not the legal liability of such
Person, the amount thereof shall be deemed to be the
lesser of (1) the actual amount of such liability or
obligation and (2) the book value of such Person's
Property security such liability or obligation, and (x)
any other obligation for borrowed money or other
financial accommodation which in accordance with
Agreement Accounting Principles would be shown as a
liability on the consolidated balance sheet of such
Person.
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<PAGE>
"indemnified liabilities" has the meaning
ascribed to such term in Section 12.3.
"Indemnitees" has the meaning ascribed to such
term in Section 12.3.
"Interest Period" means, for each Bridge Note,
the period commencing on the Closing Date and ending on
the immediately succeeding Bridge Payment Date, and,
thereafter, each subsequent period commencing on the last
day of the immediately preceding Interest Period and
ending on the immediately succeeding Bridge Payment Date.
"Interest Rate Determination Date" means, with
respect to any Interest Period, the second Business Day
on which banks in New York and London are open prior to
the first Business Day of such Interest Period.
"Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended from time to time, and
any successor code or statute.
"Investment" of a Person means any loan,
advance (other than commission, travel and similar
advances to officers and employees made in the ordinary
course of business), extension of credit (other than
accounts or notes receivable arising in the ordinary
course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds,
mutual funds, partnership interests, notes, debentures or
other securities (other than treasury stock) owned by
such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes,
derivative financial instruments and other similar
instruments or contracts owned by such Person. Payment
by a Person under a guaranty by such Person of
Indebtedness of another Person shall be deemed to be an
Investment by such Person in such other Person in the
amount of such payment.
"Junior Securities" means securities of the
Company subordinated to the Senior Debt to the same
extent as the Obligations and which, in any case, do not
mature or become subject to a mandatory redemption
obligation prior to the one-year anniversary of the
maturity of the Senior Debt or of any securities
distributed in any proceeding on account of the Senior
Debt.
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<PAGE>
"Lenders" has the meaning ascribed to that term
in the introduction to this Agreement and shall include
any assignee of any Loan, Note or Loan Commitment to the
extent of such assignment.
"Leverage Ratio" means, as of any date of
calculation, the ratio of (i) Consolidated Funded
Indebtedness outstanding on such date to (ii)
Consolidated EBITDA for the Company's then most-recently
ended four fiscal quarters.
"LIBO Base Rate" shall mean, with respect to
each day during an Interest Period, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16th of
1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the term "LIBO
Base Rate" shall mean, with respect to each day during an
Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of
such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate
is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of
1%). In the event that neither of such rates is
available, the Agent shall refer to the alternative rate
set forth in Section 2.7(a).
"LIBO Rate" shall mean with respect to each day
during an Interest Period for the Bridge Loan, a rate per
annum determined for such day in accordance with the
following formula (rounded upwards to the nearest whole
multiple of one-sixteenth of one percent):
LIBO Base Rate
---------------------------------
1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements" shall mean, with
respect to each day during an Interest Period for the
Bridge Loan, that percentage (expressed as a decimal)
which is in effect on such day, as prescribed by the
Federal Reserve Board or other governmental authority or
agency having jurisdiction with respect thereto for
determining the maximum reserves (including, without
limitation, basic,
15
<PAGE>
supplemental, marginal and emergency
reserves) for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D) maintained
by a member bank of the Federal Reserve System.
"Lien" means any lien (statutory or other),
mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation,
the interest of a vendor or lessor under any conditional
sale, Capitalized Lease or other title retention
agreement).
"Loan Commitment" means the Bridge Loan
Commitment and the Rollover Bridge Loan Commitment.
"Loan Documents" means this Agreement, the
Bridge Notes, the Rollover Bridge Notes, the Note
Documents and the Registration Statement.
"Loans" means the Bridge Loan and the Rollover
Bridge Loan as each may be outstanding.
"Loan Parties" means the Company and any
Guarantor.
"Margin Stock" has the meaning assigned to that
term in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means a material
adverse effect on (i) the business, Property, condition
(financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, (ii) the
ability of the Company and the Guarantors collectively to
perform their obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent or the
Lenders thereunder.
"Material Domestic Subsidiary" means any
Domestic Subsidiary having assets (other than non-U.S.
domiciled assets and Equity Interests in Foreign
Subsidiaries) with a book value of $10,000,000 or more or
any group of Domestic Subsidiaries on a combined basis
having such assets with a book value of $15,000,000 or
more.
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<PAGE>
"Material Indebtedness" is defined in Section
7.1(e).
"Material Subsidiary" means any Subsidiary, or
group of Subsidiaries on a combined basis, that
constitutes a Substantial Portion of the Property of the
Company and its Subsidiaries.
"Maturity Date" means the one year anniversary
of the Closing Date.
"Maximum Cash Interest Rate" means an interest
rate of 14% per annum; provided that in computing such
interest rate, fees paid to the Lenders shall not be
deemed an interest payment.
"Moody's" mean Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA and to which the Company or any member of the
Controlled Group is obligated to make contributions.
"Net Cash Proceeds" means, with respect to any
Asset Sale or Financing by any Person or the issuance of
the Permanent Securities, (a) cash received by such
Person or any Subsidiary of such Person from such Asset
Sale (including cash received as consideration for the
assumption or incurrence of liabilities incurred in
connection with or in anticipation of such Asset Sale) or
Financing or the issuance of the Permanent Securities,
after (i) provision for all income or other taxes
measured by or resulting from such Asset Sale or
Financing or the issuance of the Permanent Securities,
(ii) payment of all brokerage commissions and other fees
and expenses related to such Asset Sale or Financing or
the issuance of the Permanent Securities, (iii) repayment
of Indebtedness secured by a Lien on any asset disposed
of in such Asset Sale, (iv) deduction of appropriate
amounts to be provided by such Person or a Subsidiary of
such Person as a reserve, in accordance with Agreement
Accounting Principles, against any liabilities associated
with the assets sold or disposed of in such Asset Sale
and retained by such Person or a Subsidiary of such
Person after such Asset Sale, including, without
limitation, liabilities related to environmental matters,
or against any indemnification obligations associated
with the assets sold or disposed of in such Asset Sale,
and (v) in the case of a sale of a facility, the costs of
relocating the operations of the Borrower and its
Subsidiaries from that facility; and (b) cash payments in
respect of
17
<PAGE>
any Indebtedness, Equity Interest or other
consideration received by such Person or any Subsidiary
of such Person from such Asset Sale upon receipt of such
cash payments by such Person or such Subsidiary.
"Non-Payment Default" means any event (other
than a Payment Default) the occurrence of which entitles
one or more Persons to act to accelerate the maturity of
any Senior Debt.
"Note Documents" means the Exchange Notes, the
Permanent Securities, the Senior Subordinated Indenture,
the indenture governing the Permanent Securities and any
guarantee related thereto.
"Notes" means, collectively, the Bridge Notes
and the Rollover Bridge Notes.
"Notice of Borrowing" means a notice
substantially in the form of Exhibit IV-A annexed hereto
with respect to a proposed borrowing.
"Obligations" means all obligations of every
nature of the Company from time to time owed to the
Lenders and the Agent under the Loan Documents, whether
for principal, premiums, reimbursements, interest, fees,
expenses, indemnities or otherwise, and whether primary,
secondary, direct, indirect, contingent, fixed or
otherwise (including obligations of performance).
"Off-Balance Sheet Liability" of a Person means
(i) any repurchase obligation or recourse liability of
such Person with respect to the collectability of
accounts or notes receivable sold by such Person, (ii)
any liability under any Sale and Leaseback Transaction
which is not a Capitalized Lease, (iii) any liability
under any so-called "synthetic lease" transaction entered
into by such Person, or (iv) any obligation arising with
respect to any other transaction which is the functional
equivalent of borrowing but which does not constitute a
liability on the balance sheet of such Person, but
excluding from this clause (iv) any lease of Property
(other than a Capitalized Lease) by such Person as lessee
which has an original term (including any required
renewals and any renewals effective at the option of the
lessor) of one year or more.
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<PAGE>
"Offer Payment Date" has the meaning ascribed
to such term in Section 2.5(d)(iii).
"Officer" means, with respect to any Person,
the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Controller,
the Treasurer or the Secretary of such Person.
"Officers' Certificate" means, as applied to
any corporation, a certificate executed on behalf of such
corporation by two Officers; provided, however, that
every Officers' Certificate with respect to the
compliance with a condition precedent to the making of
the Loans hereunder shall include (i) a statement that
the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions
or other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such
examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a
statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Original Bridge Notes" has the meaning
ascribed to such term in Section 2.1(d).
"Original Rollover Bridge Notes" has the
meaning ascribed to such term in Section 2.2(e).
"Payment Blockage Period" has the meaning
ascribed to such term in Section 8.2(b).
"Payment Default" means any default in the
payment of principal, premium, if any, or interest on any
Senior Debt beyond any applicable grace period with
respect thereto.
"Payment Office" shall mean the office of the
Agent located at 677 Washington Blvd., 6th Floor Tower,
Stamford, Connecticut 06901 or such other office as the
Agent may designate to the Company and the Lenders from
time to time.
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"PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Permanent Securities" means any Securities of
the Company and/or the Guarantors, the proceeds of which
are used to repay the Notes in full. If the Permanent
Securities consist of debt Securities, such Permanent
Securities shall be governed by an indenture or other
instrument which contains covenants, events of default
and subordination provisions substantially similar to
those described in the "Description of Notes" set forth
in the January 27, 2000 draft of the Company's
Preliminary Offering Memorandum with respect to
$150,000,000 in principal amount of __% Senior
Subordinated Notes due 2007.
"Permitted Acquisition" means any Acquisition
made by the Company or any of its Subsidiaries, provided
that (i) as of the date of the consummation of such
Acquisition, no Default or Event of Default shall have
occurred and be continuing or would result from such
Acquisition, and the representation and warranty
contained in Section 4.11 shall be true both before and
after giving effect to such Acquisition, (ii) such
Acquisition is consummated on a non-hostile basis
pursuant to a negotiated acquisition agreement approved
by the board of directors or other applicable governing
body of the seller or entity to be acquired, and no
material challenge to such Acquisition (excluding the
exercise of appraisal rights) shall be pending or
threatened by any shareholder or director of the seller
or entity to be acquired, (iii) the business to be
acquired in such Acquisition is reasonably related to one
or more of the fields of enterprise in which the Company
and its Subsidiaries are engaged on the Closing Date,
(iv) as of the date of the consummation of such
Acquisition, all material approvals required in
connection therewith shall have been obtained, and (v)
from the period beginning on the Closing Date and ending
on the date the Bridge Notes are exchanged for Rollover
Notes, as of the date of the consummation of such
Acquisition, the Company shall be in compliance with the
financial covenants contained in the Senior Secured
Credit Agreement as in effect on the Closing Date, both
prior to and after giving effect to such Acquisition.
"Person" means any natural person, corporation,
firm, joint venture, partnership, limited liability
company, association, enterprise, trust or other entity
or organization, or any government or political
subdivision or any agency, department or instrumentality
thereof.
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"PIK Interest Amount" has the meaning ascribed
to such term in Section 2.3(b).
"Plan" means an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the
Internal Revenue Code as to which the Company or any
member of the Controlled Group could reasonably be
expected to incur any liability.
"Prepayment Date" has the meaning set forth in
Section 2.5(c).
"Property" of a Person means any and all
property, whether real, personal, tangible, intangible,
or mixed, of such Person, or other assets owned, leased
or operated by such Person, including, without
limitation, Equity Interests of Subsidiaries of such
Person.
"PSD" means Pasteur Sanofi Diagnostics S.A.
"PSD Acquisition" means the acquisition by the
Company of the outstanding capital stock of PSD and
certain related assets (the "Acquired Business") pursuant
to the PSD Purchase Agreement.
"PSD Purchase Agreement" means the Purchase
Agreement dated July 3, 1999 among the Company, Sanofi
Synthelabo and Institut Pasteur.
"Rate Management Transaction" means any
transaction (including an agreement with respect thereto)
now existing or hereafter entered into for bona fide
hedging purposes (and not for speculative purposes),
which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap
transaction, cross-currency rate swap transaction,
currency option or any other similar transaction
(including any option with respect to any of these
transactions) or any combination thereof, whether linked
to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial
measures.
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"Rate Management Obligations" of a Person means
any and all obligations of such Person, whether absolute
or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions
therefor), under (i) any and all Rate Management
Transactions, and (ii) any and all cancellations, buy
backs, reversals, terminations or assignments of any Rate
Management Transactions.
"Refinance" means, in respect of any security
or Indebtedness, to refinance, extend, renew, refund,
repay, prepay, redeem, defease or retire, or to issue a
security or Indebtedness in exchange or replacement for,
such security or Indebtedness in whole or in part.
"Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to such
term in Section 12.20.
"Registration Statement" means a registration
statement of the Company and the Guarantors with respect
to the Exchange Notes, including the Prospectus,
amendments and supplements to such Registration
Statement, including post-effective amendments, all
exhibits and all material incorporated by reference in
such Registration Statement.
"Reportable Event" means a reportable event as
defined in Section 4043 of ERISA and the regulations
issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has
by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified within 30 days of the
occurrence of such event, provided, however, that a
failure to meet the minimum funding standard of Section
412 of the Internal Revenue Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Internal Revenue Code.
"Representative" means the indenture trustee or
other trustee, agent or representative in respect of any
Senior Debt; provided that if, and for so long as, any
Senior Debt lacks such a representative, then the
Representative for such Senior Debt shall at all times
constitute the holders of a majority in outstanding
principal amount of such Senior Debt in respect of any
Senior Debt.
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"Required Lenders" means Lenders holding in the
aggregate more than 50% of the outstanding principal
amount of Notes.
"Rollover Bridge Loan Commitment" has the
meaning ascribed to such term in Section 2.2(a).
"Rollover Bridge Notes" has the meaning
ascribed to such term in Section 2.2(c).
"Rollover Bridge Loan Rate" means, for the
period from and including the Maturity Date and to but
excluding the three-month anniversary of the Maturity
Date, a rate of interest per annum equal to the greater
of (i) 14%, (ii) the Applicable Treasury Rate on the
Maturity Date plus 6.25%, and (iii) the rate of interest
on the Bridge Loan in effect on the Maturity Date. For
each subsequent three month period the Rollover Bridge
Loan Rate means the Rollover Bridge Loan Rate in effect
for the immediately preceding three month period plus
0.50%.
"Rollover Loan" has the meaning ascribed to
such term in Section 2.2(a).
"Rollover Notice" means a notice substantially
in the form of Exhibit IV-B annexed hereto with respect
to a proposed conversion.
"S&P" means Standard and Poor's Ratings
Services, a division of The McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale
or other transfer of Property by any Person with the
intent to lease such Property as lessee.
"Schwartz Group" means David and Alice
Schwartz, their family and heirs, and corporations,
partnerships and limited liability companies 100% owned
by any of the foregoing and trusts for the benefit of any
of the foregoing.
"Securities" means any stock, shares,
partnership interests, voting trust certificates,
certificates of interest or participation in any profit
sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible,
subordinated or
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otherwise, or in general any instruments
commonly known as "securities" or any certificates of
interest, shares or participations in temporary or
interim certificates for the purchase or acquisition of,
or any right to subscribe to, purchase or acquire, any of
the foregoing.
"Securities Act" means the Securities Act of
1933, as amended, and any successor statute or statutes
thereto.
"Senior Debt" means up to $220 million of the
following: the principal of, premium, if any, and
interest (including any interest accruing subsequent to
an event specified in Section 7.1(f) or Section 7.1(g)
hereof at the rate provided for in the documentation
governing such Senior Debt, whether or not such interest
is an allowed claim under applicable law) on, and all
other obligations (including reimbursements, fees,
expenses, indemnities or otherwise, and whether primary,
secondary, direct, indirect, contingent, fixed or
otherwise) with respect to (i) all Indebtedness under or
in respect of the Senior Secured Credit Agreement and any
guaranty of any Indebtedness under or in respect of the
Senior Secured Credit Agreement and (ii) all Rate
Management Transactions and any cancellation, buyback,
reversal, termination or assignment of any Rate
Management Transaction.
"Senior Financing" means the initial borrowing
by the Company under the Senior Secured Credit Agreement.
"Senior Officers" means each of the Chief
Executive Officer, Chief Financial Officer and Chief
Operating Officer of the Company.
"Senior Secured Credit Agreement" means the
Credit Agreement dated as of September 30, 1999, among
Bio-Rad Laboratories, Inc., the lenders party thereto in
their capacities as lenders thereunder, Bank One, NA, as
agent, ABN AMRO Bank N.V., as syndication agent, and
Union Bank of California, as documentation agent,
together with the related documents thereto (including,
without limitation, any guarantee agreements and security
documents), in each case as such agreements may be
amended (including any amendment and restatement
thereof), supplemented, replaced, refinanced or otherwise
modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount
of available borrowings thereunder (provided that such
increase in borrowings is permitted by Section 6.2
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<PAGE>
hereof) or adding or deleting Subsidiaries as additional
borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any
other agent, lender or group of lenders.
"Senior Subordinated Indenture" means an
indenture, under which the Exchange Notes will be issued,
that complies with the Trust Indenture Act of 1939
between the Company and a trustee conforming to the terms
and conditions of the Rollover Loan (except as described
below) and containing such other terms and conditions
typical for publicly traded high yield debt securities.
The covenants, events of default and subordination
provisions of the Senior Subordinated Indenture shall be
substantially similar to those described in the
"Description of Notes" set forth in the January 27, 2000
draft of the Company's Preliminary Offering Memorandum
with respect to $150,000,000 in principal amount of __%
Senior Subordinated Notes due 2007. The Senior
Subordinated Indenture shall have mandatory redemption
provisions typical for publicly traded high yield debt
securities. The Exchange Notes shall initially bear
interest at the Rollover Bridge Loan Rate. For so long
as the Exchange Notes bear interest at an increasing rate
of interest, the Exchange Notes will be redeemable at the
option of the Company, in whole or in part at any time,
at par plus accrued and unpaid interest to the redemption
date. Each holder of the Exchange Notes shall have the
option to fix the interest rate on the Exchange Notes at
a rate that is equal to the then applicable rate of
interest borne by the Exchange Notes (but in no event in
excess of 18% per annum). The Maximum Cash Interest Rate
shall apply to the Exchange Notes, with all interest in
excess of the Maximum Cash Interest Rate payable at the
option of the Company in additional Exchange Notes. In
such event, such Exchange Notes will be noncallable until
the third anniversary of the Closing Date and will be
callable thereafter at par plus accrued interest plus a
premium equal to one-half of the coupon in effect on the
date on which the interest rate was fixed declining
ratably to par on the date that is one year prior to
maturity of the Exchange Notes. The trustee shall be
appointed by the Company and shall be acceptable to the
Lenders receiving the Exchange Notes. The bank or trust
company acting as trustee under the Senior Subordinated
Indenture shall at all times be a corporation organized
and doing business under the laws of the United States of
America or the State of New York, in good standing and
having its principal offices in the Borough of Manhattan,
in The City of New York, which is authorized under such
laws to exercise corporate trust powers and is subject to
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supervision or examination by Federal or State authority
and which has a combined capital and surplus of not less
than $50,000,000.
"Single Employer Plan" means a Plan (other than
a Multiemployer Plan) maintained by the Company or any
member of the Controlled Group for employees of the
Company or any member of the Controlled Group.
"Subordinated Indebtedness" means Indebtedness
of the Company or any Guarantor which is expressly
subordinated in right of payment to the Notes or the
Guarantee of such Guarantor, as the case may be.
"Subsequent Bridge Note" has the meaning
ascribed to such term in Section 2.1(d).
"Subsequent Rollover Bridge Note" has the
meaning ascribed to such term in Section 2.2(c).
"Subsidiary" of a Person means (i) any
corporation more than 50% of the outstanding securities
having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such
Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any
partnership, limited liability company, association,
joint venture or similar business organization more than
50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a
Subsidiary of the Company.
"Substantial Portion" means, with respect to
the Property of the Company and its Subsidiaries,
Property which (i) represents more than 10% of the
consolidated assets of the Company and its Subsidiaries
as shown in the consolidated financial statements of the
Company and its Subsidiaries as at the end of the four
fiscal quarter period ending immediately prior to the
fiscal quarter in which such determination is made, or
(ii) is responsible for more than 10% of the consolidated
net income of the Company and its Subsidiaries as
reflected in the financial statements referred to in
clause (i) above.
"Synthetic Lease" is defined in Section 6.2(h).
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"Taxes" has the meaning ascribed to such term
in Section 2.10.
"Transactions" means the borrowings of the
Loans and the repayment of the amounts outstanding under
the Existing Bridge Agreement.
"Tribunal" means any government, any
arbitration panel, any court or any governmental
department, commission, board, bureau, agency, authority
or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession,
county, parish, town, township, village or municipality,
whether now or hereafter constituted and/or existing.
"UBS" means UBS AG, Stamford Branch.
"Unfunded Liabilities" means the amount (if
any) by which the present value of all vested and
unvested accrued benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets
allocable to such benefits, all determined as of the then
most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan
terminations.
"U.S. Legal Tender" means such coin or currency
of the United States of America as at the time of payment
shall be legal tender for the payment of public and
private debts.
"Voting Equity Interests" means Equity
Interests which at the time are entitled to vote in the
election of, as applicable, directors, members or
partners generally.
"WDR" means Warburg Dillon Read.
"Wholly Owned Subsidiary" of any Person means
any Subsidiary of such Person of which all the
outstanding voting securities (other than in the case of
a Foreign Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other
Persons pursuant to applicable law) are owned by such
Person or any Wholly Owned Subsidiary of such Person.
Unless otherwise specified, all references to a "Wholly
Owned Subsidiary" shall mean a Wholly Owned Subsidiary of
the Company.
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<PAGE>
"Year 2000 Issues" means anticipated costs,
problems and uncertainties associated with the inability
of certain computer applications (whether of the Company,
any of its Subsidiaries, or any of the Company's or any
of its Subsidiaries' material customers, suppliers or
vendors) to effectively handle data including dates on
and after January 1, 2000, as such inability affects the
business, operations and financial condition of the
Company and its Subsidiaries.
"Year 2000 Program" is defined in Section 4.19.
1.2 Accounting Terms. For the purposes of this
Agreement, all accounting terms not otherwise defined
herein shall have the meanings assigned to them in
conformity with GAAP.
1.3 Other Definitional Provisions; Anniversaries. Any
of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or
the plural depending on the reference. For purposes of
this Agreement, a monthly anniversary of the Closing Date
shall occur on the same day of the applicable month as
the day of the month on which the Closing Date occurred;
provided, however, that if the applicable month has no
such day (i.e., 29, 30 or 31), the monthly anniversary
shall be deemed to occur on the last day of the
applicable month.
SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENT AND
LOANS; NOTES
2.1 Bridge Loan and Bridge Note.
(a) Bridge Loan Commitment. Subject to the terms and
conditions of this Agreement and in reliance upon the
representations and warranties of the Company herein set
forth, the Lenders hereby agree to lend to the Company
on the Closing Date $100,000,000.00 (one hundred million
dollars) in the aggregate (the "Bridge Loan"), each such
Lender committing, severally and not jointly, to lend the
amount set forth next to such Lender's name on the
signature pages hereto. The Lenders' commitments to make
the Bridge Loan to the Company pursuant to this Section
2.1(a) are herein called individually, a "Bridge Loan
Commitment" and collectively, the "Bridge Loan
Commitments."
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(b) Notice of Borrowing. When the Company desires
to borrow under this Section 2.1, it shall deliver to the
Agent a Notice of Borrowing no later than 12:00 P.M. (New
York time), at least three Business Days in advance of
the Closing Date or such later date as shall be agreed to
by the Agent. The Notice of Borrowing shall specify the
applicable date of borrowing (which shall be a Business
Day). Upon receipt of such Notice of Borrowing, the
Agent shall promptly notify each Lender of its share of
the Bridge Loan and the other matters covered by the
Notice of Borrowing.
(c) Disbursement of Funds. No later than 1:00 P.M. (New
York time) on the Closing Date, each Lender will make
available its pro rata share of the Bridge Loan requested
to be made on such date in the manner provided below.
All amounts shall be made available to the Agent in U.S.
Legal Tender and immediately available funds at the
Payment Office and the Agent promptly will make available
to the Company by depositing to its account at the
Payment Office the aggregate of the amounts so made
available in the type of funds received. Unless the
Agent shall have been notified by any Lender prior to the
Closing Date that such Lender does not intend to make
available to the Agent its portion of the Bridge Loan to
be made on such date, the Agent may assume that such
Lender has made such amount available to the Agent on
such date, and the Agent, in reliance upon such
assumption, may (in its sole discretion and without any
obligation to do so) make available to the Company a
corresponding amount. If such corresponding amount is
not in fact made available to the Agent by such Lender
and the Agent has made available same to the Company, the
Agent shall be entitled to recover such corresponding
amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the
Company, and the Company shall immediately pay such
corresponding amount to the Agent. The Agent shall also
be entitled to recover from the Lender or the Company, as
the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding
amount was made available by the Agent to the Company
to the date such corresponding amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such
Lender, the overnight Federal Funds Rate or (y) if paid
by the Company, the then applicable rate of interest on
the Loans.
Nothing herein shall be deemed to relieve any Lender
from its obligation to fulfill its Bridge Loan Commitment
hereunder or to prejudice any rights
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which the Company
may have against any Lender as a result of any default by
such Lender hereunder.
(d) Bridge Notes. The Company shall execute and deliver
to each Lender on the Closing Date a Bridge Note dated
the Closing Date substantially in the form of Exhibit I
annexed hereto to evidence the portion of the Bridge Loan
made on such date by such Lender and with appropriate
insertions ("Original Bridge Notes"). On each interest
payment date prior to the Maturity Date on which the
Company elects to pay a PIK Interest Amount pursuant to
Section 2.3(b), the Company shall execute and deliver to
each Lender on such interest payment date a Bridge Note
dated such interest payment date substantially in the
form of Exhibit I annexed hereto in a principal amount
equal to such Lender's pro rata portion of such PIK
Interest Amount and with other appropriate insertions
(each a "Subsequent Bridge Note" and, together with the
Original Bridge Notes, the "Bridge Notes"). A Subsequent
Bridge Note shall bear interest from the date of its
issuance at the same rate borne by all Bridge Notes.
(e) Scheduled Payment of Bridge Loan. Subject to
Section 2.2, the Company shall pay in full the
outstanding amount of the Bridge Loan and all other
Obligations owing hereunder no later than the Maturity
Date.
(f) Termination of Bridge Loan Commitment. The Bridge
Loan Commitment hereunder shall terminate on the earlier
of (i) immediately after the Closing Date, provided the
Bridge Loan has been made, or (ii) 5:00 p.m., New York
time, on January 31, 2000. The Company shall have the
right, without premium or penalty, to reduce or terminate
the Bridge Loan Commitment of the Lenders hereunder at
any time. Any Loan repaid may not be redrawn.
(g) Pro Rata Borrowings. The Bridge Loan made under
this Agreement shall be made by the Lenders pro rata on
the basis of their respective Bridge Loan Commitments.
It is understood that no Lender shall be responsible for
any default by any other Lender of its obligation to make
its portion of the Bridge Loan hereunder and that each
Lender shall be obligated to make its portion of the
Bridge Loan hereunder, regardless of the failure of any
other Lender to fulfill its commitments hereunder.
2.2 Rollover Bridge Loan and Rollover Bridge Note.
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(a) Rollover Bridge Loan Commitment. Subject to
the terms and conditions of this Agreement, including
without limitation the conditions precedent set forth in
Section 3.2, and in reliance upon the representations and
warranties of the Company herein set forth, the Lenders
hereby agree, upon the request of the Company, to convert
on the Maturity Date the then outstanding principal
amount of the Bridge Notes into a Rollover Bridge Loan
(the "Rollover Bridge Loan"), such Rollover Bridge Loan
to be in the aggregate principal amount of the then
outstanding principal amount of the Bridge Notes. The
Company's request shall be evidenced by a Rollover Notice
delivered to the Lenders no later than 12:00 P.M. (New
York time), at least two Business Days in advance of the
Maturity Date. The Lenders' commitments under this
Section 2.2(a) are herein called collectively, the
"Rollover Bridge Loan Commitment."
(b) Making of Rollover Bridge Loan. Upon satisfaction
or waiver of the conditions precedent specified in
Section 3.2 hereof, each Lender shall extend to the
Company the Rollover Bridge Loan to be issued on the
Maturity Date by such Lender by canceling on its records
a corresponding principal amount of the Bridge Notes
held by such Lender.
(c) Maturity of Rollover Bridge Loan. The Rollover
Bridge Loan shall mature and the Company shall pay in
full the outstanding principal amount thereof and
accrued interest thereon on September 30, 2005 (the
"Final Maturity Date").
(d) Rollover Bridge Notes. The Company, as
borrower, shall execute and deliver to each Lender on
the Maturity Date a Rollover Bridge Note dated the
Maturity Date substantially in the form of Exhibit II
annexed hereto to evidence the Rollover Bridge Loan made
on such date, in the principal amount of the Bridge
Notes held by such Lender on such date and with other
appropriate insertions (collectively the "Original
Rollover Bridge Notes"). On or after the Maturity Date,
on each interest payment date on which the Company
elects to pay a PIK Interest Amount pursuant to Section
2.3(b), the Company shall execute and deliver to each
Lender on such interest payment date a Rollover Bridge
Note dated such interest payment date substantially in
the form of Exhibit II annexed hereto in a principal
amount equal to such Lender's pro rata portion of such
PIK Interest Amount and with other appropriate
insertions (each a "Subsequent Rollover Bridge Note"
and, together with the Original Rollover Bridge Notes,
the "Rollover Bridge Notes"). A
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Subsequent Rollover
Bridge Note shall bear interest at the same rate borne
by all Rollover Bridge Notes.
2.3 Interest on the Notes.
(a) Rate of Interest. The Notes shall bear interest on
the unpaid principal amount thereof from the date made
through maturity (whether by prepayment, acceleration or
otherwise) at a rate determined as set forth below.
(i) Bridge Notes. Subject to Section 2.3(a)(iii) and
Section 2.7, the Bridge Notes shall bear interest for
each Interest Period at a rate per annum equal to the
LIBO Rate for such period plus the Applicable Margin.
(ii) Rollover Bridge Notes. At any time after the
Maturity Date, the Rollover Bridge Notes shall bear
interest at a rate per annum equal to the Rollover
Bridge Loan Rate.
(iii) Maximum Interest. Notwithstanding clause (i) or
(ii) of this Section 2.3(a) or any other provision
herein, other than Section 2.3(c), in no event will the
combined sum of interest (cash or otherwise) on the
Bridge Notes or the Rollover Bridge Notes exceed the
lower of 18.00% per annum or the maximum interest rate
permitted by law.
(b) Interest Payments. Interest shall be payable
(i) with respect to the Bridge Notes, in arrears on
April 30, 2000 and every one, two or three months
thereafter as the Company may elect with the Agent's
consent (each of the preceding dates, a "Bridge Payment
Date") and upon any prepayment of the Bridge Notes (to
the extent accrued on the amount being prepaid) and on
the Maturity Date in respect of the principal amount of
any Subsequent Bridge Notes and (ii) with respect to the
Rollover Bridge Notes, in arrears on each March 31, June
30, September 30 and December 31 of each year,
commencing on the first of such dates to follow the
Maturity Date, upon any prepayment of the Rollover
Bridge Notes (to the extent accrued on the amount being
prepaid) and on the Final Maturity Date; provided,
however, that if, on any interest payment date, the
interest rate borne by the Bridge Notes or the Rollover
Bridge Notes, as the case may be, exceeds the Maximum
Cash Interest Rate, the Company may pay all or a portion
of the interest payable in excess of the amount of
interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent
Bridge Notes or Subsequent Rollover Bridge
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Notes, as the
case may be, in an aggregate principal amount equal to
the amount of such interest being so paid (the "PIK
Interest Amount").
(c) Post-Maturity Interest. Upon the occurrence and
during the continuance of any Event of Default, the
Company shall pay interest on the unpaid principal
amount of each Note owing to each Lender, payable on
demand, at a rate per annum equal to the rate which is
(i) if any Rollover Bridge Notes are outstanding, 2.0%
per annum in excess of the rate per annum then borne by
such Rollover Bridge Notes and (ii) if any Bridge Notes
are outstanding, the LIBO Rate plus 2% per annum plus
the Applicable Margin with respect to such Bridge Notes.
With respect to the amount of any interest, fee or other
amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount
shall be paid in full, the Company shall pay interest
thereon, to the extent permitted under applicable law,
in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal to the rate
which is (i) if any Rollover Bridge Notes are
outstanding, 2.0% per annum in excess of the rate per
annum then borne by such Rollover Bridge Notes and (ii)
if any Bridge Notes are outstanding, the LIBO Rate plus
2% per annum plus the Applicable Margin with respect to
such Bridge Notes.
(d) Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year and,
with respect to the Bridge Loan, the actual number of
days elapsed in the period during which it accrues or,
with respect to the Rollover Loan, twelve 30-day months.
In computing interest on the Loans, the date of the
making of the Loans shall be included and the date of
payment shall be excluded; provided, however, that if a
Loan is repaid on the same day on which it is made, one
day's interest shall be paid on that Loan.
2.4 Fees. The Company agrees to pay to WDR, the Agent,
and the Lenders all fees and other obligations in
accordance with, and at the times specified by, the Fee
Letter.
2.5 Prepayments and Payments.
(a) Voluntary Prepayments. Prior to the Final
Maturity Date, the Company may, upon five days' prior
written notice to each of the Lenders, prepay the Loans
at any time, in whole or in part, on a pro rata basis,
by paying to each applicable Lender an amount equal to
100% of such Lender's pro rata share of the
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aggregate
principal amount of the Loan to be prepaid, plus accrued
and unpaid interest thereon to the Prepayment Date and
all other amounts then due and owing hereunder;
provided, however, that in connection with any
prepayment of a Bridge Note made on a date other than
the expiration of the Interest Period applicable
thereto, the Company shall compensate each Lender in
accordance with Section 2.8.
(b) Mandatory Prepayments. The Company shall prepay
the Loans ratably in accordance with the aggregate
outstanding principal balances thereof, with 100% of the
Net Cash Proceeds of: (i) the issuance of the Permanent
Securities, (ii) any Asset Sale and (iii) any Financing;
provided, however, that if any Indebtedness is
outstanding under the Senior Secured Credit Agreement,
then any amounts received pursuant to clauses (ii) and
(iii) shall first be used for (A) any required repayment
of such Indebtedness or (B) with respect to the Net Cash
Proceeds of any Asset Sale, if permitted by the Senior
Secured Credit Agreement, investment in assets or
Property (other than Cash Equivalent Investments) in the
Company's or any Subsidiary's business within twelve
months after such Asset Sale.
The Company shall, not later than the next
Business Day following the receipt of any Net Cash
Proceeds required to be applied to prepayment of the
Loans pursuant to the immediately preceding paragraph,
apply such Net Cash Proceeds on a pro rata basis to
prepay the Loans by paying to each Lender an amount
equal to 100% of such Lender's pro rata share of the
aggregate principal amount of the Loans to be prepaid,
plus accrued and unpaid interest thereon to the
Prepayment Date and any other amounts then due and owing
hereunder. Concurrently with any prepayment of the Loans
pursuant to this Section 2.5(b), the Company shall
deliver to the Agent an Officer's Certificate
demonstrating the calculation of the amount of the
applicable net proceeds that gave rise to such
prepayment.
(c) Effect of Notice of Prepayment. The Company shall
notify the Lenders in writing at their addresses shown
in the Register of any date set for mandatory or
optional prepayment (each such day, a "Prepayment Date")
of applicable Loans. Once such notice is sent or
mailed, the Loans to be prepaid shall become due and
payable on the Prepayment Date set forth in such notice.
Such notice may not be conditional.
(d) Purchase of Notes Upon a Change of Control.
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(i) Upon the occurrence of a Change of Control,
the Company shall offer to prepay all or any part of the
principal amount of each Lender's Bridge Notes or
Rollover Bridge Notes pursuant to the offer described
below (the "Change of Control Offer") at a prepayment
price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued interest thereon to the
date of repurchase.
(ii) At least ten days prior to any Change of Control,
the Company shall mail a notice to each Lender stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 2.5(d) and that all Notes
validly tendered will be accepted for payment;
(2) the purchase price and the purchase date, which
shall be the date on which such Change of Control occurs
(the "Offer Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that any Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest
after the Offer Payment Date unless the Company shall
default in the payment of the repurchase price of the
Notes;
(5) that if a Lender elects to have a Note purchased
pursuant to the Change of Control Offer it will be
required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Company prior to 5:00 p.m.
New York time on the Offer Payment Date;
(6) that a Lender will be entitled to withdraw its
election if the Company receives, not later than
5:00 p.m. New York time on the Business Day preceding
the Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the principal
amount of Notes such Lender delivered for purchase, and
a statement that such Lender is withdrawing its election
to have such Note purchased; and
(7) that if Notes are purchased only in part, a new
Note of the same type will be issued in principal amount
equal to the unpurchased portion of the Notes
surrendered.
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(iii) On or before the Offer Payment Date, the
Company shall (1) accept for payment Notes or portions
thereof which are to be purchased in accordance with the
above, and (2) deposit at the Payment Office U.S. Legal
Tender sufficient to pay the purchase price of all Notes
to be purchased. The Agent shall promptly mail or, if
provided with appropriate instructions, send by wire
transfer to the Lenders whose Notes are so accepted
payment in an amount equal to the purchase price unless
such payment is prohibited pursuant to Section 8 hereof
or otherwise.
(e) Manner and Time of Payment. All payments of
principal, interest, and any other amounts due hereunder
and under the Notes by the Company or the Guarantors
shall be made without defense, set-off or counterclaim
and in same-day funds and delivered to the Agent, unless
otherwise specified, not later than 1:00 P.M. (New York
time) on the date due at the Payment Office for the
account of the Lenders; funds received by the Agent
after that time shall be deemed to have been paid by the
Company on the next succeeding Business Day. Other than
with respect to PIK Interest Amounts, all payments of
any Obligations to be made hereunder or under the Notes
by the Company or any other obligor with respect thereto
shall be made solely in U.S. Legal Tender or such other
currency as is then legal tender for public and private
debts in the United States of America.
(f) Payments on Non-Business Days. Whenever any
payment to be made hereunder or under the Notes shall be
stated to be due on a day which is not a Business Day,
the payment shall be made on the next succeeding
Business Day and such extension of time shall be
included in the computation of the payment of interest
hereunder or under the Notes or of the commitment fees
and other amounts due hereunder, as the case may be.
(g) Notation of Payment. Each Lender agrees that
before disposing of any Note held by it, or any part
thereof (other than by granting participations therein),
such Lender will make a notation thereon of all
principal payments previously made thereon and of the
date to which interest thereon has been paid and will
notify the Company of the name and address of the
transferee of that Note; provided, however, that the
failure to make (or any error in the making of) such a
notation or to notify the Company of the name and
address of such transferee shall not limit or otherwise
affect the obligation of the Company hereunder or under
such Notes with respect to the Loans and payments of
principal or interest on any such Note.
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2.6 Use of Proceeds.
(a) Bridge Loan. The proceeds of the Bridge Loan shall
be applied by the Company to the repayment of amounts
outstanding under the Existing Bridge Agreement.
(b) Rollover Bridge Loan. The proceeds of the Rollover
Bridge Loan shall be used to repay and cancel any
outstanding amount of Bridge Notes converted to Rollover
Bridge Notes on such date.
(c) Margin Regulations. No portion of the proceeds of
any borrowing under this Agreement shall be used by the
Company in any manner which might cause the borrowing or
the application of such proceeds to violate the
applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal
Reserve System or any other regulation of the Board of
Governors or to violate the Exchange Act, in each case
as in effect on the date or dates of such borrowing and
such use of proceeds. In addition, following
application of the proceeds of any borrowing under this
Agreement, not more than 25% of the value of the assets
(either of the Company only or of the Company and its
Subsidiaries or a consolidated basis) will be Margin
Stock
2.7 Interest Rate Unascertainable, Increased Costs,
Illegality.
(a) In the event that the Agent, in the case of clause
(i) below, or any Lender, in the case of clauses (ii)
and (iii) below, shall have determined (which
determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the LIBO Rate for any
Interest Period, that by reason of any changes arising
after the date of this Agreement affecting the London
interbank market, adequate and fair means do not exist
for ascertaining the applicable interest rate on the
basis provided for in the definition of the LIBO Rate;
or
(ii) at any time, that the relevant LIBO Rate
applicable to any of its Notes shall not represent the
effective pricing to such Lender for maintaining a
Bridge Loan, or such Lender shall incur increased costs
or reductions in the amounts received or receivable
hereunder in respect of any Bridge Note, in
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any such case because of (x) any change since the date of this
Agreement in any applicable law or governmental rule,
regulation, guideline or order or any interpretation
thereof and including the introduction of any new law or
governmental rule, regulation, guideline or order (such
as for example but not limited to a change in official
reserve requirements, but, in all events, excluding
reserves required under Regulation D of the Federal
Reserve Board to the extent included in the computation
of the LIBO Rate), whether or not having the force of
law and whether or not failure to comply therewith would
be unlawful, and/or (y) other circumstances affecting
such Lender or the London interbank market or the
position of such Lender in such market; or
(iii) at any time, that the making or continuance by it
of any Bridge Loan has become unlawful by compliance by
such Lender in good faith with any law or governmental
rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to
comply therewith would be unlawful) or has become
impracticable as a result of a contingency occurring
after the date of this Agreement which materially and
adversely affects the London interbank market;
then, and in any such event, the Agent or such Lender
shall, promptly after making such determination, give
notice (by telephone promptly confirmed in writing) to
the Company and (if applicable) the Agent of such deter
mination (which notice the Agent shall promptly transmit
to each of the other Lenders). Thereafter in the case
of clause (i), (ii) and (iii) above, each Bridge Note
shall bear interest at a rate equal to the Applicable
Treasury Rate plus the Applicable Margin; provided,
however, that in the case of clause (ii) above, the
Company shall have the option of paying interest at a
rate equal to the LIBO Rate (if the Bridge Loan is then
outstanding) plus the Applicable Margin if it pays to
such Lender, upon such Lender's delivery of written
demand therefor to the Company with a copy to the Agent,
such additional amounts (in the form of an increased
rate of interest, or a different method of calculating
interest, or otherwise, as such Lender in its sole
discretion shall determine) as shall be required to
compensate such Lender for such increased costs or
reduction in amounts received or receivable hereunder.
(b) In the event that the Agent determines at any time
following its giving of notice based on the conditions
described in clause (a)(i) above that none of such condi
tions exist, the Agent shall promptly give notice
thereof to the
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Company and the Lenders, whereupon the
Bridge Notes will again bear interest pursuant to
Section 2.3.
(c) In the event that a Lender determines at any time
following its giving of a notice based on the conditions
described in clause (a)(iii) above that none of such
conditions exist, such Lender shall promptly give notice
thereof to the Company and the Agent, whereupon the
Bridge Notes held by such Lender shall bear interest
pursuant to Section 2.3.
2.8 Funding Losses. The Company shall compensate each
Lender, upon such Lender's delivery of a written demand
therefor to the Company, with a copy to the Agent (which
demand shall set forth the basis for requesting such
amounts and shall, absent manifest error, be final and
conclusive and binding upon all of the parties hereto),
for all reasonable losses, expenses and liabilities
(including,without limitation, any loss, expense or
liability incurred by such Lender in connection with the
liquidation or reemployment of deposits or funds
required by it to make or carry its Bridge Notes), that
such Lender sustains: (i) if for any reason (other than
a default by such Lender) a borrowing of Bridge Notes
does not occur on a date specified therefor in a Notice
of Borrowing (whether or not rescinded, cancelled or
withdrawn or deemed rescinded, cancelled or withdrawn,),
(ii) if any repayment (including, without limitation,
payment after acceleration) or conversion of any of its
Bridge Notes occurs on a date which is not the last day
of the Interest Period applicable thereto, (iii) if any
prepayment of any of its Bridge Notes is not made on any
date specified in a notice of prepayment given by the
Company, or (iv) as a consequence of any default by the
Company in repaying its Bridge Notes or any other
amounts owing hereunder in respect of its Bridge Notes
when required by the terms of this Agreement.
Calculation of all amounts payable to a Lender under
this Section 2.8 shall be made on the assumption that
such Lender has funded its relevant Bridge Notes through
the purchase of a Eurodollar deposit bearing interest at
the LIBO Rate in an amount equal to the amount of such
Bridge Notes with a maturity equivalent to the Interest
Period applicable to such Bridge Notes, and through the
transfer of such Eurodollar deposit from an offshore
office of such Lender to a domestic office of such
Lender in the United States of America, provided that
each Lender may fund its Eurodollar Loans in any manner
that it in its sole discretion chooses and the foregoing
assumption shall only be made in order to calculate
amounts payable under this Section 2.8.
2.9 Increased Capital.
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(a) If any Lender shall have determined that
compliance with any applicable law, rule, regulation,
guideline, request or directive (whether or not having
the force of law) of any governmental authority, central
bank or comparable agency, has or would have the effect
of reducing the rate of return on the capital or assets
of such Lender or any Person controlling such Lender as
a consequence of its commitments or obligations here
under, then from time to time, upon such Lender's
delivery of a written demand therefor to the Agent and
the Company (with a copy to the Agent), the Company
shall pay to such Lender such additional amount or
amounts as will compensate such Lender or Person for
such reduction.
(b) In the event that any change in law occurring after
the date that any lender becomes a Lender party to this
Agreement shall, in the opinion of such Lender, require
that any Bridge Loan Commitment of such Lender be
treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital
to be maintained by such Lender or any Person
controlling such Lender, and such change in law shall
have the effect of reducing the rate of return on the
capital or assets of such Lender or any Person
controlling such Lender as a consequence of its
commitments or obligations hereunder, then from time to
time, upon such Lender's delivery of a written demand
therefor to the Agent and the Company (with a copy to
the Agent), the Company shall pay to such Lender such
additional amount or amounts as will compensate such
Lender or Person for such reduction.
2.10 Taxes.
(a) All payments made by the Company under this
Agreement and the other Loan Documents shall be made
free and clear of, and without reduction or withholding
for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any
governmental authority excluding, in the case of the
Agent and each Lender, net income and franchise taxes
imposed on the Agent or such Lender by the jurisdiction
under the laws of which the Agent or such Lender is
organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in
which such Lender's Domestic Lending Office or
Eurodollar Lending Office, as the case may be, is
located or any political subdivision or taxing authority
thereof or therein (all such non-excluded taxes, levies,
imposts, deductions, charges or withholdings being
hereinafter called "Taxes"). If any Taxes are required
to be withheld from any
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amounts payable to the Agent or
any Lender hereunder or under the Notes, the amounts so
payable to the Agent or such Lender shall be increased
to the extent necessary to yield to the Agent or such
Lender (after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes. The
Company agrees to indemnify and hold harmless the Agent
and any Lender for the full amount of Taxes paid by the
Agent or such Lender and any incremental taxes, interest
or penalties arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally
asserted. Payment under this indemnification shall be
made within 30 days after the date the Agent or any
Lender makes written demand therefor. Whenever any Taxes
are payable by the Company, as promptly as possible
thereafter, and in any event within 30 days, the Company
shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified
copy of an original official receipt received by the
Company showing payment thereof. If the Company fails
to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the
Company shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may
become payable by the Agent or any Lender as a result of
any such failure. The agreements in this Section 2.10
shall survive the termination of this Agreement and the
payment of the Notes and all other Obligations.
(b) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof
(including each assignee, transferee or recipient that
becomes a party to this Agreement pursuant to Section
12.1) agrees that, prior to the first date on which any
payment is due to it hereunder, it will deliver to the
Company and the Agent (i) two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224
or successor applicable form, as the case may be,
certifying in each case that such Lender is entitled to
benefits under an income tax treaty to which the United
States is a party that reduces the rate of withholding
tax on payments under this Agreement or certifying that
the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or
business in the United States, and (ii) an Internal
Revenue Service Form W-8 or W-9 or successor applicable
form, as the case may be, to establish an exemption from
United States backup withholding tax. If the form
provided by a Lender prior to the first date on which a
payment is due to it hereunder indicates a United States
interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender
provides
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the appropriate form certifying that a lesser
rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes;
provided, however, that, if at the date of an assignment
under Section 12.1(a) pursuant to which such Lender
assignee becomes a party to this Agreement, the Lender
assignor was entitled to payments under subsection
2.10(a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such
extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or
other amounts otherwise includible in Taxes) United
States withholding tax, if any, applicable with respect
to the Lender assignee on such date. Each Lender which
delivers to the Company and the Agent a Form 1001 or
4224 and Form W-8 or W-9 pursuant to the preceding
sentence further undertakes to deliver to the Company
and the Agent two further copies of the said letter and
Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner of certification, as
the case may be, on or before the date that any such
letter or form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent letter and form previously delivered by it to the
Company, and such extensions or renewals thereof as may
reasonably be requested by the Company, certifying in
the case of a Form 1001 or 4224 that such Lender is
entitled to receive payments under this Agreement
without deduction or withholding of any United States
federal income taxes, unless in any such case an event
(including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required
which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering
any such letter or form with respect to it and such
Lender advises the Company that it is not capable of
receiving payments without any deduction or withholding
of United States federal income tax, and in the case of
a Form W-8 or W-9, establishing an exemption from United
States backup withholding tax.
SECTION 3. CONDITIONS
3.1 Conditions to Bridge Loan. The obligation of the
Agent and each Lender to make the Bridge Loan is subject
to the prior or concurrent satisfaction of each of the
following conditions:
(a) Document Delivery. On or before the Closing
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 the Agent shall be
reasonably satisfactory in form and substance
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to the Agent, and the Agent shall have received on behalf of
the Lenders the following items, each of which shall be
in form and substance satisfactory to the Agent and,
unless otherwise noted below or in the definition
thereof, dated the Closing Date:
(i) executed copies of this Agreement and the Bridge
Notes substantially in the form of Exhibit I annexed
hereto executed in accordance with Section 2.1(d) drawn
to the order of the Lenders and with appropriate
insertions;
(ii) a certified copy of the Company's charter or an
officer's certificate stating that there has been no
change to the Company's charter since September 30,
1999, together with a certificate of status, compliance,
good standing or like certificate with respect to the
Company issued by the appropriate government officials
of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or
carries on any material business, each to be dated a
recent date prior to the Closing Date;
(iii) a copy of the Company's bylaws, certified as of the
Closing Date by its Secretary or one of its Assistant
Secretaries, or an officer's certificate stating that
there has been no change to the Company's bylaws since
September 30, 1999;
(iv) intentionally omitted;
(v) Board Resolutions of the Company approving and
authorizing the execution, delivery and performance of
this Agreement, each of the other Loan Documents and any
other documents, instruments and certificates required
to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution,
delivery and payment of the Notes and the consummation
of the Transactions;
(vi) signature and incumbency certificates of the
Company's officers executing this Agreement and the
Bridge Notes;
(vii) an originally executed Notice of Borrowing
substantially in the form of Exhibit IV-A annexed
hereto, signed by the President or
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a Vice President of
the Company on behalf of the Company and delivered to
the Agent;
(viii) originally executed copies of one or more favorable
written opinions of (I) Latham and Watkins, counsel for
the Company, substantially in the form of Exhibit V
annexed hereto and addressed to the Lenders and
(II) such other opinions of counsel and such
certificates or opinions of accountants, appraisers or
other professionals as the Agent shall have reasonably
requested;
(ix) a certificate of the Chief Financial Officer or the
Treasurer of the Company addressed to the Agent and the
Lenders and in form and substance satisfactory to the
Agent and the Lenders, attesting that the Company and
its Subsidiaries (individually or in the aggregate) are
solvent;
(x) an executed payoff letter with respect to
Indebtedness outstanding under the Existing Bridge
Agreement;
(xv) satisfactory evidence that all
amounts due and payable to Banc One Capital Markets,
Inc. pursuant to that certain engagement letter dated
June 16, 1999 between the Company and Banc One Capital
Markets, Inc. have been paid in full and such engagement
letter and the engagement of Banc One Capital Markets,
Inc. thereunder has been terminated;
(xi) a funds flow memorandum satisfactory in form and
substance to the Agent; and
(xii) such other documents, certificates and opinions as
the Agent may reasonably request.
(b) Consent under Senior Secured Credit Agreement. The
Company shall have obtained the consent of the Agent and
the Required Lenders under the Senior Secured Credit
Agreement to (i) the terms and conditions of this
Agreement and (ii) the issuance of up to $150 million of
Permanent Securities.
(c) Capitalization; Etc. The corporate, capital and
ownership structure (including articles of incorporation
and bylaws), stockholders' agreements and management of
the Company and its Subsidiaries shall be satisfactory
to the Agent in all respects.
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(d) No Inconsistent Information. The information
disclosed to WDR, the Agent or the Lenders prior to the
date of the Commitment Letter shall not have proven to
be materially false or inaccurate, nor shall the Agent
and the Lenders have discovered or otherwise become
aware of information not previously disclosed to them
that is materially inconsistent with information
disclosed to WDR, the Agent or the Lenders prior to the
date of the Commitment Letter with respect to the
business, assets, liabilities (actual and contingent),
operations, condition (financial or otherwise),
management, prospects or value of the Company or its
Subsidiaries.
(e) Financial Statements. The Agent shall have
received and, in each case, approved all audited,
unaudited and pro forma financial statements described
in Section 4.4 and all completed, probable and pending
acquisitions (including the PSD Acquisition), all
meeting the requirements of Regulation S-X under the
Securities Act, applicable to a Registration Statement
under the Securities Act on Form S-1, except that the
Agent and the Lenders acknowledge and agree that such
financial statements shall not include interim 1998
financial data for PSD. All such financial statements
of PSD shall be prepared in accordance with GAAP.
(f) Material Adverse Change. No material adverse
change (including any event which, in the opinion of the
Agent, is reasonably likely to result in such a material
adverse change) in the business, assets, liabilities
(actual and contingent), operations, condition
(financial or otherwise), management, prospects or value
of the Company and its Subsidiaries, taken as a whole,
shall have occurred since the date of the most recent
audited annual financial statements of the Company and
PSD described in Section 4.4 and delivered to the Agent
as of the Closing Date, and no material inaccuracy in
such financial statements shall exist.
(g) Market Conditions. No material adverse change in
the financial or capital markets generally, or in the
market for high yield debt or bridge loans in
particular, shall have occurred which, in the judgment
of the Agent, would make it impractical or inadvisable
to proceed with the funding of the Bridge Loan or the
sale of the Permanent Securities. No banking moratorium
shall have been declared by Federal or New York banking
officials.
(h) Other Obligations. On or prior to the Closing
Date, (A) all fees and expenses due and payable to the
Agent, WDR, any Lender and/or their affiliates pursuant
to the Engagement Letter or the Fee Letter shall have
been paid in full as contemplated therein, and (B) the
Company shall have complied with all of its
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obligations
under the Engagement Letter and the Fee Letter, and each
such agreement shall be in full force and effect.
(i) Consents. All governmental, shareholder and third-
party consents and approvals necessary or reasonably
advisable in connection with the Transactions and the
other transactions contemplated hereby shall have been
obtained; all such consents and approvals shall be in
full force and effect; and all applicable waiting
periods shall have expired without any action being
taken or threatened by any authority that could
restrain, prevent or impose any material adverse
conditions on the Transactions or such other
transactions.
(j) Judgments, Etc. There shall not exist (A) any
order, decree, judgment, ruling or injunction which
restrains the consummation of the Transactions or (B)
any pending or threatened action, suit, investigation or
proceeding before any Tribunal that, if adversely
determined, could have a Material Adverse Effect.
(k) Intellectual Property. The Company shall provide a
schedule of all United States registered patents and
United States registered trademarks for the Company.
(l) Other Reports. The Agent shall have received, in
form and substance reasonably satisfactory to it, all
environmental reports, Year 2000 questionnaires and such
other reports as it may reasonably request.
(m) Officer's Certificate. Simultaneously with the
making of the Bridge Loan by the Lenders, the Company
shall have delivered to the Agent an Officers'
Certificate from the Company in form and substance
satisfactory to the Agent to the effect that (i) the
representations and warranties in Section 4 are true,
correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on
and as of that date and (ii) on or prior to the Closing
Date, the Company has performed and complied in all
material respects with all covenants and conditions
required to be performed and observed by the Company on
or prior to the Closing Date.
(n) No Default. No event shall have occurred and be
continuing or would result from the consummation of the
borrowing contemplated by the Notice of Borrowing which
would constitute a Default or Event of Default.
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(o) Regulatory Requirements The making of the
Bridge Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of
Regulation T, U or X of the Board of Governors of the
Federal Reserve Board or any other regulation of the
Board.
(p) Offering Memorandum. The Company shall have
delivered to WDR (i) a preliminary offering memorandum
to be distributed at the direction of WDR to potential
purchasers, containing all relevant information about
the Transactions and any other matters which WDR may
deem necessary to a successful offering or which WDR or
the Company may consider necessary or appropriate for
accurate, complete and adequate disclosure, (ii)
management's projections for the Company after giving
pro forma effect to the Transactions and (iii) such
other information as may be reasonably requested by any
rating agency or by WDR or their counsel.
