SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22758
UNILAB CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 95-4415490
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
18448 Oxnard Street, Tarzana, California 91356
(Address of principal executive offices) (Zip Code)
(818) 996-7300
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
As of April 26, 1996, 35,500,367 shares of Registrant's Common
Stock, par value $.01 per share, and 1,050,000 shares of
Registrant's Non-Voting Common Stock, par value $.01 per share,
were outstanding.
Page 1 of 13 pages
<PAGE>
UNILAB CORPORATION AND SUBSIDIARIES
Form 10-Q for the Quarterly Period Ended March 31, 1996
INDEX
Page
Part I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 3
1996 and December 31, 1995.
Consolidated Statements of Operations -
Three month periods ended March 31, 1996
and March 31, 1995. 5
Consolidated Statements of Cash Flows -
Three month periods ended March 31, 1996
and March 31, 1995. 6
Notes to Consolidated Financial Statements. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
Part II - OTHER INFORMATION:
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
<TABLE>
UNILAB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1996 AND DECEMBER 31, 1995
(amounts in thousands)
<CAPTION>
ASSETS
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $9,795 $70
Accounts receivable, net of allowance for
doubtful accounts of $9,689 at March 31
and $8,454 at December 31 43,748 40,334
Amounts due from UGL/UniHolding 15,375 15,000
Inventory of supplies 2,438 2,361
Prepaid expenses and other current assets 2,410 1,819
_________________________
Total current assets 73,766 59,584
_________________________
PROPERTY AND EQUIPMENT, net 18,153 18,326
GOODWILL, net of accumulated
amortization of $6,562 at March 31
and $5,676 at December 31 99,712 100,598
OTHER INTANGIBLE ASSETS, net of
accumulated amortization of $18,447
at March 31 and $17,909 at December 31 11,883 12,421
OTHER ASSETS 6,702 5,245
__________________________
$210,216 $196,174
__________________________
</TABLE>
<PAGE>
<TABLE>
UNILAB CORPORATION AND SUBSIDIARIES (Continued)
CONSOLIDATED BALANCE SHEETS - MARCH 31, 1996 AND DECEMBER 31, 1995
(amounts in thousands)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,586 $21,947
Accounts payable and accrued liabilities 25,970 27,326
__________________________
Total current liabilities 27,556 49,273
__________________________
LONG-TERM DEBT, net of current portion 127,498 87,207
OTHER LIABILITIES 3,149 3,364
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock $.01 par value
Issued and Outstanding - 400 at March 31
and December 31 4 4
Common stock $.01 par value
Voting - Authorized - 100,000 shares;
Issued and Outstanding - 35,500 at
March 31 and 35,052 at December 31 356 351
Non-Voting - Authorized - 5,000 shares;
Issued and Outstanding - 1,050 at
March 31 and December 31 10 10
Additional paid-in capital 225,075 224,020
Accumulated deficit (173,432) (168,055)
__________________________
Total shareholders' equity 52,013 56,330
__________________________
$210,216 $196,174
__________________________
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
Unilab Corporation and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
(amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three months ended March 31,
1996 1995
____________________________________________________________________________
<S> <C> <C>
Revenue $51,541 $42,242
____________________________________________________________________________
Operating Expenses:
Salaries, wages and benefits 17,605 13,784
Supplies 6,600 5,183
Other operating expenses 13,033 9,835
Legal charge -- 1,200
Amortization and depreciation 2,819 1,871
____________________________________________________________________________
Total Operating Expenses 40,057 31,873
Selling, general and administrative expenses 10,984 8,289
____________________________________________________________________________
Operating Income 500 2,080
Other Income (Expenses):
Third party interest, net (2,765) (1,622)
Related party interest 375 (43)
Equity in earnings of affiliate -- 175
____________________________________________________________________________
Total Other Expenses, net (2,390) (1,490)
____________________________________________________________________________
Income (Loss) Before Income Taxes and (1,890) 590
Extraordinary Item
Tax Provision -- --
____________________________________________________________________________
Income (Loss) Before Extraordinary Item (1,890) 590
Extraordinary Item - loss on early 3,451 --
extinguishment of debt
____________________________________________________________________________
Net Income (Loss) ($5,341) $590
____________________________________________________________________________
Preferred Stock Dividends $36 $36
Net Income (Loss) Available to Common ($5,377) $554
Shareholders
Net Income (Loss) Per Share:
Income (Loss) Before Extraordinary Item ($0.05) $0.02
Extraordinary Item ($0.10) --
Net Income (Loss) ($0.15) $0.02
Weighted Average Common Shares Outstanding 36,551 35,599
____________________________________________________________________________
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
Unilab Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(amounts in thousands)
(Unaudited)
<CAPTION>
Three months ended March 31,
1996 1995
____________________________________________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($5,341) $590
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Amortization and depreciation 2,819 1,871
Provision for doubtful accounts 3,376 2,577
Equity in earnings of affiliate -- (175)
Extraordinary item - loss on early
extinguishment of debt 3,451 --
Changes in assets and liabilities affecting
operations, net of acquisitions:
Increase in Accounts receivable (6,790) (6,986)
Increase in Inventory of supplies (77) (97)
Increase in Prepaid expenses and other
current assets (591) (472)
(Increase) decrease in Other assets 91 (129)
Increase (decrease) in Accounts payable (1,511) 3,022
and accrued liabilities
Other 64 (52)
___________________________________________________________________________
Net cash provided (used) by operating activities (4,509) 149
___________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under third party debt 123,490 2,300
Payments under third party debt (103,564) (1,403)
Financing costs under the Senior Notes (4,173) --
Other -- (200)
___________________________________________________________________________
Net cash provided by financing activities 15,753 697
___________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,021) (608)
Other (498) (45)
___________________________________________________________________________
Net cash used by investing activities (1,519) (653)
___________________________________________________________________________
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,725 193
CASH AND CASH EQUIVALENTS - Beginning of Period 70 1,491
___________________________________________________________________________
CASH AND CASH EQUIVALENTS - End of Period $9,795 $1,684
___________________________________________________________________________
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
UNILAB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Management Opinion
In the opinion of management, the accompanying unaudited
interim financial statements reflect all adjustments which are
necessary to present fairly the financial position, results of
operations and cash flows for the interim periods reported. All
such adjustments made were of a normal recurring nature, except
for the extraordinary charge of $3.5 million recorded in the first
quarter of 1996, as discussed in note 3 below, and the legal charge
of $1.2 million recorded in the first quarter of 1995, as discussed in
note 4 below.
The accompanying interim financial statements and related notes
should be read in conjunction with the consolidated financial
statements of Unilab Corporation ( "Unilab" or the "Company")
and related notes as contained in the Annual Report on Form 10-K
for the year ended December 31, 1995.
2. Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income
(loss) less preferred stock dividends by the weighted average
number of common shares outstanding plus common stock
equivalents, which include options and warrants, during the period.
The assumed conversion of the convertible preferred stock is
excluded from the calculation since its effect would be immaterial.
3. Long-Term Debt
In March 1996, the Company completed an offering for $120.0
million of Senior Notes (the "Senior Notes"). Interest on the
Senior Notes is 11% and is payable on April 1st and October 1st
of each year, commencing October 1, 1996. The Senior Notes are
due April 2006 and the Company is not required to make any
mandatory redemption or sinking fund payment with the respect to
the Senior Notes prior to maturity.
The proceeds from the Senior Notes offering were used to retire
outstanding borrowings under the Company's then existing bank
term loan and revolving line of credit facility (the "Existing Credit
Facility") in the principal amount of $102.1 million, plus accrued
interest. In connection with the Senior Notes offering, the
Company replaced the Existing Credit Facility with a new credit
facility which provides for a $20.0 million revolving working
capital line of credit.
In connection with the Senior Notes offering, the Company
incurred approximately $5.0 million of financing costs (of which
approximately $4.2 million had been paid by March 31, 1996).
The debt financing costs are deferred and amortized, using the
interest method, over the term of the related debt. Upon
completion of the Senior Notes offering, the Company wrote-off
$3.5 million of deferred financing costs related to the Company's
previous credit agreements. The $3.5 million charge has been
shown as an extraordinary loss from the early extinguishment of
debt in the statement of operations.
The Senior Notes were issued at a discount of 99.242% per note.
The aggregate discount on the Senior Notes approximated $0.9
million and is charged to operations as additional interest expense
over the life of the Senior Notes using the interest method.
The Senior Notes are not redeemable prior to April 1, 2001, after
which the Senior Notes will be redeemable at any time at the
option of the Company, in whole or in part, at various redemption
prices as set forth in the indenture covering such Senior Notes (the
"Indenture"), plus accrued and unpaid interest, if any, to the date
of redemption. In addition, at any time prior to April 1, 1999, the
Company may redeem up to $42.0 million in aggregate principal
amount of the Senior Notes with the net proceeds of one or more
public offerings of common stock of the Company, at a redemption
price of 110% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the redemption date.
In the event of a change in control, as defined in the Indenture,
holders of the Senior Notes will have the right to require the
Company to purchase their notes, in whole or in part, at a price
equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase.
The Notes are general unsecured obligations of the Company and
rank pari passu in right of payment with all unsubordinated
indebtedness of the Company. In addition, the Indenture limits the
ability of the Company to incur additional indebtedness, under
certain circumstances.
In March 1996, the Company recognized an expense of
approximately $80,000 related to the termination of its interest rate
swap and cap agreements.
4. Legal Charge
In December 1993, the Company was named as a defendant in The
Trylon Corporation v. MetWest Inc., Unilab Corporation and Does
1 through 30. The lawsuit alleged that Unilab breached a contract,
and the implied covenants of good faith and fair dealing in
connection with that contract with respect to the sales, marketing
and distribution of blue white speculite lightsticks, a product
designed for use in connection with PAP smears to screen for
cervical cancer and precancerous conditions in women. Plaintiff
sought an unspecified amount of damages. In February 1994, the
case was referred to arbitration in accordance with the arbitration
clause of the contract between the parties. In September 1995, the
arbitrator rendered an award in favor of The Trylon Corporation
("Trylon") of approximately $437,000. In November 1995, the
arbitrator reduced the award to Trylon to approximately $374,000
(comprised of approximately $313,000 principal award plus
interest of approximately $61,000) and granted Trylon's request for
payment of legal fees of approximately $1.4 million. The
Company recorded a $1.2 million charge during the first quarter of
1995 related to the expected cost, consisting primarily of legal fees,
in defending itself against such lawsuit and another $2.0 million
charge during the fourth quarter of 1995 reflecting the costs
associated with the conclusion of this arbitration, including the fees
of Trylon's counsel and counsel for the Company.
5. Supplemental Disclosure of Cash Flow Information
(amounts in thousands) Three months ended March 31,
1996 1995
Cash paid during the period for:
Interest $2,961 $1,525
Income taxes 8 3
In addition, the Company issued Unilab common shares valued at
$1.0 million in the first quarter of 1996 in partial payment of the
purchase price for an acquisition made in 1993.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Quarter Ended March 31, 1996 Compared with Quarter Ended
March 31, 1995
Revenue increased to $51.5 million for the three months ended
March 31, 1996 from $42.2 million for the comparable prior year
period, representing an increase of $9.3 million or 22.0%. The
increase was the result of additional specimen volume generating
approximately $10.2 million offset by decreases in reimbursement
levels of approximately $0.9 million. The increase in specimen
volume was primarily attibutable to growth in the Company's core
business of $4.5 million and revenue from the acquisition of
Medical Laboratory Network, Inc. ("MLN") completed in May
1995 of $5.7 million. The decrease in reimbursement levels is
primarily due to a reduction in the national fee caps for Medicare
reimbursement in January 1996 and a general softening in
reimbursement levels across most payor groups.
Salaries, wages and benefits increased to $17.6 million for the
three months ended March 31, 1996 from $13.8 million for the
comparable prior year period. As a percentage of revenue,
salaries, wages and benefits increased to 34.2% in 1996 from
32.6% in 1995. Such increase is consistent with the higher trends
recognized by the Company in the second half of 1995.
Supplies expense increased to $6.6 million for the three months
ended March 31, 1996 from $5.2 million from the comparable
prior year period. As a percentage of revenue, supplies expense
increased to 12.8% in 1996 from 12.3% in 1995. Such increase
was the result of increased specimen volume and slightly higher
supplies cost.
Other operating expenses increased to $13.0 million for the three
months ended March 31, 1996 from $9.8 million from the
comparable prior year period. As a percentage of revenue, other
operating expenses increased to 25.3% in 1996 from 23.3% in
1995. Such increase was primarily due to an increase in lab
subcontracting expenses due to increases in fees charged by, and
volume sent to, outside reference laboratories and an increase in
bad debt expenses, both being consistent with the higher trends
recognized by the Company in the second half of 1995.
In December 1993, the Company was named as a defendant in The
Trylon Corporation v. MetWest Inc., Unilab Corporation and Does
1 through 30. The lawsuit alleged that Unilab breached a contract,
and the implied covenants of good faith and fair dealing in
connection with that contract with respect to the sales, marketing
and distribution of blue white speculite lightsticks, a product
designed for use in connection with PAP smears to screen for
cervical cancer and precancerious conditions in women. Plaintiff
sought an unspecified amount of damages. In February 1994, the
case was referred to arbitration in accordance with the arbitration
clause of the contract between the parties. In September 1995, the
arbitrator rendered an award in favor of Trylon of approximately
$437,000. In November 1995, the arbitrator reduced the award to
Trylon to approximately $374,000 (comprised of approximately
$313,000 principal award plus interest of approximately $61,000)
and granted Trylon's request for payment of legal fees of
approximately $1.4 million (payment of such legal fees of $1.4
million was made in the first quarter of 1996). The Company
recorded a $1.2 million charge during the first quarter of 1995
related to the expected cost, consisting primarily of legal fees, in
defending itself against such lawsuit and another $2.0 million
charge during the fourth quarter of 1995 reflecting the costs
associated with the conclusion of this arbitration, including the fees
of Trylon's counsel and counsel for the Company.
Selling, general and administrative expenses increased to $11.0
million for the three months ended March 31, 1996 from $8.3
million from the comparable prior year period. As a percentage of
revenue, selling, general and administrative expenses increased to
21.3% in 1996 from 19.6% in 1995. Such increase was primarily
due to personnel added in sales and marketing throughout the latter
half of 1995.
Amortization and depreciation expense increased to $2.8 million
for the three months ended March 31, 1996 from $1.9 million from
the comparable prior year period primarily due to the additional
amortization expense of approximately $0.4 million resulting from
the acquisition of MLN and additional depreciation expense of
approximately $0.4 million primarily resulting from depreciation
started in the second half of 1995 on approximately $3.0 million
of computer equipment and software.
Third party interest expense increased to $2.8 million for the three
months ended March 31, 1996 from $1.6 million for the
comparable prior year period primarily due to increased
borrowings by the Company used to finance the acquisition of
MLN and to pay related transaction fees and expenses in May 1995
and increased indebtedness incurred by the Company under the
Senior Notes offering in March 1996.
Related party interest income of $375,000 for the three months
ended March 31, 1996 reflects interest income on the $15.0 million
promissory note the Company received upon the sale of its equity
investment in UGL. The sale was effective June 30, 1995 and the
Company ceased recording equity earnings from UGL after April 30, 1995.
Upon completion of the Senior Notes offering, the Company wrote
off $3.5 million of deferred financing costs related to the
Company's previous credit agreements.
Liquidity and Capital Resources
Net cash used by operating activities was $4.5 million for the three
months ended March 31, 1996 and reflects a decrease of $4.7
million over the comparable prior year period when net cash
provided by operating activities was $0.2 million. The decrease
was primarily due to a reduction in the net income before
extraordinary item and the payment of legal fees of approximately
$1.4 million in connection with the conclusion of the Trylon
arbitration.
Net cash provided by financing activities was $15.8 million for the
three months ended March 31, 1996, primarily resulting from
approximately $4.4 million of borrowing under the Company's
previous credit facility used for working capital purposes and
approximately $17.0 million of additional indebtedness incurred in
connection with the Senior Notes offering offset primarily by $1.5
million of scheduled principal repayments under the Company's
previous credit facility and payment of approximately $4.2 million
of financing costs incurred in connection with the Senior Notes
offering.
Net cash used by investing activities was $1.5 million for the three
months ended March 31, 1996, primarily resulting from $1.0
million of capital expenditures and $0.5 million of payments made
on an acquisition completed in 1995.
The Company has $9.8 million of cash and cash equivalents on
hand at March 31, 1996. Cash on hand and additional borrowing
capabilities of $20.0 million under a working capital line of credit
are expected to be sufficient to meet anticipated operating
requirements, debt repayments and provide funds for capital
expenditures and working capital for the foreseeable future.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Unilab, MetWest and certain unnamed persons or entities were
named as defendants in The Trylon Corporation v. MetWest Inc.,
Unilab Corporation and Does 1 through 30, filed on or about
December 8, 1993 in the Superior Court of the State of California
for the County of Los Angeles. The plaintiff alleged that MetWest
and Unilab breached a contract, and the implied covenants of good
faith and fair dealing in connection with that contract with respect
to the sales, marketing and distribution by MetWest and Unilab of
Blue-White Speculite Lightsticks, a Trylon product designed for
use in connection with PAP smears to screen for cervical cancer
and precancerous conditions in women. Plaintiff sought an
unspecified amouont of damages. In February 1994, the case was
referred to arbitration before the American Arbitration Association
in Los Angeles County in accordance with the arbitration clause of
the contract between the parties. In September 1995, the arbitrator
rendered an award in favor of Trylon of approximately $437,000.
In November 1995, the arbitrator reduced the award to Trylon to
approximately $374,000 (comprised of approximately $313,000
principal award plus interest of approximately $61,000) and
granted Trylon's request for reimbursement of legal fees of
approximately $1.4 million. The Company appealed that award of
legal fees to the California Superior Court, which declined to
overturn the award and confirmed the arbitrator's decision in
February 1996. The Company recorded a $1.2 million charge
during the first quarter of 1995 related to the expected cost,
consisting primarily of legal fees, in defending itself against such
lawsuit and another $2.0 million charge in the fourth quarter of
1995, reflecting the costs associated with the conclusion of this
arbitration, including the fees of Trylon's counsel and counsel for
the Company.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 3.1 - Amended and Restated By-laws of the Company, as
amended as of February 27, 1996 (Incorporated by reference to
Exhibit 3.1 to the Company's Current Report on Form 8-K dated
March 19, 1996)
Exhibit 4.1 - Amended and Restated Rights Agreement, dated as of
March 15, 1996, between the Company and Chemical Mellon
Shareholder Services, as Rights Agent (Incorporated by reference
to Amendment No. 1 to the Registration Statement on Form 8-A
dated March 18, 1996).
Exhibit 4.2 - Indenture, dated as of March 14, 1996, between the
Company and Marine Midland Bank, as Trustee, with respect to
the 11% Senior Notes due 2006.
Exhibit 10.1 - Credit Agreement, dated as of March 14, 1996,
among the Company, various Banks, and Banque Paribas, as Agent.
Exhibit 10.2 - Stock Option Agreement, dated as of February 27,
1996, between the Company and Andrew H. Baker.
Exhibit 10.3 - Stock Option Agreement, dated as of February 27,
1996, between the Company and Richard A. Michaelson.
Exhibit 99.1 - Press Release, dated April 30, 1996, announcing
first quarter earnings results.
(B) Reports on Form 8-K
Current Report on Form 8-K dated March 19, 1996, with respect to
Items 5 and 7.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
UNILAB CORPORATION
By: Richard A. Michaelson
Date: May 1, 1996 Richard A. Michaelson
Senior Vice President - Finance,
Treasurer and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,795
<SECURITIES> 0
<RECEIVABLES> 91,117
<ALLOWANCES> (31,994)
<INVENTORY> 2,438
<CURRENT-ASSETS> 73,766
<PP&E> 37,341
<DEPRECIATION> (19,188)
<TOTAL-ASSETS> 210,216
<CURRENT-LIABILITIES> 27,556
<BONDS> 127,498
0
4
<COMMON> 366
<OTHER-SE> 51,643
<TOTAL-LIABILITY-AND-EQUITY> 210,216
<SALES> 51,541
<TOTAL-REVENUES> 51,541
<CGS> 0
<TOTAL-COSTS> 34,632
<OTHER-EXPENSES> 13,033
<LOSS-PROVISION> 3,376
<INTEREST-EXPENSE> 2,390
<INCOME-PRETAX> (1,890)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,890)
<DISCONTINUED> 0
<EXTRAORDINARY> 3,451
<CHANGES> 0
<NET-INCOME> (5,341)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.15)
</TABLE>
Exhibit 4.2
UNILAB CORPORATION
11% SENIOR NOTES DUE 2006
_________________
INDENTURE
Dated as of March 14, 1996
_________________
MARINE MIDLAND BANK
Trustee
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.10
(c) N.A.
