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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 23, 1998 (JUNE 16, 1998)
PHYSICIANS CLINICAL LABORATORY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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DELAWARE 0-20678 68-0280528
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
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3301 C STREET, SUITE 100E
SACRAMENTO, CALIFORNIA 95816
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (916) 444-3500
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ITEM 5. OTHER EVENTS.
PREFATORY STATEMENT
THIS REPORT ON FORM 8-K REFERS TO AND SUMMARIZES CERTAIN
AGREEMENTS, CONTRACTS AND DOCUMENTS RELATING TO PHYSICIANS CLINICAL LABORATORY,
INC. ANY DESCRIPTION OF THE TERMS OR PROVISIONS OF SUCH AGREEMENTS, CONTRACTS
AND DOCUMENTS DOES NOT PURPORT TO BE COMPLETE AND IN EACH INSTANCE REFERENCE IS
MADE TO THE ACTUAL AGREEMENT, CONTRACT OR DOCUMENT BEING DISCUSSED WHICH IS
FILED AS AN EXHIBIT HERETO.
COMPLETION OF SECURED DEBT FINANCING WITH AFFILIATE
On June 16, 1998 (the "Closing Date"), Oaktree Capital
Management, LLC, acting as agent on behalf of certain funds and accounts
("Oaktree") loaned $4,000,000 (the "Loan") to Physicians Clinical Laboratory,
Inc. (the "Registrant"). Oaktree, an affiliate of the Registrant and owned
directly or on behalf of certain funds and accounts approximately, 44% of the
Registrant's issued and outstanding shares of Common Stock and approximately 96%
of the outstanding principal amount of the Registrant's Senior Secured Notes Due
2004 (the "Prior Notes"). The proceeds of the loan will be used by the
Registrant for working capital.
The loan is evidenced by certain secured promissory notes (the
"Notes") bearing interest at the rate of 15% per annum and maturing on June 12,
2001. The Notes by their terms are subordinated to the $10 million secured
credit facility of Daiwa Healthco-3LLC and senior to the $55 million outstanding
principal amount of the Prior Notes issued under an indenture dated September
30, 1997 (the "Indenture"). In connection with, and as an additional
consideration for, the Loan, Nu-Tech Bio Med, Inc ("Nu-Tech"), a holder of
approximately 52.6% of the issued and outstanding capital stock of the
Registrant's, on the Closing Date, sold and transferred 67,500 of shares (the
"Shares") of common stock (the "Common Stock") of the Registrant, constituting
approximately 2.7% of the issued and outstanding capital stock of the Registrant
to Oaktree. The contemporaneous sale of the Shares was a condition to Oaktree
making the Loan. As a result of this sale Oaktree and Nu-Tech now own
approximately 46.8% and 49.9%, respectively, of the issued and outstanding
shares of the Registrant.
In connection with the issuance and sale of the Notes and the
sale of the Shares, (the "Transaction") the Registrant entered into the
following agreements: (A) a Note Purchase Agreement dated as of June 12, 1998
between the Registrant and Oaktree, attached hereto as Exhibit 99.1 (the "Note
Purchase Agreement"); (B) a Security Agreement, dated as of June 12,1998,
between the Registrant and Oaktree, attached hereto as Exhibit 99.2 (the
"Security Agreement"); (C) a Pledge Agreement, dated as of June 12, 1998,
between the Registrant and Oaktree, attached hereto as 99.3 (the "Pledge
Agreement"); (D) an Amended and Restated Stockholders Agreement, dated as of
June 12, 1998, by and among the Registrant, Nu-Tech, Oaktree and J. Marvin
Feigenbaum attached hereto as Exhibit 99.4 (the "Amended and Restated
Stockholders Agreement"); (E) an Intercreditor and Subordination Agreement by
and between Oaktree and U.S. Bank Trust National Association( as trustee (the
"Trustee") under the Indenture by the Registrant), and acknowledged by the
Registrant, attached hereto as Exhibit 99.5 (the "Trustee Intercreditor
Agreement"); (F) the Intercreditor and Subordination
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Agreement by and between Oaktree and Diawa HealthCo-3LLC ("Diawa"), and
acknowledged by the Registrant, attached hereto as Exhibit 99.6 (the "Diawa
Intercreditor Agreement"). In addition, in connection with the Transactions, the
Trustee, a majority of the holders of the Prior Notes and Diawa, to the extent
necessary, executed documents consenting to the Registrant entering into and
consummating the Transactions and waiving any breach or default that may have
occurred as a result of the Registrant entering into and consummating the
Transactions; provided, however that neither the Trustee, Diawa or a majority of
the holders of the Prior Notes waived any existing, if any, or future defaults
by the Registrant under any documents executed by such parties and the
Registrant.
DESCRIPTION OF THE SECURED LOAN AND RELATED DOCUMENTS
The Note Purchase Agreement was entered into between the
Registrant and Oaktree in connection with the issuance of 15% Senior Secured
Notes Due 2001(the "Notes") in the aggregate principal amount of $4,000,000 (the
"Notes"). The proceeds of the loan will be used by the Registrant for working
capital. The Notes bear interest at the rate of 15% per annum. Interest on the
Notes is payable semi-annually on April 1 and October 1 of each year, commencing
on October 1 ,1998. The Registrant may elect in its sole discretion to pay
interest by either of a (a) payment of cash or (b) delivery of additional Notes
(valued at 100% of the principal amount thereof). The Notes will mature on June
12, 2001.
The Notes may be redeemed, at the Registrant's option, in whole
or in part, upon 10 days' notice, at a redemption price equal to 100% of the
principal amount thereon, plus accrued and unpaid interest thereon through the
applicable redemption date. The Registrant is not obligated to make mandatory
redemption or sinking fund payments with respect to the Notes.
Other than with respect to the account receivables of the
Registrant as to which Daiwa has a first lien, payment of the Notes is secured
by a first priority lien in all existing and future assets of the Registrant
including, without limitation, equipment, inventory, intellectual property
(including patents, copyrights and trademarks), documents and instruments. As
additional collateral for payment of the Notes, the Registrant has pledged 100
shares of common stock of Bio-Cypher Funding Corp., an accounts receivable
funding subsidiary of the Registrant. With respect to the account receivables of
the Registrant, Oaktree has a second priority lien. Each of the Security
Agreement and Pledge Agreement contains customary provisions regarding the
preservation of collateral, defaults and remedies, as well as customary
covenants, representations and warranties. Pursuant to the terms of the Trustee
Intercreditor Agreement, the security interests granted to the Trustee to secure
the Prior Notes with respect to certain collateral will be subordinated to
Oaktree. Pursuant to the terms of the Diawa Intercreditor Agreement, the
security interest granted to Oaktree in the account receivables of the
Registrant will be subordinated to the security interests granted to Diawa in
such account receivables.
DESCRIPTION OF THE SALE OF THE SHARES OF THE COMMON STOCK OF THE REGISTRANT AND
THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
On June 16, 1998, Nu-Tech sold 67,500 shares(the "Shares") of
common stock of the Registrant to Oaktree representing approximately 2.7% of the
issued and outstanding capital stock of the Registrant. The sale of the Shares
was a condition to Oaktree making the Loan. Following the completion of a
reorganization of the Registrant under chapter 11 of the Bankruptcy Code,
Nu-Tech owned approximately 52.6% of the issued and outstanding capital stock of
the Registrant. In June 1998,
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the Registrant's business required $4,000,000 (the "Required Amount") for
working capital purposes, Nu-Tech, however, did not have sufficient monies
available to loan the Required Amount to the Registrant or to participate in
any lending transaction. Oaktree, the holder of approximately 44% of the issued
and outstanding capital stock of the Registrant and approximately 96% of the
outstanding principal amount of the Prior Notes, agreed to loan the Registrant
the Required Amount. As consideration for the Loan, Oaktree required and
received the Notes and the right to purchase the Shares and to elect a majority
of the Registrant's Board of Directors. As a result of this sale Oaktree and
Nu-Tech now own approximately 46.8% and 49.9%, respectively, of the issued and
outstanding capital stock of the Registrant. In connection with the sale of the
Shares, the Registrant, Oaktree and J. Marvin Feigenbaum (the "Stockholders")
entered into an Amended and Restated Stockholders Agreement which amended and
restated an initial Stockholders Agreement by and among the Stockholders dated
September 30, 1997. The following is a brief description of the substantive
provisions of such agreement:
(i) Transfer Restrictions. None of the shares of
Common Stock or any securities exercisable for or
convertible into the Common Stock (the
"Securities") held by the Stockholders may be
transferred unless (A) the transferee shall
deliver to Registrant, a written acknowledgment
that the Securities are subject to the
Stockholders Agreement; (B) such transfer shall be
made pursuant to a public offering registered
under the Securities Act and in accordance with
applicable state law; (C) such transfer is made to
an affiliate of the transferring Stockholder; (D)
such transfer is made by the Registrant in a pro
rata distribution of Securities to its
stockholders or (E) such transfer is made by
Oaktree in a distribution to its partners. In
addition, the Stockholders agree that they will
not, without the prior written consent of
Registrant, transfer any shares of Common Stock to
Cerberus Partners, L.P. or any entity which owns,
directly or indirectly, 5% or more of the issued
and outstanding equity securities of any entity
that conducts clinical or specialized laboratory
services as its principal business.
(ii) Stockholder Share Purchase Rights. If the
Registrant desires in good faith to issue or
transfer the securities, the Registrant shall
deliver a written notice to the proposed transfer
to each Stockholder (the "Transfer Notice"), which
notice shall contain a description of the proposed
transaction and the terms thereof, and shall be
accompanied by a copy of the bona fide third party
written offer. If the Registrant receives
authority from its Board of Directors, it may
issue the Securities on the terms set forth in the
Transfer Notice; subsequently (except in certain
circumstances set forth in the Shareholders
Agreement), the Registrant shall make the offer to
sell to each Stockholder a pro rata portion of the
Securities based upon such Stockholder's holdings
of New Common Stock. Any Stockholder may, by
written notice, accept such offer, in whole or in
part, within thirty (30) days after receipt of the
offer.
(iii) Composition of Board of Directors. The Board
of Directors, as specified in the Amended and
Restated Stockholders Agreement is comprised of:
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Dr. Nathan Rubin
Mr. J. Marvin Feigenbaum
Mr. Matthew S. Barrett
Mr. David Sterling
Mr. Kenneth Liang
(iv) Voting Agreement. At the next annual or
special meeting called for the purpose of electing
directors, the Stockholders shall elect five
members to the Board of Directors, of which two
individuals shall be designated by Nu-Tech and
three individuals shall be designated by the
Oaktree. If a director designated by Oaktree or
Nu-Tech vacates such position for any reason prior
to the expiration of his or her term, then Oaktree
or Nu-Tech shall have the right to nominate a
replacement so long as it continues to
beneficially own the percentage of outstanding
Securities specified in the Stockholders
Agreement.
(v) Corporate Governance. During such time as
Nu-Tech has the right to designate Directors under
the Shareholders Agreement, an affirmative vote of
at least one Director who is appointed by Nu-Tech
shall be required to: (A) authorize or propose to
authorize any agreement of the Registrant other
than issuances of securities pursuant to warrants,
employee benefit plans, management incentive plans
or employment agreements with officers of
Registrant; (B) issue, or propose to issue any
capital stock; (C) modify or propose to modify the
Certificate of Incorporation or the Bylaws of
Registrant; (D) or any security exercisable or
exchangeable for or convertible into any of its
capital stock; (E) effect or propose to effect a
recapitalization or propose to or reorganization
of Registrant in any form; (F) consolidate or
merge, or transfer all or substantially all of the
properties and assets of Registrant; (G) incur, or
cause any subsidiary of Registrant to incur any
indebtedness or other payment obligation out of
the ordinary course of business (other than
amounts borrowed pursuant to the Loan and Security
Agreement), that exceeds $1,000,000 when
aggregated with all other outstanding indebtedness
of Registrant and its subsidiary; (H) make any
capital expenditure that exceeds $1,000,000 when
aggregated with all other capital expenditures in
the immediately preceding twelve month period; or
(I) modify the employment agreement or otherwise
approve any compensation arrangement or other
transaction for the benefit of Mr. Feigenbaum
other than as provided in the employment
agreement.
In addition, upon the affirmative vote of two directors,
Registrant shall institute claims for indemnification pursuant to the provisions
of the Stock Purchase Agreement between Registrant and Nu-Tech dated as of
September 30, 1997. The Stockholders shall take all actions necessary to cause
the Board of Directors to adopt resolutions that establish an Indemnity
Committee.
(vi) Option. Pursuant to terms of the Stockholders
Agreement, Nu-Tech has granted to Oaktree an
exclusive option (the "Option") to purchase all of
the Securities held at the time of exercise of
such Option (the "Option Shares") by
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Nu-Tech for aggregate consideration of $10,000,000
(the "Option Price"). The Option is exercisable by
Oaktree on or prior to the earlier of (x) December
31, 2000 or (y) in the event that shareholder
approval of the Option is required by the
stockholders of Nu-Tech and such approval is not
obtained prior to December 31, 1998 (the
"Stockholder Termination Date"), then December 31,
1998. The Option shall be exercisable for a period
of ninety (90) days following each date on which
(i) one or more directors nominated by Nu-Tech
fails to affirmatively vote for any action
described in section (v) above that would require
the approval of a director nominated by Nu-Tech
and (ii) such action is approved by a majority of
the members of the Board of Directors (each such
date, a "Triggering Event").
Oaktree may exercise the Option by delivering written notice to
Nu-Tech of its intent to so exercise the Option and specifying the date on which
the closing of such exercise of the Option shall occur, which shall in no event
be later than ninety (90) days following the Triggering Event (the "Option
Closing"). In the event that Oaktree exercises the Option prior to the
Stockholder Termination Date and, as of such date, the Nu-Tech Stockholder
Approval has not been obtained, the Option Closing shall occur as soon as
practicable following the date on which Nu-Tech Stockholder Approval is
obtained. In the event the Nu-Tech Stockholder Approval is not obtained prior to
the Stockholder Termination Date, the exercise of the Option shall be deemed to
have not occurred and Oaktree shall have no obligation to deliver the Option
Price to Nu-Tech.
(vii) Buy-Sell Agreement. Subject to receipt of the
Nu-Tech Stockholder Approval, if necessary, from
and after December 31, 2000 until the date that is
five years following the date the that Nu-Tech
Stockholder Approval is obtained, either Oaktree
or Nu- Tech (the "Initiating Stockholder") may
give written notice (the "Buy/Sell Offering
Notice") to the other party (the "Responding
Stockholder") of the Initiating Stockholder's
intent to purchase all (but not less than all) of
the Securities that the Responding Stockholder
owns.
The Initiating Stockholder shall specify in the Buy/Sell Offering
Notice the cash purchase price per share at which the Initiating Stockholder
would be willing to purchase all of the Securities that the Responding
Shareholder owns, which consideration shall not be less than $0.81 per share
(subject to adjustment to reflect any and all stock splits, stock dividends and
other combinations and reclassifications of Securities occurring following the
date of the Stockholders Agreement) and the date on which such transaction will
be consummated (which such date shall not be more than ninety (90) nor less than
fifteen (15) days after the date of receipt by the Responding Stockholder of the
Buy/Sell Offering Notice (the "Buy/Sell Closing")).
Upon receipt of the Buy/Sell Offering Notice, the Responding
Stockholder shall be obligated either:
(i) To sell to the Initiating Stockholder for cash
all of its Securities on the date, at the price
per share and
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on the terms set forth in the Buy/Sell Offering
Notice; or
(ii) To purchase all of the Securities owned by the
Initiating Stockholder for cash on the date, at
the price per share and on the terms set forth in
the Buy/Sell Offering Notice. If the Responding
Stockholder elects to purchase the shares of the
Initiating Stockholder, the offer of the
Initiating Stockholder to purchase the Responding
Stockholder's shares shall be deemed to be null
and void and the Initiating Stockholder shall be
deemed to have accepted an offer by the Responding
Stockholder to purchase the Initiating
Stockholder's shares at the per share purchase
price proposed by the Initiating Stockholder.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) N/A
(b) N/A
(c) EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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99.1 Note Purchase Agreement, dated as of June 12, 1998
between the Registrant and Oaktree Capital Management,
LLC, acting as agent on behalf of certain funds and
accounts ("Oaktree").
99.2 Security Agreement, dated as of June 12, 1998, between
the Registrant and Oaktree.
99.3 Pledge Agreement, dated as of June 12, 1998, between the
Registrant and Oaktree.
99.4 Amended and Restated Stockholders Agreement, dated as of
June 12, 1998, by and among the Registrant, Nu-Tech Bio
Med, Inc., Oaktree and J. Marvin Feigenbaum.
99.5 Intercreditor and Subordination Agreement by and between
Oaktree and U.S. Bank Trust National Association and
acknowledged by the Registrant.
99.6 Intercreditor and Subordination Agreement by and between
the Registrant and Diawa HealthCo-3LLC ("Diawa), and
acknowledged by the Registrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
PHYSICIANS CLINICAL LABORATORY, INC.
By: /s/ J. MARVIN FEIGENBAUM
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J. Marvin Feigenbaum
Chairman of the Board, President and
Chief Executive Officer
Date: June 23, 1998
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EXHIBIT 99.1
PHYSICIANS CLINICAL LABORATORY, INC.
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NOTE PURCHASE AGREEMENT
DATED AS OF JUNE 12, 1998
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15% SENIOR SECURED NOTES DUE 2001
EXH 99.1 - 1
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TABLE OF CONTENTS
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Page
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Section 1. ISSUANCE OF NOTES.............................................................. 1
Section 1.1. Authorization........................................................ 1
Section 1.2. Purchase and Sale of Notes; Closing.................................. 1
Section 2. REPRESENTATIONS OF THE COMPANY................................................. 2
Section 2.1. Organization and Authority of the Company............................ 2
Section 2.2. Litigation; Observance of Statutes, Regulations and Orders........... 2
Section 2.3. Taxes................................................................ 3
Section 2.4. Compliance with Laws and Other Instruments of the Company............ 3
Section 2.5. Governmental Authorizations.......................................... 3
Section 2.6. Licenses and Permits................................................. 3
Section 2.7. Offering of Notes.................................................... 4
Section 2.8. Margin Regulations................................................... 4
Section 2.9. Investment Company Act............................................... 4
Section 3. REPRESENTATIONS OF THE PURCHASER............................................... 4
Section 3.1. Due Authorization.................................................... 4
Section 3.2. Investment Purpose................................................... 4
Section 3.3. Experienced Investor................................................. 4
Section 3.4. Accredited Investor.................................................. 5
Section 3.5. Receipt of Information............................................... 5
Section 4. PURCHASERS' CONDITIONS OF CLOSING.............................................. 5
Section 4.1. Representations True................................................. 5
Section 4.2. Proceedings Satisfactory............................................. 5
Section 4.3. Purchase Permitted by Applicable Laws................................ 5
Section 4.4. Notes................................................................ 5
Section 4.5. Other Agreements..................................................... 6
Section 5. PAYMENT AND PREPAYMENT OF THE NOTES............................................ 6
Section 5.1. Payments of Principal and Interest................................... 6
Section 5.2. Optional Prepayment of Principal and Interest........................ 6
Section 5.3. Mandatory Prepayment of Principal and Interest....................... 6
Section 6. COVENANTS...................................................................... 6
Section 7. DEFINITIONS.................................................................... 6
Section 7.1. Definitions.......................................................... 6
Section 7.2. Accounting Terms..................................................... 7
Section 8. EVENTS OF DEFAULT; REMEDIES.................................................... 7
Section 8.1. Events of Default.................................................... 7
Section 8.2. Remedies............................................................. 9
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EXH 99.1 - 2
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Section 9. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES.............................................................................. 10
Section 10. AMENDMENT AND WAIVER.......................................................... 10
Section 11. TAXES......................................................................... 11
Section 12. MISCELLANEOUS................................................................. 12
Section 12.1. Expenses............................................................ 12
Section 12.2. Reliance on and Survival of Representations......................... 12
Section 12.3. Successors and Assigns.............................................. 12
Section 12.4. Notices............................................................. 12
Section 12.5. Stay, Extension and Usury Laws...................................... 13
Section 12.6. Pro Rated Interests and Limited Liabilities of Funds................ 13
Section 12.7. Counterparts........................................................ 13
Section 12.8. Governing Law; Dispute Resolution................................... 13
Section 12.9. Waiver of Jury Trial................................................ 14
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EXH 99.1 - 3
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Physician's Clinical Laboratory, Inc.
3301 C Street, Suite 100E
Sacramento, California 95816
NOTE PURCHASE AGREEMENT
New York, New York
as of June 12, 1998
To: The Purchasers listed in Schedule 1.2
Ladies and Gentlemen:
Physician's Clinical Laboratory, Inc., a Delaware corporation (the
"Company"), hereby agrees with the Purchasers as follows:
Section 1. ISSUANCE OF NOTES.
Section 1.1. Authorization. The Company has duly authorized an issue of
its 15% Senior Secured Notes due June 12, 2001 in the aggregate principal amount
of Four Million Dollars ($4,000,000) (the "Notes"). Each Note will shall be
secured by a lien on the Collateral; provided, however, that with respect to
certain accounts, such lien shall be subordinated to the security interest
granted by the Company to Daiwa Healthco-2 LLC on the Collateral; provided
further, that such lien shall be senior to any security interest granted by the
Company on the Collateral with respect to the Company's Senior Secured Notes due
2004. Each Note shall be in the form of Exhibit A and shall mature, bear
interest and be payable and shall be otherwise as provided herein and therein.
As used herein, the term "Notes" shall include all notes originally issued
pursuant to this Note Purchase Agreement (the "Agreement"), all notes delivered
in substitution or exchange for any of such notes and all notes issued as
payment in kind as payment of interest on such notes and, where applicable,
shall include the singular number as well as the plural. Capitalized terms used
herein without definition shall have the meanings specified in Section 7 hereof.