(q) Repayment of Existing Indebtedness. The Company
shall have paid (or made arrangements to pay
concurrently with the making of the Bridge Loan
hereunder) all principal, interest, fees and premiums,
if any, on all Indebtedness outstanding under the
Existing Bridge Agreement and all expenses and other
amounts payable with respect thereto.
(r) Credit Ratings. The Company shall have received a
rating on the Permanent Securities of at least "B2" from
Moody's and "B" from S&P.
3.2 Conditions to Rollover Bridge Loan. The obligation
of the Lenders to make the Rollover Bridge Loan on the
Maturity Date is subject to the prior or concurrent
satisfaction or waiver of the following conditions
precedent:
(a) No Default. There shall exist no Default or Event
of Default on the Maturity Date.
(b) Fees, etc. All fees due to the Agent, WDR and/or
the Lenders shall have been paid in full and all other
requirements and obligations under the Fee Letter and
the Engagement Letter shall have been satisfied or
fulfilled.
(c) No Injunction, Etc. No order, decree, injunction
or judgment enjoining the issuance of any Rollover
Bridge Loan shall be in effect.
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(d) Senior Subordinated Indenture. At least
thirty (30) days prior to the Maturity Date, the Company
shall have delivered a draft of the Senior Subordinated
Indenture reasonably acceptable to the Lenders, and
such Senior Subordinated Indenture shall be in full
force and effect on or prior to the Maturity Date.
(e) Registration Statement. A Registration Statement
shall be in effect for the issuance of Exchange Notes to
the Lenders.
(f) Rollover Notice. The Agent shall have received in
accordance with the provisions of Section 2.2(a) an
originally executed Rollover Notice.
(g) Officer's Certificate. On the Maturity Date, the
Agent shall have received an Officers' Certificate from
the Company dated the Maturity Date and satisfactory in
form and substance to the Agent, to the effect that the
conditions in this Section 3.2 are satisfied on and as
of the Maturity Date.
(h) Rollover Bridge Notes. The Company shall have
executed and delivered to the Agent on the Maturity Date
for delivery to the Lenders, Rollover Bridge Notes dated
the Maturity Date substantially in the form of Exhibit
II annexed hereto to evidence the Rollover Bridge Loan,
in the principal amount of the Rollover Bridge Loan
(which principal amount shall be the aggregate principal
amount of the Bridge Loan outstanding on the Maturity
Date, including the principal amount of any Subsequent
Bridge Notes), and with other appropriate insertions.
(i) Certain Regulations. The making of the Rollover
Bridge Loan shall not violate Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or
any other regulation of the Board.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
In order to induce the Lenders to enter into
this Agreement and to make the Loans, the Company
represents and warrants to the Lenders that, at the time
of execution hereof and on the Closing Date, the
following statements are true, correct and complete:
4.1 Existence and Standing. Each of the Company and
its Subsidiaries is a corporation, partnership (in the
case of Subsidiaries only) or limited
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liability company
duly and properly incorporated or organized, as the case
may be, validly existing and (to the extent such concept
applies to such entity) in good standing under the laws
of its jurisdiction of incorporation or organization and
has all requisite authority to own, operate and encumber
its Property and to conduct its business as presently
conducted in each jurisdiction in which its business is
conducted, except for any failure to be so authorized
that could not reasonably be expected to have a Material
Adverse Effect.
4.2 Authorization and Validity. Each Loan Party has
the power and authority and legal right to execute and
deliver the Loan Documents to which it is a party and to
perform its obligations thereunder. The execution and
delivery by each Loan Party of the Loan Documents to
which it is a party and the performance of its
obligations thereunder have been duly authorized by
proper corporate (or equivalent) proceedings, and the
Loan Documents to which such Loan Party is a party
constitute legal, valid and binding obligations of such
Loan Party enforceable against such Loan Party in
accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors'
rights generally or by general principles of equity
(regardless of whether such enforcement is considered in
a proceeding in equity or at law).
4.3 No Conflict; Government Consent. Neither the
execution and delivery by the Loan Parties of the Loan
Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions
thereof will violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award
binding on the Company or any of its Subsidiaries or
(ii) the Company's or any Subsidiary's articles or
certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of
organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions
of any indenture, instrument or agreement to which the
Company or any of its Subsidiaries is a party or is
subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any
Lien in, of or on the Property of the Company or any
Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or
validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any
Governmental Authority which has not been obtained by
the Company or any of its Subsidiaries, is
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required to
be obtained by the Company or any of its Subsidiaries in
connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the
payment and performance by the Company of the
Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents, except
filings, consents or notices which have been made,
obtained or given, or which, if not made, obtained or
given, individually or in the aggregate could not
reasonably be expected to have a Material Adverse
Effect.
4.4 Financial Statements. (a) The December 31, 1998
audited consolidated financial statements and the March
31, 1999, June 30, 1999 and September 30, 1999 unaudited
consolidated financial statements of the Company and its
Subsidiaries heretofore delivered to the Lenders were
prepared in accordance with generally accepted
accounting principles in effect on the date such
statements were prepared and fairly present the
consolidated financial condition and operations of the
Company and its Subsidiaries at such dates and the
consolidated results of their operations for the periods
then ended, subject, in the case of such unaudited
financial statements, to normal year-end adjustments and
the absence of notes.
(b) The December 31, 1998, financial
statements of the Acquired Business and any additional
financial statements of the Acquired Business required
by the Securities and Exchange Commission heretofore
delivered to the Lenders were prepared in accordance
with GAAP in effect on the date such statements were
prepared and fairly present the financial condition and
operations of the Acquired Business at such dates and
the results of its operations for the periods then
ended. Notwithstanding the foregoing, the Company has
submitted to Sanofi Synthelabo and Institut Pasteur, the
prior owners of the Acquired Business, suggested
adjustments to the certain previously prepared financial
statements of the Acquired Business, which adjustments
may revise the December 31, 1998 financial statements
and any additional financial statements of the Acquired
Business; provided, however, that the Company does not
believe that any such adjustments could result in a
Material Adverse Effect.
(c) The pro forma financial statements of the
Company and its Subsidiaries, copies of which are
attached hereto as Schedule 4.4, present on a pro forma
basis the financial condition of the Company and its
Subsidiaries as of such date, and reflect on a pro forma
basis those liabilities reflected in the notes thereto
and resulting from consummation of the PSD Acquisition,
the transactions contemplated by this Agreement and the
Senior Secured Credit Agreement, and the
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payment or
accrual of all costs and expenses with respect to any of
the foregoing. The projections and assumptions
expressed in such pro forma financials were prepared in
good faith and represent good faith assumptions and
estimates on the part of the Company based on the
information available to the Company at the time so
prepared.
4.5 Material Adverse Change. Since December 31, 1998
there has been no change in the business, Property,
condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries taken as
a whole, including, without limitation, the Acquired
Business, which could reasonably be expected to have a
Material Adverse Effect.
4.6 Taxes. The Company and its Subsidiaries have filed
all United States federal tax returns and all other tax
returns which are required to be filed and have paid all
taxes due pursuant to said returns or pursuant to any
assessment received by the Company or any of its
Subsidiaries, except such taxes, if any, as are not yet
due and payable or are being contested in good faith and
as to which adequate reserves have been provided in
accordance with Agreement Accounting Principles. The
United States income tax returns of the Company and its
Subsidiaries have been audited by the Internal Revenue
Service through the fiscal year ended December 31, 1994.
No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges,
accruals and reserves on the books of the Company and
its Subsidiaries in respect of any taxes are adequate in
accordance with Agreement Accounting Principles.
4.7 Litigation and Contingent Obligations. Except as
set forth on Schedule 4.7, there is no litigation,
arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their
officers, threatened against or affecting the Company or
any of its Subsidiaries which could reasonably be
expected to have a Material Adverse Effect or which
seeks to prevent, enjoin or delay the making of any
Loans. Other than any liability incident to any
litigation, arbitration or proceeding which (i) could
not reasonably be expected to have a Material Adverse
Effect or (ii) is set forth on Schedule 4.7, the Company
and its Subsidiaries have no material contingent
obligations not provided for or disclosed in the
financial statements referred to in Section 4.4.
4.8 Subsidiaries. Schedule 4.8 contains an
accurate list of all Subsidiaries of the Company as of
the date of this Agreement, setting forth their
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respective jurisdictions of organization and the
percentage of their respective Equity Interests owned by
the Company or other Subsidiaries. All of the issued
and outstanding Equity Interests of such Subsidiaries
have been (to the extent such concepts are relevant with
respect to such ownership interests) duly authorized and
issued and are fully paid and non-assessable.
4.9 ERISA. Except as could not reasonably be expected,
individually or in the aggregate, to have a Material
Adverse Effect: there are no Unfunded Liabilities under
any Single Employer Plans; neither the Company nor any
other member of the Controlled Group has incurred, or is
reasonably expected to incur, any withdrawal liability
to Multiemployer Plans; each Plan complies in all
material respects with all applicable requirements of
law and regulations; no Reportable Event has occurred
with respect to any Plan; neither the Company nor any
other member of the Controlled Group has withdrawn from
any Plan or initiated steps to do so; and no steps have
been taken to reorganize or terminate any Plan.
4.10 Accuracy of Information. No information, exhibit
or report furnished by the Company or any of its
Subsidiaries to the Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or
omitted to state a material fact or any fact necessary
to make the statements contained therein not materially
misleading in a manner relied upon by the Lenders to
their detriment.
4.11 Regulation U. Neither the Company nor any of its
Subsidiaries is engaged in the business of extending
credit for the purpose of purchasing or carrying Margin
Stock.
4.12 Material Agreements. Neither the Company nor any
Subsidiary is a party to any agreement or instrument or
subject to any charter or other corporate restriction
which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Subsidiary
is in default in the performance, observance or
fulfillment of any of the obligations, covenants or
conditions contained in any agreement (other than
agreements or instruments evidencing or governing
Indebtedness) to which it is a party, which default
could reasonably be expected to have a Material Adverse
Effect.
4.13 Compliance With Laws. The Company and its
Subsidiaries have complied with all applicable statutes,
rules, regulations, orders and restrictions
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of any
Governmental Authority having jurisdiction over the
conduct of their respective businesses or the ownership
of their respective Property, except for any failure to
comply with any of the foregoing which could not
reasonably be expected to have a Material Adverse
Effect.
4.14 Ownership of Properties. Except as set forth on
Schedule 6.6, on the date of this Agreement, the Company
and its Subsidiaries will have good title, free of all
Liens other than those permitted by Section 6.6, to all
of the Property and assets reflected in the Company's
most recent consolidated financial statements provided
to the Agent as owned by the Company and its
Subsidiaries and all other Property material to the
Company's and its Subsidiaries' businesses, except as
sold or otherwise disposed of in the ordinary course of
business. The Company and each Subsidiary (i) owns
and/or possesses all the patents, trademarks, trade
names, service marks, copyrights, licenses and rights
with respect to the foregoing necessary for the present
conduct of its business without any known conflict with
the rights of others, and (ii) owns and/or possesses
and/or has applied for all the patents, trademarks,
trade names, service marks, copyrights, licenses and
rights with respect to the foregoing necessary for the
planned conduct of its business for the next six months,
without any known conflict with the rights of others,
except, with respect to clauses (i) and (ii), where the
failure to own and/or possess any patents, trademarks,
trade names, service marks, copyrights, licenses and/or
rights could not reasonably be expected to have a
Material Adverse Effect and/or subject the Company or
any Subsidiary to any material liability in connection
with any infringement and/or similar cause of action
related to any of the foregoing.
4.15 Plan Assets; Prohibited Transactions. The Company
is not an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. 2510.3-101 of an employee benefit
plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the
meaning of Section 4975 of the Internal Revenue Code),
and neither the execution of this Agreement nor the
making of Loans hereunder gives rise to a prohibited
transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code) with
respect to "plan assets" of the Company and its
Subsidiaries.
4.16 Environmental Matters. In the ordinary course
of its business, the officers of the Company consider
the effect of Environmental Laws on the business of the
Company and its Subsidiaries, in the course of which
they identify and evaluate potential risks and
liabilities accruing to the Company due to
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Environmental
Laws. On the basis of this consideration, the Company
has concluded that Environmental Laws could not
reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary has
received any notice to the effect that its operations
are not in material compliance with any of the
requirements of applicable Environmental Laws or are the
subject of any investigation by any Governmental
Authority evaluating whether any remedial action is
needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which
non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect.
4.17 Investment Company Act. Neither the Company nor
any Subsidiary is an "investment company" or a company
"controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as
amended.
4.18 Public Utility Holding Company Act. Neither the
Company nor any Subsidiary 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, as
amended.
4.19 Year 2000. The Company has generally completed its
assessment of Year 2000 Issues and has a realistic
program (the "Year 2000 Program") for completing
required remediations and replacements of its assets on
a timely basis. Based on its assessment and Year 2000
Program the Company does not anticipate that Year 2000
Issues will have a Material Adverse Effect.
4.20 Post-Retirement Benefits. As of the Closing Date,
neither the Company nor any of its Subsidiaries has any
expected costs of post-retirement medical and insurance
benefits payable to their employees and former
employees, as estimated by the Company in accordance
with Financial Accounting Standards Board Statement No.
106.
4.21 Insurance. Schedule 4.21 accurately sets
forth as of the Closing Date all insurance policies and
programs currently in effect with respect to the
respective properties and assets and business of the
Company and its Domestic Subsidiaries, specifying, for
each such policy and program, (i) the amount thereof,
(ii) the risks insured against thereby, (iii) the name
of the insurer and each insured party thereunder,
(iv) the policy or other identification number thereof,
(v) the
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expiration date thereof, (vi) the annual premium
with respect thereto, and (vii) any reserves relating to
any self-insurance program that is in effect.
4.22 Solvency. (a) Immediately after the consummation
of the transactions to occur on the date hereof and
immediately following the making of each Loan, if any,
made on the date hereof and after giving effect to the
application of the proceeds of such Loans, (i) the fair
value of the assets of the Company and its Subsidiaries
on a consolidated basis, at a fair valuation, will
exceed the debts and liabilities, subordinated,
contingent or otherwise, of the Company and its
Subsidiaries on a consolidated basis; (ii) the present
fair saleable value of the Property of the Company and
its Subsidiaries on a consolidated basis will be greater
than the amount that will be required to pay the
probable liability of the Company and its Subsidiaries
on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured;
(iii) the Company and its Subsidiaries on a consolidated
basis will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) the
Company and its Subsidiaries on a consolidated basis
will not have unreasonably small capital with which to
conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be
conducted after the date hereof.
(b) The Company does not intend to, or to
permit any of its Subsidiaries to, and does not believe
that it or any of its Subsidiaries will, Incur debts
beyond its ability to pay such debts as they mature,
taking into account the timing of and amounts of cash to
be received by it or any such Subsidiary and the timing
of the amounts of cash to be payable on or in respect of
its Indebtedness or the Indebtedness of any such
Subsidiary.
4.23 Termination of June 1999 Engagement Letter. The
Company has terminated that certain engagement letter
dated June 16, 1999 between the Company and Banc One
Capital Markets, Inc. and the engagement of Banc One
Capital Markets, Inc. thereunder as exclusive
underwriter, arranger or placement agent with respect to
the Permanent Securities.
SECTION 4A. REPRESENTATIONS AND WARRANTIES OF THE
LENDERS
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Each of the Lenders represents and warrants to
the Company that, at the time of execution hereof and on
the Closing Date, the following statements are true,
correct and complete:
4A.1 Accredited Investor. Such Lender is an
institutional "accredited investor" within the meaning
of Regulation D of the Securities Act and the Notes to
be acquired by it pursuant to this Agreement are being
acquired for its own account and without a view to, or
for resale in connection with, any distribution thereof
or any interest therein; provided that the provisions of
this Section shall not prejudice such Lender's right at
all times to sell or otherwise dispose of all or any
part of the Notes so acquired pursuant to the terms of
this Agreement, a registration under the Securities Act
or an exemption from such registration available under
the Securities Act.
4A.2 Knowledge and Experience. Such Lender
has such knowledge and experience in financial and
business matters so as to be capable of evaluating the
merits and risks of its investment in the Notes, such
Lender is capable of bearing the economic risks of such
investment and such Lender has had the opportunity to
conduct its own due diligence investigation in relation
to its making of the Loans and the acquisition of the
Notes hereunder.
4A.3 Source of Funds. No part of the funds
used by such Lender to make the Loans hereunder
constitutes assets of any "plan" (as defined in Section
4975 of the Internal Revenue Code).
SECTION 5. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until
the Loans and the Notes and all other amounts due under
this Agreement have been indefeasibly paid in full, it
shall perform all covenants in this Section 5 required
to be performed by it.
5.1 Financial Reporting. The Company will maintain,
for itself and each Subsidiary, a system of accounting
established and administered in accordance with
generally accepted accounting principles, and furnish to
the Lenders:
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(a) Within 90 days after the close of each of its
Fiscal Years, an unqualified (except for qualifications
relating to changes in accounting principles or
practices reflecting changes in generally accepted
accounting principles and required or approved by the
Company's independent certified public accountants)
audit report certified by independent certified public
accountants acceptable to the Required Lenders, prepared
in accordance with Agreement Accounting Principles on a
consolidated basis for itself and its Subsidiaries,
including balance sheets as of the end of such period,
related profit and loss and reconciliation of surplus
statements, and a statement of cash flows.
(b) Within 45 days after the close of the first three
quarterly periods of each of its Fiscal Years, for
itself and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of
surplus statements and a statement of cash flows for the
period from the beginning of such Fiscal Year to the end
of such quarter, all certified by its chief financial
officer.
(c) As soon as available, but in any event within 90
days after the beginning of each Fiscal Year of the
Company, a copy of the plan and forecast (including a
projected consolidated balance sheet, income statement
and funds flow statement) of the Company and its
Subsidiaries for such Fiscal Year.
(d) Within 10 days after the delivery of the financial
statements required under Section 5.1(a) and within 15
days after the delivery of the financial statements
required under Section 5.1(b), a compliance certificate
in substantially the form of Exhibit III signed by its
Chief Financial Officer or Treasurer showing the
calculations necessary to determine compliance with this
Agreement and stating that no Default or Event of
Default exists, or if any Default or Event of Default
exists, stating the nature and status thereof.
(e) Within 270 days after the close of each Fiscal
Year, a statement of the Unfunded Liabilities of each
Single Employer Plan, certified as correct by an actuary
enrolled under ERISA.
(f) As soon as possible and in any event within 20
days after the Company knows that any Reportable Event
has occurred with respect to any Plan, a statement,
signed by the Chief Financial Officer or Treasurer of
the Company,
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describing said Reportable Event and the
action which the Company proposes to take with respect
thereto.
(g) As soon as possible and in any event within 20 days
after receipt by the Company, a copy of (a) any notice
or claim to the effect that the Company or any of its
Subsidiaries is or may be liable to any Person as a
result of the release by the Company, any of its
Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Company or any of its Subsidiaries,
which, in either case, could reasonably be expected to
have a Material Adverse Effect.
(h) Promptly upon the furnishing thereof to the
shareholders of the Company, copies of all financial
statements, reports and proxy statements so furnished.
(i) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly
or other regular reports which the Company or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(j) Such other information (including non-financial
information) as the Agent or any Lender may from time to
time reasonably request.
5.2 Use of Proceeds. The Company will, and will cause
each Subsidiary to, use the proceeds of the Loans in
accordance with Section 2.6. The Company will not, nor
will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any Margin
Stock.
5.3 Notice of Default. The Company will give prompt
notice in writing to the Lenders of the occurrence of
any Default or Event of Default and of any other
development, financial or otherwise (including, without
limitation, developments with respect to Year 2000
Issues), which could reasonably be expected to have a
Material Adverse Effect.
5.4 Conduct of Business. The Company will, and
will cause each Subsidiary to, carry on and conduct its
business only in fields of enterprise substantially the
same as or reasonably related to the fields of
enterprise in which it
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is presently conducted and do all
things necessary to remain duly incorporated or
organized, validly existing and (to the extent such
concept applies to such entity) in good standing as a
domestic corporation, partnership or limited liability
company in its jurisdiction of incorporation or
organization, as the case may be, and maintain all
requisite authority to conduct its business in each
jurisdiction in which its business is conducted, in each
case, except to the extent that a failure to do so could
not reasonably be expected to have a Material Adverse
Effect.
5.5 Taxes. The Company will, and will cause each
Subsidiary to, timely file complete and correct United
States federal, if applicable, and applicable foreign,
state and local tax returns required by law and pay when
due all taxes, assessments and governmental charges and
levies upon it or its income, profits or Property which
if unpaid might become a Lien on any of its Property,
except those which are being contested in good faith by
appropriate proceedings and with respect to which
adequate reserves have been set aside if and to the
extent required by Agreement Accounting Principles.
5.6 Insurance. The Company shall maintain for itself
and its Domestic Subsidiaries, or shall cause each of
its Domestic Subsidiaries to maintain, in full force and
effect the insurance policies and programs listed on
Schedule 4.21 or substantially similar policies and
programs or other policies and programs as reflect
coverage that is reasonably consistent with prudent
industry practice. In the event the Company or any of
its Domestic Subsidiaries, at any time or times
hereafter shall fail to obtain or maintain any of the
policies or insurance required herein or to pay any
premium in whole or in part relating thereto within ten
days after written notice from the Agent, then the
Agent, without waiving or releasing any obligations or
resulting Event of Default hereunder, may at any time or
times thereafter so long as such failure shall continue
(but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such
premiums and take any other action with respect thereto
which the Agent deems advisable. All sums so disbursed
by the Agent shall constitute part of the Obligations,
payable as provided in this Agreement.
5.7 Compliance with Laws. The Company will, and
will cause each Subsidiary to, comply with all laws,
rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be
subject including, without limitation, all Environmental
Laws, the violation of which could reasonably be
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expected to have a Material Adverse Effect and/or result
in the creation of any Lien not permitted by Section
6.6.
5.8 Maintenance of Properties. The Company will, and
will cause each Subsidiary to, do all things necessary
and commercially reasonable to maintain, preserve,
protect and keep its Property in good repair, working
order and condition, ordinary wear and tear excepted,
and make all necessary and proper repairs, renewals and
replacements so that its business carried on in
connection therewith may be properly conducted at all
times, in each case except to the extent that a failure
to do so could not reasonably be expected to have a
Material Adverse Effect.
5.9 Inspection. The Company will, and will cause each
Subsidiary to, permit the Agent and the Lenders, by
their respective representatives and agents, to inspect
any of the Property, books and financial records of the
Company and each Subsidiary, to examine and make copies
of the books of accounts and other financial records of
the Company and each Subsidiary, and to discuss the
affairs, finances and accounts of the Company and each
Subsidiary with, and to be advised as to the same by,
their respective officers, in each case upon reasonable
advance notice and at such reasonable times (during
normal business hours) and intervals as the Agent may
designate.
5.10 Year 2000. The Company will take and will cause
each of its Subsidiaries to take all such actions as are
reasonably necessary to successfully implement the Year
2000 Program and to assure that Year 2000 Issues will
not have a Material Adverse Effect. At the request of
the Agent, the Company will provide a description of the
Year 2000 Program, together with any updates or progress
reports with respect thereto.
5.11 Additional Guarantors. If at any time on or
after the Closing Date, any one or more Domestic
Subsidiaries shall constitute a Material Domestic
Subsidiary, the Company shall promptly notify the Agent
thereof, which notice shall specify the date as of which
such Domestic Subsidiary or Subsidiaries became a
Material Domestic Subsidiary. (Each reference hereafter
in this Section 5.11 to a Material Domestic Subsidiary
shall mean each Subsidiary constituting such Material
Domestic Subsidiary.) Within 90 days after the date
specified in such notice, the Company shall cause such
Material Domestic Subsidiary to execute and deliver to
the Agent a Guaranty, together with such supporting
documentation, including corporate resolutions and/or
opinions of counsel with respect to such additional
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Guaranty, as may be reasonably required by the Agent.
Notwithstanding the foregoing, (i) if the Company
acquires a Material Domestic Subsidiary pursuant to a
Permitted Acquisition, the Company may, as an
alternative to complying with the preceding sentence,
within 90 days after the consummation of such Permitted
Acquisition, cause such Material Domestic Subsidiary to
merge into, or to transfer all or substantially all of
its assets to, the Company or a Guarantor, and (ii) the
Company shall comply with the preceding sentence or, in
the alternative, the preceding clause (i), with respect
to Sanofi Diagnostics Pasteur, Inc. and Genetic Systems
no later than March 31, 2000. In addition, if any
Subsidiary of the Company guarantees the obligations of
the Company under the Senior Secured Credit Agreement,
such Subsidiary shall also deliver a Guaranty to the
Agent, together with such supporting documentation,
including corporate resolutions and/or opinions of
counsel with respect to such additional Guaranty, as may
be reasonably required by the Agent.
5.12 Exchange of Rollover Bridge Notes. The Company
will, on or before the fifth Business Day following the
written request (the "Exchange Request") of the holder
of any Rollover Bridge Note (or beneficial owner of a
portion thereof):
(a) Execute and deliver, cause each Guarantor to
execute and deliver, and cause a bank or trust company
acting as trustee thereunder to execute and deliver, the
Senior Subordinated Indenture, if such Senior
Subordinated Indenture has not previously been executed
and delivered, and
(b) Execute and deliver to such holder or beneficial
owner in accordance with the Senior Subordinated
Indenture a note in the form attached to the Senior
Subordinated Indenture (the "Exchange Notes") bearing an
increasing interest rate equal to the Rollover Bridge
Loan Rate in exchange for such Rollover Bridge Note
dated the date of the issuance of such Exchange Note,
payable to the order of such holder or owner, as the
case may be, in the same principal amount as such
Rollover Bridge Note (or portion thereof) being
exchanged, and cause each Guarantor to endorse its
guarantee thereon.
The Exchange Request shall specify the principal
amount of the Rollover Bridge Notes to be exchanged
pursuant to this Section 5.12 which shall be at least
$5,000,000 and integral multiples of $500,000 in excess
thereof (or, in the case any Lender holds Rollover
Bridge Notes with an outstanding amount less than
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$5,000,000, such remaining amount). Rollover Bridge
Notes delivered to the Company under this Section 5.12
in exchange for Exchange Notes shall be cancelled by the
Company and the corresponding amount of the Rollover
Bridge Loan deemed repaid and the Exchange Notes shall
be governed by and construed in accordance with the
terms of the Senior Subordinated Indenture.
5.13 Permanent Securities. Upon the request of WDR, the
Company will issue Permanent Securities in such amount
as will generate gross proceeds equal to up to
$150,000,000, which shall be used to repay (i) all
outstanding Bridge Notes, Rollover Bridge Notes and
Exchange Notes and all related fees and expenses and
(ii) otherwise be applied as required under the Senior
Secured Credit Agreement. Such securities shall have
such form, term, guarantees, covenants, default and
subordination provisions and other terms as are
customary for securities of the type issued and may be
issued in one or more tranches, all as determined by
WDR, in its sole discretion; provided, however, that the
Permanent Securities will bear interest at a rate per
annum not greater than 18% and shall be subject to the
Maximum Cash Interest Rate. WDR will act as the
exclusive lead underwriter, lead arranger or lead
placement agent (as it shall determine in its sole
discretion) and AAI will act as the exclusive co-
underwriter, co-arranger or co-placement agent, in
connection with such issuance of Permanent Securities
pursuant to the provisions of the Engagement Letter.
The Company will do all things reasonably required in
the opinion of WDR and AAI in connection with the sale
of the Permanent Securities. In addition, WDR and AAI
may require the Company to execute an underwriting or
purchase agreement providing for the issuance of
Permanent Securities contemplated by this Section 5.13
substantially in the form of WDR's standard underwriting
or purchase agreement, modified as appropriate to
reflect the terms of the transactions contemplate
thereby and containing such terms, covenants,
conditions, representations, warranties and indemnities
as are customary in similar transactions and providing
for the delivery of legal opinions, comfort letters and
officers' certificates, all in form and substance
reasonably satisfactory to WDR and AAI, as well as such
other terms and conditions as WDR and AAI reasonably
consider appropriate in light of the then prevailing
market conditions applicable to similar financings.
5.14 Lenders Meeting. The Company will participate in a
meeting with the Lenders once during each Fiscal Year to
be held at a location and a time selected by the Company
and reasonably satisfactory to the Lenders.
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5.15 Note Documents. Each of the Company and the
Guarantors shall, on the date it executes and delivers
any Note Document, have the full corporate (or
equivalent) power, authority and capacity to do so and
to perform all of its obligations to be performed
thereunder; all corporate (or equivalent) and other
acts, conditions and things required to be done and
performed or to have occurred prior to such execution
and delivery to constitute them as valid and legally
binding obligations of the Company enforceable against
the Company and the Guarantors in accordance with their
respective terms except to the extent that the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally
or by general principles of equity (regardless of
whether such enforcement is considered in a proceeding
in equity or at law), shall have been done and performed
and shall have occurred in due compliance with all
applicable laws; on the date of such execution and
delivery by the Company and the Guarantors, each Note
Document shall constitute a legal, valid, binding and
unconditional obligation of the Company or the
Guarantor, as the case may be, enforceable against the
Company or such Guarantors, as the case may be, in
accordance with its respective terms, except to the
extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors'
rights generally or by general principles of equity
(regardless of whether such enforcement is considered in
a proceeding in equity or at law).
5.16 Syndication. The Company shall actively
assist WDR in achieving syndication of the Bridge Loan
Commitment and the Bridge Loan in a manner reasonably
satisfactory to WDR. In the event that such syndication
cannot be achieved in a manner reasonably satisfactory
to WDR under the terms and conditions set forth herein,
the Company shall cooperate with WDR in developing an
alternative structure that will permit syndication of
the Bridge Loan Commitment and the Bridge Loan in a
manner reasonably satisfactory to WDR and the Company.
Syndication of the Bridge Loan Commitment and the Bridge
Loan will be accomplished by a variety of means,
including direct contact during the syndication between
senior management and advisors of the Company and the
proposed Lenders. To assist WDR in its syndication
efforts, the Company shall (a) provide and cause its
advisors to provide WDR and the other Lenders upon
request with all information reasonably deemed necessary
by WDR to complete syndication, including but not
limited to information and evaluations prepared by the
Company and its advisors, or on its behalf, relating to
the Transactions, provided that the Company does not
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hereby waive its attorney-client privilege, (b) assist
WDR in the preparation of the Offering Memorandum
described in Section 3.1(o) and (c) otherwise assist WDR
in its syndication efforts, including making available
officers and advisors of the Company from time to time
to attend and make presentations regarding the business
and prospects of the Company at a meeting or meetings of
prospective Lenders.
It is understood and agreed that WDR, after
consultation with the Company, will manage and control
all aspects of the syndication, including decisions as
to the selection of proposed Lenders and any titles
offered to proposed Lenders, when commitments will be
accepted and the final allocations of the commitments
among the Lenders. WDR agrees to use its reasonable
efforts to satisfy the Company's preferences with
respect to the selection of proposed Lenders and the
final allocation of the commitments among the Lenders.
SECTION 6. NEGATIVE COVENANTS
The Company covenants and agrees that until
the satisfaction in full of the Loans and the Notes and
all other Obligations due under this Agreement it will
fully and timely perform all covenants in this Section
6.
6.1 Dividends. The Company will not, nor will it
permit any Subsidiary to, declare or pay any dividends
or make any distributions on its capital stock (other
than dividends payable in its own capital stock) or
redeem, repurchase or otherwise acquire or retire any of
its Equity Interests at any time outstanding, except
that any Subsidiary may declare and pay dividends or
make distributions to the Company or to a Wholly-Owned
Subsidiary and excluding share repurchases of the
Company's capital stock used solely to fund employee
stock purchase plans and employee stock option plans,
provided such share repurchases do not exceed $5,000,000
in the aggregate in any fiscal year.
6.2 Indebtedness. The Company will not, nor will it
permit any Subsidiary to, Incur any Indebtedness,
except:
(a) The Loans.
(b) Indebtedness under the Senior Secured Credit
Agreement in an amount not to exceed $220,000,000.
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(c) Indebtedness (other than Indebtedness of
Foreign Subsidiaries) existing on the date hereof and
described in Schedule 6.2.
(d) Indebtedness arising under Rate Management
Transactions and other Financial Contracts permitted by
Section 6.14.
(e) Indebtedness of Foreign Subsidiaries not exceeding
$25,000,000 (or equivalent in foreign currencies) in
aggregate principal amount at any one time outstanding.
(f) Factoring of accounts and notes receivable of
Foreign Subsidiaries, provided that (i) such receivables
sold without recourse to the selling Foreign Subsidiary
shall be sold on commercially reasonable terms and (ii)
the liabilities of such Foreign Subsidiaries with
respect to such receivables sold with recourse to the
selling Foreign Subsidiary shall not exceed $10,000,000
(or equivalent in foreign currencies) in the aggregate
at any time.
(g) Indebtedness constituting Contingent Obligations
permitted by Section 6.13.
(h) Indebtedness incurred pursuant to so-called
"synthetic lease" transactions ("Synthetic Leases") and
Sale and Leaseback Transactions, provided that at the
time such transaction is entered into (A) no Default or
Event of Default exists and (B) the Leverage Ratio as of
the last day of the most recent fiscal quarter for which
the Company has delivered financial statements pursuant
to Section 5.1 on a pro forma basis as if such Synthetic
Lease or Sale and Leaseback Transaction were entered
into at the beginning of the four-fiscal quarter period
ending on such day would have been equal to or less than
3.00 to 1.
(i) Indebtedness of the Company to any Subsidiary or of
any Guarantor to the Company or any other Guarantor or
of any Subsidiary that is not a Guarantor to any other
Subsidiary that is not a Guarantor; provided that if the
Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness shall be expressly
subordinate to the payment in full of the Obligations in
a manner satisfactory in form and substance to the
Agent.
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(j) Other Indebtedness, not otherwise permitted by
clauses (a) through (i) above, not exceeding $15,000,000
in the aggregate outstanding at any one time.
6.3 Merger. The Company will not, nor will it permit
any Subsidiary to, merge or consolidate with or into any
other Person, except that a Subsidiary may merge (i)
into the Company or a Wholly-Owned Subsidiary or (ii) in
connection with a Permitted Acquisition.
6.4 Sale of Assets. The Company will not, nor will it
permit any Subsidiary to, lease, sell or otherwise
dispose of its Property to any other Person, except:
(a) Sales of inventory in the ordinary course of
business.
(b) Sales by Foreign Subsidiaries of accounts
receivable and notes receivable permitted by Section
6.2(f).
(c) Sales or other dispositions of Property in
connection with Synthetic Leases and Sale and Leaseback
Transactions permitted by Section 6.2(h).
(d) Equipment or other assets traded in or exchanged
for replacement assets.
(e) Leases, sales or other dispositions of its Property
(excluding leases, sales or other dispositions permitted
under clauses (a) through (d) above) that, together with
all other Property of the Company and its Subsidiaries
previously leased, sold or disposed of as permitted by
this clause (e) during the four-fiscal quarter period
ending with the fiscal quarter in which any such lease,
sale or other disposition occurs, do not constitute a
Substantial Portion of the Property of the Company and
its Subsidiaries, provided that during the continuance
of a Default or an Event of Default, any disposition of
Property constituting Collateral (as defined in the
Senior Secured Credit Agreement) pursuant to this clause
(e) shall be for consideration consisting only of cash
and Cash Equivalent Investments.
6.5 Investments and Acquisitions. The Company
will not, nor will it permit any Subsidiary to, make or
suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments
in, Subsidiaries), or
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commitments therefor, or to create
any Subsidiary or to become or remain a partner in any
partnership or joint venture, or to make any Acquisition
of any Person, except:
(a) Cash Equivalent Investments.
(b) Existing Investments in Subsidiaries and other
Investments in existence on the date hereof and
described in Schedule 6.5.
(c) Investments by the Company or any Guarantor in
Subsidiaries other than Guarantors, in addition to
Investments permitted by clause (b) above, not to exceed
in the aggregate during the term of this Agreement the
sum of (i) $15,000,000 (or equivalent in foreign
currencies) plus (ii) the cumulative amount of
repayments of principal, returns of capital and
dividends received by the Company or any Guarantor from
Subsidiaries other than Guarantors on Investments
(including existing Investments) in such Subsidiaries.
(d) Investments in the Company and in Subsidiaries that
are Guarantors, and Investments by Subsidiaries that are
not Guarantors in other Subsidiaries that are not
Guarantors.
(e) Investments constituting Rate Management
Transactions and Financial Contracts permitted by
Section 6.14.
(f) Permitted Acquisitions and Investments in joint
ventures, provided that no Default or Event of Default
exists before or after giving effect to such Permitted
Acquisition or such joint venture Investment.
(g) Other Investments not otherwise permitted by
clauses (a) through (f) above, not exceeding in the
aggregate during the term of this Agreement the sum of
(i) $10,000,000 plus (ii) the cumulative amount of
repayments of principal, returns of capital and
dividends received by the Company or any Guarantor on
Investments made pursuant to this clause (g).
6.6 Liens. The Company will not, nor will it permit
any Subsidiary to, create, incur, or suffer to exist any
Lien in, of or on the Property of the Company or any of
its Subsidiaries, except:
(a) Liens securing Indebtedness and other obligations
under the Senior Secured Credit Agreement.
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(b) Liens for taxes, assessments or governmental
charges (other than Liens imposed by the PBGC) or levies
on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate
proceedings and for which adequate reserves shall have
been set aside on its books if and to the extent
required by Agreement Accounting Principles.
(c) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar
liens arising in the ordinary course of business which
secure payment of obligations not more than 60 days past
due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves
shall have been set aside on its books if and to the
extent required by Agreement Accounting Principles.
(d) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old
age pensions, or other social security or retirement
benefits, or similar legislation.
(e) Utility easements, building restrictions and such
other encumbrances or charges against real property as
are of a nature generally existing with respect to
properties of a similar character and which do not in
any material way affect the marketability of the same or
interfere with the use thereof in the business of the
Company or its Subsidiaries.
(f) Liens granted to or for the benefit of any of the
agent or any lender under the Senior Secured Credit
Agreement, or any of their respective Affiliates,
pursuant to any Rate Management Transaction.
(g) Liens on property of Foreign Subsidiaries in
connection with banker's acceptances with maturities not
in excess of 180 days.
(h) Liens on accounts and notes receivable of Foreign
Subsidiaries securing loans and advances to Foreign
Subsidiaries permitted by Section 6.2.
(i) Liens against equipment, property, or plant leased
by the Company or any Subsidiary in favor of the lessor
thereof.
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(j) Purchase money Liens to secure Indebtedness
permitted hereunder, and extensions, renewals and
refinancing thereof so long as the principal amounts
thereof are not increased.
(k) Liens to secure the performance of tenders,
statutory obligations, bids, leases, government
contracts, performance and surety bonds and other
similar obligations in the ordinary course of business.
(l) Liens on documents and related property arising in
connection with trade letters of credit in the ordinary
course of business.
(m) Liens (excluding liens permitted under clauses (a)
through (l) above) existing on the date hereof, the
aggregate amount of liabilities secured by which does
not exceed $5,000,000. All such Liens securing
liabilities in excess of $250,000 are listed on Schedule
6.6 hereto.
(n) Liens (excluding Liens permitted under clauses (a)
through (m) above) to secure obligations of the Company
or any Subsidiary, the principal amount of which does
not exceed $15,000,000 at any one time.
6.7 Capital Expenditures. The Company will not, nor
will it permit any Subsidiary to, expend, or be
committed to expend, in excess of $40,000,000 for
Capital Expenditures during any one Fiscal Year,
commencing with Fiscal Year 1999, in the aggregate for
the Company and its Subsidiaries on a consolidated
basis; provided, however, that for each Fiscal Year
after 1999, such aggregate amount shall be increased by
an amount (the "Carryover Amount") that is the lesser of
(i) the excess, if any, of (A) the maximum aggregate
amount of Capital Expenditures (including any Carryover
Amount) permitted pursuant to this Section 6.7 for the
immediately preceding fiscal year over (B) the aggregate
amount of actual Capital Expenditures during such
preceding Fiscal Year and (ii) $40,000,000.
Notwithstanding the foregoing and in addition thereto,
the Company and its Subsidiaries may make Capital
Expenditures (1) in an amount equal to Available Net
Cash Proceeds (as defined in the Senior Secured Credit
Agreement) in accordance with Section 2.7.2(a) of the
Senior Secured Credit Agreement and (2) in an amount
equal to Excess Cash Flow (as defined in the Senior
Secured Credit Agreement) on a cumulative basis to the
extent not required to be applied as a mandatory
prepayment of the loans under the Senior Secured Credit
Agreement.
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6.8 Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries. (a) The Company
shall not (and shall not suffer or permit any of its
Domestic Subsidiaries to), directly or indirectly, enter
into any agreement with any Person which prohibits or
limits the ability of any of the Company or any of its
Domestic Subsidiaries to create, incur, assume or suffer
to exist any Lien upon any of its Property or revenues,
whether now owned or hereafter acquired, other than (i)
this Agreement and the other Loan Documents, (ii) the
Senior Secured Credit Agreement, (iii) Lien restrictions
in a Capitalized Lease or other purchase money financing
arrangement permitted hereunder relating to the asset
financed thereunder and (iv) purchase agreements,
license agreements, leases and other similar agreements
entered into in the ordinary course of business that
prohibit a Lien on the asset or assets subject to such
agreements.
(b) The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create,
assume or suffer to exist any consensual restriction on
the ability of any of its Subsidiaries to pay dividends
or make other distributions to or on behalf of, or to
pay any obligation to or on behalf of, or otherwise to
transfer assets or Property to or on behalf of, or make
or pay loans or advances to or on behalf of, the Company
or any of its Subsidiaries, except:
(i) restrictions imposed by this Agreement and the
other Loan Documents;
(ii) restrictions imposed by the Senior Credit
Agreement;
(iii) restrictions imposed by applicable law;
(iv) existing restrictions under Indebtedness of any
Subsidiary outstanding on the Closing Date;
(v) restrictions under any Acquired Indebtedness not
Incurred in violation of any agreement (including any
Equity Interest) relating to any Property, asset or
business acquired by the Company or any of its
Subsidiaries, which restrictions in each case existed at
the time of the Acquisition, were not put in place in
connection with or in anticipation of such Acquisition
and are not applicable to any Person, other than the
Person acquired, or to any Property, asset or business,
other than the Property, assets and business so
acquired;
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(vi) restrictions with respect solely to any of its
Subsidiaries imposed pursuant to a binding agreement
which has been entered into for the sale or disposition
of all or substantially all of the Equity Interests or
assets of such Subsidiary; provided, that such
restrictions apply solely to the Equity Interests or
assets of such Subsidiary which are being sold;
(vii) restrictions on transfer contained in purchase
money Indebtedness; provided, that such restrictions
relate only to the transfer of the Property acquired
with the proceeds of such purchase money Indebtedness;
(viii) provisions with respect to the disposition or
distribution of assets or Property in joint venture
agreements, asset sale agreements, stock sale agreements
and other similar agreements entered into in the
ordinary course of business;
(ix) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the
ordinary course of business;
(x) in connection with and pursuant to permitted
Refinancings, replacements of restrictions imposed
pursuant to clauses (ii), (iv), (v) or (vii) above or
this clause (ix) that are not more restrictive taken as
a whole than those being replaced and do not apply to
any other Person or assets than those that would have
been covered by the restrictions in the Indebtedness so
Refinanced; and
(xi) restrictions contained in Indebtedness Incurred by
a Foreign Subsidiary in accordance with this Agreement;
provided, that such restrictions relate only to one or
more Foreign Subsidiaries.
Notwithstanding the foregoing, (A) customary
provisions restricting subletting or assignment of any
lease entered into in the ordinary course of business,
consistent with industry practice and (B) any asset
subject to a Lien which is not prohibited to exist with
respect to such asset pursuant to the terms of this
Agreement may be subject to customary restrictions on
the transfer or disposition thereof pursuant to such
Lien.
6.9 Affiliates. The Company will not, and will not
permit any Subsidiary to, enter into any transaction
(including, without limitation, the purchase
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or sale of
any Property or service) with, or make any payment or
transfer to, any Affiliate (other than the Company and
its Wholly-Owned Subsidiaries) except in the ordinary
course of business and pursuant to the reasonable
requirements of the Company's or such Subsidiary's
business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than the
Company or such Subsidiary would obtain in a comparable
arms-length transaction.
6.10 Unfunded Liabilities. Except as could not
reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, the
Company will not permit any Unfunded Liabilities to
exist under any Plan.
6.11 Intentionally Omitted.
6.12 Sale and Leaseback Transactions. The Company will
not, nor will it permit any Subsidiary to, enter into or
suffer to exist any Sale and Leaseback Transaction other
than Sale and Leaseback Transactions and Synthetic
Leases permitted by Section 6.2(h).
6.13 Contingent Obligations. The Company will not, nor
will it permit any Subsidiary to, make or suffer to
exist any Contingent Obligation (including, without
limitation, any Contingent Obligation with respect to
the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in
the ordinary course of business, (ii) guaranties of
Indebtedness permitted by Section 6.2, (iii) guaranties
by the Company or any Subsidiary of employee credit card
obligations in the ordinary course of business, (iv)
recourse obligations in connection with the factoring of
accounts and notes receivable of Foreign Subsidiaries,
(v) guaranties and other Contingent Obligations of the
Company or any Subsidiary with respect to obligations of
any Subsidiary and (vi) other Contingent Obligations not
otherwise permitted by clauses (i) through (v) above not
exceeding $2,000,000 in the aggregate outstanding at any
one time.
6.14 Financial Contracts. The Company will not, nor
will it permit any Subsidiary to, enter into or remain
liable upon any Financial Contract, except (i) Rate
Management Transactions required pursuant to the terms
of the Senior Secured Credit Agreement and (ii) other
Financial Contracts pursuant to which the Company or any
Subsidiary has hedged its reasonably estimated interest
rate, foreign currency or commodity exposure.
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6.15 Refinancing of the Loans in Part. The Company
shall not, nor shall the Company cause or permit any of
its Subsidiaries to, Incur any Indebtedness to Refinance
the Loans in part other than the Permanent Securities or
the Exchange Notes.
6.16 Senior Subordinated Indebtedness. Neither the
Company nor any of the Guarantors shall, directly or
indirectly, Incur any Indebtedness (other than the
Notes, the Exchange Notes, the Permanent Securities and
Indebtedness between the Company and its Wholly Owned
Subsidiaries) that is by its terms (or by the terms of
any agreement governing such Indebtedness) subordinated
in right of payment to any other Indebtedness of the
Company or of such Guarantor unless such Indebtedness is
also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate
to the Loans and the Notes and the Guarantees to the
same extent and in the same manner as such Loans and
Notes and Guarantees are subordinated to the Senior
Secured Credit Agreement.
6.17 Leverage Ratio. (a) The Company will not permit
the ratio, determined as of the end of each of its
fiscal quarters, of (i) Consolidated Funded Indebtedness
to (ii) Consolidated EBITDA for the then most-recently
ended four fiscal quarters to be greater than 5.00 to 1.
(b) In the event that the Company or any Subsidiary
shall have consummated a Permitted Acquisition or
Investment in a joint venture during any four fiscal
quarter period for which the Leverage Ratio covenant
contained in this Section 6.17 is calculated, the
Leverage Ratio shall be calculated as if such Permitted
Acquisition or Investment (including any Indebtedness
Incurred in connection therewith) had been consummated
on the first day of such four fiscal quarter period,
provided that the Company shall not include such
Permitted Acquisition or Investment in the calculation
of Consolidated EBITDA, unless the Company shall have
delivered to the Lenders, at or prior to the time
financial statements as of the last day of such four
fiscal quarter period are delivered to the Lenders
pursuant to Section 5.1, audited financial statements of
the acquired business or Person or joint venture, as the
case may be, stated in Dollars and presented in
conformity with GAAP, and covering the period from the
first day of such four fiscal quarter period to the
actual date of the consummation of such Permitted
Acquisition or Investment.
SECTION 7. EVENTS OF DEFAULT
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7.1 Events of Default. The occurrence
of any one or more of the following events shall
constitute an Event of Default:
(aa) Any representation or warranty made or deemed made
by or on behalf of the Company or any of its
Subsidiaries to the Lenders or the Agent under or in
connection with this Agreement, any Loan, or any
certificate or information delivered in connection with
this Agreement or any other Loan Document shall be
materially false on the date as of which made.
(b) Nonpayment of principal of any Loan when due, or
nonpayment of interest upon any Loan or of any
commitment fee or other obligations under any of the
Loan Documents within five days after the same becomes
due.
(c) The breach by the Company of any of the terms or
provisions of Section 5.2 or Section 6; or the breach by
the Company of any of the terms and conditions of
Section 5.1, 5.3, 5.6 or 5.9 which is not remedied
within ten days.
(d) The breach by the Company (other than a breach
which constitutes an Event of Default under another
subsection of this Section 7) of any of the terms or
provisions of this Agreement or any other Loan Document
which is not remedied within thirty days after written
notice from the Agent or the Required Lenders.
(e) (i) Failure of the Company or any of its
Subsidiaries to pay when due any Indebtedness (other
than Indebtedness owing by the Company to any Subsidiary
or by any Subsidiary to the Company or another
Subsidiary and other than Rate Management Obligations)
outstanding in a principal amount aggregating in excess
of $5,000,000 ("Material Indebtedness"); or the default
by the Company or any of its Subsidiaries in the
performance (beyond the applicable grace period with
respect thereto, if any) of any term, provision or
condition contained in any agreement under which any
such Material Indebtedness was created or is governed,
or any other event shall occur or condition exist, the
effect of which default or event is to cause, or to
permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to
become due prior to its stated maturity; or any Material
Indebtedness of the Company or any of its Subsidiaries
then outstanding in a principal amount in excess of
$2,500,000 shall be declared to be due and payable or
required to be prepaid or repurchased (other than by a
regularly scheduled
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payment and other than in connection
with the refinancing of the Bridge Loan with the
proceeds of the Permanent Securities) prior to the
stated maturity thereof; or the Company or any of its
Subsidiaries shall not pay, or shall admit in writing
its inability to pay, its debts generally as they become
due; or (ii) the occurrence of an early termination
under any Rate Management Transaction resulting from (A)
any event of default under such Rate Management
Transaction as to which the Company or any Subsidiary is
the defaulting party or (B) any termination event as to
which the Company or any Subsidiary is an affected party
and, in either event, the termination value or other
similar obligation owed by the Company or such
Subsidiary as a result thereof is in excess of
$5,000,000 and remains unpaid.
(f) The Company or any of its Material Subsidiaries
shall (i) have an order for relief entered with respect
to it under the Bankruptcy Law as now or hereafter in
effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief
under the Bankruptcy Law as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition
of it or its debts under any Bankruptcy Law or fail to
file (by the deadline for such filing) an answer or
other pleading denying the material allegations of any
such proceeding filed against it, (v) take any corporate
or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.1(f) or
(vi) fail to contest in good faith and in a reasonably
timely manner any appointment or proceeding described in
Section 7.1(g).
(g) Without the application, approval or consent of the
Company or any of its Material Subsidiaries, a receiver,
trustee, examiner, liquidator or similar official shall
be appointed for the Company or any of its Material
Subsidiaries or any Substantial Portion of its Property,
or a proceeding described in Section 7.1(f)(iv) shall be
instituted against the Company or any of its Material
Subsidiaries and in each case such appointment continues
undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.
(h) Any court, government or governmental agency
shall condemn, seize or otherwise appropriate, or take
custody or control of, all or any portion of the
Property of the Company and its Subsidiaries which, when
taken together with all other Property of the Company
and its Subsidiaries so condemned,
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seized, appropriated,
or taken custody or control of, during the twelve-month
period ending with the month in which any such action
occurs, constitutes a Substantial Portion.
(i) The Company or any of its Subsidiaries shall fail
within 30 days to pay, bond or otherwise discharge one
or more (i) judgments or orders for the payment of money
(except to the extent covered by insurance as to which
the insurer has not disclaimed coverage) in excess of
$5,000,000 (or the equivalent thereof in currencies
other than Dollars) in the aggregate, or (ii)
nonmonetary judgments or orders which, individually or
in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgment(s), in any such
case, is/are not stayed on appeal or otherwise being
appropriately contested in good faith in a reasonably
timely manner.
(j) The Company or any other member of the Controlled
Group shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be
paid to Multiemployer Plans by the Company or any other
member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), could
reasonably be expected to have a Material Adverse
Effect.
(k) The Company or any other member of the Controlled
Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such
reorganization or termination the aggregate annual
contributions of the Company and the other members of
the Controlled Group (taken as a whole) to all
Multiemployer Plans which are then in reorganization or
being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan
immediately preceding the plan year in which the
reorganization or termination occurs by an amount which
could reasonably be expected to have a Material Adverse
Effect.
(l) The Company or any of its Subsidiaries shall
(i) be the subject of any order by any Governmental
Authority or any judicial determination of liability
pertaining to the release by the Company, any of its
Subsidiaries or any other Person of any toxic or
hazardous waste or substance into the environment, or
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(ii) violate any Environmental Law, which, in the case
of an event described in clause (i) or clause (ii),
could reasonably be expected to have a Material Adverse
Effect, taking into account amounts to be paid by third
parties.
(m) Any Guarantor shall take any action to revoke or
discontinue or to assert the invalidity or
unenforceability of any Guarantee, or any Guarantor
shall deny that it has any further liability under any
Guarantee to which it is a party, or shall give notice
to such effect.
7.2 Acceleration. If any Event of Default described in
Section 7.1(f) or 7.1(g) occurs with respect to the
Company, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the
Obligations shall immediately become due and payable
without any election or action on the part of the Agent
or any Lender. If any other Event of Default occurs,
the Required Lenders (or the Agent with the consent of
the Required Lenders) may terminate or suspend the
obligations of the Lenders to make Loans, or declare the
Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice
of any kind, all of which the Company hereby expressly
waives.
If, within 30 days after acceleration of the
maturity of the Obligations or termination of the
obligations of the Lenders to make Loans hereunder as a
result of any Event of Default (other than any Event of
Default as described in Section 7.1(f) or 7.1(g) with
respect to the Company) and before any judgment or
decree for the payment of the Obligations due shall have
been obtained or entered, the Required Lenders (in their
sole discretion) shall so direct, the Agent shall, by
notice to the Company, rescind and annul such
acceleration and/or termination.
SECTION 8. SUBORDINATION
8.1 Obligations Subordinated to Senior
Debt of the Company. The Lenders covenant and agree
that payments of the Obligations by the Company shall be
subordinated in accordance with the provisions of this
Section 8 to the prior indefeasible payment in full, in
cash or Cash Equivalent Investments, of all amounts
payable in respect of Senior Debt of the Company,
whether now outstanding or hereafter created, that the
subordination is for the benefit of the holders of
Senior Debt of the Company, and that each holder of
Senior Debt of the Company whether
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now outstanding or
hereafter Incurred shall be deemed to have acquired
Senior Debt of the Company in reliance upon the
covenants and provisions contained in this Agreement.
8.2 Priority and Payment Over of Proceeds in Certain
Events.
(a) Subordination on Dissolution, Liquidation or
Reorganization of the Company. Upon any payment or
distribution of assets or securities of the Company of
any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total
or partial liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all
Senior Debt of the Company shall first be indefeasibly
paid in full in cash or Cash Equivalent Investments (or
such payment shall first be duly provided for to the
satisfaction of the holders of Senior Debt), before the
Lenders shall be entitled to receive any payment by the
Company of any Obligations (other than Junior
Securities), and upon any such dissolution or winding up
or liquidation or reorganization, any payment or
distribution of assets or securities of the Company of
any kind or character, whether in cash, property or
securities (other than Junior Securities), to which the
Lenders would be entitled except for the provisions of
this Section 8 shall be made by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or
distribution, directly to the holders of the Senior Debt
of the Company or their representatives to the extent
necessary to pay all of the Senior Debt of the Company
to the holders of such Senior Debt of the Company.
(b) Subordination on Default on Senior Debt. Upon
the maturity of any Senior Debt of the Company by lapse
of time, acceleration or otherwise, all Senior Debt of
the Company then due and payable shall first be
indefeasibly paid in full in cash or Cash Equivalent
Investments (or such payment shall first be duly
provided for to the satisfaction of the holders of
Senior Debt), before any payment is made by the Company
or any Person acting on behalf of the Company with
respect to the Obligations (other than Junior
Securities). No direct or indirect payment by the
Company or any Person acting on behalf of the Company of
any Obligations whether pursuant to the terms of the
Loans or upon acceleration or otherwise shall be made
(other than Junior Securities), if at the time of such
payment, there exists a default (as defined in the
document governing any Senior Debt of the Company) in
the payment of all or any portion of any Senior Debt of
the Company and such default shall not have been cured
or waived in writing or the benefits of this sentence
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waived in writing by or on behalf of the holders of such
Senior Debt. In addition, during the continuation of
any other event of default with respect to the Senior
Debt of the Company pursuant to which the maturity
thereof may be accelerated, upon the receipt by the
Agent of written notice from the Representative of the
holders of such Senior Debt, no such payment may be made
by the Company upon or in respect of the Obligations
(other than Junior Securities), for a period (a "Payment
Blockage Period") commencing on the date of receipt of
such notice and ending 179 days after receipt of such
notice (unless such Payment Blockage Period shall be
terminated by written notice to the Agent from such
Representative). Notwithstanding anything herein to the
contrary, (x) in no event will a Payment Blockage Period
or successive Payment Blockage Periods with respect to
the same payment on the Obligations extend beyond 179
days from the date the payment on the Obligations was
due and (y) only one such Payment Blockage Period may be
commenced within any 360 consecutive days. For all
purposes of this Section 8.2(b), no event of default
which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect
to the Senior Debt of the Company initiating such
Payment Blockage Period shall be, or be made, the basis
for the commencement of a second Payment Blockage Period
by the holders or by the Representative of such Senior
Debt whether or not within a period of 360 consecutive
days, unless such event of default shall have been cured
or waived for a period of not less than 90 consecutive
days.