311 (a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) N.A.
(c) N.A.
313 (a) 7.06
(b) 7.06
(c) 7.06
(d) 7.06
314 (a) N.A.
(b) N.A.
(c)(1) N.A.
(c)(2) N.A.
(c)(3) N.A.
(d) N.A.
(e) N.A.
(f) N.A.
315 (a) N.A.
(b) 7.05
(c) N.A.
(d) N.A.
(e) N.A.
316 (a)(last sentence) N.A.
(a)(1)(A) N.A.
(a)(1)(B) N.A.
(a)(2) N.A.
(b) N.A.
(c) 2.13
317 (a)(1) N.A.
(a)(2) N.A.
(b) N.A.
318 (a) N.A.
(b) N.A.
(c) N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions
Section 1.02. Other Definitions
Section 1.03. Incorporation by Reference of
Trust Indenture Act
Section 1.04. Rules of Construction
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating
Section 2.02. Execution and Authentication
Section 2.03. Registrar and Paying Agent
Section 2.04. Paying Agent to Hold Money in Trust
Section 2.05. Lists of Holders of the Notes
Section 2.06. Transfer and Exchange
Section 2.07. Replacement Notes
Section 2.08. Outstanding Notes
Section 2.09. Treasury Notes
Section 2.10. Temporary Notes
Section 2.11. Cancellation
Section 2.12. Defaulted Interest
Section 2.13. Record Date
Section 2.14. CUSIP Number
Section 2.15. Computation of Interest
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee
Section 3.02. Selection of Notes to Be Purchased or Redeemed
Section 3.03. Notice of Redemption
Section 3.04. Effect of Notice of Redemption
Section 3.05. Deposit of Redemption or Purchase Price
Section 3.06. Notes Redeemed or Purchased in Part
Section 3.07. Optional Redemption
Section 3.08. Mandatory Redemption
Section 3.09. Asset Sale Offers
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes
Section 4.02. Maintenance of Office or Agency
Section 4.03. Reports
Section 4.04 Compliance Certificate
Section 4.05. Taxes
Section 4.06. Stay, Extension and Usury Laws
Section 4.07. Restricted Payments
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries
Section 4.09. Line of Business
Section 4.10. Asset Sales
Section 4.11. Transactions with Affiliates
Section 4.12. Liens
Section 4.13. Sale and Lease Back Transactions
Section 4.14. Incurrence of Indebtedness and Issuance
of Preferred Stock
Section 4.15. Offer to Purchase Upon Change of Control
Section 4.16. Corporate Existence
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets
Section 5.02. Successor Corporation Substituted
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default
Section 6.02. Acceleration and Payment of Premium
Section 6.03. Other Remedies
Section 6.04. Waiver of Past Defaults
Section 6.05. Control by Majority
Section 6.06. Limitation on Suits
Section 6.07. Rights of Holders of Notes to Receive Payment
Section 6.08. Collection Suit by Trustee
Section 6.09. Trustee May File Proofs of Claim
Section 6.10. Priorities
Section 6.11. Undertaking for Costs
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee
Section 7.02. Rights of Trustee
Section 7.03. Individual Rights of Trustee
Section 7.04. Trustee's Disclaimer
Section 7.05. Notice of Defaults
Section 7.06. Reports by Trustee to Holders of the Notes
Section 7.07. Compensation and Indemnity
Section 7.08. Replacement of Trustee
Section 7.09. Successor Trustee by Merger, etc.
Section 7.10. Eligibility; Disqualification
Section 7.11. Preferential Collection of Claims Against Company
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance
or Covenant Defeasance
Section 8.02. Legal Defeasance and Discharge
Section 8.03. Covenant Defeasance
Section 8.04. Conditions to Legal or Covenant Defeasance
Section 8.05. Deposited Money and Government
Securities to be Held in Trust; Other
Miscellaneous Provisions.
Section 8.06. Repayment to Company
Section 8.07. Reinstatement
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes
Section 9.02. With Consent of Holders of Notes
Section 9.03. Compliance with Trust Indenture Act
Section 9.04. Revocation and Effect of Consents
Section 9.05. Notation on or Exchange of Notes
Section 9.06. Trustee to Sign Amendments, etc.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls
Section 10.02. Notices
Section 10.03. Communication by Holders of Notes with Other
Holders of Notes
Section 10.04. Certificate and Opinion as to Conditions Precedent
Section 10.05. Statements Required in Certificate or Opinion
Section 10.06. Rules by Trustee and Agents
Section 10.07. No Personal Liability of Directors,
Officers, Employees and
Stockholders
Section 10.08. Governing Law
Section 10.09. No Adverse Interpretation of Other Agreements
Section 10.10. Successors
Section 10.11. Severability
Section 10.12. Counterpart Originals
Section 10.13. Table of Contents, Headings, etc.
Section 10.14. Trustee To Include Paying Agent
<PAGE>
INDENTURE dated as of March 14, 1996
among Unilab Corporation, a Delaware corporation, as Issuer
("Unilab"), and Marine Midland Bank, as trustee (the
"Trustee").
The Company and the Trustee agree as follows
for the benefit of each other and for the equal and ratable
benefit of the Holders of the 11% Senior Notes due 2006:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Acquired Debt" means, with respect to the
Company or any of its Restricted Subsidiaries, (i) Indebtedness
of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of the
Company or assumed in connection with the acquisition of
assets from such Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a
Restricted Subsidiary of the Company or such acquisition of
assets, and (ii) Indebtedness secured by a Lien encumbering
any asset acquired by such specified Person.
"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.
"Agent" means any Registrar, Paying Agent or
co-Registrar.
"Asset Sale" means (i) the sale, lease (that has
the effect of a disposition and is not for security purposes),
conveyance or other disposition (that is not for security
purposes) of any assets (including, without limitation, by way
of a sale and leaseback) other than in the ordinary course of
business (provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole will be
governed by the provisions of Section 4.15 and/or the
provisions described above under Article 5 hereof and not by
the provisions of the Asset Sale covenant), and (ii) the issuance
of Equity Interests in any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries, in the case of either clause (i) or (ii) whether in a
single transaction or a series of related transactions for net
proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a
Restricted Subsidiary of the Company or by a Subsidiary of the
Company to the Company or to another Restricted Subsidiary
of the Company, (ii) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to a Restricted
Subsidiary of the Company, (iii) sales or other dispositions of
obsolete equipment and (iv) a Restricted Payment that is
permitted under Section 4.07 hereof will not be deemed to be
Asset Sales.
"Attributable Debt" in respect of a sale and
leaseback transaction means, at the time of determination, the
present value (discounted at the rate of interest implicit in such
transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code
or any similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of
Directors of the Company or any authorized committee of the
Board of Directors.
"Board Resolution" means a copy of a
resolution certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Borrowing Base" means, as of any date, an
amount equal to (i) the greater of (A) $20 million and (B) 80%
of all accounts receivable owned by the Company and its
Restricted Subsidiaries as of such date that are not more than
120 days past due minus (ii) the aggregate amount of all
permanent reductions of Senior Revolving Debt required to be
made pursuant to clause (a) of the second paragraph of Section
4.10 hereof. To the extent that information is not available as
to the amount of accounts receivable or inventory as of a
specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing
Base.
"Business Day" means any day other than a
Legal Holiday.
"Capital Lease Obligation" means, at the time
any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time be
required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a
corporation, corporate stock, (ii) in the case of a partnership,
partnership interests (whether general or limited), (iii) in the
case of an association or any other business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) in the equity of such association or entity,
and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States
dollars, (ii) securities issued or directly and fully guaranteed or
insured by the United States government or any agency or
instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit
and time deposits with maturities of six months or less from the
date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case
with any commercial bank having capital and surplus in excess
of $500 million and a Keefe Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii)
above and (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. ("Moody's")
or Standard & Poor's Ratings Group ("S&P") and in each case
maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of
any of the following events: (i) except for any transaction not
constituting a Change of Control pursuant to clause (iii) below,
any sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation or for security
purposes), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its
Subsidiaries taken as a whole to any "person" (as defined in
Section 13(d) of the Exchange Act) or "group" (as defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) the
adoption by the Company of a plan for the liquidation or
dissolution of the Company, (iii) the Company consolidates
with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or "group" (as
defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
in a transaction or series of related transactions in which the
Voting Stock of the Company is converted into or exchanged
for cash, securities or other property, other than any
transaction where (A) the outstanding Voting Stock of the
Company is converted into or exchanged for (1) Voting Stock
(other than Disqualified Stock) of the surviving or transferee
corporation and/or (2) cash, securities and other property in an
amount which could be paid by the Company as a Restricted
Payment under Section 4.07 hereof and (B) the "beneficial
owners" (as defined in Rule 13d-3 under the Exchange Act) of
the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, not less than a majority
of the total Voting Stock of the surviving or transferee
corporation immediately after such transaction, (iv) the
consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any
"person" (as defined in Section 13(d) of the Exchange Act)
becomes the "beneficial owner" (as defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the Voting Stock of the Company, or (v) the
first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors. For
purposes of this definition, any transfer of an equity interest of
an entity that was formed for the purpose of acquiring Voting
Stock of the Company, and has acquired such Voting Stock,
will be deemed to be a transfer of such portion of such Voting
Stock as corresponds to the portion of the equity of such entity
that has been so transferred.
"Commission" means the Securities and
Exchange Commission.
"Company" means Unilab until a successor
replaces it pursuant to Article 5 of this Indenture and thereafter
means the successor.
"Consolidated Cash Flow" means, with respect
to any Person for any period, the Consolidated Net Income of
such Person for such period plus (i) an amount equal to any
extraordinary or nonrecurring loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) consolidated interest
expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations, but
excluding amortization of deferred financing costs attributable
to the sale of the Notes) to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid
cash expenses that were paid in a prior period) of such Person
and its Restricted Subsidiaries for such period to the extent that
such depreciation and amortization were deducted in computing
such Consolidated Net Income, in each case, on a consolidated
basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the
income or profits of, and the depreciation and amortization of,
a Restricted Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow
only to the extent (and in same proportion) that the Net Income
of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of
determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect
to any Person for any period, the aggregate of the Net Income
of such Person and its Restricted Subsidiaries for such period,
on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person
that is not a Restricted Subsidiary or that is accounted for by
the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash
to the referent Person or a Wholly Owned Restricted Subsidiary
thereof, (ii) the Net Income of any Person that is a Subsidiary
(other than a Restricted Subsidiary of which at least 80% of the
Voting Stock of such subsidiary is owned by the referent
Person directly or indirectly through one or more Wholly
Owned Restricted Subsidiaries) shall be included only to the
extent of the amount of dividends or similar distributions paid
to the referent Person or a Wholly Owned Restricted Subsidiary
thereof, (iii) the Net Income of any Restricted Subsidiary shall
be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been
obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, (iv) the Net
Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
shall be excluded and (v) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect
to any Person as of any date, the sum of (i) the consolidated
equity of the common stockholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock,
less (x) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the
acquisition of such business) subsequent to the date hereof in
the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as
of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted
Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all
of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date
of determination, any member of the Board of Directors of the
Company who (i) was a member of such Board of Directors on
the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the
time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be
at the address of the Trustee specified in Section 10.02 hereof
or such other address as to which the Trustee may give notice
to the Company.
"Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy
Law.
"Default" means any event that is or with the
passage of time or the giving of notice or both would be an
Event of Default.
"Disqualified Stock" means, with respect to any
Person, any Capital Stock of such Person that, by its terms (or
by the terms of any security into which it is convertible or for
which it is exchangeable, except to the extent such Capital
Stock is exchangeable only at the option of such Person and
only subject to the terms of any debt instrument to which such
Person is a party), or upon the happening of any event, matures
or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to October 1,
2006.
"Dollars" and "$" mean lawful money of the
United States of America.
"Equity Interests" means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Existing Credit Facility" means that certain
Credit Facility, dated as of May 16, 1995, by and among the
Company and Banque Paribas, as Agent, including any related
notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case
as amended, amended and restated, modified, renewed,
refunded, replaced or refinanced from time to time, including
any agreement extending the maturity of, increasing the
commitments under, or otherwise restructuring all or any
portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Existing Indebtedness" means up to $11.5
million in aggregate principal amount of Indebtedness of the
Company (other than Indebtedness under the Existing Credit
Facility or the New Credit Facility, as the case may be) in
existence on the date hereof, until such amounts are repaid.
"Fixed Charges" means, with respect to any
Person for any period, the sum of (i) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued (including, without limitation,
amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment
obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to
Hedging Obligations, but excluding amortization of deferred
financing costs attributable to the sale of the Notes) and (ii) the
consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period, and (iii)
any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien
is called upon) and (iv) the product of (A) all cash dividend
payments (and non-cash dividend payments in the case of a
Person that is a Restricted Subsidiary) on any series of
preferred stock of such Person, times (B) a fraction, the
numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with
respect to any Person for any period, the ratio of the
Consolidated Cash Flow of such Person and its Restricted
Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period;
provided, however that (i) if the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees or redeems
any Indebtedness (other than revolving credit borrowings),
issues or redeems preferred stock or otherwise disposes of
assets subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption,
Guarantee or redemption of Indebtedness, such issuance or
redemption of preferred stock or such disposition of assets, as
if the same had occurred at the beginning of the applicable
four-quarter reference period; (ii) if the Company or any
Restricted Subsidiary has made any acquisition of assets or
common stock of an entity, including through mergers or
consolidations and including any related financing transactions,
subsequent to the commencement of the four-quarter reference
period but prior to the Calculation Date, the Fixed Charge
Coverage Ratio shall be calculated as if such acquisition had
occurred at the beginning of the applicable four-quarter
reference period; (iii) the Consolidated Cash Flow attributable
to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded; and (iv) the Fixed Charges
attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, but only to
the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession,
which are in effect on the date of the Indenture; provided,
however, that all reports and other financial information
provided by the Company to the Holders, the Trustee and/or
the Commission shall be prepared in accordance with GAAP,
as in effect on the date of such report or other financial
information.
"Government Securities" means direct
obligations of, or obligations guaranteed by, the United States
of America for the payment of which guarantee or obligations
the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by
endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner
(including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any
part of any Indebtedness. The amount of any Guarantee of any
guaranteeing Person shall be deemed to be the lower of (i) an
amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee is made
and (ii) the maximum amount for which such guaranteeing
Person may be liable pursuant to the terms of the applicable
Guarantee, unless such primary obligation and the maximum
amount for which such guaranteeing Person may be liable are
not stated or determinable, in which case, the amount of such
Guarantee shall be such guaranteeing Person's maximum
reasonably anticipated liability in respect thereof as determined
by such guaranteeing Person in good faith.
"Hedging Obligations" means, with respect to
any Person, the obligations of such Person under (i) interest
rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.
"Holder" means a Person in whose name a
Note is registered.
"Indebtedness" means, with respect to any
Person, without duplication, any indebtedness of such Person,
whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase
price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, all
indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such
Person, but only to the extent of the fair market value of such
asset if such fair market value is less than the amount of such
Indebtedness and such Indebtedness has not been assumed by
such Person), the maximum fixed repurchase price of
Disqualified Stock issued by such Person and the liquidation
preference of preferred stock issued by such Person, in each
case, if held by any Person other than the Company or a
Restricted Subsidiary and, to the extent not otherwise included,
the Guarantee by such Person of any indebtedness of any other
Person.
"Indenture" means this Indenture, as amended
or supplemented from time to time in accordance with the
terms hereof.
"Investments" means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the forms of direct or indirect loans
(including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other
items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP but excluding
extensions of trade credit in the ordinary course of business;
provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of
Equity Interests (other than Disqualified Stock) of the Company
shall not be deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday
or a day on which banking institutions in the City of New York
or at a place of payment are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of
any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any
Person, the net income (loss) of such Person, determined in
accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however, (i) any gain
(but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with (a) any
Asset Sale (including, without limitation, dispositions pursuant
to sale and leaseback transactions) or (b) the disposition of any
securities by such Person or the extinguishment of any
Indebtedness of such Person and (ii) any extraordinary or
nonrecurring gain (but not loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain
(but not loss).
"Net Proceeds" means the aggregate cash
proceeds received by the Company or any of its Restricted
Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition
of any non-cash consideration received in any Asset Sale), net
of fees, commissions, expenses and other direct costs relating
to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales
commissions) and any relocation expenses and severance or
shut down costs incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing
arrangements), amounts applied to the repayment of
Indebtedness (other than Senior Revolving Debt) secured by a
Lien on the asset or assets that were the subject of such Asset
Sale, any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP and
any reserves in accordance with GAAP against any liabilities
associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale.
"New Credit Facility" means that certain Credit
Facility, dated as of March 14, 1996, by and among the
Company, Banque Paribas, as Agent, the lenders party thereto,
including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith,
and in each case as amended, amended and restated, modified,
renewed, refunded, replaced or refinanced from time to time,
including any agreement extending the maturity of, increasing
the commitments under, or otherwise restructuring all or any
portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Non-Recourse Debt" means Indebtedness (i) as
to which neither the Company nor any of its Restricted
Subsidiaries (A) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute
Indebtedness), (B) is directly or indirectly liable (as a guarantor
or otherwise), or (C) constitutes the lender; and (ii) no default
with respect to which (including any rights that the holders
thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
"Non-Voting Preferred Stock" means the
Company's issued and outstanding convertible preferred stock,
$.01 par value, which is redeemable at the option of the
Company after November 10, 1998 and which has a liquidation
preference of $5.75 per share.
"Notes" means the 11% Senior Notes due
2006, as amended or supplemented from time to time pursuant
to the terms hereof, that are issued under this Indenture.
"Obligations" means any principal, interest,
penalties, fees, indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any
Indebtedness.
"Officer" means, with respect to any Person,
the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate
signed on behalf of the Company by two Officers of the
Company, one of whom must be the principal executive
officer, principal financial officer or principal accounting
officer of the Company, that meets the requirements of Section
10.05 hereof.
"Opinion of Counsel" means an opinion from
legal counsel who is reasonably acceptable to the Trustee that
meets the requirements of Section 10.05 hereof. The counsel
may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Acquisition Indebtedness" means
any Indebtedness the proceeds of which are used to make an
Investment in any Person or substantially all of the assets of
any Person, in either case, that is engaged in a Permitted
Business; provided, however, that (i) such Indebtedness shall
not provide for payment of principal thereon (whether pursuant
to any scheduled sinking fund or at maturity) prior to October
1, 2006; (ii) such Indebtedness shall not provide for the
payment of cash interest with respect thereto (A) prior to five
years after the initial incurrence of such Permitted Acquisition
Indebtedness (the "Triggering Date") and (B) unless such
Permitted Acquisition Indebtedness could then be incurred
pursuant to the first paragraph under Section 4.14. hereof at
any time after the Triggering Date and prior to April 1, 2006;
(iii) such Indebtedness shall provide that (A) upon the
occurrence of certain bankruptcy events with respect to the
Company and (B) during the continuance of any other Default
under the Notes, no payment of principal, premium or interest
on such Permitted Acquisition Indebtedness shall be made until
the earlier to occur of (1) the date on which all principal,
premium and interest and other obligations with respect to the
Notes has been paid in cash or (2) the date on which such
Default under the Notes has been cured or waived by the
requisite holders of the Notes; and (iv) such Indebtedness shall
provide that, for so long as the Notes are outstanding, no
acceleration of the obligations thereunder shall become
effective and no other remedy with respect to a default
thereunder shall be taken unless the Indebtedness of the
Company with respect to the Notes has been accelerated or is
otherwise due and payable at the time of acceleration of such
Permitted Acquisition Indebtedness.
"Permitted Business" means the provision of
any health care services and any activity reasonably related
thereto.