Each Purchaser will have registration rights with respect to the Notes as set
forth in that certain Registration Rights Agreement, dated June 12, 1998, by and
between the Company and the Purchasers (the "Registration Rights Agreement").
Section 1.2. Purchase and Sale of Notes; Closing. In reliance upon the
representations made in Section 3 hereof and subject to the terms and conditions
set forth herein, the Company shall sell to the entities listed on Schedule 1.2
(each a "Purchaser" and collectively, the "Purchasers"), severally and not
jointly, and, subject to the terms and conditions hereof, the Purchasers shall
purchase from the Company, the Notes in an aggregate principal amount of Four
Million Dollars ($4,000,000) (as further described in Schedule 1.2). In
consideration for the purchase of the Notes, the Purchasers shall deliver to the
Company the amount of money set forth opposite such Purchaser's name on Schedule
1.2 (the "Purchase Price").
The closing (the "Closing") of such purchase of the Notes shall be held
at 10:00 a.m., local time, on June 12, 1998 (the "Closing Date"), at the office
of Milbank, Tweed, Hadley & McCloy, 1 Chase
EXH 99.1 - 4
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Manhattan Plaza, New York, New York, 10005, or at such other time or place as
the parties hereto may mutually agree.
On the Closing Date, the Company shall deliver to each Purchaser one or
more certificates representing the Notes registered in such Purchaser's name or
in the name of such Purchaser's nominee, as such Purchaser may specify by
written notice delivered to the Company on or prior to the Closing Date, duly
executed and dated the Closing Date, against such Purchaser's delivery to the
Company of the Purchase Price.
Section 2. REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants to the Purchasers as of the Closing Date that:
Section 2.1. Organization and Authority of the Company.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, other than with
respect to a dispute between the Company and the Delaware Franchise Tax Board
with respect to approximately $173,000 in taxes allegedly owed by the Company.
The Company has all requisite power and authority to own or hold under lease the
property it purports to own or hold under lease, to transact the business it
transacts and proposes to transact. The Company has all requisite power and
authority to execute and deliver this Agreement, the Notes and any other
documents or agreements contemplated hereby and thereby, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereunder and thereunder. The Company is duly qualified and in good
standing in each jurisdiction in which the character of the properties owned or
held under lease by it or the nature of the business transacted by it requires
such qualification, except where the failure to be so qualified or in good
standing will not have a Material Adverse Effect on the Company.
(b) The execution, delivery and performance of this Agreement,
the Notes and any other documents or agreements to which the Company is a party
contemplated hereby and thereby, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and approved by the
Company's board of directors. Each of this Agreement, the Notes and any other
document or agreement to which the Company is a party contemplated hereby or
thereby has been duly authorized, executed and delivered by, and each is the
valid and binding obligation of, the Company, enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by legal or equitable principles
relating to or limiting creditors' rights generally.
Section 2.2. Litigation; Observance of Statutes, Regulations and
Orders.
(a) There are no actions, suits or proceedings pending or, to the
best knowledge of the Company, threatened against or affecting the Company or
any of its properties in any court or before any arbitrator of any kind or
before or by any Governmental Body except actions, suits or proceedings arising
in the ordinary course of business which individually or in the aggregate, if
adversely determined, would not have a Material Adverse Effect on the Company or
materially adversely affect its ability to perform its obligations under this
Agreement, the Notes and any other document or agreement contemplated hereby or
thereby.
(b) The Company is not in default under any order of any court,
arbitrator or Governmental Body, or is subject to or a party to any Order of any
court or Governmental Body arising
EXH 99.1 - 5
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out of any action, suit or proceeding under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or similar matters.
The Company is not in violation of any statute or other rule or regulation of
any Governmental Body the violation of which might have a Material Adverse
Effect on the Company or materially adversely affect its ability to perform its
obligations under this Agreement, the Notes and any other document or agreement
contemplated hereby or thereby.
Section 2.3. Taxes. The Company has filed all tax returns which are
required to have been filed in any jurisdiction, and has paid all taxes shown to
be due and payable on such returns and all other taxes and assessments payable
by the Company to the extent the same have become due and payable and before
they have become delinquent, except for any taxes and assessments the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company has set aside on
its books reserves (segregated to the extent required by GAAP) deemed by it to
be adequate, including with respect to a dispute between the Company and the
Delaware Franchise Tax Board with respect to approximately $173,000 in taxes
allegedly owed by the Company. The Company knows of no proposed material tax
assessment against the Company and in the opinion of the Company all tax
liabilities are adequately provided for on the books of the Company.
Section 2.4. Compliance with Laws and Other Instruments of the Company.
The consummation of the transactions contemplated by this Agreement and the
execution, delivery and performance of the terms and provisions of this
Agreement, the Notes or any other document or agreement contemplated hereby or
thereby will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of the Company under, any material indenture, mortgage, deed of trust, bank loan
or credit agreement or other material agreement or instrument to which the
Company is a party or by which the Company or any of its properties may be bound
or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any Order of any court, arbitrator or Governmental
Body applicable to the Company, or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Body applicable to the Company.
Section 2.5. Governmental Authorizations. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Body is required for the issuance of the Notes or the valid execution and
delivery of the Notes or for the performance by the Company of this Agreement,
the Notes and any other documents or agreements contemplated hereby and thereby,
other than the filings, registrations or qualifications under the securities
laws or "blue sky" laws of any State that may be required to be made or obtained
in connection with the offer, issuance, sale or delivery of the Notes or any
interest therein.
Section 2.6. Licenses and Permits. The Company possesses all licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names, or rights thereto, required to conduct its business substantially as now
conducted and as currently proposed to be conducted, without known conflict with
the rights of others.
Section 2.7. Offering of Notes. Neither the Company nor anyone acting on
its behalf has offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any person other than the Purchasers.
Section 2.8. Margin Regulations. No part of the proceeds from the sale
of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any "margin stock" within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or
EXH 99.1 - 6
<PAGE> 7
for the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of such
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of such Board (12 CFR 220). The assets of the Company do not
include any margin stock, and the Company has no present intention of acquiring
any margin stock.
Section 2.9. Investment Company Act. The Company is not an investment
company or a person directly or indirectly controlled by or acting on behalf of
an investment company within the meaning of the Investment Company Act of 1940,
as amended.
Section 3. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser,
severally but not jointly, represents and warrants to the Company the following:
Section 3.1. Due Authorization. The execution, delivery and performance
of this Agreement and any other documents or agreements to which such Purchaser
is a party contemplated hereby and thereby, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by such Purchaser's appropriate representatives. Each of this Agreement
and any other document or agreement to which such Purchaser is a party
contemplated hereby or thereby has been duly authorized, executed and delivered
by, and each is the valid and binding obligation of, such Purchaser, enforceable
in accordance with its terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws or by legal or
equitable principles relating to or limiting creditors' rights generally.
Section 3.2. Investment Purpose. Such Purchaser is purchasing the Notes
to be purchased by it solely for its own account and not as nominee or agent for
any other Person and not with a view to, or for offer or sale in connection
with, any distribution thereof (within the meaning of the Securities Act) that
would be in violation of the securities laws of the United States of America or
any state thereof, without prejudice, however, to your right at all times to
sell or otherwise dispose of all or any part of said Notes under a registration
under the Securities Act or under an exemption from such registration available
under the Securities Act, and subject, nevertheless, to the disposition of your
property being at all times within your control.
Section 3.3. Experienced Investor. Such Purchaser is knowledgeable,
sophisticated and experienced in business and financial matters; that you have
previously invested in securities similar to the Notes and fully understand the
limitations on transfer described in the Notes; that such Purchaser is able to
bear the economic risk of your investment in the Notes and is presently able to
afford the complete loss of such investment; and that such Purchaser has been
afforded access to information about the Company and the financial condition,
results of operations, business, property, management and prospects of the
Company sufficient to enable it to evaluate its investment in the Notes.
Section 3.4. Accredited Investor. Such Purchaser is an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act).
Section 3.5. Receipt of Information. Such Purchaser has received
information regarding the Company and been afforded the opportunity (i) to ask
such questions as it have deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Notes and the merits and risks of investing in the Notes and
(ii) to obtain such additional information which the Company possesses or can
acquire without unreasonable effort or expense that is necessary to verify the
accuracy and completeness of the information given to you concerning the
Company.
EXH 99.1 - 7
<PAGE> 8
Section 4. PURCHASERS' CONDITIONS OF CLOSING. The Purchasers' obligation
to purchase and pay for the Notes to be purchased by the Purchasers on the
Closing Date shall be subject to the satisfaction on or before the Closing Date
of the conditions hereinafter set forth.
Section 4.1. Representations True. All representations and warranties of
the Company contained in Section 2 are true and correct.
Section 4.2. Proceedings Satisfactory. All proceedings taken on or prior
to the Closing Date in connection with the issuance of the Notes and the
consummation of the transactions contemplated hereby and all documents and
papers relating thereto shall be reasonably satisfactory in form and substance
to the Purchasers and their special counsel, and they shall have received copies
of such documents, papers, and certificates of officers of the Company, all in
form and substance reasonably satisfactory to the Purchasers and their special
counsel, as they may reasonably request in connection therewith.
Section 4.3. Purchase Permitted by Applicable Laws. The sale by the
Company and the payment for the Notes to be purchased by the Purchasers (i)
shall not be prohibited by any applicable law or governmental regulation,
release, interpretation or opinion, (ii) shall not subject the Purchasers to any
penalty under or pursuant to any applicable law or governmental regulation, and
(iii) shall be permitted by the laws and regulations of the jurisdictions to
which the Purchasers are subject.
Section 4.4. Notes. The Notes shall have been duly executed and
delivered by the parties thereto in the respective form attached as Exhibit A
hereto, with only such changes or additions as the Purchasers or their special
counsel shall, in their sole judgment, require and all governmental charges
payable in connection therewith shall have been paid (or payment shall have been
provided for) in full, and shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived without the
Purchasers' prior written consent.
Section 4.5. Other Agreements. Each dated as of the date hereof, the
Security Agreement between the Company and the Purchaser, the Pledge Agreement
between the Company and the Purchaser, Intercreditor Agreement and Subordination
from Daiwa Healthco-2 LLC, Intercreditor Agreement and Subordination from U.S.
Bank Trust National Association (f/k/a First Trust National Association), the
Consent and Waiver of U.S. Bank Trust National Association (f/k/a First Trust
National Association), the Consent of Oaktree Capital Management LLC, the UCC-1s
relating to the Notes, the legal opinion of special counsel to the Company and
such other documents as may be reasonably requested by the Purchasers shall have
been duly executed and delivered by the parties thereto and all governmental
charges payable in connection therewith shall have been paid (or payment shall
have been provided for) in full, and shall be in full force and effect and no
term or condition thereof shall have been amended, modified or waived without
the Purchasers' prior written consent.
Section 5. PAYMENT AND PREPAYMENT OF THE NOTES.
Section 5.1. Payments of Principal and Interest. Interest on the Notes
shall be payable in accordance with the terms of the Notes.
Section 5.2. Optional Prepayment of Principal and Interest. The Company,
at its option, may prepay the Notes in whole or in part in accordance with the
terms of the Notes.
EXH 99.1 - 8
<PAGE> 9
Section 5.3. Mandatory Prepayment of Principal and Interest. The Company
shall, upon occurrence of certain events set forth in the Note, prepay the Notes
in accordance with the terms of the Notes.
Section 6. COVENANTS. The Company covenants and agrees that on and after
the date hereof, so long as any Note shall be outstanding, the extent applicable
and mutatis mutandis, the covenants contained in Article 4 and Article 6 of the
Indenture.
Section 7. DEFINITIONS.
Section 7.1. Definitions. Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Indenture. Except as otherwise
specified or as the context may otherwise require, the following terms shall
have the respective meanings set forth below whenever used in this Agreement:
"Agreement" has the meaning ascribed thereto in Section 1.1.
"Closing" has the meaning ascribed thereto in Section 1.2.
"Closing Date" has the meaning ascribed thereto in Section 1.2.
"Company" means Physician's Clinical Laboratory, Inc., a Delaware
corporation.
"Default" means any default or other event which, with notice or
the lapse of time or both, would constitute an Event of Default.
"Events of Default" has the meaning ascribed thereto in Section
8.1.
"Governmental Body" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
foreign or domestic, or any financial or other rating agency.
"Holders" means the Purchasers and any other Person that becomes
a registered holder of any of the Notes (or any note or notes issued by the
Company in exchange therefor in accordance with this Agreement) as registered on
the books of the Company.
"Indenture" means that certain Indenture, dated as of September
30, 1997, by and between the Company and First Trust National Association.
"Majority Holders" means, at anytime, the holders of at least a
majority in principal amount of the then outstanding Notes; provided that Notes
owned by the Company or any Affiliate of the Company shall be disregarded, and
deemed not outstanding for this purpose.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the business, prospects, properties, condition
(financial or otherwise) or operations of such Person.
"Notes" has the meaning ascribed thereto in Section 1.1.
EXH 99.1 - 9
<PAGE> 10
"Order" means any order, writ, injunction, decree, judgment,
award, determination, direction or demand.
"Purchasers" means those Person listed on Schedule 1.2.
Section 7.2. Accounting Terms. All accounting terms used herein which
are not expressly defined in this Agreement have the meanings respectively given
to them in accordance with GAAP, all computations made pursuant to this
Agreement shall be made in accordance with GAAP, and all balance sheets and
other financial statements shall be prepared in accordance with GAAP, except in
the case of unaudited financial statements which are subject to year-end audit
adjustments and the absence of footnotes.
Section 8. EVENTS OF DEFAULT; REMEDIES.
Section 8.1. Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in the payment of principal of the Notes
when the same becomes due and payable at maturity, upon redemption or
otherwise;
(b) the Company defaults in the payment of interest on any Note
when the same becomes due and payable and such Default continues for a
period of five (5) Business Days;
(c) the Company defaults in the payment or deposit of Liquidated
Damages when the same become due and payable (or are required to be
deposited with the Trustee) in accordance with the provisions of Section
1 of the Registration Rights Agreement and such Default continues for a
period of five (5) Business Days;
(d) the Company fails to comply with following provisions of the
Indenture, each as incorporated into this Agreement pursuant to Section
6 above: Sections 4.7 (with respect to Restricted Payments other than as
provided in clause (iii) of the definitions of Restricted Payments),
4.10, 4.12 (with respect to consensual Liens), 4.14 (with respect to the
incurrence of any Indebtedness in an individual amount or in the
aggregate in excess of $100,000), 4.15, 4.25, 4.26, 4.27 or 6.1, which
failure shall be an Event of Default without the notice or passage of
time;
(e) the Company fails to comply with any other agreement or
covenant in, or provision of, the Notes or this Agreement, including the
provisions of the Indenture as incorporated into this Agreement pursuant
to Section 6 above, other than those provisions reference in Section
8.1(d) above, or any other document contemplated hereby for thirty (30)
days after notice from the Holders of at least twenty five percent (25%)
in aggregate principal amount at maturity of the then outstanding Notes;
provided, however, that no notice shall be required to commence such
thirty (30) day period in the case of Section 4.12 of the Indenture;
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company (or the
payment of which is guaranteed by the Company) whether such Indebtedness
or Guarantee now exists, or is created after the date of this Agreement,
which default (i) is caused by a failure to pay when due the final
scheduled principal installment on the stated maturity thereof prior to
the expiration of the grace period set forth in the
EXH 99.1 - 10
<PAGE> 11
documents governing such Indebtedness (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates Five Million
Dollars ($5,000,000) or more;
(g) at any time after the execution and delivery thereof, (i) any
Collateral Documents shall cease to be in full force and effect in any
material respect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination of such
Collateral Documents in accordance with the terms hereof or thereof) or
shall be declared null and void, in each case for any reason other than
the failure of any Holder to take any action within its control, or
(iii) any of the Company shall contest the validity or enforceability of
any document in writing or deny in writing that it has any further
liability under any Collateral Documents to which it is a party;
(h) the Company fails to pay final judgments reasonably
determined not to be covered by insurance maintained by or for the
benefit of the Company aggregating in excess of Five Million Dollars
($5,000,000) if (A) any creditor has commenced an enforcement proceeding
with respect to such final judgments or (B) such final judgments are not
paid, discharged or stayed within sixty (60) days of their entry;
(i) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) admits in writing its inability generally to pay its
debts as the same become due;
(j) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case
in which it is the debtor,
(ii) appoints a Custodian of the Company or for all or
substantially all of the property of the Company, or
(iii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for sixty (60)
consecutive days; or
EXH 99.1 - 11
<PAGE> 12
(k) the Company is in default with respect to the Company's
Senior Secured Notes due 2004.
Section 8.2. Remedies. In the Event of Default to the extent applicable,
the Purchasers may assert against the Company any remedy set forth in Article 7
of the Indenture.
Section 9. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES. The
Company shall keep at its principal executive office a register in which,
subject to such reasonable regulations as it may prescribe, but at its expense
(other than transfer taxes, if any), it shall provide for the registration and
transfer of the Notes. The Notes may not be sold, transferred, pledged or
hypothecated unless the proposed transaction does not require registration or
qualification under federal or state securities laws or unless the proposed
transaction is registered or qualified as required. The holder of any of the
Notes may, at such holder's option, surrender the same for transfer or exchange
either at the principal executive office of the Company or at the place of
payment named in such Note, accompanied in the case of a transfer or assignment
by a written instrument of transfer or assignment in form satisfactory to the
Company duly executed by the registered holder thereof or by such holder's
attorney duly authorized in writing. In case any holder shall so request the
transfer, assignment or exchange of any Note, the Company at its expense shall
execute and deliver in exchange therefor one or more new Notes, as may be
requested by such holder, in the same denomination or denominations as the Notes
or Notes so surrendered. Any Note issued in exchange for any other Note or upon
transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, and neither
gain nor loss of interest shall result from any such transfer or exchange. The
Company and any agent of the Company may treat the Person in whose name any Note
is registered as the owner of such Note for the purpose of receiving payment of
the principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of any
Note, and (in case of loss, theft or destruction) of indemnity reasonably
satisfactory to it, upon surrender and cancellation of such Note or receipt of
such indemnity, the Company shall make and deliver in lieu of such Note a new
Note in the same denomination and, in the case of a Note, dated as of the date
to which interest has been paid thereon. Notwithstanding the foregoing
provisions of this Section, if any Note of which the Purchasers or any other
institutional Holder is the owner is lost, stolen or destroyed, then the
affidavit of the Purchaser or such Holder's Treasurer or Assistant Treasurer (or
other responsible official), setting forth the name of the owner of such Note
and the circumstances with respect to such loss, theft or destruction, shall be
accepted as satisfactory evidence thereof, and no indemnity shall be required as
a condition to the execution and delivery by the Company of a new Note in lieu
of such Note (or as a condition to the payment thereof, if due and payable)
other than a Purchasers' or such Holder's written agreement to indemnify the
Company.
Section 10. AMENDMENT AND WAIVER.
Section 10.1. Any term, covenant, agreement or condition of this
Agreement or the Notes may, with the written consent of the Company as
authorized by its board of directors, be amended, or compliance therewith may be
waived (either generally or in a particular instance and either retroactively or
prospectively), by one or more substantially concurrent written instruments
signed by the Majority Holders; provided, however, that no such amendment or
waiver shall:
(a) reduce the principal of, or reduce the rate of or
change the time for payment of interest payable with respect to, any
Note, or extend the maturity of any Note, without the consent of the
Holder of each Note so affected;
EXH 99.1 - 12
<PAGE> 13
(b) modify any of the provisions of this Agreement or of
the Notes with respect to the payment or prepayment thereof, or reduce
the percentage of Holders required to approve any such amendment or
effectuate any such waiver, without the consent of the Holders of all of
the Notes at the time outstanding;
(c) no such waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon;
or
(d) amend any provision of this Section 10 without the
unanimous written consent of the Holders of all of the Notes at the time
outstanding.
Section 10.2. Any amendment or waiver pursuant to Section 10.1 shall
apply equally to all the Holders (other than an amendment pursuant to Section
10.1(a)) and shall be binding upon them, upon each future Holder and upon the
Company, in each case whether or not a notation thereof shall have been placed
on any Note.
Section 10.3. So long as any outstanding Notes are owned by the
Purchasers or any other institutional Holder, neither the Company or any of its
Affiliates shall solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or the
Notes unless each Holder (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Company and shall be afforded the opportunity
of considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any amendment or waiver effected pursuant
to the provisions of this Section 10 shall be delivered by the Company to each
Holder forthwith following the date on which the same shall have been executed
and delivered as set forth herein. The Company shall not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by such Holder of any
amendment or waiver of any of the terms and provisions of this Agreement unless
such remuneration is concurrently paid, on the same terms, ratably to the
Holders of all of the Notes outstanding at the time such offer is made, and who
consented to such amendment or waiver.
Section 11. TAXES. The Company shall pay all taxes (including interest
and penalties), other than taxes imposed on the income of the Holders, which may
be payable in respect of the execution and delivery of this Agreement or of the
execution and delivery of any of the Notes or of any amendment of, or waiver or
consent under or with respect to, this Agreement or any of the Notes and shall
save the Purchasers and all subsequent Holders of the Notes harmless against any
loss or liability resulting from nonpayment or delay in payment of any such tax.
The obligations of the Company under this Section shall survive the payment of
the Notes.
Section 12. MISCELLANEOUS.
Section 12.1. Expenses. The Company agrees, whether or not the
transactions contemplated hereby are consummated, to pay all reasonable expenses
incident to such transactions and also in connection with any future amendment,
waiver or consent (whether or not the same becomes effective) with respect to
this Agreement, the Notes and any other documents or agreements contemplated
hereby and thereby, including in each case, without limitation, all document
production and other expenses, all recording and filing fees, the reasonable
fees and disbursements of the Purchasers' special counsel and all expenses in
connection with the shipping to and from the Purchasers' offices or the offices
of
EXH 99.1 - 13
<PAGE> 14
the Purchasers' nominee of the Notes and upon any exchange or substitution
pursuant to the provisions of the Notes or this Agreement, and to reimburse the
Purchaser for any reasonable out-of-pocket expenses in connection therewith. The
obligations of the Company under this Section shall survive the payment of the
Notes.