(c) Rights and Obligations of the Lenders. In the
event that, notwithstanding the foregoing provisions
prohibiting such payment or distribution, the Agent or
any Lender shall have received any payment on account of
any Obligation (other than as permitted by Sections (a)
and (b) of this Section 8.2) at a time when such payment
is prohibited by this Section 8.2, then and in such
event such payment or distribution shall be received and
held in trust for the Representative of the holders of
the Senior Debt of the Company and shall be paid over or
delivered to Representative of the holders of the Senior
Debt of the Company remaining unpaid to the extent
necessary to pay in full in cash or Cash Equivalent
Investments all Senior Debt of the Company in accordance
with their terms after giving effect to any concurrent
payment or distribution to the holders of such Senior
Debt of the Company.
If payment of the Obligations is accelerated
because of an Event of Default, the Company shall
promptly notify the Representative of the holders of
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Senior Debt of the Company of the acceleration. If any
Senior Debt is outstanding, the Company may not make any
payment on account of such accelerated Obligations until
five Business Days after such Representative receives
notice of such acceleration and, thereafter, may pay the
Obligations only if this Section 8 otherwise permits
payment at that time.
Upon any payment or distribution of assets or
securities referred to in this Section 8, the Lenders
(notwithstanding any other provision of this Agreement)
shall be entitled to rely upon any order or decree of a
court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization
proceedings are pending, and upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making any such payment or
distribution, delivered to the Lenders for the purpose
of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Debt of the
Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Section 8.
The Company shall give written notice to each
of the Lenders of any default or event of default under
any Senior Debt of the Company or under any agreement
pursuant to which Senior Debt of the Company may have
been issued, and, in the event of any such event of
default, shall provide to the Agent the names and
addresses of the Representatives of holders of such
Senior Debt of the Company.
With respect to the holders and owners of
Senior Debt of the Company, each Lender undertakes to
perform only such obligations on the part of such Lender
as are specifically set forth in this Section 8, and no
implied covenants or obligations with respect to the
holders or owners of Senior Debt of the Company shall be
read into this Agreement against the Lenders. The
Lenders shall not be deemed to owe any fiduciary duty to
the holders or owners of Senior Debt of the Company or
to the agent under the Senior Secured Credit Agreement
or any Representative of the holders of the Senior Debt
of the Company.
8.3 Payments May Be Paid Prior to Dissolution. Nothing
contained in this Section 8 or elsewhere in this
Agreement shall prevent or delay (a) the Company, except
under the conditions described in Section 8.2, from
making payments at any time for the purpose of paying
Obligations, or from depositing with the Agent any
moneys for such payments, or (b) subject to Section 8.2,
the
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application by the Agent of any moneys deposited
with it for the purpose of paying Obligations.
8.4 Rights of Holders of Senior Debt of the Company Not
To Be Impaired. No right of any present or future
holder of any Senior Debt of the Company to enforce
subordination as provided in this Section 8 shall at any
time in any way be prejudiced or impaired by any act or
failure to act by any such holder (other than an express
waiver of subordination or an amendment of this Section
8.4), or by any noncompliance by the Company with the
terms and provisions and covenants herein, regardless of
any knowledge thereof any such holder may have or
otherwise be charged with. Without in any way limiting
the generality of the foregoing sentence, such holders
of Senior Debt of the Company may, at any time and from
time to time without impairing or releasing the
subordination provided in this Section 8 or the
obligations of the Lender hereunder to the holders of
Senior Debt of the Company, do any one or more of the
following: (a) change the manner, place, terms or time
of payment of, or renew or alter, Senior Debt of the
Company or otherwise amend or supplement in any manner
Senior Debt of the Company or any instrument evidencing
the same or any agreement under which any Senior Debt of
the Company is outstanding; (b) sell, exchange, release,
or otherwise deal with any property pledged, mortgaged,
or otherwise securing Senior Debt of the Company or fail
to perfect or delay in the perfection of the security
interest in such property; (c) release any Person liable
in any manner for the collection of Senior Debt of the
Company; and (d) exercise or refrain from exercising any
rights against the Company or any other Person. Each
Lender by purchasing or accepting a Note waives any and
all notice of the creation, modification, renewal,
extension or accrual of any Senior Debt of the Company
and notice of or proof of reliance by any holder or
owner of Senior Debt of the Company upon this Section 8
and the Senior Debt of the Company shall conclusively be
deemed to have been Incurred in reliance upon this
Section 8, and all dealings between the Company and the
holders and owners of the Senior Debt of the Company
shall be deemed to have been consummated in reliance
upon this Section 8.
The provisions of this Section 8 are intended
to be for the benefit of, and shall be enforceable
directly by, the holders of the Senior Debt of the
Company.
8.5 Subrogation. Upon the indefeasible payment in full
in accordance with the terms of Section 8.2 of all
amounts payable under or in respect of the Senior Debt
of the Company, the Lenders shall be subrogated to the
rights of
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the holders of such Senior Debt of the Company
to receive payments or distributions of assets of the
Company made on such Senior Debt of the Company until
the Obligations shall be paid in full in cash or Cash
Equivalent Investments to the extent set forth herein;
and for purposes of such subrogation no payments or
distributions to holders of such Senior Debt of the
Company of any cash, property or securities to which the
Lenders would be entitled except for the provisions of
this Section 8, and no payment over pursuant to the
provisions of this Section 8 to holders of such Senior
Debt of the Company by the Lenders, shall, as between
the Company, its creditors other than holders of such
Senior Debt of the Company and the Lenders, be deemed to
be a payment by the Company to or on account of such
Senior Debt of the Company, it being understood that the
provisions of this Section 8 are solely for the purpose
of defining the relative rights of the holders of such
Senior Debt of the Company, on the one hand, and the
Lenders, on the other hand. A release of any claim by
any holder of Senior Debt of the Company shall not limit
the Lenders' rights of subrogation under this
Section 8.5.
If any payment or distribution to which the
Lenders would otherwise have been entitled but for the
provisions of this Section 8 shall have been applied,
pursuant to the provisions of this Section 8, to the
payment of all amounts payable under the Senior Debt of
the Company, then and in such case, the Lenders shall be
entitled to receive from the holders of such Senior Debt
of the Company at the time outstanding the amount of any
such payments or distributions received by such holders
of Senior Debt of the Company in excess of the amount
sufficient to pay all Senior Debt of the Company payable
under or in respect of the Senior Debt of the Company in
full in cash or Cash Equivalent Investments in
accordance with the terms of Section 8.2.
8.6 Obligations of the Company Unconditional. Nothing
contained in this Section 8 or elsewhere in this
Agreement is intended to or shall impair as between the
Company and the Lenders the obligations of the Company,
which are absolute and unconditional, to pay to the
Lenders the Obligations as and when the same shall
become due and payable in accordance with their terms,
or is intended to or shall affect the relative rights of
the Lenders and creditors of the Company other than the
holders of the Senior Debt of the Company, nor shall
anything herein or therein prevent the Lenders from
exercising all remedies otherwise permitted by
applicable law upon default under this Agreement,
subject to the rights, if any, under this Section 8 of
the holders of such Senior Debt of the
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Company in
respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
The failure to make a payment on account of
Obligations by reason of any provision of this Section 8
shall not prevent the occurrence of an Event of Default
under Section 7.
8.7 Lenders Authorize Agent To Effectuate
Subordination. Each Lender hereby authorizes and
expressly directs the Agent on its behalf to take such
action as may be necessary or appropriate to effectuate
the subordination provided in this Section 8 and
appoints the Agent its attorney in fact for such
purpose, including, without limitation, in the event of
any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy,
insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of
creditors or any other similar remedy or otherwise)
tending towards liquidation of the business and assets
of the Company, the immediate filing of a claim for the
unpaid balance of the Obligations in the form required
in said proceedings and causing said claim to be
approved or the actions required to negotiate and/or
effectuate a restructuring of the Indebtedness
represented hereby. If the Agent does not file a proper
claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of
the Senior Debt of the Company are hereby authorized to
have the right to file and are hereby authorized to file
an appropriate claim for and on behalf of the Lenders.
In the event of any such proceeding, until the Senior
Debt of the Company is paid in full in cash or Cash
Equivalent Investments, without the consent of the
holders of a majority in principal amount outstanding of
Senior Debt of the Company, no Lender shall waive,
settle or compromise any such claim or claims relating
to the Obligations that such Lender now or hereafter may
have against the Company.
SECTION 9. THE AGENT
9.1 Appointment. Each Lender hereby
irrevocably designates and appoints UBS AG, Stamford
Branch as Agent of such Lender to act as specified
herein and in the other Loan Documents, and each Lender
hereby irrevocably authorizes UBS AG, Stamford Branch as
the Agent to take such action on its behalf under the
provisions of this Agreement and the other Loan
Documents and to
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exercise such powers and perform such
duties as are expressly delegated to the Agent by the
terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth
herein or in the other Loan Documents, or any fiduciary
relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or
otherwise exist against the Agent. The provisions of
this Section 9 are solely for the benefit of the Agent
and the Lenders, and neither the Company nor any of its
Subsidiaries shall have any rights as a third party
beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement
and the other Loan Documents, the Agent shall act solely
as agent of the Lenders and the Agent does not assume
and shall not be deemed to have assumed any obligation
or relationship of agent or trust with or for the
Company or any of its Subsidiaries.
9.2 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan
Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not
be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. The Agent shall not
be (a) liable for any action lawfully taken or omitted
to be taken by it or any Person described in Section 9.2
under or in connection with this Agreement or the other
Loan Documents (except for its or such Person's own
gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction).
(b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties
made by the Company or any of its Subsidiaries or any of
their respective officers contained in this Agreement,
any other Loan Document, or in any certificate, report,
oral or written statement or other document referred to
or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan
Document, (c) responsible in any manner to any of the
Lenders for any failure of the Company or any of its
Subsidiaries or any of their respective officers to
perform its obligations hereunder or under any other
Loan Document, (d) responsible in any manner to any of
the Lenders for the effectiveness, genuineness,
validity, enforceability, collectability or sufficiency
of this Agreement or any other Loan Document, (e)
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required to ascertain or inquire as to the performance
or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or
in any other Loan Document or as to the use of the
proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default, or (f)
required to inspect the properties, books or records of
the Company or any of its Subsidiaries.
9.4 Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy,
facsimile, telex or teletype message, statement, order
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, without
limitation, counsel to the Company or any of its
Subsidiaries), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes
unless the Agent shall have received an executed
assignment and assumption agreement pursuant to Section
12.1(a) in respect thereof. The Agent shall be fully
justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or 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. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and
such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
9.5 Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless the
Agent has received notice from a Lender or the Company
referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a
"notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt
notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required
Lenders; provided, that unless and until the Agent shall
have received such directions, the Agent may (but shall
not be obligated to) take such action, or
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refrain from
taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Agent nor
any of its respective officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the
affairs of the Company or any of its Subsidiaries shall
be deemed to constitute any representation or warranty
by the Agent. Each Lender represents to the Agent that
it has, independently and without reliance upon the
Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its
own appraisal of and investigation into the business,
assets, operations, property, financial and other
condition, prospects and creditworthiness of the Company
or its Subsidiaries and made its own decision to make
its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not
taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as
to the business, assets, operations, property, financial
and other condition, prospects and creditworthiness of
the Company and its Subsidiaries. The Agent shall not
have any duty or responsibility to provide any Lender
with any credit or other information concerning the
business, operations, assets, liabilities, property,
prospects, financial and other condition or
creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the
Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to
indemnify the Agent in its capacity as such and its
officers, directors, employees, representatives and
agents ratably according to their respective
"percentages" as used in determining the Required
Lenders at such time, from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever
(including, without limitation, the fees and
disbursements of counsel for the Agent or such Person in
connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or
not the Agent or such Person shall be designated a party
thereto) which
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may at any time (including, without
limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted
against the Agent or such Person in any way as a result
of, relating to or by reason of, or arising out of the
execution, delivery or performance of this Agreement or
any other Loan Document, or any documents contemplated
by or referred to herein or the transactions
contemplated hereby of any action taken or omitted to be
taken by the Agent under or in connection with any of
the foregoing, but only to the extent that any of the
foregoing is not paid by the Company or any of its
Subsidiaries; provided, that no Lender shall be liable
to the Agent or such Person for the payment of any
portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the
gross negligence or willful misconduct of the Agent or
such Person as finally determined by a court of
competent jurisdiction. If any indemnity furnished to
the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may
call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in
this Section 9.7 shall survive the payment of all
Obligations.
9.8 Agent in Its Individual Capacity. The Agent and
its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the
Company and its Subsidiaries as though the Agent were
not the Agent hereunder. With respect to the Loans made
by it and all Obligations owing to it, the Agent shall
have the same rights and powers under this Agreement as
any Lender and may exercise the same as though it were
not the Agent and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
9.9 Resignation of the Agent; Successor Agent.
The Agent may resign as the Agent upon 20 days' notice
to the Lenders and the Company. If the Agent shall
resign as Agent under this Agreement and the other Loan
Documents, the Required Lenders shall appoint from
among the Lenders during such 20-day period a successor
Agent which is a bank or a trust company, whereupon such
successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean
such successor Agent effective upon its appointment, and
the resigning Agent's rights, powers and duties as the
Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of
the parties to this Agreement. If the Required Lenders
are not able to appoint a successor Agent during such 20-
day period, then the Required Lenders shall carry
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out the duties of Agent under the provisions of this
Agreement and the other Loan Documents until a successor
Agent is appointed. After the resignation of the Agent
hereunder, the provisions of this Section 9 and of
Sections 12.2 and 12.3 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it
was Agent under this Agreement.
SECTION 10. GUARANTEE
10.1 Unconditional Guarantee. Each
Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as
the "Guarantee"), subject to Section 11, to each of the
Lenders and to the Agent and their respective successors
and assigns, that: (a) the principal of and interest on
the Loans will be promptly paid in full when due,
subject to any applicable grace period, whether at
maturity, by acceleration or otherwise and interest on
the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Loans and all
other obligations of the Company to the Lenders or the
Agent hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of
time of payment or renewal of any of the Loans or of any
such other obligations, the same will be promptly paid
in full when due or performed in accordance with the
terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case
of clauses (a) and (b) above, to the limitations set
forth in Section 10.5. Each Guarantor hereby agrees
that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Loans or this Agreement, the
absence of any action to enforce the same, any waiver or
consent by any of the Lenders with respect to any
provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of
a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged
except by complete performance of the obligations
contained in the Loans, this Agreement and in this
Guarantee. If any Lender or the Agent is required by
any court or otherwise to return to the Company, any
Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company
or any
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Guarantor, any amount paid by the Company or any
Guarantor to the Agent or such Lender, this Guarantee,
to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor
further agrees that, as between each Guarantor, on the
one hand, and the Lenders and the Agent, on the other
hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 7 for
the purposes of this Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed
hereby, and (y) in the event of any acceleration of such
obligations as provided in Section 7, such obligations
(whether or not due and payable) shall forthwith become
due and payable by each Guarantor for the purpose of
this Guarantee.
10.2 Subordination of Guarantee. The obligations of
each Guarantor to the Lenders and to the Agent pursuant
to the Guarantee of such Guarantor and the other
sections of this Agreement are expressly subordinate and
subject in right of payment to the prior payment in full
of all Guarantor Senior Debt of such Guarantor, to the
extent and in the manner provided in Section 11.
10.3 Severability. In case any provision of this
Guarantee shall be invalid, illegal or unenforceable,
the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.
10.4 Release of a Guarantor. Upon (a) the release by
the lenders under the Senior Secured Credit Agreement of
all obligations of a Guarantor under the Senior Secured
Credit Agreement and all Liens on the property and
assets of such Guarantor relating to such Indebtedness,
or (b) the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or
all or substantially all its assets) to an entity which
is not a Subsidiary of the Company and which sale or
disposition is otherwise in compliance with the terms of
this Agreement, such Guarantor shall be deemed released
from all obligations under this Section 10 without any
further action required on the part of the Agent or any
Lender; provided, however, that any such termination
shall occur only to the extent that all obligations of
such Guarantor under the Senior Secured Credit
Agreement, and under all of its pledges of assets or
other security interests which secure such Indebtedness,
shall also terminate upon such release, sale or
transfer.
The Agent shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the
Company accompanied by an Officers'
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Certificate
certifying as to the compliance with this Section 10.4.
Any Guarantor not so released remains liable for the
Obligations as provided in this Section 10.
10.5 Limitation of Guarantor's Liability. Each
Guarantor and, by its acceptance hereof each of the
Lenders, hereby confirms that it is the intention of all
such parties that this Guarantee not constitute a
fraudulent transfer or conveyance for purposes of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing
intention, the Lenders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor
under the Guarantee shall be limited to the maximum
amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor
(including, but not limited to, the Guarantor Senior
Debt of such Guarantor) and after giving effect to any
collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee or pursuant to
Section 10.7, result in the obligations of such
Guarantor under the Guarantee not constituting such
fraudulent transfer or conveyance.
10.6 Guarantors May Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Agreement or in the Loans
shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor or shall
prevent any sale or conveyance of the Property of a
Guarantor as an entirety or substantially as an
entirety, to the Company or another Guarantor. Upon any
such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have
any force or effect.
(b) Except as set forth in Section 6.3, nothing
contained in this Agreement or in the Loans shall
prevent any consolidation or merger of a Guarantor with
or into a corporation or corporations other than the
Company or another Guarantor (whether or not affiliated
with the Guarantor); provided, however, that, subject to
Sections 10.4 and 10.6(a), (i) immediately after such
transaction, and giving effect thereto, no Default or
Event of Default shall have occurred as a result of such
transaction and be continuing, and (ii) upon any such
consolidation, merger, sale or conveyance, the Guarantee
of such Guarantor set forth in this Section 10, and the
due and punctual performance and observance of all of
the covenants and conditions of this Agreement to be
performed by such Guarantor, shall be expressly assumed
(in the event that the Guarantor is not the surviving
corporation in the
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merger), in writing satisfactory in
form to the Agent, executed and delivered to the Agent,
by the corporation formed by such consolidation, or into
which the Guarantor shall have merged, or by the
corporation that shall have acquired such Property. In
the case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor
corporation in writing executed and delivered to the
Agent and satisfactory in form to the Agent of the due
and punctual performance of all of the covenants and
conditions of this Agreement to be performed by the
Guarantor, such successor corporation shall succeed to
and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor.
10.7 Contribution. In order to provide for just and
equitable contribution among the Guarantors, the
Guarantors agree, inter se, that in the event any
payment or distribution is made by any Guarantor (a
"Funding Guarantor") under its Guarantee, such Funding
Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the
Adjusted Net Assets of each Guarantor (including the
Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in
discharging the Company's obligations with respect to
the Obligations. "Adjusted Net Assets" of such
Guarantor at any date shall mean the lesser of (x) the
amount by which the fair value of the Property of such
Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities
(after giving effect to all other fixed and contingent
liabilities Incurred on such date (other than
liabilities of such Guarantor under Subordinated
Indebtedness)), but excluding liabilities under the
Guarantee, of such Guarantor at such date and (y) the
amount by which the present fair salable value of the
assets of such Guarantor at such date exceeds the amount
that will be required to pay the probable liabilities of
such Guarantor on its debts including, without
limitation, Guarantor Senior Debt (after giving effect
to all other fixed and contingent liabilities Incurred
on such date and after giving effect to any collection
from any Subsidiary of such Guarantor in respect of the
obligations of such Subsidiary under the Guarantee),
excluding debt in respect of the Guarantee of such
Guarantor, as they become absolute and matured.
10.8 Waiver of Subrogation. Until such time as all
Obligations on the Loans are paid in full, each
Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the
Company that arise from the existence, payment,
performance or enforcement of such Guarantor's
obligations under its Guarantee and the other sections
of this Agreement, including,
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without limitation, any
right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any
claim or remedy of any Lender against the Company,
whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law,
including, without limitation, the right to take or
receive from the Company, directly or indirectly, in
cash or other Property or by set-off or in any other
manner, payment or security on account of such claim or
other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence and the
Loans shall not have been paid in full, such amount
shall be deemed to have been paid to such Guarantor for
the benefit of, and held in trust for the benefit of,
the Lenders, and shall, subject to the provisions of
Section 8, Section 10.2 and Section 11, forthwith be
paid to the Agent for the benefit of such Lenders to be
credited and applied upon the Loans, whether matured or
unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing
arrangements contemplated by this Agreement and that the
waiver set forth in this Section 10.8 is knowingly made
in contemplation of such benefits.
10.9 Evidence of Guarantee. To evidence their
guarantees to the Lenders set forth in this Section 10,
each of the Guarantors hereby agrees to execute the
notation of Guarantee in substantially the form included
in Exhibit VI. Each such notation of Guarantee shall be
signed on behalf of each Guarantor by two Officers, or
an Officer and an Assistant Secretary or one Officer
shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly
authorized by all requisite corporate actions) shall
attest to such notation of Guarantee.
10.10 Waiver of Stay, Extension or Usury Laws. Each
Guarantor covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive such
Guarantor from performing its Guarantee as contemplated
herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the
performance of this Agreement; and (to the extent that
it may lawfully do so) each Guarantor hereby expressly
waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Agent, but
will suffer and permit the execution of every such power
as though no such law had been enacted.
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SECTION 11. SUBORDINATION OF GUARANTEE
OBLIGATIONS
11.1 Guarantee Obligations Subordinated to Guarantor
Senior Debt. The Lenders covenant and agree that
payments of the obligations by a Guarantor in respect of
its Guarantee (collectively, as to any Guarantor, its
"Guarantee Obligations") shall be subordinated in
accordance with the provisions of this Section 11 to the
prior indefeasible payment in full, in cash or Cash
Equivalent Investments, of all amounts payable in
respect of Guarantor Senior Debt of such Guarantor,
whether now outstanding or hereafter created, that the
subordination is for the benefit of the holders of
Guarantor Senior Debt of such Guarantor, and that each
holder of Guarantor Senior Debt of such Guarantor
whether now outstanding or hereafter Incurred shall be
deemed to have acquired Guarantor Senior Debt of such
Guarantor in reliance upon the covenants and provisions
contained in this Agreement.
11.2 Priority and Payment Over of Proceeds in Certain
Events.
(a) Subordination of Guarantee Obligations on
Dissolution, Liquidation or Reorganization of Such
Guarantor. Upon any payment or distribution of assets
or securities of any Guarantor of any kind or character,
whether in cash, Property or securities, upon any
dissolution or winding up or total or partial
liquidation or reorganization of such Guarantor, whether
voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings (other than a
liquidation or dissolution of such Guarantor into the
Company or another Guarantor), all Guarantor Senior Debt
of such Guarantor shall first be indefeasibly paid in
full in cash or Cash Equivalent Investments (or such
payment shall first be duly provided for to the
satisfaction of the holders of Guarantor Senior Debt),
before the Lenders shall be entitled to receive any
payment with respect to any Guarantee Obligations of
such Guarantor (other than Guarantor Junior Securities),
and upon any such dissolution or winding up or
liquidation or reorganization, any payment or
distribution of assets or securities (other than
Guarantor Junior Securities) of such Guarantor of any
kind or character, whether in cash, Property or
securities, to which the Lenders would be entitled
except for the provisions of this Section 11, shall be
made by such Guarantor or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, directly to the
holders of the Guarantor Senior Debt of such Guarantor
or their representatives to
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the extent necessary to pay
all of the Guarantor Senior Debt of such Guarantor to
the holders of such Guarantor Senior Debt.
(b) Subordination of Guarantee Obligations on
Default on Guarantor Senior Debt. Upon the maturity of
any Guarantor Senior Debt of a Guarantor by lapse of
time, acceleration or otherwise, all Guarantor Senior
Debt of such Guarantor then due and payable shall first
be indefeasibly paid in full in cash or Cash Equivalent
Investments (or such payment shall first be duly
provided for to the satisfaction of the holders of
Guarantor Senior Debt), before any payment is made by
such Guarantor or any Person acting on behalf of such
Guarantor with respect to the Guarantee Obligations of
such Guarantor (other than Guarantor Junior Securities).
No direct or indirect payment by any Guarantor or any
Person acting on behalf of such Guarantor of any
Guarantee Obligations of such Guarantor whether pursuant
to the terms of the Loans or upon acceleration or
otherwise shall be made (other than Guarantor Junior
Securities), if at the time of such payment, there
exists a default (as defined in the document governing
any Guarantor Senior Debt of such Guarantor) in the
payment of all or any portion of any Guarantor Senior
Debt of such Guarantor and such default shall not have
been cured or waived in writing or the benefits of this
sentence waived in writing by or on behalf of the
holders of such Guarantor Senior Debt. In addition,
during the continuation of any other event of default
with respect to any Guarantor Senior Debt of such
Guarantor pursuant to which the maturity thereof may be
accelerated, upon the receipt by the Agent of written
notice from the Representative of the holders of such
Guarantor Senior Debt, no such payment may be made by
such Guarantor under its Guarantee (other than Guarantor
Junior Securities) for a period (a "Guarantor Payment
Blockage Period") commencing on the date of receipt of
such notice and ending 179 days after receipt of such
written notice by the Agent (unless such Guarantor
Payment Blockage Period shall be terminated by written
notice to the Agent from such Representative).
Notwithstanding anything herein to the contrary, (x) in
no event will a Guarantor Payment Blockage Period or
successive Guarantor Payment Blockage Periods with
respect to the same payment on such Guarantee extend
beyond 179 days from the date the payment on such
Guarantee was due and (y) only one such Payment Blockage
Period may be commenced within any 360 consecutive days.
For all purposes of this Section 11.2(b), no event of
default which existed or was continuing on the date of
the commencement of any Guarantor Payment Blockage
Period with respect to the Guarantor Senior Debt
initiating such Guarantor
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Payment Blockage Period shall
be, or be made, the basis for the commencement of a
second Guarantor Payment Blockage Period by the holders
or by the Representative of such Guarantor Senior Debt
whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive
days.
(c) Rights and Obligations of the Lenders. In the
event that, notwithstanding the foregoing provisions
prohibiting such payment or distribution, the Agent or
any Lender shall have received any payment on account of
any Guarantee Obligation (other than as permitted by
Sections (a) and (b) of this Section 11.2) at a time
when such payment is prohibited by this Section 11.2,
then and in such event such payment or distribution
shall be received and held in trust for the
Representative of the holders of the Guarantor Senior
Debt and shall be paid over or delivered to the
Representative of the holders of the Guarantor Senior
Debt remaining unpaid to the extent necessary to pay in
full in cash or Cash Equivalent Investments all
Guarantor Senior Debt in accordance with their terms
after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior
Debt.
Nothing contained in this Section 11 will
limit the right of the Lenders to take any action to
accelerate the maturity of the Loans pursuant to Section
7 or to pursue any rights or remedies hereunder or
otherwise; provided, however, that if any Guarantor
Senior Debt is outstanding, no Guarantor shall make any
payment on account of the Guarantee Obligations until
five Business Days after the Representative of the
holders of the Guarantor Senior Debt receives notice of
such acceleration and, thereafter, such Guarantor may
pay the Guarantee Obligations only if this Section 11
otherwise permits payment at that time.
Upon any payment or distribution of assets or
securities referred to in this Section 11, the Lenders
(notwithstanding any other provision of this Agreement)
shall be entitled to rely upon any order or decree of a
court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization
proceedings are pending, and upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making any such payment or
distribution, delivered to the Lenders for the purpose
of ascertaining the Persons entitled to participate in
such distribution, the holders of Guarantor Senior Debt,
the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 11.
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The Guarantors shall give written notice to
each of the Lenders of any default or event of default
under any Guarantor Senior Debt or under any agreement
pursuant to which Guarantor Senior Debt may have been
issued, and, in the event of any such event of default,
shall provide to the Agent the names and addresses of
the Representatives of holders of such Guarantor Senior
Debt.
With respect to the holders and owners of
Guarantor Senior Debt, each Lender undertakes to perform
only such obligations on the part of the Lenders as are
specifically set forth in this Section 11, and no
implied covenants or obligations with respect to the
holders or owners of Guarantor Senior Debt shall be read
into this Agreement against the Lenders. The Lenders
shall not be deemed to owe any fiduciary duty to the
holders or owners of Guarantor Senior Debt or to the
agent under the Senior Secured Credit Agreement or any
Representative of the holders of the Guarantor Senior
Debt.
11.3 Payments May Be Paid Prior to Dissolution. Nothing
contained in this Section 11 or elsewhere in this
Agreement shall prevent or delay (a) the Guarantors,
except under the conditions described in Section 11.2,
from making payments at any time for the purpose of
paying Guarantee Obligations, or from depositing with
the Agent any moneys for such payments, or (b) subject
to Section 11.2, the application by the Agent of any
moneys deposited with it for the purpose of paying
Guarantee Obligations.
11.4 Rights of Holders of Guarantor Senior Debt Not
To Be Impaired. No right of any present or future
holder of any Guarantor Senior Debt to enforce
subordination as provided in this Section 11 shall at
any time in any way be prejudiced or impaired by any act
or failure to act by any such holder (other than an
express waiver of subordination or an amendment of this
Section 11.4), or by any noncompliance by any Guarantor
with the terms and provisions and covenants herein,
regardless of any knowledge thereof any such holder may
have or otherwise be charged with. Without in any way
limiting the generality of the foregoing sentence, such
holders of Guarantor Senior Debt may, at any time and
from time to time without impairing or releasing the
subordination provided in this Section 11 or the
obligations of the Lenders hereunder to the holders of
Guarantor Senior Debt, do any one or more of the
following: (a) change the manner, place, terms or time
of payment of, or renew or alter, Guarantor Senior Debt
or otherwise amend or supplement in any manner Guarantor
Senior Debt or any instrument evidencing the same or any
agreement under which any Guarantor Senior Debt is
outstanding;
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(b) sell, exchange, release, or otherwise
deal with any property pledged, mortgaged, or otherwise
securing Guarantor Senior Debt or fail to perfect or
delay in the perfection of the security interest in such
property; (c) release any Person liable in any manner
for the collection of Guarantor Senior Debt; and
(d) exercise or refrain from exercising any rights
against the Guarantors or any other Person. Each Lender
by purchasing or accepting a Note waives any and all
notice of the creation, modification, renewal, extension
or accrual of any Guarantor Senior Debt and notice of or
proof of reliance by any holder or owner of Guarantor
Senior Debt upon this Section 11 and the Guarantor
Senior Debt shall conclusively be deemed to have been
Incurred in reliance upon this Section 11, and all
dealings between the Guarantors and the holders and
owners of the Guarantor Senior Debt shall be deemed to
have been consummated in reliance upon this Section 11.
The provisions of this Section 11 are intended
to be for the benefit of, and shall be enforceable
directly by, the holders of the Guarantor Senior Debt.
11.5 Subrogation. Upon the indefeasible payment in full
in accordance with the terms of Section 11.2 of all
amounts payable under or in respect of the Guarantor
Senior Debt, the Lenders shall be subrogated to the
rights of the holders of such Guarantor Senior Debt to
receive payments or distributions of assets of the
Guarantors made on such Guarantor Senior Debt until the
Guarantee Obligations shall be paid in full in cash or
Cash Equivalent Investments to the extent set forth
herein; and for purposes of such subrogation no payments
or distributions to holders of such Guarantor Senior
Debt of any cash, Property or securities to which the
Lenders would be entitled except for the provisions of
this Section 11, and no payment over pursuant to the
provisions of this Section 11 to holders of such
Guarantor Senior Debt by the Lenders, shall, as between
such Guarantor, its creditors other than holders of such
Guarantor Senior Debt and the Lenders, be deemed to be a
payment by such Guarantor to or on account of such
Guarantor Senior Debt, it being understood that the
provisions of this Section 11 are solely for the purpose
of defining the relative rights of the holders of such
Guarantor Senior Debt, on the one hand, and the Lenders,
on the other hand. A release of any claim by any holder
of Guarantor Senior Debt shall not limit the Lenders'
rights of subrogation under this Section 11.5.
If any payment or distribution to which the Lenders
would otherwise have been entitled but for the
provisions of this Section 11 shall have been applied,
pursuant to the provisions of this Section 11, to the
payment of all amounts payable
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under the Guarantor
Senior Debt, then and in such case, the Lenders shall be
entitled to receive from the holders of such Guarantor
Senior Debt at the time outstanding the amount of any
payments or distributions received by such holders of
Guarantor Senior Debt in excess of the amount sufficient
to pay all Guarantor Senior Debt payable under or in
respect of the Guarantor Senior Debt in full in cash or
Cash Equivalent Investments in accordance with the terms
of Section 11.2.
11.6 Obligations of the Guarantors Unconditional.
Nothing contained in this Section 11 or elsewhere in
this Agreement or in the Guarantees is intended to or
shall impair as between the Guarantors and the Lenders
the obligations of the Guarantors, which are absolute
and unconditional, to pay to the Lenders the Guarantee
Obligations as and when the same shall become due and
payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Lenders
and creditors of the Guarantors other than the holders
of the Guarantor Senior Debt, nor shall anything herein
or therein prevent the Lenders from exercising all
remedies otherwise permitted by applicable law upon
default under this Agreement, subject to the rights, if
any, under this Section 11 of the holders of such
Guarantor Senior Debt in respect of cash, Property or
securities of the Guarantors received upon the exercise
of any such remedy.
The failure to make a payment on account of
Guarantee Obligations by reason of any provision of this
Section 11 shall not prevent the occurrence of an Event
of Default under Section 7.
11.7 Lenders Authorize Agent To Effectuate
Subordination. Each Lender hereby authorizes and
expressly directs the Agent on its behalf to take such
action as may be necessary or appropriate to effectuate
the subordination provided in this Section 11 and
appoints the Agent its attorney in fact for such
purpose, including, without limitation, in the event of
any dissolution, winding up, liquidation or
reorganization of any Guarantor (whether in bankruptcy,
insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of
creditors or any other similar remedy or otherwise)
tending towards liquidation of the business and assets
of any Guarantor, the immediate filing of a claim for
the unpaid balance of the Guarantee Obligations in the
form required in said proceedings and causing said claim
to be approved or the actions required to negotiate
and/or effectuate a restructuring of the Guarantee
Obligations. If the Agent does not file a proper claim
or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to
file such claim or claims, then the holders of
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the Guarantor Senior Debt are hereby authorized to have the
right to file and are hereby authorized to file an
appropriate claim for and on behalf of the Lenders. In
the event of any such proceeding, until the Guarantor
Senior Debt is paid in full in cash or Cash Equivalent
Investments, without the consent of the holders of a
majority in principal amount outstanding of Guarantor
Senior Debt, no Lender shall waive, settle or compromise
any such claim or claims relating to the Obligations
that such Lender now or hereafter may have against the
Guarantors.
SECTION 12. MISCELLANEOUS
12.1 Participations in and Assignments of Loans and
Notes.
(a) Each Lender shall have the right at any time
to sell, assign, transfer or negotiate all or any
portion of its Notes or its Loan Commitment in an
aggregate amount of not less than $5,000,000 to any
Eligible Assignee, other than to an Eligible Assignee
which has, or has a Subsidiary which has, a principal
line of business similar to any principal line of
business of the Company or any of its Subsidiaries. In
the case of any sale, transfer or negotiation of all or
part of the Notes or any Loan Commitment authorized
under this Section 12.1(a), the assignee, transferee or
recipient shall become a party to this Agreement as a
Lender by execution of an assignment and assumption
agreement; provided that (i) at such time Section 2.1(a)
or 2.2(a), as the case may be, shall be deemed modified
to reflect the Loan Commitment of such new Lender and of
the existing Lenders, (ii) upon surrender of the Notes,
new Notes will be issued, at the Company's expense, to
such new Lender and to the assigning Lender, such new
Notes to be in conformity with the requirements of
Section 2.1(d) or 2.2(c) as the case may be (with
appropriate modifications) to the extent needed to
reflect the revised Loan Commitment, and (iii) the Agent
shall receive at the time of each such assignment, from
the assigning or assignee Lender, the payment of a non-
refundable assignment fee of $3,500; and provided,
further, that such transfer or assignment will not be
effective until recorded by the Agent on the Register
pursuant to Section 12.20. To the extent of any
assignment pursuant to this Section 12.1(a), the
assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Loan Commitment,
and the assignee, transferee or recipient shall have, to
the extent of such sale, assignment, transfer or
negotiation, the same rights, benefits and obligations
as it would if it were a Lender with respect to such
Notes or Loan Commitment, including, without limitation,
the right to approve or disapprove actions which, in
accordance with the
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terms hereof, require the approval
of a Lender. At the time of each assignment pursuant to
this Section 12.1(a) to an Eligible Assignee which is
not already a Lender hereunder and which is not a United
States Person (as such term is defined in Section
7701(a)(30) of the Internal Revenue Code) for Federal
income tax purposes, the respective Eligible Assignee
shall provide to the Company and the Agent the
appropriate Internal Revenue Service Forms described in
Section 2.10(b).
(b) Each Lender may grant participations in all or any
part of its Notes or its Loan Commitment in an aggregate
amount of not less than $1,000,000 to any Eligible
Assignee, other than to an Eligible Assignee which has,
or has a Subsidiary which has, a principal line of
business similar to any principal line of business of
the Company or any of its Subsidiaries; provided,
however, 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) the
Company, the 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 the Agreement and such Lender shall retain the
sole right to enforce the obligations of the Company
relating to the Loans and to approve any amendment,
modification or waiver of any provision of this
Agreement (other than amendments, modifications or
waivers with respect to any fees payable hereunder or
the amount of principal of or the rate at which interest
is payable on the Loans, or the dates fixed for payments
of fees or principal of or interest on the Loans or
termination of the Loan Commitment).
(c) The Company shall, at its own cost and expense,
provide such certificates, acknowledgments and further
assurances in respect of this Agreement and the Loans as
any Lender may reasonably require in connection with any
participation, transfer or assignment pursuant to this
Section 12.1.
(d) Nothing in this Agreement shall prevent or prohibit
any Lender from pledging its Loan and Notes hereunder to
a Federal Reserve Bank in support of borrowings made by
such Lender from such Federal Reserve Bank.
12.2 Expenses. Whether or not the transactions
contemplated hereby shall be consummated, the Company
agrees to pay promptly upon demand (a) all the actual
and reasonable costs and expenses of preparation of the
Loan Documents and all the costs of furnishing all
opinions by counsel for the Company and the Guarantors
(including without limitation any opinions requested by
the
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Lenders as to any legal matters arising hereunder),
and of the Company's and the Guarantors' performance of
and compliance with all agreements and conditions
contained herein on its part to be performed or complied
with; (b) the reasonable fees, expenses and
disbursements of counsel to the Lenders (including
allocated costs of internal counsel) in connection with
the negotiation, preparation, execution and
administration of the Loan Documents and the Loans
hereunder, and any amendments, modifications and waivers
hereto or thereto and consents to departures from the
terms hereof and thereof; and (c) after the occurrence
of an Event of Default, all costs and expenses
(including reasonable attorneys' fees, including
allocated costs of internal counsel, and costs of
settlement) incurred by the Lenders or the Agent in
enforcing any Obligations of or in collecting any
payments due from the Company or any Guarantor hereunder
or under the Notes by reason of such Event of Default or
in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in
the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
12.3 Indemnity. In addition to the payment of
expenses pursuant to Section 12.2, whether or not the
transactions contemplated hereby shall be consummated,
the Company agrees to indemnify, pay and hold each of
the Lenders, the Agent and any holder of any of the
Notes, and each of their respective officers, directors,
employees, agents, representatives and affiliates
(collectively called the "Indemnitees"), harmless from
and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or
threatened, whether or not such Indemnitee shall be
designated as a party thereto), which may be suffered
by, imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected
with, in respect of, relating to or arising out of this
Agreement, the other Loan Documents, the Lenders'
agreements to make the Loans or the use or intended use
of any of the proceeds of the Loans hereunder, the
issuance of the Exchange Notes or the Permanent
Securities (the "indemnified liabilities"); provided,
however, that the Company shall have no obligation to an
Indemnitee hereunder with respect to indemnified
liabilities (a) to the extent such liabilities are
finally judicially determined to have resulted solely
from (i) the gross negligence or willful misconduct of
such Indemnitee or an affiliate of such Indemnitee or
(ii) the failure of such Indemnitee to perform its
obligations
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under any Loan Document or (iii) such
Indemnitee's violation of law or (b) in connection with
the obligations of any Indemnitee under any Loan
Document or for any transfer fees. To the extent that
the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the
Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
12.4 Setoff. Subject to Section 8, in addition to any
rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of
Default or, after the Maturity Date, upon all of the
unpaid principal amount of and accrued interest on the
Loans becoming due and payable, each Lender, the Agent
and each subsequent holder of any Note is hereby
authorized by the Company and each Guarantor at any time
or from time to time, without notice to the Company or
such Guarantor, or to any other Person, any such notice
being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or
unmatured but not including trust accounts or any other
accounts held for the benefit of another Person) and any
other Indebtedness at any time held or owing by such
Person or any such subsequent holder to or for the
credit or the account of the Company or such Guarantor
against and on account of the obligations and
liabilities of the Company or such Guarantor to such
Person or such subsequent holder under this Agreement
and the Notes, including, but not limited to, all claims
of any nature or description arising out of or connected
with this Agreement or the Notes, irrespective of
whether or not (a) such Person or such subsequent holder
shall have made any demand hereunder or (b) such Person
or such subsequent holder shall have declared the
principal of or the interest on its portion of the Loans
and its Notes and other amounts due hereunder to be due
and payable as permitted by Section 7 and although said
obligations and liabilities, or any of them, may be
contingent or unmatured.
12.5 Amendments and Waivers. No amendment,
modification, termination or waiver of any term or
provision of this Agreement, of the Notes or, prior to
the execution and delivery thereof, of the form of the
Senior Subordinated Indenture or consent to any
departure by the Company or any Guarantor therefrom,
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shall in any event be effective without the prior
written concurrence of the Company or such Guarantor, as
the case may be, and the Required Lenders, and, upon the
request of any Lender, the receipt of a written opinion
of counsel of the Company addressed to the Lenders to
the effect that such amendment, modification,
termination, waiver or consent does not violate or
conflict with any of the terms and provisions of the
Senior Secured Credit Agreement or any other indenture,
lease or other agreement of the Company; provided,
however, that, notwithstanding the third sentence of
Section 12.14, without the prior written consent of each
Lender affected, an amendment, modification, termination
or waiver of this Agreement, any Notes, any Guarantee,
or consent to departure from a term or provision hereof
or thereof may not: (a) reduce the principal amount of
Notes whose holders must consent to any such amendment,
modification, termination, waiver or consent; (b) reduce
the rate of or extend the time for payment of principal
or interest on any Note; (c) reduce the principal amount
of any Note; (d) make any Note payable in money other
than that stated in the Note; (e) make any change in
Section 12.5 or make any change in or waive performance
by the Company of its obligations under Section 2.5(d)
or in the definition of Change of Control; (f) reduce
the rate or extend the time of payment of fees or other
compensation payable to the Lenders hereunder; or
(g) modify the provisions of Section 8 or Section 11 or
any of the defined terms related thereto in any manner
adverse to the Lenders; and provided, further, that
without the consent of the Agent, no such amendment,
modification, termination or waiver may amend, modify,
terminate or waive any provision of Section 9 as the
same applies to the Agent or any other provision of this
Agreement as it relates to the rights or obligations of
the Agent. Any waiver or consent shall be effective
only in the specific instance and for the specific
purpose for which it was given. No notice to or demand
on the Company or any Guarantor in any case shall
entitle the Company or such Guarantor to any further
notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.5 shall be
binding upon each holder of the Notes at the time
outstanding, each further holder of the Notes, and, if
signed by the Company or a Guarantor, on the Company and
such Guarantor.
12.6 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any
of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such
action is taken or condition exists. For the
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purpose of
determining compliance with any covenant contained
herein, if an item meets the criteria of more than one
type of exception described in such covenants or the
definitions used therein, the Company or the Subsidiary
in question shall have the right to determine in its
sole discretion the category to which such item applies
and shall not be required to include the amount and type
of such item in more than one of such categories and may
elect to apportion such item between or among two or
more of such categories otherwise applicable.
12.7 Entirety. The Loan Documents and the Fee Letter
embody the entire agreement of the parties and supersede
all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
12.8 Notices. Unless otherwise provided herein, any
notice or other communications herein required or
permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by mail
and shall be deemed to have been given when delivered in
person, upon receipt of telecopy or telex against
receipt of answer back or four Business Days after
depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided,
however, that notices shall not be effective until
received. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is
delivered as provided in this Section 12.8) shall be set
forth under each party's name on the signature pages
hereto.
12.9 Survival of Warranties and Certain Agreements.
(a) All agreements, representations and warranties made
herein shall survive the execution and delivery of this
Agreement, the making of the Loans hereunder and the
execution and delivery of the Notes and, notwithstanding
the making of the Loans, the execution and delivery of
the Notes or any investigation made by or on behalf of
any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall
not prejudice any right of one party against any other
party in respect of anything done or omitted hereunder
or in respect of any right to damages or other remedies.
(b) Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of the
Company set forth in Sections 12.2, 12.3, 12.13, 12.14,
12.16 and 12.19 shall survive the payment of the Loans
and the Notes and the termination of this Agreement.
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12.10 Failure or Indulgence Not Waiver;
Remedies Cumulative. No failure or delay on the part of
the Agent or any Lender or any holder of any Note in the
exercise of any power, right or privilege hereunder,
under a Guarantee or under the Notes shall impair such
power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and
remedies existing under this Agreement, under a
Guarantee or the Notes are cumulative to and not
exclusive of any rights or remedies otherwise available.
12.11 Severability. In case any provision in or
obligation under this Agreement, under a Guarantee or
the Notes shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and
enforceability of the remaining provisions or
obligations, or of such provision or obligation in any
other jurisdiction, shall not in any way be affected or
impaired thereby.
12.12 Headings. Section and Section headings in
this Agreement are included herein for convenience of
reference only and shall not constitute a part of this
Agreement for any other purpose or given any substantive
effect.
12.13 Applicable Law. THIS AGREEMENT, INCLUDING
EACH GUARANTEE, AND THE NOTES SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
AGREEMENTS MADE AND PERFORMED WITHIN SUCH STATE WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
12.14 Successors and Assigns; Subsequent
Holders of Notes. This Agreement shall be binding upon
the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties
hereto and the permitted successors and assigns of the
Lenders. The terms and provisions of this Agreement and
each Guarantee shall inure to the benefit of any
assignee or transferee of the Notes pursuant to Section
12.1(a), and in the event of such transfer or
assignment, the rights and privileges herein conferred
upon the Lenders shall automatically extend to and be
vested in such transferee or assignee, all subject to
the terms and conditions hereof. Except as provided in
Section 12.5, in determining whether the
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holders of a
sufficient aggregate principal amount of the Loans shall
have consented to any action under this Agreement, any
amount of the Loans owned or held by the Company, any
Guarantor or any of its their respective Affiliates
shall be disregarded. The Company's and the Guarantors'
rights or any interest therein hereunder may not be
assigned without the prior express written consent of
each of the Lenders.
12.15 Counterparts; Effectiveness. This Agreement
and any amendments, waivers, consents or supplements 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. This
Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto, and
delivery thereof to the Agent or, in the case of the
Lenders, written telex or facsimile notice or telephonic
notification (confirmed in writing) of such execution
and delivery. The Agent will give the Company and each
Lender prompt notice of the effectiveness of this
Agreement.
12.16 Consent to Jurisdiction; Venue; Waiver of Jury
Trial.
(a) Any legal action or proceeding with respect to
this Agreement, any Note or any Guarantee may be brought
in any New York state court or any United States court
sitting in New York City, and, by execution and delivery
of this Agreement, each of the parties to this Agreement
hereby irrevocably accepts for itself and in respect of
its respective property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the
parties to this Agreement hereby further irrevocably
waives any claim that any such courts lack jurisdiction
over itself, and agrees not to plead or claim, in any
legal action or proceeding with respect to this
Agreement or the Notes brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such
party. Each of the parties to this Agreement
irrevocably consents to the service of process in any
such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage
prepaid, to such party, at its respective address for
notices pursuant to Section 12.8, such service to become
effective 30 days after such mailing. To the extent
permitted by law, each of the parties to this Agreement
hereby irrevocably waives any objection to such service
of process and further irrevocably waives and agrees not
to plead or claim in any action or proceeding commenced
hereunder or under any Note that service of process was
in any way invalid or ineffective. Nothing herein shall
affect the right of any party to this Agreement to serve
process in any other manner permitted by
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law or to
commence legal proceedings or otherwise proceed against
any party in any other jurisdiction.
(b) Each of the parties to this Agreement hereby
irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in
connection with this Agreement or the Notes brought in
the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or
claim in any such court that any such action or
proceeding brought in any such court has been brought in
an inconvenient forum.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.17 Payments Pro Rata.
(a) The Agent agrees that promptly after its receipt of
each payment of any interest or premium on or principal
of the Notes from or on behalf of the Company or any
Guarantor, it shall, except as otherwise provided in
this Agreement, distribute such payment to the Lenders
(other than any Lender that has consented in writing to
waive its pro rata share of such payment) pro rata based
upon their respective pro rata shares, if any, of such
payment.
(b) Each of the Lenders agrees that, if it should
receive any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise
of the right of setoff or banker's lien, by counterclaim
or cross action, by the enforcement of any right under
the Loan Documents, or otherwise) which is applicable to
the payment of the principal of, or interest on, the
Loans of a sum which with respect to the related sum or
sums received by other Lenders is in a greater
proportion than the total of such Obligations then owed
and due to such Lender bears to the total of such
Obligations then owed and due to all of the Lenders
immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an
interest in the Obligations of the Company to such
Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount;
provided
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that, if all or any portion of such excess
amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without
interest.
12.18 Waiver of Stay, Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive the Company
from paying all or any portion of the principal of or
interest on the Loans as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do
so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will
not hinder, delay or impede the execution of any power
herein granted to the Agent, but will suffer and permit
the execution of every such power as though no such law
had been enacted.
12.19 Confidentiality. Each Lender shall hold
all non-public information obtained pursuant to the
requirements of or in connection with this Agreement
which has been identified as confidential by the Company
in accordance with such Lender's customary procedures
for handling confidential information of this nature and
in accordance with safe and sound banking practices, it
being understood and agreed by the Company that (a) in
any event a Lender may make disclosures reasonably
required by any actual or prospective assignee,
transferee or participant in connection with the
contemplated assignment or transfer by such Lender of
any Loans or any participation therein or as required or
requested by any governmental agency or representative
thereof or pursuant to legal process; provided that
unless specifically prohibited by applicable law or
court order, each Lender shall notify the Company of any
request by any governmental agency or representative
thereof (other than any such request in connection with
any examination of the financial condition of such
Lender by such governmental agency) for disclosure of
any such non-public information prior to disclosure of
such information and (b) a Lender may share with any of
its Affiliates (that are not competitors of the Company
or any Subsidiary in any of their respective lines of
business), and such Affiliates may share with any Lender
(that is not a competitor of the Company or any
Subsidiary in any of their respective lines of
business), any information related to the Company or the
Company's or their respective Affiliates (including
information relating to creditworthiness); and provided,
further, that in no event shall any Lender
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be obligated
or required to return any materials furnished by the
Company or any of its Subsidiaries.
12.20 Register. The Company hereby designates the
Agent to serve as the Company's agent, solely for
purposes of this Section 12.20, to maintain a register
(the "Register") on which it will record the Loans made
by each of the Lenders and each repayment in respect of
the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in
such recordation shall not affect the Company's
obligations in respect of such Loans. With respect to
any Lender, the transfer of the Loan Commitments of such
Lender and the rights to the principal of, and interest
on, any Loan made pursuant to such Loan Commitments
shall not be effective until such transfer is recorded
on the Register maintained by the Agent with respect to
ownership of such Loan Commitments and Loans and prior
to such recordation all amounts owing to the transferor
with respect to such Loan Commitments and Loans shall
remain owing to the transferor. The registration of
assignment or transfer of all or part of any Loan
Commitments and Loans shall be recorded by the Agent on
the Register only upon the receipt by the Agent of a
properly executed and delivered assignment and
assumption agreement pursuant to Section 12.1(a).
Coincident with the delivery of such an Assignment and
Assumption Agreement to the Agent for acceptance and
registration of assignment or transfer of all or part of
a Loan, or as soon thereafter as practicable, the
assigning or transferor Lender shall surrender the Note
evidencing such Loan, and thereupon one or more new
Notes of the same type and in the same aggregate
principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender.
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WITNESS the due execution hereof by the
respective duly authorized officers of the undersigned
as of the date first written above.
COMPANY:
BIO-RAD LABORATORIES, INC.
By: /s/ Ronald W. Hutton
Name:Title:Ronald W. Hutton
Treasurer
Notice Address:
1000 Alfred Nobel Drive
Hercules, California 94547
Attention: Chief Financial
Officer (with a copy to the
General Counsel)
Telephone: (510) 741-7000Telecopy: (510)
741-5815
S-1
<PAGE>
AGENT:
UBS AG, STAMFORD BRANCH,
as Agent
By: /s/ Michael Y. Leder
Name:Title: Michael Y. Leder
Executive Director
Leveraged Finance
By: /s Michael J. Cerminaro
Name:Title: Michael J. Cerminaro
Executive Director
Leveraged Finance
Notice Address:
677 Washington Blvd., 6th
Floor Tower
Stamford, Connecticut
06901
Attention: Lynne Alfarone
Telephone: (203) 719-4308Telecopy:
(203) 719-3888
S-2
<PAGE>
LENDERS:
Commitment: $80,000,000 UBS AG, STAMFORD BRANCH
By: /s/ Michael Y. Leder
Name:Title: Michael Y. Leder
Executive Director
Leveraged Finance
By: /s/ Michael J. Cerminaro
Name:Title: Michael J. Cerminaro
Executive Director
Leveraged Finance
Notice Address:
677 Washington Blvd., 6th Floor Tower
Stamford, Connecticut 06901
Attention: Lynne Alfarone
Telephone: (203) 719-4308 Telecopy:
(203) 719-3888
S-3
<PAGE>
Commitment: $20,000,000 ABN AMRO BANK N.V.
By: /s/ Jeffrey A. French
Name:Title: Jeffrey A. French
Senior Vice President
By: /s/ Amanda C. Cox
Name:Title: Amanda C. Cox
Vice President
Notice Address:
ABN AMRO Bank N.V.
San Francisco Branch
101 California Street, Suite 4550
San Francisco, California 94111
Attention: Jeffrey French
Telephone: (415) 984-3730Telecopy:
(415) 362-3524
with a copy to:
ABN AMRO Bank N.V.
Credit Administration
208 S. LaSalle Street, Suite 1500
Chicago, Illinois 60604-1003
Attention: Joe Coriaci
Telephone: (312) 992-5118
Telecopy: (312) 992-5111
<PAGE>
EXHIBIT 4.5
Exhibit 4.5
BIO-RAD LABORATORIES, INC.
(as Issuer)
11-5/8% Senior Subordinated Notes due 2007
_____________
INDENTURE
Dated as of February 17, 2000
_____________
Norwest Bank Minnesota, N.A.