"Permitted Investments" means (a) any
Investments in the Company or in a Restricted Subsidiary of the
Company; (b) any Investments in cash or Cash Equivalents; (c)
Investments by the Company or any Restricted Subsidiary of
the Company in a Person, if, as a result of such Investment,
such Person becomes a Restricted Subsidiary of the Company,
or is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) Investments in one or more entities engaged in a
Permitted Business of which the Company (v) owns Capital
Stock in an aggregate amount outstanding at any time not to
exceed $5 million; (e) accounts receivable arising in the
ordinary course of business; and (f) Investments made as a
result of the receipt of non-cash consideration from an Asset
Sale that was made pursuant to and in compliance with Section
4.10 hereof.
"Permitted Liens" means (i) Liens in favor of
the Company; (ii) Liens on property of a Person existing at the
time such Person becomes a Restricted Subsidiary of the
Company or is merged into or consolidated with the Company
or any Subsidiary of the Company; provided that such Liens
were not incurred in connection with such event, merger or
consolidation and do not extend to any assets other than those
of such Person; (iii) Liens on property existing at the time of
acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were not incurred in
connection with such acquisition; (iv) Liens to secure the
performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens on
accounts receivable and inventory and proceeds thereof and
cash collateral accounts to secure Senior Revolving Debt
permitted by clause (i) of Section 4.14 hereof; (vi) Liens to
secure Indebtedness (including Capital Lease Obligations)
permitted by clause (iii) of the second paragraph of Section
4.14 hereof covering only the assets acquired with such
Indebtedness; (vii) Liens existing on the date hereof; (viii)
Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other
appropriate provision required by GAAP shall have been made
therefor; (ix) statutory Liens of landlords and carriers',
warehousemens', mechanics', suppliers', materialmens',
repairmens' or other like Liens arising in the ordinary course of
business, deposits made to obtain the release of such Liens, and
with respect to amounts not yet delinquent for a period of more
than 60 days or being contested in good faith by appropriate
proceedings, if a reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been
made therefor; (x) easements, rights-of-way, zoning or other
restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its
Restricted Subsidiaries incurred in the ordinary course of
business; (xi) Liens securing reimbursement obligations with
respect to letters of credit which encumber documents and
other property relating to such letters of credit and the products
and proceeds thereof; (xii) judgment and attachment Liens not
giving rise to an Event of Default; (xiii) leases or subleases
granted to others not interfering in any material respect with
the business of the Company or any of its Restricted
Subsidiaries; (xiv) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the
Company or any of its Restricted Subsidiaries in the ordinary
course of business of the Company and its Restricted
Subsidiaries; (xv) any interest or title of a lessor in the property
subject to any operating lease permitted pursuant to Section
4.13 hereof; (xvi) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xvii)
the Lien granted to the Trustee under the Indenture and any
substantially equivalent Lien granted to any trustee or similar
institution under any indenture for Indebtedness permitted by
the terms hereof; and (xviii) Liens incurred in the ordinary
course of business of the Company or any Restricted Subsidiary
of the Company with respect to obligations that do not exceed
$2.0 million at any one time outstanding, are not incurred in
connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary
course of business) and do not in the aggregate materially
detract from the value of the property or materially impair the
use thereof in the operation of business by the Company or
such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means
any Indebtedness of the Company issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund (including principal, interest, fees,
expenses and costs thereof) other Indebtedness or the cost of
such Permitted Refinancing Indebtedness of the Company;
provided that, except with respect to Indebtedness incurred to
repay, repurchase, redeem or defease all the Notes: (i) the
principal amount of such Permitted Refinancing Indebtedness
does not exceed the principal amount of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of accrued interest, fees, expenses, premiums
and other amounts payable in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms
at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or agency or
political subdivision thereof (including any subdivision or
ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Purchase Money Obligation" means any
Indebtedness of the Company incurred to finance the purchase
or construction of any assets by the Company, to the extent (i)
the purchase cost or cost of construction for such assets is or
should be included in "additions to property, plant and
equipment" in accordance with GAAP and (ii) such Purchase
Money Obligation is incurred within 90 days of such purchase
or construction.
"Responsible Officer" when used with respect
to the Trustee, means any officer within the Corporate Trust
Department of the Trustee (or any successor group of the
Trustee) with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means an Investment
other than a Permitted Investment.
"Restricted Subsidiary" of a Person means any
Subsidiary of such Person that is not an Unrestricted
Subsidiary.
"Securities Act" means the Securities Act of
1933, as amended.
"Senior Revolving Debt" means Obligations in
respect of revolving credit borrowings and letters of credit
under the Existing Credit Facility, the New Credit Facility
and/or any successor facility or facilities.
"Significant Subsidiary" means any Subsidiary
that would be a "significant subsidiary" as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the
Securities Act, as such Regulation is in effect on the date
hereof.
"Subsidiary" means, with respect to any
Person, (i) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii)
any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any
combination thereof).
"TIA" means the Trust Indenture Act of 1939
(15 U.S.C. Section 77aaa-77bbbb) as in effect on the date on which
this Indenture is qualified under the Trust Indenture Act of
1939; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, the "TIA" means, to
the extent required by such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trustee" means the party named as such above
until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means any successor
trustee serving hereunder.
"Unrestricted Subsidiary" means (i) any
Subsidiary that at the time of determination is an Unrestricted
Subsidiary (as designated in compliance with this definition by
the Board of Directors pursuant to a Board Resolution) and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary if such Subsidiary: (A) has no Indebtedness other
than Non-Recourse Debt; (B) is not party to any agreement,
contract, arrangement or understanding with the Company or
any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (C) is a Person
with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x)
to subscribe for additional Equity Interests or (y) to maintain or
preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; (D)
has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (E) has at least one director on
its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at
least one executive officer that is not a director or executive
officer of the Company or any of its Restricted Subsidiaries.
Any such designation by the Board of Directors shall be
deemed to constitute a Restricted Investment in such subsidiary
(with the amount thereof equal to the fair market value of the
assets of such subsidiary) and shall be required to comply with
Section 4.07 hereof. Any such designation shall be
evidenced to the Trustee by filing with the Trustee a certified
copy of the Board Resolution giving effect to such designation
and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by
Section 4.07 hereof. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes hereof and any
Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of
such date under Section 4.14 hereof, the Company shall be in
default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.14 hereof and (ii) no Default or
Event of Default would be in existence following such
designation.
"Voting Stock" means any class or classes of
Capital Stock pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees
of any Person (irrespective of whether or not, at the time, stock
of any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency).
"Weighted Average Life to Maturity" means,
when applied to any Indebtedness at any date, the number of
years obtained by dividing (i) the sum of the products obtained
by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in
respect thereof by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the
making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any
Person means a Restricted Subsidiary of such Person all
outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be
owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" 4.11
"Asset Sale Offer" 4.10
"Change of Control Offer" 4.15
"Change of Control Payment" 4.15
"Change of Control Payment Date" 4.15
"Covenant Defeasance" 8.03
"Commencement Date" 4.10
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.14
"Legal Defeasance" 8.02
"Moody's" 1.01
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Default" 6.01
"Prior Acquisition" 4.10
"Purchase Date" 3.09
"Registrar" 2.03
"Restricted Payments" 4.07
"S&P". . . 1.01
"Subsequent Asset Sale" 4.10
Section 1.03. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of
the TIA, the provision is incorporated by reference in and
made a part of this Indenture, other than those provisions of the
TIA that may be excluded herein, which provision shall be
excluded to the extent specifically excluded in this Indenture.
The following TIA terms used in this Indenture
have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and
any successor obligor upon the Notes, as the case may be.
All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by a rule or regulation promulgated by the
Commission under the TIA have the meanings so assigned to
them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act or the Exchange Act shall be deemed to
include substitute, replacement or successor sections or
rules adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
hereto, the terms of which are incorporated in and made a part
of this Indenture. The Notes may have notations, legends or
endorsements approved as to form by the Company and
required by law, stock exchange rule, agreements to which the
Company is subject, or usage. Each Note shall be dated the
date of its authentication. The Notes shall be issuable in
registered form, without coupons, and only in denominations of
$1,000 and integral multiples thereof.
Section 2.02. Execution and Authentication.
One Officer of the Company shall sign the Notes
for the Company by manual or facsimile signature.
If an Officer of the Company whose signature is
on a Note no longer holds that office at the time the Note is
authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the
manual signature of a Responsible Officer of the Trustee. The
signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Notes
shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the
Company signed by two Officers of the Company, authenticate
Notes for original issue up to an aggregate principal amount at
maturity stated in the Notes. The aggregate principal amount at
maturity of Notes outstanding at any time shall not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. Unless
limited by the terms of such appointment, an authenticating
agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal
with the Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain (i) an office or
agency where Notes may be presented for registration of
transfer or for exchange (including any co-registrar, the
"Registrar") and (ii) an office or agency where Notes may be
presented for payment ("Paying Agent") within the City of and
the State of New York or, at the option of the Company,
payment of interest may be made by check mailed to the
Holders at their respective addresses set forth in the register of
Holders. The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company may appoint one
or more co-Registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent,
Registrar or co-Registrar without prior notice to any Holder.
The Company shall notify the Trustee and the Trustee shall
notify the Holders of the name and address of any Agent not a
party to this Indenture. The Company may act as Paying
Agent, Registrar or co-Registrar. The Company shall enter
into an appropriate agency agreement with any Agent not a
party to this Indenture, which shall be subject to any
obligations imposed by the provisions of the TIA. The
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails
to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be
entitled to appropriate compensation in accordance with Section
7.07 hereof.
The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of notices and
demands in connection with the Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent
other than the Trustee to agree in writing that the Paying Agent
shall hold in trust for the benefit of the Holders or the Trustee
all money held by the Paying Agent for the payment of
principal of, premium, if any, and interest on the Notes, and
shall notify the Trustee of any Default by the Company in
making any such payment. While any such Default continues,
the Trustee may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed.
The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company) shall
have no further liability for the money delivered to the Trustee.
If the Company acts as Paying Agent, it shall segregate and
hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
Section 2.05. Lists of Holders of the Notes.
The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of
the names and addresses of Holders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the
Company shall furnish to the Trustee at least seven (7) Business
Days before each interest payment date and at such other times
as the Trustee may request in writing a list in such form and as
of such date as the Trustee may reasonably require of the
names and addresses of Holders, including the aggregate
principal amount at maturity of the Notes held by each thereof,
and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
When Notes are presented to the Registrar with a
request to register the transfer or to exchange them for an equal
principal amount at maturity of Notes of other denominations,
the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met; provided,
however, that any Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed or
accompanied by a written instruction of transfer in form
satisfactory to the Issuer and the Trustee duly executed by the
Holder thereof or by his attorney duly authorized in writing.
To permit registrations of transfer and exchanges, the Company
shall issue and the Trustee shall authenticate Notes at the
Registrar's request, subject to such rules as the Trustee may
reasonably require.
Neither the Company nor the Registrar shall be
required to (i) issue, register the transfer of or exchange Notes
during a period beginning at the opening of business on a
Business Day fifteen (15) days before the day of any selection
of Notes for redemption or purchase under Section 3.02 hereof
and ending at the close of business on the day of selection,
(ii) register the transfer of or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (iii) register the transfer
or exchange of a Note between a record date and the next
succeeding interest payment date.
No service charge shall be made to any Holder for
any registration of transfer or exchange (except as otherwise
expressly permitted herein), but the Company may require
payment of a sum sufficient to cover any transfer tax or other
governmental charge payable in connection therewith (other
than such transfer tax or similar governmental charge payable
upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof,
which shall be paid by the Company).
Prior to due presentment to the Trustee for
registration of the transfer of any Note, the Trustee, any Agent
and the Company may deem and treat the Person in whose
name any Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of, premium,
if any, and interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and none of
the Trustee, any Agent nor the Company shall be affected by
notice to the contrary.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the
Trustee, or the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Note
and the ownership thereof, the Company shall issue and the
Trustee, upon the written order of the Company signed by two
Officers of the Company, shall authenticate a replacement Note
if the Trustee's requirements for replacements of Notes are
met. In every case the applicant for a replacement Note shall
furnish to the Company and to the Trustee and any agent of the
Company or the Trustee, an indemnity bond as may be
required in the reasonable judgment of the Trustee and the
Company to protect the Company, the Trustee, each Agent and
each authenticating agent from any loss which any of them may
suffer if a Note is replaced. The Company and the Trustee
may charge the applicant for their expenses in replacing a
Note.
Every replacement Note is an additional
Obligation of the Company and shall be entitled to all of the
benefits of (but shall be subject to all the limitations of rights
set forth in) this Indenture equally and ratably with all other
Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the
Notes authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described
in this Section 2.08 as not outstanding. If a Note is replaced
pursuant to Section 2.07 hereof, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. If the principal
amount at maturity of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on
it ceases to accrue. Subject to Section 2.09 hereof, a Note does
not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required
principal amount at maturity of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company or
any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether
the Trustee shall be protected in relying on any such direction,
waiver or consent, only Notes which a Responsible Officer of
the Trustee actually knows to be so owned shall be so
considered. Notwithstanding the foregoing, Notes that are to
be acquired by the Company or an Affiliate of the Company
pursuant to an exchange offer, tender offer or other agreement
shall not be deemed to be owned by such entity until legal title
to such Notes passes to such entity.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in
the form of definitive Notes but may have variations that the
Company and the Trustee consider appropriate for temporary
Notes. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of the written order of
the Company signed by two Officers of the Company, shall
authenticate definitive Notes in exchange for temporary Notes.
Until such exchange, temporary Notes shall be entitled to the
same rights, benefits and privileges as definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee
shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation. Subject to
Section 2.07 hereof, the Company may not issue new Notes to
replace Notes that it has redeemed or paid or that have been
delivered to the Trustee for cancellation. All cancelled Notes
held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest
on the Notes, the Company shall pay the defaulted interest in
any lawful manner plus, to the extent lawful, interest payable
on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five (5)
Business Days prior to the payment date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The
Company shall fix or cause to be fixed each such special record
date and payment date, and shall, promptly thereafter, notify
the Trustee of any such date. At least fifteen (15) days before
the special record date, the Company (or the Trustee, in the
name of and at the expense of the Company) shall mail to
Holders, at their addresses as they appear on the register of
Notes maintained by the Registrar, a notice that states the
special record date, the related payment date and the amount of
such interest to be paid.
Section 2.13. Record Date.
The record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by
vote or consent authorized or permitted under this Indenture
shall be determined as provided for in TIA Section 316(c).
Section 2.14. CUSIP Number.
The Company in issuing the Notes may use a
"CUSIP" number and, if it does so, the Trustee shall use the
CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the
Notes and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company
will promptly notify the Trustee of any change in the CUSIP
number.
Section 2.15. Computation of Interest.
Interest on the Notes will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to
the optional redemption provisions of Section 3.07 hereof, it
shall furnish to the Trustee, at least 30 days but not more than
60 days before a redemption date, an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which
the redemption shall occur, (ii) the redemption date, (iii) the
principal amount at maturity of Notes to be redeemed and (iv)
the redemption price.
If the Company is required to make an offer to
purchase Notes pursuant to the provisions of Sections 3.09 or
4.15 hereof, it shall furnish to the Trustee, at least 30 days
before the scheduled purchase date, an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which
the offer to purchase shall occur, (ii) the terms of the offer, (iii)
the purchase price, (iv) the principal amount at maturity of the
Notes to be purchased, (v) the purchase date, and (vi) further
setting forth, as applicable, a statement to the effect that (a) the
Company or one of its Restricted Subsidiaries has effected an
Asset Sale and there are Excess Proceeds aggregating more
than $5.0 million and the amount of such Excess Proceeds or
(b) a Change of Control has occurred.
Section 3.02. Selection of Notes to Be Purchased or
Redeemed.
If less than all of the Notes are to be redeemed at
any time, the Trustee shall select the Notes to be redeemed
among the applicable Holders of the Notes in compliance with
the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or by such other method the
Trustee deems fair and appropriate; provided that no Notes of
$1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of
any Note selected for partial purchase or redemption, the
principal amount at maturity thereof to be purchased or
redeemed. Notes and portions of Notes selected shall be in
amounts of $1,000 or whole multiples of $1,000; except that if
all of the Notes of a Holder are to be purchased or redeemed,
the entire outstanding amount of Notes held by such Holder,
even if not a multiple of $1,000, shall be purchased or
redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for
redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before
a redemption date, the Company shall mail or cause to be
mailed, by first class mail, postage prepaid, a notice of
redemption to Holders whose Notes are to be redeemed at their
last addresses as they shall appear upon the registry books.
The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not
the Holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice to the Holder of
any Note shall not affect the validity of the proceeding for the
redemption of any other Note.
The notice shall identify the Notes to be redeemed
and shall state:
(a) the redemption date;
(b) the redemption price (including accrued
interest to the redemption date);
(c) the principal amount at maturity of Notes
to be redeemed;
(d) if any Note is being redeemed in part,
the portion of the principal amount at
maturity of such Note to be redeemed
and that, after the redemption date upon
surrender of such Note, a new Note or
Notes in principal amount at maturity
equal to the unredeemed portion shall be
issued upon cancellation of the original
Note;
(e) the name and address of the Paying
Agent;
(f) that Notes called for redemption must be
surrendered to the Paying Agent to
collect the redemption price;
(g) that, unless the Company defaults in
making such redemption payment,
interest on Notes called for redemption
ceases to accrue on and after the
redemption date; and
(h) that no representation is made as to the
correctness or accuracy of the CUSIP
number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at its
expense; provided, however, that the Company shall have
delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be
stated in such notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance
with Section 3.03 hereof, Notes called for redemption become
irrevocably due and payable on the redemption date at the
redemption price, plus accrued and unpaid interest, if any, to
such date. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption or Purchase Price.
On or before 10:00 a.m. (New York City time) on
each redemption date or the date on which Notes must be
accepted for purchase pursuant to Section 3.09 or 4.15, the
Company shall deposit with the Trustee or with the Paying
Agent in immediately available funds money sufficient to pay
the redemption or purchase price of and unpaid and accrued
interest, if any, on all Notes to be redeemed or purchased on
that date. The Trustee or the Paying Agent shall promptly
return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption or purchase price of (including
any applicable premium), and accrued interest on, all Notes to
be redeemed or purchased.
If Notes called for redemption or tendered in an
Asset Sale Offer or Change of Control Offer are paid or if the
Company has deposited with the Trustee or Paying Agent
money sufficient to pay the redemption or purchase price of,
and unpaid and accrued interest, if any, on all Notes to be
redeemed or purchased on and after the redemption or purchase
date, interest shall cease to accrue on the Notes or the portions
of Notes called for redemption or tendered and not withdrawn
in an Asset Sale Offer or Change of Control Offer (regardless
of whether certificates for such securities are actually
surrendered). If a Note is redeemed or purchased on or after
an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at
the close of business on such record date. If any Note called
for redemption or subject to an Asset Sale Offer or Change of
Control Offer shall not be so paid upon surrender for
redemption or purchase because of the failure of the Company
to comply with the preceding paragraph, interest shall be paid
on the unpaid principal, from the redemption or purchase date
until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.
Section 3.06. Notes Redeemed or Purchased in Part.
Upon surrender of a Note that is redeemed or
purchased in part, the Company shall issue and the Trustee
shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount at maturity to the
unredeemed or unpurchased portion of the Note surrendered.
Section 3.07. Optional Redemption.
Except as provided in the next paragraph, the
Notes shall not be redeemable at the Company's option prior to
April 1, 2001. Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal
amount at maturity) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on April 1 of the
years indicated below:
Year Percentage
2001 105.500%
2002 103.667%
2003 101.833%
2004 and thereafter. . . . . . . . . . . . 100.000%
Notwithstanding the foregoing, at any time prior to
April 1, 1999, the Company may on one or more occasions
redeem up to $42.0 million in aggregate principal amount at
maturity of Notes with the net proceeds of one or more public
offerings of common stock of the Company at a redemption
price equal to 110% of the principal amount at maturity
thereof, plus accrued and unpaid interest thereon to the
applicable redemption date; provided that at least $78.0 million
in aggregate principal amount at maturity of the Notes remain
outstanding immediately after the occurrence of each such
redemption; and provided, further, that any such redemption
must occur within 90 days of the date of the closing of such
public offering.
Section 3.08. Mandatory Redemption.
Except as set forth below under Section 3.09,
Section 4.10 and Section 4.15 hereof, the Company shall not be
required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.09. Asset Sale Offers.