Section 12.2. Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company contained in this
Agreement and in any certificates or other instruments delivered pursuant to
this Agreement shall (i) be deemed to be material and to have been relied upon
by the Purchasers, notwithstanding any investigation heretofore or hereafter
made by the Purchaser or on their behalf, and (ii) survive the execution and
delivery of this Agreement and the Notes, and shall continue in effect so long
as any Note is outstanding and thereafter as provided in Sections 11 and 12.1.
Section 12.3. Successors and Assigns. This Agreement shall bind and
inure to the benefit of and be enforceable by the Company, the Purchasers, and
the Purchasers' respective successors and assigns, and, in addition, shall inure
to the benefit of and be enforceable by each Person who shall from time to time
be a Holder of any of the Notes. The Company may not assign its rights under
this Agreement.
Section 12.4. Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, addressed:
(a) If to the Company:
Physician's Clinical Laboratory, Inc.
3301 C Street, Suite 100E
Sacramento, California 95816
Attention: J. Marvin Feigenbaum
Telecopy: (916) 498-6030
with a copy to:
Camhy, Karlinsky & Stein, LLP
1740 Broadway, 16th Floor
New York, New York 10019
Attention: Charles P. Axelrod, Esq.
Telecopy: (212) 977-8389
(b) If to the Holders, at the addresses set forth on Schedule 1.2
(in the case of the original Holder) and as may be designated by notice
to the Company.
Any such notice or communication shall be deemed to have been duly given when
delivered, telecopied or mailed as aforesaid.
Section 12.5. Stay, Extension and Usury Laws. The Company agrees (to the
extent 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
or extension law or any usury law or other law which would prohibit or forgive
the Company from paying all or a portion of the principal of or interest on the
Notes as contemplated herein, wherever enacted, now or at any time hereinafter
in force, or which may materially affect the covenants or the performance of
this Agreement in a manner inconsistent with the
EXH 99.1 - 14
<PAGE> 15
provisions of this Agreement. The Company expressly waives all benefit or
advantage of any such law and agrees not to hinder, delay or impede the
execution of any power granted to the Holders, but shall suffer and permit the
execution of such power as though no such law has been enacted. If a court of
competent jurisdiction prescribes that the Company may not waive its rights to
take the benefit or advantage of any stay or extension law or any usury law or
other law in accordance with the prior sentence, then the obligation to pay
interest on the Notes shall be reduced to the maximum legal limit under
applicable law governing the interest payable in connection with the Notes.
Section 12.6. Pro Rated Interests and Limited Liabilities of Funds. The
parties hereby acknowledges that (i) Purchaser has executed this Amendment
solely as agent and nominee of the entities listed on Schedule 1.2; (ii) all of
the obligations of the entities listed on Schedule 1.2 hereunder are several and
not joint, in accordance with, and in proportion to, such entities' respective
percentage with, and in proportion to, such entities' respective percentage
interests as set forth on Schedule 1.2, and (iii) each representation and
warranty made herein by or as to each such entity relates only to such entity,
and that no such entity is liable for breach of any representation or warranty
made by or as to any other such entity.
Section 12.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 12.8. Governing Law; Dispute Resolution. This Agreement and the
Notes and (unless otherwise provided) all amendments, supplements, waivers and
consents relating hereto or thereto shall be governed by and construed in
accordance with the laws of the State of New York. The parties agree that any
dispute controversy or claim arising out of or relating to this Agreement, of
the breach, termination or invalidity hereof shall be resolved in the
appropriate court in New York City, New York which shall have exclusive
jurisdiction thereof, and the parties hereby consent to the jurisdiction of such
court and to service of process with respect thereto in any manner provided by
applicable law.
Section 12.9. Waiver of Jury Trial. THE PURCHASERS, EACH HOLDER, BY ITS
ACCEPTANCE OF ANY OF THE NOTES, AND THE COMPANY, EACH HEREBY AGREE TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE NOTES OR ANY OTHER AGREEMENTS RELATING TO THE
NOTES OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PURCHASERS AND
THE COMPANY EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH SHALL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE PURCHASERS AND THE COMPANY FURTHER
REPRESENT AND WARRANT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN,
EXH 99.1 - 15
<PAGE> 16
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE NOTES OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE NOTES. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
EXH 99.1 - 16
<PAGE> 17
The Purchaser is requested to sign the form of acceptance in the
space provided below whereupon this Agreement shall become a binding agreement
between the Purchaser and the Company.
Very truly yours,
PHYSICIAN'S CLINICAL LABORATORY, INC.
By: _______________________________
Name:
Title:
The foregoing Agreement is hereby accepted as of the date first above written:
Purchaser
By: _______________________________
Name:
Title:
<PAGE> 18
SCHEDULE 1.2
The Purchasers
<TABLE>
<CAPTION>
AGGREGATE PURCHASE
PURCHASER PRINCIPAL AMOUNT PRICE
- --------- ---------------- --------
<S> <C> <C>
Oaktree Capital Management, LLC, $4,000,000 $4,000,000
solely as agent and nominee for
the following entities in the
following percentages:
</TABLE>
Notice Address
Oaktree Capital Management, LLC
450 Lexington Avenue, Suite 1600
New York, New York 10017
Telecopy: (212) 885-8699
Attention: Kenneth Liang, Esq.
General Counsel
with copy to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Telecopy: (212) 530-5219
Attention: David C.L. Frauman, Esq.
EXH 99.1 - 18
<PAGE> 19
EXHIBIT A
THE NOTES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. THE NOTES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION
UNDER FEDERAL OR STATE SECURITIES LAWS, OR UNLESS THE PROPOSED TRANSACTION IS
REGISTERED OR QUALIFIED AS REQUIRED.
15% SENIOR SECURED NOTES DUE 2001
of
PHYSICIAN'S CLINICAL LABORATORY, INC.
No. 1 New York, New York
$4,000,000 June 12, 1998
For value received, the undersigned, PHYSICIAN'S CLINICAL LABORATORY,
INC., a Delaware corporation (the "Company"), promises to pay to OAKTREE CAPITAL
MANAGEMENT, LLC (solely as agent and nominee for the entities set forth on Annex
I hereto) or registered assigns, the principal sum of FOUR MILLION AND NO/100
DOLLARS ($4,000,000.00) on June 12, 2001, with interest (computed on the basis
of a 360-day year comprised of twelve 30-day months) on the unpaid principal
hereof at the rate of fifteen percent (15%) per annum from the date hereof,
under the terms of that certain Note Purchase Agreement, dated June 12, 1998, by
and among the Company and each of the purchasers named therein (the
"Agreement"). Capitalized terms used herein but not otherwise defined shall have
the meanings assigned to such terms in the Agreement.
The Company may elect, in its sole discretion, to pay interest by either
of a (a) payment of cash or (b) delivery of additional Notes (valued at 100% of
the principal amount thereof, which shall be rounded upward to the nearest
$1.00) in lieu of cash in satisfaction of the interest payment due at such time.
The Company will pay interest, or issue additional Notes in lieu of cash
interest payments as provided herein and in the Agreement, semi-annually in
arrears on April 1 and October 1 of each year, commencing on October 1, 1998, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date") to Holders of record on the immediately preceding
March 15 and September 15. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes.
The Company will pay interest on the Notes to the Persons who are
registered Holders of Notes at the close of business on March 15 and September
15 next preceding the Interest Payment Date, unless such Notes have been
cancelled after such record date and on or before such Interest Payment Date.
The Notes will be payable as to principal and interest at the office or agency
of the Company maintained in the City of New York; provided, however, in the
event that the Company elects to pay the interest in cash, payment of interest
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders. 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.
The Company may, in its sole discretion and without any penalty, redeem
the Notes, in whole or in part, at any time upon ten (10) days' written notice
to the Holders, at a redemption price equal to one hundred percent (100%) of the
principal amount thereof then outstanding, including additional
EXH 99.1 - 19
<PAGE> 20
Notes issued as in kind payment of interest thereon, plus accrued and unpaid
interest thereon to the applicable redemption date (the "Redemption Price").
In the event that after December 31, 1999, Nu-Tech Bio-Med, Inc., a
Delaware corporation, pursuant to and in accordance with the Company's
Stockholders Agreement, as amended, purchases any shares of Common Stock of the
Company held by another shareholder, the Company shall redeem the Notes at the
Redemption Price.
The Company shall mail to each Holder of Notes to be redeemed at such
Holder's registered address written notice of redemption at least ten (10) days
prior to the redemption date. On and after the redemption date, interest ceases
to accrue on Notes or portions thereof called for redemption.
The Company agrees (to the extent 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 or extension law or any usury law or other
law which would prohibit or forgive the Company from paying all or a portion of
the principal of or interest on the Notes as contemplated herein, wherever
enacted, now or at any time hereinafter in force, or which may materially affect
the covenants or the performance of this Note in a manner inconsistent with the
provisions of the Agreement or this Note. The Company expressly waives all
benefit or advantage of any such law and agrees not to hinder, delay or impede
the execution of any power granted to each Holder of the Notes, but shall suffer
and permit the execution of such power as though no such law has been enacted.
If a court of competent jurisdiction prescribes that the Company may not waive
its rights to take the benefit or advantage of any stay or extension law or any
usury law or other law in accordance with the prior sentence, then the
obligation to pay interest on the Notes shall be reduced to the maximum legal
limit under applicable law governing the interest payable in connection with the
Notes.
Upon surrender of this Note for registration of transfer or assignment,
duly endorsed or accompanied by a written instrument of transfer or assignment,
duly executed, by the registered Holder hereof or such Holder's attorney duly
authorized in writing, a new Note for a like principal amount shall be issued
to, and, at the option of the Holder, registered in the name of, the transferee
or assignee, The Company may deem and treat the person in whose name this Note
is registered as the Holder and owner hereof for purposes of receiving payments
and for all other purposes whatsoever, and the Company shall not be affected by
any notice to the contrary.
This Note is one of the Notes issued pursuant to the Agreement and is
entitled to the benefits thereof.
If an Event of Default shall occur and be continuing, the principal of
this Note may, under certain circumstances, become or be declared due and
payable in the manner and with the effect provided in the Agreement.
The law of the State of New York shall govern and be used to construe
the Agreement and the Notes.
PHYSICIAN'S CLINICAL LABORATORY, INC.,
a Delaware corporation
By:____________________________________
Name:
Title:
EXH 99.1 - 20
<PAGE> 21
Annex A
<TABLE>
<CAPTION>
Fund or Account Amount
- --------------- ------
<S> <C>
OCM Opportunities Fund, L.P. $ 27,124,070
Columbia/HCA Master Retirement
Trust (Separate Account I) $ 2,252,330
OCM Opportunities Fund II, L.P. $ 20,546,500
Columbia/HCA Master Retirement
Trust (Separate Account II) $ 316,100
------------
$ 50,239,000
</TABLE>
EXH 99.1 - 21
<PAGE> 1
EXHIBIT 99.2
----------
SECURITY AGREEMENT
DATED AS OF JUNE 12, 1998
BETWEEN
PHYSICIANS CLINICAL LABORATORY, INC.
AND
OAKTREE CAPITAL MANAGEMENT, LLC
SOLELY AS AGENT AND NOMINEE
----------
EXH. 99.2 - 1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions and Interpretation...................................................1
1.1 Certain Defined Terms...........................................................1
Section 2. Collateral.......................................................................4
2.1 Grant...........................................................................4
2.2 Intellectual Property...........................................................6
2.3 Perfection......................................................................6
2.4 Preservation and Protection of Security Interests...............................6
2.5 Attorney-in-Fact................................................................7
2.6 Use of Intellectual Property....................................................8
2.7 Instruments.....................................................................8
2.8 Use of Collateral...............................................................8
2.9 Rights and Obligations..........................................................9
2.10 Release of Motor Vehicles......................................................9
2.11 Termination...................................................................10
2.12 Subordination and Release Prior to Termination................................10
Section 3. Representations and Warranties..................................................10
3.1 Title..........................................................................10
3.2 Intellectual Property..........................................................10
3.3 Goods..........................................................................11
Section 4. Covenants.......................................................................11
4.1 Books and Records..............................................................11
4.2 Removals, Etc..................................................................12
4.3 Sales and Other Liens..........................................................12
4.4 Intellectual Property..........................................................12
4.5 Further Assurances.............................................................13
Section 5. Remedies........................................................................14
5.1 Events of Default, Etc.........................................................14
5.2 Deficiency.....................................................................15
5.3 Private Sale...................................................................15
5.4 Application of Proceeds........................................................16
Section 6. Miscellaneous...................................................................16
6.1 Waiver.........................................................................16
6.2 Notices........................................................................16
6.3 Expenses, Etc..................................................................17
6.4 Amendments, Etc................................................................17
6.5 Successors and Assigns.........................................................17
6.6 Survival.......................................................................17
6.7 Agreements Superseded..........................................................18
6.8 Severability...................................................................18
</TABLE>
EXH. 99.2 - 2
<PAGE> 3
<TABLE>
<S> <C>
6.9 Captions.......................................................................18
6.10 Counterparts..................................................................18
6.11 GOVERNING LAW.................................................................18
6.12 Liabilities of Oaktree Capital Management, LLC................................18
6.13 Agent Representation..........................................................18
</TABLE>
ANNEX 1 - LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS
AND APPLICATIONS FOR COPYRIGHT REGISTRATION
ANNEX 2 - LIST OF PATENTS AND PATENT APPLICATIONS
ANNEX 3 - LIST OF TRADE NAMES, TRADEMARKS, SERVICE
MARKS, TRADEMARK AND SERVICE MARK REGISTRATIONS
AND APPLICATIONS FOR TRADEMARK AND SERVICE
MARK REGISTRATIONS
ANNEX 4 - LIST OF CONTRACTS, LICENSES AND OTHER
AGREEMENTS
ANNEX 5 - LIST OF LOCATIONS
ANNEX 6 - DEPOSIT ACCOUNTS
EXH. 99.2 - 3
<PAGE> 4
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") dated as of June 12,
1998 is made between Physicians Clinical Laboratory, Inc. (the "Company") and
Oaktree Capital Management, LLC, solely as agent and nominee for the entities
set forth on Schedule 1 (each such entity a "Fund" and collectively, the
"Funds"), in such capacity, the "Agent".
R E C I T A L S
M. Concurrently with the execution hereof, the Company is
entering into that certain Note Purchase Agreement, dated the
date hereof (the "Purchase Agreement"), with the Agent.
N. The Purchase Agreement provides for the issuance by the
Company of its 15% Senior Secured Notes Due 2001 (the "Senior
Notes"), in an aggregate principal amount of $4,000,000 on the
date hereof. Any Person that holds any of the Senior Notes now
or hereafter shall be referred to herein as a "Noteholder".
O. To induce the Agent to enter into the Purchase Agreement and
the other documents related thereto, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company has agreed to pledge and grant
a security interest in the Collateral (as hereinafter defined)
as security for the Secured Obligations (as hereinafter
defined).
A G R E E M E N T
Now therefore, in consideration of the above recitals and other
consideration and the mutual covenants hereinafter set forth, the parties hereto
agree as follows:
Section 1. Definitions and Interpretation.
1.1 Certain Defined Terms. Unless otherwise defined,
all capitalized terms used in this Agreement
that are defined in the Purchase Agreement
(including those terms incorporated by
reference) shall have the respective meanings
assigned to them in the Purchase Agreement. In
addition, the following terms shall have the
following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in
Section 2.1(a).
"Collateral" shall have the meaning assigned to that term in
Section 2.1.
"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by the Company, including each Copyright identified
in Annex 1.
EXH. 99.2 - 4
<PAGE> 5
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present or future infringements) now
or hereafter due or payable under or with respect to any of the foregoing, (ii)
to sue for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in
Section 2.1(e).
"Equipment" shall have the meaning assigned to that term in
Section 2.1(d).
"Governmental Approvals" shall mean any authorization, consent,
approval, license, lease, ruling, permits, waiver, exemption, filing,
registration or notice by or with any Governmental Person.
"Governmental Person" shall mean any national (Federal or
foreign), state or local government, any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, agency, body or corporation, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, any central bank or any
comparable authority.
"Instruments" shall have the meaning assigned to that term in
Section 2.1(b).
"Intellectual Property" shall mean all Copyright Collateral, all
Patent Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information, know-how,
trade secrets, computer software, source codes, mask works, and technology; (b)
all licenses or user or other agreements granted to the Company with respect to
any of the foregoing, in each case whether now or hereafter owned or used,
including the licenses or other agreements with respect to the Copyright
Collateral, the Patent Collateral or the Trademark Collateral listed in Annex 4;
(c) all information, customer lists, advertising, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs; (d) all field repair data, sales data and other
information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) all Governmental Approvals now held or hereafter
obtained by the Company in respect of any of the foregoing; and (g) all causes
of action, claims and warranties now owned or hereafter acquired by the Company
in respect of any of the foregoing. It is understood that Intellectual Property
shall include all of the foregoing owned or acquired by the Company on a
worldwide basis.
"Inventory" shall have the meaning assigned to that term in
Section 2.1(c).
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
EXH. 99.2 - 5
<PAGE> 6
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Company, including each Patent identified in Annex 2.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Secured Obligations" shall mean any and all obligations of the
Company under the Purchase Agreement and the Senior Notes.
"Signing Date" shall mean the date of this Agreement.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by the Company, including each Trademark identified
in Annex 3. Notwithstanding the foregoing, the Trademark Collateral shall not
include any Trademark which would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the Trademark
Collateral.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark registrations
and applications for trademark and service mark registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future infringements)
now or hereafter due or payable under or with respect to any of the foregoing,
(ii) to sue for all past, present and future infringements with respect to any
of the foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the State of California from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
Section 2. Collateral.
2.1 Grant. Subject to Section 2.11, as
collateral security for the prompt payment in
full when due (whether at stated maturity, by
acceleration or otherwise) and performance of
the Secured Obligations, the Company hereby
pledges and grants to the Agent a security
interest in all of the Company's right, title
and interest in and to the following property,
whether now owned or hereafter acquired by the
Company and whether now existing or hereafter
coming into existence (collectively, the
"Collateral"):
EXH. 99.2 - 6
<PAGE> 7
(a) all accounts and general intangibles (each as
defined in the Uniform Commercial Code) of the
Company constituting a right to the payment of
money, whether or not earned by performance,
including all moneys due and to become due to
the Company in repayment of any loans or
advances, in payment for goods (including
Inventory and Equipment) sold or leased or for
services rendered, in payment of tax refunds and
in payment of any guarantee of any of the
foregoing (collectively, the "Accounts");
(b) all instruments, chattel paper or letters of
credit (each as defined in the Uniform
Commercial Code) of the Company evidencing,
representing, arising from or existing in
respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts
(collectively, the "Instruments");
(c) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including
Motor Vehicles) of the Company that are held by
the Company for sale, lease or furnishing under
a contract of service (including to its
Subsidiaries or Affiliates), that are so leased
or furnished or that constitute raw materials,
work in process or material used or consumed in
its business, including all spare parts and
related supplies, all goods obtained by the
Company in exchange for any such goods, all
products made or processed from any such goods
and all substances, if any, commingled with or
added to any such goods (collectively, the
"Inventory");
(d) all equipment (as defined in the Uniform
Commercial Code) and all other goods (including
Motor Vehicles) of the Company that are used or
bought for use primarily in its business,
including all spare parts and related supplies,
all goods obtained by the Company in exchange
for any such goods, all substances, if any,
commingled with or added to such goods and all
upgrades and other improvements to such goods,
in each case to the extent not constituting
Inventory (collectively, the "Equipment");
(e) all documents of title (as defined in the
Uniform Commercial Code) or other receipts of
the Company covering, evidencing or representing
Inventory or Equipment (collectively, the
"Documents");
(f) all contracts and other agreements of the
Company relating to the sale or other
disposition of all or any part of the Inventory,
Equipment or Documents and all rights,
warranties, claims and benefits of the Company
against any
EXH. 99.2 - 7
<PAGE> 8
Person arising out of, relating to or in
connection with all or any part of the
Inventory, Equipment or Documents of the
Company, including any such rights, warranties,
claims or benefits against any Person storing or
transporting any such Inventory or Equipment or
issuing any such Documents;
(g) all other accounts or general intangibles of
the Company not constituting Accounts,
including, (i) to the extent related to all or
any part of the other Collateral, all books,
correspondence, credit files, records, invoices,
tapes, cards, computer runs and other papers and
documents in the possession or under the control
of the Company or any computer bureau or service
company from time to time acting for the Company
and (ii) all clinical laboratory licenses issued
to or held by the Company and all other
licenses, permits, approvals or authorizations
of any kind or nature relating to the laboratory
testing business or any other business in which
the Company may at any time be engaged; and all
contracts, contract rights, undertakings,
franchise agreements, other agreements, whether
written or oral in or under which the Company
may now or hereafter have any right, title or
interest, including, without limitation, with
respect to an Account, any agreement relating to
the terms of payment or the terms of performance
thereof;
(h) all other tangible and intangible property of
the Company, including all Intellectual
Property;
(i) all of the Company's rights, title, estate and
interest, whether now existing or hereafter
acquired, in and to any and all deposit accounts
(as defined in the Uniform Commercial Code)
including, without limitation, those identified
on Annex 6 hereto (collectively, the "Deposit
Accounts"); and
(j) all proceeds and products in whatever form of
all or any part of the other Collateral,
including all proceeds of insurance and all
condemnation awards and all other compensation
for any casualty event with respect to all or
any part of the other Collateral (together with
all rights to recover and proceed with respect
to the same), and all accessories to,
substitutions for and replacements of all or any
part of the other Collateral.