(as Trustee)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.1 Definitions 1
Section 1.2 Other Definitions 21
Section 1.3Incorporation by Reference of Trust Indenture Act 22
Section 1.4 Rules of Construction 23
ARTICLE IITHE NOTES 23
Section 2.1 Form and Dating 23
Section 2.2 Execution and Authentication 24
Section 2.3 Registrar, Paying Agent and Depositary 24
Section 2.4 Paying Agent to Hold Money in Trust 25
Section 2.5 Holder Lists 25
Section 2.6 Transfer and Exchange 25
Section 2.7 Replacement Notes 37
Section 2.8 Outstanding Notes 37
Section 2.9 Treasury Notes 38
Section 2.10 Temporary Notes 38
Section 2.11 Cancellation 38
Section 2.12 Defaulted Interest 38
Section 2.13 CUSIP Numbers 39
ARTICLE IIIREDEMPTION 39
Section 3.1 Notices to Trustee 39
Section 3.2 Selection of Notes to be Redeemed 39
Section 3.3 Notice of Redemption 40
Section 3.4 Effect of Notice of Redemption 40
Section 3.5 Deposit of Redemption Price 40
Section 3.6 Notes Redeemed in Part 41
Section 3.7 Optional Redemption 41
ARTICLE IVCOVENANTS 42
Section 4.1 Payment of Notes 42
Section 4.2 Maintenance of Office or Agency 42
Section 4.3 SEC Reports and Reports to Holders 43
Section 4.4 Compliance Certificate 43
Section 4.5 Taxes 44
Section 4.6 Stay, Extension and Usury Laws 44
Section 4.7Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock 44
Section 4.8 Limitation on Liens 47
Section 4.9 Limitations on Restricted Payments 47
Section 4.10Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries 49
Section 4.11 Limitation on Transactions with Affiliates 50
Section 4.12Limitation on Sale of Assets and Subsidiary Stock 50
Section 4.13Repurchase of Notes at the Option of the Holder upon
a Change of Control 53
Section 4.14 Limitation on Layering Indebtedness 55
Section 4.15 Consolidation of Genetic Systems 55
Section 4.16 Limitation on Status as Investment Company 55
Section 4.17 Corporate Existence 55
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ARTICLE VSUCCESSORS 56
Section 5.1 Merger, Consolidation or Sale of Assets. 56
Section 5.2 Successor Corporation Substituted 56
ARTICLE VIDEFAULTS AND REMEDIES 57
Section 6.1 Events of Default. 57
Section 6.2 Acceleration 58
Section 6.3 Other Remedies 59
Section 6.4 Waiver of Past Defaults 59
Section 6.5 Control by Majority 60
Section 6.6 Limitation on Suits 60
Section 6.7 Rights of Holders of Notes to Receive Payment 60
Section 6.8 Collection Suit by Trustee 60
Section 6.9 Trustee May File Proofs of Claim 61
Section 6.10 Priorities 61
Section 6.11 Undertaking for Costs. 62
ARTICLE VIITRUSTEE 62
Section 7.1 Duties of Trustee. 62
Section 7.2 Rights of Trustee. 63
Section 7.3 Individual Rights of Trustee. 64
Section 7.4 Trustee's Disclaimer. 64
Section 7.5 Notice of Defaults Agreement 64
Section 7.6 Reports by Trustee to Holders of the Notes 64
Section 7.7 Compensation and Indemnity 64
Section 7.8 Replacement of Trustee 65
Section 7.9 Successor Trustee by Merger, etc. 66
Section 7.10 Eligibility; Disqualification 66
Section 7.11Preferential Collection of Claims against Company 67
ARTICLE VIIILEGAL DEFEASANCE AND COVENANT DEFEASANCE 67
Section 8.1Option to Effect Legal Defeasance or Covenant
Defeasance. 67
Section 8.2 Legal Defeasance and Discharge. 67
Section 8.3 Covenant Defeasance 67
Section 8.4 Conditions to Legal or Covenant Defeasance 68
Section 8.5Deposited Money and Government Securities to be Held
in Trust;Other Miscellaneous Provisions. 69
Section 8.6 Repayment to Company 69
Section 8.7 Reinstatement 70
Section 8.8 Satisfaction and Discharge 70
ARTICLE IXAMENDMENT, SUPPLEMENT AND WAIVER 71
Section 9.1 Without Consent of Holders of Notes. 71
Section 9.2 With Consent of Holders of Notes 71
Section 9.3 Compliance with Trust Indenture Act 73
Section 9.4 Revocation and Effect of Consents 73
Section 9.5 Notation on or Exchange of Notes 73
Section 9.6 Trustee to Sign Amendments, etc. 73
ARTICLE XGUARANTEES 74
Section 10.1 Guarantees 74
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Section 10.2 Execution and Delivery of Guarantees 75
Section 10.3Guarantors May Consolidate, etc., on Certain Terms 75
Section 10.4 Future Guarantors 76
Section 10.5 Release of Guarantors 76
Section 10.6Limitation of Guarantor's Liability;
Certain Bankruptcy Events. 77
Section 10.7Application of Certain Terms and Provisions to the
Guarantors 77
Section 10.8 Subordination of Guarantees 78
ARTICLE XISUBORDINATION 78
Section 11.1 Notes Subordinate to Senior Debt 78
Section 11.2 No Payment on Notes in Certain Circumstances 79
Section 11.3Notes Subordinate to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization 80
Section 11.4Holders to be Subrogated to Rights of Holders of
Senior Debt 80
Section 11.5Obligations of the Company and the Guarantors
Unconditional. 80
Section 11.6Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice 81
Section 11.7Application by Trustee of Assets Deposited with It 81
Section 11.8Subordination Rights Not Impaired by Acts or
Omissions of the Company, the Guarantors or
Holders of Senior Debt. 82
Section 11.9Holders Authorize Trustee To Effectuate
Subordination of Notes 82
Section 11.10 Rights of Trustee to Hold Senior Debt 83
Section 11.11 Article XI Not to Prevent Events of Default 83
Section 11.12No Fiduciary Duty of Trustee to Holders of Senior
Debt 83
Section 11.13 Notice by Company 83
ARTICLE XIIMISCELLANEOUS 83
Section 12.1 Trust Indenture Act Controls 83
Section 12.2 Notices 83
Section 12.3Communication by Holders of Notes with Other
Holders of Notes. 85
Section 12.4Certificate and Opinion as to Conditions Precedent 85
Section 12.5 Statements Required in Certificate or Opinion 85
Section 12.6 Rules by Trustee and Agents. 85
Section 12.7No Personal Liability of Directors, Officers,
Employees and Stockholders 85
Section 12.8 Governing Law. 86
Section 12.9 No Adverse Interpretation of Other Agreements. 86
Section 12.10 Successors. 86
Section 12.11 Severability. 86
Section 12.12 Counterpart Originals. 87
Section 12.13 Table of Contents, Headings, etc. 87
EXHIBIT A
FORM OF NOTE A-1
EXHIBIT BFORM OF CERTIFICATE OF TRANSFER B-1
EXHIBIT CFORM OF CERTIFICATE OF EXCHANGE C-1
EXHIBIT DFORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR D-1
EXHIBIT EFORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY
SUBSIDIARY GUARANTORS E-1
iii
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CROSS-REFERENCE TABLE*
TIA Section Indenture Section
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.8; 7.10
(b) 7.8; 7.10; 12.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 12.3
(c) 12.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6; 12.2
(d) 7.6
314(a) 4.3; 4.4; 12.2
(b) N.A.
(c)(1) 12.4
(c)(2) 12.4
(c)(3) N.A.
(d) N.A.
(e) 12.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5; 12.2
(c) 7.1(a)
(d) 7.1(c)
(e) 6.11
316(a)(last sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
(b) 6.7
317(a)(1) 6.8
(a)(2) 6.9
(b) 2.4
318(a) 12.1
(c) 12.1
______________________________
N.A. means not applicable
*This Cross-Reference table shall not, for any purpose, be deemed
to be part of this Indenture.
<PAGE>
INDENTURE, dated as of February 17, 2000, between Bio-
Rad Laboratories, Inc., a Delaware corporation (the "Company"),
and Norwest Bank Minnesota, N.A., as trustee (the "Trustee").
The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of
the Holders of the 11-5/8% Series A Senior Subordinated Notes due
2007 (the "Series A Notes") and the 11_% Series B Senior
Subordinated Notes due 2007 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"144A Global Note" means one or more Global Notes bearing
the Private Placement Legend, that will be issued in an aggregate
amount of denominations equal in total to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Accrued Bankruptcy Interest" means, with respect to any
Indebtedness, all interest accruing thereon after the filing of a
petition by or against the Company or any of its Subsidiaries
under any Bankruptcy Law, in accordance with and at the rate
(including any rate applicable upon any default or event of
default, to the extent lawful) specified in the documents
evidencing or governing such Indebtedness, whether or not the
claim for such interest is allowed as a claim after such filing
in any proceeding under such Bankruptcy Law.
''Acquired Indebtedness'' means Indebtedness (including
Disqualified Capital Stock) of any Person existing at the time
such Person becomes a Subsidiary of the Company, including by
designation, or is merged or consolidated into or with the
Company or one of its Subsidiaries.
''Acquisition'' means the purchase or other acquisition of
any Person or all or substantially all the assets of any Person
by any other Person, whether by purchase, merger, consolidation,
or other transfer, and whether or not for consideration.
''Affiliate'' means any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company. For purposes of this definition, the
term ''control'' means the power to direct the management and
policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting
securities, by contract, or otherwise; provided, that with
respect to ownership interests in the Company and its
Subsidiaries, a Beneficial Owner of 10% or more of the total
voting power normally entitled to vote in the election of
directors, managers or trustees, as applicable, shall for such
purposes be deemed to constitute control. Notwithstanding the
foregoing, Affiliate shall not include Wholly Owned Subsidiaries
that are Guarantors.
"Agent" means any Registrar, Paying Agent or co-registrar.
''Applicable Premium'' means, with respect to any Note on
any Redemption Date, the greater of:
(a) 1.0% of the principal amount of the Note; or
(b) the excess of:
(i) the present value at such Redemption Date of
(A) the redemption price of the Note at February 15,
2004 (such redemption price being stated in the table
appearing in Section 3.7 plus (B) all required interest
payments due on the Note through February 15,
<PAGE>
2004, computed using a discount rate equal to the Treasury
Rate as of such Redemption Date plus 75 basis points;
over
(ii) the principal amount of the Note.
"Applicable Procedures" means, with respect to any transfer
or exchange of or for beneficial interests in any Global Note,
the rules and procedures of the Depositary, Euroclear and Cedel
that apply to such transfer or exchange at the relevant time.
''Average Life'' means, as of the date of determination,
with respect to any security or instrument, the quotient obtained
by dividing (a) the sum of the products (i) of the number of
years from the date of determination to the date or dates of each
successive scheduled principal (or redemption) payment of such
security or instrument and (ii) the amount of each such
respective principal (or redemption) payment by (b) the sum of
all such principal (or redemption) payments.
"Bankruptcy Code" means the United States Bankruptcy Code,
codified at 11 U.S.C. 101-1330, as amended.
''Beneficial Owner'' or ''beneficial owner'' for purposes of
the definition of Change of Control and Affiliate has the meaning
attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act
(as in effect on the Issue Date), whether or not applicable,
except that a ''person'' shall be deemed to have ''beneficial
ownership'' of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time.
''Board of Directors'' means, with respect to any Person,
the board of directors of such Person or any committee of the
Board of Directors of such Person authorized, with respect to any
particular matter, to exercise the power of the board of
directors of such Person.
"Broker-Dealer" means any broker-dealer that receives
Exchange Notes for its own account in the Exchange Offer in
exchange for Notes that were acquired by such broker-dealer as a
result of market-making or other trading activities.
''Business Day'' means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in New York, New York are authorized or obligated by
law or executive order to close.
''Capital Contribution'' means any contribution to the
equity of the Company for which no consideration other than the
issuance of common stock with no redemption rights and no special
preferences, privileges or voting rights is given.
''Capitalized Lease Obligation'' means, as to any Person,
the obligations of such Person under a lease that are required to
be classified and accounted for as capital lease obligations
under GAAP and, for purposes of this definition, the amount of
such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with
GAAP.
''Capital Stock'' means, with respect to any corporation,
any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness that is not itself
otherwise capital stock), warrants, options, participations or
other equivalents of or interests (however designated) in stock
issued by that corporation.
''Cash Equivalent'' means:
<PAGE>
(a) securities issued or directly and fully guaranteed
or insured by the United States of America or any agency or
instrumentality thereof (provided, that the full faith and
credit of the United States of America is pledged in support
thereof) maturing within one year after the date of
acquisition;
(b) time deposits and certificates of deposit and
commercial paper issued by the parent corporation of any
domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 and a Thompson
Bank Watch rating of ''B'' or better maturing within one
year after the date of acquisition;
(c) commercial paper issued by others having the
highest rating obtainable from Standard & Poor's Corporation
or Moody's Investors Services, Inc.;
(d) repurchase obligations with a term of not more
than ten days for underlying securities of the types
described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above;
(e) marketable obligations issued by any state of the
United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing,
or payable at the demand of the holder thereof, within one
year from the date of acquisition thereof and, at the time
of acquisition, having one of the three highest ratings
obtainable from either Standard & Poor's Corporation or
Moody's Investors Services, Inc.; and
(f) investments in money market funds substantially
all of whose assets comprise securities of the types
described in clauses (a) through (e) above.
"Cedel" means Cedel Bank, S.A., or its successors.
''Change of Control'' means:
(a) any merger or consolidation of the Company with or
into any Person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of
the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, if,
immediately after giving effect to such transaction(s),
either (i) any ''person'' or ''group'' (other than the
Excluded Persons) is or becomes the ''beneficial owner,''
directly or indirectly, of more than 40% of the Voting
Equity Interests of the transferee(s) or surviving entity or
entities, and the Excluded Persons shall cease to own
beneficially at least a greater percentage of the Voting
Equity Interests of the transferee(s) or surviving entity or
entities or (ii) the Excluded Persons shall cease to own
beneficially (A) 30% of the Voting Equity Interests of such
transferee(s) or surviving entity or entities or (B) a
greater percentage of the Voting Equity Interests of such
transferee(s) or surviving entity or entities than any other
person or group, which ever is less,
(b) any ''person'' or ''group'' (other than the
Excluded Persons) is or becomes the ''beneficial owner,''
directly or indirectly, of more than 40% of the Voting
Equity Interests of the Company, and the Excluded Persons
shall cease to own beneficially at least a greater
percentage of the Voting Equity Interests of the Company,
(c) the Continuing Directors cease for any reason to
constitute a majority of the Board of Directors of the
Company then in office, or
(d) the Company adopts a plan of liquidation or
dissolution.
<PAGE>
As used in this definition, ''person'' or ''group''
has the meaning given by Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable.
''Consolidated Coverage Ratio'' of any Person on any date of
determination (the ''Transaction Date'') means the ratio, on a
pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of
such Person (exclusive of amounts attributable to operations
and businesses permanently discontinued or disposed of) for
the Reference Period to
(b) the aggregate Consolidated Fixed Charges of such
Person (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only
to the extent that the obligations giving rise to such
Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference
Period;
provided, that for purposes of such calculation:
(i) Acquisitions which occurred during the
Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date shall be
assumed to have occurred on the first day of the
Reference Period,
(ii) transactions giving rise to the need to
calculate the Consolidated Coverage Ratio shall be
assumed to have occurred on the first day of the
Reference Period,
(iii) the incurrence of any Indebtedness
(including issuance of any Disqualified Capital Stock)
during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction
Date (and the application of the proceeds therefrom to
the extent used to refinance or retire other
Indebtedness) shall be assumed to have occurred on the
first day of the Reference Period, and
(iv) the Consolidated Fixed Charges of such Person
attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a
floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect
from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the
entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Swap or Hedging
Obligation (which shall remain in effect for the 12-
month period immediately following the Transaction
Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate
(whether higher or lower) shall be used.
''Consolidated EBITDA'' means, with respect to any Person,
for any period, the Consolidated Net Income of such Person for
such period adjusted to add thereto (to the extent deducted from
net revenues in determining Consolidated Net Income), without
duplication, the sum of
(a) Consolidated income tax expense,
(b) Consolidated depreciation and amortization
expense,
(c) Consolidated Fixed Charges, and
(d) all other non-cash charges (excluding any such non-
cash charge to the extent that it represents an accrual of
or reserve for cash expenditures in any future period),
<PAGE>
less the amount of all cash payments made by such Person or any
of its Subsidiaries during such period to the extent such
payments relate to non-cash charges that were added back in
determining Consolidated EBITDA for such period or any prior
period; provided, that consolidated income tax expense,
depreciation and amortization and Consolidated Fixed Charges of a
Subsidiary (i) that is a less than Wholly Owned Subsidiary shall
only be added to the extent and in the same proportions that the
net income of such Subsidiary was included in the calculation of
Consolidated Net Income of such Person and (ii) shall only be
added to the extent and in the same proportions that the
Consolidated EBITDA of such Subsidiary is permitted to be paid or
distributed as a dividend, advance, loan or other distribution to
such Person.
''Consolidated Fixed Charges'' of any Person means, for any
period, the aggregate amount (without duplication and determined
in each case in accordance with GAAP) of
(a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance
with the following sentence, interest attributable to
Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of
all deferred payment obligations, and (iii) all commissions,
discounts and other fees and charges owed with respect to
banker's acceptances and letters of credit financings and
currency and Interest Swap and Hedging Obligations, in each
case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or
guaranteed) by such Person or any of its Consolidated
Subsidiaries in respect of Preferred Stock (other than by
Subsidiaries of such Person to such Person or such Person's
Wholly Owned Subsidiaries).
For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined in good faith by such Person
to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by
such Person or a Subsidiary of such Person of an obligation of
another Person shall be deemed to be the interest expense
attributable to the Indebtedness guaranteed.
''Consolidated Net Income'' means, with respect to any
Person for any period, the net income (or loss) of such Person
and its Consolidated Subsidiaries (determined on a consolidated
basis in accordance with GAAP) for such period, adjusted to
exclude (only to the extent included in computing such net income
(or loss) and without duplication):
(a) all gains or losses which are extraordinary (as
determined in accordance with GAAP) (including any gain from
the sale or other disposition of assets outside the ordinary
course of business or from the issuance or sale of any
capital stock),
(b) the net income, if positive, of any Person, other
than a Consolidated Subsidiary, in which such Person or any
of its Consolidated Subsidiaries has an interest, except to
the extent of the amount of any dividends or distributions
actually paid in cash to such Person or a Consolidated
Subsidiary of such Person during such period, but in any
case not in excess of such Person's pro rata share of such
Person's net income for such period,
(c) the net income or loss of any Person acquired in a
pooling of interests transaction for any period prior to the
date of such acquisition,
(d) the net income, if positive, of any of such
Person's Consolidated Subsidiaries to the extent that the
declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of
its charter or bylaws or any other agreement, instrument,
<PAGE>
judgment, decree, order, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary, and
(e) the net income of, and all dividends and
distributions from, any Unrestricted Subsidiary.
''Consolidated Net Worth'' of any Person at any date means
the aggregate consolidated stockholders' equity of such Person
(plus amounts of equity attributable to preferred stock) as would
be shown on the consolidated balance sheet of such Person
prepared in accordance with GAAP, adjusted to exclude (to the
extent included in calculating such equity), (a) the amount of
any such stockholders' equity attributable to Disqualified
Capital Stock or treasury stock of such Person and its
Consolidated Subsidiaries, (b) all upward revaluations and other
write-ups in the book value of any asset of such Person or a
Consolidated Subsidiary of such Person subsequent to the Issue
Date, and (c) all investments in subsidiaries that are not
Consolidated Subsidiaries and in Persons that are not
Subsidiaries.
''Consolidated Subsidiary'' means, for any Person, each
Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which are
consolidated for financial statement reporting purposes with the
financial statements of such Person in accordance with GAAP.
"Consolidation" means the consolidation of the accounts of
the Company with the accounts of its Subsidiaries, all in
accordance with GAAP; provided, that ''consolidation'' will not
include consolidation of the accounts of any Unrestricted
Subsidiary with the accounts of the Company. The term
''consolidated'' has a correlative meaning to the foregoing.
''Continuing Director'' means during any period of 12
consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so approved,
including new directors designated in or provided for in an
agreement regarding the merger, consolidation or sale, transfer
or other conveyance, of all or substantially all of the assets of
the Company, if such agreement was approved by a vote of such
majority of directors).
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 12.2 or such other address as to
which the Trustee may give notice to the Company; provided, that
for purposes of complying with Section 2.3 such address shall be
_ Norwest Bank Minnesota, N.A., 333 South Grand Avenue, Suite
740, Los Angeles, California 90071, Attention: Jeanie Mar. All
notices by the Company sent to the Trustee at its Corporate Trust
Office in the Borough of Manhattan, The City of New York shall
also be sent to the Trustee at the address set forth in Section
12.2.
''Credit Agreement'' means the Credit Agreement, dated as of
September 30, 1999, by and among the Company, certain of its
Subsidiaries, certain financial institutions and Bank One, NA, as
agent and representative, providing for (a) an aggregate
$100,000,000 term loan facility, and (b) an aggregate
$100,000,000 revolving credit facility, including any related
notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit
agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time
to time whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to
the next succeeding sentence, irrespective of any changes in the
terms and conditions thereof. Without limiting the generality of
the foregoing, the term ''Credit Agreement'' shall include
agreements in respect of Interest Swap and Hedging Obligations
with lenders party to the Credit Agreement or their affiliates
and shall also include any amendment, amendment and restatement,
renewal, extension,
<PAGE>
restructuring, supplement or modification to
any Credit Agreement and all refundings, refinancings and
replacements of any Credit Agreement, including any agreement
(i) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby,
(ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or
more of the Company and its Subsidiaries and their
respective successors and assigns,
(iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder;
provided, that on the date such Indebtedness is incurred its
incurrence would not be prohibited by this Indenture, or
(iv) otherwise altering the terms and conditions
thereof in a manner not prohibited by the terms of this
Indenture.
"Default" means any event that is or with the passage of
time or the giving of notice or both would be an Event of
Default.
"Definitive Note" means one or more certificated Notes
registered in the name of the Holder thereof and issued in
accordance with Section 2.6, in the form of Exhibit A hereto
except that such Note shall not include the information called
for by footnotes 3, 4 and 5 thereof.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified
in Section 2.3 as the Depositary with respect to the Notes, until
a successor will have been appointed and become such pursuant to
the applicable provisions of this Indenture, and thereafter
"Depositary" will mean or include such successor.
''Designated Senior Debt'' means Senior Debt from time to
time outstanding under the Credit Agreement.
''Disqualified Capital Stock'' means, with respect to any
Person,
(a) Equity Interests of such Person that, by its terms
or by the terms of any security into which it is
convertible, exercisable or exchangeable, is, or upon the
happening of an event or the passage of time or both, would
be, required to be redeemed or repurchased (including at the
option of the holder thereof) by such Person or any of its
Subsidiaries, in whole or in part, on or prior to the Stated
Maturity of the Notes, and
(b) any Equity Interests of any Subsidiary of such
Person other than any common equity with no preferences,
privileges, and no redemption or repayment provisions.
"Distribution Compliance Period" means the 40-day restricted
period as defined in Regulation S.
"Equity Interests" means Capital Stock or partnership,
participation or membership interests and all warrants, options
or other rights to acquire Capital Stock or partnership,
participation or membership interests (but excluding any debt
security that is convertible into, or exchangeable for, Capital
Stock or partnership, participation or membership interests).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, or its successor, as operator of the Euroclear
system.
<PAGE>
"Event of Loss" means, with respect to any property or
asset, any (a) loss, destruction or damage of such property or
asset or (b) any condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property or
asset, or confiscation or requisition of the use of such property
or asset.
''Exchange Act'' means the Securities Exchange Act of 1934,
as amended.
"Exchange Notes" means Series B Notes issued pursuant to an
Exchange Offer.
"Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Exchange Offer Registration Statement" shall have the
meaning set forth in the Registration Rights Agreement.
"Excluded Persons" means (a) David Schwartz, Alice Schwartz,
Norman D. Schwartz, Steven Schwartz, (b) any spouse, immediate
family member, relative or lineal descendant of any person
described in clause (a), (c) any trust in which any one or more
of the persons described in clause (a) or (b) holds all of the
beneficial interests, and (d) any Affiliate of the persons
described in clause (a) or (b).
''Exempted Affiliate Transaction'' means:
(a) customary employee compensation and benefit
arrangements approved by a majority of independent (as to
such transactions) members of the Board of Directors of the
Company,
(b) Restricted Payments, other than Investments,
permitted under Section 4.9,
(c) transactions solely between the Company and any
Guarantor, or solely among Guarantors,
(d) payment of reasonable directors' fees to persons
who are not otherwise Affiliates of the Company,
(e) sales of Equity Interests (other than Disqualified
Capital Stock) to Affiliates of the Company,
(f) performance of all agreements in existence on the
Issue Date and any modification thereto or any transaction
contemplated thereby in any replacement agreement therefor
so long as such modification or replacement is not more
disadvantageous to the Company, any of its Subsidiaries or
the Holders in any material respect than the original
agreement as in effect on the Issue Date,
(g) transactions with suppliers or vendors pursuant to
purchase orders executed in the ordinary course of business
consistent with past practice and
(h) transactions solely between the Company and any
Subsidiary or solely among Subsidiaries;
provided, that in the case of clauses (g) and (h) only, such
transactions are otherwise in compliance with Section 4.11
without giving effect to the application of clause (c) of Section
4.11.
''Existing Indebtedness'' means Indebtedness of the Company
and its Subsidiaries (other than
<PAGE>
Indebtedness under the Credit
Agreement) in existence on the Issue Date immediately after
giving effect to the Transactions, reduced to the extent such
amounts are repaid, refinanced or retired.
''Foreign Subsidiary'' means any Subsidiary of the Company
which (a) is not organized under the laws of the United States,
any state thereof or the District of Columbia and (b) conducts
substantially all of its business operations outside the United
States of America.
''Foreign Subsidiary Credit Agreement'' means any credit
agreement or similar instrument, including, without limitation,
working capital or equipment purchase lines of credit, entered
into by any Foreign Subsidiary governing the terms of a bona fide
borrowing by such Foreign Subsidiary from (a) a third-party
financial institution that is primarily engaged in the business
of commercial banking or (b) a vendor or other provider of
financial accommodations in connection with the purchase of
equipment, in either case for valid business purposes, including
any related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, as such may be
amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the
proviso in clause (iii) of the next sentence, irrespective of any
changes in the terms and conditions thereof. Without limiting the
generality of the foregoing, the term ''Foreign Subsidiary Credit
Agreement'' shall include agreements in respect of Interest Swap
and Hedging Obligations with lenders party to a Foreign
Subsidiary Credit Agreement and shall also include any amendment,
amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Foreign Subsidiary Credit
Agreement and all refundings, refinancings and replacements of
any Foreign Subsidiary Credit Agreement, including any agreement
(i) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby,
(ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or
more of the Foreign Subsidiaries and their respective
successors and assigns,
(iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder;
provided, that on the date such Indebtedness is incurred its
incurrence would not be prohibited by this Indenture, or
(iv) otherwise altering the terms and conditions
thereof in a manner not prohibited by the terms of this
Indenture.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant
segment of the accounting profession in the United States as in
effect from time to time.
''Genetic Systems'' means Genetic Systems Corporation, a
Delaware corporation.
"Global Notes" means one or more Notes in the form of
Exhibit A hereto that includes the information referred to in
footnotes 3, 4 and 6 to the form of Note, attached hereto as
Exhibit A, issued under this Indenture, that is deposited with or
on behalf of and registered in the name of the Depositary or its
nominee.
"Global Note Legend" means the legend set forth in Section
2.6(g)(ii), which is required to be placed on all Global Notes
issued under this Indenture.
<PAGE>
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of the United States or foreign government, any
state, province or any city or other political subdivision or
otherwise and whether now or hereafter in existence, or any
officer or official thereof, and any maritime authority.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness. When
used with respect to the Notes, a "Guarantee" means a guarantee
by the Guarantors of all or any part of the Notes, in accordance
with Article X.
"Guarantor" means each of the Subsidiaries of the Company
that in the future executes a Guarantee pursuant to and in
accordance with the requirements of this Indenture in which such
Subsidiary unconditionally guarantees on a senior subordinated
basis the obligations of the Company under the Notes and this
Indenture; provided, that any Person constituting a Guarantor as
described above shall cease to constitute a Guarantor when its
respective Guarantee is released in accordance with the terms of
this Indenture.
"Holder" means a Person in whose name a Note is registered
on the Registrar's books.
"Indebtedness"of any Person means, without duplication,
(a) all liabilities and obligations, contingent or
otherwise, of such Person, to the extent such liabilities
and obligations would appear as a liability upon the
consolidated balance sheet of such Person in accordance with
GAAP
(i) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof),
(ii) evidenced by bonds, notes, debentures or
similar instruments,
(iii) representing the balance deferred and
unpaid of the purchase price of any property or
services, except (other than accounts payable or other
obligations to trade creditors which have remained
unpaid for greater than 90 days past their original due
date) those incurred in the ordinary course of its
business that would constitute ordinarily a trade
payable to trade creditors,
(iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, or
(v) relating to any Capitalized Lease Obligation,
(b) all liabilities and obligations, contingent or
otherwise, of such Person evidenced by a letter of credit or
a reimbursement obligation of such Person with respect to
any letter of credit,
(c) all net obligations of such Person under Interest
Swap and Hedging Obligations,
(d) all liabilities and obligations of others of the
kind described in the preceding clause (a), (b) or (c) that
such Person has guaranteed or provided credit support or
that is otherwise its legal liability or which are secured
by any assets or property of such Person,
(e) any and all deferrals, renewals, extensions,
refinancing and refundings (whether
<PAGE>
direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any
of the preceding clauses (a), (b), (c), (d), or this clause
(e), whether or not between or among the same parties,
(f) all Disqualified Capital Stock of such Person
(measured at the greater of its voluntary or involuntary
maximum fixed repurchase price plus accrued and unpaid
dividends), and
(g) all obligations to purchase, redeem or acquire any
third-party Equity Interests.
For purposes hereof, the ''maximum fixed repurchase price''
of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms
of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture,
and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value
to be determined in good faith by the board of directors of the
issuer (or managing general partner of the issuer) of such
Disqualified Capital Stock.
The amount of any Indebtedness outstanding as of any date
shall be (x) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount, but the
accretion of original issue discount in accordance with the
original terms of Indebtedness issued with an original issue
discount will not be deemed to be an incurrence and (y) the
principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Indirect Participant" means an entity that, with respect to
DTC, clears through or maintains a direct or indirect, custodial
relationship with a Participant.
"Initial Purchasers" mean the initial purchasers of the
Series A Notes under the Purchase Agreement, dated February 14,
2000, among the Company and such purchasers relating to the
initial purchase and sale of the Series A Notes.
"Institutional Accredited Investor" means an institution
that is an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, who is not also a QIB.
"Interest Payment Date" means the stated due date of an
installment of interest on the Notes.
"Interest Swap and Hedging Obligation" means any obligation
of any Person pursuant to any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement,
interest rate exchange agreement, currency exchange agreement or
any other agreement or arrangement designed to protect against
fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or
indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a fixed or
floating rate of interest on a stated notional amount in exchange
for periodic payments made by such Person calculated by applying
a fixed or floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means
(without duplication):
(a) the acquisition (whether by purchase, merger,
consolidation or otherwise) by such Person (whether for
cash, property, services, securities or otherwise) of Equity
Interests, bonds,
<PAGE>
notes, debentures, partnership or other
ownership interests or other securities of such other Person
or any agreement to make any such acquisition;
(b) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other
Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent
or otherwise, to resell such property to such other Person)
or any written commitment to make any such advance, loan or
extension (but excluding accounts receivable, endorsements
for collection or deposits arising in the ordinary course of
business) within one year;
(c) other than guarantees of Indebtedness of the
Company or any Subsidiary to the extent permitted by Section
4.7, the entering into by such Person of any guarantee of,
or other credit support or contingent obligation with
respect to, Indebtedness or other liability of such other
Person;
(d) the making of any capital contribution (which
shall be deemed to include payment of consideration in
excess of fair market value of any assets received) by such
Person to such other Person; and
(e) the designation by the Board of Directors of the
Company of any Person to be an Unrestricted Subsidiary.
The Company shall be deemed to make an Investment in an
amount equal to the fair market value of the net assets of any
subsidiary (or, if neither the Company nor any of its
Subsidiaries has theretofore made an Investment in such
subsidiary, in an amount equal to the Investments being made), at
the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted
Subsidiary from the Company or a Subsidiary of the Company shall
be deemed an Investment valued at its fair market value at the
time of such transfer. The fair market value of each Investment
shall be measured at the time made or returned, as applicable.
"Issue Date" means the date of first issuance of the Notes
under this Indenture.
''Junior Security'' means any Qualified Capital Stock and
any Indebtedness of the Company or a Subsidiary, as applicable,
that is contractually subordinated in right of payment to Senior
Debt at least to the same extent as the Notes, and has no
scheduled installment of principal due, by redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of
the Notes; provided, that in the case of subordination in
respect of Designated Senior Debt, ''Junior Security'' shall mean
any Qualified Capital Stock and any Indebtedness of the Company
or the Subsidiary that
(a) has a final maturity date occurring after the
final maturity date of all Designated Senior Debt on the
date of issuance of such Qualified Capital Stock or
Indebtedness,
(b) is unsecured,
(c) has an Average Life longer than the security for
which such Qualified Capital Stock or Indebtedness is being
exchanged, and
(d) by their terms or by law are subordinated to
Designated Senior Debt on the date of issuance of such
Qualified Capital Stock or Indebtedness at least to the same
extent as the Notes.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, or the city in
which the Corporate Trust Office of the Trustee is located, or at
a place of payment, are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal
Holiday,
<PAGE>
payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to
be prepared by the Company and sent to all Holders of the Notes
for use by such Holders in connection with the Exchange Offer.
"Lien" means any mortgage, charge, pledge, lien (statutory
or otherwise), privilege, security interest, hypothecation or
other encumbrance upon or with respect to any property of any
kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
''Material Domestic Subsidiary'' means any Subsidiary (other
than a Foreign Subsidiary) that is a Significant Subsidiary or
any group of Subsidiaries (other than Foreign Subsidiaries) that
on a combined basis would constitute a Significant Subsidiary.
"Net Cash Proceeds" means the aggregate amount of cash or
Cash Equivalents received by the Company in the case of a sale of
Qualified Capital Stock or a Capital Contribution and by the
Company and its Subsidiaries in respect of an Asset Sale plus, in
the case of an issuance of Qualified Capital Stock upon any
exercise, exchange or conversion of securities of the Company
(including options, warrants, rights and convertible or
exchangeable debt) that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Company
upon the issuance of such securities (including options,
warrants, rights and convertible or exchangeable debt) less, in
each case, the sum of all payments, fees, commissions and (in the
case of Asset Sales, reasonable and customary), expenses
(including, without limitation, the fees and expenses of legal
counsel and investment banking fees and expenses) incurred in
connection with such Asset Sale, sale of Qualified Capital Stock
or Capital Contribution, and, in the case of an Asset Sale only,
less the amount (estimated reasonably and in good faith by the
Company) of income, franchise, sales and other applicable taxes
required to be paid by the Company or any of its Subsidiaries in
connection with such Asset Sale in the taxable year that such
sale is consummated or in the immediately succeeding taxable
year, the computation of which shall take into account the
reduction in tax liability resulting from any available operating
losses and net operating loss carryovers, tax credits and tax
credit carryforwards, and similar tax attributes.
"Non-Recourse Indebtedness" means Indebtedness of a Person
as to which neither the Company nor any Subsidiary provides any
guarantee, collateral or other credit support of any kind
whatsoever.
"Notes Custodian" means the Trustee, as custodian with
respect to the Notes in global form, or any successor entity
thereto.
"Obligation" means any principal, premium or interest
payment, or monetary penalty, or damages, due by the Company or
any Guarantor under the terms of the Notes or this Indenture,
including any Liquidated Damages due pursuant to the terms of the
Registration Rights Agreement.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary, any
Assistant Secretary or any Vice President of such Person.
"Officers' Certificate" means an officers' certificate to be
delivered upon the occurrence of certain events as set forth in
this Indenture.
<PAGE>
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the
requirements of Sections 12.4 and 12.5. The counsel may be an
employee of or counsel to the Company or any Subsidiary of the
Company.
"Participant" means, with respect to the Depositary,
Euroclear or Cedel, a Person who has an account with the
Depositary, Euroclear or Cedel, respectively (and, with respect
to The Depository Trust Company, shall include Euroclear and
Cedel).
''Permitted Investment'' means:
(a) any Investment in the Company or any Subsidiary;
provided, that Investments by the Company or any Guarantor
in Subsidiaries of the Company (other than Guarantors) shall
be limited to $15,000,000 in the aggregate, subject to
clause (d) below;
(b) any Investment in Cash Equivalents;
(c) intercompany notes to the extent permitted under
Section 4.7;
(d) any Investment by the Company or any Subsidiary of
the Company in a Person in a Related Business if as a result
of such Investment such Person immediately becomes a
Subsidiary of the Company or such Person is immediately
merged with or into the Company or a Subsidiary of the
Company; provided, that Investments by the Company or any
Guarantor under this clause (d) shall be subject to and
reduce dollar for dollar the amount of Investments in
Subsidiaries that may be made under clause (a) above,
unless, as a result of such Investment, such Person
immediately becomes a Guarantor or is immediately merged
with or into the Company or a Guarantor, in which case such
Investment shall not reduce the amount available under
clause (a);
(e) other Investments in any Person or Persons;
provided, that after giving pro forma effect to each such
Investment, the aggregate amount of all such Investments
made on and after the Issue Date pursuant to this clause (e)
that are outstanding (after giving effect to any such
Investments that are returned to the Company or any
Subsidiary of the Company that made such prior Investment,
without restriction, in cash on or prior to the date of any
such calculation, but only up to the amount of the
Investment made under this clause (e) in such Person) at any
time does not in the aggregate exceed $10,000,000 (measured
by the value attributed to the Investment at the time made);
(f) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that complies with
Section 4.12;
(g) any acquisition of assets solely in exchange for
the issuance of the Equity Interests of the Company (other
than Disqualified Capital Stock);
(h) any Investment in connection with Interest Swap
and Hedging Obligations otherwise permitted under this
Indenture;
(i) any Investment received (i) in satisfaction of
judgments or (ii) as payment on a claim made in connection
with any bankruptcy, liquidation, receivership or other
insolvency proceeding; and
(j) Investments in a Person or Persons existing on the
Issue Date, plus additional Investments in such Person or
Persons made on or after the Issue Date in an aggregate
amount not to exceed at any time outstanding $10,000,000.
<PAGE>
"Permitted Liens" means:
(a) Liens existing on the Issue Date, immediately
after giving effect to the Transactions;
(b) Liens imposed by governmental authorities for
taxes, assessments or other charges not yet subject to
penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books and records of the
Company in accordance with GAAP;
(c) statutory liens of carriers, warehousemen,
mechanics, material men, landlords, repairmen or other like
Liens arising by operation of law in the ordinary course of
business; provided, that (i) the underlying obligations are
not overdue for a period of more than 30 days, or (ii) such
Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are
maintained on the books of the Company in accordance with
GAAP;
(d) Liens securing the Notes and the Exchange Notes;
(e) Liens securing Indebtedness of a Person existing
at the time such Person becomes a Subsidiary of the Company
or is merged with or into the Company or one of its
Subsidiaries or Liens securing Indebtedness incurred in
connection with an Acquisition; provided, that such Liens
were in existence prior to the date of such acquisition,
merger or consolidation, were not incurred in anticipation
thereof, and do not extend to any other assets;
(f) Liens arising from Purchase Money Indebtedness
permitted to be incurred pursuant to this Indenture;
provided, that such Liens relate solely to the property
which is subject to such Purchase Money Indebtedness;
(g) Liens arising from precautionary Uniform
Commercial Code financing statement filings regarding
operating leases entered into by the Company or any of its
Subsidiaries in the ordinary course of business;
(h) Liens securing Refinancing Indebtedness incurred
to refinance any Indebtedness that was previously so secured
in a manner no more adverse to the Holders than the terms of
the Liens securing such refinanced Indebtedness; provided,
that the Indebtedness secured is not increased and the Lien
is not extended to any additional assets or property that
would not have been security for the Indebtedness
refinanced;
(i) Liens securing Indebtedness under the Credit
Agreement incurred in accordance with the terms of this
Indenture;
(j) Liens securing Indebtedness of any Foreign
Subsidiary incurred in accordance with the terms of this
Indenture;
(k) Liens in favor of the Company or any Guarantor;
(l) Liens securing reimbursement obligations with
respect to commercial letters of credit which solely
encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(m) Liens securing other Indebtedness not exceeding
$10,000,000 at any time outstanding; and
<PAGE>
(n) Liens on the Equity Interests of Unrestricted
Subsidiaries securing obligations of Unrestricted
Subsidiaries to the extent permitted by the terms of this
Indenture.
''Person'' or ''person'' means any corporation, individual,
limited liability company, joint stock company, joint venture,
partnership, limited liability partnership, unincorporated
association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other
entity.
"Preferred Stock" means any Equity Interest of any class or
classes of a Person (however designated) which is preferred as to
payments of dividends, or as to distributions upon any
liquidation or dissolution, over Equity Interests of any other
class of such Person.
"Private Placement Legend" means the legend set forth in
Section 2.6(g)(i) to be placed on all Notes issued under this
Indenture except where specifically stated otherwise by the
provisions of this Indenture.
"Pro Forma" or "pro forma" shall have the meaning set forth
in Regulation S-X of the Securities Act of 1933, as amended,
unless otherwise specifically stated herein.
"Purchase Money Indebtedness" of any Person means any
Indebtedness of such Person to any seller or other Person
incurred solely to finance the acquisition (including in the case
of a Capitalized Lease Obligation, the lease), construction,
installation or improvement of any after acquired real or
personal tangible property which, is directly related to a
Related Business of the Company and which is incurred
concurrently with (or within 180 days following) such
acquisition, construction, installation or improvement and is
secured only by the assets so financed.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Capital Stock" means any of the Capital Stock of
the Company that is not Disqualified Capital Stock.
"Qualified Exchange" means:
(a) any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock of the
Company or Indebtedness of the Company issued on or after
the Issue Date with the Net Cash Proceeds received by the
Company from the substantially concurrent sale of Qualified
Capital Stock of the Company or, to the extent used to
retire the Indebtedness of the Company (other than
Disqualified Capital Stock) issued on or after the Issue
Date, Subordinated Indebtedness of the Company;
(b) any issuance of Qualified Capital Stock of the
Company in exchange for any of the Capital Stock of the
Company or Indebtedness issued on or after the Issue Date;
or
(c) any exchange of Subordinated Indebtedness of the
Company for Subordinated Indebtedness of the Company issued
on or after the Issue Date.
"Record Date" means a Record Date specified in the Notes,
whether or not such date is a Business Day.
"Reference Period" with regard to any Person means the four
full fiscal quarters (or such lesser period during which such
Person has been in existence) ended immediately preceding any
date upon which any determination is to be made pursuant to the
terms of the Notes or this Indenture.
<PAGE>
"Refinancing Indebtedness" means Indebtedness or
Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the
issuance and sale of which are used substantially
concurrently to repay, redeem, defease, refund, refinance,
discharge or otherwise retire for value, in whole or in
part, or
(b) constituting an amendment, modification or
supplement to, or a deferral or renewal of (clauses (a) and
(b) above are, collectively, a ''Refinancing''), any
Indebtedness (including Disqualified Capital Stock) in a
principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses
incurred in connection with the Refinancing plus the amount
of any premium paid in connection with such Refinancing in
accordance with the terms of the documents governing the
Indebtedness refinanced without giving effect to any
modification thereof made in connection with or in
contemplation of such refinancing) the lesser of
(a) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the
Indebtedness (including Disqualified Capital Stock) so
Refinanced and
(b) if such Indebtedness being Refinanced was issued
with an original issue discount, the accreted value thereof
(as determined in accordance with GAAP) at the time of such
Refinancing;
provided, that:
(i) such Refinancing Indebtedness shall only be used
to refinance outstanding Indebtedness (including
Disqualified Capital Stock) of such Person issuing such
Refinancing Indebtedness,
(ii) such Refinancing Indebtedness shall (A) not have
an Average Life shorter than the Indebtedness (including
Disqualified Capital Stock) to be so refinanced at the time
of such Refinancing and (B) in all respects, be no less
contractually subordinated or junior, if applicable, to the
rights of Holders than was the Indebtedness (including
Disqualified Capital Stock) to be refinanced,
(iii) such Refinancing Indebtedness shall have a
final stated maturity or redemption date, as applicable, no
earlier than the final stated maturity or redemption date,
as applicable, of the Indebtedness (including Disqualified
Capital Stock) to be so refinanced or, if sooner, 91 days
after the Stated Maturity of the Notes, and
(iv) such Refinancing Indebtedness shall be secured (if
secured) in a manner no more adverse to the Holders than the
terms of the Liens (if any) securing such refinanced
Indebtedness, including, without limitation, the amount of
Indebtedness secured shall not be increased.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of the Issue Date, by and among the
Company and the Initial Purchasers, as such agreement may be
amended, modified or supplemented from time to time.
"Reg S Permanent Global Note" means one or more permanent
Global Notes bearing the Private Placement Legend, that will be
issued in an aggregate amount of denominations equal in total to
the outstanding principal amount of the Reg S Temporary Global
Note upon expiration of the Distribution Compliance Period.
<PAGE>
"Reg S Temporary Global Note" means one or more temporary
Global Notes bearing the Private Placement Legend and the Reg S
Temporary Global Note Legend, issued in an aggregate amount of
denominations equal in total to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation
S.
"Reg S Temporary Global Note Legend" means the legend set
forth in Section 2.6(g)(iii), which is required to be placed on
all Reg S Temporary Global Notes issued under this Indenture.
"Regulation S" means Regulation S promulgated under the
Securities Act, as it may be amended from time to time, and any
successor provision thereto.
"Regulation S Global Note" means a Reg S Temporary Global
Note or a Reg S Permanent Global Note, as the case may be.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the
Issue Date and any and all businesses that in the good faith
judgment of the Board of Directors of the Company are materially
related businesses.
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Debt.
"Restricted Definitive Note" means one or more Definitive
Notes bearing the Private Placement Legend, issued under this
Indenture.
"Restricted Global Note" means one or more Global Notes
bearing the Private Placement Legend, issued under this
Indenture; provided, that in no case shall an Exchange Note
issued in accordance with this Indenture and the terms of the
Registration Rights Agreement be a Restricted Global Note.
"Restricted Investment" means in one or a series of related
transactions, any Investment other than Permitted Investments.
"Restricted Payment" means, with respect to any Person:
(a) the declaration or payment of any dividend or
other distribution in respect of Equity Interests of such
Person or any parent or Subsidiary of such Person;
(b) any payment on account of the purchase, redemption
or other acquisition or retirement for value of Equity
Interests of such Person or any Subsidiary or parent of such
Person;
(c) other than with the proceeds from the
substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness any purchase, redemption, or other
acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance
of, any Subordinated Indebtedness (other than the Notes),
directly or indirectly, by such Person or a parent or
Subsidiary of such Person prior to the scheduled maturity,
any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness; and
(d) any Restricted Investment by such Person;
provided, however, that the term ''Restricted Payment'' does not
include:
(i) any dividend, distribution or other payment on or
with respect to Equity Interests of an issuer to the extent
payable solely in shares of Qualified Capital Stock of such
issuer, or
<PAGE>
(ii) any dividend, distribution or other payment to the
Company, or to any Subsidiary of the Company, by the Company
or any of its Subsidiaries.
"Rule 144A" means Rule 144A promulgated under the Securities
Act, as it may be amended from time to time, and any successor
provision thereto.
"SEC" means the United States Securities and Exchange
Commission, or any successor agency.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Securities Intermediary" means U.S. Trust Company, National
Association, as securities intermediary under the Security
Agreement.
"Senior Debt" with respect to the Company or any Guarantor,
means Indebtedness of the Company (including any monetary
obligation in respect of the Credit Agreement, and any Accrued
Bankruptcy Interest incurred pursuant to the Credit Agreement in
any proceeding under any Bankruptcy Law) arising under the Credit
Agreement or any Guarantee thereof or that is permitted to be
incurred under the terms of this Indenture unless the terms of
the instrument creating or evidencing such Indebtedness expressly
provide that it is on a parity with or subordinated in right of
payment to the Notes; provided, that in no event shall Senior
Debt include:
(a) Indebtedness of the Company to any Subsidiary of
the Company or any officer, director or employee of the
Company or any of its Subsidiaries or any other Affiliate,
(b) Indebtedness incurred in violation of the terms of
this Indenture,
(c) Indebtedness to trade creditors,
(d) Disqualified Capital Stock,
(e) Capitalized Lease Obligations, and
(f) any liability for taxes owed or owing by the
Company or any Guarantor.
"Shelf Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.
"Significant Subsidiary" shall have the meaning provided
under Regulation S-X of the Securities Act, as in effect on the
Issue Date, except that all references to "10%" in such
Regulation shall be deemed to be references to "5%" for purposes
of this definition.
"Special Record Date" means, for payment of any Defaulted
Interest, a date fixed by the Paying Agent pursuant to Section
2.12.
"Stated Maturity" or "stated maturity" means, (a) with
respect to any debt security, the date specified in such debt
security as the fixed date on which the final installment of
principal of such debt security is due and payable (which shall
mean February 15, 2007 with respect to the Notes) and (b) with
respect to any scheduled installment of principal of or interest
on any debt security, the date specified in such debt security as
the fixed date on which such installment is due and payable.
<PAGE>
"Subordinated Indebtedness" means Indebtedness of the
Company that is subordinated in right of payment by its terms or
the terms of any document or instrument relating thereto to the
Notes.
"Subsidiary," with respect to any Person, means:
(a) a corporation a majority of whose Equity Interests
with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by
such Person, by such Person and one or more Subsidiaries of
such Person or by one or more Subsidiaries of such Person,
(b) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person,
or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof
has at least majority ownership interest, or
(c) a partnership in which such Person or a Subsidiary
of such Person is, at the time, a general partner and in
which such Person, directly or indirectly, at the date of
determination thereof has at least a majority ownership
interest.
Notwithstanding the foregoing, an Unrestricted Subsidiary
shall not be a ''Subsidiary'' of the Company or a ''Subsidiary''
of any of the Subsidiaries of the Company. Unless the context
requires otherwise, Subsidiary means each direct and indirect
Subsidiary of the Company.
"Transactions" means the Acquisition, entering into the
senior subordinated credit facility with Banc One Capital
Markets, Inc. and entering into the Credit Agreement.
"Transfer Restricted Notes" means Global Notes and
Definitive Notes that bear or are required to bear the Private
Placement Legend, issued under this Indenture.
''Treasury Rate'' means, as of any Redemption Date, the
yield to maturity as of that Redemption Date of United States
Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two
Business Days before the Redemption Date (or, if that Statistical
Release is no longer published, any publicly available source of
similar market date)) most nearly equal to the period from the
Redemption Date to February 15, 2004; provided, however, that if
the period from the Redemption Date to February 15, 2004 is less
than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one
year shall be used.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means such successor
serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private
Placement Legend, issued under this Indenture.
"Unrestricted Global Note" means one or more permanent
Global Notes representing a series of Notes that does not bear
and is not required to bear the Private Placement Legend, issued
under this Indenture.
"Unrestricted Subsidiary" means any subsidiary of the
Company that does not own any Capital Stock of, or own or hold
any Lien on any property of, the Company or any of its
Subsidiaries and that, at the time of determination, shall be an
Unrestricted Subsidiary (as designated by the Board of Directors
of the Company); provided, that such subsidiary at the time of
such designation
(a) has no Indebtedness other than Non-Recourse
Indebtedness,
<PAGE>
(b) is not party to any agreement, contract,
arrangement or understanding with the Company or any of its
Subsidiaries unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable
to the Company or such Subsidiary than those that might be
obtained at the time from Persons who are not Affiliates of
the Company,
(c) is a Person with respect to which neither the
Company nor any of its Subsidiaries has any direct or
indirect obligation (i) to subscribe for additional Equity
Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any
specified levels of operating results, and
(d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of
the Company or any of its Subsidiaries, other than
Guarantees of the Notes.
The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Subsidiary; provided, that (x)
no Default or Event of Default is existing or will occur as a
consequence thereof and (y) immediately after giving effect to
such designation, on a pro forma basis, the Company could incur
at least $1.00 of Indebtedness pursuant to the Debt Incurrence
Ratio set forth in Section 4.7. Each such designation shall be
evidenced by filing with the Trustee a certified copy of the
resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable
obligations of, or noncallable obligations guaranteed by, the
United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of
America is pledged.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Voting Equity Interests" means Equity Interests which at
the time are entitled to vote in the election of, as applicable,
directors, members or partners generally.
"Wholly Owned Subsidiary" means a Subsidiary all the Equity
Interests of which (other than directors' qualifying Shares) are
owned by the Company and/or one or more of its Wholly Owned
Subsidiaries.
Section 1.2 Other Definitions.
Term Defined in
Section
"Affiliate Transaction" 4.11
"Asset Sale" 4.12
"Asset Sale Offer" 4.12
"Asset Sale Offer Amount" 4.12
"Asset Sale Offer Period" 4.12
"Asset Sale Offer Price" 4.12
"Authentication Order" 2.2
"Bankruptcy Law" 6.1
"Benefitted Party" 10.1
"Change of Control Offer" 4.13
"Change of Control Offer 4.13
Period"
<PAGE>
"Change of Control Purchase 4.13
Date"
"Change of Control Purchase 4.13
Price"
"Covenant Defeasance" 8.3
"Custodian" 6.1
"Debt Incurrence Ratio" 4.7
"Defaulted Interest" 2.12
"Designation Date" 4.9
"DTC" 2.3
"Excess Proceeds" 4.12
"Guarantee Obligations" 10.1
"incur" or "incurrence" 4.7
"Incurrence Date" 4.7
"Investment Company Act" 4.16
"Legal Defeasance" 8.2
"Non-payment Default" 11.2
"Paying Agent" 2.3
"Payment Blockage Period" 11.2
"Payment Default" 11.2
"Payment Notice" 11.2
"Registrar" 2.3
"Redemption Date" 3.7
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in and made a part of
this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company, each Guarantor and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined
by SEC rule under the TIA have the meanings so assigned to them.
Section 1.4 Rules of Construction.
<PAGE>
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(7) references to sections of or rules under the Securities Act
and the Exchange Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time; and
(8) unless otherwise required by the context, references to
"Section" or "Article" are references to a Section or Article of
this Indenture.
ARTICLE II
THE NOTES
Section 1.5 Form and Dating.
(1) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Note shall
be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this
Indenture and the Company, any Guarantors and the Trustee,
by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the
provisions of this Indenture shall govern and be
controlling.
(2) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including
the Global Note Legend thereon and the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Each Global Note shall represent such
of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon
and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the
Trustee or the Notes Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as
required by Section 2.6 hereof.
<PAGE>
(3) Euroclear and Cedel Procedures Applicable. The provisions
of the "Operating Procedures of the Euroclear System" and "Terms
and Conditions Governing Use of Euroclear" and the "General Terms
and Conditions of Cedel Bank" and "Customer Handbook" of Cedel
Bank in effect at the relevant time shall be applicable to
transfers of beneficial interests in the Regulation S Global
Notes that are held by Participants through Euroclear or Cedel
Bank.
Section 1.6 Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual
or facsimile signature. If an Officer whose signature is on a
Note no longer holds that office at the time a Note is
authenticated, the Note shall nevertheless be valid. A Note
shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. The Trustee
shall, upon a written order of the Company signed by an Officer
(an "Authentication Order"), authenticate Notes for issuance up
to the aggregate principal amount stated in such Authentication
Order; provided, that Notes authenticated for issuance on the
Issue Date shall not exceed $150,000,000 in aggregate principal
amount. The aggregate principal amount of Notes outstanding at
any time may not exceed $150,000,000, except in accordance with
Section 2.8. The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.
Section 1.7 Registrar, Paying Agent and Depositary.
The Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where Notes may be
presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep
a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar. The Company initially appoints
The Depository Trust Company ("DTC") to act as Depositary with
respect to the Global Notes. The Company initially appoints the
Trustee to act as the Registrar and Paying Agent and to act as
Notes Custodian with respect to the Global Notes.
Section 1.8 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by
the Paying Agent for the payment of principal, premium or
Liquidated Damages, if any, or interest on the Notes, and will
notify the Trustee in writing of any default by the Company in
making any such payment. While any such default continues, the
Trustee may require a Paying Agent and in such event any such
Paying Agent shall have the obligation to pay all money held by
it to the Trustee. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company
or a Subsidiary) shall have no further liability for such money.
If the Company or a Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company,
the Trustee shall serve as Paying Agent for the Notes.
<PAGE>
Section 1.9 Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of all Holders and shall otherwise comply
with TIA 312(a). If the Trustee is not the Registrar, the
Company shall furnish, or shall cause the Registrar (if other
than the Company) to furnish, to the Trustee at least seven
Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the
names and addresses of the Holders of Notes and the Company shall
otherwise comply with TIA 312(a).
Section 1.10 Transfer and Exchange.
(1) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a
nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the
Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be
exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that (A) the
Depositary is unwilling or unable to continue to act as
Depositary for the Global Notes and the Company thereupon fails
to appoint a successor Depositary within 90 days or (B) the
Depositary is no longer a clearing agency registered under the
Exchange Act, (ii) the Company in its sole discretion determines
that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to
such effect to the Trustee or (iii) upon request of the Trustee
or Holders of a majority of the aggregate principal amount of
outstanding Notes if there shall have occurred and be continuing
a Default or Event of Default with respect to the Notes;
provided, that in no event shall the Reg S Temporary Global Note
be exchanged by the Company for Definitive Notes prior to (A) the
expiration of the Distribution Compliance Period and (B) the
receipt by the Registrar of any certificate identified by the
Company and its counsel to be required pursuant to Rule 903 or
Rule 904 under the Securities Act. Upon the occurrence of any of
the preceding events in (i), (ii) or (iii) above, Definitive
Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.7 and
2.10 hereof. Every Note authenticated and delivered in exchange
for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall
be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note
other than as provided in this Section 2.6(a), however,
beneficial interests in a Global Note may be transferred and
exchanged as provided in Section 2.6(b), (c) or (f) hereof.