In the event that the Company shall be required to
commence an Asset Sale Offer pursuant to Section 4.10 hereof,
it shall follow the procedures specified below:
The Asset Sale Offer shall remain open for 20
Business Days after the Commencement Date relating to such
Asset Sale Offer, except to the extent required to be extended
by applicable law (as so extended, the "Offer Period"). No
later than five Business Days after the termination of the Offer
Period (the "Purchase Date"), the Company shall purchase the
principal amount at maturity (the "Offer Amount") of Notes
required to be purchased in such Asset Sale Offer pursuant to
Sections 3.02 and 4.10 hereof or, if less than the Offer Amount
has been tendered, all Notes tendered in response to the Asset
Sale Offer.
If the Purchase Date is on or after an interest
payment record date and on or before the related interest
payment date, any interest accrued to such Purchase Date shall
be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest
shall be payable to Holders who tender Notes pursuant to the
Asset Sale Offer.
On the Commencement Date of any Asset Sale
Offer, the Company shall send or cause to be sent, by first
class mail, postage prepaid, a notice to each of the Holders,
with a copy to the Trustee. Such notice, which shall govern
the terms of the Asset Sale Offer, shall contain all instructions
and materials necessary to enable the Holders to tender Notes
pursuant to the Asset Sale Offer and shall state:
(1) that the Asset Sale Offer is being made
pursuant to this Section 3.09 and Section 4.10
hereof and the length of time the Asset Sale
Offer shall remain open;
(2) the Offer Amount, the purchase price and the
Purchase Date;
(3) that any Note not tendered or accepted for
payment shall continue to accrue interest;
(4) that, unless the Company defaults in the
payment of the purchase price, any Note
accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest after
the Purchase Date;
(5) that Holders electing to have a Note
purchased pursuant to any Asset Sale Offer
shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note
completed, to the Company, a depositary, if
appointed by the Company, or a Paying
Agent at the address specified in the notice
prior to the close of business at least one
Business Day preceding the Purchase Date;
(6) that Holders shall be entitled to withdraw
their election if the Company, depositary or
Paying Agent, as the case may be, receives,
not later than the close of business on the last
day of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth
the name of the Holder, the principal amount
at maturity of the Note the Holder delivered
for purchase and a statement that such Holder
is withdrawing his election to have the Note
purchased;
(7) that, if the aggregate principal amount at
maturity of Notes surrendered by Holders
exceeds the Offer Amount, the Trustee shall
select the Notes to be purchased on a pro rata
basis (with such adjustments as may be
deemed appropriate by the Company so that
only Notes in denominations of $1,000, or
integral multiples thereof, shall be
purchased); and
(8) that Holders whose Notes were purchased
only in part shall be issued new Notes equal
in principal amount at maturity to the
unpurchased portion of the Notes
surrendered.
On or before 10:00 a.m. (New York City time) on
each Purchase Date, the Company shall irrevocably deposit
with the Trustee or Paying Agent in immediately available
funds the aggregate purchase price with respect to a principal
amount at maturity of Notes equal to the Offer Amount,
together with accrued interest thereon, if any, to be held for
payment in accordance with the terms of this Section 3.09. On
the Purchase Date, the Company shall, to the extent lawful, (i)
accept for payment, pursuant to Section 3.02 hereof, an
aggregate principal amount at maturity equal to the Offer
Amount of Notes tendered pursuant to the Asset Sale Offer, or
if less than the Offer Amount has been tendered, all Notes or
portions thereof tendered, (ii) deliver or cause the Paying
Agent or depositary, as the case may be, to deliver to the
Trustee Notes so accepted and (iii) deliver to the Trustee an
Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with
the terms of this Section 3.09. The Company, the depositary
or Paying Agent, as the case may be, shall promptly (but in any
case not later than three Business Days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the
Purchase Price with respect to the Notes tendered by such
Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee
shall authenticate and mail or deliver such new Note, to such
Holder, equal in principal amount at maturity to any
unpurchased portion of such Holder's Notes surrendered. Any
Note not accepted in the Asset Sale Offer shall be promptly
mailed or delivered by the Company to the Holder thereof.
The Company shall publicly announce in a newspaper of
general circulation or in a press release provided to a nationally
recognized financial wire service the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section
3.09, each purchase pursuant to this Section 3.09 shall be made
pursuant to the provisions of Sections 3.01, 3.02, 3.05 and
3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the
principal of, premium, if any, and interest on the Notes on the
dates and in the manner provided in this Indenture and the
Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other
than the Company, holds as of 10:00 a.m. (New York City
time) on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. Such
Paying Agent shall return to the Company, no later than five
days following the date of payment, any money that exceeds
such amount of principal, premium, if any, and interest paid on
the Notes.
The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law)
on overdue principal at the rate equal to 1% per annum in
excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of
Manhattan, the City of New York, an office or agency (which
may be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-Registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time
designate one or more other offices or agencies where the
Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of
New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Corporate
Trust Office of the Trustee as one such office or agency of the
Company in accordance with Section 2.03 hereof.
Section 4.03. Reports.
So long as required to do so under the Exchange
Act, the Company shall file with the Commission and distribute
to the Holders of the Notes copies of the quarterly and annual
financial information required to be filed with the Commission
pursuant to the Exchange Act. All such financial information
shall include consolidated financial statements (including
footnotes) prepared in accordance with GAAP. Such annual
financial information shall also include an opinion thereon
expressed by an independent accounting firm of established
national reputation. All such consolidated financial statements
shall be accompanied by a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the
Company and its Restricted Subsidiaries. In addition, whether
or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Company shall file
with the Commission (unless the Commission will not accept
such a filing) and furnish to the Holders of Notes (i) all
quarterly and annual financial information that would be
required to be contained in a filing with the Commission on
Forms 10-Q and 10-K, if the Company were required to file
such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the
Company and its Restricted Subsidiaries and, with respect to
the annual information only, a report thereon by the
Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file
such reports. The Company also agrees to make such
information available to securities analysts and prospective
investors upon request.
The financial information to be distributed to
Holders of Notes shall be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes
maintained by the Registrar, within 120 days after the end of
the Company's fiscal years and within 60 days after the end of
each of the first three quarters of each such fiscal year.
The Company shall provide the Trustee with a
sufficient number of copies of all reports and other documents
and information that the Trustee may be required to deliver to
the Holders under this Section 4.03.
Section 4.04 Compliance Certificate.
(a) The Company shall deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate
which need not comply with Section 10.05 from the principal
executive, financial or accounting officer of the Company as to
his or her knowledge of the Company's compliance with all
conditions and covenants under the Indenture (such compliance
to be determined without regard to any period of grace or
requirement of notice provided under the Indenture).
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, in connection with the year-end financial
statements delivered pursuant to Section 4.03 hereof, the
Company shall use its best efforts to deliver a written statement
of the Company's independent public accountants (who shall be
a firm of established national reputation reasonably satisfactory
to the Trustee) that in making the examination necessary for
certification of such financial statements, nothing has come to
their attention that would lead them to believe that the
Company has violated any provisions of this Article 4, Section
5.01 hereof or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood
that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such
violation. In the event that such written statement of the
Company's independent public accountants cannot be obtained,
the Company shall deliver an Officer's Certificate certifying
that it has used its best efforts to obtain such statement but was
unable to do so.
(c) The Company shall, so long as any of the
Notes are outstanding, deliver to the Trustee, forthwith upon
any Officer becoming aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or
proposes to take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in
accordance with GAAP.
Section 4.06. Stay, Extension and Usury Laws.
The Company (to the extent that it may lawfully
do so) shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not,
by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution on
account of the Company's or any of its Subsidiaries' Equity
Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the
Company), except in each case for dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or distributions payable to the
Company or any Restricted Subsidiary of the Company;
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any Affiliate of the
Company (other than any such Equity Interests owned by the
Company or any Restricted Subsidiary of the Company); (iii)
voluntarily purchase, redeem, defease or otherwise acquire or
retire for value prior to any scheduled maturity date, scheduled
repayment date (except for mandatory repurchases or
redemptions upon the occurrence of certain specified events) or
sinking fund payment date any Indebtedness that is
subordinated to the Notes; or (iv) make any Restricted
Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless:
(a) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof;
(b) the Company would, at the time of such
Restricted Payment and after giving pro forma effect
thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.14
hereof;
(c) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the
Company and its Restricted Subsidiaries after the date
of the Indenture (excluding Restricted Payments
permitted by clauses (b)(1) and (b)(2) in the next
succeeding paragraph), is less than the sum of (i) 50%
of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after
the date of the Indenture to the end of the Company's
most recently ended fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of any cash dividends received
by the Company or a Restricted Subsidiary of the
Company after the date of the Indenture from any
Unrestricted Subsidiary of the Company, plus (iii)
100% of the aggregate net cash proceeds and the fair
market value of any property that is converted into cash
within 180 days after receipt thereof, in each case, that
is received by the Company as a capital contribution or
from the issue or sale since the date of the Indenture of
Equity Interests of the Company or of debt securities of
the Company that have been converted into such Equity
Interests (other than Equity Interests (or convertible
debt securities) sold to a Subsidiary of the Company
and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock), provided,
however, that in no event shall any net proceeds or
property utilized to redeem, repurchase, retire or
acquire Equity Interests or subordinated Indebtedness
pursuant to clause (b)(1) or (b)(2) of the following
paragraph be included for purposes of this clause (iii),
plus (iv) to the extent that any Restricted Investment
that was made after the date of the Indenture is sold for
cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted
Investment. For purposes of clause (iii) of this
paragraph (c) the fair market value of any property
received as a capital contribution or from the issue or
sale of Equity Interests or convertible debt securities
shall be the amount of cash received upon conversion
of such property.
In determining the aggregate amount expended for Restricted
Payments for purposes of clause (c) of this paragraph, 100% of
the amounts expended pursuant to clauses (a) of the next
succeeding paragraph (but only to the extent the declaration
thereof has not already decreased amounts available for
Restricted Payments pursuant to clause (c) of this paragraph),
(b)(3), (b)(4), (b)(5) and (b)(6) of the next succeeding
paragraph shall be included.
The foregoing provisions will not prohibit (a) the
payment of any dividend within 60 days after the date of
declaration thereof if at said date of declaration such payment
would have complied with the provisions of the Indenture or
(b) if no Default or Event of Default shall have occurred or be
continuing immediately following such Restricted Payment, (1)
the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to
a Subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c) (iii) of the preceding
paragraph; (2) the defeasance, redemption or repurchase of
subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of the
Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net
cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded
from clause (c)(iii) of the preceding paragraph; (3) payment of
cash dividends on shares of the Company's Non-Voting
Preferred Stock outstanding on the date of the Indenture;
provided that the aggregate amount of all such dividends
following the date of the Indenture shall not exceed $1.5
million; (4) loans or advances to employees made in the
ordinary course of business not exceeding $2.0 million
outstanding at any one time; (5) payment of dividends by any
Restricted Subsidiary of the Company on any class of Equity
Interests of such Restricted Subsidiary if (A) such dividend is
paid pro rata to all holders of such Equity Interests and (B) the
Company and one or more of its Wholly Owned Restricted
Subsidiaries own at least 80% of the Equity Interests of such
Restricted Subsidiary; and (6) other Restricted Payments in an
aggregate amount since the date hereof not to exceed $2.0
million.
Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officer's
Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by
this covenant were computed, which calculations may be based
upon the Company's latest available financial statements.
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(A) pay dividends or make any other
distributions to the Company or any of its Restricted
Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or
(B) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the
Company or any of its Restricted Subsidiaries or (iii) transfer
any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (A) Existing
Indebtedness as in effect on the date hereof, (B) the New Credit
Facility as in effect on the date of the Indenture and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in
the New Credit Facility as in effect on the date of the
Indenture, (C) the Indenture and the Notes, (D) applicable law,
(E) any agreement or instrument binding on a Person acquired
by the Company or any of its Restricted Subsidiaries, or on the
property or assets of such Person, as in effect at the time of
such acquisition (except to the extent such encumbrance or
restriction was incurred in connection with or in contemplation
of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the
Person, so acquired, (F) customary non-assignment provisions
in leases entered into in the ordinary course of business and
consistent with past practices, (G) purchase money obligations
for property acquired in the ordinary course of business that
impose restrictions of the nature described in this clause (iii) on
the property so acquired or (H) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
Section 4.09. Line of Business.
The Company shall not, and shall not permit any
Restricted Subsidiary to, engage in any business other than a
Permitted Business.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, engage in an Asset Sale unless
(i) the Company (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale at least
equal to the fair market value (evidenced by a resolution of the
Board of Directors set forth in an Officer's Certificate delivered
to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration
therefor received by the Company or such Restricted
Subsidiary is in the form of cash; provided that (x) the amount
of (1) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet or in the
notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to the
Notes or any guarantee thereof) that are assumed by the
transferee of any such assets and (2) any notes or other
obligations received by the Company or any such Restricted
Subsidiary from such transferee that are immediately converted
by the Company or such Restricted Subsidiary into cash (to the
extent of the cash received) shall be deemed to be cash for
purposes of this provision, (y) if the Company or any
Restricted Subsidiary has acquired a Person engaged in a
Permitted Business (a "Prior Acquisition") within 365 days
prior to any Asset Sale involving assets acquired in the Prior
Acquisition (the "Subsequent Asset Sale"), then, subject to the
following proviso, all or a portion of the consideration received
by the Company or the applicable Restricted Subsidiary in
connection with such Subsequent Asset Sale need not be in the
form of cash; provided, however, that (1) such non-cash
consideration may not exceed 20% of the aggregate
consideration paid by the Company or such Restricted
Subsidiary in the Prior Acquisition and (2) the aggregate fair
market value of all such non-cash consideration received by the
Company and its Restricted Subsidiaries since the date of the
Indenture shall not exceed $20 million, and (z) any sale by the
Company or any Restricted Subsidiary of Equity Interests of
any Unrestricted Subsidiary of the Company shall not be
subject to the requirement set forth in clause (ii) of this
paragraph.
Within 270 days after the receipt of any Net
Proceeds from an Asset Sale, the Company may apply such Net
Proceeds, at its option, (a) to permanently reduce Senior
Revolving Debt (and to correspondingly reduce Commitments
with respect thereto, unless such revolving credit debt could be
incurred under the first paragraph of Section 4.14 hereof) or
(b) to an investment in a Permitted Business, or the making of a
capital expenditure or the acquisition of other long-
term/tangible assets or other assets that would be included as
property, plant and equipment on a balance sheet in accordance
with GAAP, in each case, utilized in a Permitted Business.
Pending the final application of any such Net Proceeds, the
Company may temporarily reduce Senior Revolving Debt or
otherwise invest such Net Proceeds in any manner that is not
prohibited herein. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company will be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount at maturity of Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash
in an amount equal to 100% of the principal amount at maturity
thereof plus accrued and unpaid interest thereon to the date of
purchase, in accordance with the procedures set forth in
Section 3.09 hereof. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, any remaining Excess Proceeds upon
completion of such offer to purchase shall cease to be Excess
Proceeds and may be used by the Company for general
corporate purposes. If the aggregate principal amount at
maturity of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes
to be purchased on a pro rata basis.
An Asset Sale Offer shall be made pursuant to the
provisions of Section 3.09 hereof. No later than the date which
is five (5) Business Days after the date on which the aggregate
amount of Excess Proceeds exceeds $5.0 million, the Company
shall notify the Trustee of such Asset Sale Offer in accordance
with Section 3.09 hereof and commence or cause to be
commenced the Asset Sale Offer on a date no later than fifteen
(15) Business Days after such notice (the "Commencement
Date).
The Asset Sale Offer shall be made by the
Company in compliance with all applicable laws, including,
without limitation, Rule 14e-1 under the Exchange Act and the
rules thereunder, to the extent applicable, and all other
applicable federal and state securities laws.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make
any contract, agreement, loan, advance or guarantee with, or
for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction") unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (a) with respect to any
Affiliate Transaction involving aggregate consideration in
excess of $1.0 million, an Officer's Certificate setting forth a
resolution of the Board of Directors to the effect that such
Affiliate Transaction complies with clause (i) above and that
such Affiliate Transaction has been approved by a majority of
the disinterested members of the Board of Directors and (b)
with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, an opinion issued by an
investment banking firm of national standing as to the fairness
to the Company or such Restricted Subsidiary of such Affiliate
Transaction from a financial point of view; provided that the
following shall not be deemed Affiliate Transactions: (x)
reasonable and customary payments and other benefits
(including indemnification) provided to directors for service on
the Board of Directors of the Company or any Restricted
Subsidiary, including the reimbursement or advancement of
out-of-pocket expenses and directors' and officers' liability
insurance; (y) transactions between or among the Company
and/or its Restricted Subsidiaries; and (z) Restricted Payments
permitted by clauses (a), (b)(3) and (b)(5) of the second
paragraph of Section 4.07 hereof.
Section 4.12. Liens.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Lien, except Permitted
Liens, on any asset now owned or hereafter acquired or any
income or profits therefrom or assign or convey any right to
receive income therefrom to secure any Indebtedness unless (i)
such Indebtedness is pari passu in right of payment with the
Notes and (ii) all Obligations with respect to the Notes are
secured on an equal and ratable basis with the Indebtedness so
secured.
Section 4.13. Sale and Lease Back Transactions.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, enter into any sale and
leaseback transaction; provided that the Company or any of its
Restricted Subsidiaries may enter into a sale and leaseback
transaction if (i) the Company or such Restricted Subsidiary
could have incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction
pursuant to the applicable Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.14 hereof, (ii) the gross
cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by
the Board of Directors and set forth in an Officer's Certificate
delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by,
and the Company or such Restricted Subsidiary applies the
proceeds of such transaction in compliance with Section 4.10
hereof.
Section 4.14. Incurrence of Indebtedness and Issuance
of Preferred Stock.
The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired
Debt) and that the Company will not issue any Disqualified
Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that (i)
the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if (A) the Fixed
Charge Coverage Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock
is issued would have been at least 2.0 to 1 determined on a pro
forma basis after giving effect to the incurrence of such
Indebtedness or issuance of Disqualified Stock (including a pro
forma application of the net proceeds therefrom) as if the
additional Indebtedness or Disqualified Stock had been incurred
or issued, as applicable, at the beginning of such four-quarter
period and (B) any such Indebtedness that is subordinated in
right of payment to the Notes provides for no sinking fund
payments, and does not mature, prior to October 1, 2006;
provided, however, that the provisions of this clause (B) shall
not apply to up to $10 million aggregate principal amount of
subordinated Indebtedness of the Company outstanding at any
time that is incurred to fund all or a portion of the purchase
price of the acquisition of all of the Capital Stock or assets of
any entity engaged in a Permitted Business and (ii) any
Restricted Subsidiary may incur Acquired Debt and
Attributable Debt in respect of permitted sale and leaseback
transactions in an aggregate amount not to exceed $5.0 million
outstanding at any time if the Fixed Charge Coverage Ratio for
the Company's most recently ended four fiscal quarters for
which internal financial statements are available immediately
preceding the date on which the Acquired Debt or Attributable
Debt is incurred would have been at least 2.0 to 1 determined
on a pro forma basis after giving effect to the incurrence of
such Acquired Debt or Attributable Debt as if it had been
incurred at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company of Senior
Revolving Debt for working capital purposes (with letters of
credit thereunder being deemed to have a principal amount
equal to the maximum potential liability of the Company
thereunder) in an aggregate principal amount not to exceed the
Borrowing Base;
(ii) the incurrence by the Company of
Indebtedness represented by the Notes;
(iii) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness represented by Capital
Lease Obligations or Purchase Money Obligations, in each case
incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of
property or purchase of equipment used in the business of the
Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $5 million at any time
outstanding;
(iv) the incurrence by the Company or any of its
Restricted Subsidiaries of Permitted Refinancing Indebtedness
in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund (including
the cost thereof), Existing Indebtedness or Indebtedness that
was permitted hereby to be incurred (other than Indebtedness
incurred pursuant to clause (xi) of this paragraph); provided,
however, that no Restricted Subsidiary shall incur Permitted
Refinancing Indebtedness in respect of Indebtedness of the
Company;
(v) the incurrence by the Company or any of its
Wholly Owned Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries; provided, however, that
(i) any subsequent issuance or transfer (other than for security
purposes) of Equity Interests that results in any such
Indebtedness being held by a Person other than a Wholly
Owned Restricted Subsidiary and (ii) any sale or other transfer
(other than for security purposes) of any such Indebtedness to a
Person that is neither the Company nor a Wholly Owned
Restricted Subsidiary of the Company shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be;
(vi) the incurrence by the Company or any of its
Restricted Subsidiaries of Hedging Obligations that are incurred
for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the
terms of the Indenture to be outstanding;
(vii) the incurrence by the Company or any of its
Restricted Subsidiaries of Indebtedness in respect of bid,
performance or advance payment bonds, bankers' acceptances
and surety or appeal bonds provided in the ordinary course of
business;
(viii) the incurrence by the Company of
Indebtedness under a Guarantee of any Indebtedness of a
Restricted Subsidiary permitted to be incurred pursuant to the
Indenture;
(ix) the incurrence by the Company of
Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount
at any time outstanding not to exceed $5.0 million;
(x) the incurrence by the Company of
Indebtedness under a Guarantee of any Indebtedness of an
employee of the Company or any of its Restricted Subsidiaries
incurred by such employee in connection with his or her
relocation for work purposes in a principal amount not to
exceed $1.0 million outstanding at any time, and any
refinancing of such employee Indebtedness; provided, however,
that the principal amount of such refinanced Indebtedness shall
not exceed the principal amount of the Indebtedness so
refinanced; and
(xi) the incurrence by the Company of up to $15.0
million principal amount of Permitted Acquisition Indebtedness
after the date hereof.