2.2 Intellectual Property. Solely for the purpose
of enabling the Agent to exercise its rights,
remedies, powers and privileges under Section 5
at such time or times as the Agent shall be
lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no
other purpose, the Company hereby grants to the
Agent, to the extent assignable, an irrevocable,
EXH. 99.2 - 8
<PAGE> 9
nonexclusive license (exercisable without
payment of royalty or other compensation to the
Company) to use, assign, license or sublicense
any of the Intellectual Property of the Company,
together with reasonable access to all media in
which any of the licensed items may be recorded
or stored and to all computer programs used for
the compilation or printout of such items.
2.3 Perfection. Concurrently with the execution
and delivery of this Agreement, the Company
shall (i) file such financing statements and
other documents in such offices as shall be
necessary or as the Agent may reasonably request
to perfect and establish the priority (subject
only to Liens permitted under the terms of the
Purchase Agreement) of the Liens granted by this
Agreement, (ii) deliver and pledge to the Agent
any and all Instruments, endorsed or accompanied
by such instruments of assignment and transfer
in such form and substance as the Agent may
request, (iii) cause the Agent (to the extent
requested by the Agent) to be listed as the
lienholder on all certificates of title or
ownership relating to Motor Vehicles owned by
the Company and deliver to the Agent originals
of all such certificates of title or ownership
for the Motor Vehicles together with the
odometer statements for each respective Motor
Vehicle and (iv) take all such other actions as
shall be necessary or as the Agent may request
to perfect and establish the priority (subject
only to such permitted Liens) of the Liens
granted by this Agreement.
2.4 Preservation and Protection of Security
Interests. Subject to Section 2.11, the Company
shall:
(a) upon the acquisition after the Signing Date by
the Company of any Instrument, promptly deliver
and pledge to the Agent all such Instruments,
endorsed or accompanied by such instruments of
assignment and transfer in such form and
substance as the Agent may request;
(b) upon the acquisition after the Signing Date by
the Company of any Motor Vehicle, promptly
deliver to the Agent originals of the
certificates of title or ownership for such
Motor Vehicles with the Agent listed as
lienholder, together with the manufacturer's
statement of origin and odometer statements;
(c) without limiting the obligations of the
Company under Section 2.04(b), upon the
acquisition after the Signing Date by the
Company of any Equipment covered by a
certificate of title or ownership, promptly
cause the Agent to be listed as the lienholder
on such certificate of title and within 120 days
EXH. 99.2 - 9
<PAGE> 10
of the acquisition of such Equipment deliver
evidence of the same to the Agent;
(d) upon the Company's acquiring, or otherwise
becoming entitled to the benefits of, any
Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or
associated goodwill) or other Intellectual
Property or upon or prior to the Company's
filing, either directly or through any agent,
licensee or other designee, of any application
with any Governmental Person for any Copyright,
Patent, Trademark, or other Intellectual
Property, in each case after the Signing Date,
execute and deliver such contracts, agreements
and other instruments as the Agent may request
to evidence, validate, perfect and establish the
priority (subject only to Liens permitted under
the Purchase Agreement) of the Liens granted by
this Agreement in such and any related
Intellectual Property and, if requested by the
Agent, amend Annex 1, 2 or 3 (as the case may
be) to reflect the inclusion of any such
Intellectual Property as part of the Collateral
(it being understood that the failure to amend
any such Annex shall not affect the Liens
granted by this Agreement on any such
Intellectual Property); and
(e) give, execute, deliver, file or record any and
all financing statements, notices, contracts,
agreements or other instruments, obtain any and
all Governmental Approvals and take any and all
steps that may be necessary or as the Agent may
request to create, perfect, establish the
priority (subject only to Liens permitted under
the Purchase Agreement) of, or to preserve the
validity, perfection or priority (subject only
to such permitted Liens) of, the Liens granted
by this Agreement or to enable the Agent to
exercise and enforce its rights, remedies,
powers and privileges under this Agreement with
respect to such Liens.
2.5 Attorney-in-Fact.
(a) Subject to the rights of the Company under
Sections 2.6, 2.7, 2.8 and 2.9, the Agent is
hereby appointed the attorney-in-fact of the
Company for the purpose of carrying out the
provisions of this Agreement and taking any
action and executing any instruments which the
Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, to
preserve the validity, perfection and priority
(subject only to Liens permitted under terms of
the Purchase Agreement) of the Liens granted by
this Agreement and, following any Default, to
exercise its rights, remedies, powers and
privileges under this Agreement. This
appointment as attorney-in-fact is irrevocable
and coupled with an interest.
EXH. 99.2 - 10
<PAGE> 11
Without limiting the generality of the
foregoing, the Agent shall be entitled under
this Agreement upon the occurrence and
continuation of any Event of Default (i) to ask,
demand, collect, sue for, recover, receive and
give receipt and discharge for amounts due and
to become due under and in respect of all or any
part of the Collateral; (ii) to receive, endorse
and collect any Instruments or other drafts,
instruments, documents and chattel paper in
connection with clause (i) above (including any
draft or check representing the proceeds of
insurance or the return of unearned premiums);
(iii) to file any claims or take any action or
proceeding that the Agent may deem necessary or
advisable for the collection of all or any part
of the Collateral, including the collection of
any compensation due and to become due under any
contract or agreement with respect to all or any
part of the Collateral; and (iv) to execute, in
connection with any sale or disposition of the
collateral under Section 5, any endorsements,
assignments, bills of sale or other instruments
of conveyance or transfer with respect to all or
any part of the Collateral.
(b) Without limiting the rights and powers of the
Agent under Section 2.05(a), the Company hereby
appoints the Agent as its attorney-in-fact,
effective the Signing Date and terminating upon
the termination of this Agreement, for the
purpose of (i) executing on behalf of the
Company title or ownership applications for
filing with appropriate state agencies to enable
Motor Vehicles now owned or hereafter acquired
by the Company to be retitled and the Agent to
be listed as lienholder as to such Motor
Vehicles, (ii) filing such applications with
such state agencies and (iii) executing such
other documents and instruments on behalf of,
and taking such other action in the name of, the
Company as the Agent may deem necessary or
advisable to accomplish the purposes of this
Agreement (including the purpose of creating in
favor of the Agent a perfected lien on the Motor
Vehicles and exercising the rights and remedies
of the Agent under Section 6). This appointment
as attorney-in-fact is irrevocable and coupled
with an interest.
2.6 Use of Intellectual Property. Subject to such
action not otherwise constituting a Default and
so long as no Event of Default shall have
occurred and be continuing, the Company will be
permitted to exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or
take other actions with respect to the
Intellectual Property in the ordinary course of
the business of the Company. In furtherance of
the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Agent
shall from time to time, upon the request of the
Company, execute and deliver any
EXH. 99.2 - 11
<PAGE> 12
instruments, certificates or other documents, in
the form so requested, which such Company shall
have certified are appropriate (in its judgment)
to allow them to take any action permitted above
(including relinquishment of the license
provided pursuant to Section 2.2 as to any
specific Intellectual Property). The exercise of
rights, remedies, powers and privileges under
Section 5 by the Agent shall not terminate the
rights of the holders of any licenses or
sublicenses theretofore granted by the Company
in accordance with the first sentence of this
Section 2.6.
2.7 Instruments. So long as no Event of Default
shall have occurred and be continuing, the
Company may retain for collection in the
ordinary course of business any Instruments
obtained by it in the ordinary course of
business, and the Agent shall, promptly upon the
request, and at the expense of, the Company,
make appropriate arrangements for making any
Instruments pledged by the Company available to
the Company for purposes of presentation,
collection or renewal. Any such arrangement
shall be effected, to the extent deemed
appropriate by the Agent, against trust receipt
or like document.
2.8 Use of Collateral. So long as no Event of
Default shall have occurred and be continuing,
the Company shall, in addition to its rights
under Sections 2.6, 2.7 and 2.8 in respect of
the Collateral contemplated in those sections,
be entitled to use and possess the other
Collateral and to exercise its rights, title and
interest in all contracts, agreements, licenses
and Governmental Approvals, subject to the
rights, remedies, powers and privileges of the
Agent under Section 5.
2.9 Rights and Obligations.
(a) The Company shall remain liable to perform its
duties and obligations under the contracts and
agreements included in the Collateral in
accordance with their respective terms to the
same extent as if this Agreement had not been
executed and delivered. The exercise by the
Agent of any right, remedy, power or privilege
in respect of this Agreement shall not release
the Company from any of its duties and
obligations under such contracts and agreements.
The Agent shall have no duty, obligation or
liability under such contracts and agreements or
in respect to any Governmental Approval included
in the Collateral by reason of this Agreement or
any other Document, nor shall the Agent be
obligated to perform any of the duties or
obligations of the Company under any such
contract or agreement or any such Governmental
Approval or to take any action to collect or
enforce any claim
EXH. 99.2 - 12
<PAGE> 13
(for payment) under any such contract or
agreement or Governmental Approval.
(b) No Lien granted by this Agreement in the
Company's right, title and interest in any
contract, agreement or Governmental Approval
shall be deemed to be a consent by the Agent to
any such contract, agreement or Governmental
Approval.
(c) No reference in this Agreement to proceeds or
to the sale or other disposition of Collateral
shall authorize the Company to sell or otherwise
dispose of any Collateral except to the extent
otherwise expressly permitted by the terms of
any Document.
(d) The Agent shall not be required to take steps
necessary to preserve any rights against prior
parties to any part of the Collateral.
2.10 Release of Motor Vehicles. So long as no Event
of Default shall have occurred and be
continuing, upon the request of, and at the
expense of, the Company, the Agent shall execute
and deliver to the Company such instruments as
the Company shall reasonably request to remove
the notation of the Agent as lienholder on any
certificate of title for any Motor Vehicle;
provided that any such instruments shall be
delivered, and the release shall be effective,
only upon receipt by the Agent of a certificate
from the Company stating that the Motor Vehicle
the Lien on which is to be released is to be
sold in the ordinary course of business or has
suffered a casualty loss (with title passing to
the appropriate casualty insurance company in
settlement of the claim for such loss).
2.11 Termination. When all Secured Obligations
shall have been paid in full, this Agreement
shall terminate, and the Agent shall forthwith
cause to be assigned, transferred and delivered,
against receipt but without any recourse,
warranty or representation whatsoever, any and
all remaining Collateral and money received in
respect of the Collateral, to or on the order of
the Company and to be released, canceled and
granted back all licenses and rights referred to
in Section 2.2. The Agent shall also execute and
deliver to the Company upon such termination
such Uniform Commercial Code termination
statements, certificates for terminating the
Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested
by the Company to effect the termination and
release of the Liens granted by this Agreement
on the Collateral.
EXH. 99.2 - 13
<PAGE> 14
2.12 Subordination and Release Prior to
Termination. The Agent hereby acknowledges that
pursuant to the Intercreditor and Subordination
Agreement dated as of June 12, 1998, the
security interest in Accounts and Instruments
granted pursuant to Sections 2.01(a) and 2.01(b)
is expressly subordinated to the security
interest granted by the Company to Daiwa
Healthco-2 LLC and the rights of the parties
with respect thereto are as set forth in such
intercreditor agreement.
Section 3. Representations and Warranties. As of the
Signing Date, the Company represents and
warrants to the Agent as follows:
3.1 Title. The Company is the sole beneficial
owner of the Collateral in which it purports to
grant a Lien pursuant to this Agreement, and
such Collateral is free and clear of all Liens,
except for the Liens granted to the Agent
pursuant to this Agreement and the Liens
permitted under the terms of the Purchase
Agreement. The Liens granted by this Agreement
in favor of the Agent have attached and
constitute a perfected security interest in all
of such Collateral (other than Intellectual
Property registered or otherwise located outside
of the United States of America) prior to all
other Liens (except such permitted Liens).
3.2 Intellectual Property.
(a) Annexes 1, 2 and 3 set forth completely and
correctly all Copyrights, Patents and Trademarks
owned by the Company on the Signing Date; except
pursuant to licenses and other user agreements
entered into by the Company in the ordinary
course of business and listed in Annex 4, the
Company owns and possesses the right to use, and
has done nothing to authorize or enable any
other Person to use, any Copyright, Patent or
Trademark listed in Annex 1, 2 or 3; all
registrations listed in Annexes 1, 2 and 3 are
valid and in full force and effect; and, except
as may be set forth in Annex 4 the Company owns
and possesses the right to use all Copyrights,
Patents and Trademarks listed in Annexes 1, 2
and 3.
(b) Annex 4 sets forth completely and correctly
all licenses and other user agreements included
in the Intellectual Property on the Signing
Date.
(c) To the Company's knowledge, (i) except as set
forth in Annex 4, there is no violation by
others of any right of the Company with respect
to any Copyright, Patent or Trademark listed in
Annex 1, 2 or 3 and (ii) the Company is not
infringing in any respect upon any Copyright,
Patent or
EXH. 99.2 - 14
<PAGE> 15
Trademark of any other Person; and no
proceedings have been instituted, are pending
against the Company or, to the Company's
knowledge, have been threatened against, and no
claim has been received by, the Company,
alleging any such violation, except as may be
set forth in Annex 4.
(d) The Company does not own any Trademarks
registered in the United States of America to
which the last sentence of the definition of
Trademark Collateral applies.
3.3 Goods. Any goods now or hereafter manufactured
or otherwise produced by the Company or any of
its Subsidiaries included in the Collateral have
been and will be produced in compliance with the
requirements of the Fair Labor Standards Act.
Section 4. Covenants.
4.1 Books and Records. The Company shall:
(a) keep full and accurate books and records
relating to the Collateral and stamp or
otherwise mark such books and records in such
manner as the Agent may reasonably require in
order to reflect the Liens granted by this
Agreement;
(b) furnish to the Agent from time to time (but,
unless a Default shall have occurred and be
continuing, no more frequently than quarterly)
statements and schedules further identifying and
describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such
other reports in connection with the Copyright
Collateral, the Patent Collateral and the
Trademark Collateral, as the Agent may
reasonably request, all in reasonable detail;
(c) prior to filing, either directly or through an
agent, licensee or other designee, any
application for any Copyright, Patent or
Trademark, furnish to the Agent prompt notice of
such proposed filing; and
(d) permit representatives of the Agent, upon
reasonable notice, at any time during normal
business hours to inspect and make abstracts
from its books and records pertaining to the
Collateral, permit representatives of the Agent
to be present at the Company's place of business
to receive copies of all communications and
remittances relating to the Collateral and
forward copies of any notices or communications
received by the Company with respect to the
Collateral, all in such manner as the Agent may
request.
EXH. 99.2 - 15
<PAGE> 16
4.2 Removals, Etc. Without at least 30 days' prior
written notice to the Agent, the Company shall
not (i) maintain any of its books and records
with respect to the Collateral at any office or
maintain its principal place of business at any
place, or permit any Inventory or Equipment to
be located anywhere, other than at the address
initially indicated for notices to it under
Section 6 or at one of the locations identified
in Annex 5 or in transit from one of such
locations to another or (ii) except with respect
to the change of the Company's name to
Bio-Cypher Laboratories Ltd., change its
corporate name, or the name under which it does
business, from the name shown on the signature
pages to this Agreement.
4.3 Sales and Other Liens. Without the prior
written consent of the Agent, the Company shall
not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien (other than
Liens permitted under the terms of the Purchase
Agreement) upon any Collateral or file or suffer
to be on file or authorize to be filed, in any
jurisdiction, any financing statement or like
instrument with respect to all or any part of
the Collateral in which the Agent is not named
as the sole secured party for its own benefit;
provided, however, that the Company shall,
without the consent of the Agent, be allowed,
(i) to dispose of obsolete Collateral in the
ordinary course of business, and (ii) provided
that no Event of Default shall have occurred and
be continuing, to dispose of Collateral in the
ordinary course of business.
4.4 Intellectual Property.
(a) The Company (either itself or through
licensees) will, for each Trademark, (i) to the
extent consistent with past practice and good
business judgment, continue to use such
Trademark on each and every trademark class of
goods applicable to its current line as
reflected in its current catalogs, brochures and
price lists in order to maintain such Trademark
in full force and effect free from any claim of
abandonment for nonuse, (ii) maintain as in the
past the quality of products and services
offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of
registration and (iv) not (and not permit any
licensee or sublicensee to) do any act or
knowingly omit to do any act whereby any
Trademark material to the conduct of its
business may become invalidated.
(b) The Company (either itself or through
licensees) will not do any act or knowingly omit
to do any act whereby any Patent material to the
conduct of its business may become abandoned or
dedicated.
EXH. 99.2 - 16
<PAGE> 17
(c) The Company shall notify the Agent immediately
if it knows or has reason to know that any
Intellectual Property material to the conduct of
its business may become abandoned or dedicated,
or of any adverse determination or development
(including the institution of, or any such
determination or development in, any proceeding
before any Governmental Person) regarding the
Company's ownership of any Intellectual Property
material to its business, its right to
copyright, patent or register the same (as the
case may be), or its right to keep, use and
maintain the same.
(d) The Company will take all necessary steps that
are consistent with good business practices in
any proceeding before any appropriate
Governmental Person to maintain and pursue each
application relating to any Intellectual
Property (and to obtain the relevant
registrations) and to maintain each registration
material to the conduct of its business,
including payment of maintenance fees, filing of
applications for renewal, affidavits of use,
affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In the event that any Intellectual Property
material to the conduct of its business is
infringed, misappropriated or diluted by a third
party, the Company shall notify the Agent within
(10) days after it learns of such event and
shall, if consistent with good business
practice, promptly sue for infringement,
misappropriation or dilution, seek temporary
restraints and preliminary injunctive relief to
the extent practicable, seek to recover any and
all damages for such infringement,
misappropriation or dilution and take such other
actions as are appropriate under the
circumstances to protect such Collateral.
(f) The Company shall, through counsel acceptable
to the Agent, prosecute diligently any
application for any Intellectual Property
pending as of the Signing Date or thereafter
made until the termination of this Agreement,
make application on uncopyrighted but
copyrightable material, unpatented but
patentable inventions and unregistered but
registerable Trademarks and preserve and
maintain all rights in applications for any
Intellectual Property; provided, however, that
the Company shall have no obligation to make any
such application if making such application
would be unnecessary or imprudent in the good
faith business judgment of the Company. Any
expenses incurred in connection with such an
application shall be borne by the Company. The
Company shall not abandon any right to file an
application for any Intellectual Property or any
pending such application
EXH. 99.2 - 17
<PAGE> 18
in the United States without the consent of the
Agent, which consent shall not be unreasonably
withheld.
(g) The Agent shall have the right but shall in no
way be obligated to bring suit in its own name
to enforce the Copyrights, Patents and
Trademarks and any license under such
Intellectual Property, in which event the
Company shall, at the request of the Agent, do
any and all lawful acts and execute and deliver
any and all proper documents reasonably required
by the Agent in aid of such enforcement action.
4.5 Further Assurances. The Company agrees that,
from time to time upon the written request of
the Agent, the Company will execute and deliver
such further documents and do such other acts
and things as the Agent may reasonably request
in order fully to effect the purposes of this
Agreement.
Section 5. Remedies.
5.1 Events of Default, Etc. If any Event of
Default shall have occurred and be continuing,
subject to Section 2.11:
(a) The Agent in its discretion may require the
Company to, and the Company shall, assemble the
Collateral owned by it at such place or places,
reasonably convenient to both the Agent and the
Company, designated in the Agent's request;
(b) the Agent in its discretion may make any
reasonable compromise or settlement it deems
desirable with respect to any of the Collateral
and may extend the time of payment, arrange for
payment in installments, or otherwise modify the
terms of, all or any part of the Collateral;
(c) the Agent in its discretion may, in its name
or in the name of the Company or otherwise,
demand, sue for, collect or receive any money or
property at any time payable or receivable on
account of or in exchange for all or any part of
the Collateral, but shall be under no obligation
to do so;
(d) the Agent in its discretion may, upon ten
business days' prior written notice to the
Company of the time and place, with respect to
all or any part of the Collateral which shall
then be or shall thereafter come into the
possession, custody or control of the Agent or
any of its agents, sell, lease or otherwise
dispose of all or any part of such Collateral,
at such place or places as the Agent deems best,
for cash, for credit or for future delivery
(without thereby assuming any credit risk) and
at public or private sale, without demand of
performance or notice of intention to effect any
such
EXH. 99.2 - 18
<PAGE> 19
disposition or of time or place of any such sale
(except such notice as is required above or by
applicable statute and cannot be waived), and
the Agent or any other Person may be the
purchaser, lessee or recipient of any or all of
the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any
private sale) and thereafter hold the same
absolutely, free from any claim or right of
whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the
Company, any such demand, notice and right or
equity being hereby expressly waived and
released. In the event of any sale, license or
other disposition of any of the Trademark
Collateral, the goodwill connected with and
symbolized by the Trademark Collateral subject
to such disposition shall be included, and the
Company shall supply to the Agent or its
designee, for inclusion in such sale, assignment
or other disposition, all Intellectual Property
relating to such Trademark Collateral. The Agent
may, without notice or publication, adjourn any
public or private sale or cause the same to be
adjourned from time to time by announcement at
the time and place fixed for the sale, and such
sale may be made at any time or place to which
the sale may be so adjourned; and
(e) the Agent shall have, and in its discretion
may exercise, all of the rights, remedies,
powers and privileges with respect to the
Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform
Commercial Code is in effect in the jurisdiction
where such rights, remedies, powers and
privileges are asserted) and such additional
rights, remedies, powers and privileges to which
a secured party is entitled under the laws in
effect in any jurisdiction where any rights,
remedies, powers and privileges in respect of
this Agreement or the Collateral may be
asserted, including the right, to the maximum
extent permitted by law, to exercise all voting,
consensual and other powers of ownership
pertaining to the Collateral as if the Agent
were the sole and absolute owner of the
Collateral (and the Company agrees to take all
such action as may be appropriate to give effect
to such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.1 and of the exercise of the license
granted to the Agent in Section 2.2 shall be applied in accordance with Section
5.4.