(2) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the
Global Notes shall be effected through the Depositary, in
accordance with the provisions of this Indenture and the
Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by
the Securities Act. Transfers of beneficial interests in the
Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or
more of the other following subparagraphs, as applicable:
(1) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in
accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the
expiration of the Distribution Compliance Period, transfers of
beneficial interests in the Reg S Temporary Global Note may not
be made to a U.S. Person or for the account or benefit of a U.S.
Person (other than an Initial Purchaser). Beneficial interests
in
<PAGE>
any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions
shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.6(b)(i).
(2) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.6(b)(i)
above, the transferor of such beneficial interest must deliver to
the Registrar either (A) (1) an order from a Participant or an
Indirect Participant given to the Depositary in accordance with
the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note
in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the
Participant account to be credited with such increase or (B) (1)
an order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures
directing the Depositary to cause to be issued a Definitive Note
in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given by the Depositary to the
Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the
transfer or exchange referred to in (B)(1) above; provided, that
in no event shall Definitive Notes be issued upon the transfer or
exchange of beneficial interests in the Reg S Temporary Global
Note prior to (x) the expiration of the Distribution Compliance
Period and (y) the receipt by the Registrar of any certificates
identified by the Company or its counsel to be required pursuant
to Rule 903 and Rule 904 under the Securities Act. Upon
consummation of an Exchange Offer by the Company in accordance
with Section 2.6(f) hereof, the requirements of this Section
2.6(b)(ii) shall be deemed to have been satisfied upon receipt by
the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests
in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or
otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.6(h) hereof.
(3) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note
may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note
if the transfer complies with the requirements of Section
2.6(b)(ii) above and the Registrar receives the following:
(1) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof; and
(2) if the transferee will take delivery in the form of a
beneficial interest in the Reg S Temporary Global Note or the
Reg S Permanent Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(4) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the
Unrestricted Global Note. A beneficial interest in any
Restricted Global Note may be exchanged by any holder thereof for
a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the
<PAGE>
form of a beneficial interest in an Unrestricted Global Note if the
exchange or transfer complies with the requirements of Section
2.6(b)(ii) above and:
(1) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and Section 2.6(f) hereof, and the holder of the
beneficial interest to be transferred, in the case of an
exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(2) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(3) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(4) the Registrar receives the following: (1) if the
holder of such beneficial interest in a Restricted Global Note
proposes to xchange such beneficial interest for a beneficial
interest in an unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or (2) if the holder of
such beneficial interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof; and, in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form, and from legal
counsel, reasonably acceptable to the Registrar and the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the
Securities Act.
(1)
If any such transfer is effected pursuant to
subparagraph (B) or (D) above at a time when an
Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.2
hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of
beneficial interests transferred pursuant to
subparagraph (B) or (D) above. Beneficial interests in
an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global
Note.
(3) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(1) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon
receipt by the Registrar of the following documentation:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a
<PAGE>
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(2) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(3) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(4) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(5) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(6) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(7) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of
the applicable Restricted Global Note to be reduced
accordingly pursuant to Section 2.6(h) hereof, and the
Company shall execute and, upon receipt of an Authentication
Order pursuant to Section 2.2, the Trustee shall
authenticate and deliver to the Person designated in the
instructions a Restricted Definitive Note in the appropriate
principal amount. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global
Note pursuant to this Section 2.6(c) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Restricted Definitive Notes to
the Persons in whose names such Notes are so registered.
Any Restricted Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to
this Section 2.6(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer
contained therein.
(2) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest
in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
<PAGE>
(1) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and Section 2.6(f) hereof, and the holder of such
beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a Broker-
Dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(2) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(3) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(4) the Registrar receives the following: (1) if the
holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or (2) if
the holder of uch beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a Definitive Note
that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and, in each such case set
forth in this subparagraph (D), an Opinion of Counsel in form,
and from legal counsel, reasonably acceptable to the Registrar
and the Company to the effect that such exchange or transfer is
in compliance with the Securities Act and that the restrictions
on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the
Securities Act.
(3) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such
beneficial interest for an Unrestricted Definitive Note or to
transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note, then,
upon satisfaction of the conditions set forth in Section
2.6(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Unrestricted Global Note to be
reduced accordingly pursuant to Section 2.6(h) hereof, and the
Company shall execute and, upon receipt of an Authentication
Order pursuant to Section 2.2, the Trustee shall authenticate and
deliver to the Person designated in the instructions an
Unrestricted Definitive Note in the appropriate principal amount.
Any Unrestricted Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.6(c)(iii) shall be
registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Unrestricted Definitive Notes to the
Persons in whose names such Notes are so registered. Any
Unrestricted Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.6(c)(iii) shall not bear the
Private Placement Legend.
(4) Transfer or Exchange of Reg S Temporary Global Notes.
Notwithstanding the other provisions of this Section 2.6, a
beneficial interest in the Reg S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (1) the expiration
of the Distribution Compliance Period (unless such exchange is
effected by the Company, does
<PAGE>
not require an investment decision on the part of the holder thereof
and does not violate the provisions of Regulation S) and (2) the
receipt by the Registrar of any certificates identified by the
Company or its counsel to be required pursuant to Rule 903(b)(3)(B)
under the Securities Act or (B) transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to the events
set forth in clause (A) above or unless the transfer is pursuant to
an exemption from the registration requirements of the Securities
Act other than Rule 903 or Rule 904.
(4) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(1) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted
Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such
Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(1) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(2) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (1) thereof; or
(3) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof,
the Trustee shall cancel the Restricted Definitive
Note, increase or cause to be increased the aggregate
principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of
clause (B) above, the 144A Global Note, and in the case
of clause (C) above, the Regulation S Global Note.
(2) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive
Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Restricted Definitive
Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:
(1) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and Section 2.6(f) hereof, and the Holder, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(2) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
<PAGE>
(3) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(4) the Registrar receives the following: (1) if the
Holder of such Restricted Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof; and, in each such case set forth in this subparagraph
(D), an Opinion of Counsel, and from legal counsel, in form
reasonably acceptable to the Registrar and the Company to the
effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities
Act. Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.6(d)(ii), the Trustee shall
cancel the Restricted Definitive Notes so transferred or
exchanged and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(3) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest
in an Unrestricted Global Note or transfer such Definitive Notes
to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note
and increase or cause to be increased the aggregate principal
amount of one of the Unrestricted Global Notes. If any such
exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) of this Section 2.6(d) at a time when an Unrestricted
Global Note has not yet been issued, the Company shall issue and,
upon receipt of an Authentication Order in accordance with
Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal
to the principal amount of Definitive Notes so transferred.
(5) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such
Holder's compliance with the provisions of this Section 2.6(e),
the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by its attorney, duly
authorized in writing. In addition, the requesting Holder shall
provide any additional certifications, documents and information,
as applicable, required pursuant to the following provisions of
this Section 2.6(e).
(1) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in
the form of a Restricted Definitive Note if the Registrar
receives the following:
<PAGE>
(1) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(2) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(3) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(2) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred
to a Person or Persons who take delivery thereof in the form of
an Unrestricted Definitive Note if:
(1) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and Section 2.6(f) hereof, and the Holder, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(2) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(3) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(4) the Registrar receives the following: (1) if the
Holder of such Restricted Definitive Notes proposes to exchange
such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or (2) if the Holder of
such Restricted Definitive Notes proposes to transfer such Notes
to a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof; and, in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form, and from legal
counsel, reasonably acceptable to the Registrar and the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the
Securities Act.
(3) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer
such Notes to a Person who takes delivery thereof in the form of
an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
<PAGE>
(6) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company
shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2, and an Opinion of Counsel for the
Company as to certain matters discussed in this Section 2.6(f)
the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the sum of
(A) the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (1) they
are not Broker-Dealers, (2) they are not participating in a
distribution of the Exchange Notes and (3) they are not
affiliates (as defined in Rule 144) of the Company, and accepted
for exchange in the Exchange Offer and (B) the principal amount
of Definitive Notes exchanged or transferred for beneficial
interests in Unrestricted Global Notes in connection with the
Exchange Offer pursuant to Section 2.6(d)(ii) and (ii) Definitive
Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange
in the Exchange Offer (other than Definitive Notes described in
clause (i)(B) immediately above). Concurrently with the issuance
of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced
accordingly, and the Company shall execute and, upon receipt of
an Authentication Order pursuant to Section 2.2, the Trustee
shall authenticate and deliver to the Persons designated by the
Holders of Definitive Notes so accepted Definitive Notes in the
appropriate principal amount.
The Opinion of Counsel for the Company referenced above
shall state that:
(1) the issuance and sale of the Exchange Notes by the Company
have been duly authorized and, when executed and authenticated in
accordance with the provisions of this Indenture and delivered in
exchange for Series A Notes in accordance with this Indenture and
the Exchange Offer, will be valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms except as the enforceability thereof may be limited by (A)
bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally
and (B) equitable principles of general applicability (regardless
of whether enforceability is considered at equity or in law); and
(1)
(2) if applicable, when the Exchange Notes are executed and
authenticated in accordance with the provisions of this Indenture
and delivered in exchange for Series A Notes in accordance with
this Indenture and the Exchange Offer, the Guarantees by the
Guarantors endorsed thereon will be valid and binding obligations
of the Guarantors, enforceable against the Guarantors in
accordance with their terms except as the enforceability thereof
may be limited by (A) bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and (B) equitable principles of
general applicability (regardless of whether enforceability is
considered at equity or in law).
(7) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture
unless specifically stated otherwise in the applicable provisions
of this Indenture.
(1) Private Placement Legend.
(1) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:
<PAGE>
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER:
(1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT
RESALES OF THE NOTES BY WARBURG DILLON READ LLC
AND ABN AMRO INCORPORATED (THE "INITIAL
PURCHASERS"), (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT;
(2) AGREES THAT, IN CONNECTION WITH RESALES AND
TRANSFERS OF THE NOTES OTHER THAN EXEMPT RESALES
OF THE NOTES BY THE INITIAL PURCHASERS, IT WILL
NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903
OR 904 OF REGULATION S UNDER THE SECURITIES ACT,
(D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER), OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"U.S. PERSON" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S
UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING."
(2) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
of this Section 2.6 (and all Notes issued in exchange therefor
or substitution thereof) shall not bear the Private Placement
Legend.
<PAGE>
(2) Global Note Legend. To the extent required by the
Depositary, each Global Note shall bear legends in substantially
the following forms:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED
IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
"UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(3) Reg S Temporary Global Note Legend. To the extent
required by the Depositary, each Reg S Temporary Global Note
shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY
GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO
RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD
WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS
LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM
ACCRUING ON THIS NOTE."
(8) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have
been exchanged for Definitive Notes or a particular Global Note
has been redeemed, repurchased or cancelled in whole and not in
part, each such Global Note shall be returned to or retained and
cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial
interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall
be reduced accordingly and an endorsement shall be made on such
Global Note by the Trustee or by the Depositary at the direction
of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be
<PAGE>
increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the
Trustee to reflect such increase.
(9) General Provisions Relating to Transfers and Exchanges.
(1) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes upon receipt of an Authentication
Order.
(2) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant to Sections
2.10, 3.6, 4.12, 4.13 and 9.5 hereof).
(3) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
(4) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the Company,
evidencing the same Indebtedness, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive
Notes surrendered upon such registration of transfer or exchange.
(5) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of
any selection of Notes for redemption under Section 3.2 hereof
and ending at the close of business on the day of selection, (B)
to register the transfer of or to exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (C) to register the
transfer of or to exchange a Note between a Record Date and the
next succeeding Interest Payment Date.
(6) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment
of principal of and interest on such Notes and for all other
purposes, and none of the Trustee, any Agent or the Company shall
be affected by notice to the contrary.
(7) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.2 hereof.
(8) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this
Section 2.6 to effect a registration of transfer or exchange may
be submitted by facsimile.
Notwithstanding anything herein to the contrary, as to
any certifications and certificates delivered to the
Registrar pursuant to this Section 2.6, the Registrar's
duties shall be limited to confirming that any such
certifications and certificates delivered to it are in the
form of Exhibits A, B, C and D attached hereto. The
Registrar shall not be responsible for confirming the truth
or accuracy of representations made in any such
certifications or certificates.
<PAGE>
Section 1.11 Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of
the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon receipt of an Authentication Order,
shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is
sufficient in both the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if
a Note is replaced. The Company may charge for its expenses in
replacing a Note. Every replacement Note is an additional
obligation of the Company and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all
other Notes duly issued hereunder.
Section 1.12 Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee (including any Note represented by a
Global Note) except for those cancelled by it, those delivered to
it for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions
hereof, and those described in this Section as not outstanding.
Except as set forth in Section 2.9 hereof, a Note does not cease
to be outstanding because the Company or an Affiliate of the
Company holds the Note. If a Note is replaced pursuant to
Section 2.7 hereof, such Note, together with the Guarantee of
that particular Note endorsed thereon, ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. If the principal
amount of any Note is considered paid under Section 4.1 hereof,
it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or the
maturity date, money sufficient to pay Notes payable on that
date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.
Section 1.13 Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, or by any Person directly or
indirectly controlling or controlled by or under direct or
indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes that the
Trustee knows are so owned shall be so disregarded.
Section 1.14 Temporary Notes.
Until certificates representing Notes are ready for
delivery, the Company may prepare and the Trustee, upon receipt
of an Authentication Order, shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of Definitive
Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate
Definitive Notes in exchange for temporary Notes. Holders of
temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 1.15 Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee, and no one else
shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all
cancelled Notes
<PAGE>
shall be delivered to the Company. Subject to Section 2.7 hereof, the
Company may not issue new Notes to replace Notes that it has paid or that
have been delivered to the Trustee for cancellation.
Section 1.16 Defaulted Interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment
Date plus, to the extent lawful, any interest payable on the
defaulted interest at the rate and in the manner provided in
Section 4.1 hereof and in the Note (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered
holder on the relevant Record Date, and such Defaulted Interest
may be paid by the Company, at its election in each case, as
provided in clause (a) or (b) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes are registered
at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee and the Paying
Agent in writing of the amount of Defaulted Interest proposed to
be paid on each Note and the date of the proposed payment, and at
the same time the Company shall deposit with the Paying Agent an
amount of cash equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements
reasonably satisfactory to the Paying Agent for such deposit
prior to the date of the proposed payment, such cash when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as provided in this clause
(a). Thereupon the Paying Agent shall fix a "Special Record
Date" for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after the
receipt by the Paying Agent of the notice of the proposed
payment. The Paying Agent shall promptly notify the Company and
the Trustee of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each
Holder at its address as it appears in the Note register
maintained by the Registrar not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been mailed as aforesaid, such Defaulted Interest shall be paid
to the persons in whose names the Notes (or their respective
predecessor Notes) are registered on such Special Record Date and
shall no longer be payable pursuant to the following clause (b).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee and the Paying Agent
of the proposed payment pursuant to this clause, such manner
shall be deemed practicable by the Trustee and the Paying Agent.
Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Note shall carry
the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Note.
Section 1.17 CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders;
provided, that any such notice may state that no representation
is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The
Company will promptly notify the Trustee of any change in the
"CUSIP" numbers.
<PAGE>
ARTICLE III
REDEMPTION
Section 1.18 Notices to Trustee.
If the Company elects to redeem Notes pursuant to the
redemption provisions of Section 3.7 hereof, it shall furnish to
the Trustee, at least 30 days (unless a shorter period is
acceptable to the Trustee) but not more than 60 days (unless a
longer period is acceptable to the Trustee) before a redemption
date, an Officers' Certificate setting forth (a) the clause of
this Indenture pursuant to which the redemption shall occur, (b)
the redemption date, (c) the principal amount of Notes to be
redeemed and (d) the redemption price.
Section 1.19 Selection of Notes to be Redeemed.
(1) If less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes or portions thereof to
be redeemed among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if
any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or in accordance with any
other method the Trustee considers appropriate and fair. Any
such determination shall be conclusive. In the event of partial
redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 days
nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
(2) The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to
be redeemed. The Notes may be redeemed in part in multiples of
$1,000 only. Notes and portions of Notes in denominations of
larger than $1,000 selected shall be in amounts of $1,000 or
integral multiples of $1,000; except that if all of the Notes of
a Holder are to be redeemed, the entire outstanding amount of
Notes held by such Holder, even if not an integral multiple of
$1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called
for redemption also apply to portions of Notes called for
redemption.
Section 1.20 Notice of Redemption.
(1) Subject to the provisions of Section 3.7 hereof, at least
30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.
(2) The notice shall identify the Notes to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part, the portion of the
principal amount equal to the unredeemed portion thereof and
that, after the redemption date upon surrender of such Note, a
new Note or Notes in principal amount equal to the unredeemed
portion shall be issued upon cancellation of the original Note;
(4) the name and address of the Paying Agent;
<PAGE>
(5) that Notes or portions thereof called for redemption must
be surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Notes or portions thereof called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes or portions thereof called for
redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
(3) At the written request of the Company, the Trustee shall
give the notice of redemption in the Company's name and at its
expense.
Section 1.21 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.3 hereof, Notes called for redemption become
irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
Section 1.22 Deposit of Redemption Price.
On or prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent immediately
available funds sufficient to pay the redemption price of and
accrued and unpaid interest (and Liquidated Damages, if any) on
all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued
and unpaid interest (and Liquidated Damages, if any) on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease
to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest Record
Date but on or prior to the related Interest Payment Date, then
any accrued and unpaid interest (and Liquidated Damages, if any)
shall be paid to the Person in whose name such Note was
registered at the close of business on such Record Date. If any
Note called for redemption shall not be so paid upon surrender
for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the
unpaid principal, from the redemption date until such principal
is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the
Notes and in Section 4.1 hereof.
Section 1.23 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon receipt of an Authentication Order,
the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 1.24 Optional Redemption.
Except as set forth below in this Section 3.7, the Notes
shall not be redeemable by the Company.
<PAGE>
(1) The Notes shall be redeemable for cash at the option of the
Company, in whole or in part, at any time prior to February 15,
2004, at a redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium as of, and accrued and unpaid
interest and Liquidated Damages, if any, thereon to, the date of
redemption of the Notes ("Redemption Date").
(2) The Notes shall be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after February
15, 2004, at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the
12-month period commencing February 15 of the years indicated
below, in each case (subject to the right of Holders of record on
a Record Date to receive the corresponding interest due (and the
corresponding Liquidated Damages, if any) on the corresponding
Interest Payment Date that is on or prior to such redemption
date) together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date:
Year Percentage
2004 105.813%
2005 102.906%
2006 100.000%
2007 and thereafter 100.000%
(3) Notwithstanding the provisions of clause (a) of this Section
3.7, at any time or from time to time prior to February 15, 2003,
upon any sale of the common stock of the Company, up to 35% of
the aggregate principal amount of the Notes originally issued
under this Indenture may be redeemed at the option of the
Company within 90 days of such sale, on not less than 30 days,
but not more than 60 days, prior notice to each Holder of the
Notes to be redeemed, with cash from the Net Cash Proceeds of
such sale, at a redemption price equal to 111.625% of the
principal amount thereof (subject to the right of Holders of
record on a Record Date to receive the corresponding interest
(and the corresponding Liquidated Damages, if any) due on the
Interest Payment Date that is on or prior to such redemption
date) together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date; provided, that
immediately following such redemption not less than 65% of the
aggregate principal amount of the Notes originally issued
pursuant to this Indenture remain outstanding.
(4) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Sections 3.1 through 3.6 hereof.
ARTICLE IV
COVENANTS
Section 1.25 Payment of Notes.
(1) The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds
as of 12:00 noon Eastern time on the due date money deposited by
the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest
then due. The Company shall pay all Liquidated
<PAGE>
Damages, if any, in the same manner on the dates and in the amounts set
forth in the Registration Rights Agreement and herein.
(2) The Company shall pay interest (including Accrued Bankruptcy
Interest in any proceeding under any Bankruptcy Law) on overdue
principal at the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including Accrued
Bankruptcy Interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Liquidated Damages, if
any, (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 1.26 Maintenance of Office or Agency.
(1) The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office.
(2) The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to
time rescind such additional designations; provided, that no
such designation or recission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York. The Company shall
give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other
office or agency.
(3) The Company hereby designates the Corporate Trust Office as
one such office or agency of the Company in accordance with
Section 2.3 hereof.
Section 1.27 SEC Reports and Reports to Holders.
(1) Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the
Company will deliver to the Trustee and to each Holder and to
prospective purchasers of Notes identified to the Company by an
Initial Purchaser, at the time the Company is or would have been
(if the Company were subject to such reporting obligations)
required to file such with the Commission, such annual reports
and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act, if the
Company were subject to the requirements of Section 13 or 15(d)
of the Exchange Act, including, with respect to annual
information only, a report thereon by the certified independent
public accountants of the Company as such would be required in
such reports to the Commission, and, in each case, together with
a management's discussion and analysis of financial condition and
results of operations which would be so required and, unless the
Commission will not accept such reports, file with the Commission
the annual, quarterly and other reports which it is or would have
been required to file with the Commission.
(2) For so long as any Transfer Restricted Notes remain
outstanding, the Company shall make available (which shall
include filings by EDGAR) to all Holders and prospective
purchasers, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
<PAGE>
Section 1.28 Compliance Certificate.
(1) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to
determining whether the Company and its Subsidiaries have kept,
observed, performed and fulfilled their obligations under this
Indenture, and further stating, as to each such Officer signing
such certificate, that to the best of his or her knowledge the
Company and its Subsidiaries are not in default in the
performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of
Default shall have occurred and be continuing, describing all
such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to
take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has
occurred, a description of the event and what action the Company
is taking or proposes to take with respect thereto. The Company
shall provide the Trustee with timely written notice of any
change in its fiscal year end, which is currently December 31.
(2) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, promptly upon becoming aware
of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
(1)
Section 1.29 Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are contested
in good faith and by appropriate proceedings or where the failure
to effect such payment would not have a material adverse effect
on the ability of the Company and any Guarantors to satisfy their
obligations under the Notes, any Guarantees and this Indenture.
Section 1.30 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law
has been enacted.
Section 1.31 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.
(1) Except as set forth in this Section 4.7, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, issue, assume, guaranty, incur, become directly or
indirectly liable with respect to, or otherwise become
responsible for, contingently or otherwise (individually and
collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness (including Disqualified Capital Stock and
Acquired Indebtedness). Notwithstanding the foregoing if (i) no
Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence of Indebtedness and (ii) on the
date of such incurrence (the "Incurrence Date"), the Consolidated
Coverage Ratio of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on
a pro
<PAGE>
forma basis to such incurrence of such Indebtedness and,
to the extent set forth in the definition of Consolidated
Coverage Ratio, the use of proceeds thereof, would be at least
2.25 to 1.00 (the "Debt Incurrence Ratio"), then the Company and
its Guarantors may incur such Indebtedness (including
Disqualified Capital Stock).
(2) The foregoing limitations will not apply to:
(1) the incurrence by the Company or any Subsidiary of Purchase
Money Indebtedness; provided, that
(1) the aggregate amount of such Indebtedness incurred and
outstanding at any time pursuant to this paragraph (i) (plus any
Refinancing Indebtedness issued to retire, defease, refinance,
replace or refund such Indebtedness) shall not exceed
$15,000,000 (or the equivalent thereof, at the time of
incurrence, in the applicable foreign currency), and
(2) in each case, such Indebtedness shall not constitute
more than 100% of the cost to the Company or to such Subsidiary
(determined in accordance with GAAP), as applicable, of the
property so purchased, constructed, improved or leased;
(2) the incurrence by the Company or any Guarantor of
Indebtedness in an aggregate amount incurred and outstanding at
any time pursuant to this paragraph (ii) (plus any Refinancing
Indebtedness incurred to retire, defease, refinance, replace or
refund such Indebtedness) of up to $20,000,000 (or the equivalent
thereof, at the time of incurrence, in the applicable foreign
currencies);
(3) the incurrence by the Company or any Guarantor of
Indebtedness pursuant to the Credit Agreement in an aggregate
amount incurred and outstanding at any time pursuant to this
paragraph (iii) (plus any Refinancing Indebtedness incurred to
retire, defease, refinance, replace or refund such Indebtedness)
of up to $180,000,000, minus the amount of any such Indebtedness
(A) retired with the Net Cash Proceeds from any Asset Sale
applied to permanently reduce the outstanding amounts or the
commitments with respect to such Indebtedness pursuant to clause
(i)(B)(2) of paragraph (a) of Section 4.12 or (B) assumed by a
transferee in an Asset Sale;
(4) the incurrence by the Subsidiaries of the Company that are
not Guarantors of Indebtedness so long as, immediately after
giving effect thereto, the aggregate principal amount of any such
Indebtedness incurred and outstanding pursuant to this clause
(iv) (plus any Refinancing Indebtedness incurred to retire,
defease, refinance, replace or refund such Indebtedness) does not
exceed 10% of the consolidated total assets of the Company;
(5) the incurrence by the Company and its Subsidiaries of
Indebtedness evidenced by the Notes and the Exchange Notes issued
pursuant to this Indenture up to the amounts being issued on the
Issue Date;
(6) the incurrence by the Company and any Guarantor of
Refinancing Indebtedness with respect to any Indebtedness
(including Disqualified Capital Stock), described in clause (v)
above, or this clause (vi) or clause (xii) below (less the amount
of any such Existing Indebtedness repaid on or after the Issue
Date), or incurred pursuant to the Debt Incurrence Ratio or which
was refinanced pursuant to this clause (vi);
<PAGE>
(7) the incurrence by the Company and any Guarantor of
Indebtedness solely in respect of bankers' acceptances, letters
of credit and performance bonds (to the extent that such
incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of others), all
in the ordinary course of business in accordance with customary
industry practices, in amounts and for the purposes customary in
the industry of the Company; provided, that the aggregate
principal amount outstanding of such Indebtedness (including any
Refinancing Indebtedness and any other Indebtedness issued to
retire, refinance, refund, defease or replace such Indebtedness)
shall at no time exceed $10,000,000;
(8) the incurrence by the Company and its Subsidiaries of
Indebtedness represented by performance bonds and letters of
credit for the account of the Company or any such Subsidiary, as
the case may be, in order to provide security for Value Added Tax
(VAT) or customs obligations under bonds posted to a governmental
authority, security for workers' compensation claims and payment
obligations in connection with self-insurance, in each case, that
are incurred in the ordinary course of business in accordance
with customary industry practice in amounts, and for the
purposes, customary in the Company's industry;
(9) the incurrence by the Company of Indebtedness owed to
(borrowed from) any Subsidiary of the Company, and any Subsidiary
of the Company may incur Indebtedness owed to (borrowed from) any
other Subsidiary of the Company or the Company; provided, that
in any case where the Company is the obligor, such obligations
shall be unsecured and contractually subordinated in all respects
to the obligations of the Company pursuant to the Notes, and any
event that causes such Subsidiary no longer to be a Subsidiary
(including by designation to be an Unrestricted Subsidiary) shall
be deemed to be a new incurrence subject to this covenant;
(10) the guaranty by any Subsidiary of the Company of
Indebtedness of the Company or of another Subsidiary that was
permitted to be incurred pursuant to this Indenture,
substantially concurrently with such incurrence or at the time
such Person becomes a Subsidiary; provided, that a Guarantor
cannot guarantee debt of a Subsidiary that is not a Guarantor;
(11) the incurrence by the Company and its Subsidiaries of
Interest Swap and Hedging Obligations that are incurred for the
purpose of fixing or hedging interest rate or currency risk with
respect to any fixed or floating rate Indebtedness that is
permitted by this Indenture to be outstanding or any receivable
or liability the payment of which is determined by reference to a
foreign currency; provided, that the notional amount of any such
Interest Swap and Hedging Obligation does not exceed the
principal amount of Indebtedness to which such Interest Swap and
Hedging Obligation relates;
(12) the incurrence by the Company and its Subsidiaries of
Existing Indebtedness;
(13) the incurrence by the Company of Indebtedness arising from
agreements of the Company or its Subsidiaries providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary of the
Company otherwise permitted by this Indenture;
<PAGE>
(14) the accrual of interest, accretion or amortization of
original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same
terms, and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified
Stock; provided, that in each such case, that the amount thereof
is included in Consolidated Fixed Charges of the Company as
accrued; and
(15) the incurrence by the Company and its Subsidiaries of
Indebtedness to the extent the proceeds thereof are used to
purchase Notes pursuant to a Change of Control offer.
(3) Indebtedness (including Disqualified Capital Stock) of any
Person which is outstanding at the time such Person becomes a
Subsidiary of the Company (including upon designation of any
subsidiary or other Person as a Subsidiary) or is merged with or
into or consolidated with the Company or a Subsidiary of the
Company shall be deemed to have been incurred at the time such
Person becomes a Subsidiary of the Company or is merged with or
into or consolidated with the Company or a Subsidiary of the
Company, as applicable.
(4) Notwithstanding any other provision of this Section 4.7, and
to avoid duplication only, a guarantee of Indebtedness of the
Company or a Subsidiary of the Company incurred in accordance
with the terms of this Indenture issued at the time such
Indebtedness was incurred or if later at the time the guarantor
thereof became a Subsidiary of the Company will not constitute a
separate incurrence, or amount outstanding, of Indebtedness.
Upon each incurrence, the Company may designate the provision of
this Section 4.7 pursuant to which such Indebtedness is being
incurred and, at the time of each subsequent incurrence in
accordance with this Section 4.7, may reclassify such item of
Indebtedness (or any part thereof) in any manner that complies
with the provisions of this Section 4.7.
Section 1.32 Limitation on Liens.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any
Lien of any kind securing Indebtedness, other than Permitted
Liens, upon any of their respective assets now owned or acquired
on or after the Issue Date or upon any income or profits
therefrom unless the Company provides, and causes its
Subsidiaries to provide, concurrently therewith, that the Notes
are equally and ratably so secured; provided, that if such
Indebtedness is Subordinated Indebtedness, the Lien securing such
Indebtedness shall be subordinate and junior to the Lien securing
the Notes with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes.
Section 1.33 Limitations on Restricted Payments.
(1) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted
Payment if, after giving effect to such Restricted Payment on a
pro forma basis,
(1) a Default or an Event of Default shall have occurred and be
continuing,
(2) the Company is not permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio in
Section 4.7, or
(3) the aggregate amount of all Restricted Payments made by the
Company and its Subsidiaries, including after giving effect to
such proposed Restricted Payment, on and after the Issue Date,
would exceed, without duplication, the sum of
<PAGE>
(1) 50% of the aggregate Consolidated Net Income of the
Company for the period (taken as one accounting period),
commencing on the first day of the first full fiscal quarter
commencing after the Issue Date, to and including the last day
of the fiscal quarter ended immediately prior to the date of
each such calculation for which the consolidated financial
statements of the Company are available (or, in the event the
Consolidated Net Income of the Company for such period is a
deficit, then minus 100% of such deficit), plus
(2) the aggregate Net Cash Proceeds received by the
Company from a Capital Contribution or from the sale of
Qualified Capital Stock of the Company (other than (1) to one
of the Company's Subsidiaries and (2) to the extent applied in
connection with a Qualified Exchange after the Issue Date), plus
(3) except in each case, in order to avoid duplication,
to the extent any such payment or proceeds have been included
in the calculation of Consolidated Net Income, an amount equal
to the net reduction in Investments (other than returns of or
from Permitted Investments) in any Person resulting from
distributions on or repayments of any Investments, including
payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other distributions or other transfers of
assets, in each case to the Company or any Subsidiary of the
Company or from the Net Cash Proceeds from the sale of any such
Investment (valued in each case as provided in the definition of
''Investments''), not to exceed, in each case, the amount of
Investments previously made by the Company or any Subsidiary of
the Company in such Person, plus
(4) 50% of any cash dividends received by the Company or
any of its Subsidiaries after the date of this Indenture from an
Unrestricted Subsidiary, to the extent that such dividends were
not otherwise included in the Consolidated Net Income of the
Company for such period, plus
(5) to the extent that any Unrestricted Subsidiary is
redesignated as a Subsidiary after the date of this Indenture,
the lesser of (1) the fair market value of the Investment by the
Company in such Unrestricted Subsidiary as of the date on which
such Subsidiary was originally designated as an Unrestricted
Subsidiary (the ''Designation Date'') plus the fair market value
of any additional Investments in such Unrestricted Subsidiary
made by the Company after the Designation Date, if any, and (2)
the fair market value of such Investments as measured on the
Determination Date, in each case to the extent such amount was
not otherwise included in Consolidated Net Income of the
Company.
(2) The foregoing clauses (ii) and (iii) of paragraph (a),
however, will not prohibit:
(1) any dividend, distribution or other payments by any
Subsidiary of the Company on its Equity Interests that is paid
pro rata to all holders of such Equity Interests;
(2) a Qualified Exchange;
(3) the payment of any dividend on Qualified Capital Stock
within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in
compliance with the foregoing provisions;
<PAGE>
(4) repurchases of the Capital Stock of the Company deemed to
occur on the exercise of stock options;
(5) payments in lieu of fractional shares not to exceed
$2,000,000 in the aggregate;
(6) repurchases of Capital Stock of the Company in accordance
with a repurchase program that is approved and adopted by the
Board of Directors of the Company and whose primary purpose is to
provide Capital Stock to satisfy the obligations of the Company
under stock option plans and employee stock purchase plans not to
exceed $4,000,000 in the aggregate;
(7) that portion of Investments the payment for which consists
exclusively of the Equity Interests of the Company (other than
Disqualified Stock); or
(8) other Restricted Payments not to exceed $20,000,000 in the
aggregate.
(3) The full amount of any Restricted Payment made pursuant to
the foregoing clauses (i), (iii), (v), (vi), and (viii) (but not
pursuant to clause (ii), (iv) and (vii)) of paragraph (b) above,
however, will be counted as Restricted Payments made for purposes
of the calculation of the aggregate amount of Restricted Payments
available to be made referred to in clause (iii) of paragraph (a)
above.
(4) For purposes of this Section 4.9, the amount of any
Restricted Payment made or returned, if other than in cash, shall
be the fair market value thereof, as determined in the good faith
reasonable judgment of the Board of Directors of the Company,
unless stated otherwise, at the time made or returned, as
applicable. Additionally, not later than the date of making each
Restricted Payment, the Company shall deliver an Officers'
Certificate to the Trustee describing in reasonable detail the
nature of such Restricted Payment, stating the amount of such
Restricted Payment, stating in reasonable detail the provisions
hereof pursuant to which such Restricted Payment was made and
certifying that such Restricted Payment was made in compliance
with the terms hereof.
Section 1.34 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
(1) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, assume or suffer
to exist any consensual restriction on the ability of any of its
Subsidiaries to pay dividends or make other distributions to or
on behalf of, or to pay any obligation to or on behalf of, or
otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or
any of its Subsidiaries, except
(1) restrictions imposed by the Notes or this Indenture or by
the other Indebtedness of the Company ranking senior or pari
passu with the Notes; provided, that, except as set forth in
clause (v) below, such restrictions are no more restrictive taken
as a whole than those imposed by this Indenture and the Notes,
(2) restrictions imposed by applicable law,
(3) existing restrictions under Existing Indebtedness,
(4) restrictions under any Acquired Indebtedness not incurred
in violation of this Indenture or any agreement (including any
Equity Interest) relating to any property, asset, or business
acquired by the Company or any of its Subsidiaries, which
restrictions in
<PAGE>
each case existed at the time of acquisition, were not put in place
in connection with or in anticipation of such acquisition and are
not applicable to any Person, other than the Person acquired, or to
any property, asset or business, other than the property, assets and
business so acquired,
(5) any restriction imposed by Indebtedness incurred under the
Credit Agreement; provided, that such restriction or requirement
is no more restrictive taken as a whole than that imposed by the
Credit Agreement as of the Issue Date,
(6) restrictions with respect solely to a Subsidiary of the
Company imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially
all of the Equity Interests or assets of such Subsidiary;
provided, that such restrictions apply solely to the Equity
Interests or assets of such Subsidiary which are being sold,
(7) restrictions on transfer contained in Purchase Money
Indebtedness; provided, that such restrictions relate only to the
transfer of the property acquired with the proceeds of such
Purchase Money Indebtedness,
(8) provisions with respect to the disposition or distribution
of assets or property in joint venture agreements, asset sale
agreements, stock sale agreements and other similar agreements
entered into in the ordinary course of business,
(9) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course
of business, and
(10) in connection with and pursuant to permitted Refinancings,
replacements of restrictions imposed pursuant to clauses (i),
(iii), (iv), (v) or (vii) above or this clause (x) that are not
more restrictive taken as a whole than those being replaced and
do not apply to any other Person or assets than those that would
have been covered by the restrictions in the Indebtedness so
refinanced.
(2) Notwithstanding the foregoing, (i) customary provisions
restricting subletting or assignment of any lease entered into in
the ordinary course of business, consistent with industry
practice and (ii) any asset subject to a Lien which is not
prohibited to exist with respect to such asset pursuant to the
terms of this Indenture may be subject to customary restrictions
on the transfer or disposition thereof pursuant to such Lien.
Section 1.35 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its
Subsidiaries on or after the Issue Date to, enter into or suffer
to exist any contract, agreement, arrangement or transaction with
any Affiliate (an ''Affiliate Transaction''), or any series of
related Affiliate Transactions (other than Exempted Affiliate
Transactions)
(1) unless it is determined that the terms of such Affiliate
Transaction are fair and reasonable to the Company, and no less
favorable to the Company than could have been obtained in an
arm's length transaction with a non-Affiliate,
(2) if involving consideration to either party in excess of
$5,000,000 such Affiliate Transaction(s) is evidenced by an
Officers' Certificate addressed and delivered to the Trustee
<PAGE>
certifying that such Affiliate Transaction (or Transactions) has
been approved by a majority of the members of the Board of
Directors of the Company that are disinterested in such
transaction, and
(3) if involving consideration to either party in excess of
$7,000,000, obtain a written favorable opinion as to the fairness
of such transaction to the Company from a financial point of view
from an independent investment banking firm of national
reputation in the United States or, if pertaining to a matter for
which such investment banking firms do not customarily render
such opinions, an appraisal or valuation firm of national
reputation in the United States.
Section 1.36 Limitation on Sale of Assets and Subsidiary Stock.
(1) The Company shall not, and shall not permit any of its
Subsidiaries to, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of their property, business or assets,
including by merger or consolidation (in the case of a Subsidiary
of the Company), and including any sale or other transfer or
issuance of any Equity Interests of any Subsidiary of the
Company, whether by the Company or any Subsidiary of the Company
or through the issuance, sale or transfer of Equity Interests by
a Subsidiary of the Company and including any sale and leaseback
transaction (any of the foregoing, an ''Asset Sale''), unless
(1) either:
(1) an amount equal to the Net Cash Proceeds therefrom
(the ''Asset Sale Offer Amount'') are applied within 365 days
after the date of such Asset Sale to the repurchase of the Notes
and such other Indebtedness on a parity with the Notes and with
similar provisions requiring the Company to make an offer to
purchase such Indebtedness with the proceeds from such Asset
Sale pursuant to a cash offer (subject only to conditions
required by applicable law, if any) (pro rata in proportion to
the respective principal amounts (or accreted values in the
case of Indebtedness issued with an original issue discount) of
the Notes and such other Indebtedness then outstanding) (the
''Asset Sale Offer'') at a purchase price of 100% of the
principal amount (or accreted value in the case of Indebtedness
issued with an original issue discount) (the ''Asset Sale Offer
Price'') together with accrued and unpaid interest and
Liquidated Damages, if any, to the date of payment, or
(2) within 365 days following such Asset Sale, the Asset
Sale Offer Amount is
(1) invested in property or assets (other than notes,
bonds, obligations and securities) which will immediately
constitute or be a part of a Related Business of the
Company or such Subsidiary (if it continues to be a
Subsidiary) immediately following such transaction, or
(2) used to retire Purchase Money Indebtedness
secured by the asset which was the subject of the Asset
Sale, Indebtedness outstanding under the Credit Agreement
or a Foreign Subsidiary Credit Agreement, or other Senior
Debt, on a pro rata basis, and to permanently reduce (in
the case of Senior Debt that is not such Purchase Money
Indebtedness) the amount of such Indebtedness outstanding
on the Issue Date or permitted pursuant to clause (b)(iii)
of Section 4.7 (and, in the case of a revolver or similar
arrangement that makes credit available on a committed
basis, to
<PAGE>
permanently reduce the applicable commitment(s) by such
amount or by the amount required by such agreement,
whichever is less),
except that, in the case of each of the provisions of
clauses (A) and (B), only proceeds from an Asset Sale
of assets or capital stock of a Foreign Subsidiary may
be invested in or used to retire Indebtedness of a
Foreign Subsidiary,
(2) at least 75% of the total consideration for such Asset Sale
or series of related Asset Sales consists of cash or Cash
Equivalents,
(3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on
a pro forma basis, to such Asset Sale, and
(4) the Board of Directors of the Company determines in good
faith that the Company received or such Subsidiary received, as
applicable, fair market value for such Asset Sale.
(1)
(2) An acquisition of Notes pursuant to an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset
Sales not applied as set forth in (i)(A) or (i)(B) above (the
''Excess Proceeds'') exceeds $10,000,000, and each Asset Sale
Offer shall remain open for 20 Business Days following its
commencement (the ''Asset Sale Offer Period'').
(3) Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount plus an amount equal to
accrued and unpaid interest and Liquidated Damages, if any, to
the purchase of all Indebtedness properly tendered in accordance
with the provisions hereof (on a pro rata basis if the Asset Sale
Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued
interest and Liquidated Damages, if any). To the extent that the
aggregate amount of Notes and such other pari passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Asset
Sale Offer Amount, the Company may use any remaining Net Cash
Proceeds for general corporate purposes as otherwise permitted by
this Indenture and following the consummation of each Asset Sale
Offer the Excess Proceeds amount shall be reset to zero. For
purposes of (a)(ii) above, total consideration received means the
total consideration received for such Asset Sales minus the
amount of, (i) Purchase Money Indebtedness secured solely by the
assets sold and assumed by a transferee; provided, that the
Company is and its Subsidiaries are fully released from
obligations in connection therewith and (ii) property that within
30 days of such Asset Sale is converted into cash or Cash
Equivalents; provided, that such cash and Cash Equivalents shall
be treated as Net Cash Proceeds attributable to the original
Asset Sale for which such property was received).
(4) Notwithstanding, and without complying with, the provisions
of this Section 4.12,
(1) the Company and its Subsidiaries may, in the ordinary
course of business,
(1) convey, sell, transfer, assign or otherwise dispose of
inventory and other assets acquired and held for resale in the
ordinary course of business,
(2) liquidate Cash Equivalents and
(3) liquidate securities that consist of shares of capital
stock that are traded on a nationally recognized stock exchange,
<PAGE>
(2) the Company and its Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Article V hereof,
(3) the Company and its Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer
necessary for the proper conduct of the business of the Company
or such Subsidiary, and the Company may convey, sell, transfer,
assign or otherwise dispose of assets to any Subsidiary of the
Company provided such transaction is otherwise in compliance with
Section 4.11, except that the Company is not required to comply
with the provisions of clause (c) of such Section,
(4) Subsidiaries of the Company may convey, sell, transfer,
assign or otherwise dispose of assets to the Company or any other
Subsidiary of the Company,
(5) the Company and its Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign, or otherwise
dispose of assets (or related assets in related transactions) with
a fair market value of less than $2,000,000,
(6) the Company and its Subsidiaries may exchange assets held
by the Company or such Subsidiaries for assets held by any Person or
entity; provided, that (A) the assets received by the Company or
such Subsidiaries in any such exchange will immediately
constitute, be a part of, or be used in, a Related Business of
the Company or such Subsidiaries, (B) the Board of Directors of
the Company has determined that the terms of any exchange are
fair and reasonable, (C) any such exchange shall be deemed to be
an Asset Sale to the extent that the Company or any of its
Subsidiaries receives cash or Cash Equivalents in such exchange,
and (D) that, in the case of a transaction exceeding $10,000,000
of consideration to any party thereto, the Company shall have
obtained a favorable written opinion by an independent financial
advisor of national reputation in the United States as to the
fairness from a financial point of view to the Company or such
Subsidiaries of the proposed transaction,
(7) the Subsidiaries of the Company may issue their Equity
Interests to the Company or to another Subsidiary of the Company,
(8) Permitted Liens may be granted, and
(9) the Company and its Subsidiaries may make or liquidate any
Restricted Payment or Permitted Investment that is permitted by
Section 4.9 hereof.
(5) All Net Cash Proceeds from an Event of Loss in excess of
$10,000,000 (other than the proceeds of any business interruption
insurance) shall be reinvested or used as otherwise provided
above in clauses (i)(A) or (i)(B) of paragraph (a) of this
Section 4.12.
(6) Any Asset Sale Offer shall be made in compliance with all
applicable laws, rules, and regulations, including, if
applicable, Regulation 14E of the Exchange Act and the rules and
regulations thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of
this Section 4.12, compliance by the Company or any of its
Subsidiaries with such laws and regulations shall not in and of
itself cause a breach of the Company's obligations under this
Section 4.12.
(7) If the payment date in connection with an Asset Sale Offer
hereunder is on or after an interest payment Record Date and on
or before the associated Interest Payment Date, any accrued
<PAGE>
and unpaid interest (and Liquidated Damages, if any) due on such
Interest Payment Date will be paid to the Person in whose name a
Note is registered at the close of business on such Record Date,
and such interest (or Liquidated Damages, if applicable) will not
be payable to Holders who tender Notes pursuant to such Asset
Sale Offer.
Section 1.37 Repurchase of Notes at the Option of the Holder
upon a Change of Control.
(1) In the event that a Change of Control has occurred, each
Holder of Notes will have the right, at such Holder's option,
pursuant to an offer (subject only to conditions required by
applicable law, if any) by the Company (the ''Change of Control
Offer''), to require the Company to repurchase all or any part of
such Holder's Notes (provided, that the principal amount of such
Notes must be $1,000 or an integral multiple thereof) on a date
(the ''Change of Control Purchase Date'') that is no later than
45 Business Days after the occurrence of such Change of Control,
at a cash price equal to 101% of the principal amount thereof
(the ''Change of Control Purchase Price''), together with accrued
and unpaid interest and Liquidated Damages, if any, to the Change
of Control Purchase Date.
(2) The Change of Control Offer shall be made within 10 Business
Days following a Change of Control (but may be commenced prior to
the Change of Control so long as it is contingent on the Change
of Control) and shall remain open for 20 Business Days following
its commencement (the ''Change of Control Offer Period''). Upon
expiration of the Change of Control Offer Period, the Company
shall promptly purchase all Notes properly tendered in response
to the Change of Control Offer.
(3) Notwithstanding the foregoing, the Company shall not be
required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change
of Control Offer made by the Company.
(4) Prior to the commencement of a Change of Control Offer, but
in any event within 45 days following any Change of Control, the
Company shall:
(1)
(1) repay in full and terminate all commitments of
Indebtedness under the Credit Agreement and all other Senior
Debt the terms of which require repayment upon a Change of
Control or
(2) offer to repay in full and terminate all commitments
of Indebtedness under the Credit Agreement and all such other
Senior Debt and repay the Indebtedness owed to each lender which
has accepted such offer in full, or
(2) obtain the requisite consents under the Credit Agreement
and all such other Senior Debt to permit the repurchase of the Notes
as provided herein.
(5) The failure of the Company to comply with the preceding
sentence shall constitute an Event of Default described in clause
(a)(iii) of Section 6.1, but without giving effect to the stated
exceptions in that clause.
(6) On or before the Change of Control Purchase Date, the
Company shall
<PAGE>
(1) accept for payment Notes or portions thereof properly
tendered pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent cash sufficient to pay the
Change of Control Purchase Price (together with accrued and
unpaid interest and Liquidated Damages, if any) of all Notes or
portion thereof so tendered, and
(3) deliver to the Trustee the Notes so accepted together with
an Officers' Certificate listing the Notes or portions thereof
being purchased by the Company.
(7) The Paying Agent promptly will pay the Holders of Notes so
accepted an amount equal to the Change of Control Purchase Price
(together with accrued and unpaid interest and Liquidated
Damages, if any) and the Trustee promptly will authenticate and
deliver to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered. Any Notes not so
accepted will be delivered promptly by the Company to the Holder
thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
(8) Any Change of Control Offer shall be made in compliance with
all applicable laws, rules and regulations, including, if
applicable, Regulation 14E under the Exchange Act and the rules
thereunder and all other applicable Federal and state securities
laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.13,
compliance by the Company or any of the Guarantors with such laws
and regulations shall not in and of itself cause a breach of
their obligations hereunder.
(9) If the Change of Control Purchase Date hereunder is on or
after an interest payment Record Date and on or before the
associated Interest Payment Date, then any accrued and unpaid
interest (and Liquidated Damages, if any) due on such Interest
Payment Date will be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such
interest (and Liquidated Damages, if applicable) will not be
payable to Holders who tender the Notes pursuant to the Change of
Control Offer.
Section 1.38 Limitation on Layering Indebtedness.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, incur, or suffer to
exist any Indebtedness that is contractually subordinate in right
of payment to any other Indebtedness unless, by its terms, such
Indebtedness is Indebtedness of the Company and is contractually
subordinate in right of payment to, or ranks pari passu with, the
Notes.
Section 1.39 Consolidation of Genetic Systems.
Within 180 days following the Issue Date, the Company shall
either (a) consolidate with or merge with (such that the Company
is the surviving entity), or cause to be transferred to the
Company all of the assets of, Genetic Systems or (b) cause
Genetic Systems to irrevocably and unconditionally guarantee the
Notes on a senior subordinated basis.
Section 1.40 Limitation on Status as Investment Company.
The Company and its Subsidiaries shall not become required
to register as an "investment company" (as that term is defined
in the Investment Company Act of 1940, as amended (the
"Investment Company Act")), or otherwise become subject to
regulation under the Investment Company Act.
<PAGE>
Section 1.41 Corporate Existence.
Subject to Article V hereof, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect (a) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in
accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such
Subsidiary and (b) the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries; provided,
however, that the Company shall not be required to preserve any
such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole.
ARTICLE V
SUCCESSORS
Section 1.42 Merger, Consolidation or Sale of Assets.
(1) The Company shall not consolidate with or merge with or into
another Person or, directly or indirectly, sell, lease, convey or
transfer all or substantially all of the assets of the Company
(computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another
Person or group of affiliated Persons unless
(1) either (A) the Company is the continuing entity or (B) the
resulting, surviving or transferee entity (the "Surviving
Person") is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Notes, this
Indenture and the Registration Rights Agreement,
(2) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such
transaction,
(3) unless such transaction is solely the merger of the Company
with or into any person solely for the purpose of effecting a
change in the state of incorporation of the Company and one of
the Company's previously existing Wholly Owned Subsidiaries and
which transaction is not for the purpose of evading this
provision immediately after giving effect to such transaction on
a pro forma basis, (A) the Surviving Person would immediately
thereafter be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt Incurrence Ratio set forth in
Section 4.7 hereof, and (B) the Consolidated Net Worth of the
Surviving Person is at least equal to the Consolidated Net Worth
of the Company immediately prior to such transaction, and
(4) each Guarantor, if any, unless such Guarantor is the Person
with which the Company has entered into a transaction under this
covenant shall have by amendment to its Guarantee confirmed that
its Guarantee shall apply to the obligations of the Company or
the obligations of the surviving entity, as applicable, in
accordance with the Notes and this Indenture.
(2) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the
properties and assets of one or more Subsidiaries, the interest
of the Company in which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be
the transfer of all or substantially all of the properties and
assets of the Company.
<PAGE>
Section 1.43 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with
Section 5.1 hereof, the successor corporation formed by such
consolidation or into which the Company is merged or to which
such transfer is made shall (except in the case of a lease)
succeed to and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same
effect as if such successor corporation had been named therein as
the Company, and (except in the case of a lease) the Company
shall be released from the obligations under the Notes and this
Indenture except with respect to any obligations that arise from,
or are related to, such transaction.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 1.44 Events of Default.
(1) "Event of Default," wherever used herein, means any one of
the following events:
(1) the failure by the Company to pay any installment of
interest (or Liquidated Damages, if any) on the Notes as and when
the same becomes due and payable and the continuance of any such
failure for 30 days,
(2) the failure by the Company to pay all or any part of the
principal, or premium, if any, on the Notes when and as the same
becomes due and payable at maturity, redemption, by acceleration
or otherwise, including, without limitation, payment of the
Change of Control Purchase Price (except as provided in Section
4.13 hereof) or the Asset Sale Offer Price, on Notes validly
tendered and not properly withdrawn pursuant to a Change of
Control Offer or Asset Sale Offer, as applicable (as set forth in
Sections 4.13 and 4.12 hereof),
(3) the failure by the Company or any of its Subsidiaries to
observe or perform any other covenant or agreement contained in
the Notes or this Indenture and, except for Sections 4.12, 4.13,
4.15 and 5.1 hereof, the continuance of such failure for a period
of 45 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Notes outstanding,
(4) a default in the Indebtedness of the Company or any of its
Subsidiaries with an aggregate amount outstanding in excess of
$10,000,000 (A) resulting from the failure to pay principal at
maturity or (B) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated maturity,
(5) final unsatisfied judgments not covered by insurance
aggregating in excess of $10,000,000, at any one time rendered
against the Company or any of its Subsidiaries and not stayed,
bonded or discharged within 60 days,
(6) any Guarantee of a Guarantor that is a Significant
Subsidiary (or group of Guarantors that on a combined basis would
constitute a Significant Subsidiary) ceases to be in full force
and effect or becomes unenforceable or invalid or is declared
null and void (other than in accordance with the terms of the
Guarantee) or any Guarantor that is a Significant Subsidiary (or
group of Guarantors that on a combined basis would constitute a
Significant Subsidiary) denies or disaffirms its Obligations
under its Guarantee,
<PAGE>
(7) a court having jurisdiction in the premises enters a decree
or order for (A) relief in respect of the Company or any
Significant Subsidiary in an involuntary case under any
applicable Bankruptcy Law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the
property and assets of the Company or any Significant Subsidiary
or (C) the winding up or liquidation of the affairs of the
Company or any Significant Subsidiary and, in each case, such
decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or
(8) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable Bankruptcy Law now or
hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to
the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any Significant Subsidiary or for all
or substantially all of the property and assets of the Company or
any Significant Subsidiary or (C) effects any general assignment
for the benefit of creditors.
(2) The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
Section 1.45 Acceleration.
(1) If an Event of Default (other than an Event of Default
specified in clause (a)(vii) or (a)(viii) of Section 6.1 that
occurs with respect to the Company) occurs and is continuing
under this Indenture, then in every such case, unless the
principal of all of the Notes shall have already become due and
payable, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice
is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal of, premium, if any,
and accrued interest (and Liquidated Damages, if any) on the
Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal of, premium, if any, and accrued
interest (and Liquidated Damages, if any) shall be immediately
due and payable; provided, however, that if any Designated
Senior Debt is outstanding, upon a declaration of such
acceleration, such principal and interest shall be due and
payable upon the earlier of (i) the fifth Business Day after the
sending to the Company and to the Representative under the Credit
Agreement, of such written notice, unless such Event of Default
is cured or waived prior to such date and (ii) the date of
acceleration of any Designated Senior Debt. In the event a
declaration of acceleration resulting solely from an Event of
Default described in clause (a)(iv) above has occurred and is
continuing, such declaration of acceleration shall be
automatically annulled if such default is cured or waived or the
holders of the Indebtedness which is the subject of such default
have rescinded their declaration of acceleration in respect of
such Indebtedness within five days thereof and the Trustee has
received written notice of such cure, waiver or rescission and no
other Event of Default described in clause (a)(iv) above has
occurred that has not been cured or waived within five days of
the declaration of such acceleration in respect of such
Indebtedness. If an Event of Default specified in clauses
(a)(vii) or (a)(viii) above, relating to the Company, occurs, all
principal and accrued interest (and Liquidated Damages, if any)
thereon will be immediately due and payable on all outstanding
Notes without any declaration or other act on the part of the
Trustee or the Holders.
(2) At any time after such a declaration of acceleration being
made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter provided in this
Article VI, the Holders of not less than a majority in aggregate
principal amount of
<PAGE>
then outstanding Notes, by written notice to the Company and the Trustee,
may rescind, on behalf of all Holders, any such declaration of
acceleration if:
(1) the Company has paid or deposited with the Trustee cash
sufficient to pay: (A) all overdue interest and Liquidated
Damages, if any, on all Notes; (B) the principal of (and premium,
if any, applicable to) any Notes which would become due other
than by reason of such declaration of acceleration, and interest
thereon at the rate borne by the Notes; (C) to the extent that
payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; (D) all sums paid or
advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel, and all other amounts due the Trustee
under Section 7.7; and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest (and Liquidated
Damages, if any) on the Notes which have become due solely by
such declaration of acceleration, have been cured or waived as
provided in Section 6.4.