For purposes of determining compliance with this
covenant from time to time, (i) in the event that an item of
Indebtedness meets the criteria of more than one type of
Indebtedness permitted by this covenant, the Company in its
sole discretion will for purposes of this covenant, classify such
item of Indebtedness as only one such type and will only be
required to include the amount of such Indebtedness in such
one type; and (ii) the amount of Indebtedness issued at a price
which is less than the principal amount thereof shall be equal to
the amount of liability in respect thereto determined in
accordance with GAAP.
Section 4.15. Offer to Purchase Upon Change of
Control.
Upon the occurrence of a Change of Control, each
Holder of Notes will have the right to require the Company to
repurchase all or any part of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal
amount at maturity thereof plus accrued and unpaid interest
thereon to the date of purchase (the "Change of Control
Payment").
Within thirty (30) calendar days following any
Change of Control, the Company shall mail a notice to each
Holder stating:
(1) that the Change of Control Offer is being
made pursuant to this Section 4.15 and that all
Notes properly tendered will be accepted for
payment;
(2) the purchase price and the purchase date,
which will be no earlier than 30 days nor later
than 60 days from the date such notice is
mailed (the "Change of Control Payment
Date");
(3) that any Note not properly tendered will
continue to accrue interest;
(4) that, unless the Company defaults in the
payment of the Change of Control Payment,
all Notes accepted for payment pursuant to
the Change of Control Offer will cease to
accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have any Notes
purchased pursuant to a Change of Control
Offer will be required to surrender the Notes,
with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes
completed, or transfer by book-entry, to the
Paying Agent at the address specified in the
notice prior to the close of business at least
one Business Day preceding the Change of
Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not
later than one Business Day prior to the close
of business on the Change of Control
Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of
the Holder, the principal amount at maturity
of Notes delivered for purchase, and a
statement that such Holder is withdrawing his
election to have such Notes purchased;
(7) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in
principal amount at maturity to the
unpurchased portion of the Notes surrendered
(or transferred by book-entry), which
unpurchased portion must be equal to $1,000
in principal amount at maturity or an integral
multiple thereof; and
(8) the circumstances and material facts regarding
such Change of Control (including, but not
limited to, information with respect to pro
forma and historical financial information
after giving effect to such Change of Control,
and information regarding the Person or
Persons acquiring control).
On the Change of Control Payment Date, the
Company will, to the extent lawful, (1) accept for payment all
Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of
all Notes or portions thereof so tendered and (3) deliver or
cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate
principal amount at maturity of Notes or portions thereof
tendered to the Company. The Paying Agent will promptly
mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount at
maturity to any unpurchased portion of the Notes surrendered,
if any; provided that each such new Note will be in a principal
amount at maturity of $1,000 or an integral multiple thereof.
The Company will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change
of Control Payment Date.
The Company shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
the Notes as a result of a Change of Control.
Section 4.16. Corporate Existence.
Subject to Section 4.15 and Article 5 hereof, as the
case may be, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other
existence of each of its Restricted Subsidiaries, in accordance
with the respective organizational documents (as the same may
be amended from time to time) of the Company or any such
Restricted Subsidiary, as the case may be, and (ii) the rights
(charter and statutory), licenses and franchises of the Company
and its Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other
existence of any of its Restricted Subsidiaries, if the Board of
Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole,
and that the loss thereof is not adverse in any material respect
to the Holders of the Notes.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company may not consolidate or merge with
or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another Person
unless (i) the Company is the surviving corporation or the
Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the
District of Columbia; (ii) the Person formed by or surviving
any such consolidation or merger (if other than the Company)
or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Notes and the
Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after
such transaction no Default or Event of Default exists; and (iv)
the Company or the entity or Person formed by or surviving
any such consolidation or merger (if other than the Company),
or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal
to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time
of such transaction and after giving pro forma effect thereto as
if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in clause (a) of the first paragraph
of Section 4.14 hereof.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the
date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture referring to
the "Company" shall refer instead to the successor corporation
and not to the Company), and may exercise every right and
power of the Company under this Indenture with the same
effect as if such successor Person had been named as the
Company herein; provided that, solely for purposes of
computing Consolidated Net Income for purposes of clause
(c)(i) of the first paragraph of Section 4.07 hereof, the
Consolidated Net Income of any Person other than Unilab and
its Restricted Subsidiaries shall only be included for periods
subsequent to the effective time of such merger, consolidation,
combination or transfer of assets; and provided, however, in the
case of any sale, assignment, transfer, lease, conveyance or
other disposition of less than all of the assets of the Company,
the Company shall not be released or discharged from the
obligation to pay the principal of or interest on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of
interest on the Notes when the same becomes due and
payable and such default continues for a period of
thirty (30) days;
(b) the Company defaults in the payment of
principal of or premium, if any, on the Notes when the
same becomes due and payable at maturity, upon
redemption or otherwise;
(c) the Company fails to comply with the
provisions of Sections 4.07, 4.10 and 5.01 hereof and
such Default continues for a period of thirty (30) days;
(d) the Company fails to comply with any
other agreement or covenant in, or provision of, the
Notes or this Indenture for sixty (60) days after notice
from the Trustee or Holders of at least 25% in
aggregate principal amount at maturity of the then
outstanding Notes;
(e) 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 any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of this
Indenture, 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 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 $5.0
million or more;
(f) the Company or any of its Restricted
Subsidiaries fails to pay final judgments aggregating in
excess of $5.0 million 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 60 days of their
entry;
(g) the Company or any Restricted
Subsidiary that is a Significant Subsidiary or group of
Restricted Subsidiaries that, together, would constitute
a Significant Subsidiary, 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;
(h) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or
any Restricted Subsidiary that is a
Significant Subsidiary or group of
Restricted Subsidiaries that, together,
would constitute a Significant Subsidiary
of the Company in an involuntary case in
which it is the debtor,
(ii) appoints a Custodian of the
Company or any Restricted Subsidiary
that is a Significant Subsidiary or group
of Restricted Subsidiaries that, together,
would constitute a Significant Subsidiary
of the Company or for all or substantially
all of the property of the Company or
any Restricted Subsidiary that is a
Significant Subsidiary or group of
Restricted Subsidiaries that, together,
would constitute a Significant Subsidiary
of the Company, or
(iii) orders the liquidation of the
Company or any Restricted Subsidiary
that is a Significant Subsidiary or group
of Restricted Subsidiaries that, together,
would constitute a Significant Subsidiary
of the Company,
and the order or decree remains unstayed and in effect
for 60 consecutive days.
Section 6.02. Acceleration and Payment of Premium.
If an Event of Default (other than an Event of
Default with respect to the Company specified in clauses (g)
and (h) of Section 6.01 hereof) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount at
maturity of the then outstanding Notes by written notice to the
Company (and the Trustee, if given by Holders) may declare
the unpaid principal of, premium, if any, and accrued and
unpaid interest on all the Notes to be due and payable and the
same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the New Credit
Facility, shall become due and payable upon the first to occur
of an acceleration under the New Credit Facility or five
business days after receipt by the Company and the
administrative agent under the New Credit Facility of notice of
such acceleration under the Indenture if such Event of Default
is continuing at such time. If an Event of Default with respect
to the Company specified in clauses (g) or (h) of Section 6.01
hereof occurs, all outstanding Notes shall ipso facto become
and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
In the case of any Event of Default occurring by
reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company or any of its Subsidiaries with the
intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 3.07 hereof, an
equivalent premium shall also become and be immediately due
and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior
to April 1, 2001 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company or any of
its Subsidiaries with the intention of avoiding the prohibition on
redemption of the Notes prior to April 1, 2001, then the
premium payable for purposes of this paragraph for each of the
twelve month period beginning on April 1 of the years set forth
below shall be as set forth in the following table expressed as a
percentage of the amount that would otherwise be due but for
the provisions of this paragraph, plus accrued interest, if any,
to the date of payment:
Year Percentage
1996 . . . . . . . . . . 111.000%
1997 . . . . . . . . . . 109.900%
1998 . . . . . . . . . . 108.800%
1999 . . . . . . . . . . 107.700%
2000 . . . . . . . . . . 106.600%
The Holders of a majority in principal amount at
maturity of the then outstanding Notes by written notice to the
Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and
if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the
acceleration) have been cured or waived.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect the
payment of principal, premium, if any, and interest on the
Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it
does not possess any of the Notes or does not produce any of
them in the proceeding. A delay or omission by the Trustee or
any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event
of Default. All remedies are cumulative to the extent permitted
by law.
Section 6.04. Waiver of Past Defaults.
Holders of a majority in aggregate principal
amount at maturity of the Notes then outstanding, by notice to
the Trustee, may on behalf of the Holders of all of the Notes
waive any existing Default or Event of Default and its
consequences under this Indenture, except a continuing Default
or Event of Default in the payment of the principal of,
premium, if any, or interest on, the Notes. Upon any such
waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount at
maturity of the then outstanding Notes may direct the time,
method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture
that the Trustee determines may be unduly prejudicial to the
rights of other Holders or that may involve the Trustee in
personal liability. The Trustee may take any other action
which it deems proper which is not inconsistent with any such
direction.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with
respect to this Indenture or the Notes if:
(a) the Holder gives to the Trustee written
notice of a continuing Event of Default or the Trustee
receives such notice from the Company;
(b) the Holders of at least 25% in principal
amount at maturity of the then outstanding Notes make
a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer and, if
requested, provide to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the
request within 60 days after receipt of the request and
the offer and, if requested, the provision of indemnity;
and
(e) during such 60-day period the Holders of
a majority in principal amount at maturity of the then
outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or
priority over another Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive
Payment.
Notwithstanding any other provision of this
Indenture, the right of any Holder of a Note to receive payment
of principal of, premium, if any, and interest on the Note, on
or after the respective due dates expressed in the Note
(including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a)
or (b) hereof occurs and is continuing, the Trustee is authorized
to recover judgment in its own name and as trustee of an
express trust against the Company or any other obligor for the
whole amount of principal of, premium, if any, and interest
remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest and such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel and all other amounts due the Trustee pursuant to
Section 7.07 hereof.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of
claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and the Holders allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes),
its creditors or its property and shall be entitled and empowered
to collect, receive and distribute any money or other property
payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys
for amounts due under Section 7.07 hereof, including
payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and
the costs and expenses of collection;
Second: to Holders for amounts due and
unpaid on the Notes for principal, premium, if any, and
interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Notes for principal, premium, if any, and interest,
respectively;
Third: without duplication, to Holders for
any other Obligations owing to the Holders under this
Indenture or the Notes; and
Fourth: to the Company or to such other
party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment
date for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal
amount at maturity of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree
of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of
Default:
(i) the duties of the Trustee shall be
determined solely by the express provisions of this
Indenture or the TIA and the Trustee need perform
only those duties that are specifically set forth in this
Indenture or the TIA and no others, and no implied
covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee
shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), and (c) of this Section
7.01.
(e) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or incur any
liability. The Trustee shall be under no obligation to exercise
any of its rights and powers under this Indenture at the request
of any Holders, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree in
writing with the Company. Money held in trust by the Trustee
need not be segregated from other funds except to the extent
required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of
Counsel or both. The Trustee shall not be liable for any action
it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or
any Opinion of Counsel shall be full and complete authorization
and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be
authorized or within the rights or powers conferred upon it by
this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the
Company. A permissive right granted to the Trustee hereunder
shall not be deemed an obligation to act.
(f) The Trustee shall not be charged with
knowledge of any Default or Event of Default unless either (i) a
Responsible Officer of the Trustee shall have actual knowledge
of such Default or Event of Default or (ii) written notice of
such Default or Event of Default shall have been given to the
Trustee by the Company or any Holder.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity
may become the owner or pledgee of Notes and may otherwise
deal with the Company or any Affiliate of the Company with
the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as trustee or resign.
Any Agent may do the same with like rights and duties.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes
no representation as to the validity or adequacy of this
Indenture or the Notes, it shall not be accountable for the
Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under
any provision of this Indenture, it shall not be responsible for
the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for
any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is
continuing and if it is known to a Responsible Officer of the
Trustee, the Trustee shall mail to the Holders of the Notes a
notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in
payment on any Note pursuant to Section 6.01(a) or (b) hereof,
the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders.
Section 7.06. Reports by Trustee to Holders of the
Notes.
Within 60 days after each March 1 beginning with
the March 1 following the date of this Indenture, and for so
long as Notes remain outstanding, the Trustee shall mail to the
Holders a brief report dated as of such reporting date that
complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to
the Holders shall be mailed to the Company and filed with the
Commission and each stock exchange on which the Notes are
listed in accordance with TIA Section 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time
to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against
any and all losses, liabilities or expenses incurred by it arising
out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses
of enforcing this Indenture against the Company (including this
Section 7.07), and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such
loss, liability or expense may be attributable to its negligence or
bad faith. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section
7.07 shall survive the resignation or removal of the Trustee and
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in
this Section 7.07, the Trustee shall have a Lien prior to the
Notes on all money or property held or collected by the
Trustee, except that held in trust to pay principal and interest
on particular Notes. Such Lien shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 6.01(g)
or (h) hereof occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as
provided in this Section 7.08.
The Trustee may resign in writing at any time and
be discharged from the trust hereby created by so notifying the
Company. The Holders of Notes of a majority in principal
amount at maturity of the then outstanding Notes may remove
the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section
7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect
to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes
charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the
Company shall promptly appoint a successor Trustee.
If a successor Trustee does not take office within
60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company, or the Holders of at least 10%
in principal amount at maturity of the then outstanding Notes
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder
fails to comply with Section 7.10 hereof, such Holder of a Note
may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon, the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail
a notice of its succession to Holders. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the
successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for
in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's
obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee or any Agent consolidates, merges
or converts into, or transfers all or substantially all of its
corporate trust business to another corporation, the successor
corporation without any further act shall be the successor
Trustee or Agent.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that
is a corporation organized and doing business under the laws of
the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The
Trustee is subject to TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to
the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or
Covenant Defeasance.
The Company may, at the option of its Board of
Directors evidenced by a resolution set forth in an Officers'
Certificate and at any time, elect to have either Section 8.02 or
8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.02, the
Company shall, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and
the other Sections of this Indenture referred to in (a) and (b) of
this Section 8.02, and to have satisfied all its other obligations
under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when
such payments are due from the trust referred to below, or on
the redemption date, as the case may be, (b) the Company's
obligations with respect to such Notes under Sections 2.03,
2.06, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers, trust,
duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03, the
Company shall, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, be released from its obligations
under the covenants contained in Sections 3.09, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, and 5.01 hereof
with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver,
consent or declaration or act of Holders (and the consequences
of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be
deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a
Default or an Event of Default under Sections 6.01(a) through
6.01(f) hereof, but, except as specified above, the remainder of
this Indenture, such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(a) through 6.01(f) hereof shall not
constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant
Defeasance.
The following shall be the conditions to the application
of either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or
Covenant Defeasance:
(a) the Company shall irrevocably have deposited
or caused to be irrevocably deposited with the Trustee
(or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the
provisions of this Article 8 applicable to it) as trust
funds in trust for the purpose of making the following
payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such
Notes, (i) cash in Dollars in an amount, or (ii) non-
callable Government Securities which through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not
later than one day before the due date of any payment,
cash in Dollars in an amount, or (iii) a combination
thereof, in such amounts, as will be sufficient, in the
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge
and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge the principal
of, premium, if any, and interest on the outstanding
Notes on the stated maturity or on the applicable
redemption date, as the case may be, of such principal
or installment of principal of, premium, if any, and
interest on the outstanding Notes, provided that the
Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such non-callable
Government Securities to said payments with respect to
the Securities;
(b) in the case of an election under Section 8.02
hereof, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in
either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of
the outstanding Notes will not recognize income, gain
or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner
and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03
hereof, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in
the same manner and at the same times as would have
been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit)
or, insofar as Sections 6.01(g) and 6.01(h) hereof are
concerned, at any time in the period ending on the 91st
day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until
the expiration of such period);
(e) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of,
or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the
Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the
Trustee an Opinion of Counsel to the effect that after
the 91st day following the deposit, (A) no Event of
Default under Sections 6.01(g) and 6.01(h) hereof shall
have occurred and (B) the trust funds are not, as of the
date of such opinion, subject to the effect of any
applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit
was not made by the Company with the intent of
preferring the Holders over any other creditors of the
Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or
others; and
(h) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent
provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Section 8.05. Deposited Money and Government
Securities to be Held in Trust; Other
Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-
callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the "Trustee")
pursuant to Section 8.04 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent)
as the Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the cash or non-callable Government Securities
deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders
of the outstanding Notes.
Anything in this Article 8 to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon the request of the Company
any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
The Trustee shall promptly pay to the Company,
after written request therefor, any money held at such time in
excess of the amounts required to pay any of the Company's
Obligations then owing with respect to the Notes.
Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest, if
any, on any Note and remaining unclaimed for one year after
such principal, and premium, if any, or interest, if any, have
become due and payable shall be paid to the Company on its
request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of
the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice
that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply
any cash or non-callable Government Securities in accordance
with Section 8.02 or 8.03 hereof, as the case may be, by reason
of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with
Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal
of, premium, if any, or interest, if any, on any Note following
the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive
such payment from the money held by the Trustee or Paying
Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 hereof, the
Company and the Trustee may amend or supplement this
Indenture or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or
inconsistency;
(b) to provide for uncertificated Notes in
addition to or in place of certificated Notes;
(c) to provide for the assumption of the
Company's obligations under this Indenture to the
Holders in the case of a merger or consolidation;
(d) to make any change that would provide
any additional rights or benefits to the Holders of the
Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note; or
(e) to comply with requirements of the
Commission in order to effect or maintain the
qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by
a Board Resolution authorizing the execution of any such
supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall
join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into such amended or
supplemental indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the
Company and the Trustee may amend or supplement this
Indenture or the Notes with the consent of the Holders of at
least a majority in principal amount at maturity of the Notes
then outstanding (including consents obtained in connection
with a tender offer or exchange offer for the Notes), and any
existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes
may be waived with the consent of the Holders of a majority in
principal amount at maturity of the then outstanding Notes
(including consents obtained in connection with a tender offer
or exchange offer for the Notes).
Upon the request of the Company accompanied by
a Board Resolution, authorizing the execution of any such
amended or supplemental indenture, and upon the filing with
the Trustee of evidence reasonably satisfactory to the Trustee of
the consent of the Holders of Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company in the
execution of such amended or supplemental indenture unless
such amended or supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or
supplemental indenture.
It shall not be necessary for the consent of the
Holders of Notes under this Section 9.02 to approve the
particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under
this Section 9.02 becomes effective, the Company shall mail to
the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver. Subject to Sections
6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount at maturity of the Notes then outstanding may
waive any existing default or compliance in a particular
instance by the Company with any provision of this Indenture
or the Notes. Without the consent of each Holder affected,
however, an amendment or waiver may not (with respect to
any Note held by a non-consenting Holder);
(a) reduce the principal amount at maturity
of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the
fixed maturity date of any Note, alter any of the
provisions with respect to the redemption of the Notes
or alter the price at which the Company must offer to
purchase the Notes pursuant to an Asset Sale Offer or
any Change of Control Offer;
(c) reduce the rate of or change the time for
payment of interest on any Note;
(d) waive a Default or Event of Default in
the payment of principal of or premium, if any, or
interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount at maturity
thereof and a waiver of the payment default that
resulted from such acceleration), including any
payment pursuant to an Asset Sale Offer or a Change
of Control Offer;
(e) make any Note payable in money other
than that stated in the Notes;
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the
rights of Holders of Notes to receive payments of
principal of, premium, if any, or interest on the Notes.