5.2 Deficiency. If the proceeds of, or other
realization upon, the Collateral by virtue of
the exercise of remedies under Section 5.1 and
of the exercise of the license granted by the
Agent in Section 2.2 are insufficient to cover
the costs and expenses of such exercise and the
payment in full of the other
EXH. 99.2 - 19
<PAGE> 20
Secured Obligations, the Company shall remain
liable for any deficiency.
5.3 Private Sale.
(a) The Agent shall incur no liability as a result
of the sale, lease or other disposition of all
or any part of the Collateral at any private
sale pursuant to Section 5.01 conducted in a
commercially reasonable manner. The Company
hereby waives any claims against the Agent
arising by reason of the fact that the price at
which the Collateral may have been sold at such
a private sale was less than the price which
might have been obtained at a public sale or was
less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first
offer received and does not offer the Collateral
to more than one offeree.
(b) The Company recognizes that, by reason of
certain prohibitions contained in the Securities
Act of 1933 and applicable state securities
laws, the Agent may be compelled, with respect
to any sale of all or any part of the
Collateral, to limit purchasers to those who
will agree, among other things, to acquire the
Collateral for their own account, for investment
and not with a view to distribution or resale.
The Company acknowledges that any such private
sales may be at prices and on terms less
favorable to the Agent than those obtainable
through a public sale without such restrictions,
and, notwithstanding such circumstances, agree
that any such private sale shall be deemed to
have been made in a commercially reasonable
manner and that the Agent shall have no
obligation to engage in public sales and no
obligation to delay the sale of any Collateral
for the period of time necessary to permit the
respective Issuer of such Collateral to register
it for public sale.
5.4 Application of Proceeds. Except as otherwise
expressly provided in this Agreement and except
as provided below in this Section 5.4, the
proceeds of, or other realization upon, all or
any part of the Collateral by virtue of the
exercise of remedies under Section 5.1 or of the
exercise of the license granted in Section 2.2,
and any other cash at the time held by the Agent
under this Section 5, shall be applied by the
Agent:
First, to the payment of the costs and expenses of such exercise
of remedies, including reasonable out-of-pocket costs and expenses of the Agent,
the reasonable fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Agent in that connection;
EXH. 99.2 - 20
<PAGE> 21
Next, to the payment in full of the remaining Secured Obligations
in such manner as the Agent may determine in accordance with the provisions of
the Purchase Agreement; and
Finally, to the payment to the Company, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.
As used in this Section 5, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Section 6. Miscellaneous.
6.1 Waiver. No failure on the part of the Agent to
exercise and no delay in exercising, and no
course of dealing with respect to, any right,
remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy,
power or privilege, nor shall any single or
partial exercise of any right, remedy, power or
privilege under this Agreement preclude any
other or further exercise of any such right,
remedy, power or privilege or the exercise of
any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided
in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and
privileges provided by law.
6.2 Notices. All notices and communications to be
given under this Agreement shall be given or
made in writing to the intended recipient at the
address specified below or, as to any party, at
such other address as shall be designated by
such party in a notice to each other party.
Except as otherwise provided in this Agreement,
all such communications shall be deemed to have
been duly given when transmitted by telex or
telecopier, delivered to the telegraph or cable
office or personally delivered or, in the case
of a mailed notice, upon receipt, in each case,
given or addressed as provided in this Section
6.2:
To the Company: Physicians Clinical Laboratory, Inc.
3301 "C" Street, Suite 100E
Sacramento, California 95816
Attention: J. Marvin Feigenbaum
To the Agent: Oaktree Capital Management, LLC
450 Lexington Avenue
Suite 1600
New York, New York 10017
Attention:
EXH. 99.2 - 21
<PAGE> 22
6.3 Expenses, Etc. The Company agrees to pay or to
reimburse the Agent for all costs and expenses
(including reasonable attorney's fees and
expenses) that may be incurred by the Agent in
any effort to enforce any of the provisions of
Section 5 or any of the obligations of the
Company in respect of the Collateral or in
connection with (a) the preservation of the Lien
of, or the rights of the Agent under, this
Agreement or (b) any actual or attempted sale,
lease, disposition, exchange, collection,
compromise, settlement or other realization in
respect of, or care of, the Collateral,
including all such costs and expenses (and
reasonable attorney's fees and expenses)
incurred in any bankruptcy, reorganization,
workout or other similar proceeding.
6.4 Amendments, Etc. Any provision of this
Agreement may be modified, supplemented or
waived only by an instrument in writing duly
executed by the Company and the Agent. Any such
modification, supplement or waiver shall be for
such period and subject to such conditions as
shall be specified in the instrument effecting
the same and shall be binding upon the Agent,
each holder of any of the Secured Obligations
and the Company, and any such waiver shall be
effective only in the specific instance and for
the purposes for which given.
6.5 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the
Company, the Agent and each holder of any of the
Secured Obligations and their respective
successors and permitted assigns. The Company
shall not assign or transfer its rights under
this Agreement without the prior written consent
of the Agent.
6.6 Survival. All representations and warranties
made in this Agreement or in any certificate or
other document delivered pursuant to or in
connection with this Agreement shall survive the
execution and delivery of this Agreement or such
certificate or other document (as the case may
be) or any deemed repetition of any such
representation or warranty.
6.7 Agreements Superseded. This Agreement
supersedes all prior agreements and
understandings, written or oral, among the
parties with respect to the subject matter of
this Agreement.
6.8 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the
remaining provisions of this Agreement, and any
such prohibition or unenforceability in any
jurisdiction shall not
EXH. 99.2 - 22
<PAGE> 23
invalidate or render unenforceable such
provision in any other jurisdiction.
6.9 Captions. The table of contents and captions
and section headings appearing in this Agreement
are included solely for convenience of reference
and are not intended to affect the
interpretation of any provision of this
Agreement.
6.10 Counterparts. This Agreement may be executed
in any number of counterparts, all of which
taken together shall constitute one and the same
instrument and any of the parties to this
Agreement may execute this Agreement by signing
any such counterpart.
6.11 GOVERNING LAW. THE INTERNAL LAW OF THE STATE
OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS AGREEMENT.
6.12 Liabilities of Oaktree Capital Management,
LLC. The Company hereby acknowledges that
Oaktree Capital Management LLC is entering into
this Agreement and all of the documents to be
executed and delivered in connection herewith
(collectively, the "Security Documents"), and
undertaking the obligations of the Funds under
the Security Documents as general partner,
attorney-in-fact or investment manager of each
of the Funds, and in each such Fund's behalf,
and not individually, and that, except with
respect to any actions taken outside of its
authority as general partner, attorney-in-fact
or investment advisor for each of the Funds,
Oaktree Capital Management, LLC is not
personally liable with respect to the
obligations of the Funds under the Security
Documents. The Company further acknowledges
that, with respect to the Security Documents,
(i) all of the obligations of the Funds are
several and not joint, in accordance with, and
in proportion to, the Funds' respective
percentage interests in the rights set out in
Exhibit A to this Agreement (it being the
parties' intent that each Fund will be
responsible only for its percentage of the
aggregate obligations of Oaktree Capital
Management LLC), and (ii) each representation
and warranty made by Oaktree Capital Management,
LLC on behalf of each Fund relates only to such
Fund, and that no Fund is liable for breach of
any representation or warranty made by or as to
any other Fund.
6.13 Agent Representation. The Agent has all
necessary power and authority to execute,
deliver and perform its obligations under this
Agreement on behalf of the Funds.
EXH. 99.2 - 23
<PAGE> 24
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PHYSICIANS CLINICAL
LABORATORY, INC.
By:______________________________________
Name:
Title:
OAKTREE CAPITAL MANAGEMENT
LLC, solely as agent and nominee for the
Funds set forth on Schedule 1
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
<PAGE> 25
ANNEX 1
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
PHYSICIANS CLINICAL LABORATORY, INC.
<TABLE>
<CAPTION>
Title Date Filed Registration No. Effective Date
- ----- ---------- ---------------- --------------
<S> <C> <C> <C>
None.
</TABLE>
EXH. 99.2 - 25
<PAGE> 26
ANNEX 2
LIST OF PATENTS AND PATENT APPLICATIONS
PHYSICIANS CLINICAL LABORATORIES, INC.
<TABLE>
<CAPTION>
File Patent Country Registration No. Date
- ---- ------ ------- ---------------- ----
<S> <C> <C> <C> <C>
None
</TABLE>
EXH. 99.2 - 26
<PAGE> 27
ANNEX 3
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
U.S. TRADEMARKS
PHYSICIANS CLINICAL LABORATORIES, INC.
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
---------------------- --------------
<S> <C> <C>
See Attached.
</TABLE>
EXH. 99.2 - 27
<PAGE> 28
FOREIGN TRADEMARKS
PHYSICIANS CLINICAL LABORATORIES, INC.
<TABLE>
<CAPTION>
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- ---- ---------------- ------- ---------------
<S> <C> <C> <C>
None.
</TABLE>
EXH. 99.2 - 28
<PAGE> 29
ANNEX 4
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
PHYSICIANS CLINICAL LABORATORIES, INC.
None
EXH. 99.2 - 29
<PAGE> 30
ANNEX 5
LIST OF LOCATIONS
PHYSICIANS CLINICAL LABORATORIES, INC.
See attached.
EXH. 99.2 - 30
<PAGE> 31
ANNEX 6
DEPOSIT ACCOUNTS
See Attached.
EXH. 99.2 - 31
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
Fund or Account Amount
- --------------- ------
<S> <C>
OCM Opportunities Fund, L.P. $ 27,124,070
Columbia/HCA Master Retirement
Trust (Separate Account I) $ 2,252,330
OCM Opportunities Fund II, L.P. $ 20,546,500
Columbia/HCA Master Retirement
Trust (Separate Account II) $ 316,100
-----------
$ 50,239,000
</TABLE>
EXH. 99.2 - 32
<PAGE> 1
EXHIBIT 99.3
*****************************************************************
PLEDGE AGREEMENT
DATED AS OF JUNE 12, 1998
BETWEEN
PHYSICIANS CLINICAL LABORATORY, INC.
AND
OAKTREE CAPITAL MANAGEMENT LLC,
SOLELY AS AGENT AND NOMINEE
*****************************************************************
EXH. 99.3 - 1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions and Interpretation..............................- 1 -
1.1 Certain Defined Terms.....................................- 1 -
Section 2. Collateral..................................................- 2 -
2.1 Grant.....................................................- 2 -
2.2 Perfection................................................- 3 -
2.3 Preservation and Protection of Security Interests.........- 3 -
2.4 Attorney-in-Fact..........................................- 4 -
2.5 Special Provisions Relating to Stock Collateral...........- 5 -
2.6 Rights and Obligations....................................- 5 -
2.7 Termination...............................................- 6 -
Section 3. Representations and Warranties..............................- 6 -
3.1 Title.....................................................- 6 -
3.2 Pledged Stock.............................................- 6 -
Section 4. Covenants...................................................- 7 -
4.1 Books and Records.........................................- 7 -
4.2 Removals, Etc.............................................- 7 -
4.3 Sales and Other Liens.....................................- 7 -
4.4 Stock Collateral..........................................- 7 -
4.5 Further Assurances........................................- 7 -
Section 5. Remedies....................................................- 8 -
5.1 Events of Default, Etc....................................- 8 -
5.2 Deficiency................................................- 9 -
5.3 Private Sale..............................................- 9 -
5.4 Application of Proceeds...................................- 9 -
Section 6. Miscellaneous..............................................- 10 -
6.1 Waiver...................................................- 10 -
6.2 Notices..................................................- 10 -
6.3 Expenses, Etc............................................- 11 -
6.4 Amendments, Etc..........................................- 11 -
6.5 Successors and Assigns...................................- 11 -
6.6 Survival.................................................- 11 -
6.7 Agreements Superseded....................................- 12 -
6.8 Severability.............................................- 12 -
7.10 Captions.................................................- 12 -
7.11 Counterparts.............................................- 12 -
7.12 GOVERNING LAW............................................- 12 -
7.13 Liabilities of Oaktree Capital Management, LLC...........- 12 -
7.14 Agent Representation.....................................- 13 -
</TABLE>
EXH. 99.3 - 2
<PAGE> 3
ANNEX 1 - PLEDGED STOCK
EXH. 99.3 - 3
<PAGE> 4
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement") dated as of June 12,
1998 is made between Physicians Clinical Laboratory, Inc. (the "Obligor") and
Oaktree Capital Management, LLC, solely as agent and nominee for the entities
set forth on Schedule 1 (each such entity a "Fund" and collectively, the
"Funds"), in such capacity, the "Agent").
R E C I T A L S
Section A. Concurrently with the execution hereof, the Obligor is
entering into that certain Note Purchase Agreement, dated the date hereof (the
"Purchase Agreement"), with the Agent.
Section B. The Purchase Agreement provides for the issuance by
the Obligor of its 15% Senior Secured Notes Due 2001 (the "Senior Notes"), in an
aggregate principal amount of $4,000,000 on the date hereof. Any Person that
holds any of the Senior Notes now or hereafter shall be referred to herein as a
"Noteholder".
Section C. To induce the Agent to enter into the Purchase
Agreement and the other documents related thereto, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligor has agreed to pledge and grant a security interest in
the Collateral (as hereinafter defined) as security for the Secured Obligations
(as hereinafter defined).
A G R E E M E N T
Now therefore, in consideration of the above recitals and other
consideration and the mutual covenants hereinafter set forth, the parties hereto
agree as follows:
Section 1. Definitions and Interpretation.
1.1 Certain Defined Terms. Unless otherwise defined, all
capitalized terms used in this Agreement that are defined in the Purchase
Agreement (including those terms incorporated by reference) shall have the
respective meanings assigned to them in the Purchase Agreement. In addition, the
following terms shall have the following meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in
Section 2.1.
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including any stockholders' or voting trust agreements)
for the issuance, sale, registration or voting of, or the outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Obligor that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital
EXH. 99.3 - 4
<PAGE> 5
stock now owned or hereafter acquired by the Obligor, including the respective
corporations identified in Annex 1 under the caption "Issuer."
"Pledged Stock" shall have the meaning assigned to that term in
Section 2.1(a).
"Secured Obligations" shall mean any and all obligations of the
Obligor under the Purchase Agreement and the Senior Notes.
"Signing Date" shall mean the date first written above.
"Stock Collateral" shall have the meaning assigned to that term
in Section 2.1(a).
"Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in the State of California from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
Section 2. Collateral.
2.1 Grant. As collateral security for the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Obligor hereby pledges and grants to
the Agent, for the benefit of the Agent and the Noteholders, a security interest
in all of the Obligor's right, title and interest in and to the following
property, whether now owned or hereafter acquired by the Obligor and whether now
existing or hereafter coming into existence (collectively, the "Collateral"):
(a) (i) all of the shares of capital stock of the Issuers
represented by the respective certificates identified in Annex 1 and all other
shares of capital stock of whatever class of the Issuers, now owned or hereafter
acquired by the Obligor, together with in each case the certificates
representing the same (collectively, the "Pledged Stock");
(ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of capital in respect of
any of the Pledged Stock, resulting from a split-up, revision, reclassification
or other like change of any of the Pledged Stock or otherwise received in
exchange for any of the Pledged Stock and all Equity Rights issued to the
holders of, or otherwise in respect of, any of the Pledged Stock; and
(iii) without affecting the obligations of the Obligor
under any provision prohibiting such action under any Document, in the event of
any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Company itself) formed by
or resulting from such consolidation or merger (collectively, and together with
the property described in clauses (i) and (ii) above, the "Stock Collateral");
(b) to the extent related to all or any part of the other
Collateral, all books, correspondence, credit files, records, invoices, tapes,
cards, computer runs and other papers and documents in the possession or under
the control of the Obligor or any computer bureau or service company from time
to time acting for the Obligor; and
EXH. 99.3 - 5
<PAGE> 6
(c) all proceeds and products in whatever form of all or any
part of the other Collateral.
2.2 Perfection. Concurrently with the execution and delivery of
this Agreement, the Obligor shall (i) deliver to the Agent or its collateral
agent all certificates identified in Annex 1, accompanied by undated stock
powers duly executed in blank and (ii) take all such other actions as shall be
necessary or as the Agent may request to perfect and establish the priority
(subject only to Liens permitted under the terms of the Purchase Agreement) of
the Liens granted by this Agreement.
2.3 Preservation and Protection of Security Interests. The
Obligor shall:
(a) upon the acquisition after the Signing Date by the Obligor
of any Stock Collateral, promptly either (x) transfer and deliver to the Agent
all such Stock Collateral (together with the certificates representing such
Stock Collateral securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank) or (y) take such other action as the Agent
shall deem reasonably necessary or appropriate to perfect, and establish the
priority of, the Liens granted by this Agreement in such Stock Collateral; and
(b) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all approvals required by any governmental agencies and take any
and all steps that may be necessary or as the Agent may request to create,
perfect, establish the priority (subject only to Liens permitted under the terms
of the Purchase Agreement) of, or to preserve the validity, perfection or
priority (subject only to such permitted Liens) of, the Liens granted by this
Agreement or to enable the Agent to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such Liens, including
causing any or all of the Stock Collateral to be transferred of record into the
name of the Agent or its nominee (and the Agent agrees that if any Stock
Collateral is transferred into its name or the name of its nominee, the Agent
will thereafter promptly give to the Obligor copies of any notices and
communications received by it with respect to the Stock Collateral pledged by
the Obligor).
2.4 Attorney-in-Fact. Subject to the rights of the Obligor under
Section 2.5, the Agent is hereby appointed the attorney-in-fact of the Obligor
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instruments which the Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, to preserve the
validity, perfection and priority (subject only to Liens permitted under the
terms of the Purchase Agreement) of the Liens granted by this Agreement and,
following any Default, to exercise its rights, remedies, powers and privileges
under this Agreement. This appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, the
Agent shall be entitled under this Agreement, upon the occurrence and
continuation of any Event of Default, (i) to ask, demand, collect, sue for,
recover, receive and give receipt and discharge for amounts due and to become
due under and in respect of all or any part of the Collateral; (ii) to receive,
endorse and collect any drafts, instruments, documents and chattel paper in
connection with clause (i) above; (iii) to file any claims or take any action or
proceeding that the Agent may deem necessary or advisable for the collection of
all or any part of the Collateral; and (iv) to execute, in connection with any
sale or disposition of the collateral under Section 5, any endorsements,
assignments, bills of sale or other instruments of conveyance or transfer with
respect to all or any part of the Collateral.
EXH. 99.3 - 6
<PAGE> 7
2.5 Special Provisions Relating to Stock Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of any Document, provided that the
Obligor agrees that it will not vote the Stock Collateral in any manner that is
inconsistent with the terms of any Document; and the Agent shall, at the
Obligor's expense, execute and deliver to the Obligor or cause to be executed
and delivered to the Obligor all such proxies, powers of attorney, dividend and
other orders and other instruments, without recourse, as the Obligor may
reasonably request for the purpose of enabling the Obligor to exercise the
rights and powers which it is entitled to exercise pursuant to this Section
2.5(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall be entitled to receive and retain any dividends on
the Stock Collateral paid in cash out of earned surplus.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Agent or any Noteholder exercises any
available right to declare any Secured Obligation due and payable or seeks or
pursues any other right, remedy, power or privilege available to it under
applicable law, this Agreement or any other document, all dividends and other
distributions on the Stock Collateral shall be paid directly to the Agent and
retained by it as part of the Stock Collateral, subject to the terms of this
Agreement, and, if the Agent shall so request, the Obligor agrees to execute and
deliver to the Agent appropriate additional dividend, distribution and other
orders and instruments to that end, provided that if such Event of Default is
cured, any such dividend or distribution paid to the Agent prior to such cure
shall, upon request of the Obligor (except to the extent applied to the Secured
Obligations), be returned by the Agent to the Obligor.
2.6 Rights and Obligations.
(a) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Document.
(b) Neither the Agent nor any Noteholder shall be required to
take steps necessary to preserve any rights against prior parties to any part of
the Collateral.
2.7 Termination. When all Secured Obligations shall have been
paid in full, this Agreement shall terminate, and the Agent shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect of the Collateral (together with the certificates
representing the Stock Collateral and any accompanying undated stock powers), to
or on the order of the Obligor.
Section 3. Representations and Warranties. As of the Signing
Date, the Obligor represents and warrants to the Noteholders and the Agent as
follows:
3.1 Title. The Obligor is the sole beneficial owner of the
Collateral in which it purports to grant a Lien pursuant to this Agreement, and
such Collateral is free and clear of all Liens
EXH. 99.3 - 7
<PAGE> 8
(and, with respect to the Stock Collateral, of any Equity Right in favor of any
other Person), except for the Liens granted under the Purchase Agreement and any
other Liens permitted under terms of the Purchase Agreement. The Liens granted
by this Agreement in favor of the Agent for the benefit of the Agent and the
Noteholders have attached and constitute a perfected security interest in all of
such Collateral prior to all other Liens (except such permitted Liens).
3.2 Pledged Stock.
(a) The Pledged Stock evidenced by the certificates identified
in Annex 1 is duly authorized, validly existing, fully paid and nonassessable,
and none of such Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of such
Pledged Stock, upon the transfer of such Pledged Stock (except for any such
restriction contained in any Document).
(b) The Pledged Stock evidenced by the certificates identified
in Annex 1 constitutes all of the issued and outstanding shares of capital stock
of any class of the Issuers beneficially owned by the Obligor on the Signing
Date (whether or not registered in the name of the Obligor), and Annex 1
correctly identifies, as at the Signing Date, the respective Issuers of such
Pledged Stock, the respective class and par value of the shares comprising such
Pledged Stock and the respective number (and registered owners) of the shares
evidenced by each such certificate.
Section 4. Covenants.