(3) Notwithstanding the previous sentence of this Section 6.2,
no waiver shall be effective against any Holder for any Event of
Default or event which with notice or lapse of time or both would
be an Event of Default with respect to (i) any covenant or
provision which cannot be modified or amended without the consent
of the Holder of each outstanding Note affected thereby, unless
all such affected Holders agree, in writing, to waive such Event
of Default or other event and (ii) any provision or covenant
requiring supermajority approval to amend, unless such default
has been waived by such a supermajority. No such waiver shall
cure or waive any subsequent default or impair any right
consequent thereon.
(4) If payment of the Notes is accelerated because of an Event
of Default, the Company shall promptly notify each Representative
of Senior Debt of the acceleration.
Section 1.46 Other Remedies.
(1) If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of
principal, premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this
Indenture.
(2) The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of
a Note in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 1.47 Waiver of Past Defaults.
Subject to Section 6.7, the Holders of at least a majority
in principal amount of the outstanding Notes by written notice to
the Company and to the Trustee, may, on behalf of all Holders,
waive any existing or past Default or Event of Default hereunder
and its consequences under this Indenture, except a default:
(1) in the payment of principal of, premium, if any, or interest
on any Note not yet cured as specified in clauses (a)(i) and
(a)(ii) of Section 6.1 hereof;
<PAGE>
(2) in respect of a covenant or provision hereof which, under
Article IX, cannot be modified or amended without the consent of
the Holder of each outstanding Note affected, unless all such
affected Holders agree, in writing, to waive such default;
(3) any provision or covenant requiring supermajority approval
to amend, unless such default has been waived by such a
supermajority; or
(4) the rescission of which would conflict with any judgment or
decree of a court of competent jurisdiction.
(5) Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair
any right arising therefrom.
Section 1.48 Control by Majority.
Holders of at least a majority in aggregate principal amount
of the then outstanding Notes may direct the time, method and
place of conducting any proceeding for exercising any remedy
available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the
Trustee determines in good faith may be unduly prejudicial to the
rights of other Holders of Notes not joining in the giving of
such direction or that may involve the Trustee in personal
liability and the Trustee may take any other action it deems
proper that is not inconsistent with any such direction received
from Holders of the Notes.
Section 1.49 Limitation on Suits.
(1) A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(1) the Holder of a Note gives to the Trustee written notice of
a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the then outstanding Notes make a written request to the Trustee
to pursue the remedy;
(3) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the
Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
(2) A Holder of a Note may not use this Indenture to prejudice
the rights of another Holder of a Note or to obtain a preference
or priority over another Holder of a Note.
Section 1.50 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture,
except as permitted by Section 9.2 and subject to the provisions
of Article XI, the right of any Holder of a Note to receive
payment of the principal of, premium and Liquidated Damages, if
any, and interest on the Note, on or after the respective due
dates
<PAGE>
expressed in the Note (including in connection with an offer to purchase)
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 1.51 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1 occurs and
is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the
Company for the whole amount of principal of, premium and
Liquidated Damages, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
Section 1.52 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and the Holders of the
Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable
on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. To the extent that the payment
of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any
such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise; provided, that
nothing stated herein shall modify the rights as between the
Holders of the Notes and the holders of Senior Debt or Senior
Debt of the Guarantors, as applicable, as set forth in Article
XI. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Notes or the rights of any Holder,
or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and may be a member of
the creditor's committee.
Section 1.53 Priorities.
(1) If the Trustee collects any money pursuant to this Article,
it shall pay out the money in the following order:
(1) to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
(2) subject to the provisions of Article XI, to Holders of
Notes for amounts due and unpaid on the Notes for principal and
Liquidated Damages, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the
<PAGE>
Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
(3) to the Company or to such party as a court of competent
jurisdiction shall direct.
(2) The Trustee may fix a Record Date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
(1)
Section 1.54 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 1.55 Duties of Trustee.
(1) If an Event of Default of which the Trustee has knowledge
has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent
man would exercise or use under the circumstances in the conduct
of its own affairs.
(2) Except during the continuance of an Event of Default of
which the Trustee has knowledge:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by an Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
<PAGE>
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(4) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the
Trustee is subject to Sections 7.1 and 7.2.
(5) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and
powers under this Indenture at the request of any Holders, unless
such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or
expense.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with
the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
Section 1.56 Rights of Trustee.
(1) In connection with the Trustee's rights and duties under
this Indenture, the Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting under this
Indenture, it may require an Officers' Certificate or an Opinion
of Counsel or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee
may consult with counsel and the written advice of such counsel
or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(3) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall
be sufficient if signed by an Officer of the Company.
(6) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders
shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might
be incurred by it in compliance with such request or direction.
(7) Except with respect to Section 4.1 hereof, the Trustee shall
have no duty to inquire as to the performance of the Company's
covenants in Article IV hereof. In addition, the Trustee shall
not be deemed to have knowledge of any Default or Event of
Default except (i) any Event of Default occurring pursuant to
Sections 6.1(a)(i), 6.1(a)(ii) and 4.1 or (ii) any Default or
Event of Default of which the Trustee shall have received written
notification in the manner set for in this Indenture, or an
officer in the corporate trust administration of the Trustee
shall have obtained actual knowledge.
<PAGE>
(8) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trustee may,
in its discretion, make such further inquiry or investigation
into such facts or matters as it may see fit.
(1)
Section 1.57 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with
the Company or any Affiliate of the Company with the same rights
it would have if it were not Trustee. However, in the event that
the Trustee acquires any conflicting interest (as defined in the
TIA) it must eliminate such conflict within 90 days, apply to the
SEC for permission to continue as trustee or resign. Any Agent
may do the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
Section 1.58 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture
or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company
or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application
of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital
herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 1.59 Notice of Defaults Agreement.
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to
Holders of Notes a notice in the manner and to the extent
provided by Section 313(c) of the TIA of the Default or Event of
Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, premium,
if any, or interest on any Note, the Trustee may withhold the
notice if and so long as a committee of its Officers in good
faith determines that withholding the notice is in the interests
of the Holders of the Notes.
Section 1.60 Reports by Trustee to Holders of the Notes.
(1) Within 60 days after each March 15 beginning with the March
15 following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the
Notes a brief report dated as of such reporting date that
complies with TIA 313(a) (but if no event described in TIA
313(a) has occurred within the 12 months preceding the
reporting date, no report need be transmitted). The Trustee also
shall comply with TIA 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA 313(c).
(2) A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Notes are listed in
accordance with TIA 313(d). The Company shall promptly notify
the Trustee when the Notes are listed on any stock exchange.
Section 1.61 Compensation and Indemnity.
(1) The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and
services hereunder. The Trustee's compensation shall not
<PAGE>
be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents
and counsel.
(2) The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses (including reasonable attorneys'
fees) incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.7) and defending
itself against any claim (whether asserted by the Company or any
Holder or any other Person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder,
except to the extent any such loss, liability or expense may be
attributable to its negligence, bad faith or willful misconduct.
The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
(3) The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
(4) To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes;
provided, that nothing stated herein shall modify the rights as
between the Holders of the Notes and the holders of the Senior
Debt or Senior Debt of the Guarantors, as applicable, as set
forth in Article XI hereof. Such Lien shall survive the
satisfaction and discharge of this Indenture.
(5) When the Trustee incurs expenses or renders services after
an Event of Default specified in Sections 6.1(a)(vii) or
6.1(a)(viii) hereof occurs, the expenses and the compensation for
the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
(6) The Trustee shall comply with the provisions of TIA
313(b)(2) to the extent applicable.
Section 1.62 Replacement of Trustee.
(1) A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section
7.8.
(2) The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the
Company. The Holders of Notes of a majority in principal amount
of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
<PAGE>
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
(3) If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in
principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by
the Company.
(4) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company, or the Holders of Notes of at least 10% in
principal amount of the then outstanding Notes may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
(5) If the Trustee, after written request by any Holder of a
Note who has been a Holder of a Note for at least six months,
fails to comply with Section 7.10, such Holder of a Note may
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(6) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Thereupon, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the
successor Trustee; provided, that all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in
Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under
Section 7.7 hereof shall continue for the benefit of the retiring
Trustee.
Section 1.63 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 1.64 Eligibility; Disqualification.
(1) There shall at all times be a Trustee hereunder that is a
corporation or trust company (or a member of a bank holding
company) organized and doing business under the laws of the
United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state
authorities and that has (or the bank holding company of which it
is a member has) a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual
report of condition.
(2) This Indenture shall always have a Trustee who satisfies the
requirements of TIA 310(a)(1), (2) and (5). The Trustee is
subject to TIA 310(b).
Section 1.65 Preferential Collection of Claims against Company.
<PAGE>
The Trustee is subject to TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has
resigned or been removed shall be subject to TIA 311(a) to the
extent indicated therein.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 1.66 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate,
at any time, elect to have either Section 8.2 or 8.3 hereof be
applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article VIII.
Section 1.67 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, each of the Company and
the Guarantors, as applicable, shall, subject to the satisfaction
of the applicable conditions set forth in Section 8.4 hereof, be
deemed to have been discharged from its obligations with respect
to all outstanding Notes and Guarantees, as applicable, on the
date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes and the
Guarantors shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Guarantees, which
shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied
all its other obligations under such Notes, such Guarantees and
this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging
the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.4 hereof, and as more
fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due,
(b) the Company's obligations with respect to such Notes under
Article II and Section 4.2 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this
Article VIII. Subject to compliance with this Article VIII, the
Company may exercise its option under this Section 8.2
notwithstanding the prior exercise of its option under Section
8.3 hereof.
Section 1.68 Covenant Defeasance.
Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, subject to the
satisfaction of the applicable conditions set forth in Section
8.4 hereof, the Company and the Guarantors shall be released from
their respective obligations under Sections 4.3, 4.4, 4.5, 4.7,
4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and
clause (iii) of Section 5.1 hereof and the Guarantors shall be
released from their obligations under Section 10.3(b) hereof, in
each case on and after the date the conditions set forth below
are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
and the Guarantees shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance
means that, with respect to the outstanding Notes, the Company
may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1
hereof, but, except as specified above, the remainder of this
<PAGE>
Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.1 hereof of
the option applicable to this Section 8.3 hereof, subject to the
satisfaction of the applicable conditions set forth in Section
8.4 hereof, (a) Sections 6.1(a)(iii) through 6.1(a)(vi) hereof
shall not constitute Events of Default and (b) Sections
6.1(a)(vii) and 6.1(a)(viii) shall not constitute Events of
Default as of the 91st day following the occurrence of the
Company's exercise of Covenant Defeasance; provided, however,
that for all other purposes as set forth herein, such Covenant
Defeasance provisions shall be effective.
Section 1.69 Conditions to Legal or Covenant Defeasance.
(1) The following shall be the conditions to the application of
either Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or
Covenant Defeasance:
(1) the Company must irrevocably deposit or cause to be
deposited with the Trustee, in trust, for the benefit of the
Holders of the Notes, U.S. legal tender, U.S. Government
Obligations or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium,
if any, Liquidated Damages, if any, and interest on such Notes on
the stated date for payment thereof or on the redemption date of
such principal or installment of principal of, premium, if any,
Liquidated Damages, if any, or interest on such Notes, and the
Holders of Notes must have a valid, perfected, exclusive security
interest in such trust;
(2) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has
been published by the Internal Revenue Service, a ruling or
(B) since the date of this Indenture, there has been a change in
the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of such Notes will not recognize
income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to such Trustee
confirming that the Holders of such Notes will not recognize
income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under
this Indenture or any other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the
<PAGE>
Holders of such Notes over any other creditors of the Company or with
the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; and
(7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
the conditions precedent provided for in, in the case of the
Officers' Certificate, clauses (i) through (vi) and, in the case
of the Opinion of Counsel, clauses (i) (with respect to the
validity and perfection of the security interest), (ii),
(iii) and (v) of this paragraph (a) have been complied with.
(2) If the funds deposited with the Trustee to effect Covenant
Defeasance are insufficient to pay the principal of, premium, if
any, and interest on the Notes when due, then the obligations of
the Company and the Guarantors under this Indenture will be
revived and no such defeasance shall be deemed to have occurred.
Section 1.70 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.
(1) Subject to Section 8.6 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes
of this Section 8.5, the "Trustee") pursuant to Section 8.4
hereof in respect of the outstanding Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the Holders of such Notes
of all sums due and to become due thereon in respect of
principal, premium, if any, and interest (and Liquidated Damages,
if any), but such money need not be segregated from other funds
except to the extent required by law.
(2) The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash
or U.S. Government Obligations deposited pursuant to Section 8.4
hereof or the principal and interest received in respect thereof,
other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Notes.
(3) Anything in this Article VIII to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon the request of the Company any money or
U.S. Government Obligations held by it as provided in Section 8.4
hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.4(a) hereof), are in excess of
the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 1.71 Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the
principal of, premium, if any, Liquidated Damages, if any, or
interest on any Note and remaining unclaimed for two years after
such principal, and premium, if any, Liquidated Damages, if any,
or interest has become due and payable shall be paid to the
Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Note
shall thereafter, as a creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The
<PAGE>
Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
Section 1.72 Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States legal tender or U.S. Government Obligations in
accordance with Section 8.2 or 8.3 hereof, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 or 8.3 hereof until
such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.2 or 8.3 hereof, as
the case may be; provided, however, that, if the Company makes
any payment of principal of, premium, if any, or interest on any
Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying
Agent.
Section 1.73 Satisfaction and Discharge.
In addition to the Company's rights under Sections 8.2 and
8.3, the Company and the Guarantors may terminate all of their
obligations under this Indenture (subject to Section 8.7) when:
(1) either (i) all such outstanding Notes theretofore
authenticated and delivered (other than Notes that have been
destroyed, lost or stolen and that have been replaced or paid as
provided in Section 2.7) have been delivered to the Trustee for
cancellation, or (ii) all such Notes not theretofore delivered to
the Trustee for cancellation have become due and payable or,
within one year will become due and payable or subject to
redemption under Section 3.7 hereof, and the Company has
irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and
interest to the Stated Maturity of the Notes;
(2) the Company has paid all sums payable hereunder;
(3) the Company has delivered irrevocable instructions to the
Trustee to apply the deposited money toward the payment of the
Notes at maturity or on the redemption date, as the case may be;
(4) the Holders have a valid, perfected, exclusive security
interest in such trust; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied
with, and that such satisfaction and discharge will not result in
a breach or violation of, or constitute a Default under, this
Indenture or any other material instrument to which the Company,
any Guarantors or any of their Subsidiaries is a party or by
which it or their property is bound.
(1)
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 1.74 Without Consent of Holders of Notes.
<PAGE>
(1) Notwithstanding Section 9.2 of this Indenture, the Company,
any Guarantor and the Trustee may amend or supplement this
Indenture, the Notes or any Guarantee, without the consent of any
Holder of a Note:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article V hereof;
(4) to provide for additional Guarantors as set forth in
Section 10.4 or for the release or assumption of a Guarantee in
compliance with this Indenture;
(5) to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not
adversely affect the rights hereunder of any Holder;
(6) to comply with the provisions of the Depositary, Euroclear
or Cedel or the Trustee with respect to the provisions of this
Indenture or the Notes relating to transfers and exchanges of
Notes or beneficial interests therein; or
(7) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
(2) Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the
terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but
the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Section 1.75 With Consent of Holders of Notes.
(1) Except as expressly stated otherwise in this Section 9.2,
and subject to Sections 6.4 and 6.7 hereof, the Company, any
Guarantor and the Trustee may amend or supplement this Indenture,
the Notes and the Guarantees, with the consent of the Holders of
a majority in aggregate principal amount of the Notes then
outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer
for, the Notes), and, subject to Sections 6.4 and 6.7 hereof, any
existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium, if
any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with
any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes (including consents obtained
in connection with a purchase of, or tender offer or exchange
offer for, the Notes); provided, that no such modification may,
without the consent of Holders of at least 66_% in aggregate
principal amount of Notes at the time outstanding, modify the
provisions (including the defined terms used therein) of Section
4.13 in a manner adverse to the Holders; and provided, further,
that no such modification may, without the consent of each Holder
affected thereby
<PAGE>
(1) change the Stated Maturity on any Note, or reduce the
principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the
redemption thereof at the Company's option, or change the place
of payment where, or the coin or currency in which, any Note or
any premium or the interest thereon (and Liquidated Damages, if
any) is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or in the case of redemption at the Company's option, on
or after the Redemption Date), or, after the applicable Change of
Control or Asset Sale occurs, reduce the corresponding Change of
Control Purchase Price or the Asset Sale Offer Price or alter the
provisions (including the defined terms used herein) of Article
III of this Indenture in a manner adverse to the Holders; or
(2) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in this
Indenture; or
(3) modify any of the waiver provisions, except to increase any
required percentage or to provide that certain other provisions
of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Note affected thereby.
(2) In connection with any amendment, supplement or waiver under
this Article IX, the Company may, but shall not be obligated to,
offer to any Holder who consents to such amendment, supplement or
waiver, or to all Holders, consideration for such Holder's
consent to such amendment, supplement or waiver.
(3) Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such
amended or supplemental indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of
the Holders of Notes as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with the Company in the execution of such
amended or supplemental indenture unless such amended or
supplemental indenture adversely affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental indenture.
(4) It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if
such consent approves the substance thereof.
(5) After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes
affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such amended or supplemental
indenture or waiver.
(1)
Section 1.76 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that
complies with the TIA as then in effect.
Section 1.77 Revocation and Effect of Consents.
<PAGE>
(1) Until an amendment, supplement or waiver becomes effective
(as determined by the Company and which may be prior to any such
amendment, supplement or waiver becoming operative), a consent to
it by a Holder of a Note is a continuing consent by the Holder of
a Note and every subsequent Holder of a Note or portion of a Note
that evidences the same Indebtedness as the consenting Holder's
Note, even if notation of the consent is not made on any Note.
However, any such Holder of a Note or subsequent Holder of a Note
may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver,
supplement or amendment becomes effective (as determined by the
Company).
(2) The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver, which record date
shall be the date so fixed by the Company notwithstanding the
provisions of the TIA. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date,
and only those Persons (or their duly designated proxies), shall
be entitled to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date.
(3) After an amendment, supplement or waiver becomes effective,
it shall bind every Holder unless it makes a change described in
any of clauses (a)(i) through (a)(iii) of Section 9.2 hereof, in
which case, the amendment, supplement or waiver shall bind only
each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note; provided, that
any such waiver shall not impair or affect the right of any
Holder to receive payment of principal and premium of and
interest (and Liquidated Damages, if any) on a Note, on or after
the respective dates set for such amounts to become due and
payable expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective
dates.
Section 1.78 Notation on or Exchange of Notes.
(1) The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the
amendment, supplement or waiver.
(2) Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment,
supplement or waiver.
Section 1.79 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article IX if the amendment,
supplement or waiver does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. In executing
any amendment, supplement or waiver, the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and
to receive and (subject to Section 7.1) shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amendment, supplement
or waiver is authorized or permitted by this Indenture.
ARTICLE X
GUARANTEES
Section 1.80 Guarantees.
<PAGE>
(1) Subject to the provisions of this Article X, and in
consideration of good and valuable consideration, the receipt of
and sufficiency of which are hereby acknowledged, each Guarantor
that from time to time shall be required to execute a
supplemental indenture in accordance with Section 10.4 hereof,
jointly and severally, if any, to the fullest extent permitted
under applicable law, irrevocably and unconditionally guarantees,
as to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, that:
(i) the principal of, and premium and interest and Liquidated
Damages, if any, on the Notes shall be duly and punctually paid
in full when due, whether at maturity, by acceleration, call for
redemption, upon a Change of Control Offer, upon an Asset Sale
Offer or otherwise, and interest on overdue principal, and
premium, if any, and (to the extent permitted by law) interest on
any interest, if any, on the Notes and all other obligations of
the Company to the Holders or the Trustee hereunder or under the
Notes (including fees, expenses or other) shall be promptly paid
in full or performed, all in accordance with the terms hereof;
and (ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, the same shall be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated
maturity, by acceleration, call for redemption, upon a Change of
Control, upon an Asset Sale Offer or otherwise (collectively, the
"Guarantee Obligations"). Failing payment when due of any
Guarantee Obligation or failing performance of any other
obligation of the Company to the Holders, for whatever reason,
each Guarantor shall be obligated to pay, or to perform or to
cause the performance of, the same immediately and before the
failure to so pay becomes an Event of Default. An Event of
Default under this Indenture or the Notes shall constitute an
event of default under the Guarantee, and shall entitle the
Trustee or the Holders of Notes to accelerate the Guarantee
Obligations of each Guarantor hereunder in the same manner and to
the same extent as the Obligations of the Company.
(2) Each Guarantor hereby agrees that, to the fullest extent
permitted under applicable law, its Guarantee Obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any thereof, the entry
of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby, to the fullest extent permitted under
applicable law, waives and relinquishes, (i) any right to require
the Trustee, the Holders or the Company (each, a "Benefitted
Party") to proceed against the Company, the Subsidiaries or any
other Person or to proceed against or exhaust any security held
by a Benefitted Party at any time or to pursue any other remedy
in any secured party's power before proceeding against the
Guarantors; (ii) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other
Person or Persons or the failure of a Benefitted Party to file or
enforce a claim against the estate (in administration, bankruptcy
or any other proceeding) of any other Person or Persons; (iii)
demand, protest and notice of any kind (except as expressly
required by this Indenture), including but not limited to notice
of the existence, creation or incurring of any new or additional
Indebtedness or obligation or of any action or non-action on the
part of the Guarantors, the Company, the Subsidiaries, any
Benefitted Party, any creditor of the Guarantors, the Company or
the Subsidiaries or on the part of any other Person whomsoever in
connection with any obligations the performance of which are
hereby guaranteed; (vi) any defense based upon an election of
remedies by a Benefitted Party, including but not limited to an
election to proceed against the Guarantors for reimbursement; (v)
any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(vi) any defense arising because of a Benefitted Party's
election, in any proceeding instituted under the Bankruptcy Law,
of the application of Section 1111(b)(2) of the Bankruptcy Code;
and (vii) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code. The
Guarantors hereby covenant that, except as otherwise provided
therein, the Guarantees shall not be discharged except by payment
in
<PAGE>
full of all Guarantee Obligations, including the principal,
premium, if any, and interest on the Notes and all other costs
provided for under this Indenture or as provided in Section 8.1.
(3) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or the Guarantors, or
any trustee or similar official acting in relation to either the
Company or the Guarantors, any amount paid by the Company or the
Guarantors to the Trustee or such Holder, the Guarantees, to the
extent theretofore discharged, shall be reinstated in full force
and effect. Each of the Guarantors agrees that it shall not be
entitled to any right of subrogation in relation to the Holders
in respect of any Guarantee Obligations hereby until payment in
full of all such obligations guaranteed hereby. Each Guarantor
agrees that, as between it, on the one hand, and the Holders of
Notes and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article VI hereof for the purposes hereof, notwithstanding any
stay, injunction or other prohibition preventing such
acceleration in respect of the Guarantee Obligations, and (ii) in
the event of any acceleration of such obligations as provided in
Article VI hereof, such Guarantee Obligations (whether or not due
and payable), shall forthwith become due and payable by such
Guarantor for the purpose of the Guarantee.
Section 1.81 Execution and Delivery of Guarantees.
(1) To evidence the Guarantees set forth in Section 10.1 hereof,
each of the Guarantors agrees that a supplemental indenture
substantially in the form of Exhibit E hereto shall be executed
on behalf of each of the Guarantors by an Officer of each of the
Guarantors.
(2) Each of the Guarantors agree that the Guarantees set forth
in this Article X shall remain in full force and effect and apply
to all the Notes notwithstanding any failure to endorse on each
Note a notation of the Guarantees.
(3) If an Officer whose facsimile signature is on a Note or a
notation of Guarantee no longer holds that office at the time the
Trustee authenticates the Note on which the Guarantees are
endorsed, the Guarantees shall be valid nevertheless.
(4) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of the Guarantees set forth in this Indenture on behalf of the
Guarantors.
Section 1.82 Guarantors May Consolidate, etc., on Certain
Terms.
(1) Nothing contained in this Indenture or in the Notes shall
prevent any consolidation or merger of any Guarantor with or into
each other or with or into the Company. Upon any such
consolidation or merger, the Subsidiary Guarantee of the
Subsidiary Guarantor that does not survive the consolidation or
merger shall no longer be of any force or effect.
(2) Except for a merger or consolidation in which a Guarantor is
sold and its Guarantee is released in compliance with the
provisions of Section 10.5, no Guarantor shall consolidate or
merge with or into (whether or not such Guarantor is the
surviving Person) another Person unless, subject to the
provisions of the following paragraph and certain other
provisions of this Indenture, (i) the Person formed by or
surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor pursuant
to a supplemental indenture in form reasonably satisfactory to
the Trustee, pursuant to which such person shall unconditionally
guarantee, on a senior subordinated basis, all of such
Guarantor's obligations under such Guarantor's Guarantee and this
Indenture on the terms set forth in this Indenture; and (ii)
immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default
shall have occurred or be continuing. In case of any such
consolidation or merger and upon
<PAGE>
the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and reasonably satisfactory in form
to the Trustee, of the Guarantees endorsed upon the Notes and the due
and punctual performance of all of the covenants and conditions of
this Indenture to be performed by such Guarantor, such successor
corporation shall succeed to and be substituted for such
Guarantor with the same effect as if it had been named herein as
a Guarantor. Such successor corporation thereupon may cause to
be signed any or all of the Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee. All the
Guarantees so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Guarantees
theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Guarantees had been issued
at the date of the execution hereof.
(3) The Trustee, subject to the provisions of Section 12.4
hereof, shall be entitled to receive an Officers' Certificate as
conclusive evidence that any such consolidation or merger, and
any such assumption of Guarantee Obligations, comply with the
provisions of this Section 10.3. Such Officers' Certificate
shall comply with the provisions of Section 12.5.
Section 1.83 Future Guarantors.
The Company shall not permit any Subsidiary individually or
together with all other Subsidiaries that are not Guarantors to
become Material Domestic Subsidiaries unless such Subsidiary and
all such other Subsidiaries, if applicable, simultaneously
executes a supplemental indenture to this Indenture providing for
the Guarantee of the payment of the Notes by such Subsidiary or
Subsidiaries, which Guarantee(s) shall be irrevocable and
unconditional in respect of all principal, premium, if any,
Liquidated Damages, if any, and interest on the Notes on a senior
subordinated basis and shall execute a supplemental indenture
substantially in the form of Exhibit E hereto.
Section 1.84 Release of Guarantors.
(1) Notwithstanding Section 10.3(b), upon the sale or
disposition (whether by merger, stock purchase, asset sale or
otherwise) of a Guarantor (or all or substantially all of its
assets) to an entity which is not a Subsidiary, or the
designation of a Subsidiary to become an Unrestricted Subsidiary,
which transaction is otherwise in compliance with this Indenture
(including, without limitation, the provisions of Section 4.12),
such Guarantor shall be deemed released from its obligations
under its Guarantee of the Notes.
(2) Upon delivery by the Company to the Trustee of an Officer's
Certificate, to the effect that such sale or other disposition or
that such designation was made by the Company in accordance with
the provisions of this Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of
any such Guarantor from its Guarantee Obligations under its
Guarantee. Except as provided in Section 10.3(a), any Guarantor
not released from its Guarantee Obligations under its Guarantee
shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Article X.
(3) Notwithstanding the foregoing provisions of this Article X,
(i) any Guarantor whose Guarantee would otherwise be released
pursuant to the provisions of this Section 10.5 may elect, at its
sole discretion, by written notice to the Trustee, to maintain
such Guarantee in effect notwithstanding the event or events that
otherwise would cause the release of such Guarantee (which
election to maintain such Guarantee in effect may be conditional
or for a limited period of time), and (ii) any Subsidiary of the
Company which is not a Guarantor may elect, at its sole
discretion, by
<PAGE>
written notice to the Trustee, to become a Guarantor (which election
may be conditional or for a limited period of time).
Section 1.85 Limitation of Guarantor's Liability; Certain
Bankruptcy Events.
(1) Each Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that
the Guarantee Obligation of such Guarantor pursuant to its
Guarantee not constitute a fraudulent transfer or conveyance for
purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal
or state law. To effectuate the foregoing intention, the Holders
and such Guarantor hereby irrevocably agree that the Guarantee
Obligations of such Guarantor under this Article X shall be
limited to the maximum amount as will, after giving effect to all
other contingent and fixed liabilities of such Guarantor and
after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the Guarantee
Obligations of such other Guarantor under this Article X, result
in the Guarantee Obligations of such Guarantor under the
Guarantee of such Guarantor not constituting a fraudulent
transfer or conveyance.
(2) Each Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event
of the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company, such Guarantor shall not file (or
join in any filing of), or otherwise seek to participate in the
filing of, any motion or request seeking to stay or to prohibit
(even temporarily) execution on the Guarantee Obligations and
hereby waives and agrees not to take the benefit of any such stay
of execution, whether under Section 362 or 105 of the Bankruptcy
Law or otherwise.
Section 1.86 Application of Certain Terms and Provisions to the
Guarantors.
(1) For purposes of any provision of this Indenture which
provides for the delivery by any Guarantor of an Officers'
Certificate and/or an Opinion of Counsel, the definitions of
such terms in Section 1.1 shall apply to such Guarantor as
if references therein to the Company were references to such
Guarantor.
(2) Any request, direction, order or demand which by any
provision of this Indenture is to be made by any Guarantor, shall
be sufficient if evidenced as described in Section 12.2 as if
references therein to the Company were references to such
Guarantor.
(3) Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the
Trustee or by the holders of Notes to or on any Guarantor may be
given or served as described in Section 12.2 as if references
therein to the Company were references to such Guarantor.
(1)
(4) Upon any demand, request or application by any Guarantor to
the Trustee to take any action under this Indenture, such
Guarantor shall furnish to the Trustee such certificates and
opinions as are required in Section 12.4 hereof as if all
references therein to the Company were references to such
Guarantor.
Section 1.87 Subordination of Guarantees.
(1) The obligations of each Guarantor under its Guarantee
pursuant to this Article X is subordinated in right of payment to
the prior payment in full in cash of all Senior Debt of such
Guarantor on the same basis as the Notes are subordinated to
Senior Debt of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to
receive and/or retain payments by any of the Guarantors only at
such times as they may receive and/or
<PAGE>
retain payments in respect of Notes pursuant to this Indenture,
including Article XI hereof. In the event that the Trustee receives any
Guarantor payment at a time when an officer of the corporate trust
administration of the Trustee has actual knowledge that such payment is
prohibited by the foregoing sentence, such Guarantor payment shall be paid
over and delivered to the holders of the Senior Debt of such Guarantor
remaining unpaid, to the extent necessary to pay in full all such
Senior Debt. In the event that a Holder receives any Guarantor
payment at a time when such payment is prohibited by the
foregoing sentence, such Guarantor payment shall be paid over and
delivered to the holders of the Senior Debt of such Guarantor
remaining unpaid, to the extent necessary to pay in full all such
Senior Debt.
(2) Each Holder of a Note by its acceptance thereof (i)
acknowledge that as of the Issue Date there are no Guarantors,
(ii) agrees to and shall be bound by the provisions of this
Section 10.8, (iii) authorizes and directs the Trustee on the
Holder's behalf to take such action as may be necessary and
appropriate to effectuate the subordination so provided, and (vi)
appoints the Trustee as the Holder's attorney-in-fact for any and
all such purposes.
ARTICLE X
SUBORDINATION
Section 1.88 Notes Subordinate to Senior Debt.
(1) The Company, the Guarantors and each Holder, by its
acceptance of the Notes, agree that (i) the payment of the
principal of and interest on the Notes and (ii) any other payment
in respect of the Notes, including on account of the acquisition
or redemption of the Notes by the Company and the Guarantors
(including, without limitation, pursuant to Sections 4.12 and
4.13 and Article X), as applicable, is subordinated, to the
extent and in the manner provided in this Article XI, to the
prior payment in full in cash of all Senior Debt and that these
subordination provisions are for the benefit of the holders of
Senior Debt.
(2) This Article XI shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of,
or continue to hold, Senior Debt, and such provisions are made
for the benefit of the holders of Senior Debt and such holders
are made obligees hereunder and any one or more of them may
enforce such provisions.
Section 1.89 No Payment on Notes in Certain Circumstances.
(1) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company or the Guarantors, as applicable, on
account of the principal of, premium, if any, or interest (or
Liquidated Damages, if any) on the Notes, or on account of any
other obligation for the payment of money due in respect of the
Notes, or on account of the redemption provisions of the Notes
(including any repurchases of Notes), for cash or property (other
than payments made with Junior Securities or from the trust
described in Sections 8.2 and 8.3 hereof), in the event of a
default in the payment of any principal of, premium, if any, or
interest on, Designated Senior Debt of the Company or such
Guarantor when it becomes due and payable, whether at maturity,
or at a date fixed for prepayment or by declaration of
acceleration or otherwise (a "Payment Default"), unless and until
such Payment Default has been cured or waived or otherwise has
ceased to exist.
(2) Upon (i) the happening of an event of default other than a
Payment Default that permits the holders of Designated Senior
Debt or any representative thereof to declare such Designated
Senior Debt to be due and payable (a "Non-payment Default") and
(ii) written notice of
<PAGE>
such event of default specifically referring to this Section 11.2 given
to the Company and the Trustee by the Representative under the Credit
Agreement (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no
payment (by set-off or otherwise) may be made by or on behalf of
the Company or any Guarantor, as applicable, including the
principal of, premium, if any, or interest on the Notes (or
Liquidated Damages, if any), or on account of the redemption
provisions of the Notes (including any repurchases of any of the
Notes), in any such case, other than payments made with Junior
Securities or from the trust described in Sections 8.2 and 8.3
hereof. Notwithstanding the foregoing, unless the Designated
Senior Debt in respect of which such event of default exists has
been declared due and payable in its entirety within 179 days
after the Payment Notice is delivered as set forth above (the
"Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period,
the Company and the Guarantors shall be required to pay all sums
not paid to the Holders of the Notes during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other
payments as and when due on the Notes. Any number of Payment
Notices may be given; provided, that (i) not more than one
Payment Notice shall be given within a period of any 360
consecutive days, and (ii) no Non-payment Default that existed
upon the date of such Payment Notice or the commencement of such
Payment Blockage Period (whether or not such event of default is
on the same issue of Senior Debt) shall be made the basis for the
commencement of any other Payment Blockage Period (unless such
default shall have been cured or waived for a period of not less
than 120 days).
(3) In furtherance of the provisions of Section 11.1, in the
event that, notwithstanding the foregoing provisions of this
Section 11.2 and the provisions of Section 11.3, any payment or
distribution of assets of the Company or any Guarantor (other
than Junior Securities or from the trust described in Sections
8.2 and 8.3 hereof) shall be received by the Trustee or the
Holders at a time when the Trustee or such Holder, as applicable,
has actual knowledge that such payment or distribution is
prohibited by the foregoing provisions of this Section 11.2 or
the provisions of Section 11.3, such payment or distribution
shall be held in trust for the benefit of the holders of such
Senior Debt, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of such Senior
Debt remaining unpaid or unprovided for or to their
representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing
any of such Senior Debt may have been issued, ratably according
to the aggregate principal amounts remaining unpaid on account of
such Senior Debt held or represented by each, for application to
the payment of all such Senior Debt remaining unpaid, to the
extent necessary to pay or to provide for the payment of all such
Senior Debt in full in cash or Cash Equivalents or otherwise to
the extent holders accept satisfaction of amounts due by
settlement in other than cash or Cash Equivalents after giving
effect to any concurrent payment or distribution to the holders
of such Senior Debt.
Section 1.90 Notes Subordinate to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization.
Upon any distribution of the assets of the Company upon any
dissolution, winding up, total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary,
in bankruptcy, insolvency, receivership or a similar proceeding
or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full in cash or Cash Equivalents (or have such
payment duly provided for in accordance with the terms thereof)
or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than cash or Cash Equivalents before
the Holders are entitled to receive any payment on account of any
Obligation in respect of the Notes, including the principal of,
premium, if any, and interest on the
<PAGE>
Notes or Liquidated Damages, if any, pursuant to the Registration Rights
Agreement (other than Junior Securities); and
(2) any payment or distribution of assets of the Company or any
Guarantor of any kind or character from any source, whether in
cash, property or securities (other than Junior Securities) to
which the Holders or the Trustee on behalf of the Holders would
be entitled (by set-off or otherwise), except for the
subordination provisions contained in this Indenture, shall be
paid by the liquidating trustee or agent or other person making
such a payment or distribution directly to the holders of such
Senior Debt or their representative to the extent necessary to
make payment in full (or have such payment duly provided for to
the satisfaction of the Holders of the Senior Debt) on all such
Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Debt.
Section 1.91 Holders to be Subrogated to Rights of Holders of
Senior Debt.
Subject to the payment in full of all Senior Debt as
provided herein, the Holders of Notes shall be subrogated to the
rights of the holders of such Senior Debt to receive payments or
distributions of assets of the Company and any Guarantor
applicable to the Senior Debt until all amounts owing on the
Notes shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of
such Senior Debt by or on behalf of the Company or any Guarantor,
or by or on behalf of the Holders by virtue of this Article XI,
which otherwise would have been made to the Holders shall, as
between the Company or any Guarantor and the Holders, be deemed
to be payment by the Company or any Guarantor or on account of
such Senior Debt, it being understood that the provisions of this
Article XI are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and
the holders of such Senior Debt, on the other hand.
Section 1.92 Obligations of the Company and the Guarantors
Unconditional.
Nothing contained in this Article XI or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as
between the Company and any Guarantor and the Holders, the
obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium,
if any, and interest on (or, if applicable, Liquidated Damages,
if any) the Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders and creditors of
the Company and the Guarantors other than the holders of the
Senior Debt, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon any default under this
Indenture, subject to the rights, if any, under this Article XI,
of the holders of Senior Debt, including, without limitation,
their right to receive any cash, property or Notes of the Company
and any Guarantor received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article XI or
elsewhere in this Indenture or in the Notes, upon any
distribution of assets of the Company and the Guarantors referred
to in this Article XI, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, and the Holders shall be entitled to rely
upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation
or reorganization proceedings are pending, or a certificate of
the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article XI so long
as such court has been apprised of the provisions of, or the
order, decree or certificate makes reference to, the provisions
of this Article XI. Nothing in this Article XI shall apply to
the claims of, or payments to, the Trustee under or pursuant to
Section 7.7.
Section 1.93 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice.
<PAGE>
The Trustee shall not at any time be charged with knowledge
of the existence of any facts which would prohibit the making of
any payment to or by the Trustee unless and until a corporate
trust officer of the Trustee or any Paying Agent shall have
received at the addresses for notices set forth in Section 12.2,
no later than two Business Days prior to such payment written
notice thereof specifically referring to this Article XI from the
Company or from one or more holders of Senior Debt or from any
representative therefor and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, shall be entitled in all respects
conclusively to assume that no such fact exists.
The Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself to be a
holder of Senior Debt (or a representative on behalf of such
holder) to establish that such notice has been given by a holder
of Senior Debt or a representative on behalf of such holder. In
the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person who
is a holder of Senior Debt to participate in any payment or
distribution pursuant to this Article XI, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such Person is entitled to participate in
such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XI, and if such evidence
is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment or until such time as the Trustee shall be
otherwise satisfied as to the right of such Person to receive
such payment.
Section 1.94 Application by Trustee of Assets Deposited with
It.
Amounts deposited in trust with the Trustee pursuant to and
in accordance with Article VIII shall be for the sole benefit of
Holders and, to the extent (i) the making of such deposit by the
Company shall not be in contravention of any term or provisions
the Credit Agreement or other Senior Debt and (ii) allocated for
the payment of Notes, shall not be subject to the subordination
provisions of this Article XI. Otherwise, any deposit of assets
with the Trustee or the Paying Agent (whether or not in trust)
for the payment of principal of or interest on any Notes shall be
subject to the provisions of Sections 11.1, 11.2, 11.3 and 11.4;
provided, that, if prior to one Business Day preceding the date
on which by the terms of this Indenture any such assets may
become distributable for any purpose (including without
limitation, the payment of either principal of or interest on any
Security) the Trustee or such Paying Agent shall not have
received with respect to such assets the written notice provided
for in Section 11.6, then the Trustee or such Paying Agent shall
have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary which may be
received by it on or after such date.
Section 1.95 Subordination Rights Not Impaired by Acts or
Omissions of the Company, the Guarantors or Holders of Senior
Debt.
No right of any present or future holders of any Senior Debt
to enforce subordination provisions contained in this Article XI
shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or any Guarantor or
by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company or any Guarantor with the
terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with. The
holders of Senior Debt may extend, renew, modify or amend the
terms of the Senior Debt or any security therefor and release,
sell or exchange such security and otherwise deal freely with the
Company and the Guarantors, all without affecting the liabilities
and obligations of the parties to this Indenture or the Holders.
The subordination provisions contained in this Indenture are for
the benefit of the holders from time to time of Senior Debt and
may not be rescinded, cancelled, amended or modified in any way
other than any amendment or modification that would not adversely
affect the rights of any holder of Senior Debt or any amendment
or modification that is consented to by each holder of Senior
Debt that would be adversely affected thereby. The subordination
provisions hereof shall continue to be effective or be
reinstated, as the
<PAGE>
case may be, if at any time any payment of any
of the Senior Debt is rescinded or must otherwise be returned by
any holder of the Senior Debt upon the insolvency, bankruptcy, or
reorganization of the Company or any Guarantor, or otherwise, all
as though such payment has not been made.
Section 1.96 Holders Authorize Trustee To Effectuate
Subordination of Notes.
Each Holder of the Notes by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate
the subordination provisions contained in this Article XI and to
protect the rights of the Holders pursuant to this Indenture, and
appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company or any Guarantor
(whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company or any
Guarantor), the immediate filing of a claim for the unpaid
balance of his Notes in the form required in said proceedings and
cause said claim to be approved. In the event of any liquidation
or reorganization of the Company or any Guarantor in bankruptcy,
insolvency, receivership or similar proceeding, if the Holders of
the Notes (or the Trustee on their behalf) have not filed any
claim, proof of claim, or other instrument of similar character
necessary to enforce the obligations of the Company or any
Guarantor in respect of the Notes at least thirty (30) days
before the expiration of the time to file the same, then in such
event, but only in such event, the Representatives under the
Credit Agreement or the holders of an aggregate of at least
$5,000,000 principal amount outstanding of any other Senior Debt
or a representative on their behalf may, as an attorney-in-fact
for such Holders, file any claim, proof of claim, or other
instrument of similar character on behalf of such Holders.
Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Debt or their representative to
authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior
Debt or their representative to vote in respect of the claim of
any Holder in any such proceeding. As a condition to taking any
action by the Trustee pursuant to this Section 11.9, the Holders
shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may
be incurred thereby.
Section 1.97 Rights of Trustee to Hold Senior Debt.
The Trustee shall be entitled to all of the rights set forth
in this Article XI in respect of any Senior Debt at any time held
by it to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
Section 1.98 Article XI Not to Prevent Events of Default.
The failure to make a payment on account of principal of,
premium, if any, or interest (or Liquidated Damages, if any) on
the Notes by reason of any provision of this Article XI shall not
be construed as preventing the occurrence of a Default or an
Event of Default under Section 6.1 or in any way limit the rights
of the Trustee or any Holder to pursue any other rights or
remedies with respect to the Notes.
Section 1.99 No Fiduciary Duty of Trustee to Holders of Senior
Debt.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt, and shall not be liable to any such
holders (other than for its willful misconduct or negligence) if
it shall in good faith mistakenly pay over or distribute to the
Holders of Notes or the Company, any Guarantor or any other
Person, cash, property or Notes to which any holders of Senior
Debt shall be entitled by virtue of this Article XI or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any
other such Person to hold such payment for the benefit of, and to
pay such payment over to, the holders of Senior Debt or their
representative. In the event of any conflict between the
fiduciary duty of the Trustee to the Holders of Notes
<PAGE>
and any duty to the holders of Senior Debt, the Trustee is expressly
authorized to resolve such conflict in favor of the Holders.
Section 1.100 Notice by Company.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a
payment of any Obligations with respect to the Notes to violate
this Article XI, but failure to give such notice shall not affect
the subordination of the Notes to the Senior Debt as provided in
this Article XI.
ARTICLE XI
MISCELLANEOUS
Section 1.101 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by the TIA, the imposed duties
shall control.
Section 1.102 Notices.
(1) Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return
receipt requested), telex, telecopier or overnight air courier
guaranteeing next day delivery, to the others' address:
If to the Company:
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Telephone No.: (510) 741-7000
Telecopier No.: (510) 741-5815
Attention: Chief Financial Officer
With a copy (which shall not constitute notice)
to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Telephone No.: (415) 391-0600
Telecopier No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
If to the Trustee:
Norwest Bank Minnesota, N.A.
333 South Grand Avenue, Suite 740
Los Angeles, California 90071
Telephone No.: (213) 253-6320
Telecopier No.: (213) 680-1827
Attention: Jeanie Mar
<PAGE>
(2) The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent
notices or communications; provided, that until such time, all
notices under this Indenture to the Trustee shall be sent to both
of the Trustee's addresses set forth above.
(3) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; when answered back,
if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent
by overnight air courier guaranteeing next day delivery.
(4) Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed
to any Person described in TIA 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.
(5) If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
(6) If the Company mails a notice or communication to Holders,
it shall mail a copy to the Trustee and each Agent at the same
time.
Section 1.103 Communication by Holders of Notes with Other
Holders of Notes.
Holders may communicate pursuant to TIA 312(b) with other
Holders with respect to their rights under this Indenture or the
Notes. The Company, any Guarantors, the Trustee, the Registrar
and anyone else shall have the protection of TIA 312(c).
Section 1.104 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee, if required by the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements
set forth in Section 12.5 hereof) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action
have been satisfied; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements
set forth in Section 12.5 hereof) stating that, in the opinion of
such counsel, all such conditions precedent and covenants, if
any, have been satisfied.
Section 1.105 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other
than a certificate provided pursuant to TIA 314(a)(4)) shall
comply with the provisions of TIA 314(e) and shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
<PAGE>
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied; provided,
however, that with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or certificate of
public officials.
Section 1.106 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make
reasonable rules and set reasonable requirements for its
functions.
Section 1.107 No Personal Liability of Directors, Officers,
Employees and Stockholders.
No past, present or future director, officer, employee,
incorporator or stockholder (direct or indirect) of the Company
or the Guarantors (or any such successor entity), as such, shall
have any liability for any Obligations of the Company or the
Guarantors under the Notes, the Guarantees or this Indenture or
for any claim based on, in respect of, or by reason of, such
Obligations or their creation, except in their capacity as an
obligor or Guarantor of the Notes in accordance with this
Indenture. Each Holder by accepting a Note waives and releases
all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 1.108 Governing Law.
(1) THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND
BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES,
INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(2) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF
THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR
ANY NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION.
<PAGE>
Section 1.109 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its
Subsidiaries or of any other Person. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 1.110 Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its
successors.
Section 1.111 Severability.
In case any one or more of the provisions of this Indenture
or in the Notes or in the Guarantees shall be held invalid,
illegal or unenforceable, in any respect for any reason, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that
all of the provisions hereof shall be enforceable to the full
extent permitted by law.
Section 1.112 Counterpart Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 1.113 Table of Contents, Headings, etc.
The Table of Contents and headings of the Articles and
Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture
and shall in no way modify or restrict any of the terms or
provisions hereof.
[Signatures on following page]
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed
this Indenture as of the date first written above.
THE COMPANY:
BIO-RAD LABORATORIES, INC.
By: /s/ Thomas C. Chesterman
Name: Thomas C. Chesterman
Title:Vice President & Chief Financial Officer
By: /s/ Ronald W. Hutton
Name: Ronald W. Hutton
Title:Treasuer
THE TRUSTEE:
NORWEST BANK MINNESOTA, N.A.
By: /s/Jeanie Mar
Name: Jeanie Mar
Title:Vice President
<PAGE>
EXHIBIT A
[FORM OF NOTE]
BIO-RAD LABORATORIES, INC.
11-5/8% [SERIES A] [SERIES B]1 SENIOR SUBORDINATED NOTE DUE 2007
No. CUSIP: __________
$________________
Bio-Rad Laboratories, Inc., a Delaware corporation
(hereinafter called the "Company" which term includes any
successors under this Indenture hereinafter referred to), for
value received, hereby promises to pay to
_________________________, or registered assigns, the principal
sum of _________________________ Dollars, on February 15, 2007.
Interest Payment Dates: February 15 and August 15;
commencing August 15, 2000.
Record Dates: February 1 and August 1.
Reference is made to the further provisions of this Note on
the reverse side, which will, for all purposes, have the same
effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
BIO-RAD LABORATORIES, INC.,
a Delaware corporation
By:
Name:
Title:
By:
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes described in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By:
Authorized Signatory
Dated:
<PAGE>
(Back of Note)
11-5/8% [Series A] [Series B]2 Senior Subordinated Notes due 2007
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY.]3
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]4
[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE
CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER
HOLDS THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO
PREVENT INTEREST FROM ACCRUING ON THIS NOTE.]5
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
<PAGE>
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:
(1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT RESALES OF THE
NOTES BY WARBURG DILLON READ LLC AND ABN AMRO INCORPORATED (THE
"INITIAL PURCHASERS"), (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB") OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT;
(2) AGREES THAT, IN CONNECTION WITH RESALES AND TRANSFERS OF THE
NOTES OTHER THAN EXEMPT RESALES OF THE NOTES BY THE INITIAL
PURCHASERS, IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE ISSUER), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S. PERSON"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902
OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]6
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless
otherwise indicated.
1. Interest. Bio-Rad Laboratories, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the
principal amount of this Note at 11_% per annum until maturity
and shall pay the Liquidated Damages, if any, payable pursuant to
Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages, if
any, semi-annually on February 15 and August 15 of each year, or
if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on this
Note will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the Issue Date;
provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a Record Date
(defined below) referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be August 15, 2000. The
Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at the rate then in
effect; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages, if any, (without
regard to any applicable grace periods) from time to time on
<PAGE>
demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on
this Note (except defaulted interest) and Liquidated Damages, if
any, to the Persons who are registered Holders of Notes at the
close of business on the February 1 or August 1 next preceding
the Interest Payment Date (each a "Record Date"), even if such
Notes are cancelled after such Record Date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the
Indenture (as defined below) with respect to defaulted interest.
This Note will be payable as to principal, premium, interest and
Liquidated Damages, if any, at the office or agency of the
Company maintained within the City and State of New York for such
purpose, or, at the option of the Company, payment of interest
and Liquidated Damages, if any, may be made by check mailed to
the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of
immediately available funds to an account within the United
States will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on all Global
Notes. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, Norwest Bank
Minnesota, N.A., the Trustee under the Indenture, will act as
Paying Agent and Registrar. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company or
any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued this Note under an
Indenture dated as of February 17, 2000 ("Indenture") between the
Company and the Trustee. The terms of this Note include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code 77aaa-77bbbb). This Note is subject to all such terms,
and Holders are referred to the Indenture and such Act for a
statement of such terms. The Notes will be limited in aggregate
principal amount to $150,000,000.
5. Optional Redemption.
Except as set forth below, the Notes shall not be
redeemable by the Company.
(1) The Notes shall be redeemable for cash at the option of the
Company, in whole or in part, at any time prior to February 15,
2004, upon not less than 30 days nor more than 60 days prior
notice mailed by first class mail to each Holder at its last
registered address, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and
accrued and unpaid interest and Liquidated Damages, if any,
thereon to, the Redemption Date.
(2) The Notes shall be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after February
15, 2004, upon not less than 30 days nor more than 60 days prior
notice mailed by first class mail to each Holder at its last
registered address, at the following redemption prices (expressed
as percentages of the principal amount) if redeemed during the
12-month period commencing February 15 of the years indicated
below, in each case (subject to the right of Holders of record on
a Record Date to receive the corresponding interest due (and the
corresponding Liquidated Damages, if any) on the corresponding
Interest Payment Date that is on or prior to such redemption
date) together with accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date:
Year Percentage
2004 105.813%
2005 102.906%
2006 100.000%
<PAGE>
2007 and thereafter 100.000%
(3) Notwithstanding the provisions of paragraph (a), at any time
or from time to time prior to February 15, 2003, upon any sale of
the common stock of the Company, up to 35% of the aggregate
principal amount of the Notes originally issued under this
Indenture may be redeemed at the option of the Company within 90
days of such sale, on not less than 30 days, but not more than 60
days, prior notice to each Holder of the Notes to be redeemed,
with cash from the Net Cash Proceeds of such sale, at a
redemption price equal to 111.625% of the principal amount
thereof (subject to the right of Holders of record on a Record
Date to receive the corresponding interest (and the corresponding
Liquidated Damages, if any) due on the Interest Payment Date that
is on or prior to such redemption date) together with accrued and
unpaid interest and Liquidated Damages, if any, thereon to the
redemption date; provided, that immediately following such
redemption not less than 65% of the aggregate principal amount of
the Notes originally issued pursuant to this Indenture remain
outstanding.
(4) Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the redemption
date to each Holder whose Notes are to be redeemed at its
registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in integral multiples of $1,000,
unless all of the Notes held by a Holder are to be redeemed. On
and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption unless the Company
defaults in such payments due on the redemption date.
6. Repurchase of Notes at the Option of the Holder upon a
Change of Control. In the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such
Holder's option, pursuant to an offer (subject only to conditions
required by applicable law, if any) by the Company, to require
the Company to repurchase all or any part of such Holder's Notes
(provided, that the principal amount of such Notes must be $1,000
or an integral multiple thereof) on a date (the ''Change of
Control Purchase Date'') that is no later than 45 Business Days
after the occurrence of such Change of Control, at a cash price
equal to 101% of the principal amount thereof, together with
accrued and unpaid interest and Liquidated Damages, if any, to
the Change of Control Purchase Date.
7. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and
integral multiples of $1,000. The transfer of Notes may be
registered and Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a Record
Date and the corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note
may be treated as its owner for all purposes.
9. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture, the Notes or the Guarantees may be
amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the then outstanding
Notes, and any existing Default or compliance with any provision
of the Indenture, the Notes or the Guarantees may be waived with
the consent of the Holders of a majority in principal amount of
the then outstanding Notes; provided, that no such modification
may, without the consent of Holders of at least 66_% in aggregate
principal amount of Notes at the time outstanding, modify the
provisions (including the defined terms used therein) of Section
4.13 of the
<PAGE>
Indenture in a manner adverse to the Holders.
Without the consent of any Holder of a Note, the Indenture, the
Notes or the Guarantees may be amended or supplemented to cure
any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in case of a merger or consolidation, to
provide for additional Guarantors as set forth in the Indenture
or for the release or assumption of Guarantees in compliance with
the Indenture, to make any change that would provide any
additional rights or benefits to the Holders of the Notes
(including the addition of any Guarantor) or that does not
adversely affect the rights under the Indenture of any such
Holder, to comply with the provisions of the Depositary,
Euroclear or Cedel or the Trustee with respect to the provisions
of the Indenture or the Notes relating to transfers and exchanges
of Notes or beneficial interests therein, or to comply with the
requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA.
10. Defaults and Remedies. The Indenture provides that
each of the following constitutes an Event of Default:
(a) the failure by the Company to pay any installment
of interest (or Liquidated Damages, if any) on the Notes as
and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Company to pay all or any part
of the principal, or premium, if any, on the Notes when and
as the same becomes due and payable at maturity, redemption,
by acceleration or otherwise, including, without limitation,
payment of the Change of Control Purchase Price (except as
provided in Section 4.13 of the Indenture), or the Asset
Sale Offer Price, on Notes validly tendered and not properly
withdrawn pursuant to a Change of Control Offer, or Asset
Sale Offer, as applicable (as set forth in Sections 4.13 and
4.12 of the Indenture);
(c) the failure by the Company or any of its
Subsidiaries to observe or perform any other covenant or
agreement contained in the Notes or the Indenture and,
except for the provisions under Sections 4.12, 4.13, 4.15
and 5.1 of the Indenture, the continuance of such failure
for a period of 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of
the Notes outstanding;
(d) a default in the Indebtedness of the Company or
any of its Subsidiaries with an aggregate amount outstanding
in excess of $10,000,000 (i) resulting from the failure to
pay principal at maturity or (ii) as a result of which the
maturity of such Indebtedness has been accelerated prior to
its stated maturity;
(e) final unsatisfied judgments not covered by
insurance aggregating in excess of $10,000,000, at any one
time rendered against the Company or any of its Subsidiaries
and not stayed, bonded or discharged within 60 days;
(f) any Guarantee of a Guarantor that is a Significant
Subsidiary (or group of Guarantors that on a combined basis
would constitute a Significant Subsidiary) ceases to be in
full force and effect or becomes unenforceable or invalid or
is declared null and void (other than in accordance with the
terms of the Guarantee) or any Guarantor that is a
Significant Subsidiary (or group of Guarantors that on a
combined basis would constitute a Significant Subsidiary)
denies or disaffirms its Obligations under its Guarantee;
(g) a court having jurisdiction in the premises enters
a decree or order for (i) relief in respect of the Company
or any Significant Subsidiary in an involuntary case under
any applicable Bankruptcy Law now or hereafter in effect,
(ii) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the
Company or any Significant Subsidiary or
<PAGE>
for all or substantially all of the property and assets of the Company
or any Significant Subsidiary or (iii) the winding up or
liquidation of the affairs of the Company or any Significant
Subsidiary and, in each case, such decree or order shall
remain unstayed and in effect for a period of 60 consecutive
days; or
(h) the Company or any Significant Subsidiary (i)
commences a voluntary case under any applicable Bankruptcy
Law now or hereafter in effect, or consents to the entry of
an order for relief in an involuntary case under any such
law, (ii) consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or
any Significant Subsidiary or for all or substantially all
of the property and assets of the Company or any Significant
Subsidiary or (iii) effects any general assignment for
benefit of creditors.