(g) waive a redemption or purchase payment
with respect to any Note; or
(h) make any change in the foregoing
amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Notes
shall be set forth in a supplemental indenture that complies with
the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver
becomes effective, a consent to it by a Holder is a continuing
consent by the Holder and every subsequent Holder of a Note
or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder or subsequent
Holder of a Note may revoke the consent as to its Note if the
Trustee receives written notice of revocation before the date the
waiver, supplement or amendment becomes effective. An
amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to,
fix a record date for determining which Holders must consent
to such amendment or waiver. If the Company fixes a record
date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the
most recent list of Holders furnished to the Trustee prior to
such solicitation pursuant to Section 2.05 hereof or (ii) such
other date as the Company shall designate.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation
about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all
Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a
new Note shall not affect the validity and effect of such
amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article 9 if
the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not
sign an amendment or supplemental indenture until the Board
of Directors of the Company approves it. In signing or
refusing to sign any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon, in addition to
the documents required by Section 10.04 hereof, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence
that such amendment or supplemental indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in
accordance with its terms.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by TIA Section 318(c), the
imposed duties shall control.
Section 10.02. Notices.
Any notice or communication by the Company or
the Trustee to the others is duly given if in writing and
delivered in Person or mailed by first class mail (registered or
certified, return receipt requested), telecopier or overnight air
courier guaranteeing next day delivery, to the others' address:
If to the Company:
Unilab Corporation
Corporate Headquarters
18448 Oxnard Street
Tarzana, CA 91356
Attention: Chief Financial Officer
Facsimile No.: (818) 757-0601
With, in the case of a notice of Default, or an
Event of Default, a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Robert Heckart, Esq.
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Attention: Corporate Trust Administration
Facsimile No.: (212) 658-6425
The Company or the Trustee, by notice to the
others may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication to a Holder shall be
mailed by first class mail, certified or registered, return receipt
requested, or by overnight air courier guaranteeing next day
delivery to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice or communication to Holders is mailed
in the manner provided above within the time prescribed, it is
duly given, whether or not the addressee receives it.
If the Company mails a notice or communication
to Holders, it shall mail a copy to the Trustee and each Agent
at the same time.
Section 10.03. Communication by Holders of Notes with
Other Holders of Notes.
Holders may communicate pursuant to TIA
Section 312(b) with other Holders with respect to their rights under
this or the Notes. The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA Section 312(c).
Section 10.04. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company
to the Trustee to take any action under this Indenture, the
Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 10.05 hereof)
stating that, in the opinion of the signers, all conditions
precedent and covenants provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall
include the statements set forth in Section 10.05 hereof)
stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 10.05. Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture (other than a certificate provided pursuant to TIA
Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(b) a brief statement as to the nature and
scope of the examination or investigation upon which
the statements or opinions contained in such certificate
or opinion are based;
(c) a statement that, in the opinion of such
Person, he or she has made such examination or
investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has
been satisfied.
Section 10.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action
by or at a meeting of Holders. The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for
its functions.
Section 10.07. No Personal Liability of Directors,
Officers, Employees and Stockholders.
No past, present or future director, officer,
employee, incorporator or stockholder of the Company shall
have any liability for any obligations of the Company under the
Notes, any guarantee thereof or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that
such a waiver is against public policy.
Section 10.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
Section 10.09. No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret any
other indenture, loan or debt agreement of the Company or its
Subsidiaries or of any other Person. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 10.10. Successors.
All agreements of the Company in this Indenture
and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
Section 10.11. Severability.
In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 10.12. Counterpart Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 10.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify
or restrict any of the terms or provisions hereof.
Section 10.14. Trustee To Include Paying Agent.
In case at any time any Paying Agent other than
the Trustee shall have been appointed by the Company and be
then acting hereunder, the term "Trustee" as used in this
Article 10 shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and
purposes as if such Paying Agent were named in this Article 10
in place of the Trustee.
[Signatures on following page]
<PAGE>
SIGNATURES
Dated as of March 14, 1996 UNILAB CORPORATION
By:
Name:
Title:
Dated as of March 14, 1996 MARINE MIDLAND BANK
By:
Name:
Title:
<PAGE>
Exhibit A
(Face of Note)
11% SENIOR NOTES DUE 2006
No. $
UNILAB CORPORATION
promises to pay to
or registered assigns,
the principal sum of $
on April 1, 2006.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Dated: _____________
UNILAB CORPORATION
By:____________________________________
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes
referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:__________________________________
<PAGE>
(Back of Security)
11% SENIOR NOTES due 2006
of
UNILAB CORPORATION
Capitalized terms used herein have the
meanings assigned to them in the Indenture (referred to below)
unless otherwise indicated.
1. Interest. Unilab Corporation, a
Delaware corporation (the "Company"), promises to pay
interest on the principal amount at maturity of the 11% Senior
Notes due 2006 (the "Notes") of which this Note is a part at the
rate and in the manner specified below.
The Company shall pay interest on the
principal amount at maturity of this Note in cash at the rate per
annum shown above. The Company will pay interest semi-
annually in arrears on April 1 and October 1 of each year,
commencing on October 1, 1996, or if any such day is not a
Business Day (as defined in the Indenture), 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 will be computed on the basis of a 360-
day year comprised of twelve 30-day months. 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. To the extent lawful, the
Company shall pay interest on overdue principal at the rate of
1% per annum in excess of the then applicable interest rate on
the Notes; it shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. Method of Payment. The Company
will pay interest on the Notes (except defaulted interest) 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, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes will be payable as to principal,
premium, if any, and interest at the office or agency of the
Company maintained in the City of New York; provided
however, 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.
3. Paying Agent and Registrar. Initially,
the Trustee under the Indenture will act as Paying Agent and
Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. The
Company may act in any such capacity.
4. Indenture. The Company issued the
Notes under an Indenture dated as of March 14, 1996 (the
"Indenture") between the Company and Marine Midland Bank,
as Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.
Code Sections (77aaa-77bbbb) as in effect on the date of the
Indenture. The Notes are subject to all such terms, and
Holders of the Notes are referred to the Indenture and such act
for a statement of such terms. The terms of the Indenture shall
govern any inconsistencies between the Indenture and the
Notes. The Notes are unsecured general Obligations of the
Company limited to $120,000,000 in aggregate principal
amount at maturity, plus amounts, if any, sufficient to pay
interest and premium, if any, on outstanding Notes as set forth
in Paragraph 1 hereof.
5. Optional Redemption. Except as
provided in the next paragraph, the Notes will not be
redeemable at the Company's option prior to April 1, 2001.
Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of the principal amount at maturity)
set forth below plus accrued and unpaid interest thereon to the
applicable redemption date, if redeemed during the twelve-
month period beginning on April 1 of the years indicated
below:
Year Percentage
2001 105.500%
2002 103.667%
2003 101.833%
2004 and thereafter 100.000%
Notwithstanding the foregoing, at any time
prior to April 1, 1999, the Company may on one or more
occasions redeem up to $42.0 million in aggregate principal
amount at maturity of Notes with the net proceeds of one or
more public offerings of common stock of the Company at a
redemption price equal to 110% of the principal amount at
maturity thereof, plus accrued and unpaid interest therein to the
applicable date of redemption; provided, that at least $78.0
million in aggregate principal amount at maturity of Notes
remain outstanding immediately after the occurrence of each
such redemption; and provided, further, that any such
redemption must occur within 90 days of the date of the closing
of such public offering.
6. Mandatory Redemption. Except as set
forth under Section 3.09, Section 4.10 and Section 4.15 of the
Indenture, the Company shall not be required to make
mandatory redemption or sinking fund payments with respect to
the Notes.
7. Repurchase at the Option of Holders.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described in the
Indenture (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount at
maturity thereof plus accrued and unpaid interest, if any,
thereon to the date of purchase.
(b) When the aggregate amount of Excess
Proceeds from Asset Sales exceeds $5.0 million, the Company
shall make an offer to all Holders to purchase the maximum
principal amount at maturity of Notes that may be purchased
out of the Excess Proceeds at an offer price in cash equal to
100% of the principal amount at maturity thereof plus accrued
and unpaid interest thereon to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the
Indenture. If the aggregate principal amount at maturity of
Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use such
deficiency for general corporate purposes.
(c) Holders that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale
Offer from the Company prior to any related purchase date,
and may elect to have such Notes purchased by completing the
form entitled "Option of Holder to Elect Purchase" appearing
below.
8. Notice of Redemption. Notice of
redemption shall be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. Notes may be redeemed
in part but only in whole multiples of $1,000, unless all of the
Notes held by a Holder are to be redeemed. On and after the
redemption date, interest ceases to accrue on Notes or portions
thereof called for redemption.
9. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the
transfer of any Note or portion of a Note selected for
redemption or purchase, except for the unredeemed or
unpurchased portion of any Note being redeemed or
repurchased in part. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or repurchased during the period
between a record date and the corresponding interest payment
date.
10. Persons Deemed Owners. The
registered holder of a Note shall be treated as its owner for all
purposes.
11. Amendments and Waivers. Subject to
certain exceptions, the Indenture or the Notes may be amended
with the consent of the Holders of at least a majority in
principal amount at maturity of the then outstanding Notes
(including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing Default or Event
of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of
the Indenture or the Notes may be waived with the consent of
the Holders of a majority in principal amount at maturity of the
then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
Without the consent of any Holder, the Indenture or the Notes
may be amended to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to
or in place of certificated Notes, to provide for the assumption
of the Company's obligations under the Indenture to Holders in
the case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders
or that does not adversely affect the legal rights of any Holder
under the Indenture, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of
the Indenture under the TIA.
Notwithstanding the foregoing, without the
consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting
Holder): (i) reduce the principal amount at maturity of Notes
whose Holders must consent to an amendment, supplement or
waiver, (ii) reduce the principal or change the fixed maturity
date of any Note or alter the provisions with respect to the
redemption of the Notes, or alter the price at which the
Company must offer to purchase the Notes pursuant to an Asset
Sale Offer or a Change of Control Offer, (iii) reduce the rate of
or change the time for payment of interest, on any Note, (iv)
waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least
a majority in aggregate principal amount at maturity thereof
and a waiver of the payment default that resulted from such
acceleration), including any payment pursuant to an Asset Sale
Offer or a Change of Control Offer, (v) make any note payable
in money other than that stated in the Notes, (vi) make any
change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of notes to receive
payments of principal of, premium, if any, or interest on the
Notes, (vii) waive a redemption or purchase payment with
respect to any Note or (viii) make any change in the foregoing
amendment and waiver provisions.
12. Defaults and Remedies. Events of
Default occur if: (a) the Company defaults in the payment of
interest on the Notes when the same becomes due and payable
and such default continues for a period of thirty (30) days; (b)
the Company defaults in the payment of principal of or
premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption or otherwise; (c) the
Company fails to comply with the provisions of Sections 4.07,
4.10 and 5.01 of the Indenture and such Default continues for a
period of thirty (30) days; (d) the Company fails to comply
with any other agreement or covenant in, or provision of, the
Notes or the Indenture for sixty (60) days after notice from the
Trustee or Holders of at least 25% in aggregate principal
amount at maturity of the then outstanding Notes; (e) 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 any of its Restricted Subsidiaries (or the payment
of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now
exists, or is created after the date of the Indenture, 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
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 $5.0 million or more; (f) the Company
or any of its Restricted Subsidiaries fails to pay final judgments
aggregating in excess of $5.0 million, if (A) any creditor has
commenced an enforcement proceeding with respect to such
final judgments or (B) such judgments are not discharged or
stayed within 60 days of their entry; or (g) certain events of
bankruptcy with respect to the Company or any Restricted
Subsidiary that is a Significant Subsidiary or group of
Restricted Subsidiaries that, together, would constitute a
Significant Subsidiary.
If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount at maturity of the then outstanding Notes may
declare all the Notes to be due and payable and the same (i)
shall become immediately due and payable or (ii) if there are
any amounts outstanding under the New Credit Facility (as
defined in the Indenture), shall become due and payable upon
the first to occur of an acceleration under the New Credit
Facility or five business days after receipt by the Company and
the administrative agent under the New Credit Facility of notice
of such acceleration under the Indenture if such Event of
Default is continuing at such time. Notwithstanding the
foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the
Company, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not
enforce the Indenture or the Notes except as provided in the
Indenture.
Subject to certain limitations, Holders of a
majority of principal amount at maturity of the then outstanding
Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes
notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal
or interest) if it determines that withholding notice is in their
interest.
13. Trustee Dealings with Company. The
Trustee, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. No past,
present or future director, officer, employee, incorporator or
stockholder, as such, of the Company shall have any liability
for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Holder by accepting
a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the
Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
15. Authentication. This Note shall not be
valid until authenticated by the manual signature of the Trustee
or an authenticating agent.
16. Abbreviations. Customary
abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants
with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
17. CUSIP Numbers. Pursuant to a
recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the
Trustee to use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
18. Governing Law. THE INTERNAL
LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THE INDENTURE AND
THE NOTES.
The Company will furnish to any Holder upon
written request and without charge a copy of the Indenture.
Request may be made to:
Unilab Corporation
Corporate Headquarters
18448 Oxnard Street
Tarzana, CA 91356
Attention: Chief Financial Officer
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
____________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________
to transfer this Note on the books of the Company. The agent
may substitute another to act for him.
_____________________________________________________________
Date: _____________
Your Signature:___________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by
the Company pursuant to Section 4.10 or 4.15 of this
Indenture, check the box below:
___ Section 4.10 ___ Section 4.15
If you want to elect to have only part of the Note
purchased by the Company pursuant to Section 4.10 or Section
4.15 of the Indenture, state the amount you elect to have
purchased: $___________
Date: ___________ Your Signature: _____________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: ______________________
Signature Guarantee.
Exhibit 10.1
_____________________________________________________
$20,000,000
CREDIT AGREEMENT
among
UNILAB CORPORATION,
VARIOUS BANKS
and
BANQUE PARIBAS,
as Agent
_________________________________
Dated as of March 14, 1996
_________________________________
_____________________________________________________
<PAGE>
TABLE OF CONTENTS
Section 1. Amount and Terms of Credit
1.01 Revolving Commitment
1.02 Minimum Amount of Each Borrowing
1.03 Notice of Borrowing
1.04 Disbursement of Funds
1.05 Notes
1.06 Conversions
1.07 Pro Rata Borrowings
1.08 Interest
1.09 Interest Periods
1.10 Increased Costs, Illegality, etc.
1.11 Compensation
1.12 Change of Lending Office
1.13 Replacement of Banks
Section 2. Letters of Credit
2.01 Letters of Credit
2.02 Minimum Stated Amount
2.03 Letter of Credit Requests
2.04 Letter of Credit Participations
2.05 Agreement to Repay Letter of Credit Drawings
2.06 Increased Costs
Section 3. Commitment Commission; Fees; Reductions of Commitment
3.01 Fees
3.02 Voluntary Termination of Unutilized Commitments
3.03 Mandatory Reduction of Commitments
Section 4. Prepayments; Payments; Taxes
4.01 Voluntary Prepayments
4.02 Mandatory Repayments
4.03 Method and Place of Payment
4.04 Net Payments
Section 5. Conditions Precedent to Credit Events on the
Initial Borrowing Date
5.01 Execution of Agreement; Notes
5.02 Officer's Certificate
5.03 Opinions of Counsel
5.04 Corporate Documents; Proceedings
5.05 Employee Benefit Plans; Shareholders'
Agreements; Management Agreements;
Employment Agreements; Collective
Bargaining Agreements; Existing
Indebtedness Agreements; Tax Sharing
Agreements; Supply Agreements; Non-
Compete Agreements; Material Contracts
5.06 Senior Notes
5.07 Initial Borrowing Base Certificate
5.08 Security Agreement
5.09 Adverse Change, etc.
5.10 Litigation
5.11 Fees, etc.
5.12 Insurance Policies
5.13 Approvals
5.14 Financial Statements
5.15 Projections
5.16 Refinancing
5.17 Consent Letter
5.18 Due Diligence
Section 6. Conditions Precedent to All Credit Events
6.01 No Default; Representations and
Warranties
6.02 Adverse Change, etc.
6.03 Litigation
6.04 Notice of Borrowing; Letter of Credit Request
Section 7. Representations, Warranties and Agreements
7.01 Corporate Status
7.02 Corporate Power and Authority
7.03 No Violation
7.04 Governmental Approvals
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc.
7.06 Litigation
7.07 True and Complete Disclosure
7.08 Use of Proceeds; Margin Regulations
7.09 Tax Returns and Payments
7.10 Security Agreement
7.11 Capitalization
7.12 Subsidiaries
7.13 Senior Notes
7.14 Indebtedness
7.15 Compliance with Statutes, etc.
7.16 Compliance with ERISA
7.17 Environmental Matters
7.18 Labor Relations
7.19 Patents, Licenses, Franchises and Formulas
7.20 Properties; Insurance
7.21 Investment Company Act
7.22 Public Utility Holding Company Act
7.23 Leases
Section 8. Affirmative Covenants
8.01 Information Covenants
(a) Monthly Reports
(b) Quarterly Financial Statements
(c) Annual Financial Statements
(d) Budgets
(e) Officer's Certificates
(f) Notice of Default or Litigation
(g) Other Reports and Filings
(h) Environmental Matters
(i) Annual Meetings with Banks
(j) Borrowing Base Certificate
(k) Other Information
8.02 Books, Records and Inspections
8.03 Maintenance of Property, Insurance
8.04 Corporate Franchises
8.05 Compliance with Statutes, etc.
8.06 Compliance with Environmental Laws
8.07 ERISA
8.08 End of Fiscal Years; Fiscal Quarters
8.09 Performance of Obligations
8.10 Payment of Taxes
8.11 Use of Proceeds
8.12 UCC Searches
8.13 Intellectual Property Rights
8.14 Registry
8.15 Further Actions
8.16 Permitted Acquisitions
Section 9. Negative Covenants
9.01 Liens
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
9.03 Dividends
9.04 Leases
9.05 Indebtedness
9.06 Advances, Investments and Loans
9.07 Transactions with Affiliates
9.08 Capital Expenditures
9.09 Fixed Charge Coverage Ratio
9.10 Interest Coverage Ratio
9.11 Consolidated Indebtedness to Consolidated EBITDA
9.12 Limitation on Voluntary Payments and
Modifications of Indebtedness;
Modifications of Certificate of
Incorporation, By-Laws and Certain
Other Agreements; etc.