4.1 Books and Records. The Obligor shall:
(a) keep full and accurate books and records relating to the
Collateral and stamp or otherwise mark such books and records in such manner as
the Agent may reasonably require in order to reflect the Liens granted by this
Agreement; and
(b) permit representatives of the Agent, upon reasonable
notice, at any time during normal business hours to inspect and make abstracts
from its books and records pertaining to the Collateral, permit representatives
of the Agent to be present at the Obligor's place of business to receive copies
of all communications and remittances relating to the Collateral and forward
copies of any notices or communications received by the Obligor with respect to
the Collateral, all in such manner as the Agent may reasonably request.
4.2 Removals, Etc. Without at least 30 days' prior written
notice to the Agent, the Obligor shall not (i) maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any place, other than at the address initially indicated
for notices to it under Section 6 or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages to this
Agreement.
4.3 Sales and Other Liens. Except as otherwise permitted under
the terms of the Purchase Agreement, without the prior written consent of the
Agent, the Obligor shall not dispose of any Collateral, create, incur, assume or
suffer to exist any Lien upon any Collateral or file or suffer to be on file or
authorize to be filed, in any jurisdiction, any financing statement or like
instrument with respect to all or any part of the Collateral in which the Agent
is not named as the sole secured party for the benefit of the Noteholders.
EXH. 99.3 - 8
<PAGE> 9
4.4 Stock Collateral. The Obligor will cause the Stock
Collateral to constitute at all times 100% of the total number of shares of each
class of capital stock of each Issuer then outstanding. The Obligor shall cause
all such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any restriction
under the charter or bylaws of the respective Issuer of such Stock Collateral,
upon the transfer of such Stock Collateral (except for any such restriction
contained in any Document).
4.5 Further Assurances. The Obligor agrees that, from time to
time upon the written request of the Agent, the Obligor will execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order fully to effect the purposes of this Agreement.
Section 5. Remedies.
5.1 Events of Default, Etc. If any Event of Default shall have
occurred and be continuing:
(a) The Agent in its discretion may, in its name or in the
name of the Obligor or otherwise, demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
all or any part of the Collateral, but shall be under no obligation to do so;
(b) the Agent in its discretion may, upon ten business days'
prior written notice to the Obligor of the time and place, with respect to all
or any part of the Collateral which shall then be or shall thereafter come into
the possession, custody or control of the Agent, the Noteholders or any of their
respective agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Agent deems best, for cash, for
credit or for future delivery (without thereby assuming any credit risk) and at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of time or place of any such sale (except such
notice as is required above or by applicable statute and cannot be waived), and
the Agent or any Noteholder or any other Person may be the purchaser, lessee or
recipient of any or all of the Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Obligor, any such
demand, notice and right or equity being hereby expressly waived and released.
The Agent may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time or place to
which the sale may be so adjourned; and
(c) the Agent shall have, and in its discretion may exercise,
all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privileges are asserted) and such additional rights,
remedies, powers and privileges to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Agent were the sole
EXH. 99.3 - 9
<PAGE> 10
and absolute owner of the Collateral (and the Obligor agrees to take all such
action as may be appropriate to give effect to such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.1 shall be applied in accordance with
Section 5.4.
5.2 Deficiency. If the proceeds of, or other realization upon,
the Collateral by virtue of the exercise of remedies under Section 5.01 are
insufficient to cover the costs and expenses of such exercise and the payment in
full of the other Secured Obligations, the Obligor shall remain liable for any
deficiency.
5.3 Private Sale.
(a) The Agent and the Noteholders shall incur no liability as
a result of the sale, lease or other disposition of all or any part of the
Collateral at any private sale pursuant to Section 5.01 conducted in a
commercially reasonable manner. The Obligor hereby waives any claims against the
Agent or any Noteholder arising by reason of the fact that the price at which
the Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if the Agent accepts the first offer
received and does not offer the Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws, the Agent may be compelled, with respect to any sale of all or
any part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to distribution or resale. The Obligor acknowledges that any
such private sales may be at prices and on terms less favorable to the Agent
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the Agent
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to permit the
respective Issuer of such Collateral to register it for public sale.
5.4 Application of Proceeds. Except as otherwise expressly
provided in this Agreement and except as provided below in this Section 5.04,
the proceeds of, or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under Section 5.1, and any other cash at the
time held by the Agent under this Section 5, shall be applied by the Agent:
First, to the payment of the costs and expenses of such exercise
of remedies, including reasonable out-of-pocket costs and expenses of the Agent,
the reasonable fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Agent in that connection;
Next, to the payment in full of the remaining Secured Obligations
equally and ratably in accordance with their respective amounts then due and
owing or as the Noteholders holding the same may otherwise agree, all in
accordance with the terms of the Purchase Agreement; and
Finally, to the payment to the Obligor, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any surplus then remaining.
EXH. 99.3 - 10
<PAGE> 11
As used in this Section 5, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Section 6. Miscellaneous.
6.1 Waiver. No failure on the part of the Agent to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
remedy, power or privilege under this Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Agreement preclude any other
or further exercise of any such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
6.2 Notices. All notices and communications to be given under
this Agreement shall be given or made in writing to the intended recipient at
the address specified below or, as to any party, at such other address as shall
be designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or facsimile delivered to the telegraph or
cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 6.02:
To the Obligor: Physicians Clinical
Laboratory, Inc.
3301 C Street, Suite 100E
Sacramento, California 95816
Attention: J. Marvin Feigenbaum
Facsimile No.: (916) 498-6030
To the Agent: Oaktree Capital Management, LLC
450 Lexington Avenue
Suite 1600
New York, New York 10017
Attention:
Facsimile No.: (212) 885-8699
6.3 Expenses, Etc. The Obligor agrees to pay or to reimburse
the Agent for all costs and expenses (including reasonable attorney's fees and
expenses) that may be incurred by the Agent in any effort to enforce any of the
provisions of Section 5 or any of the obligations of the Obligor in respect of
the Collateral or in connection with (a) the preservation of the Lien of, or the
rights of the Agent and the Noteholders under, this Agreement or (b) any actual
or attempted sale, lease, disposition, exchange, collection, compromise,
settlement or other realization in respect of, or care of, the Collateral,
including all such costs and expenses (and reasonable attorney's fees and
expenses) incurred in any bankruptcy, reorganization, workout or other similar
proceeding.
EXH. 99.3 - 11
<PAGE> 12
6.4 Amendments, Etc. Any provision of this Agreement may be
modified, supplemented or waived only by an instrument in writing duly executed
by the Obligor and the Agent. Any such modification, supplement or waiver shall
be for such period and subject to such conditions as shall be specified in the
instrument effecting the same and shall be binding upon the Agent, each holder
of any of the Secured Obligations and the Obligor, and any such waiver shall be
effective only in the specific instance and for the purposes for which given.
6.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Obligor, the Agent, the Noteholders and
each holder of any of the Secured Obligations and their respective successors
and permitted assigns. The Obligor shall not assign or transfer its rights under
this Agreement without the prior written consent of the Agent.
6.6 Survival. All representations and warranties made in this
Agreement or in any certificate or other document delivered pursuant to or in
connection with this Agreement shall survive the execution and delivery of this
Agreement or such certificate or other document (as the case may be) or any
deemed repetition of any such representation or warranty.
6.7 Agreements Superseded. This Agreement supersedes all prior
agreements and understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
6.8 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7.10 Captions. The table of contents and captions and section
headings appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
7.11 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties to this Agreement may execute this Agreement
by signing any such counterpart.
7.12 GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS AGREEMENT.
7.13 Liabilities of Oaktree Capital Management, LLC. The
Obligor hereby acknowledges that Oaktree Capital Management, LLC is entering
into this Agreement and all of the documents to be executed and delivered in
connection herewith (collectively, the "Security Documents"), and undertaking
the obligations of the Funds under the Security Documents as general partner,
attorney-in-fact or investment manager of each of the Funds, and in each such
Fund's behalf, and not individually, and that, except with respect to any
actions taken outside of its authority as general partner, attorney-in-fact or
investment advisor for each of the Funds, Oaktree Capital Management, LLC is not
personally liable with respect to the obligations of the Funds under the
Security Documents. The Obligor further acknowledges that, with respect to the
Security Documents, (i) all of the obligations of the Funds are several and not
joint, in accordance with, and in proportion to, the Funds' respective
percentage interests in the rights set out in Exhibit A to this
EXH. 99.3 - 12
<PAGE> 13
Agreement (it being the parties' intent that each Fund will be responsible only
for its percentage of the aggregate obligations of Oaktree Capital Management
LLC), and (ii) each representation and warranty made by Oaktree Capital
Management, LLC on behalf of each Fund relates only to such Fund, and that no
Fund is liable for breach of any representation or warranty made by or as to any
other Fund.
7.14 Agent Representation. The Agent has all necessary power
and authority to execute, deliver and perform its obligations under this
Agreement on behalf of the Funds.
EXH. 99.3 - 13
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PHYSICIANS CLINICAL LABORATORY, INC.
By:_________________________________
Name: J. Marvin Feigenbaum
Title: Chief Operating Officer
OAKTREE CAPITAL MANAGEMENT, LLC,
solely as agent and nominee for the
Funds set forth on Schedule 1
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
EXH. 99.3 - 14
<PAGE> 15
ANNEX 1
PLEDGED STOCK
<TABLE>
<CAPTION>
Certificate Registered
Issuer Nos. Owner Number of Shares
- ------ ---- ----- ----------------
<S> <C> <C> <C>
Bio-Cypher
Funding Corp. 001 PCL 100 shares of common stock, $.01 par
value per share
</TABLE>
EXH. 99.3 - 15
<PAGE> 16
SCHEDULE 1
<TABLE>
<CAPTION>
Fund or Account Amount
- --------------- ------
<S> <C>
OCM Opportunities Fund, L.P. $27,124,070
Columbia/HCA Master Retirement
Trust (Separate Account I) $ 2,252,330
OCM Opportunities Fund II, L.P. $20,546,500
Columbia/HCA Master Retirement
Trust (Separate Account II) $ 316,100
-----------
$50,239,000
</TABLE>
EXH. 99.3 - 16
<PAGE> 1
EXHIBIT 99.4
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this
"Agreement") is made and entered into as of June __, 1998, by and among
Physicians Clinical Laboratory, Inc., a Delaware corporation (the "Company"),
and each of the entities listed under the caption "Stockholders" on the
signature pages hereof (collectively, the "Stockholders").
W I T N E S S E T H
WHEREAS, the Stockholders acquired the Securities (as defined
below) in exchange for claims against the Company that were relieved pursuant to
the Company's Plan of Reorganization approved by a court of appropriate
jurisdiction (the "Plan") or in connection with compensation arrangements
between the Company and such Stockholder or pursuant to a purchase of Securities
from other Stockholders;
WHEREAS, in connection with the acquisition of the Securities by
the Stockholders, the Company and certain of the Stockholders entered into that
certain Stockholders Agreement dated as of September 30, 1997 (the "Initial
Agreement");
WHEREAS, since the date of execution of the Initial Agreement,
certain of the Stockholders have sold a portion of their Securities to other
Stockholders;
WHEREAS, the Company and the Stockholders have agreed that it is
in the best interests of the parties hereto to amend and restate the Initial
Agreement to reflect the agreements among the Company and the Stockholders
resulting from the changes in relative holdings of the Stockholders;
WHEREAS, on the date hereof the Stockholders own the Securities
in the number of shares and percentage of outstanding Securities set forth in
Schedule I; and
WHEREAS, the Company and the Stockholders deem it to be in their
best interests to provide for continuity in the control and operation of the
Company and for various other matters set forth herein.
NOW, THEREFORE, in consideration of the agreements and mutual
covenants set forth herein, the parties agree as follows:
Section a. DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"15% Notes" has the meaning assigned to such term in Section
8(d).
EXH. 99.4 - 1
<PAGE> 2
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting stock of a
Person shall be deemed to be control.
"Agreement" means this Agreement, as the same shall be amended
from time to time.
"Articles" means the Certificate of Incorporation of the Company
as in effect on the date hereof and, following the date of filing with the
Secretary of State of the State of Delaware, the Certificate of Incorporation as
amended and restated in the form attached hereto as Exhibit A.
"Business Day" means a day other than Saturday, Sunday or any
other day on which banks located in the State of California or New York are
authorized or obligated to close.
"Buy/Sell Offering Notice" has the meaning assigned to such term
in Section 8(a).
"Buy/Sell Closing" has the meaning assigned to such term in
Section 8(b).
"Cerberus" means Cerberus Partners, L.P. and any Affiliate of
Cerberus.
"Common Stock" means the Company's common stock, $0.01 par value
per share.
"Company" has the meaning assigned to such term in the preamble.
"Company Transferee" has the meaning assigned to such term in
Section 3(a).
"Company Transfer Notice" has the meaning assigned to such term
in Section 3(a).
"Company Transfer Securities" has the meaning assigned to such
term in Section 3(a).
"Employment Agreement" means that certain Employment Agreement
dated as of September 30, 1997 by and between the Company and J. Marvin
Feigenbaum, as amended.
"Exchange Act" has the meaning assigned to such term in Section
4(a).
"Initiating Stockholder" has the meaning assigned to such term in
Section 8(a).
"Initial Public Offering" means the public offering of shares of
Common Stock of the Company pursuant to a Registration Statement in a
transaction where (A) the aggregate Proceeds to be paid to the Company in such
public offering (aggregated with the proceeds paid to the Company in any prior
public offerings of shares of Common Stock of the Company in any prior public
offerings of shares of Common Stock of the Corporation pursuant to a
Registration Statement) are not less than $10,000,000 and (B) the number of
shares of Common Stock sold pursuant to such Registration Statement (aggregated
with the shares previously sold pursuant to any
EXH. 99.4 - 2
<PAGE> 3
Registration Statement filed by the Company, including in each case any shares
sold or to be sold by selling shareholders) is not less than fifteen percent
(15%) of the fully-diluted number of outstanding shares of Common Stock after
giving pro forma effect to such Initial Public Offering.
"Nu-Tech" means Nu-Tech Bio-Med, Inc.
"Nu-Tech Stockholder Approval" has the meaning assigned to such
term in Section 9.
"Oaktree Holders" has the meaning assigned to such term in
Section 4(a).
"OCM" has the meaning assigned to such term in Section 4(a).
"Offer to Sell" has the meaning assigned to such term in Section
3(b).
"Option" has the meaning assigned to such term in Section 6(a).
"Option Closing" has the meaning assigned to such term in Section
6(b).
"Option Price" has the meaning assigned to such term in Section
6(a).
"Option Shares" has the meaning assigned to such term in Section
6(a).
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or agency or political
subdivision thereof.
"Proceeds" shall mean the proceeds of the Company in a public
offering net of underwriting discounts and commissions and before deducting any
other expenses payable by the Company.
"Pro Rata" shall mean, with respect to any offer of shares of
Common Stock or securities exercisable or convertible into shares of Common
Stock, an offer based on the relative percentages of Common Stock then held by
or issuable to all of the Stockholders to whom such offer is made.
"Public Offering" means any offering of Common Stock to the
public, including the Initial Public Offering, either on behalf of the Company
or any of its stockholders, pursuant to an effective Registration Statement
under the Securities Act.
"Qualifying Acquisition" has the meaning assigned to such term in
Section 3(a).
"Registration Statement" means a registration statement filed by
the Company pursuant to the Securities Act, other than registrations on Form S-8
or Form S-4 or any other registration form to be used for a business combination
or any successor form to either of such forms.
"Resolutions" has the meaning assigned to such term in Section
5(b).
EXH. 99.4 - 3
<PAGE> 4
"Responding Stockholder" has the meaning assigned to such term in
Section 8(a).
"Securities" shall mean the shares of Common Stock and any
securities exercisable for or convertible into shares of Common Stock, and
whenever an amount of Securities is calculated or used in any provision of this
Agreement, exercisable and convertible securities shall be counted as the number
of shares of Common Stock issuable upon such exercise or conversion.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Stockholders" has the meaning assigned to such term in the
preamble.
"Stockholder Termination Date" has the meaning assigned to such
term in Section 9.
"Stock Purchase Agreement" has the meaning assigned to such term
in Section 5(b).
"Transfer" has the meaning assigned to such term in Section 2(a).
"Transfer Notice" has the meaning assigned to such term in
Section 2.
"Triggering Event" has the meaning assigned to such term in
Section 6(a).
"Voting Stock" has the meaning assigned to such term in Section
3(a).
"Warrants" means the warrants issued pursuant to the Plan.
Section b. GENERAL PROVISIONS REGARDING TRANSFER.
(a) General Restrictions. Subject to Section 14(g), so long as
this Agreement shall remain in force, none of the Securities may be issued,
sold, assigned, transferred, given away or in any way disposed of by the
Stockholders (any of the foregoing being hereinafter referred to as a
"Transfer") unless:
(i) the Person in whose favor such Transfer is made shall
deliver to the Company a written acknowledgment that the Securities to be
transferred are subject to this Agreement and that such Person and such Person's
successors in interest are bound hereby on the same terms as the Transferor of
such Securities, but prior to any such Transfer, the Person proposing to make
such Transfer shall give the Company (1) notice describing the manner and
circumstances of the proposed Transfer and (2) if reasonably requested by the
Company, a written opinion in form and substance reasonably satisfactory to
legal counsel of the Company to the effect that the proposed Transfer may be
effected without registration under the Securities Act or any applicable state
law;
(ii) such Transfer shall be made pursuant to a public
offering registered under the Securities Act and in accordance with applicable
state law;
(iii) such Transfer is made to a Person who is an
Affiliate of the transferring Stockholder;
EXH. 99.4 - 4
<PAGE> 5
(iv) such Transfer is made by Nu-Tech in a pro rata
distribution of Securities to its stockholders; or
(v) such Transfer is made by the Oaktree Holders in a
distribution of Securities to its partners.
Any attempted Transfer other than in accordance with this Agreement shall be
void, and the Company shall refuse to recognize any such Transfer and shall not
reflect on its records any change in record ownership of the Securities pursuant
to any such attempted Transfer.
(b) Mechanics of Transfer. Any Stockholder who Transfers
Securities shall (i) take all such actions and execute and deliver all such
documents as may be necessary or reasonably requested by the Company in order to
consummate the Transfer of such Securities and (ii) pay to the Company such
amounts as may be required for any applicable stock transfer taxes.
(c) Restrictions on Transfers by Stockholders. Each of the
Stockholders hereby agrees that, so long as this Agreement is in effect, it will
not, without the prior written consent of the Company, sell or otherwise
transfer any of the shares of Common Stock held by such Stockholder to Cerberus
or any entity, other than a Stockholder, which owns, directly or indirectly, 5%
or more of the issued and outstanding equity securities of any entity that
conducts clinical or specialized laboratory services as its principal business.
Section c. PREEMPTIVE RIGHTS. (a) If the Company proposes to
issue or otherwise Transfer any Securities to any Person, then the Company shall
make the offer to sell and otherwise comply with the requirements set forth in
this Section 3. Notwithstanding the foregoing, (A) the Company may Transfer
Securities, and any right, title or interest therein, without making the offer
to sell set forth in this Section 3 in connection with (i) an Initial Public
Offering, (ii) the issuance of up to 200,000 shares of Common Stock to
management and employees of the Company pursuant to the Company's 1997 Equity
and Performance Incentive Plan or any other incentive plan which provides for
the issuance of Securities exclusively to directors, officers or employees of
the Company, (iii) the issuance of shares of Common Stock pursuant to the
Employment Agreement and the Warrants or (iv) an issuance of Securities in
consideration for and upon consummation of (x) a merger with respect to which
the holders of Voting Stock immediately prior to such merger beneficially own
not less than a majority of the issued and outstanding shares of Voting Stock of
the surviving entity or (y) an acquisition of assets or stock by the Company so
long as, in either the case of (x) or (y), such transaction has been approved by
the affirmative vote of at least one director appointed by Nu-Tech if, at the
time such merger is consummated, Nu-Tech has the right to nominate directors
pursuant to Section 4 hereof and the approval of the transaction by such
director is required pursuant to Section 5 hereof (a "Qualifying Acquisition")
and (B) any rights or obligations pursuant to this Section 3 shall terminate
upon an Initial Public Offering. For purposes of this Section 3, "Voting Stock"
shall mean stock of the Company of any class or series entitled to vote
generally in the election of directors of the Company.
(b) Transfer Notice. If the Company desires in good faith to
Transfer any Securities to any Person and the Company is required to make an
offer to sell pursuant to paragraph (a) of this Section 3, the Company shall
deliver a written notice of the proposed Transfer (the "Company Transfer
Notice") to each Stockholder. The Company Transfer Notice shall contain a
description of the proposed transaction and the terms thereof including the
number of Securities and type of Securities proposed to be transferred
(collectively, the "Company Transfer Securities"),
EXH. 99.4 - 5
<PAGE> 6
the name of each person to whom or in favor of whom the proposed Transfer is to
be made (the "Company Transferee") and a description of the consideration to be
received by the Company upon Transfer of the Company Transfer Securities. The
Company Transfer Notice shall be accompanied by a copy of the bona fide third
party written offer (for purposes of this Section 3, an executed letter of
intent stating the terms of such offer, or incorporating by reference a separate
summary of terms, shall be deemed a written offer). On a day that is not earlier
than ten (10) days following the delivery of the Company Transfer Notice and
after having received the requisite approval from the Board of Directors, the
Company may issue the Company Transfer Securities to the Company Transferee on
the terms set forth in the Company Transfer Notice.
(c) Terms of Offer. Upon completion of the issuance of the
Company Transfer Securities referred to in paragraph (b) above, the Company
shall deliver a written offer to sell (the "Offer to Sell") to each Stockholder
a Pro Rata portion of the Company Transfer Securities based upon such
Stockholder's holdings of Common Stock. The Offer to Sell shall be on the same
terms and conditions, and shall be for the same consideration, as described in
the Company Transfer Notice; provided, however, that any such Stockholder may,
at its option, pay fair market value in cash in lieu of any non-cash
consideration.