11. Subordination. The Notes and the Guarantees are
subordinated in right of payment, to the extent and in the manner
provided in Article XI and Section 10.8 of the Indenture, to the
prior payment in full of all Senior Debt. The Company agrees,
and each Holder by accepting a Note consents and agrees, to the
subordination provided in the Indenture and authorizes the
Trustee to give it effect.
12. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator or stockholder (direct
or indirect) of the Company or the Guarantors (or any such
successor entity), as such, shall have any liability for any
Obligations of the Company or the Guarantors under the Notes, the
Guarantees or this Indenture or for any claim based on, in
respect of, or by reason of, such Obligations or their creation,
except in their capacity as an obligor or Guarantor of the Notes
in accordance with this Indenture. Each Holder by accepting a
Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
14. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
15. Abbreviations. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
16. Additional Rights of Holders of Transfer Restricted
Notes.7 In addition to the rights provided to Holders of Notes
under the Indenture, Holders of Transferred Restricted Notes
shall have all the rights set forth in the Registration Rights
Agreement dated as of the date of the Indenture, between the
Company and the Initial Purchasers (the "Registration Rights
Agreement").
17. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the
Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed
thereon, and any such redemption shall not be affected by any
defect in or omission of such numbers.
<PAGE>
18. Notation of Guarantee. As more fully set forth in the
Indenture, the Company's obligations under the Notes shall be
guaranteed, to the extent permitted by law, on a senior
subordinated basis by each of the Guarantors that from time to
time shall be required to execute a supplemental indenture in
accordance with the provisions of Section 10.4 of the Indenture.
19. Governing Law.
(a) THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH
OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY
AND THE GUARANTORS IN ANY OTHER JURISDICTION.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the
Registration Rights Agreement. Requests may be made to:
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attention: Chief Financial Officer
Telephone No.: (510) 741-7000
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign
and transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*
*NOTICE: The Signature must be guaranteed by an Institution
which is a member of one of the following recognized signature
Guarantee Programs: (i) The Securities Transfer Agent Medallion
Program (STAMP); (ii) The New York Stock Exchange Medallion
Program (INSP.); (iii) The Stock Exchange Medallion Program
(SEEP); or (iv) in such other guarantee program acceptable to the
Trustee.
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.12 or 4.13 of the Indenture, check
the box below:
Section 4.12 Section 4.13
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.12 or Section 4.13 of the
Indenture, state the amount you elect to have purchased (in
denominations of $1,000 only, except if you have elected to have
all of your Notes purchased): $___________
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:______________
Signature Guarantee*
*NOTICE: The Signature must be guaranteed by an Institution
which is a member of one of the following recognized signature
Guarantee Programs: (i) The Securities Transfer Agent Medallion
Program (STAMP); (ii) The New York Stock Exchange Medallion
Program (INSP.); (iii) The Stock Exchange Medallion Program
(SEEP); or (iv) in such other guarantee program acceptable to the
Trustee.
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Notes or for a Definitive Note, or
exchanges of a part of another Global Note or Definitive Note for
an interest in this Global Note, have been made:
Principal
Amount of Amount of Amount of this Signature
decrease Increase Global Note of authorized
in Principal in Principal following officer of
Date of s Amount of this Amount of this such decrease Trustee or Note
Exchange Global Note Global Note (or increase) Custodian
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attention: Chief Financial Officer
Norwest Bank Minnesota, N.A.
333 South Grand Avenue, Suite 740
Los Angeles, California 90071
Attention: Jeanie Mar
Re: 11-5/8% Senior Subordinated Notes due 2007
Dear Sirs:
Reference is hereby made to the Indenture, dated as of
February 17, 2000 (the "Indenture"), between Bio-Rad
Laboratories, Inc., as issuer (the "Company"), and Norwest Bank,
Minnesota, N.A., as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the
Indenture. ______________, (the "Transferor") owns and proposes
to transfer the Note[s] or interest in such Note[s] specified in
Annex A hereto, in the principal amount of $___________ in such
Note[s] or interests (the "Transfer"), to __________ (the
"Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies
that:
[CHECK ALL THAT APPLY]
1. Check if Transferee will take delivery of a
beneficial interest in the 144A Global Note or a
Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in
accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the
Transferor hereby further certifies that the
beneficial interest or Definitive Note is being
transferred to a Person that the Transferor
reasonably believed and believes is purchasing the
beneficial interest or Definitive Note for its own
account, or for one or more accounts with respect
to which such Person exercises sole investment
discretion, and such Person and each such account
is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A and such Transfer is in
compliance with any applicable blue sky securities
laws of any State of the United States. Upon
consummation of the proposed Transfer in
accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed
on the 144A Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
2. Check if Transferee will take delivery of a
beneficial interest in the Regulation S Global
Note or a Definitive Note pursuant to Regulation
S. The Transfer is being effected pursuant to and
in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is
not being made to a person in the United States
and (x) at the time the
<PAGE>
buy order was originated, the Transferee was outside the United
States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the
Transferee was outside the United States or (y)
the transaction was executed in, on or through the
facilities of a designated offshore securities
market and neither such Transferor nor any Person
acting on its behalf knows that the transaction
was prearranged with a buyer in the United States,
(ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b)
or Rule 904(b) of Regulation S under the
Securities Act, (iii) the transaction is not part
of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the
expiration of the Distribution Compliance Period,
the transfer is not being made to a U.S. Person or
for the account or benefit of a U.S. Person (other
than an Initial Purchaser) and the interest
transferred will be held immediately thereafter
through Euroclear or Cedel. Upon consummation of
the proposed transfer in accordance with the terms
of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S
Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. Check and complete if Transferee will take
delivery of a beneficial interest in a Definitive
Note pursuant to any provision of the Securities
Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the
transfer restrictions applicable to beneficial
interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any
applicable blue sky securities laws of any State
of the United States, and accordingly the
Transferor hereby further certifies that (check
one):
(a) Such Transfer is being effected
pursuant to and in accordance with Rule
144 under the Securities Act; or
(b) Such Transfer is being effected to
the Company or a subsidiary thereof; or
(c) Such Transfer is being effected
pursuant to an effective registration
statement under the Securities Act and
in compliance with the prospectus
delivery requirements of the Securities
Act; or
(d) such Transfer is being effected to
an Institutional Accredited Investor and
pursuant to an exemption from the
registration requirements of the
Securities Act other than Rule 144A,
Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not
engaged in any general solicitation
within the meaning of Regulation D under
the Securities Act and the Transfer
complies with the transfer restrictions
applicable to beneficial interests in a
Restricted Global Note or Restricted
Definitive Notes and the requirements of
the exemption claimed, which
certification is supported by (1) a
certificate executed by the Transferee
in a form of Exhibit D to the Indenture
and (2) if such Transfer is in respect
of a principal amount of Notes at the
time of transfer of less than $250,000,
an Opinion of Counsel provided by the
Transferor or the
<PAGE>
Transferee (a copy of which the Transferor has
attached to this certification and provided to the
Company, which has confirmed its
acceptability), to the effect that such
Transfer is in compliance with the
Securities Act. Upon consummation of
the proposed transfer in accordance with
the terms of the Indenture, the
Definitive Note will be subject to the
restrictions on transfer enumerated in
the Private Placement Legend printed on
the Definitive Notes and in the
Indenture and the Securities Act.
4. Check if Transferee will take delivery of a
beneficial interest in an Unrestricted Global Note or
of an Unrestricted Definitive Note.
(a) Check if Transfer is Pursuant to Rule
144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144
under the Securities Act and in compliance
with the transfer restrictions contained in
the Indenture and any applicable blue sky
securities laws of any State of the United
States and (ii) the restrictions on transfer
contained in the Indenture and the Private
Placement Legend are not required in order to
maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture,
the transferred beneficial interest or
Definitive Note will no longer be subject to
the restrictions on transfer enumerated in
the Private Placement Legend printed on the
Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture and the
Securities Act.
(b) Check if Transfer is Pursuant to
Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act
and in compliance with the transfer
restrictions contained in the Indenture and
any applicable blue sky securities laws of
any State of the United States and (ii) the
restrictions on transfer contained in the
Indenture and the Private Placement Legend
are not required in order to maintain
compliance with the Securities Act. Upon
consummation of the proposed Transfer in
accordance with the terms of the Indenture,
the transferred beneficial interest or
Definitive Note will no longer be subject to
the restrictions on transfer enumerated in
the Private Placement Legend printed on the
Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture and the
Securities Act.
(c) Check if Transfer is Pursuant to Other
Exemption. (i) The Transfer is being
effected pursuant to and in compliance with
an exemption from the registration
requirements of the Securities Act other than
Rule 144, Rule 903 or Rule 904 and in
compliance with the transfer restrictions
contained in the Indenture and any applicable
blue sky securities laws of any State of the
United States and (ii) the restrictions on
transfer contained in the Indenture and the
Private Placement Legend are not required in
order to maintain compliance with the
Securities Act. Upon consummation of the
proposed Transfer in accordance with the
terms of the Indenture, the transferred
beneficial interest or Definitive Note will
not be subject to the restrictions on
transfer enumerated in the Private Placement
Legend printed
<PAGE>
on the Restricted Global Notes or Restricted Definitive
Notes and in the Indenture.
<PAGE>
This certificate and the statements contained herein are
made for your benefit and the benefit of the Company.
Dated:
[Insert Name of Transferor]
By:
Name:
Title:
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP _______), or
(ii) Regulation S Global Note (CUSIP ),
or
(b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP ), or
(ii) Regulation S Global Note (CUSIP ), or
(iii) Unrestricted Global Note (CUSIP
); or
(b) a Restricted Definitive Note; or
(c) an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attention: Chief Financial Officer
Norwest Bank Minnesota, N.A.
333 South Grand Avenue, Suite 740
Los Angeles, California 90071
Attention: Jeanie Mar
Re: 11-5/8% Senior Subordinated Notes due 2007
Dear Sirs:
Reference is hereby made to the Indenture, dated as of
February 17, 2000 (the "Indenture"), between Bio-Rad
Laboratories, Inc., as issuer (the "Company") and party thereto
and Norwest Bank Minnesota, N.A., as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them
in the Indenture.
________________________________, (the "Owner") owns and
proposes to exchange the Note[s] or interest in such Note[s]
specified herein, in the principal amount of
$____________________________________ in such Note[s] or
interests (the "Exchange"). In connection with the Exchange, the
Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive
Notes or Beneficial Interests in an Unrestricted Global Note.
(a) Check if Exchange is from beneficial
interest in a Restricted Global Note to
beneficial interest in an Unrestricted Global
Note. In connection with the Exchange of the
Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an
Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired
for the Owner's own account without transfer,
(ii) such Exchange has been effected in
compliance with the transfer restrictions
applicable to the Global Notes and pursuant
to and in accordance with the United States
Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the
Private Placement Legend are not required in
order to maintain compliance with the
Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is
being acquired in compliance with any
applicable blue sky securities laws of any
State of the United States.
(b) Check if Exchange is from beneficial
interest in a Restricted Global Note to
Unrestricted Definitive Note. In connection
with the Exchange of the Owner's beneficial
interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner
hereby certifies (i) the Definitive Note is
being acquired for the Owner's own account
without transfer, (ii) such Exchange
<PAGE>
has been effected in compliance with the transfer
restrictions applicable to the Restricted
Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the
restrictions on transfer contained in the
Indenture and the Private Placement Legend
are not required in order to maintain
compliance with the Securities Act and (iv)
the Definitive Note is being acquired in
compliance with any applicable blue sky
securities laws of any State of the United
States.
(c) Check if Exchange is from Restricted
Definitive Note to beneficial interest in an
Unrestricted Global Note. In connection with
the Owner's Exchange of a Restricted
Definitive Note for a beneficial interest in
an Unrestricted Global Note, the Owner hereby
certifies (i) the beneficial interest is
being acquired for the Owner's own account
without transfer, (ii) such Exchange has been
effected in compliance with the transfer
restrictions applicable to Restricted
Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the
restrictions on transfer contained in the
Indenture and the Private Placement Legend
are not required in order to maintain
compliance with the Securities Act and (iv)
the beneficial interest is being acquired in
compliance with any applicable blue sky
securities laws of any State of the United
States.
(d) Check if Exchange is from Restricted
Definitive Note to Unrestricted Definitive
Note. In connection with the Owner's
Exchange of a Restricted Definitive Note for
an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted
Definitive Note is being acquired for the
Owner's own account without transfer, (ii)
such Exchange has been effected in compliance
with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act,
(iii) the restrictions on transfer contained
in the Indenture and the Private Placement
Legend are not required in order to maintain
compliance with the Securities Act and (iv)
the Unrestricted Definitive Note is being
acquired in compliance with any applicable
blue sky securities laws of any State of the
United States.
2. Exchange of Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes for Restricted Definitive
Notes or Beneficial Interests in Restricted Global Notes
(a) Check if Exchange is from beneficial
interest in a Restricted Global Note to
Restricted Definitive Note. In connection
with the Exchange of the Owner's beneficial
interest in a Restricted Global Note for a
Restricted Definitive Note with an equal
principal amount, the Owner hereby certifies
that the Restricted Definitive Note is being
acquired for the Owner's own account without
transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note
issued will continue to be subject to the
restrictions on transfer enumerated in the
Private Placement Legend printed on the
Restricted Definitive Note and in the
Indenture and the Securities Act.
(b) Check if Exchange is from Restricted
Definitive Note to beneficial interest in a
Restricted Global Note. In connection with
the Exchange of the
<PAGE>
Owner's Restricted Definitive Note for a beneficial
interest in the: [CHECK ONE] 144A Global Note or
Regulation S Global Note with an equal
principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired
for the Owner's own account without transfer
and (ii) such Exchange has been effected in
compliance with the transfer restrictions
applicable to the Restricted Global Notes and
pursuant to and in accordance with the
Securities Act, and in compliance with any
applicable blue sky securities laws of any
State of the United States. Upon
consummation of the proposed Exchange in
accordance with the terms of the Indenture,
the beneficial interest issued will be
subject to the restrictions on transfer
enumerated in the Private Placement Legend
printed on the relevant Restricted Global
Note and in the Indenture and the Securities
Act.
<PAGE>
This certificate and the statements contained herein are
made for your benefit and the benefit of the Company.
[Insert Name of Owner]
By:
Name:
Title:
Dated:
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attention: Chief Financial Officer
Norwest Bank Minnesota, N.A.
33 South Grand Avenue, Suite 740
Los Angeles, California 90071
Attention: Jeanie Mar
Re: 11-5/8% Senior Subordinated Notes due 2007
Dear Sirs:
Reference is hereby made to the Indenture, dated as of
February 17, 2000 (the "Indenture"), between Bio-Rad
Laboratories, Inc., as issuer (the "Company") and party thereto
and Norwest Bank Minnesota, N.A., as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them
in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of: (a) a beneficial interest in a
Global Note, or (b) a Definitive Note, we confirm that:
1. We understand that any subsequent transfer of the
Notes or any interest therein is subject to certain restrictions
and conditions set forth in the Indenture and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the
Notes and any interest therein may not be offered or sold except
as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any
Guarantor or any of their respective subsidiaries, (B) in
accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an
institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter and, if the
proposed transfer is in respect of an aggregate principal amount
of Notes of less than $250,000, an Opinion
<PAGE>
of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside
the United States in accordance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the provisions of Rule
144 under the Securities Act, (F) in accordance with another
exemption from the registration requirements of the Securities
Act (and based upon an opinion of counsel acceptable to the
Company) or (G) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Note from us in a transaction
meeting the requirements of clauses (A) through (F) of this
paragraph a notice advising such purchaser that resales thereof
are restricted as stated herein.
3. We understand that, on any proposed resale of the
Notes or beneficial interest therein, we will be required to
furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the
Notes purchased by us will bear a legend to the foregoing effect.
We further understand that any subsequent transfer by us of the
Notes or beneficial interest therein acquired by us must be
effected through one of the Initial Purchasers.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act) and have such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest
therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters
covered hereby.
<PAGE>
Dated:
[Insert Name of Accredited Investor]
By:
Name:
Title:
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSIDIARY GUA
RANTORS
Supplemental Indenture (this "Supplemental Indenture"),
dated as of ________ __, ____, among
___________________________________, (the "Guaranteeing
Subsidiary"), a subsidiary of Bio-Rad Laboratories, Inc. (or its
permitted successor), a Delaware corporation (the "Company"), the
Company, the Guarantors (as defined in the Indenture referred to
herein) party thereto and Norwest Bank Minnesota, N.A., as
trustee under the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered
to the Trustee an indenture (the "Indenture"), dated as of
February 17, 2000, providing for the issuance of 11_% Senior
Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain
circumstances Subsidiaries of the Company are required to execute
and deliver to the Trustee a supplemental indenture pursuant to
which such Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Notes and the Indenture on the
terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental
Indenture.
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is
hereby acknowledged, the Guaranteeing Subsidiary and the Trustee
mutually covenant and agree for the equal and ratable benefit of
the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein
without definition shall have the meanings assigned to them in
the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary
irrevocably and unconditionally guarantees the Guarantee
Obligations, which include (i) the due and punctual payment of
the principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes, whether at maturity, by
acceleration, call for redemption, upon a Change of Control
Offer, upon an Asset Sale Offer or otherwise, the due and
punctual payment of interest on the overdue principal and
premium, if any, and (to the extent permitted by law) interest on
any interest on the Notes, and payment of expenses, and the due
and punctual performance of all other obligations of the Company,
to the Holders or the Trustee all in accordance with the terms
set forth in Article X of the Indenture, (ii) in case of any
extension of time of payment or renewal of any Notes or any such
other obligations, that the same will be promptly paid in full
when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by
<PAGE>
acceleration, call for redemption, upon a Change of Control
Offer, upon an Asset Sale Offer or otherwise, and (iii) the
payment of any and all costs and expenses (including reasonable
attorneys' fees) incurred by the Trustee in enforcing any rights
under this Guarantee.
The obligations of Guaranteeing Subsidiary to the Holders
and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article X of the Indenture
and reference is hereby made to such Indenture for the precise
terms of this Subsidiary Guarantee.
No past, present or future director, officer, employee,
incorporator or stockholder (direct or indirect) of the
Guarantors (or any such successor entity), as such, shall have
any liability for any Obligations of the Guarantors under this
Subsidiary Guarantees or the Indenture or for any claim based on,
in respect of, or by reason of, such Obligations or their
creation, except in their capacity as an obligor or Guarantor of
the Notes in accordance with the Indenture.
This is a continuing Guarantee and shall remain in full
force and effect and shall be binding upon the Guaranteeing
Subsidiary and its successors and assigns until full and final
payment of all of the Company's obligations under the Notes and
Indenture or until released in accordance with the Indenture and
shall inure to the benefit of the successors and assigns of the
Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a Guarantee
of payment and not of collectibility.
The Obligations of the Guaranteeing Subsidiary under its
Subsidiary Guarantee shall be limited to the extent necessary to
insure that it does not constitute a fraudulent conveyance under
applicable law.
THE TERMS OF ARTICLE X OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
3. NEW YORK LAW TO GOVERN.
(a) THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE,
INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.
(b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR
<PAGE>
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH
OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY
AND THE GUARANTORS IN ANY OTHER JURISDICTION.
4. Counterparts. The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same
agreement.
5. Effect of Headings. The Section headings herein are
for convenience only and shall not affect the construction
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as
of the date first above written.
THE COMPANY:
BIO-RAD LABORATORIES, INC.
By:
Name:
Title:
By:
Name:
Title:
THE GUARANTOR[S]:
[ ]
By:
Name:
Title:
[ ]
By:
Name:
Title:
<PAGE>
TRUSTEE:
NORWEST BANK MINNESOTA, N.A.
By:
Name:
Title:
<PAGE>
Exhibit 4.6
REGISTRATION RIGHTS AGREEMENT
Dated as of February 17, 2000
by and among
BIO-RAD LABORATORIES, INC.
and
WARBURG DILLON READ LLC
ABN AMRO INCORPORATED
<PAGE>
This Registration Rights Agreement (this "Agreement") is
made and entered into as of February 17, 2000, by and among (i)
Bio-Rad Laboratories, Inc., a Delaware corporation (the
"Company"), and (ii) Warburg Dillon Read LLC and ABN AMRO
Incorporated (each an "Initial Purchaser" and collectively, the
"Initial Purchasers"), each of whom has agreed to purchase the
Company's 11-5/8% Series A Senior Subordinated Notes due 2007 (the
"Series A Notes") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement,
dated February 14, 2000 (the "Purchase Agreement"), by and among
the Company and the Initial Purchasers. In order to induce the
Initial Purchasers to purchase the Series A Notes, the Company
has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth
in Sections 2 and 3 of the Purchase Agreement. Capitalized terms
used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture, dated February 17, 2000,
between the Company and Norwest Bank Minnesota, N.A., as Trustee,
relating to the Series A Notes and the Series B Notes (the
"Indenture").
The parties hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the
following capitalized terms shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Certificated Securities: Definitive Notes, as defined in
the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the
filing and effectiveness under the Act of the Exchange Offer
Registration Statement relating to the Series B Notes to be
issued in the Exchange Offer, (b) the maintenance of such
Exchange Offer Registration Statement continuously effective and
the keeping of the Exchange Offer open for a period not less than
the period required pursuant to Section 3(b) hereof and (c) the
delivery by the Company to the Registrar under the Indenture of
Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders
thereof pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
Effectiveness Deadline: As defined in Section 3(a) and 4(a)
hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exchange Offer: The exchange and issuance by the Company of
a principal amount of Series B Notes (which shall be registered
pursuant to the Exchange Offer Registration Statement) equal to
the outstanding principal amount of Series A Notes that are
tendered by such Holders in connection with such exchange and
issuance.
<PAGE>
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related
Prospectus.
Exempt Resales: The transactions in which the Initial
Purchasers propose to sell the Series A Notes to certain
"qualified institutional buyers," as such term is defined in Rule
144A under the Act and pursuant to Regulation S under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a)
hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including post-
effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Company relating to (a) an offering of Series B Notes pursuant to
an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration
Statement, in each case, (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and
material incorporated by reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 11% Series B Senior
Subordinated Notes due 2009 to be issued pursuant to the
Indenture: (i) in the Exchange Offer or (ii) as contemplated by
Section 4 hereof.
Shelf Registration Statement: As defined in Section 4
hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Series A Note, until
the earliest to occur of (a) the date on which such Series A Note
is exchanged in the Exchange Offer for a Series B Note which is
entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act,
(b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (c) the
date on which such Series A Note is distributed to the public
pursuant to Rule 144 under the Act or may be sold under Rule
144(k) under the Act (and purchasers thereof have been issued
Series B Notes) and each Series B Note until the date on which
such Series B Note is disposed of by a Broker-Dealer pursuant to
the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including the delivery of the Prospectus
contained therein).
<PAGE>
Section 2. Holders. A Person is deemed to be a holder of
Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
Section 3. Registered Exchange Offer.
(1) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section
6(a)(i) below have been complied with), the Company shall (i)
cause the Exchange Offer Registration Statement to be filed with
the Commission as soon as practicable after the Closing Date, but
in no event later than 90 days after the Closing Date (such 90th
day being the "Filing Deadline"), (ii) use its best efforts to
cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later
than 180 days after the Closing Date (such 180th day being the
"Effectiveness Deadline"), (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange
Offer Registration Statement as may be necessary in order to
cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration
and qualification of the Series B Notes to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting (i) registration of
the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and (ii) resales of
Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading
activities (other than Series A Notes acquired directly from the
Company or any of its Affiliates) as contemplated by Section 3(c)
below.
(2) The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than
the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No
securities other than the Series B Notes (and guarantees thereof,
if any) shall be included in the Exchange Offer Registration
Statement. The Company shall use its best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter
(such 30th Business Day being the "Consummation Deadline").
(3) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration
Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account
of such Broker-Dealer as a result of market-making activities or
other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the
Exchange Offer. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales by such
Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution"
shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer,
except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this
Agreement. See the Shearman & Sterling no action letter
(available July 2, 1993).
Because such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of
the Act in connection
<PAGE>
with its initial sale of any Series B Notes received by such
Broker-Dealer in the Exchange Offer, the Company shall permit the use of
the Prospectus contained in the Exchange Offer Registration Statement by
such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the Prospectus contained
in the Exchange Offer Registration Statement is available
for sales of Series B Notes by Broker-Dealers, the Company
agrees to use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented,
amended and current as required by and subject to the
provisions of Section 6(a) and (c) hereof and in conformity
with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as
announced from time to time, for a period of one year from
the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by
such Registration Statement have been sold pursuant thereto.
The Company shall provide sufficient copies of the latest
version of such Prospectus to such Broker-Dealers, promptly
upon request, and in no event later than one day after such
request, at any time during such period.
Section 4. Shelf Registration.
(1) Shelf Registration. If (i) the Exchange Offer is not
permitted by applicable law (after the Company has complied with
the procedures set forth in Section 6(a)(i) below) or (ii) if any
Holder of Transfer Restricted Securities shall notify the Company
within 20 Business Days following the Consummation Deadline that
(A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not
resell the Series B Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Company or any of its Affiliates, then the
Company shall:
(x) cause to be filed, on or prior to 30 days
after the earlier of (i) the date on which the Company
determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i)
above and (ii) the date on which the Company receives
the notice specified in clause (a)(ii) above, (such
earlier date, the "Filing Deadline"), a shelf
registration statement pursuant to Rule 415 under the
Act (which may be an amendment to the Exchange Offer
Registration Statement (the "Shelf Registration
Statement")), relating to all Transfer Restricted
Securities, and
(y) shall use their respective best efforts to
cause such Shelf Registration Statement to become
effective on or prior to 60 days after the Filing
Deadline for the Shelf Registration Statement (such
60th day the "Effectiveness Deadline").
If, after the Company has filed an Exchange Offer
Registration Statement that satisfies the requirements of
Section 3(a) above, the Company is required to file and make
effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law
(i.e., clause (a)(i) above), then the filing of the Exchange
Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; provided that, in such
event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf
Registration Statement is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the
benefit of this Section 4(a) and the other securities
required to be registered therein pursuant to Section
6(b)(ii) hereof, the Company shall use its best efforts to
keep any Shelf Registration Statement required by this
Section 4(a) continuously effective, supplemented, amended
and current as required by and subject to the provisions of
Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from
<PAGE>
time to time, for a period of at least two years (as
extended pursuant to Section 6(c)(i)) following the Closing
Date, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto, or
otherwise cease to be Transfer Restricted Securities.
(2) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted
Securities in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company
in writing, within 20 days after receipt of a request therefor,
the information specified in Item 507 or 508 of Regulation S-K,
as applicable, of the Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus
included therein or Prospectus supplement thereto. No Holder of
Transfer Restricted Securities shall be entitled to liquidated
damages pursuant to Section 5 hereof unless and until such Holder
shall have provided all such information. Each selling Holder
agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
Section 5. Liquidated Damages.
(1) If:
(1) any Registration Statement required by this Agreement is
not filed with the Commission on or prior to the
applicable Filing Deadline,
(2) any such Registration Statement has not been declared
effective by the Commission on or prior to the applicable
Effectiveness Deadline,
(3) the Exchange Offer has not been Consummated on or prior to
the Consummation Deadline or
(4) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without
being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself
declared effective immediately after filing such post-effective
amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "Registration
Default"),
then the Company hereby agrees to pay to each Holder of
Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities held by
such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period
immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum
amount of liquidated damages of $.30 per week per $1,000 in
principal amount of Transfer Restricted Securities;
provided, that the Company shall in no event be required to
pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange
Offer Registration Statement (and/or, if applicable, the
Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation
of the Exchange Offer, in the case of (iii) above, or (4)
upon the filing of a post-effective amendment to the
Registration Statement or an additional Registration
<PAGE>
Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration
Statement) to again be declared effective or made usable in
the case of (iv) above, the liquidated damages payable with
respect to the Transfer Restricted Securities as a result of
such clause (i), (ii), (iii) or (iv), as applicable, shall
cease.
(2) All accrued liquidated damages shall be paid to the Holders
entitled thereto, in the manner provided for the payment of
interest in the Indenture, on each Interest Payment Date, as more
fully set forth in the Indenture and the Series A Notes.
Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all
obligations of the Company to pay liquidated damages with respect
to securities shall survive until such time as such obligations
with respect to such securities shall have been satisfied in
full.
Section 6. Registration Procedures.
(1) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use its best
efforts to effect such exchange and to permit the resale of
Series B Notes by Broker-Dealers that tendered in the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own
account as a result of its market making activities or other
trading activities (other than Series A Notes acquired directly
from the Company or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution
thereof, and (z) comply with all of the following provisions:
(1) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such
as the Exchange Offer, that in the reasonable opinion of counsel
to the Company raises a substantial question as to whether the
Exchange Offer is permitted by applicable federal law, the
Company hereby agrees to seek a no-action letter or other
favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company hereby agrees to pursue the issuance of
such a decision to the Commission staff level. In connection
with the foregoing, the Company hereby agrees to take all such
other actions as may be requested by the Commission or otherwise
required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic
conferences with the Commission staff, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be permitted and
(C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
(2) As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker-Dealer) shall furnish,
upon the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company (which
may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it
is not an Affiliate of the Company, (B) it is not engaged in, and
does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution
of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of
business. As a condition to its participation in the Exchange
Offer each Holder using the Exchange Offer to participate in a
distribution of the Series B Notes shall acknowledge and agree
that, if the resales are of Series B Notes obtained by such
Holder in exchange for Series A Notes acquired directly from the
Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement,
rely on the position of the Commission enunciated in
<PAGE>
Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon
Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction
must be covered by an effective registration statement containing
the selling security holder information required by Item 507 or 508,
as applicable, of Regulation S-K.
(3) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991)
as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993, and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the
Series B Notes to be received in the Exchange Offer and that, to
the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B
Notes in its ordinary course of business and has no arrangement
or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer
and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant
to clause (i) above, if applicable.
(2) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall:
(1) comply with all the provisions of Section 6(c) below and
use its best efforts to effect such registration to permit the sale
of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to
Section 4(b) hereof), and pursuant thereto the Company will
prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the
Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and
otherwise in accordance with the provisions hereof; and
(2) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement
contemplated by this Agreement, Series B Notes having an aggregate
principal amount equal to the aggregate principal amount of Series A
Notes sold pursuant to the Shelf Registration Statement and
surrendered to the Company for cancellation; the Company shall
register Series B Notes on the Shelf Registration Statement for this
purpose and issue the Series B Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the
names as such purchaser(s) shall designate.
(3) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement,
the Company shall:
(1) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial
statements for the period specified in Section
<PAGE>
3 or 4 hereof, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus
contained therein (A) to contain an untrue statement of material
fact or omit to state any material fact necessary to make the
statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly
an appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use its best
efforts to cause such amendment to be declared effective as soon
as practicable;
(2) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration
Statement as may be necessary to keep such Registration Statement
effective for the applicable period set forth in Section 3 or 4
hereof, as the case may be; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and
to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions
of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(3) advise each Holder promptly and, if requested by such
Holder, confirm such advice in writing, (A) when the Prospectus
or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any applicable Registration Statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of
the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering
or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes and (D) of the existence of any
fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus,
any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(4) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain
an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
<PAGE>
(5) furnish to each Holder in connection with such exchange or
sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement), which
documents will be subject to the review and comment of such
Holder in connection with such sale, if any, for a period of at
least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which
such Holder shall reasonably object within five Business Days
after the receipt thereof. A Holder shall be deemed to have
reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading or fails to comply with the
applicable requirements of the Act;
(6) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder in
connection with such exchange or sale, if any, make the Company's
representatives available for discussion of such document and
other customary due diligence matters, and include such
information in such document prior to the filing thereof as such
Holder may reasonably request;
(7) make available, at reasonable times, for inspection by
each Holder and any attorney or accountant retained by such Holder,
all financial and other pertinent corporate documents and records
of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any
such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(8) if requested by any Holder in connection with such
exchange or sale, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment
if necessary, such information as such Holder may reasonably
request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the
Transfer Restricted Securities; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective
amendment;
(9) furnish to each Holder in connection with such exchange or
sale, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each
amendment thereto, including, if requested, all documents
incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(10) deliver to each Holder without charge, as many copies of
the Prospectus (including each preliminary Prospectus) and any
amendment or supplement thereto as such Holder reasonably may
request; the Company hereby consents to the use (in accordance
with law) of the Prospectus and any amendment or supplement
thereto by each selling Holder in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(11) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations
and warranties and take all such
<PAGE>
other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any applicable Registration Statement contemplated by
this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable
Registration Statement. In such connection, the Company shall:
(1) upon request of any Holder, furnish (or in the case
of paragraphs (A) and (B), use its best efforts to cause to be
furnished) to each Holder, upon Consummation of the Exchange
Offer or upon the effectiveness of the Shelf Registration
Statement, as the case may be:
(1) a certificate, dated such date, in the same form
as the certificate delivered upon closing of the
transactions contemplated by the Purchase Agreement and
signed on behalf of the Company by (x) the President or any
Vice President and (y) a principal financial or accounting
officer of the Company, confirming, as of the date thereof,
the matters set forth in Sections 6(w), 9(a) and 9(b) of
the Purchase Agreement and such other similar matters as
such Holder may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the
Shelf Registration statement, as the case may be, of
counsel for the Company covering matters similar to those
set forth in paragraph (e) of Section 9 of the Purchase
Agreement and such other matters as such Holder may
reasonably request, and in any event including a statement
to the effect that such counsel has participated in
conferences with officers and other representatives of the
Company, including representatives of the independent
public accountants for the Company, in connection with the
preparation of such Registration Statement and the related
Prospectus and have considered the matters required to be
stated therein and the statements contained therein,
although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and
that such counsel advises that, on the basis of the
foregoing (relying as to materiality to the extent such
counsel deems appropriate upon the statements of officers
and other representatives of the Company without
independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe
that the applicable Registration Statement, at the time
such Registration Statement or any post-effective amendment
thereto became effective and, in the case of the Exchange
Offer Registration Statement, as of the date of
Consummation of the Exchange Offer,contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes
and schedules and other financial data included or
incorporated by
<PAGE>
reference in any Registration Statement contemplated by
this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the
case may be, from the Company's independent accountants, in
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection
with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section
9(g) of the Purchase Agreement; and
(2) deliver such other documents and certificates as may
be reasonably requested by the selling Holders to evidence
compliance with the matters covered in clause (A) above and with
any customary conditions contained in any agreement entered into
by the Company pursuant to this clause (xi);
(12) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel
in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky
laws of such jurisdictions as the selling Holders may request and
do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration
Statement; provided, however, that the Company shall not be
required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject
it to the service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(13) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to
such sale of Transfer Restricted Securities;
(14) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xii) above;
(15) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and
provide the Trustee under the Indenture with printed certificates
for the Transfer Restricted Securities which are in a form
eligible for deposit with The Depository Trust Company;
(16) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited)
<PAGE>
covering a twelve-month period beginning after the effective date of
the Registration Statement (as such term is defined in paragraph (c)
of Rule 158 under the Act);
(17) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith,
cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for such Indenture to be so
qualified in accordance with the terms of the TIA; and execute
and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all
other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a
timely manner;
(18) provide promptly to each Holder, upon request, each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act; and
(19) use its best efforts to take all other steps necessary to
effect the registration of the Transfer Restricted Securities
covered by a Registration Statement contemplated hereby.
(4) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the
notice referred to in Section 6(c)(iii)(C) or any notice from the
Company of the existence of any fact of the kind described in
Section 6(c)(iii)(D) hereof (in each case, a "Suspension
Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable
Registration Statement until (i) such Holder has received copies
of the supplemented or amended Prospectus contemplated by Section
6(c)(iv) hereof, or (ii) such Holder is advised in writing by the
Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus (in each case,
the "Recommencement Date"). Each Holder receiving a Suspension
Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with
more recently dated Prospectuses or (ii) deliver to the Company
(at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Securities that was current at
the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended
by a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice
to the date of delivery of the Recommencement Date.
Section 7. Registration Expenses.
(1) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective,
including without limitation:
(1)
(1) all registration and filing fees and expenses;
(2) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws (including, without
limitation, reasonable fees and disbursements of one firm of
lawyers in connection with Blue Sky qualifications of the
Transfer Restricted Securities or Series B Notes);
<PAGE>
(3) all expenses of printing (including printing certificates
for the Series B Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and
telephone;
(4) all fees and disbursements of counsel for the Company and
one counsel for the Holders of Transfer Restricted Securities;
(5) all application and filing fees in connection with listing
the Series B Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and
(6) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special
audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal
expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts,
retained by the Company.
(2) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer
Registration Statement and the Shelf Registration Statement), the
Company will reimburse the Initial Purchasers and the Holders of
Transfer Restricted Securities who are tendering Series A Notes
in the Exchange Offer and/or selling or reselling Series A Notes
or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable
fees and disbursements of not more than one counsel, who shall be
Skadden, Arps, Slate, Meagher & Flom LLP, unless another firm
shall be chosen by the Holders of a majority in principal amount
of the Transfer Restricted Securities for whose benefit such
Registration Statement is being prepared.
Section 8. Indemnification.
(1) The Company agrees to indemnify and hold harmless each
Holder, its directors, officers and each Person, if any, who
controls such Holder (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act), from and against any and all
losses, claims, damages, liabilities, and judgments, (including
without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including
any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement
or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary Prospectus or Prospectus (or
any amendment or supplement thereto) provided by the Company to
any Holder or any prospective purchaser of Series B Notes or
registered Series A Notes, or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or
omission or alleged untrue statement or omission that is based
upon information relating to any of the Holders furnished in
writing to the Company by any of the Holders.
(2) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the
Company, its directors and officers, and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section
20 of the Exchange Act) the Company to the same extent as the
foregoing indemnity from the Company set forth in section (a)
<PAGE>
above, but only with reference to information relating to such
Holder furnished in writing to the Company by such Holder ex
pressly for use in any Registration Statement. In no event shall
any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of
the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to
a Registration Statement exceeds (i) the amount paid by such
Holder for such Transfer Restricted Securities and (ii) the
amount of any damages that such Holder, its directors, officers
or any Person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(3) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section
8(a) or 8(b) (the "indemnified party"), the indemnified party
shall promptly notify the person against whom such indemnity may
be sought (the "indemnifying party") in writing (provided, that
the failure to give such notice shall not relieve the
indemnifying party of its obligations pursuant to this Agreement,
except to the extent that such failure materially prejudices the
position of such indemnifying party as determined by a final non-
appealable order of a court of competent jurisdiction) and the
indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to
the indemnified party and the payment of all fees and expenses of
such counsel, as incurred (except that in the case of any action
in respect of which indemnity may be sought pursuant to both
Sections 8(a) and 8(b), a Holder shall not be required to assume
the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof,
but the fees and expenses of such counsel, except as provided
below, shall be at the expense of the Holder). Any indemnified
party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying
party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties
to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are
different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf
of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate
but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to one local counsel)
for all indemnified parties and all such fees and expenses shall
be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Holders, in the case
of the parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall indemnify and hold harmless
the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is
entered into more than twenty business days after the
indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply
with such reimbursement request. No indemnifying party shall,
without the prior written consent of the indemnified party,
effect any settlement or compromise of, or consent to the entry
of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a
party and indemnity or contribution may be or could have been
sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability on claims
<PAGE>
that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the
indemnified party.
(4) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of
any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Holders, on the other hand,
from their initial sale of Transfer Restricted Securities or (ii)
if the allocation provided by clause 8(d)(i) is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i)
above but also the relative fault of the Company, on the one
hand, and of the Holder, on the other hand, in connection with
the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of the
Company, on the one hand, and of the Holder, on the other hand,
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the
Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable
by a party as a result of the losses, claims, damages,
liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses
reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and, by its acquisition of Transfer
Restricted Securities, each Holder agree that it would not
be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take
account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter,
including any action that could have given rise to such
losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder,
its directors, its officers or any Person, if any, who
controls such Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the
total amount received by such Holder with respect to the
sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such
Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to
the respective principal amount of Transfer Restricted
Securities held by each Holder hereunder and not joint.
Section 9. Rule 144A and Rule 144. The Company agrees with
each Holder, for so long as any Transfer Restricted Securities
remain outstanding and during any period in which the Company (i)
is not subject to Section 13 or 15(d) of the Exchange Act, to
make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer
<PAGE>
Restricted Securities pursuant to Rule 144A, and (ii) is subject
to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of
such Transfer Restricted Securities pursuant to Rule 144.
Section 10. Miscellaneous.
(1) Remedies. The Company acknowledges and agrees that any
failure by the Company to comply with its obligations under
Sections 3 and 4 hereof may result in material irreparable injury
to the Initial Purchasers or the Holders for which there is no
adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any
such failure, the Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the
Company's obligations under Sections 3 and 4 hereof. The Company
further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(2) No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with
respect to its securities to any Person that would require such
securities to be included in any Registration Statement required
by this Agreement. The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under
any agreement in effect on the date hereof.
(3) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or
consents to or departures from the provisions hereof may not be
given unless (i) in the case of Section 5 hereof and this Section
10(c)(i), the Company has obtained the written consent of Holders
of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the
written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities (excluding
Transfer Restricted Securities held by the Company or its
Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively
to the rights of Holders whose Transfer Restricted Securities are
being tendered pursuant to the Exchange Offer, and that does not
affect directly or indirectly the rights of other Holders whose
Transfer Restricted Securities are not being tendered pursuant to
such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.
(4) Third-Party Beneficiary. The Holders shall be third-party
beneficiaries to the agreements made hereunder between the
Company, on the one hand, and the Initial Purchasers, on the
other hand, and shall have the right to enforce such agreements
directly to the extent they may deem such enforcement necessary
or advisable to protect their rights or the rights of Holders
hereunder.
(5) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt
requested), telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to a Holder, at the address set forth on the records
of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture; and
(2) if to the Company:
<PAGE>
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Telecopier No.: (510) 741-5815
Attention: Chief Financial Officer
With a copy (which shall not constitute
notice) to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Telecopier No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee at the address specified in
the Indenture.
Upon the date of filing of the Exchange Offer
Registration Statement or a Shelf Registration Statement, as
the case may be, notice shall be delivered to Warburg Dillon
Read LLC, on behalf of the Initial Purchasers (in the form
attached hereto as Exhibit A) and shall be addressed to: 667
Washington Blvd., Stamford, CT 06912, Attention: High
Yield Capital Markets, with a copy (which shall not
constitute notice) to Skadden, Arps, Slate, Meagher & Flom
LLP, 300 South Grand Avenue, Los Angeles, California 90071,
Telecopier No.: (213) 687-5600, Attention: Rodrigo A.
Guerra, Jr., Esq.
(6) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each
of the parties, including without limitation and without the need
for an express assignment, subsequent Holders; provided, that
nothing herein shall be deemed to permit any assignment, transfer
or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Transfer Restricted
Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and
provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(7) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(8) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
<PAGE>
(9) Governing Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in
accordance with the laws of the State of New York, without regard
to principles of conflicts of law except Section 5-1401 of the
New York General Obligations Law. The Company hereby irrevocably
submits to the jurisdiction of any New York state court sitting
in the Borough of Manhattan in the City of New York or any
federal court sitting in the Borough of Manhattan in the City of
New York in respect of any suit, action or proceeding arising out
of or relating to this Agreement, and irrevocably accepts for
itself and in respect of its property, generally and
unconditionally, jurisdiction of the aforesaid courts. The
Company irrevocably waives, to the fullest extent it may
effectively do so under applicable law, trial by jury and any
objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient
forum. The Company irrevocably consents, to the fullest extent
it may effectively do so under applicable law, to the service of
process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to the Company at its address
set forth herein, such service to become effective 30 days after
such mailing. Nothing herein shall affect the rights of the
Initial Purchasers and the Holders to serve process in any other
manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.
(10) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(11) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein with respect to the registration rights
granted with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
BIO-RAD LABORATORIES, INC.
By: /s/ Thomas C. Chesterman
Name: Thomas C. Chesterman
Title:Vice President & Chief Financial Officer
WARBURG DILLON READ LLC
By: /s/ Kaj Ahlburg
Name: Kaj Ahlburg
Title: Managing Director
Leveraged Finance
By: /s/ Matthew R. Stopnik
Name: Matthew R. Stopnik
Title: Associate Director
ABN AMRO INCORPORATED
By: /s/ June Yuson
Name: June Yuson
Title: Managing Director
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
[A/B EXCHANGE OFFER/SHELF] REGISTRATION STATEMENT
To: Warburg Dillon Read LLC
ABN AMRO Incorporated
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
From: Bio-Rad Laboratories, Inc.
11-5/8% Senior Subordinated Notes Due 2007
Date: [________] [__], 2000
For your information only (NO ACTION REQUIRED):
Today, [________] [__], 2000, we filed [an A/B Exchange
Offer Registration Statement/a Shelf Registration Statement] with
the Securities and Exchange Commission. We currently expect this
registration statement to be declared effective within [____]
business days of the date hereof.
<PAGE>
EXHIBIT 10.12
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIRD PARTY OWED COLLATERALLY ASSIGNED
RESTRICTIVE AGREEMENT FOR MAJORITY SHAREHOLDER
This Agreement made this 17th day of September, 1999 by and
between Schwartz Irrevocable Descendants Trust, hereinafter
referred to as the ("Trust"), and Bio-Rad Laboratories, Inc.,
hereinafter referred to as the ("Corporation").
WITNESSETH:
WHEREAS, David Schwartz, hereinafter referred to as the Employee,
is and has been employed by the Corporation for over forty (40)
years, and his wife, Alice N. Schwartz, was formerly an employee
of the Corporation and has been a director for approximately 35
years and they both have performed unique and valuable services
for the establishment, growth and development of the Corporation;
and
WHEREAS, the Corporation has determined that in the event of the
demise of Employee and his wife, their heirs might be required to
sell a significant amount of their holdings in the Corporation in
order to satisfy estate taxes, which the Corporation believes
might result in a major disruption in the trading of the
Corporation's stock.
WHEREAS, the Corporation is willing to assist said Employee and
his wife in providing insurance protection for their family which
would provide proceeds to the heirs for the payment of a portion
of the aforementioned estate taxes; and
WHEREAS, the Employee and his wife (collectively, the "Insureds")
have established the Trust as a trust for the purpose of
receiving such insurance proceeds.
NOW, THEREFORE, in consideration of past services and future
services to be rendered, the parties agree that:
1
<PAGE>
1. A $20,586,468 life insurance policy (the "Policy") on the
life of the Insureds will be purchased from Pacific Life
Insurance Company (the "Insurance Company"). The Trust will be
the owner of the Policy, subject to a split-dollar assignment to
the Corporation. Except to the extent that the Policy is needed
to secure the Corporation's interest in the Policy as hereinafter
provided, the Trust will retain all incidents of ownership
(including the right to dividends, if any, the right to surrender
or cancel the Policy and the right to borrow or withdraw against
the Policy).
2. All premiums due on the Policy shall be paid by the
Corporation to the Trust for payment to the Insurance Company.
3. The Corporation's interest in the cash surrender value of
the Policy shall be an amount equal to the lesser of the entire
cash surrender value or the Corporation's cumulative net premium
payments.
4. If the Insureds should die while this Agreement and the
Policy are in effect, the Corporation will be entitled to receive
an amount equal to its cumulative net premium payments. The
remainder of the death benefit, if any, shall belong to the
Trust.
5. The Trust agrees not to sell, assign, surrender or otherwise
terminate the Policy while this Agreement is in effect without
the consent of the Corporation.
6. This Agreement may be terminated as follows:
(a) For the period commencing on the date hereof and
continuing until September 16, 2009, by mutual
consent of the parties hereto.
(b) For the period commencing on September 16, 2009 and
continuing until the termination of the Agreement or the Policy:
(i) Either party may terminate this Agreement while no
premium under said Policy is overdue by written notice to
the other part sent by hand or registered mail to such
party's last known address. The effective date of such
termination shall be the date of mailing; or
(ii) By mutual consent of the parties hereto.
7. In the event of the termination of this Agreement under
Paragraph 6 hereof, the Trust shall pay to the Corporation an
amount equal to the Corporation's interest in the cash surrender
value of the Policy as stated in Paragraph 3, and upon such
payment the Corporation will release the collateral assignment
made to it. Should the Trust fail to pay the Corporation's total
interest in the cash surrender value within 60 days of
termination, the Corporation shall have the right to enforce any
rights it may have under the collateral assignment.
2
<PAGE>
The Insurance Company and all persons having any
interest in the Policy may in any instance conclusively
rely upon the Corporation's certification that all
conditions precedent to its right to receive its
interest have occurred and shall be released from any
and all claims, demands and responsibility in acting
upon this certification and making payment to the
Corporation of its entire interest upon the
Corporation's sole signatures. The Corporation shall
pay over to the Trust any amount collected by it which
is in excess of the amount due to it.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day first above written.
BIO-RAD LABORATORIES, INC.
/s/ David Lehman BY: /s/ Thomas C. Chesterman
(Witness) Thomas C. Chesterman
Vice President and Chief Financial Officer
SCHWARTZ IRREVOCABLE
DESCENDANTS TRUST
/s/ Deborah L. Tannenbaum BY: /s/ Howard Foster
(Witness) Howard Foster
Trustee
3
<PAGE>
EXHIBIT 13.1
Bio-Rad Laboratories, Inc.
SUMMARY OF OPERATIONS (In thousands, except per share data)
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________
1999 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net sales $549,489 $441,942 $426,914 $418,789 $396,618 $355,299
Cost of goods sold (1) 255,223 202,438 189,331 182,046 171,942 155,805
Gross profit 294,266 239,504 237,583 236,743 224,676 199,494
Selling, general and administrative expense 194,457 166,978 164,792 155,516 150,272 132,591
Product research and development expense 51,210 41,381 46,138 39,580 34,714 30,172
Purchased in-process research and
development expense 15,500 - - - - -
Restructuring costs - - - 2,700 1,500 -
Income from operations 33,099 31,145 26,653 38,947 38,190 36,731
Other income (expense):
Interest expense (12,741) (3,731) (1,216) (3,027) (4,465) (6,138)
Other, net (3,942) 6,814 (2,709) 553 (183) (6,596)
Income before taxes and extraordinary charge 16,416 34,228 22,728 36,473 33,542 23,997
Provision for income taxes 4,695 9,926 6,364 9,118 8,386 8,399
Income before extraordinary charge 11,721 24,302 16,364 27,355 25,156 15,598
Extraordinary charge (2) - - - (1,176) - -
Net income $ 11,721 $ 24,302 $ 16,364 $ 26,179 $ 25,156 $ 15,598
Basic earnings per share before
extraordinary charge (3) $0.97 $1.98 $1.33 $2.23 $2.06 $1.29
Extraordinary charge (2)(3) - - - (.10) - -
Basic earnings per share (3) $0.97 $1.98 $1.33 $2.13 $2.06 $1.29
Weighted average common shares (3) 12,110 12,264 12,260 12,273 12,206 12,113
Cash dividends paid per common share - - - - - -
Total assets $668,862 $367,299 $351,876 $284,925 $285,098 $263,650
Long-term debt, net of current maturities $239,211 $ 42,339 $ 38,952 $ 6,721 $ 20,922 $ 26,287
_______________________________________________________________________________________________________________________
<FN>
(1) In 1996, cost of goods sold includes a charge of $2.1 million for a write-down of inventory associated with the
restructuring costs.
(2) Extraordinary charge for redemption of subordinated debt: 1996 - $1,176, net of tax effect of $817.
(3) Restated to give effect to a stock split in the form of a 50% stock dividend in 1996.
</TABLE>
1
<PAGE>
Bio-Rad Laboratories, Inc.
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
________________________________________________________________________________________
December 31,
Assets 1999 1998
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 17,087 $ 10,081
Accounts receivable, less allowance of $9,582 in 1999
and $3,629 in 1998 193,898 106,010
Inventories:
Raw materials 32,398 26,038
Work in process 31,936 21,614
Finished goods 61,943 44,759
Total inventories 126,277 92,411
Deferred tax assets 20,584 18,340
Prepaid expenses and other current assets 20,871 8,547
Total current assets 378,717 235,389
Property, Plant and Equipment:
Land and improvements 8,937 8,057
Buildings and leasehold improvements 73,230 56,280
Equipment 168,401 133,838
Total property, plant and equipment 250,568 198,175
Accumulated depreciation (124,626) (116,045)
Net property, plant and equipment 125,942 82,130
Marketable Securities 1,169 6,174
Goodwill 105,350 18,616
Other Assets 57,684 24,990
Total Assets $668,862 $367,299
________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
Bio-Rad Laboratories, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
<TABLE>
<CAPTION>
__________________________________________________________________________________________
December 31,
Liabilities and Stockholders' Equity 1999 1998
<S> <C> <C>
Current Liabilities:
Notes payable $ 11,547 $ 8,721
Current maturities of long-term debt 10,413 672
Accounts payable 64,737 26,706
Accrued payroll and employee benefits 59,919 27,351
Sales, income and other taxes payable 14,086 6,396
Other current liabilities 41,819 27,398
Total current liabilities 202,521 97,244
Long-Term Debt, net of current maturities 239,211 42,339
Deferred Tax Liabilities 7,016 13,382
Total liabilities 448,748 152,965
Commitments and Contingent Liabilities
Stockholders' Equity:
Preferred stock, $1.00 par value, 2,300,000 shares authorized;
none outstanding - -
Class A common stock, $1.00 par value, 15,000,000 shares
authorized; outstanding 1999 - 9,977,862;
1998 - 9,973,679 9,978 9,974
Class B common stock, $1.00 par value, 6,000,000 shares
authorized; outstanding 1999 - 2,484,716;
1998 - 2,452,899 2,485 2,453
Additional paid-in capital 18,830 18,523
Class A treasury stock, 335,450 shares in 1999 and (7,392) (7,047)
306,368 shares in 1998 at cost
Retained earnings 200,993 189,838
Accumulated other comprehensive income:
Currency translation (4,741) 92
Net unrealized holding gain (loss) on marketable securities (39) 501
Total stockholders' equity 220,114 214,334
Total Liabilities and Stockholders' Equity $668,862 $367,299
__________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
Bio-Rad Laboratories, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________________
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Net sales $549,489 $441,942 $426,914
Cost of goods sold 255,223 202,438 189,331
Gross profit 294,266 239,504 237,583
Selling, general and administrative expense 194,457 166,978 164,792
Product research and development expense 51,210 41,381 46,138
Purchased in-process research and development expense 15,500 - -
Income from operations 33,099 31,145 26,653
Other income (expense):
Interest expense (12,741) (3,731) (1,216)
Investment income, net 873 8,790 1,601
Other, net (4,815) (1,976) (4,310)
Income before taxes 16,416 34,228 22,728
Provision for income taxes 4,695 9,926 6,364
Net income $ 11,721 $ 24,302 $ 16,364
Basic earnings per share:
Net income $0.97 $1.98 $1.33
Weighted average common shares 12,110 12,264 12,260
Diluted earnings per share:
Net income $0.96 $1.97 $1.32
Weighted average common shares 12,165 12,358 12,394
__________________________________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Bio-Rad Laboratories, Inc.
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
________________________________________________________________________________________________________
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $527,132 $436,029 $414,694
Cash paid to suppliers and employees (453,266) (395,265) (381,489)
Interest paid (9,307) (3,833) (1,155)
Income tax payments (17,237) (9,370) (10,950)
Miscellaneous receipts (payments) (2,341) (226) 9
Net cash provided by operating activities 44,981 27,335 21,109
Cash flows from investing activities:
Capital expenditures, net (27,275) (21,176) (23,571)
Payments for acquisitions (202,828) - (31,238)
Purchases of marketable securities and investments (2,216) (19,086) (8,352)
Sales of marketable securities and investments 6,600 16,367 3,419
Foreign currency hedges, net 2,401 (1,360) 3,817
Net cash used in investing activities (223,318) (25,255) (55,925)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements (13,493) (1,365) 4,665
Long-term borrowings 353,108 133,710 87,275
Payments on long-term debt (151,788) (130,666) (55,329)
Arrangement and other fees for
long-term acquisition financing (5,008) -- --
Proceeds from issuance of common stock 343 103 1,459
Purchase of treasury stock (2,233) (4,665) (5,302)
Reissuance of treasury stock 1,322 1,978 750
Net cash provided by (used in) financing activities 182,251 (905) 33,518
Effect of exchange rate changes on cash 3,092 (1,937) 2,751
Net increase (decrease) in cash and cash equivalents 7,006 (762) 1,453
Cash and cash equivalents at beginning of year 10,081 10,843 9,390
Cash and cash equivalents at end of year $ 17,087 $ 10,081 $ 10,843
________________________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Bio-Rad Laboratories, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
<TABLE>
<CAPTION>
______________________________________________________________________
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Common Stock, $1.00 par value:
Balance at beginning of year $12,427 $ 12,421 $ 12,321
Issuance of common stock 36 6 100
Balance at end of year 12,463 12,427 12,421
Additional Paid-In Capital:
Balance at beginning of year 18,523 18,426 17,067
Issuance of common stock 307 97 1,359
Balance at end of year 18,830 18,523 18,426
Treasury Stock:
Balance at beginning of year (7,047) (6,006) (1,639)
Purchase of treasury stock (2,233) (4,665) (5,302)
Reissuance of treasury stock 1,888 3,624 935
Balance at end of year (7,392) (7,047) (6,006)
Retained Earnings:
Balance at beginning of year 189,838 167,182 151,003
Net income 11,721 24,302 16,364
Reissuance of treasury stock at
less than cost (566) (1,646) (185)
Balance at end of year 200,993 189,838 167,182
Accumulated Other Comprehensive Income:
Balance at beginning of year 593 4,654 4,756
Currency translation adjustments (4,833) 1,241 (4,719)
Net unrealized holding gains 66 819 5,746
Reclassification adjustment for
gains included in net income (606) (6,121) (1,129)
Balance at end of year (4,780) 593 4,654
________ ________ ________
Total Stockholders' Equity $220,114 $214,334 $196,677
Comprehensive Income:
Net income $ 11,721 $ 24,302 $ 16,364
Currency translation adjustments (4,833) 1,241 (4,719)
Net unrealized holding gains 66 819 5,746
Reclassification adjustments for
gains included in net income (606) (6,121) (1,129)
Total Comprehensive Income $ 6,348 $ 20,241 $ 16,262
_________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Bio-Rad Laboratories, Inc.
Notes to Consolidated Financial Statements
(In thousands of dollars, except share and per share data)
_________________________________________________________________
1. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Bio-Rad
Laboratories, Inc. and all subsidiaries ("Bio-Rad" or the "Company")
after elimination of intercompany balances and transactions. The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Changes in such estimates may
affect amounts reported in the future. Certain amounts in the
financial statements of prior years have been reclassified to be
consistent with the 1999 presentation.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid in-
vestments with original maturities of three months or less which are
readily convertible into cash. Cash equivalents are stated at cost,
which approximates market value.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of trade accounts
receivable. The Company performs credit evaluation procedures and
with the exception of certain developing countries, generally does not
require collateral. As a result of increased risk in these countries,
some Bio-Rad sales are subject to collateral letters of credit.