9.13 Limitation on Issuance of Capital Stock
9.14 Business
9.15 Limitation on Creation of Subsidiaries
9.16 Account Receivable Dates
9.17 Account Payable Days
Section 10. Events of Default
10.01 Payments
10.02 Representations, etc.
10.03 Covenants
10.04 Default Under Other Agreements
10.05 Bankruptcy, etc.
10.06 ERISA
10.07 Security Documents
10.08 Judgments
10.09 Change of Control
10.10 Approvals
10.11 Debarment or Suspension
Section 11. Definitions And Accounting Terms
11.01 Defined Terms
Section 12. The Agent and the Collateral Agent
12.01 Appointment
12.02 Nature of Duties
12.03 Lack of Reliance on the Agent
12.04 Certain Rights of the Agent
12.05 Reliance
12.06 Indemnification
12.07 The Agent in Its Individual Capacity
12.08 Holders
12.09 Resignation by the Agent
Section 13. Miscellaneous
13.01 Payment of Expenses, etc.
13.02 Right of Setoff
13.03 Notices
13.04 Benefit of Agreement; Assignments; Participations
13.05 No Waiver; Remedies Cumulative
13.06 Payments Pro Rata
13.07 Calculations; Computations; Accounting Terms
13.08 GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE
13.09 Counterparts
13.10 Effectiveness
13.11 Headings Descriptive
13.12 Amendment or Waiver
13.13 Survival
13.14 Domicile of Loans
13.15 Waiver of Jury Trial
13.16 Interest Rate Limitation
<PAGE>
SCHEDULE I COMMITMENTS AND BANK
ADDRESSES (Sections 13.03 and 13.04
and definitions of "Bank" and "Revolving
Loan Commitment")
SCHEDULE II INSURANCE (Sections 5.12, 7.20 and 8.03)
SCHEDULE III REAL PROPERTY (Section 7.10(b))
SCHEDULE IV CAPITALIZATION (Section 7.11)
SCHEDULE V EXISTING LETTERS OF CREDIT (Section
2.01(a)(ii))
SCHEDULE VI EXISTING INDEBTEDNESS (Sections 7.14 and 9.05 and
definitions of "Consolidated Indebtedness"
and
Consolidated Liabilities")
SCHEDULE VII EXISTING LIENS (Section 9.01(iii))
SCHEDULE VIII ENVIRONMENTAL MATTERS (Section 7.17(c))
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Revolving Note
EXHIBIT B-2 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of special counsel
to the Borrower
EXHIBIT E-2 Form of Opinion of general counsel of the
Borrower
EXHIBIT F Form of Officers' Certificate of the Borrower
EXHIBIT G Security Agreement
EXHIBIT H Consent Letter
EXHIBIT I Borrowing Base Certificate
EXHIBIT J Assignment and Assumption Agreement
<PAGE>
CREDIT AGREEMENT, dated as of March 14, 1996,
among UNILAB CORPORATION, a Delaware corporation (the
"Borrower"), the financial institutions party hereto from time to
time (each, a "Bank," and collectively, the "Banks") and BANQUE
PARIBAS, as agent (the "Agent") for the Banks. Unless otherwise
defined herein, all capitalized terms used herein and defined in
Section 11 are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions
herein set forth, the Banks are willing to make available to the
Borrower the respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
Section 1. Amount and Terms of Credit.
1.01 Revolving Commitment. (a) Subject to and upon the
terms and conditions set forth herein, each Bank severally agrees,
at any time and from time to time on or after the Effective Date and
prior to the Revolving Loan Maturity Date, to make a loan or loans
(each a "Revolving Loan" and, collectively, the "Revolving Loans")
to the Borrower, which Revolving Loans:
(i) shall, at the option of the Borrower, be Base
Rate Loans or Eurodollar Loans, provided that except as
otherwise specifically provided in Section 1.10(b), all
Revolving Loans comprising the same Borrowing shall at all
times be of the same Type;
(ii) may be repaid and reborrowed in accordance
with the provisions hereof;
(iii) shall not exceed for any Bank at any time out-
standing that aggregate principal amount which, when added
to the product of (x) such Bank's Percentage and (y) the sum
of (I) the aggregate amount of all Letter of Credit Out-
standings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such
time and (II) the aggregate principal amount of all Swingline
Loans (exclusive of Swingline Loans which are repaid with
the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of
such Bank at such time; and
(iv) shall not exceed for all Banks at any time
outstanding that aggregate principal amount which, when
added to (x) the amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time and
(y) the aggregate principal amount of all Swingline Loans
(exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) then outstanding,
equals the lesser of (A) the Total Revolving Loan
Commitment at such time and (B) the Borrowing Base at
such time.
(b) Subject to and upon the terms and conditions herein set
forth, Paribas in its individual capacity agrees to make at any time
and from time to time after the Effective Date and prior to the
Swingline Expiry Date, a revolving loan or revolving loans (each,
a "Swingline Loan" and, collectively, the "Swingline Loans") to the
Borrower, which Swingline Loans (i) shall be made and maintained
as Base Rate Loans, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed in
aggregate principal amount at any time outstanding, when combined
with the aggregate principal amount of all Revolving Loans then
outstanding and the Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time, an amount equal to the lesser of (x)
the Total Revolving Loan Commitment at such time and (y) the
Borrowing Base at such time and (iv) shall not exceed at any time
outstanding the Maximum Swingline Amount; provided that Paribas
shall be under no obligation to make any Swingline Loan if on the
proposed date of Borrowing thereof a Bank Default exists unless
Paribas has entered into arrangements satisfactory to it and the
Borrower to eliminate Paribas' risk with respect to the Bank which
is the subject of the Bank Default, including by cash collateralizing
such Bank's Percentage of the then outstanding Swingline Loans.
(c) On any Business Day, Paribas may, in its sole
discretion, give notice to the Banks that its outstanding Swingline
Loans shall be funded with a Borrowing of Revolving Loans
(provided that such notice shall be deemed to have been
automatically given upon the occurrence of a Default or an Event
of Default under Section 10.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 10), in which
case a Borrowing of Revolving Loans constituting Base Rate Loans
(each such Borrowing, a "Mandatory Borrowing") shall be made on
the immediately succeeding Business Day by all Banks with a
Revolving Loan Commitment (without giving effect to any
reductions thereto pursuant to the last paragraph of Section 10) pro
rata based on each Bank's Percentage (determined before giving
effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10) and the proceeds
thereof shall be applied directly to Paribas to repay Paribas for such
outstanding Swingline Loans. Each such Bank hereby irrevocably
agrees to make Revolving Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified
in writing by Paribas notwithstanding (i) the amount of the
Mandatory Borrowing may not comply with the minimum amount
for Borrowings otherwise required hereunder, (ii) whether any
conditions specified in Section 5 or 6 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) the date
of such Mandatory Borrowing, (v) the amount of the Borrowing
Base at such time and (vi) any reduction or termination of the Total
Revolving Loan Commitment since the corresponding Swingline
Loans were first made. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of
a proceeding under the Bankruptcy Code with respect to the
Borrower), then each such Bank (other than Paribas) hereby agrees
that it shall forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and
prior to such purchase and without recourse or warranty) from
Paribas such participations in the outstanding Swingline Loans as
shall be necessary to cause such Banks to share in such Swingline
Loans ratably based upon their respective Percentages (determined
before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10),
provided that (x) all interest payable on the Swingline Loans shall
be for the account of Paribas until the date as of which the
respective participation is required to be purchased and, to the
extent attributable to the purchased participation, shall be payable
to the participant from and after such date and (y) at the time any
purchase of participations pursuant to this sentence is actually made,
the purchasing Bank shall be required to pay Paribas interest on the
principal amount of participation purchased for each day from and
including the day upon which the Mandatory Borrowing would
otherwise have occurred to but excluding the date of payment for
such participation, at the overnight Federal Funds Rate for the first
three days and at the rate otherwise applicable to Revolving Loans
maintained as Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate
principal amount of each Borrowing hereunder shall not be less than
the applicable Minimum Borrowing Amount and, if greater, shall
be in integral multiples of (i) for Base Rate Loans (other than
Swingline Loans), $100,000, (ii) for Eurodollar Loans, $500,000
or (iii) for Swingline Loans, $100,000, provided that Mandatory
Borrowings shall be made in the amounts required by Section
1.01(c). More than one Borrowing may occur on the same date,
but at no time shall there be outstanding more than four Borrowings
of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires
to make a Borrowing hereunder (excluding Borrowings of
Swingline Loans and Mandatory Borrowings), it shall give the
Agent at its Notice Office, prior to 12:00 Noon (New York time)
at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Base Rate
Loans and at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of each Borrowing
of Eurodollar Loans to be made hereunder. Each such notice (each
a "Notice of Borrowing"), except as otherwise expressly provided
in Section 1.10, shall be irrevocable and shall be given by the
Borrower in the form of Exhibit A, appropriately completed to
specify: (i) the aggregate principal amount of the Revolving Loans
to be made pursuant to such Borrowing; (ii) the date of such
Borrowing (which shall be a Business Day); and (iii) whether the
Revolving Loans being made pursuant to such Borrowing are to be
initially maintained as Base Rate Loans or Eurodollar Loans and,
if Eurodollar Loans, the initial Interest Period to be applicable
thereto. The Agent shall promptly give each Bank notice of such
proposed Borrowing, of such Bank's proportionate share thereof
and of the other matters specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing
of Swingline Loans hereunder, it shall give Paribas not later than
12:00 Noon (New York time) on the date that a Swingline Loan is
to be made, written notice or telephonic notice promptly confirmed
in writing of each Swingline Loan to be made hereunder. Each
such notice shall be irrevocable and specify in each case (A) the
date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(c), with the Borrower irrevocably
agreeing, by its incurrence of any Swingline Loan, to the making
of the Mandatory Borrowings as set forth in Section 1.01(c).
1.04 Disbursement of Funds. No later than 12:00 Noon
(New York time) on the date specified in each Notice of Borrowing
(or (x) in the case of Swingline Loans, not later than 2:00 P.M.
(New York time) on the date specified pursuant to Section
1.03(b)(i) or (y) in the case of Mandatory Borrowings, not later
than 12:00 Noon (New York time) on the date specified in Section
1.01(c)), each Bank will make available its pro rata portion
(determined in accordance with Section 1.07) of each such
Borrowing requested to be made on such date (or in the case of
Swingline Loans, Paribas shall make available the full amount
thereof). All such amounts shall be made available in Dollars and
in immediately available funds at the Payment Office of the Agent,
and the Agent will make available to the Borrower at the Payment
Office in immediately available funds the aggregate of the amounts
so made available by the Banks. Unless the Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank
does not intend to make available to the Agent such Bank's portion
of any Borrowing to be made on such date, the Agent may assume
that such Bank has made such amount available to the Agent on
such date of Borrowing and the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available
to the Agent by such Bank, the Agent shall be entitled to recover
such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the
Borrower and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case
may be, interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available
by the Agent to the Borrower until the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to (i)
if recovered from such Bank, the overnight Federal Funds Rate and
(ii) if recovered from the Borrower, the rate of interest applicable
to the respective Borrowing, as determined pursuant to Section
1.08. Nothing in this Section 1.04 shall be deemed to relieve any
Bank from its obligation to make Revolving Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank
as a result of any failure by such Bank to make Revolving Loans
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans made by each Bank shall be
evidenced (i) if Revolving Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of
Exhibit B-1, with blanks appropriately completed in conformity
herewith (each, a "Revolving Note" and, collectively, the
"Revolving Notes") and (ii) if Swingline Loans, by a promissory
note duly executed and delivered by the Borrower substantially in
the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Effective Date, (iii) be in a stated principal amount
equal to the Revolving Loan Commitment of such Bank and be
payable in the principal amount of the Revolving Loans evidenced
thereby, (iv) mature on the Revolving Loan Maturity Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary repayment
as provided in Section 4.01, and mandatory repayment as provided
in Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the Security Documents.
(c) The Swingline Note issued to Paribas shall (i) be
executed by the Borrower, (ii) be payable to the order of Paribas
and be dated the Effective Date, (iii) be in a stated principal amount
equal to the Maximum Swingline Amount and be payable in the
principal amount of the outstanding Swingline Loans evidenced
thereby from time to time, (iv) mature on the Swingline Expiry
Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans evidenced thereby
and (vi) be entitled to the benefits of this Agreement and the
Security Documents.
(d) Each Bank will note on its internal records the amount
of each Loan made by it and each payment in respect thereof and
will prior to any transfer of any of its Notes endorse on the reverse
side thereof the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation or any error in any such
notation shall not affect the Borrower's obligations in respect of
such Loans.
1.06 Conversions. The Borrower shall have the option to
convert on any Business Day all or a portion at least equal to the
Minimum Borrowing Amount of the outstanding principal amount
of the Revolving Loans owing by the Borrower and made pursuant
to one or more Borrowings of one Type of Revolving Loan into a
Borrowing or Borrowings of the other Type of Revolving Loan;
provided that: (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable to the Loans being
converted and no such partial conversion of Eurodollar Loans shall
reduce the outstanding principal amount of such Eurodollar Loans
made pursuant to a single Borrowing to less than the Minimum
Borrowing Amount applicable thereto; (ii) Base Rate Loans may
only be converted into Eurodollar Loans if no Default or Event of
Default is in existence on the date of the conversion; (iii) no
conversion pursuant to this Section 1.06 shall result in a greater
number of Borrowings than is permitted under Section 1.02; and
(iv) Swingline Loans may not be converted pursuant to this Section
1.06. Each such conversion shall be effected by the Borrower by
giving the Agent at its Notice Office prior to 12:00 Noon (New
York time) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion"), appropriately completed to specify the Loans to be
so converted, the Borrowing(s) pursuant to which such Loans were
made and, if to be converted into Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Agent shall give each
Bank prompt notice of any such proposed conversion affecting any
of its Loans. Upon any such conversion the proceeds thereof will
be deemed to be applied directly on the day of such conversion to
prepay the outstanding principal amount of the Loans being
converted.
1.07 Pro Rata Borrowings. All Borrowings of Revolving
Loans under this Agreement shall be incurred from the Banks pro
rata on the basis of their respective Revolving Loan Commitments.
It is understood that no Bank shall be responsible for any default by
any other Bank of its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be
made by it hereunder regardless of the failure of any other Bank to
make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from
the date of the Borrowing thereof until the maturity thereof
(whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the sum of the Applicable Base Rate Margin
plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date of
the Borrowing thereof until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall, during
each Interest Period applicable thereto, be equal to the sum of the
Applicable Eurodollar Margin plus the Quoted Rate for such
Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue
amount payable hereunder shall, in each case, bear interest at a rate
per annum equal to the greater of (x) the sum of (i) the Base Rate
in effect from time to time, (ii) the Applicable Base Rate Margin for
Base Rate Loans at such time and (iii) 2% and (y) the rate which is
2% in excess of the rate of interest then applicable to such Loan, in
each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be
payable: (i) in respect of each Base Rate Loan, quarterly in arrears
on each Quarterly Payment Date; (ii) in respect of each Eurodollar
Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each
date occurring at three month intervals after the first day of such
Interest Period; and (iii) in respect of each Loan, on any repayment
(on the amount repaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall
determine the Quoted Rate for the Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the
Banks thereof. Each such determination shall, absent manifest
error, be final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or
conversion into, a Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or prior to 12:00 Noon (New York time)
on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), the Borrower shall have the right to
elect, by giving the Agent notice thereof, the interest period (each
an "Interest Period") applicable to such Eurodollar Loan, which
Interest Period shall, at the option of the Borrower, be a one, two,
three or six month period:
(i) all Eurodollar Loans comprising a single
Borrowing shall at all times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar
Loan shall commence on the date of Borrowing of such
Loan (including the date of any conversion thereto from a
Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Loan shall commence
on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar
Loan begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire
on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan
would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
(v) no Interest Period for a Borrowing may be
elected if it would extend beyond the Revolving Loan
Maturity Date; and
(vi) no Interest Period may be selected while a
Default or Event of Default exists.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect a
new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to
convert such Eurodollar Loans into Base Rate Loans effective as of
the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
any Bank shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties
hereto but, with respect to clause (i) below, may be made only by
the Agent):
(i) on any Interest Determination Date that, by
reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market
generally, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for
in the definition of Quoted Rate; or
(ii) at any time, that such Bank shall incur
increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Loan
because of (x) any change since the date of this Agreement
in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force
of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental
rule, regulation, order, guideline or request, such as, for
example, but not limited to: (A) a change in the basis of
taxation of payments to any Bank of the principal of or
interest on the Notes or any other amounts payable
hereunder (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of such
Bank imposed by the jurisdiction in which such Bank is
organized, in which its principal office or applicable lending
office is located) or (B) a change in official reserve
requirements (but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of
the Quoted Rate) and/or (y) other circumstances since the
date of this Agreement affecting such Bank or the interbank
Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of
any Eurodollar Loan has been made (x) unlawful by any law
or governmental rule, regulation or order, (y) impossible by
compliance by any Bank in good faith with any
governmental request (whether or not having the force of
law) or (z) impracticable as a result of a contingency
occurring after the date of this Agreement which materially
and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent, in the case
of clause (i) above) shall promptly give notice (by telephone
confirmed in writing) to the Borrower and, except in the case of
clause (i) above, to the Agent of such determination (which notice
the Agent shall promptly transmit to each of the other Banks).
Thereafter: (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Agent notifies the
Borrower and the Banks that the circumstances giving rise to such
notice by the Agent no longer exist, and any Notice of Borrowing
or Notice of Conversion given by the Borrower with respect to
Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrower; (y)
in the case of clause (ii) above, the Borrower shall pay to such
Bank, upon written demand therefor, such additional amounts (in
the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such
increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to
such Bank, showing in reasonable detail the basis for the calculation
thereof, submitted to the Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding on all the parties
hereto); and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
Notwithstanding the foregoing, the failure of a Bank to give any
notice pursuant to clause (ii) above shall not release or diminish any
of the Borrower's obligations to pay additional amounts pursuant to
this Section 1.10(a), provided that if any notice required by this
Section 1.10(a) is given by any Bank more than 180 days after such
Bank obtains knowledge of the occurrence of the event giving rise
to the additional cost, reduction in amounts or other additional
amounts of the type described in this Section 1.10(a), such Bank
shall not be entitled to compensation under this Section 1.10(a) for
any such amounts incurred prior to the 180th day prior to the giving
of such notice to the Borrower.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower
may (and in the case of a Eurodollar Loan affected by the
circumstances described in Section 1.10(a)(iii) shall) either (i) if the
affected Eurodollar Loan is then being made initially or pursuant to
a conversion, by giving the Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the
affected Bank or the Agent pursuant to Section 1.10(a)(ii) or (iii),
cancel the respective Borrowing, or (ii) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written
notice to the Agent, require the affected Bank to convert such
Eurodollar Loan into a Base Rate Loan; provided that if more than
one Bank is affected at any time, then all affected Banks must be
treated the same pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction
of or any change after the date hereof in any applicable law or rule,
regulation, order, guideline or request (whether or not having the
force of law and including without limitation those announced or
published prior to the Effective Date) concerning capital adequacy,
or any change in interpretation or administration thereof by any
governmental authority, central bank or comparable agency, has or
would have the effect of increasing the amount of capital required
to be maintained by such Bank based on the existence of such
Bank's Revolving Loan Commitment hereunder or its obligations
hereunder, then the Borrower agrees to pay to such Bank, upon its
written demand therefor, such additional amounts as shall be
required to compensate such Bank for the increased cost to such Bank
or the reduction in the rate of return to such Bank as a result of
such increase of capital. In determining such additional amounts,
each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable; provided
that such Bank's determination of compensation owing under this
Section 1.10(c) shall, absent manifest error, be final and conclusive
and binding on all the parties hereto. Each Bank, upon determining
that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower,
which notice shall show in reasonable detail the basis for calculation
of such additional amounts. Notwithstanding the foregoing, the
failure of a Bank to give any notice pursuant to the preceding
sentence shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section
1.10(c), provided that if any notice required by this Section 1.10(c)
is given by any Bank more than 180 days after such Bank obtains
knowledge of the occurrence of the event giving rise to the
additional cost or reduction in amounts of the type described in this
Section 1.10(c), such Bank shall not be entitled to compensation
under this Section 1.10(c) for any such amounts incurred prior to
the 180th day prior to the giving of such notice to the Borrower.
(d) Notwithstanding any other provision of Section 1.10 or
2.06, each Bank will, to the extent the increased costs or reductions
in amounts receivable referred to above or in Section 2.06 relate to
such Bank's loans, commitments or letters of credit in general and
are not specifically attributable to a Loan, Revolving Loan
Commitment or Letter of Credit hereunder, use averaging and
attribution methods which cover all loans, commitments and letters
of credit similar to the Loans, Revolving Loan Commitment or
Letters of Credit made by such Bank in similar circumstances for
comparable customers whether or not the loan documentation for
such other loans, commitments or letters of credit permits the Bank
to make the determination specified in Section 1.10 or 2.06.
1.11 Compensation. The Borrower agrees to compensate
each Bank, upon its written request (which request shall set forth in
reasonable detail the basis for requesting such compensation), for
all losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans) which such Bank may sustain: (i) if for
any reason (other than a default by such Bank or the Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not
occur on a date specified therefor in a Notice of Borrowing or
Notice of Conversion (whether or not withdrawn by the Borrower
or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any
repayment (including any repayment made pursuant to Section 4.02)
or conversion of any Eurodollar Loans occurs on a date which is
not the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv)
as a consequence of (x) any other default by the Borrower to repay
its Eurodollar Loans when required by the terms of this Agreement
or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b). A Bank's basis for requesting compensation
pursuant to this Section and the calculations therefor shall be set
forth in reasonable detail and shall, absent manifest error, be final
and conclusive and binding on all the parties hereto.