(d) Acceptance of Offer. For a period of thirty (30) days
after receipt of an Offer to Sell, any Stockholder may, by written notice to the
Company, accept the Offer to Sell in whole or in part.
(e) Transfer of Shares. Transfers of Securities pursuant to
offers made and accepted in accordance with this Section 3 shall occur
simultaneously on a Business Day not more than sixty (60) days after the last
date on which any offer made in accordance with this Section 3 could have been
accepted and each such Transfer shall be made in accordance with Sections 2(a)
and (b).
Section d. BOARD OF DIRECTORS.
(a) Designated Directors. The Board of Directors of the
Company shall consist of the following members:
Dr. Nathan Rubin
Mr. J. Marvin Feigenbaum
Mr. Matthew S. Barrett
Mr. David Sterling
Mr. Kenneth Liang
Each of such director shall hold office until the next annual or special meeting
called on or after the date one year from the date hereof for the purpose of
electing directors in accordance with the provisions of the Company's Bylaws.
Thereafter, each Stockholder shall cause all Securities that are entitled to
vote and are beneficially owned by such Stockholder or its Affiliates, with
respect to which such Stockholder or its Affiliates may direct the voting, or
that are registered in the name of such Stockholder or its Affiliates to be
voted as required, and will otherwise take or cause to be taken all such other
action as may be necessary, (i) to cause the Board of Directors of the Company
to consist of five (5) members, and (ii) until such time as Nu-Tech and its
Affiliates no longer beneficially own at least 20% of the issued and outstanding
Common Stock, to elect two individuals designated in writing by Nu- Tech, as
members of the Board of Directors, and (iii) until such time as
EXH. 99.4 - 6
<PAGE> 7
(A) funds and accounts managed by Oaktree Capital Management, LLC ("OCM") and
their respective Affiliates (collectively, the "Oaktree Holders") no longer
beneficially own more than 30% of the issued and outstanding Common Stock or (B)
any "person" (as defined in Section 13(a) of the Exchange Act of 1934, as
amended (the "Exchange Act")) or a "group" (as defined in Section 13(a)(3) and
14(a)(2) of the Exchange Act), other than Nu-Tech and its Affiliates, holds a
number of shares of Common Stock of the Company that is greater than the number
of shares of Common Stock of the Company held by the Oaktree Holders, to elect
three individuals designated in writing by OCM; provided, that the requirement
that the Oaktree Holders or Nu-Tech and its Affiliates beneficially own more
than 30% or 20%, respectively, of the issued and outstanding Common Stock shall
be adjusted in the event of the issuance by the Company of shares of Common
Stock in a Qualifying Acquisition such that the percentage of the issued and
outstanding Common Stock required to be beneficially owned by the Oaktree
Holders or Nu-Tech and its Affiliates, as applicable, following such issuance of
Common Stock shall be equal to the quotient determined by dividing (x) the
aggregate number of shares of Common Stock that equals the specified percentage
of the issued and outstanding shares of Common Stock as of the date hereof by
(y) the sum of (I) the number of shares of Common Stock issued and outstanding
as of the date hereof plus (II) the number of shares of Common Stock issued in
such Qualifying Acquisition, plus (III) the number of shares of Common Stock
issued in all previously consummated Qualifying Acquisitions.
(b) Filling Vacancies, etc. At such time as a vacancy is
created on the Board of Directors by the death, removal or resignation of any
one of the directors, the remaining directors shall meet in person or by
telephone for the purpose of approving and appointing a director to fill such
vacancy in accordance with the provisions of the Bylaws of the Company.
Notwithstanding the foregoing sentence, if a director designated by OCM or
Nu-Tech, as the case may be, resigns or is removed from or vacates such position
for any reason prior to the expiration of his or her term as a director of the
Company, then, OCM or Nu-Tech, respectively, shall have the right to nominate a
replacement designee so long as it continues to beneficially own not less than
the applicable percentage of outstanding Securities set forth in paragraph (a)
of this Section 4, and the other Stockholders shall cause the directors to elect
such replacement designee to the Board of Directors or the Stockholders shall
vote their Securities at any regular or special meeting called for the purpose
of filling positions on the Board of Directors, or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all other
actions necessary, to ensure the election to the Board of Directors of such
replacement designee to fill the unexpired term of the director whom such new
designee is replacing. Each director elected to the initial Board of Directors
and each nominee to the Board of Directors shall provide each of the
Stockholders with his or her resume prior to such time as he or she is elected
to the Board of Directors.
(c) Voting Agreement. All parties to this Agreement agree that
this Section 4 shall constitute a voting agreement within the meaning of Section
218 of the Delaware General Corporation Law.
(d) Termination. The rights and obligations of the
Stockholders pursuant to this Section 4 shall terminate on the date that is the
earlier of (i) ten years from the date hereof and (ii) the date on which Nu-Tech
ceases to own at least 20% of the issued and outstanding shares of Common Stock
held by Nu-Tech on the date hereof.
EXH. 99.4 - 7
<PAGE> 8
Section e. CORPORATE GOVERNANCE.
(a) During such time as Nu-Tech has the right to appoint
directors pursuant to Section 4 hereof, the affirmative vote of at least one
director appointed by Nu-Tech pursuant to Section 4 hereof shall be required to:
i) authorize, issue or enter into, or proposing to
authorize, issue or enter into, any agreement, including, without
limitation, options, warrants or other rights providing for the issuance
or sale (contingent or otherwise) of any equity securities or any notes
or debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or
exchangeable for equity securities, or containing provisions that set or
provide a mandatory formula for determining, directly or indirectly, the
participation in earnings and profits, or options, warrants or rights to
acquire securities exchangeable or exercisable for any such securities)
of the Company other than issuances of securities pursuant to the
Warrants, employee benefit plans, management incentive plans or
employment agreements with officers of the Company;
ii) issue, or propose to issue, any capital stock
whether of the same series as, or of a different series from, the
Securities;
iii) supplement, modify, amend, rescind, alter or
restate, or propose to supplement, modify, amend, rescind, alter or
restate, in any manner the Articles or the By-Laws of the Company;
iv) directly or indirectly, redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire,
any of its capital stock, including any options, warrants or rights to
acquire any of its capital stock, or any security exercisable or
exchangeable for or convertible into any of its capital stock, directly
or indirectly;
v) liquidate or dissolve or propose to liquidate or
dissolve, or effecting, or propose to effect, a recapitalization or
reorganization of the Company in any form of transaction;
vi) consolidate or merge, or propose to consolidate
or merge, with or into any other Person or transfer (by lease,
assignment, sale or otherwise) all or substantially all of the
properties and assets of the Company, in a single transaction or through
a series of related transactions;
vii) incur, or cause any subsidiary of the Company to
incur, after the date hereof, any indebtedness or other payment
obligation out of the ordinary course of business (other than amounts
borrowed pursuant to that certain Loan and Security Agreement dated as
of September 30, 1997, by and between Bio-Cypher Funding Corp., a
Delaware corporation, and Daiwa Healthco-2, LLC, as in effect on the
date hereof) that, when aggregated with all other then outstanding
indebtedness of the Company and its subsidiaries incurred after the date
hereof and payment obligations of the Company and its subsidiaries
incurred after the date hereof, exceeds $1,000,000;
EXH. 99.4 - 8
<PAGE> 9
viii) make any Capital Expenditure (as hereinafter
defined) after the date hereof that, when aggregated with all other
Capital Expenditures made in the immediately preceding twelve (12) month
period, which initial twelve (12) month period shall begin on the date
hereof, exceed $1,000,000. As used herein, "Capital Expenditure" means
expenditures made in connection with the purchase, construction or
improvement of items properly categorized, in accordance with generally
accepted accounting principles, on the balance sheet of the Company as
property, plant or equipment, but not including any Capital Expenditures
that are made out of the proceeds of casualty insurance covering any
property, plant and equipment of the Company; or
ix) modify, amend, extend or renew the Employment
Agreement or otherwise approve any compensation arrangement or other
transaction for the benefit of Mr. Feigenbaum other than as provided in
the Employment Agreement;
provided, however, that the affirmative vote of a director appointed by Nu-Tech
shall not be required to approve any of the foregoing actions following the
Stockholder Termination Date (as defined herein) if the Nu-Tech Stockholder
Approval has not been obtained prior to the Stockholder Termination Date; and,
provided further, that if, prior to the Stockholder Termination Date, both of
the directors nominated by Nu-Tech fail to affirmatively vote for any action
described in this Section 5(a) and the action is approved by a majority of the
directors constituting the Board of Directors, then the Company may take such
action despite the provisions of this Section 5(a) if OCM notifies Nu-Tech in
writing that it has elected to exercise the Option described in Section 6
hereof.
(b) During such period of time as indemnification claims may
be instituted pursuant to that certain Stock Purchase Agreement by and between
the Company and Nu- Tech dated as of February 24, 1997 (the "Stock Purchase
Agreement") and notwithstanding anything to the contrary contained in the
General Corporation Law of the State of Delaware or the contrary vote of
directors constituting the majority of the Board of Directors, upon the
affirmative vote of two directors, the Company shall institute claims for
indemnification pursuant to Section 10.6 of the Stock Purchase Agreement. In
furtherance of the foregoing, the Stockholders shall take or cause to be taken
all action as may be necessary to cause the Board of Directors to adopt
resolutions substantially in the form attached hereto as Exhibit A (the
"Resolutions"), which Resolutions shall establish an Indemnity Committee
composed of two Directors designated by OCM and, so long as Nu-Tech is entitled
to designate Directors pursuant to Section 4 hereof, one Director designated by
Nu-Tech, which committee shall have the sole authority to institute such claims
for indemnification and which committee shall cease to be a committee of the
Board of Directors of the Company at such time as the Company is no longer
permitted to institute claims for indemnification pursuant to the Stock Purchase
Agreement. Further, the Stockholders shall take or cause to be taken all action
as may be necessary to ensure that the Resolutions are not amended or rescinded,
and that no resolutions inconsistent therewith are adopted by the Board of
Directors, until the expiration of the term of the Indemnity Committee as set
forth in the Resolutions. In addition, the Company shall reimburse any such
director for the reasonable costs and expenses incurred by such director in
prosecuting claims instituted on behalf of the Company pursuant to the
provisions of this Section 5(b) and shall, to the fullest extent permitted by
Delaware law and the certificate of incorporation and bylaws of the Company,
indemnify and hold harmless such director for any liability incurred in
connection with the initiation or prosecution of such claims.
EXH. 99.4 - 9
<PAGE> 10
Section f. OPTION.
(a) Nu-Tech hereby grants to OCM an exclusive option (the
"Option"), exercisable in OCM's sole and absolute discretion, to purchase all of
the Securities held at the time of exercise of such Option (the "Option Shares")
by Nu-Tech for aggregate consideration of $10,000,000 (the "Option Price"). The
Option is exercisable by OCM on or prior to the earlier of (x) December 31, 2000
or (y) if the Nu-Tech Stockholder Approval is not obtained prior to the
Stockholder Termination Date, the Stockholder Termination Date and in each case
shall be exercisable for a period of ninety (90) days following each date on
which (i) one or more directors nominated by Nu-Tech fails to affirmatively vote
for any action described in Section 5(a) of this Agreement that would, pursuant
to the terms of Section 5(a) of this Agreement, require the approval of a
director nominated by Nu-Tech and (ii) such action is approved by a majority of
the members of the Board of Directors (each such date, a "Triggering Event").
(b) OCM may exercise the Option by delivering written notice
to Nu-Tech of its intent to so exercise the Option and specifying the date on
which the closing of such exercise of the Option shall occur, which shall in no
event be later than ninety (90) days following the Triggering Event (the "Option
Closing"). In connection with the exercise of the Option and the Option Closing,
Nu-Tech will make such representations and warranties as are customary in
similar transactions and as may be reasonably requested by OCM regarding
ownership of, and ability to transfer, the shares of Common Stock subject to the
Option. At the Option Closing, Nu-Tech shall sell, transfer and assign, and OCM,
or its designees, shall purchase, all of Nu-Tech's right, title and interest in
and to the Option Shares and OCM or its designees, will pay the Option Price by
wire transfer of immediately available funds to such account or accounts as
Nu-Tech may reasonably direct by written notice delivered to OCM, or its
designees, by Nu-Tech at least one Business Day before the date of the Option
Closing. Simultaneously with the receipt of the Option Price, Nu-Tech will
assign and transfer to OCM, or its designees, all of Nu-Tech's right, title and
interest in and to the Option Shares by delivering to OCM a certificate or
certificates representing the Option Shares, in genuine and unaltered form, duly
endorsed in blank with requisite stock transfer tax stamps, if any, attached. In
the event that OCM exercises the option described herein prior to the
Stockholder Termination Date and, as of such date, the Nu-Tech Stockholder
Approval has not been obtained, the Option Closing shall occur as soon as
practicable following the date on which Nu-Tech Stockholder Approval is obtained
and at such closing Nu-Tech shall transfer and deliver to OCM or its designees
all right, title and interest in the Option Shares as described in this Section
6 together with all property or cash received by Nu-Tech as distributions from
the Company following the date on which OCM exercises the Option and prior to
the date on which the Option Closing occurs; provided that in the event the
Nu-Tech Stockholder Approval (as defined in Section 9) is not obtained prior to
the Stockholder Termination Date, the exercise of the Option shall be deemed to
have not occurred and OCM shall have no obligation to deliver the Option Price
to Nu-Tech. The obligations of Nu-Tech pursuant to this Section 6 shall be
binding upon any transferees of any Securities held by Nu- Tech and the
successors in interest of Nu-Tech.
Section g. VOTING AGREEMENT.
Feigenbaum hereby agrees that in the event that following the
purchase by Oaktree Holders of the Option Shares pursuant to the provisions of
Section 6 hereof or the purchase by the Oaktree Holders of Securities held by
Nu-Tech pursuant to Section 8 hereof, the Oaktree Holders beneficially own less
than 90% of the issued and outstanding shares of Common Stock, Feigenbaum and
each of his successors and transferees shall vote or cause to be voted all
Securities held by
EXH. 99.4 - 10
<PAGE> 11
Feigenbaum and each of his successors and transferees as directed by OCM and
Feigenbaum will, and will cause each of his successors and transferees to,
execute such proxies and take all action deemed necessary by OCM to cause such
Securities to be so voted. The parties agree that this Section 7 shall
constitute a voting agreement within the meaning of Section 218 of the Delaware
General Corporation Law.
Section h. BUY-SELL AGREEMENT.
(a) Subject to receipt of the Nu-Tech Stockholder Approval,
from and after December 31, 2000 until the date that is five years following the
date the that Nu-Tech Stockholder Approval is obtained, either OCM or Nu-Tech
(the "Initiating Stockholder") may give written notice (the "Buy/Sell Offering
Notice") to the other party (the "Responding Stockholder") of the Initiating
Stockholder's intent to rely on this Section 8 and to purchase all (but not less
than all) of the Securities that the Responding Stockholder owns, whereupon the
provisions set forth in this Section 8 shall apply.
(b) The Initiating Stockholder shall specify in the Buy/Sell
Offering Notice the cash purchase price per share at which the Initiating
Stockholder would be willing to purchase all of the Securities that the
Responding Shareholder owns, which consideration shall not be less than $0.81
per share (subject to adjustment to reflect any and all stock splits, stock
dividends and other combinations and reclassifications of Securities occurring
following the date of this Agreement) and the date on which such transaction
will be consummated (which such date shall not be more than ninety (90) nor less
than fifteen (15) days after the date of receipt by the Responding Stockholder
of the Buy/Sell Offering Notice (the "Buy/Sell Closing")). "Cash" for purposes
of this Agreement shall mean same-day funds denominated in U.S. dollars. In
connection with the Buy/Sell Closing, the participating Stockholders will make
such representations and warranties as are customary in similar transactions and
as may be reasonably requested by the other party to such transaction, including
representations regarding ownership of, ability to transfer and ability to
purchase the Securities. At the Buy/Sell Closing, the selling Stockholder shall
sell, transfer and assign, and the purchasing Stockholder, or its designees,
shall purchase, all of the selling Stockholder's right, title and interest in
and to the Common Stock. At the Buy/Sell Closing, the purchasing Stockholders
will pay the purchase price by wire transfer of immediately available funds to
such account or accounts as selling Stockholder may reasonably direct by written
notice delivered to the purchasing Stockholder by the selling Stockholder at
least one Business Day before the date of the Buy/Sell Closing. Simultaneously,
the selling Stockholder will assign and transfer to the purchasing Stockholder,
all of the selling Stockholder's right, title and interest in and to the Common
Stock by delivering a certificate or certificates representing such shares, in
genuine and unaltered form, duly endorsed in blank with requisite stock transfer
tax stamps, if any, attached.
(c) Upon receipt of the Buy/Sell Offering Notice, the
Responding Stockholder shall be obligated either:
i) To sell to the Initiating Stockholder for Cash
all of its Securities on the date, at the price per share and on the
terms set forth in the Buy/Sell Offering Notice; or
ii) To purchase all of the Securities owned by the
Initiating Stockholder for cash on the date, at the price per share and
on the terms set forth in the Buy/Sell Offering Notice. If the
Responding Stockholder elects to purchase the
EXH. 99.4 - 11
<PAGE> 12
shares of the Initiating Stockholder, the offer of the Initiating
Stockholder to purchase the Responding Stockholder's shares shall be
deemed to be null and void and the Initiating Stockholder shall be
deemed to have accepted an offer by the Responding Stockholder to
purchase the Initiating Stockholder's shares at the per share purchase
price proposed by the Initiating Stockholder.
The Responding Stockholder shall notify the Initiating Stockholder of its
election within thirty (30) days after receipt of the Buy/Sell Offering Notice.
Failure to give notice within the required time period shall be deemed an
election by the Responding Stockholder to sell its shares under subsection (a)
above.
(d) Notwithstanding anything to the contrary herein, the
obligations of OCM and the Oaktree Holders to sell Securities pursuant to this
Section 8 shall be conditioned upon the payment in full and in cash by the
Company of all unpaid principal and accrued and unpaid interest with respect to
the 15% Senior Secured Notes (the "15% Notes") of the Company due 2001 then
outstanding (including all 15% Notes issued in payment of interest obligations
on the 15% Notes).
(e) The obligations of Nu-Tech pursuant to this Section 6
shall be binding upon any transferees of any Securities held by Nu-Tech and the
successors in interest of Nu- Tech.
Section i. NU-TECH STOCKHOLDER APPROVAL. Nu-Tech hereby agrees to
use its best efforts to obtain all necessary approvals of the stockholders of
Nu-Tech for the transactions described in Section 6 and Section 8 of this
Agreement (the "Nu-Tech Stockholder Approval") as promptly as practicable and in
any event prior to the date that is the earlier of (a) one hundred and twenty
(120) days following the date on which the audit of Nu-Tech's financial
statements for the year ended March 31, 1998 has been completed and (b) December
31, 1998 (the "Stockholder Termination Date").
Section j. CERTIFICATE OF INCORPORATION.
Each of the parties hereto agrees that the Amended and Restated
Certificate of Incorporation attached hereto as Exhibit A is approved as the
Certificate of Incorporation of the Company and the parties hereto agree that
such Amended and Restated Certificate of Incorporation shall be filed with the
Secretary of State of the State of Delaware as promptly as practicable following
the earlier of the date on which the Company is in good standing in the State of
Delaware or the date on which the Secretary of State of the State of Delaware
shall accept such document for filing.
Section k. CERTIFICATES.
(a) Restrictive Endorsements. Each certificate evidencing any
Securities shall bear a legend in substantially the following form:
"The securities evidenced by this certificate are subject to an Amended
and Restated Stockholders Agreement dated as of June 12, 1998, copies of
which are on file at the principal office of the Company and will be
furnished to the holder on request to the Secretary of the Company. Such
Stockholders Agreement provides, among other things, for certain prior
rights to purchase and certain obligations to sell and to purchase
EXH. 99.4 - 12
<PAGE> 13
the shares represented by this certificate and certain restrictions on
voting, sale, transfer, pledge, hypothecation or other disposition of
the securities evidenced by this certificate. By accepting the shares of
stock represented by this certificate the holder agrees to be bound by
such Stockholder's Agreement"
(b) Replacement Certificates. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of any certificate evidencing any Securities, and (in the
case of loss, theft or destruction) of indemnity reasonably satisfactory
to the Company, upon surrender and cancellation of such certificate or
receipt of such indemnity, the Company will execute, register and
deliver a new certificate of like tenor in lieu of such lost, stolen,
destroyed or mutilated certificate.
Section l. REPRESENTATIONS. Each Stockholder represents that such
Stockholder is the record and beneficial owner of the number of issued and
outstanding Securities appearing opposite such Stockholder's name in Schedule I
attached hereto, free and clear of any option, lien, encumbrance or charge of
any kind whatsoever, except as created by or described in this Agreement.
Section m. EQUITABLE RELIEF. The parties hereto agree and declare
that legal remedies may be inadequate to enforce the provisions of this
Agreement and that equitable relief, including specific performance and
injunctive relief, may be used to enforce such provisions.
Section n. MISCELLANEOUS.
(a) Notices. All communications under this Agreement shall be
in writing and shall be personally delivered, sent by facsimile transmission or
mailed by first class mail, postage prepaid:
i) if to the Company, at
Physicians Clinical Laboratory, Inc.
3301 C Street
Sacramento, California 95816
Attention: Chief Financial Officer
ii) if to the Stockholders, at
NU-TECH BIO-MED, INC.
Attn: Mr. J. Marvin Feigenbaum
476 Main Street
Wakefield, Rhode Island 02879
Fax: 401-789-9934
OAKTREE CAPITAL MANAGEMENT, LLC
Attn: Mr. Matthew Barrett
550 S. Hope Street, 22nd Floor
Los Angeles, California 90071
Fax: 213-694-1599
EXH. 99.4 - 13
<PAGE> 14
J. Marvin Feigenbaum
C/O NU-TECH BIO-MED, INC.