Credit risk is limited due to the large number of customers and their
dispersion across many geographic areas. However, a significant
amount of trade receivables are with national healthcare systems in
countries within the European Economic Community. The Company does
not currently anticipate a credit risk associated with these receiv-
ables.
Inventory Valuation
Inventories are valued at the lower of average cost or market and
include material, labor and overhead costs.
Property, Plant and Equipment
Property, plant and equipment are carried at historical cost.
Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets ranging from two to thirty years.
Leasehold improvements are amortized over the lives of the respective
leases or the lives of the improvements, whichever is shorter.
7
<PAGE>
Marketable Securities
The Company's marketable securities are classified as available-for-
sale and are recorded at current market value. Unrealized holding
gains and losses are included as a separate component of stockholders'
equity. Realized gains and losses are included in investment income.
For the purpose of determining realized gains and losses, the cost of
securities sold is based upon specific identification.
Goodwill
Goodwill, representing the excess of the cost over the net tangible
and identifiable intangible assets of acquired businesses, is stated
at cost and is amortized on a straight-line basis over the estimated
future periods to be benefited, typically ten to fifteen years.
Goodwill, other intangibles and other long-lived assets are
periodically reviewed for impairment to ensure they are properly
valued.
Revenue Recognition and Warranty
Bio-Rad recognizes revenues when products are shipped or services are
rendered and all significant obligations of the Company have been met.
Where appropriate, the Company also establishes a concurrent reserve
for returns and allowances.
The Company warrants certain equipment against defects in design,
materials and workmanship, generally for one year. Upon shipment of
equipment sold at a price which includes a warranty, the Company
establishes, as part of cost of goods sold, a provision for the
expected costs of such warranty.
Foreign Currency Translation
Balance sheet accounts of international subsidiaries are translated at
the current exchange rate as of the end of the accounting period.
Income statement items are translated at average exchange rates. The
resulting translation adjustment is recorded as a separate component
of stockholders' equity.
Forward Exchange Contracts
The Company does not use derivative financial instruments for
speculative or trading purposes. As part of distributing its
products, the Company regularly enters into intercompany transactions.
The Company enters into forward foreign exchange contracts to hedge
against future movements in foreign exchange rates that affect foreign
currency denominated intercompany receivables and payables. These
contracts generally have maturity dates of 60 days or less, relate
primarily to currencies of industrial countries and are marked to
market at each balance sheet date. The resulting gains or losses are
included in other income and expense and offset exchange losses or
gains on the related receivables and payables. Unrealized gains and
losses are not deferred. Exchange gains and losses on these contracts
are net of premiums and discounts which result from interest rate
8
<PAGE>
differentials between the U.S. and the countries of the currencies
being traded. The cash flows related to these contracts are
classified as cash flows from investing activities in the Statement of
Cash Flows.
Stock Compensation Plans
Stock-based compensation is recognized using the intrinsic value
method. For disclosure purposes, pro forma net income and earnings
per share are provided as if the fair value method had been applied.
Earnings Per Share
Basic earnings per share are calculated on the basis of the weighted
average number of common shares outstanding for each period. Diluted
earnings per share are calculated assuming the exercise of certain
stock options. Treasury stock is not considered outstanding for
purposes of calculating weighted average shares.
Fair Value of Financial Instruments
For certain of the Company's financial instruments, including cash and
cash equivalents, accounts receivable, notes payable, accounts
payable, long-term debt and forward exchange contracts, the carrying
amounts approximate fair value. The fair values of other instruments
are disclosed in relevant notes to the financial statements.
2. Acquisitions
In October 1999, the Company acquired Pasteur Sanofi Diagnostics S.A.,
a French corporation (PSD), from its shareholders, Sanofi-Synthelabo
S.A. and Institut Pasteur. The Company paid $202,828 for all of the
capital stock of PSD (and certain ancillary assets and assumed
liabilities related to PSD). PSD was founded by the Institut Pasteur
and operates in the HIV and infectious disease diagnostic product
market. The purchase of PSD was financed with the proceeds from a
$200,000 Senior Credit Agreement and a $100,000 Senior Subordinated
Credit Agreement (see Note 5). The acquisition was accounted for
using the purchase method of accounting. The operating results of PSD
have been included in the Consolidated Statement of Income from the
date of acquisition.
As a result of the acquisition, the Company recorded $88,630 of
goodwill. Goodwill reflects the excess of the purchase price,
purchase liabilities and liabilities assumed over the fair value of
net identifiable assets and in-process research and development
projects acquired. Acquired in-process research and development of
$15,500 was charged to expense in the fourth quarter in accordance
with generally accepted accounting principles. Purchase liabilities
recorded included approximately $14,000 for severance and other
9
<PAGE>
employee costs and $4,000 for the consolidation and closure of certain
leased facilities. The Company expects to complete its workforce
reduction by September 30, 2000. The closure of facilities identified
by the Company will be completed in fiscal 2000, with lease payments,
net of sublease revenues, continuing until all contractual obligations
are met. For the year 1999 no material amounts were charged to the
purchase liability for severance and facility closures. The Company
does not believe that the final purchase price allocation will differ
significantly from the preliminary purchase price allocation recorded
in the current fiscal year.
As the Company's 1999 financial statements include only three months
of operations of PSD, the following selected unaudited pro forma
information is being provided to present a summary of the combined
results of Bio-Rad and PSD as if the acquisition had occurred as of
January 1, 1998, giving effect to purchase accounting adjustments and
actual costs of financing. The pro forma data is for informational
purposes only and may not necessarily reflect the results of
operations of Bio-Rad had PSD operated as part of the Company for the
years ended December 31, 1999 and 1998.
Unaudited Pro Forma
Year Ended December 31,
1999 1998
Sales $722,000 $669,800
Net income (loss) $6,300 $(5,000)
Basic earnings (loss)per share $0.52 $(0.41)
The pro forma amounts reflect the results of operations for Bio-Rad
and PSD and the following purchase accounting adjustments for the
periods presented:
Amortization of intangible assets and goodwill based on the
purchase price allocation for the period presented.
Amortization of debt financing fees and expenses over the
relative term of the following debt: Senior Credit
Agreement, Senior Subordinated Credit Facility and Senior
Subordinated Notes.
The additional interest expense on debt incurred to finance
the acquisition offset by a reduction of historical interest
resulting from the elimination of PSD's debt.
The estimated income tax effect on the pro forma
adjustments, including a limitation on the deductibility of
goodwill amortization.
The pro forma statements do not include the $15,500 write-
off of in-process research and development. This charge is
included in the Consolidated Statements of Operations of the
Company for 1999.
10
<PAGE>
3. Marketable Securities
The Company's portfolio is comprised principally of equity securities
with an aggregate market value of $1,169 and $6,174 and cost of $1,224
and $5,469 at December 31, 1999 and 1998, respectively. At December
31, 1999, gross unrealized holding gains and losses were $104 and
$159, respectively. At December 31, 1998, gross unrealized holding
gains and losses were $1,044 and $339, respectively.
<TABLE>
Information regarding the proceeds and gross realized gains and losses
from sales of securities is as follows:
<CAPTION>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Proceeds $ 6,600 $ 16,367 $ 3,419
Gross realized gains $ 1,260 $ 9,168 $ 1,211
Gross realized losses (410) (548) (82)
Net realized gains $ 850 $ 8,620 $ 1,129
</TABLE>
4. Investment in Affiliates
In December 1997, Bio-Rad began investing in Instrumentation
Laboratory, S.p.A. (IL), an Italian based clinical diagnostics
company. At December 31, 1999, Bio-Rad held approximately 27% of the
outstanding stock of IL. A privately held company based in Spain
controls over 50% of the outstanding stock of IL. The most recently
published financial statements for IL are as of February 28, 1999.
Given the limited availability of financial information and the low
volume of shares traded, Bio-Rad management does not believe there is
a sufficient liquid market for IL stock. Accordingly, the investment
is reported as Other Assets. Additionally, since Bio-Rad does not
have the ability to significantly influence the operating and
financial policies of IL, the investment has been recorded at its cost
of $18,830.
An unrealized holding gain of $652 was included in comprehensive
income in 1997. This amount was reversed in 1998 when the investment
in IL was reclassified to Other Assets.
5. Notes Payable and Long-Term Debt
Notes payable include local credit lines maintained by the Company's
subsidiaries aggregating approximately $32,742, of which $21,195 was
unused at December 31, 1999. The weighted average interest rate on
these lines was 5.76% and 5.14% at December 31, 1999 and 1998,
respectively. The parent company guarantees most of these credit
lines.
11
<PAGE>
The principal components of long-term debt are as follows:
<TABLE>
December 31,
1999 1998
<S> <C> <C>
Senior Subordinated Credit
Agreement $100,000 $ -
Term loan 100,000 -
Revolving credit agreement 49,000 42,000
Capitalized leases 624 606
Other - 405
249,624 43,011
Less current maturities 10,413 672
Long-Term Debt $239,211 $42,339
</TABLE>
On September 30, 1999, the Company entered into a $200,000 Senior
Credit Agreement and a $100,000 Senior Subordinated Credit Agreement
to finance the acquisition of PSD and certain related assets and to
provide funds for working capital needs. The Senior Credit Agreement
included a term loan and revolving facility, each in the amount of
$100,000. Debt issue costs related to these financings were $8,600.
The $100,000 Senior Subordinated Credit Agreement was replaced on
January 31, 2000 (see Note 14).
The term loan and revolving facility are secured by an interest in the
Company's assets. Interest on both loans is based upon either the
Eurodollar, the Federal Funds effective or corporate based (prime)
rate. The term loan interest rate was 8.92% at December 31, 1999.
The revolving credit agreement provides for borrowings on a secured
basis through September 2004. The interest rate at December 31, 1999
was 9.13%. A commitment fee ranging from .30% to .50% annually is
charged on the daily unborrowed portion of the revolving credit
agreement.
The Company entered into interest rate swap agreements to reduce the
impact of changing interest rates on its revolving credit agreement.
At December 31, 1999, the Company had two interest rate swap
agreements with commercial banks, having an aggregate notional amount
of $25,000. The agreements essentially fix the Company's interest
rate exposure on $25,000 worth of floating rate loans under its
revolving credit agreement at 8.50%. The agreements mature December
29, 2000 and June 30, 2002. The resulting applicable interest rate
was 8.81% on the revolving facility versus an effective rate of 9.13%.
In terms of the interest rate swap, the Company is exposed to credit
loss in the event of nonperformance by a counterparty, however the
Company has not experienced such nonperformance to date and considers
such a possibility remote.
The Senior Credit Agreement (including amendments) requires the
Company, among other things, to comply with certain financial ratios.
The Company was in compliance with all financial ratios as of December
31, 1999. This agreement also contains certain other restrictions,
including limitations on payment of cash dividends, sales of assets,
incurrence of indebtedness, the creation of liens, making certain
investments and engaging in sale/leaseback transactions.
12
<PAGE>
Maturities of long-term debt at December 31, 1999, are as follows:
2000 - $10,413; 2001 - $15,137; 2002 - $20,074; 2003 - $25,000;
2004 - $79,000; thereafter - $100,000.
6. Income Taxes
The U.S. and international components of income before taxes are
as follows:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
U.S. $ 15,176 $ 24,173 $ 11,343
International 1,240 10,055 11,385
Income before taxes $ 16,416 $ 34,228 $ 22,728
</TABLE>
The provision for income taxes consists of:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Current:
U.S. Federal $ 4,583 $ 8,564 $ 3,277
International 8,323 4,974 3,226
U.S. State 853 374 552
13,759 13,912 7,055
Deferred (9,064) (3,986) (691)
Provision for income taxes $ 4,695 $ 9,926 $ 6,364
</TABLE>
The Company's income tax provision differs from the amount
computed by applying the U.S. federal statutory rate to income
before taxes as follows:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
U.S. statutory tax rate 35% 35% 35%
State taxes, net of
federal income tax benefit 2 (1) 1
Foreign Sales Corporation
tax benefit (10) (5) (6)
Research and development
tax credit (1) (1) (2)
International taxes in excess
of U.S. Foreign Tax Credit 12 - 1
Loss carryforwards utilized (5) (1) (6)
Amortization of goodwill 4 - 2
Foreign losses in connection
with the PSD acquisition
not benefited 31 - -
Favorable resolution of U.S.
income tax disputes (40) - -
Other 1 2 3
Provision for income taxes 29% 29% 28%
</TABLE>
13
<PAGE>
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of deferred tax
assets and liabilities are as follows:
<TABLE>
December 31,
1999 1998
<S> <C> <C>
Deferred Tax Assets:
Reserves for obsolete inventory,
warranty and bad debts $ 12,622 $ 12,102
Eliminated intercompany profit 3,661 3,265
Tax benefit of foreign loss
carryforwards 16,457 4,732
Other 11,975 3,583
44,715 23,682
Valuation allowance (24,131) (5,342)
Deferred Tax Assets $ 20,584 $ 18,340
Deferred Tax Liabilities:
Deferred gain on condemnation $ 3,522 $ 4,473
Depreciation 1,567 1,174
Development cost of Hercules
facility 1,385 1,413
Other 542 6,322
Deferred Tax Liabilities $ 7,016 $ 13,382
</TABLE>
The valuation allowance is needed to reduce the deferred tax
assets to an amount that is more likely than not to be realized.
The net change in the valuation allowance in 1999 was an increase
of $18,789, primarily resulting from an increase in tax loss
carryforwards. The net change in 1998 was an increase of $2,057,
primarily resulting from an increase in tax loss carryforwards.
At December 31, 1999, Bio-Rad's international subsidiaries had
combined net operating loss carryforwards of $40,231. A portion
of these loss carryforwards will expire in the following years:
2000 - $809; 2001 - $394; 2002 - $754; 2003 - $150; 2004 - $178;
2005 - $1,639 and 2008 - $393. The remainder of these loss
carryforwards have no expiration date. The utilization of these
carryforwards is limited to the separate taxable income of each
individual subsidiary.
Bio-Rad does not provide for taxes which would be payable if the
cumulative undistributed earnings of its international subsidiaries,
approximately $36,916 at December 31, 1999, were remitted to the U.S.
parent company. Unless it becomes advantageous for tax or foreign
exchange reasons to remit a subsidiary's earnings, such earnings are
indefinitely reinvested in subsidiary operations. The withholding tax
and U.S. federal income taxes on these earnings, if remitted, would in
large part be offset by tax credits.
14
<PAGE>
7. Stockholders' Equity
Stock Classification
The Company's outstanding stock consists of Class A Common Stock
(Class A) and Class B Common Stock (Class B). Each share of Class A
and Class B participates equally in the earnings of Bio-Rad, and is
identical in most respects except that Class A has limited voting
rights. Each share of Class A is entitled to one-tenth of a vote on
most matters, and each share of Class B is entitled to one vote.
Additionally, Class A stockholders are entitled to elect 25% of the
Board of Directors and Class B stockholders are entitled to elect the
balance of the directors. Cash dividends may be paid on Class A
shares without paying a cash dividend on Class B shares but no cash
dividend may be paid on Class B shares unless at least an equal cash
dividend is paid on Class A shares. Class B shares are convertible at
any time into Class A shares on a one-for-one basis at the option of
the stockholder.
Stock Option Plans
Bio-Rad maintains incentive and non-qualified fixed stock option plans
for officers and certain other key employees. Under the Amended 1994
Stock Option Plan, the Company may grant options to its employees for
up to 1,175,000 shares of common stock provided that no option shall
be granted after March 1, 2004. Under the plans, Class A and Class B
options are granted at prices not less than fair market value on the
date of grant, are exercisable on a cumulative basis at a rate not
greater than 25% per annum commencing one year after the date of grant
and expire five years after the date of grant.
The Company has made no charge to income with respect to any stock
options. At the time options are exercised, the par value of the
shares is credited to common stock and the excess is credited to
additional paid-in capital. The Company may receive income tax
benefits from the exercise of non-qualified stock options and from
certain dispositions of stock received by employees under qualified or
incentive stock options. The fair value of each option granted since
January 1, 1995, was estimated on the date of the grant using the
Black-Scholes option-pricing model with the following assumptions for
grants in 1999, 1998 and 1997, respectively: no dividend yield for
all periods; expected lives of 2.2 and 3.0 years in 1999, 2.0 and 2.9
years in 1998 and 1.8 and 2.8 years in 1997; expected volatility of
34%, 35% and 33%; and risk-free interest rates ranging from 4.72% to
4.82%, 5.39% to 5.48% and 5.63% to 6.15%.
15
<PAGE>
<TABLE>
Activity under the plans is summarized below (amounts reported in the Price columns
represent the weighted average exercise price):
<CAPTION>
Year Ended December 31,
1999 1998 1997
Shares Price Shares Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 561,047 $23.73 517,018 $21.40 482,900 $16.34
Granted 166,080 19.89 150,653 23.54 147,050 32.54
Exercised (60,914) 8.47 (89,625) 10.09 (90,445) 11.88
Forfeited (19,712) 25.10 (14,677) 25.07 (19,909) 25.38
Expired (1,386) 7.37 (2,322) 9.46 (2,578) 12.04
Outstanding at end of year 645,115 $24.18 561,047 $23.73 517,018 $21.40
Options exercisable at year-end 280,825 222,539 172,689
Weighted average fair value of
options granted during the year $6.46 $7.62 $10.76
</TABLE>
<TABLE>
The following summarizes information about fixed stock options outstanding at December 31, 1999:
<CAPTION>
Options Outstanding Options Exercisable
Number Weighted Average Number
Range of Outstanding Remaining Weighted Average Exercisable Weighted Average
Exercise Prices at 12/31/99 Contractual Life Exercise Price at 12/31/99 Exercise Price
<S> <C> <C> <C> <C> <C>
$18.00 - $19.69 206,131 2.4 years $19.04 85,851 $18.13
$19.80 - $23.94 184,916 3.2 22.49 44,441 22.63
$25.92 - $29.33 124,813 1.3 26.50 85,909 26.51
$31.63 - $35.89 129,255 2.1 32.53 64,624 32.53
$18.00 - $35.89 645,115 2.4 24.18 280,825 24.72
</TABLE>
16
<PAGE>
Employee Stock Purchase Plan
Under the Amended and Restated 1988 Employee Stock Purchase Plan (the
Plan), the Company has authorized the sale of 745,000 shares of Class
A to eligible employees. The purchase price of the shares under the
Plan is the lesser of 85% of the fair market value on the first day of
each calendar quarter, or 85% of the fair market value on the last day
of each calendar quarter. Employees may designate up to 10% of their
compensation for the purchase of stock. Under the Plan, the Company
sold 58,762 shares for $1,098, 51,446 shares for $1,129 and 43,785
shares for $982 to employees in 1999, 1998 and 1997, respectively. At
December 31, 1999, 105,364 shares remained authorized under the Plan.
The fair value of the employees' purchase rights since 1995 was
estimated using the Black-Scholes model with the following assumptions
for 1999, 1998 and 1997, respectively: no dividend yield for all
periods; an expected life of three months for all periods; expected
volatility ranging from 22% to 35%, from 28% to 38% and from 19% to
30%; and risk-free interest rates ranging from 4.28% to 4.88%, from
4.27% to 5.23% and from 5.02% to 5.41%. The weighted average fair
value of those purchase rights granted in 1999, 1998 and 1997 was
$4.74, $5.55 and $5.50, respectively.
Pro Forma Disclosures
If compensation cost for the Company's stock-based compensation plans
had been determined based upon the fair value at grant dates for
awards under those plans consistent with the method of Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-
Based Compensation", the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C> <C>
Net income As reported $11,721 $24,302 $16,364
Pro forma $10,469 $23,026 $15,173
Diluted earnings per As reported $0.96 $1.97 $1.32
share Pro forma $0.86 $1.86 $1.22
</TABLE>
Under the requirements of SFAS No. 123, the above disclosures
relate only to options granted after December 15, 1994, and do
not include the impact of outstanding options that were made
prior to the period for which SFAS No. 123 is effective. Since
employee stock options vest over several years, and additional
grants are likely to be made in the future, during the phase-in
period of SFAS No. 123 the disclosures are not likely to be
representative of the effects on reported pro forma net income or
earnings per share in future years.
17
<PAGE>
8. Earnings Per Share
Weighted average shares used for diluted earnings per share
include the dilutive effect of outstanding stock options of
55,000, 94,000 and 134,000 shares, for the years ended
December 31, 1999, 1998 and 1997, respectively.
Options to purchase 261,000, 229,000 and 133,000 shares of common
stock were outstanding during 1999, 1998 and 1997, respectively,
but were excluded from the computation of diluted earnings per
share because the exercise price of the options was greater than
the average market price of the common shares. The options were
still outstanding at the end of 1999.
9. Other Income and Expense
Other, net includes the following income and (expense)
components:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Amortization of goodwill $(3,813) $(2,068) $(1,612)
Exchange gains (losses) (886) 22 (711)
Other non-operating litigation
costs, net 73 117 (1,606)
Miscellaneous other items (189) (47) (381)
Other, net $(4,815) $(1,976) $(4,310)
</TABLE>
Exchange gains (losses) include premiums and discounts on forward
foreign exchange contracts.
10. Supplemental Cash Flow Information
The reconciliation of net income to net cash provided by operating
activities is as follows:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Net income $11,721 $24,302 $16,364
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 27,495 20,975 19,470
Foreign currency hedge transactions, net (2,401) 1,360 (4,001)
Gains on dispositions of marketable securities (850) (8,620) (1,129)
Increase in accounts receivable, net (16,082) (5,739) (6,176)
(Increase) decrease in inventories 4,095 (166) (14,831)
(Increase) decrease in other current assets 5,609 4,629 (6,369)
Increase (decrease) in accounts payable and
other current liabilities 26,153 (4,808) 18,775
Increase in income taxes payable 4,804 1,040 1,122
Decrease in deferred taxes (16,946) (5,292) (1,276)
Other 1,383 (346) (840)
Net cash provided by operating activities $44,981 $27,335 $21,109
</TABLE>
18
<PAGE>
11. Commitments and Contingent Liabilities
Rents and Leases
Net rental expense under operating leases was $13,607 in 1999,
$12,622 in 1998 and $11,339 in 1997. Leases are principally
for facilities and automobiles.
Annual future minimum lease payments at December 31, 1999, under
operating leases are as follows: 2000 - $10,166; 2001 - $7,554; 2002 -
$4,914; 2003 - $3,605; 2004 - $2,769; subsequent to 2004 - $7,084.
Deferred Profit Sharing Retirement Plan
The Company has a profit sharing plan covering substantially all U.S.
employees. Contributions are made at the discretion of the Board of
Directors. Bio-Rad has no liability other than for the current year's
contribution. Contributions charged to income were $4,030,
$3,566 and $3,285 in 1999, 1998 and 1997, respectively.
Foreign Exchange Contracts
The Company enters into forward foreign exchange contracts as a hedge
against foreign currency denominated intercompany receivables and
payables. At December 31, 1999, the Company had contracts maturing in
January 2000 to sell foreign currency with a market value of $64,390 and
to purchase foreign currency with a market value of $6,339.
At December 31, 1998, the Company had contracts maturing in January 1999
to sell foreign currency with a market value of $48,053 and to purchase
foreign currency with a market value of $1,811.
12. Legal Proceedings
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of
management, the outcome of these claims, legal actions and complaints
would have no material adverse effect on the future results of operations
or the financial position of the Company.
13. Segment Information
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" in 1998 which changed the way the
Company reports information about its operating segments.
Bio-Rad is a multinational manufacturer and worldwide distributor of life
science research products, clinical diagnostics and analytical
instruments. Bio-Rad has three reportable segments: Life Science,
Clinical Diagnostics and Analytical Instruments. These reportable
segments are strategic business lines that offer different products and
services and require different marketing strategies.
The Life Science segment develops, manufactures, sells and services liquid
chromatography, electrophoresis, gene amplification and transformation,
imaging and image analysis, DNA sequencing and sample preparation products.
19
<PAGE>
These products are sold to university and medical school laboratories,
pharmaceutical and biotechnology companies, and government and industrial
research facilities.
The Clinical Diagnostics segment develops, manufactures, sells and services
automated test systems, informatics systems, test kits and specialized
quality controls for the healthcare market. These products are sold to
reference laboratories, hospital laboratories, state newborn screening
facilities, physicians office laboratories, and insurance and forensic
testing laboratories.
The Analytical Instruments segment develops, manufactures, sells and
services FT-IR spectroscopy systems, semiconductor test and manufacturing
instruments, spectral reference publications and software. These products
are sold to industrial companies, government institutions, academia and
forensic analysis laboratories.
The accounting policies of the segments are the same as those described in
Significant Accounting Policies (see Note 1). Segment profit or loss used
for corporate management purposes includes an allocation of corporate
expense based upon sales and an allocation of interest expense based upon
accounts receivable and inventories. In addition, certain items that are
classified as non-operating expenses and reported as other income and
expense on a consolidated basis are included in segment profit or loss.
Segments are expected to manage only assets completely under their control.
Accordingly, segment assets include primarily accounts receivable,
inventories and gross machinery and equipment.
Information regarding industry segments at December 31, 1999, 1998 and 1997
and for the years then ended is as follows:
<TABLE>
Life Clinical Analytical
Science Diagnostics Instruments
<S> <C> <C> <C> <C>
Segment net sales 1999 $234,696 $249,243 $ 67,974
1998 209,655 170,002 66,100
1997 205,704 150,095 75,800
Allocated interest expense 1999 $ 3,761 $ 7,775 $ 1,206
1998 1,501 1,464 571
1997 550 428 212
Depreciation and
amortization 1999 $ 8,003 $ 15,466 $ 1,335
1998 7,328 11,242 1,652
1997 7,258 7,553 3,768
Segment profit (loss) 1999 $ 16,643 $ 16,661 $ 2,928
1998 12,649 18,160 (2,166)
1997 6,816 19,257 (1,003)
Segment assets 1999 $131,689 $320,419 $ 35,387
1998 124,219 129,089 38,607
1997 116,289 111,453 44,964
20
<PAGE>
Capital expenditures 1999 $ 10,673 $ 13,388 $ 1,378
1998 6,487 15,213 1,912
1997 7,461 14,432 1,991
</TABLE>
Capital expenditures include capitalized leases of $100, $311 and
$331 in 1999, 1998 and 1997, respectively.
Inter-segment sales are primarily from Life Science to Clinical
Diagnostics and are priced to give Life Science a market
representative gross margin. This represents the difference
between total segment net sales and consolidated net sales. The
difference between total segment allocated interest expense,
depreciation and amortization, and capital expenditures and the
corresponding consolidated amounts is attributable to the
Company's corporate headquarters. The following reconciles total
segment profit to consolidated income before taxes:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Total segment profit $36,232 $28,643 $25,070
Gross profit on inter-segment sales (1,204) (1,925) (2,338)
Net corporate operating, interest
and other expense not allocated
to segments (3,985) (1,280) (1,605)
Purchased in-process research and
development (15,500) -- --
Investment income, net 873 8,790 1,601
Consolidated income before taxes $16,416 $34,228 $22,728
</TABLE>
The following reconciles total segment assets to consolidated total
assets:
<TABLE>
December 31,
1999 1998 1997
<S> <C> <C> <C>
Total segment assets $487,495 $291,915 $272,706
Cash and other current assets 58,542 36,968 39,025
Net property, plant and
equipment excluding segment
specific gross machinery and
equipment (41,378) (11,364) (5,635)
Other long-term assets 164,203 49,780 45,780
Total assets $668,862 $367,299 $351,876
</TABLE>
21
<PAGE>
The following presents sales to external customers by geographic area
based primarily on the location of the use of the product or service:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Europe $188,969 $141,004 $132,551
Pacific Rim 110,729 88,917 98,070
United States 225,795 195,309 184,533
Other (primarily Canada
and Latin America) 23,996 16,712 11,760
Total net sales $549,489 $441,942 $426,914
</TABLE>
The following presents long-lived assets by geographic area based upon
the location of the asset:
<TABLE>
December 31,
1999 1998 1997
<S> <C> <C> <C>
Europe $ 34,129 $ 7,860 $ 7,004
Pacific Rim 6,954 4,933 3,885
United States 247,293 118,628 112,967
Other (primarily Canada
and Latin America) 1,769 489 602
Total long-lived assets $290,145 $131,910 $124,458
</TABLE>
14. Subsequent Event
The Company entered into a $100,000 Senior Subordinated Credit
Agreement dated January 31, 2000. This agreement had a one-year term
and provided for an automatic rollover for an additional term maturing
in September 2005. The proceeds of this transaction were used to
replace the Senior Subordinated Credit Agreement dated September 30,
1999. Fees paid in January 2000 to replace and initiate the Senior
Subordinated Credit Agreements were $4,000. The replacement loan was
repaid in February 2000.
The Company sold $150,000 aggregate principal amount of Senior
Subordinated Notes due in 2007 under an indenture dated February 17,
2000. The notes were offered at 98.832% of par and pay a fixed rate
of interest of 11.625% per year. The notes are redeemable at the
Company's option prior to the due date under certain terms and
conditions. The Company's obligations under the notes are not secured
and rank junior to all of the Company's existing and future senior
debt. The indenture requires the Company, among other things, to
comply with certain financial ratios and covenants. The proceeds from
this transaction were used (1) to repay the $100,000 Senior
Subordinated Credit Agreement dated January 31, 2000, (2) to
permanently retire $20,000 of the $100,000 term loan, and (3) to repay
a portion of the outstanding borrowings under the revolving facility.
22
<PAGE>
15. Quarterly Financial Data - (unaudited)
Summarized quarterly financial data for 1999 and 1998 are as follows:
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter
1999
<S> <C> <C> <C> <C>
Net sales $125,738 $115,794 $113,527 $194,430
Gross profit 70,182 65,241 61,628 97,215
Net income (loss) 10,802 7,881 4,253 (11,215)
Basic earnings (loss)
per share $0.89 $0.65 $0.35 $(0.92)
Diluted earnings (loss)
per share $0.89 $0.65 $0.35 $(0.92)
1998
Net sales $116,174 $107,898 $ 98,982 $118,888
Gross profit 64,076 58,857 53,577 62,994
Net income 8,776 7,151 1,938 6,437
Basic earnings per share $0.72 $0.58 $0.16 $0.52
Diluted earnings per share $0.71 $0.58 $0.16 $0.52
</TABLE>
16. Information Concerning Common Stock - (unaudited)
The Company's Class A and Class B Common Stock are listed on the
American Stock Exchange with the symbols BIO.A and BIO.B,
respectively. The following sets forth, for the periods indicated,
the high and low prices for the Company's Class A and Class B Common
Stock.
<TABLE>
Class A Class B
High Low High Low
1999
<S> <C> <C> <C> <C>
First Quarter 21-3/4 18-7/8 21-3/8 19-3/8
Second Quarter 29 20-3/8 27-1/2 23-3/8
Third Quarter 28 25-5/8 27 25-7/8
Fourth Quarter 27-1/2 22-1/2 27-1/8 23-1/8
1998
First Quarter 27 22-1/2 26-3/8 23-1/4
Second Quarter 34-1/8 24-1/8 33-3/4 27
Third Quarter 31-7/8 23-5/16 29-1/2 24-1/4
Fourth Quarter 24-3/4 19-1/2 22-3/8 19-3/4
</TABLE>
On February 28, 2000, the Company had 570 holders of record of
Class A Common Stock and 265 holders of record of Class B Common
Stock. Bio-Rad has never paid a cash dividend and has no present
plans to pay cash dividends.
23
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Bio-Rad Laboratories, Inc.:
We have audited the accompanying consolidated balance sheets of
Bio-Rad Laboratories, Inc. (a Delaware Corporation) and
subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, cash flows and changes in
stockholders' equity for each of the three years in the period
ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Bio-Rad Laboratories, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Francisco, California, February 9, 2000,
except for Note 14, as to which the date is
February 17, 2000
24
<PAGE>
Bio-Rad Laboratories, Inc.
Management's Discussion and Analysis
________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This discussion should be read in conjunction with the
information contained in the Company's Consolidated Financial
Statements and the accompanying notes which are an integral part
of the statements. References are to the Notes to Consolidated
Financial Statements.
The following shows operating income and expense items as a
percentage of net sales:
<TABLE>
Year Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Net sales 100.0 100.0 100.0
Cost of goods sold 46.5 45.8 44.3
Gross profit 53.5 54.2 55.7
Selling, general and
administrative expense 35.4 37.8 38.7
Product research and
development expense 9.3 9.4 10.8
Purchased in-process
research and development 2.8 - -
Income from operations 6.0 7.0 6.2
===== ===== =====
Net income 2.1 5.5 3.8
===== ===== =====
</TABLE>
The year 1999 is highlighted by the October 1, 1999 acquisition
of Pasteur Sanofi Diagnostics, S.A. (PSD). The details of the
acquisition are discussed and disclosed throughout the remainder
of the Management Discussion and Analysis of Operations of the
1999 Annual Report. The significance of this transaction is that
the acquisition enhances Bio-Rad's clinical diagnostics market
position in the following ways: the companies have complementary
product lines with few actual overlapping products. The combined
company has increased geographic reach. There is an opportunity
to apply emerging Bio-Rad technologies to the combined product
portfolio. Finally, the Company expects to achieve operational
efficiencies. Profit performance in 2000 and 2001 could be
impacted when compared to prior years or until fully assimilated
and reorganized.
25
<PAGE>
Corporate Results -- Sales, Margins and Expenses
Bio-Rad's net sales (sales) in 1999 were $549.5 million, an
increase of 24.3% over 1998 sales. Included in the 1999 fourth
quarter sales was $60.2 million from the recently acquired PSD
operations (see Note 2). Excluding this amount, Bio-Rad's sales
grew by 10.7% over the year 1998. For the year 1999, the impact
from currency translation on sales was less than $1.0 million.
The strengthening of the Japanese Yen offset the negative impact
from most European currencies. Excluding any impact from
currency for 1999, the Life Science and Clinical Diagnostics
segments (excluding the PSD acquisition) grew by 11.9% and 11.2%,
respectively. The growth in the Life Science segment is
attributable to laboratory products and scientific imaging
equipment excellent performance. The Clinical Diagnostics
segment growth was a result of the continuing demand for the
Company's diabetes monitoring and quality control systems. The
Analytical Instruments segment grew by 2.8% as the market for the
Company's semiconductor test and manufacturing equipment grew
significantly in the second half of 1999.
Bio-Rad's sales in 1998 amounted to $441.9 million, an increase
of 3.5% over sales in 1997. The effect of a strengthening U.S.
dollar caused a reduction in sales growth of 2.5% or
approximately $10.5 million. When 1998 sales are compared to
1997 at constant 1997 exchange rates, sales for the Company grew
6.0%. Eliminating the effect of a strengthened U.S. dollar,
sales increased 16% and 4% in the Clinical Diagnostics and Life
Science segments, respectively. The Analytical Instruments
segment experienced lower sales as the markets it served
contracted almost worldwide. The growth in the Clinical
Diagnostics segment was attributed to the December 1997 purchase
of the controls business from Chiron Diagnostics Corporation.
The Life Science segment experienced strong growth in the U.S.
especially in the imaging and microscopy product lines.
Consolidated gross margins were 53.5% for 1999 compared to 54.2%
in the prior year. After adjusting for the acquisition of PSD,
gross margins for the businesses operated for twelve months were
55.3%, an improvement over the 54.2% recorded in 1998. The Life
Science segment's gross margin improved by 1% as sales growth
provided the opportunity to lower fixed factory overhead and new
product pricing remained firm. The Clinical Diagnostics
segment's gross margin declined slightly, (0.3%), as pricing
pressure in the healthcare industry remained a considerable
factor. Also, the cost of foreign sourced products rose as the
Yen strengthened when compared to the dollar. The Analytical
Instruments segment's gross margin improved as demand increased
and pricing improved for the Company's semiconductor test and
manufacturing equipment. Cost reductions begun in prior years
have been fully implemented across this segment.
26
<PAGE>
Consolidated gross margins were 54.2% for 1998 compared to 55.7%
for 1997. Gross margins overall were adversely affected by lower
prices on international sales caused by the strengthening U.S.
dollar and a majority of manufacturing costs being U.S. dollar
denominated. The Life Science segment margins declined from
higher service and warranty costs, and were particularly impacted
in Asia. The Clinical Diagnostics segment gross margins declined
3.1% of sales, in part from the Chiron acquisition, where several
large supply agreements existed. Continued consolidation in the
diagnostic laboratory and the role of government in diagnostic
reimbursement maintained severe pressure on prices received for
diagnostics products. Analytical Instruments segment margins
were negatively impacted by an increasingly weak semiconductor
market and the strengthening dollar.
Consolidated selling, general and administrative expense (SG&A)
decreased to 35.4% of sales in 1999 when compared to 37.8% for
1998. After adjusting for the PSD acquisition, SG&A expense for
the Company was 36.2%, a decline of 1.6% of sales from the prior
year. For the Company excluding PSD, total SG&A grew by less
than 60% of sales growth. The Company continues to make the
efficient use of SG&A expense a priority. The acquisition of PSD
should allow the Company to further leverage this expense in a
larger sales environment through the elimination of redundant
facilities and positions. In absolute dollars, the largest
increase in SG&A expense was in the Life Science segment as the
Clinical Diagnostics segment grew only slightly and Analytical
Instruments segment declined.
SG&A decreased to 37.8% of sales in 1998 from 38.7% in 1997.
Spending increased in absolute dollars only in the Clinical
Diagnostics segment, yet at a growth rate of approximately half
that in sales. The Life Science and Analytical Instruments
segments each had declines in absolute spending both from the
currency effect on foreign incurred SG&A and cost elimination
programs begun in late 1997.
Product research and development expense (R&D) increased by 23.7%
in 1999 to $51.2 million including the operations of PSD compared
to $41.4 million for the year 1998. Both Life Science and
Clinical Diagnostics segments (excluding PSD) increased R&D
spending at a rate higher than sales growth as the Company is
focusing on programs to increase sales both through new product
development and the acquisition of existing businesses. Future
spending levels are expected to be at or near current levels as a
percentage of sales. Included in income from operations is the
write-off of $15.5 million "purchased in-process research and
development expense" (IPR&D). IPR&D represents the value
assigned in a purchase business combination to research and
development projects of the acquired business that have been
commenced but not completed at acquisition. In accordance with
SFAS No. 2, "Accounting for Research and Development Costs" the
27
<PAGE>
value of IPR&D must be charged to expense as part of the
allocation of the purchase price.
R&D decreased in 1998 by 10% to $41.4 million compared to $46.1
million for the year 1997. Spending declined in the Life Science
and Analytical Instruments segments and increased 3% in the
Clinical Diagnostics segment. Declines in the Life Science and
Analytical Instruments segments were due to the completion or
termination of projects.
Corporate Results -- Non-Operating Items
Interest expense increased substantially for the year 1999 as the
purchase of PSD was financed almost entirely with borrowed funds.
The Company borrowed approximately $225 million on October 1,
1999 to pay for the acquisition, including one time bank charges
and fees for a $200 million Credit Facility and an interim $100
million Senior Subordinated Credit Facility. Costs associated
with the Credit Facility were capitalized and will be amortized
over the five year life of the revolver and term loan. Expenses
for the Senior Subordinated Credit Facility amounted to $3.6
million to December 31, 1999. Going forward, the Company expects
to experience significantly higher interest expense. At December
31, 1999 the debt to equity ratio was 119% compared to 24% at
December 31, 1998. Average borrowings for the years 1999 and
1998 were $97.8 million and $52.3 million, respectively.
Investment income in 1999, 1998 and 1997 includes gains on sales
of marketable securities. During 1999, Bio-Rad realized $0.9
million of investment income as it liquidated its investment of
marketable securities to raise cash just prior to the PSD
acquisition. During 1998, Bio-Rad realized significant income,
$8.6 million, as it sold some of its investment in marketable
securities to increase its investment in Instrumentation
Laboratory (see Note 4).
Net other income and expense for 1999 is comprised principally of
amortization of goodwill and exchange losses (see Note 9). Net
other income and expense for 1998 was principally amortization of
goodwill. Net other income and expense for 1997 was principally
non-operating litigation costs and amortization of goodwill.
Bio-Rad's hedging program is limited to nonspeculative forward
foreign exchange contracts (with major financial institutions)
which hedge the exposure of intercompany receivables and
payables. The net exchange gain or loss results from the
estimating inherent in projecting intercompany balances and from
transaction charges.
Bio-Rad's consolidated effective tax rate was 29%, 29% and 28% in
1999, 1998 and 1997, respectively. The tax rate for all years
reflects the utilization of loss carryforwards, foreign sales
corporation benefits and foreign tax credits. The effective tax
28
<PAGE>
rate in future periods is expected to rise as the deductibility
of goodwill amortization, interest expense as well as the
utilization of loss carry-forwards are dependent on the source
and amount of income generated by the Company.
Financial Condition
As a result of the substantial amount of debt and debt service
obligations undertaken in relation to the acquisition of PSD, the
Company now faces increased risk from inadequate levels of
liquidity and capital resources.
The Company became substantially leveraged as it entered into new
credit facilities. The Company entered into a $200 million
Credit Facility (consisting of a $100 million term loan and a
$100 million revolving facility) on September 30, 1999, replacing
the $100 million credit agreement previously in place. The new
facility provides for borrowing on a secured basis through
September 30, 2004. Interest is based upon the Eurodollar rate,
the Federal Funds effective rate or corporate based (prime)rate.
The Company also entered into an interim $100 million Senior
Subordinated Credit Agreement on September 30, 1999. This
agreement had a one year term and provided for an automatic
rollover for an additional term expiring September 30, 2005.
This credit facility was replaced on January 29, 2000 with a new
interim $100 million Senior Subordinated Credit Agreement. The
Company repaid amounts outstanding under this agreement with
proceeds from the February 2000 issuance of $150.0 million
aggregate principal amount of Senior Subordinated Notes due 2007.
The lenders have placed restrictions on the Company's ability to:
borrow further, service this and other debt, make expenditures
for capital improvements, pay dividends, repurchase the Company's
own stock and/or make strategic and tactical investments in
support of operating the business. The Company is also required
to comply with certain financial ratios. The amount of debt
undertaken in connection with this acquisition could materially
impact the financial condition of the Company should management's
plan for operating the new entity not be successful.
At December 31, 1999, the Company had available $17.1 million in
cash and cash equivalents, $21.2 million under its international
lines of credit, $51.0 million under its principal revolving
credit agreement (see Note 5) and marketable securities with a
market value of $1.2 million. We believe that this availability,
together with cash flow from operations, will be adequate to meet
our current objectives for operations, research and development
and investment in our systems and equipment.
Net cash provided by operations was $45.0 million, $27.3 million
and $21.1 million in 1999, 1998 and 1997, respectively.
29
<PAGE>
Consolidated net accounts receivable increased approximately $90
million in 1999 when compared to 1998. This increase is
primarily attributable to receivables acquired from PSD of
approximately $75 million and an increase in fourth quarter sales
of $15 million for Bio-Rad's same period comparable operations.
Bio-Rad's management regularly reviews the allowance for
uncollectible receivables and believes net receivables are fully
realizable.
For the year ended December 1999, consolidated inventories rose
$34.0 million to $126.3 million. The PSD acquisition added
approximately $36.0 million to the Clinical Diagnostics segment
inventories. Inventory changes for comparable segments were
generally in line with sales activity, rising in the Life Science
segment, and declining in the Analytical Instruments segment.
Management regularly reviews the impact of obsolescence on
current inventory caused by the introduction of new products.
Management will continue its focus on inventory control in the
coming year to moderate capital requirements.
A valuation reserve is necessary for deferred tax assets (see
Note 6) primarily because realization of tax attributable to
foreign loss carryforwards is uncertain.
Net capital expenditures in 1999 totaled $27.3 million compared
to $21.2 million and $23.6 million in 1998 and 1997,
respectively. Expenditures in all years include clinical
diagnostic equipment placed with customers to be used with the
Company's diagnostic reagents. Expenditures in 1998 include
additions to the Clinical Diagnostics segment's southern
California manufacturing facilities to accommodate the
consolidation of operations and assets acquired in the fourth
quarter of 1997. Management regularly approves capital spending
in the normal course of business.
The Board of Directors authorized the Company to repurchase up to
$18 million of common stock over an indefinite period of time.
Through January 2000, the Company has repurchased 567,786 shares
of Class A Common Stock and 30,000 shares of Class B Common Stock
for a total of $14.1 million. The indenture restricts the
Company's ability to repurchase its own stock to an amount not to
exceed $4.0 million in the aggregate. Share repurchases made
during 1999 amounted to $2.2 million. The repurchase is designed
to improve shareholder value and to satisfy the Company's
obligations under the employee stock purchase and stock option
plans.
30
<PAGE>
Euro - A New European Currency
On January 1, 1999, certain member countries of the European
Union began to fix the conversion rates between their national
currencies and a common currency, the "Euro". Over the period
January 1, 1999 through January 1, 2002 participating countries
will gradually transition from their national currencies to the
Euro.
This transition will have business implications including the
need to adjust internal systems to accommodate the Euro and
cross-border price transparency. A group of Corporate and
European managers have been assigned the task of preparing and
accommodating the changes required to continue to do business in
the European Union. The Company does not presently expect that
the efforts involved will have a material impact on operations,
financial position or liquidity. There will be increased
competitive pressures, and marketing strategies will need to be
continuously evaluated until the transition is complete. As a
result of competitive forces and emerging government regulations,
the Company cannot guarantee that all problems will be foreseen
and remediated, and that no material disruption will occur.
Year 2000
The scope of the Year 2000 compliance effort included (i) IT,
such as software and hardware; (ii) non-IT systems or embedded
technology for manufacturing and laboratory equipment,
environmental and safety systems, facilities and utilities (iii)
date-sensitive Company products; and (iv) the readiness of key
third party suppliers and customers.
From inception of the Company's effort on the Year 2000 issues
through December 31, 1999, the Company spent an estimated $8.0
million related to the Year 2000 readiness issue. The costs
captured include external consultants, and purchased software and
hardware. No internal costs were captured as they principally
related to payroll costs for the information systems group
working on the Year 2000 project. The Company expensed as
incurred costs related to assessment and remediation. These
costs were funded through operating cash flows. From December
31, 1999 to February 18, 2000, no material problems were reported
in any of the Company's facilities or operations. As of the date
of this filing, the Company had not experienced any material Year
2000 problems with its IT or non-IT systems or products, nor had
the Company experienced any material problems with any of its key
customers or suppliers. The Company has no indication of any
problems related to any customers or vendors.
Initial orders and shipments for the first six weeks of the new
year indicate that there may have been some accelerated
31
<PAGE>
purchasing during the fourth quarter of 1999. The Company,
however, feels given the nature of its products that any anomaly
to its established sales cycle will be short-lived.
Financial Risk Management
Bio-Rad uses derivative financial instruments to reduce the
Company's exposure to fluctuations in foreign exchange rates and
interest rates. No derivative financial instruments are entered
into for the purpose of speculating or trading. Company policy
limits all derivative positions exclusively to reducing risk by
hedging an underlying economic exposure that can be effectively
correlated to the Company's chosen hedging vehicle. Changes in
the value of the derivative are generally offset by reciprocal
changes in Bio-Rad's underlying asset.
Bio-Rad operates and conducts business in many foreign countries
and is exposed to movements in foreign currency exchange rates.
Additionally, Bio-Rad's consolidated net equity is impacted by
the conversion of the net assets of international subsidiaries
for which the functional currency is not the U.S. dollar.
Foreign currency exposures are managed on a centralized basis by
the Company's Treasury Department. This allows for the netting
of natural offsets and lowers transaction costs and exposures.
Bio-Rad currently makes more than 50% of its sales outside the
United States and weakening in one currency can often be offset
by strengthening in another.
Bio-Rad typically enters into forward exchange contracts to sell
its foreign currency. Contracts are entered into typically for
30 to 60 days, primarily in British Sterling, Japanese Yen,
Italian Lira and German Marks. The costs are recognized in
income monthly and generally are the reciprocal of the change in
underlying assets. Bio-Rad does not hold any derivative
contracts that hedge its foreign currency denominated net asset
exposures.
Bio-Rad uses sensitivity analysis to assess the market risk
associated with its foreign currency exchange risk. Market risk
is the potential change in fair value of derivative positions
from an adverse movement in currency exchange rates. The forward
foreign exchange contracts at December 31, 1999 had a net fair
value of $58.1 million. A 10% adverse loss on quoted foreign
currency exchange rates would result in a $5.8 million loss.
This impact, of a change in exchange rates, excludes from the
analysis the offset derived from the change in the Company's
underlying assets and liabilities, which could reduce the effect
to zero.
32
<PAGE>
New Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging
Activities" effective for fiscal years beginning after June 15,
1999, with early adoption permitted. The FASB has now delayed
the SFAS No. 133 for all fiscal quarters of all fiscal years
beginning after June 15, 2000. This statement establishes
accounting and reporting standards requiring companies to record
all derivatives on the balance sheet as either assets or
liabilities and measure those instruments at fair value. The
manner in which companies are to record gains or losses resulting
from changes in the values of those derivatives depends on the
use of the derivative and whether it qualifies for hedge
accounting. The impact of SFAS No. 133 on the Company's
financial statements will depend on a variety of factors,
including future interpretive guidance from the FASB, the future
level of forecasted and actual foreign currency transactions, the
extent of the Company's hedging activities, the types of hedging
instruments used and the effectiveness of such instruments.
However, the Company does not expect the effect of adopting SFAS
No. 133 to have a material effect on its financial statements.
Forward Looking Statements
Other than statements of historical fact, statements made in this
Annual Report include forward looking statements, such as
statements with respect to the Company's future financial
performance, operating results, plans and objectives. We have
based these forward looking statements on our current
expectations and projections about future events. However,
actual results may differ materially from those currently
anticipated depending on a variety of risk factors including
among other things: our ability to successfully integrate with
PSD, which we recently renamed "Bio-Rad Pasteur"; our substantial
leverage and ability to service our debt; our ability to
successfully develop and market new products; our reliance on and
access to necessary intellectual property; competition in and
government regulation of the industries in which we operate; and
the monetary policies of various countries. We undertake no
obligation to publicly update or revise any forward looking
statements, whether as a result of new information, future
events, or otherwise.
33
<PAGE>
EXHIBIT 21.1 - LISTING OF SUBSIDIARIES
JURISDICTION OF
SUBSIDIARY ORGANIZATION
Bio-Rad Laboratories Pty. Limited Australia
Sanofi Diagnostics Pasteur Pty. Australia
Bio-Rad Laboratories Ges.m.b.H. Austria
Sanofi Diagnostics Pasteur HgmbH Austria
Bio-Rad International, Inc. (FSC) Barbados
Bio-Rad Laboratories S.A.-N.V. Belgium
RSL N.V. Belgium
Bio-Metrics Properties, Limited California, USA
Bio-Rad Laboratories (Israel) Inc. California, USA
Bio-Rad Leasing Corporation California, USA
Bio-Rad Pacific Limited California, USA
Bio-Rad Laboratories (Canada) Limited Canada
Sanofi Diagnositcs Pasteur Inc. Canada
Beijing Bio-Rad Analytical
Biochemistry Instrument Co., Ltd. China
SoftShell International, Ltd. Colorado, USA
Bio-Metrics, Limited Delaware, USA
Bio-Rad Export, Inc. (DISC) Delaware, USA
Bio-Metrics (U.K.) Limited England
Bio-Rad Laboratories Europe Limited England
Bio-Rad Laboratories Limited England
Bio-Rad Lasersharp Limited England
Bio-Rad Limited England
Bio-Rad Micromeasurements Limited England
Bio-Rad Microscience Limited England
Micromeasurements Limited England
Sadtler Research Laboratories Limited England
Sanofi Diagnostics Pasteur Ltd. England
Bio-Rad S.A. France
Sanofi Diagnostics France
Sanofi Diagnostics Pasteur France
ADIL Instruments S.A. France
Bio-Rad Laboratories G.m.b.H. Germany
Sanofi Diagnostics GMB Germany
Bio-Rad China Limited Hong Kong
Bio-Rad Laboratories(India)Private Limited India
Bio-Rad Laboratories Israel Limited Israel
Bio-Rad Laboratories S.r.l. Italy
Sanofi Diagnostics Pasteur S.r.l. Italy
Nippon Bio-Rad Laboratories K.K. Japan
Sanofi Fujirebio Japan
Bio-Rad Korea Ltd. Korea
Bio-Rad Micromeasurements, Inc. Massachusetts, USA
Bio-Rad Laboratories Mexico, S.A. de C.V. Mexico
Sanofi Diagnostics Pasteur Mexico
Bio-Rad Laboratories B.V. The Netherlands
Sanofi Diagnostics Pasteur BV The Netherlands
Sandia Systems, Inc. New Mexico, USA
Polaron Instruments, Inc. Pennsylvania, USA
Sanofi Polska SP ZOO Poland
Sanofi Diagnostics Pasteur LDA Portugal
Bio-Rad Laboratories Ltd. Russia
Bio-Rad Laboratories (Singapore) Pte.Limited Singapore
Sanofi Africa Ltd. South Africa
Bio-Rad Laboratories S.A. Spain
Sanofi Diagnostics Pasteur ESP Spain
Bio-Rad Laboratories AB Sweden
Bio-Rad Laboratories AG Switzerland
Sanofi Diagnostics Pasteur S.A. Switzerland
Sanofi Pacific Diagnostics Ltd. Thailand
Blood Virus Diagnostics Inc. Washington, USA
Genetic Systems Corporation Washington, USA
Sanofi Diagnostics Pasteur Inc. Washington, USA
<PAGE>
EXHIBIT 23.1 - CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by
reference in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-8 (File Nos. 33-53335 and
33-53337). It should be noted that we have not audited any
financial statements of the Company subsequent to December 31,
1999 or performed any audit procedures subsequent to the date of
our report.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Francisco, California,
March 28, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Bio-Rad Laboratories, Inc. Form 10-K for the year ended
December 31, 1999 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 17,087
<SECURITIES> 0
<RECEIVABLES> 203,480
<ALLOWANCES> 9,582
<INVENTORY> 126,277
<CURRENT-ASSETS> 378,717
<PP&E> 250,568
<DEPRECIATION> 124,626
<TOTAL-ASSETS> 668,862
<CURRENT-LIABILITIES> 202,521
<BONDS> 239,211
0
0
<COMMON> 12,463
<OTHER-SE> 207,651
<TOTAL-LIABILITY-AND-EQUITY> 668,862
<SALES> 549,489
<TOTAL-REVENUES> 549,489
<CGS> 255,223
<TOTAL-COSTS> 255,223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,741
<INCOME-PRETAX> 16,416
<INCOME-TAX> 4,695
<INCOME-CONTINUING> 11,721
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,721
<EPS-BASIC> 0.97
<EPS-DILUTED> 0.96
</TABLE>