476 Main Street
Wakefield, Rhode Island 02879
Fax: 401-789-9934
or at such other address as the appropriate party to this Agreement may have
furnished in writing to each other party hereto, or
iii) if to any other Person who is the registered
holder of any Securities to the address for the purpose of such holder as it
appears in the stock ledger of the Company.
Any notice shall be deemed to have been duly given when delivered by hand if
personally delivered, by confirmation of completed facsimile transmission if
delivered by facsimile, and if sent by mail, two (2) Business Days after being
deposited in the mail, postage prepaid.
(b) Waiver. No failure or delay on the part of the parties or
any of them in exercising any right, power or privilege hereunder, nor any
course of dealing between the parties or any of them shall operate as a waiver
of any such right, power or privilege nor shall any single or partial exercise
of any such right, power or privilege preclude the simultaneous or later
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and are not exclusive of any rights or
remedies which the parties or any of them would otherwise have. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the other parties or any of them to take any other or
further action in any circumstances without notice or demand.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(d) Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
(e) Filing. A copy of this Agreement and of all amendments
hereto shall be filed at the principal office of the Company.
(f) Amendment or Termination. This Agreement may be amended or
terminated at any time only by an instrument in writing signed by holders of
shares of Common Stock representing 75% of shares of Common Stock held by the
Stockholders as of the date hereof (subject to adjustment for stock splits,
stock dividends and similar combinations and reclassifications of Common Stock).
(g) Benefit and Binding Effect. Except as otherwise provided in
this Agreement, no right under this Agreement shall be assignable and any
attempted assignment in violation of this provision shall be void. The rights of
Nu-Tech pursuant to Section 8 hereof and the obligations of OCM, as agent on
behalf of certain funds and accounts pursuant to Section 8
EXH. 99.4 - 14
<PAGE> 15
hereof shall be binding upon and inure only to the benefit of Nu-Tech and OCM,
respectively, and shall not be assignable to or transferable to any successor
holder of Securities. Subject to the foregoing and compliance with the terms of
this Agreement regarding Transfer of Securities, this Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. This Agreement does not create and shall not be construed as creating
any rights enforceable by any Person not a party hereto.
(h) 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 provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
Section 14. LIMITATIONS ON LIABILITY.
Each of the parties hereto acknowledges that in no event shall
any of the partners, officers, directors, shareholders, employees, agents,
affiliates or investment managers (collectively "Representatives") of OCM, as
agent and on behalf of the funds and accounts set forth on Schedule II attached
hereto (the "Funds"), have any obligation or liability to such party for any
action taken or omitted by or on behalf of such Funds or in connection herewith
(such obligation and liability being the sole responsibility of such Funds).
Each party hereto further acknowledges and agrees that (a) all obligations and
liabilities of each Fund under this Agreement or in connection herewith are
enforceable solely against such Fund and its assets and not against the assets
of OCM, any other Fund or any Representatives of OCM and (b) the obligations and
liabilities of each Fund shall be several in the proportions set forth on
Schedule II hereto and not joint and several.
[signature page follows]
EXH. 99.4 - 15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the day and year first above written.
The Company: PHYSICIANS CLINICAL LABORATORY, INC.
By:
- ------------------------------
J. Marvin Feigenbaum
Chief Operating Officer
Stockholders:
NU-TECH BIO-MED, INC.
By: _______________________________
J. Marvin Feigenbaum
Chief Executive Officer
OAKTREE CAPITAL MANAGEMENT, LLC, as
agent and on behalf of certain
funds and accounts
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
_______________________
J. Marvin Feigenbaum
EXH. 99.4 - 16
<PAGE> 17
SCHEDULE I
STOCKHOLDER SECURITIES
- ----------- ----------
Nu-Tech Bio-Med, Inc.
Oaktree Capital Management, LLC,
as agent and on behalf of the
funds and accounts set forth on
Schedule II hereto
J. Marvin Feigenbaum
EXH. 99.4 - 17
<PAGE> 18
SCHEDULE II
OCM Opportunities Fund, L.P.
54.0%
Columbia/HCA Master Retirement Trust 4.0%
(Separate Account I)
OCM Opportunities Fund II, L.P.
41.0%
Columbia/HCA Master Retirement Trust 1.0%
(Separate Account II)
EXH. 99.4 - 18
<PAGE> 1
EXHIBIT 99.5
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of June 12, 1998
(the "Agreement"), among U.S. BANK TRUST NATIONAL ASSOCIATION (f/k/a First Trust
National Association), as Trustee (together with its successors and assigns, the
"Trustee") under the Indenture (as defined below), and OAKTREE CAPITAL
MANAGEMENT, LLC (solely as agent and nominee for the entities set forth on Annex
I, each a "Fund" and collectively, the "Funds") (Oaktree Capital Management, LLC
acting in such capacity hereinafter referred to as, "Oaktree") and acknowledged
and agreed to by Physicians Clinical Laboratory, Inc. (together with its
successors and assigns, "PCL").
Reference is hereby made to that certain Indenture, dated as of
September 30, 1997, with respect to the issuance of Senior Secured Notes Due
2004 between PCL and the Trustee (as amended, modified or supplemented from time
to time in accordance with its terms, the "Indenture"). Terms not otherwise
defined herein shall have the meanings set forth in the Indenture.
Oaktree and PCL are entering into that certain Note Purchase Agreement,
dated as of June 12, 1998 with respect to the issuance of the 15% Senior Secured
Notes Due 2001 (as amended, modified or supplemented from time to time in
accordance with its terms, the "Purchase Agreement"). The obligations of PCL
under the Purchase Agreement and the 15% Senior Secured Notes Due 2001 the "Note
Obligations" are to be secured by a first priority Lien in the Collateral (other
than Daiwa Healthco-2 LLC's security interest in certain accounts of the
Company).
This Agreement is intended to set forth the subordination and
intercreditor obligations of the Trustee and Oaktree in connection with the Lien
of the Trustee in the Collateral, granted to the Trustee pursuant to the
Security Agreement between the Trustee and PCL, dated as of September 30, 1997
and the Pledge Agreement, dated as of September 30, 1997, between PCL and the
Trustee (the "Trustee Liens") and the Senior Liens (as defined below).
o. Subordination by the Trustee. The Trustee agrees that (a) the
Trustee Liens, without necessity of any further action by the Trustee, PCL or
Oaktree, are and shall be junior and subordinate to all Liens of Oaktree in the
Collateral (collectively, the "Senior Liens"), regardless of the time or order
of filing of financing statements or any failure of perfection of the Senior
Liens, and (b) pursuant to such subordination, the Trustee will not be permitted
to take (and the Trustee hereby agrees not to take) any action in respect of the
Collateral or retain or apply any proceeds of the Collateral unless and until
all amounts owing with respect to the Note Obligations have been paid in full.
Except as expressly set forth below, Oaktree shall be under no obligation to the
Trustee with respect to any enforcement action in respect of the Collateral or
any proceeds thereof, and the Trustee hereby acknowledges that it is not relying
upon Oaktree with respect to any such matters.
p. Stock Certificates. Concurrently herewith, the Trustee shall
deliver to the Oaktree certificate 001 issued by Bio-Cypher Funding Corp.
representing 100 shares of common stock, $.01 par value per share (the "Funding
Share"), delivered to the Trustee pursuant to the Pledge Agreement (as defined
in the Indenture). The Agent agrees that it shall hold the Funding Share as
collateral agent for the junior Lien of the Trustee in the Funding Share until
such time as the Company has paid in full all of its obligations under the
Purchase Agreement and the 15% Senior Secured Notes, upon which the Agent shall
deliver the Funding Share to the Trustee to be held in accordance with the terms
of the Indenture and the Collateral Documents or as required by applicable law.
Upon the occurrence of any Default or Event of Default under the Purchase
Agreement and the 15% Senior
EXH. 99.5 - 1
<PAGE> 2
Secured Notes, Oaktree shall have the right, without notice to the Trustee, to
exercise any and all remedies available to it with respect to the Funding Share
without regard to the interests of the Trustee or the Noteholders (as defined in
the Indenture) and shall have no fiduciary, agency or other obligations to the
Trustee or the Noteholders.
q. Turnover Obligation of the Trustee. Until all of the Note
Obligations have been paid in full, except with the prior written consent of
Oaktree in each instance, the Trustee will not receive or accept in any manner
(including, without limitation, by set-off) any payments in respect of the
Indenture Obligations (as defined in the Indenture) directly from the
liquidation of any Collateral. In the event and to the extent that the Trustee
shall receive any payment in respect of the Indenture Obligations in violation
of the prior sentence, the Trustee shall be deemed to have received such
payments in trust for Oaktree and shall promptly turn the same over in the form
received (subject to endorsement if appropriate) to Oaktree for application to
the Note Obligations.
r. Additional Documentation. The Trustee will, from time, upon
request of Oaktree, and at PCL's sole cost and expense execute and deliver to
Oaktree any reasonable documentation and filing statements as may be reasonably
required by Oaktree in order to confirm or evidence the agreements set forth
herein.
s. No Contesting of Liens. (a) except as expressly provided herein,
this Agreement is not intended to affect, limit or in any way diminish the
Trustee Lien or the Senior Liens or the rights that each of Oaktree and the
Trustee possess or purport to possess with respect thereto, insofar as the
rights of third parties are concerned.
(b) The Trustee hereby agrees that it will not commence or continue
any default, foreclosure or liquidation proceedings or remedies, whether legal
or equitable, in respect of any of the Collateral or the Trustee Liens or
otherwise take any action of any kind or nature to collect or receive, or
enforce rights in, realize upon, seek adequate protection with regard to, object
to the sale or use or granting of Liens prior to the interest of Oaktree on,
take or gain possession of, give it preference against, or priority over, any of
the Collateral or the Senior Liens, until all Note Obligations owing to Oaktree
under the Purchase Agreement and the 15% Senior Secured Notes have been paid in
full.
t. No Third Party Beneficiaries. This Agreement is solely for the
benefit of Oaktree and the Trustee and may be relied upon and enforced solely by
Oaktree and the Trustee and their respective successors, assigns and
transferees. No other Person, including PCL, is intended as a third-party
beneficiary hereunder.
u. Choice of Law; Waiver of Jury Trial Jurisdiction and Venue. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without giving effect to the conflict of laws principles
thereof). Each of the parties hereto hereby waives all rights to a trial by jury
in the event of any litigation with respect to any matter related to this
Agreement, and hereby irrevocably consents to the jurisdiction of the state and
federal courts located in New York County, New York City, New York in connection
with any action or proceeding arising out of or relating to this Agreement. In
any such litigation, each of the parties hereto waives personal service of any
summons, complaint or other process and agrees that service thereof may be made
by certified or registered mail directed to the provider at its address set
forth on the signature pages hereof.
v. Entire Agreement; Severability. (a) This Agreement embodies the
entire agreement and understanding of Oaktree and the Trustee concerning the
subject matter contained herein. This
EXH. 99.5 - 2
<PAGE> 3
Agreement supersedes any and all prior agreements and understandings between the
parties, whether written or oral.
(b) If any provision of this Agreement shall be declared invalid or
unenforceable, the parties hereto agree that the remaining provisions of this
Agreement shall continue in full force and effect.
w. Amendments, etc. No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by a party hereto shall be
effective unless in a writing signed by each of the Trustee and Oaktree and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the each of either the Trustee or Oaktree to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
x. Notices, etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which may include
facsimile communication) and shall be faxed or delivered, to each party hereto,
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by hard copy sent by regular mail), and notices
and communications sent by other means shall be effective when received. Oaktree
hereby agrees, with respect to the Purchase Agreement and the 15% Senior Secured
Notes, and the Trustee hereby agrees, with respect to the Indenture, to utilize
all reasonable efforts to furnish the other party any notice of an event of
default, event of termination or acceleration with respect to the Purchase
Agreement and the 15% Senior Secured Notes or the Indenture, as applicable;
provided, that the failure to deliver such notice shall in no way limit or
otherwise prevent the rights and remedies of Oaktree or the Trustee, as
applicable, thereunder.
y. Agent Representation. The Agent has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
on behalf of the Funds.
z. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
EXH. 99.5 - 3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Intercreditor and Subordination Agreement as of the date first above written.
U.S. BANK TRUST NATIONAL OAKTREE CAPITAL MANAGEMENT,
ASSOCIATION, as trustee LLC, solely as agent and nominee for the
Funds set forth on Annex I
By:______________________________ By:_____________________________________
Name: Name:
Title: Title:
By:_____________________________________
Name:
Title:
Address U.S. Bank Trust National Association Address: Oaktree Capital
U.S. Bank Trust Center Management, LLC
80 East 5th Street, 450 Lexington Avenue
Suite 200 Suite 1600
St. Paul, MN 55101 New York, NY 10017
Fax: (612) 244-0711 Attention:
Fax: (212) 885-8699
ACKNOWLEDGED AND AGREED:
PHYSICIANS CLINICAL
LABORATORY, INC.
By:__________________________________
Name:
Title:
Fax:
Address:
ANNEX I
<TABLE>
<CAPTION>
Fund or Account Amount
- --------------- ------
<S> <C>
</TABLE>
EXH. 99.5 - 4
<PAGE> 5
<TABLE>
<S> <C>
OCM Opportunities Fund, L.P. $27,124,070
Columbia/HCA Master Retirement
Trust (Separate Account I) $ 2,252,330
OCM Opportunities Fund II, L.P. $20,546,500
Columbia/HCA Master Retirement
Trust (Separate Account II) $ 316,100
-----------
$50,239,000
</TABLE>
EXH. 99.5 - 5
<PAGE> 1
EXHIBIT 99.6
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of June 12, 1998
(the "Agreement"), among OAKTREE CAPITAL MANAGEMENT FUND, LLC (solely as agent
and nominee for the entities set forth on Annex I, each a "Fund" and
collectively, the "Funds") (together with is successors, assigns and
replacements, "Oaktree") and DAIWA HEALTHCO-3, LLC (together with is successors,
assigns and replacements, "DH-3") and acknowledged and agreed to by Physicians
Clinical Laboratory, Inc. (together with its successors and assigns, "PCL") and
Bio-Cypher Funding Corp. ("Funding").
Reference is hereby made to (i) that certain Healthcare Receivables
Purchase and Transfer Agreement, dated as of September 30, 1997 (as amended,
modified or supplemented from time to time in accordance with its terms, the
"RPA"), between PCL and Funding, and (ii) that certain Loan and Security
Agreement, dated as September 30, 1997 (as amended, modified or supplemented
from time to time in accordance with its terms, the "Loan Agreement"), between
PCL and DH-3. Terms not otherwise defined herein shall have the meanings set
forth in the RPA.
Oaktree and PCL are entering into that certain Purchase Agreement, dated
as of June 12, 1998 with respect to the issuance of the 15% Senior Secured Notes
Due 2001 (as amended, modified or supplemented from time to time in accordance
with its terms, the "Purchase Agreement"). The obligations of PCL under the
Purchase Agreement and the 15% Senior Secured Notes Due 2001 the "Note
Obligations" are to be secured by a second priority Lien in certain Accounts of
PCL.
This letter is intended to set forth the subordination and intercreditor
obligations of Oaktree and DH-3 in connection with the Oaktree Lien and the
Senior Liens (each as hereinafter defined).
aa. Subordination and Release by Oaktree. Oaktree agrees that (a) the
Liens of Oaktree in Accounts of PCL shall, automatically and without further
action on the part of Oaktree or PCL, (i) be limited solely to those Accounts
(and the products and proceeds thereof) that, any time in question (x) have not
been purchased or transferred (or purported to be purchased or transferred) by
PCL to Funding, or (y) are not now owned (or purported to be owned by reason of
payment therefor) by Funding in accordance with the RPA (the Lien of Oaktree, as
so limited, are hereinafter referred to as the "Oaktree Lien"), (b) the Oaktree
Lien, without necessity of any further action by Oaktree, PCL or DH-3, is and
shall be junior and subordinate to all Liens of Funding and DH-3 in the Accounts
(collectively, the "Senior Liens"), regardless of the time or order of filing of
financing statements or any failure of perfection of the Senior Liens, and (c)
pursuant to such subordination, Oaktree will not be permitted to take (and
Oaktree hereby agrees not to take) any action in respect of the Accounts or
retain or apply any proceeds of the Accounts unless and until all Lender Debt
(as defined in the Loan Agreement) owing to DH-3 under the Loan Agreement has
been paid in full. Except as expressly set forth below, DH-3 shall be under no
obligation to Oaktree with respect to any enforcement action in respect of the
Accounts or any proceeds thereof, and Oaktree hereby acknowledges that it is not
relying upon DH-3 with respect to any such matters.
bb. Turnover Obligation of Oaktree. Until all Lender Debt has been
paid in full, except with the prior written consent of DH-3 in each instance,
Oaktree will not receive or accept in any manner (including, without limitation,
by set-off) any payments in respect of the Note Obligations directly from the
liquidation of the Accounts. In the event and to the extent that Oaktree shall
receive any payment in respect of the Note Obligations in violation of the prior
sentence, Oaktree shall be
EXH. 99.6 - 1
<PAGE> 2
deemed to have received such payments in trust for DH-3 and shall promptly turn
the same over in the form received (subject to endorsement if appropriate) to
DH- 3 for application to the Lender Debt.
cc. Additional Documentation. Oaktree will, from time to time, upon
request of DH-3, and at PCL's sole cost and expense execute and deliver to DH-3
any reasonable documentation and filing statements as may be reasonably required
by DH-3 in order to confirm or evidence the agreements set forth herein.
dd. No Contesting of Liens. (a) Except as expressly provided herein,
this Agreement is not intended to affect, limit or in any way diminish the
Oaktree Lien or the Senior Liens or the rights that each of DH-3, Oaktree and
Funding possess or purport to possess with respect thereto, insofar as the
rights of third parties are concerned.
(b) Oaktree hereby agrees that it will not commence or continue any
default, foreclosure or liquidation proceedings or remedies, whether legal or
equitable, in respect of any of the Accounts or the Senior Liens or otherwise
take any action of any kind or nature to collect or receive, or enforce rights
in, realize upon, seek adequate protection with regard to, object of the sale or
use of or granting of Liens prior to the interest of DH-3 on, take or gain
possession of, give it preference against, or priority over, any of the Accounts
or the Senior Liens, until all Lender Debt owing to DH-3 under the Loan
Agreement has been paid in full.
ee. No Payments of Principal. Without the prior written consent of
DH-3, no principal payments (whether mandatory or optional) shall be made on
account of the Note Obligations so long as any Lender Debt remains outstanding.
ff. No Third Party Beneficiaries. This Agreement is solely for the
benefit of DH-3 and Oaktree and may be relied upon and enforced solely by DH-3
and Oaktree and their respective successors, assigns and transferees. No other
Person, including PCL, is intended as a third-party beneficiary hereunder.
gg. Choice of Law; Waiver of Jury Trial Jurisdiction and Venue. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without giving effect to the conflict of laws principles
thereof). Each of the parties hereto hereby waives all rights to a trial by jury
in the event of any litigation with respect to any matter related to this
Agreement, and hereby irrevocably consents to the jurisdiction of the state and
federal courts located in New York County, New York City, New York in connection
with any action or proceeding arising out of or relating to this Agreement. In
any such litigation, each of the parties hereto waives personal service of any
summons, complaint or other process and agrees that service thereof may be made
by certified or registered mail directed to such party at its address set forth
on the signature pages hereof.
hh. Entire Agreement; Severability. (a) This Agreement embodies the
entire agreement and understanding of DH-3 and Oaktree concerning the subject
matter contained herein. This Agreement supersedes any and all prior agreements
and understandings between the parties, whether written or oral.
(b) If any provision of this Agreement shall be declared invalid or
unenforceable, the parties hereto agree that the remaining provisions of this
Agreement shall continue in full force and effect.
EXH. 99.6 - 2
<PAGE> 3
ii. Amendments, etc. No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by a party hereto shall be
effective unless in a writing signed by each of Oaktree and DH-3 and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of each of
either Oaktree or DH-3 to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.
jj. Notices, etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which may include
facsimile communication) and shall be faxed or delivered, to each party hereto,
at its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by hard copy sent by regular mail), and notices
and communications sent by other means shall be effective when received. DH-3
hereby agrees, with respect to the Loan Agreement, and Oaktree hereby agrees,
with respect to the Purchase Agreement, to utilize all reasonable efforts to
furnish the other party any notice of an event of default, event of termination
or acceleration with respect to the Loan Agreement or the Note Agreement, as
applicable; provided, that the failure to deliver such notice shall in no way
limit or otherwise prevent the rights and remedies of DH-3 or Oaktree, as
applicable, thereunder.
kk. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
EXH. 99.6 - 3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Intercreditor and Subordination Agreement as of the date first above written.
OAKTREE CAPITAL MANAGEMENT, DAIWA HEALTHCO-3, LLC
LLC, solely as agent and nominee
for the Funds set forth on Annex I
By:____________________________ By:___________________________________
Name: Name: Richard L. Taiano
Title: Title: Vice President
Address: c/o Lord Securities
Corporation
Two Wall Street
By:____________________________ New York, NY 10005
Name: Attention: Mr. Richard Taiano
Title: Fax: (212) 346-9012
Address: Oaktree Capital Management copy to: Daiwa Securities
550 South Hope St. America Inc.
22nd Floor 32 Old Slip
Los Angeles, CA 90071 New York, NY 10005
Attn: Mr. Matthew Barrett Attention: Mr. Isaac Soleimani
Fax: (213) 694-1592 Fax: (212) 612-7122
ACKNOWLEDGED AND AGREED:
PHYSICIANS CLINICAL LABORATORY, INC. BIO-CYPHER FUNDING CORP.
By:___________________________________
By:____________________________ Name:
Name: Title:
Title: Fax:
Fax: Address:
Address:
EXH. 99.6 - 4