1.12 Change of Lending Office. Each Bank agrees that
upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section
4.04, with respect to such Bank, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office of
such Bank for any Loans or Letters of Credit affected by such
event, provided that such designation is made on such terms that
such Bank or its respective lending offices suffer no economic, legal
or regulatory disadvantage as a result thereof, with the object of
avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any
Bank provided in such Sections 1.10, 2.06 or 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make
Loans or fund Unpaid Drawings or Mandatory Borrowings, (y) if
any Bank refuses to consent to certain proposed changes, waivers,
discharges or terminations with respect to this Agreement which
have been approved by the Required Banks as provided in Section
13.12(b) or (z) upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section
2.06 or Section 4.04, with respect to any Bank which results in
such Bank charging to the Borrower increased costs materially in
excess of those being generally charged by the other Banks, then the
Borrower shall have the right, if no Default or Event of Default
then exists, to replace such Bank (the "Replaced Bank") with any
other Bank or with one or more Eligible Transferee or Transferees,
none of whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") reasonably
acceptable to the Agent, provided that:
(i) at the time of any replacement pursuant to this
Section 1.13, the Replacement Bank shall enter into one or
more assignment agreements pursuant to Section 13.04(b)
(and with all fees payable pursuant to said Section 13.04(b)
to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire the Revolving Loan
Commitment and outstanding Loans of, and participations
in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in
respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Bank, (B) an amount
equal to such Replaced Bank's Percentage of all Unpaid
Drawings that have been funded by (and not reimbursed to)
such Replaced Bank, together with all then unpaid interest
with respect thereto at such time and (C) an amount equal to
all accrued, but theretofore unpaid, Fees owing to the
Replaced Bank pursuant to Section 3.01 hereof, (y) Paribas
an amount equal to such Replaced Bank's Percentage of any
Unpaid Drawing (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore
funded by such Replaced Bank and (z) Paribas an amount
equal to such Replaced Bank's Percentage of any Mandatory
Borrowing to the extent such amount was not theretofore
funded by such Replaced Bank; and
(ii) all obligations of the Borrower owing to the
Replaced Bank (other than those specifically described in
clause (i) above in respect of which the assignment purchase
price has been, or is concurrently being, paid) shall be paid
in full to such Replaced Bank concurrently with such
replacement.
Upon the execution of the respective assignment documentation, the
payment of amounts referred to in clauses (i) and (ii) above and, if
so requested by the Replacement Bank, delivery to the Replacement
Bank of the appropriate Notes executed by the Borrower, the
Replacement Bank shall become a Bank hereunder and the Replaced
Bank shall cease to constitute a Bank hereunder with respect to the
Loans and Revolving Loan Commitment so transferred, except with
respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Bank and (y) the Percentages of
the Banks shall be automatically adjusted at such time to give effect
to such replacement.
Section 2. Letters of Credit.
2.01 Letters of Credit. (a) (i) Subject to and upon the terms
and conditions herein set forth, the Borrower may request the
Issuing Bank, at any time and from time to time after the Effective
Date and prior to the Revolving Loan Maturity Date to issue, for
the account of the Borrower and for the benefit of any holder (or
any trustee, agent or other similar representative for any such
holders) of L/C Supportable Indebtedness of the Borrower, an
irrevocable standby letter of credit in a form customarily used by
the Issuing Bank or in such other form as has been approved by the
Issuing Bank in support of said L/C Supportable Indebtedness (each
such letter of credit, a "Letter of Credit" and collectively, the
"Letters of Credit"). All Letters of Credit shall be denominated in
Dollars.
(ii) It is hereby acknowledged and agreed that the
Letters of Credit described on Schedule V (the "Existing
Letters of Credit"), which were issued under the Original
Credit Agreement and are outstanding immediately prior to
the Effective Date, shall be permitted to remain outstanding
on and after the Effective Date and shall each constitute a
Letter of Credit that is issued and outstanding under this
Agreement for all purposes of this Agreement.
(b) The Issuing Bank hereby agrees that it will (subject to
the terms and conditions contained herein), at any time and from
time to time after the Effective Date and prior to the Revolving
Loan Maturity Date, following its receipt of the respective Letter
of Credit Request, issue for the account of the Borrower one or
more Letters of Credit in support of such L/C Supportable
Indebtedness of the Borrower as is permitted to remain outstanding
without giving rise to a Default or Event of Default hereunder;
provided that the Issuing Bank shall be under no obligation to issue
any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing such Letter
of Credit or any requirement of law applicable to the Issuing
Bank or any request or directive (whether or not having the
force of law) from any governmental authority with
jurisdiction over the Issuing Bank shall prohibit, or request
that the Issuing Bank refrain from, the issuance of letters of
credit generally or the Letter of Credit in particular or shall
impose upon such Issuing Bank with respect to such Letter
of Credit any restriction or reserve or capital requirement
(for which such Issuing Bank is not otherwise compensated)
not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable, in effect or
known to such Issuing Bank as of the date hereof and which
such Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank shall have received notice
from any Bank prior to the issuance of such Letter of Credit
of the type described in the penultimate sentence of Section
2.03(b); or
(iii) a Bank Default exists unless the Issuing Bank
has entered into arrangements satisfactory to it and the
Borrower to eliminate the Issuing Bank's risk with respect
to the Bank which is the subject of the Bank Default,
including the cash collateralizing by the Borrower of such
Bank's Percentage of the Letter of Credit Outstandings.
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid on the date of, and prior to the issuance of, the respective
Letter of Credit) at such time, would exceed either (x) $3,000,000
or (y) when added to the aggregate principal amount of all
Revolving Loans then outstanding and Swingline Loans then
outstanding, an amount equal to the lesser of (A) the Total Revolving
Loan Commitment then in effect (after giving effect to any
reductions to the Total Revolving Loan Commitment on such date)
or (B) the Borrowing Base then in effect, (ii) each Letter of Credit
shall by its terms terminate on or before the earlier of (x) the date
which occurs 12 months after the date of the issuance thereof
(although any such Letter of Credit may (at the sole discretion of
the Issuing Bank) be renewable for successive periods of up to 12
months, but not beyond the Revolving Loan Maturity Date) and (y)
the Revolving Loan Maturity Date and (iii) no more than four
Letters of Credit shall be outstanding at any time.
2.02 Minimum Stated Amount. The Stated Amount of each
Letter of Credit shall be not less than $100,000 or such lesser
amount as is acceptable to the Issuing Bank.
2.03 Letter of Credit Requests. (a) Whenever the
Borrower desires that a Letter of Credit be issued for its account,
the Borrower shall give the Agent and the Issuing Bank at least five
days' (or such shorter period as is acceptable to the Issuing Bank in
any given case) written notice prior to the proposed date of issuance
(which shall be a Business Day). Each notice shall be in the form
of Exhibit C (each a "Letter of Credit Request"). The Agent shall
promptly transmit copies of each Letter of Credit Request to each
Bank.
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that
such Letter of Credit may be issued in accordance with, and will
not violate the requirements of, Section 2.01(c). Unless the Issuing
Bank has received notice from any Bank before it issues a Letter of
Credit that one or more of the conditions specified in Section 5 or
6, as the case may be, are not then satisfied, or that the issuance of
such Letter of Credit would violate Section 2.01(c), then the Issuing
Bank may issue the requested Letter of Credit for the account of the
Borrower in accordance with the Issuing Bank's usual and
customary practices. Upon its issuance of any Letter of Credit, the
Issuing Bank shall promptly notify each Bank of such issuance,
which notice shall be accompanied by a copy of the Letter of Credit
actually issued.
2.04 Letter of Credit Participations. (a) Immediately upon
the issuance by the Issuing Bank of any Letter of Credit (or on the
Effective Date in the case of the Existing Letters of Credit), the
Issuing Bank shall be deemed to have sold and transferred to each
Bank with a Revolving Loan Commitment, other than the Issuing
Bank (each such Bank, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received
from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant's
Percentage in such Letter of Credit, each substitute letter of credit,
each drawing made thereunder and the obligations of the Borrower
under this Agreement with respect thereto, and any security therefor
or guaranty pertaining thereto. Upon any change in the Revolving
Loan Commitments or Percentages of the Banks pursuant to Section
13.04, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.04 to
reflect the new Percentages of the assignor and assignee Bank or of
all Banks with Revolving Loan Commitments, as the case may be.
(b) In determining whether to pay under any Letter of
Credit, the Issuing Bank shall have no obligation relative to the
other Banks other than to confirm that any documents required to
be delivered under such Letter of Credit appear to have been
delivered and that they appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted
to be taken by the Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for the Issuing
Bank any resulting liability to the Borrower or any Bank.
(c) In the event that the Issuing Bank makes any payment
under any Letter of Credit and the Borrower shall not have
reimbursed such amount in full to the Issuing Bank pursuant to
Section 2.05(a), the Issuing Bank shall promptly notify the Agent,
which shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the
Agent for the account of the Issuing Bank the amount of such
Participant's Percentage of such unreimbursed payment in Dollars
and in same day funds. If the Agent so notifies, prior to 11:00
A.M. (New York time) on any Business Day, any Participant
required to fund a payment under a Letter of Credit, such
Participant shall make available to the Agent at the Payment Office
of the Agent for the account of the Issuing Bank in Dollars such
Participant's Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such
Participant shall not have so made its Percentage of the amount of
such payment available to the Agent for the account of the Issuing
Bank, such Participant agrees to pay to the Agent for the account of
the Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such
amount is paid to the Agent for the account of the Issuing Bank at
the overnight Federal Funds Rate. The failure of any Participant to
make available to the Agent for the account of the Issuing Bank its
Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make
available to the Agent for the account of the Issuing Bank its
Percentage of any Letter of Credit on the date required, as specified
above, but no Participant shall be responsible for the failure of any
other Participant to make available to the Agent for the account of
the Issuing Bank such other Participant's Percentage of any such
payment.
(d) Whenever the Issuing Bank receives a payment of a
reimbursement obligation as to which the Agent has received for the
account of the Issuing Bank any payments from the Participants
pursuant to clause (c) above, the Issuing Bank shall pay to the
Agent and the Agent shall promptly pay each Participant which has
paid its Percentage thereof, in Dollars and in same day funds, an
amount equal to such Participant's share (based on the proportionate
aggregate amount funded by such Participant to the aggregate
amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the
purchase of the respective participations.
(e) Upon the request of any Participant, the Issuing Bank
shall furnish to such Participant copies of any Letter of Credit
issued by the Issuing Bank and such other documentation as may
reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to
the Agent for the account of the Issuing Bank with respect to Letters
of Credit issued shall be irrevocable and not subject to any
qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances,
including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the Credit Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, any Participant, or any
other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named
in any such Letter of Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of
any of the Credit Documents; or
(v) the occurrence of any Default or Event of
Default.
2.05 Agreement to Repay Letter of Credit Drawings.
(a) The Borrower hereby agrees to reimburse the Issuing Bank, by
making payment to the Agent in immediately available funds at the
Payment Office (or by making payment directly to the Issuing Bank
at such location as may otherwise have been agreed upon by the
Borrower and the Issuing Bank), for any payment or disbursement
made by the Issuing Bank under any Letter of Credit (each such
amount so paid until reimbursed, an "Unpaid Drawing"),
immediately after, and in any event on the date of, such payment or
disbursement, with interest on the amount so paid or disbursed by
the Issuing Bank, to the extent not reimbursed prior to 12:00 Noon
(New York time) on the date of such payment or disbursement,
from and including the date paid or disbursed to but excluding the
date the Issuing Bank is reimbursed by the Borrower therefor at a
rate per annum which shall be (x) unless a Borrower Bankruptcy
Default exists on the date of the respective payment or
disbursement, for the period from and including the date of the
respective payment or disbursement until the earlier to occur of a
Borrower Bankruptcy Default or the date of receipt by the Borrower
from the Issuing Bank or the Agent of written or telephonic notice
(as long as such notice is received by the Borrower prior to 2:00
P.M. (New York time) on a Business Day, otherwise the Business
Day following receipt by the Borrower of such notice) of such
payment or disbursement, the Base Rate in effect from time to time
plus the Applicable Base Rate Margin at such time, and (y) from
and including the date of the respective payment or disbursement if
a Borrower Bankruptcy Default then exists or, if a Borrower
Bankruptcy Default does not exist on the date of the respective
payment or disbursement, from and including the earlier to occur
of the date upon which a Borrower Bankruptcy Default subse-
quently occurs or the date of receipt by the Borrower from the
Issuing Bank or the Agent of written or telephonic notice (as long
as such notice is received by the Borrower prior to 2:00 P.M. (New
York time) on a Business Day, otherwise the Business Day
following receipt by the Borrower of such notice) of such payment
or disbursement to but excluding the date the Issuing Bank was
reimbursed by the Borrower therefor, equal to the sum of (i) the
Base Rate in effect from time to time, (ii) the Applicable Base Rate
Margin at such time and (iii) 2%, in each case with such interest to
be payable on demand.
(b) The obligations of the Borrower under this Section 2.05
to reimburse the Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower
may have or have had against any Bank (including in its capacity as
Issuing Bank or as Participant), including, without limitation, any
defense based upon the failure of any drawing under a Letter of
Credit (each a "Drawing") to conform to the terms of the Letter of
Credit or any nonapplication or misapplication by the beneficiary of
the proceeds of such Drawing; provided, however, that the
Borrower shall not be obligated to reimburse the Issuing Bank for
any wrongful payment made by the Issuing Bank under a Letter of
Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Issuing Bank.
2.06 Increased Costs. If at any time after the date hereof
the Issuing Bank or any Participant determines that the introduction
of or any change in any applicable law, rule, regulation, order,
guideline or request (including, without limitation, those announced
or published prior to the Effective Date) or any change in the
interpretation or administration thereof by any governmental
authority or central bank charged with the interpretation or
administration thereof, or compliance by the Issuing Bank or any
Participant with any request or directive by any such authority
(whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy
or similar requirement against letters of credit issued by the Issuing
Bank or participated in by any Participant, or (ii) impose on the
Issuing Bank or any Participant any other conditions relating,
directly or indirectly, to this Agreement or any Letter of Credit; and
the result of any of the foregoing is to increase the cost to the
Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit, or reduce the amount of any sum
received or receivable by the Issuing Bank or any Participant
hereunder or reduce the rate of return on its capital with respect to
Letters of Credit, then, upon demand to the Borrower by the Issuing
Bank or any Participant (a copy of which demand shall be sent by
the Issuing Bank or such Participant to the Agent), the Borrower
shall be obligated to pay to the Issuing Bank or such Participant
such additional amount or amounts as will compensate such Bank
for such increased cost or reduction in the amount receivable or
reduction on the rate of return on its capital. A certificate submitted
to the Borrower by the Issuing Bank or such Participant (a copy of
which certificate shall be sent by the Issuing Bank or such
Participant to the Agent), setting forth in reasonable detail the basis
for the calculation of such additional amount or amounts necessary
to compensate the Issuing Bank or such Participant shall, absent
manifest error, be final, conclusive and binding on the Borrower.
Section 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrower agrees to pay the Agent for
distribution to each Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date
to but excluding the Revolving Loan Maturity Date (or such earlier
date as the Total Revolving Loan Commitment shall have been
terminated), computed at a rate for each day equal to 1/2 of 1% per
annum on the Unutilized Revolving Loan Commitment of such
Bank. Accrued Commitment Commission shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on the
Revolving Loan Maturity Date or such earlier date upon which the
Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Issuing Bank, for its
own account, a facing fee in respect of each Letter of Credit issued
by the Issuing Bank hereunder (the "Facing Fee"), for the period
from and including the date of issuance of such Letter of Credit (or
from and including the Effective Date in the case of the Existing
Letter of Credit) to and including the termination of such Letter of
Credit, in an amount equal to 1/8 of 1% per annum of the daily
average Stated Amount of such Letters of Credit. Accrued Facing
Fees shall be due and payable quarterly in arrears on each Quarterly
Payment Date and the date of the termination of the Total Revolving
Loan Commitment on which no Letters of Credit remain
outstanding.
(c) The Borrower agrees to pay to the Agent for distribution
to each Bank a fee in respect of each Letter of Credit issued
hereunder (the "Letter of Credit Fee"), for the period from and
including the date of issuance of such Letter of Credit (or from and
including the Effective Date in the case of the Existing Letters of
Credit) (with each renewal of such Letter of Credit, for purposes of
this Section 3.01(c) being deemed to be the issuance of a new Letter
of Credit) to and including the termination of such Letter of Credit,
computed on the average daily Stated Amount of such Letter of
Credit at a rate per annum equal to the Applicable L/C Percentage
in effect from time to time. Letter of Credit Fees shall be
distributed by the Agent to the Banks on the basis of their respective
Percentages as in effect from time to time. Accrued Letter of
Credit Fees shall be due and payable quarterly in arrears on each
Quarterly Payment Date and on the date of the termination of the
Total Revolving Loan Commitment on which no Letters of Credit
remain outstanding.
(d) The Borrower shall pay to the Issuing Bank for its own
account upon each drawing under, issuance of, or amendment to,
any Letter of Credit such amount as shall at the time thereof be the
administrative charge which the Issuing Bank is generally imposing
on similarly situated credits in connection with drawings on
(including wire charges), issuances of, or amendments to, standby
letters of credit.
(e) The Borrower agrees to pay to the Agent for its own
account such other fees as have been agreed to in writing between
the Agent and the Borrower or its Affiliates.
3.02 Voluntary Termination of Unutilized Commitments.
Upon at least two Business Days' prior written notice (or telephonic
notice confirmed in writing) to the Agent at its Notice Office (which
notice the Agent shall promptly transmit to each of the Banks), the
Borrower, shall have the right, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in
whole or in part, provided that (i) each such reduction shall apply
proportionately to permanently reduce the Revolving Loan
Commitment of each Bank and (ii) the reduction to the Total Unutilized
Revolving Loan Commitment shall in no case be in an amount
which would cause the Revolving Loan Commitment of any Bank
to be reduced (as required by preceding clause (i)) by an amount
which exceeds the remainder of (x) the Unutilized Revolving Loan
Commitment of such Bank as in effect immediately before giving
effect to such reduction minus (y) such Bank's Percentage of the
aggregate principal amount of Swingline Loans then outstanding.
3.03 Mandatory Reduction of Commitments. (a) The Total
Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate on the Revolving Loan
Maturity Date.
(b) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on the date on which a
Senior Notes Change of Control occurs, the Total Revolving Loan
Commitment (and the Revolving Loan Commitment of each Bank)
shall be reduced to zero.
Section 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. The Borrower shall have the
right to prepay Loans, without premium or penalty in whole or in
part from time to time on the following terms and conditions: (i)
the Borrower shall give the Agent prior to 12:00 Noon (New York
time) at its Notice Office at least three Business Days' prior written
notice in the case of Eurodollar Loans and one Business Day's prior
written notice in the case of Base Rate Loans of the Borrower's
intent to prepay the Loans (or same day notice in the case of
Swingline Loans provided such notice is given prior to 12:00 noon
(New York time)), whether such Loans are Revolving Loans or
Swingline Loans, the amount of such prepayment and the Types of
Loans to be prepaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made, which
notice the Agent shall promptly transmit to each of the Banks; (ii)
each prepayment shall be in an aggregate principal amount of at
least the Minimum Borrowing Amount; provided that partial
prepayments of Eurodollar Loans need not be in an amount at least
equal to the Minimum Borrowing Amount but must be in an amount
at least equal to $1,000,000, no partial prepayment of Eurodollar
Loans made pursuant to any Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount
less than the Minimum Borrowing Amount applicable thereto; (iii)
prepayments of Eurodollar Loans made pursuant to this Section
4.01 may only be made on the last day of an Interest Period
applicable thereto; and (iv) each prepayment in respect of any Loans
made pursuant to a Borrowing shall be applied pro rata among such
Loans.
4.02 Mandatory Repayments.
(A) Requirements:
(a) Subject to and in accordance with Section 4.02(A)(b),
on any day on which the sum of the aggregate outstanding principal
amount of Revolving Loans, Swingline Loans and Letter of Credit
Outstandings exceeds the Total Revolving Loan Commitment as
then in effect, the Borrower shall prepay the principal of Swingline
Loans and, after the Swingline Loans have been repaid in full,
Revolving Loans in an amount equal to such excess. If, after giving
effect to the prepayment of all outstanding Swingline Loans and
Revolving Loans, the Letter of Credit Outstandings exceed the
Total Revolving Loan Commitment as then in effect, the Borrower
shall pay to the Agent at its Payment Office on such date an amount
of cash or Cash Equivalents equal to the amount of such excess,
such cash or Cash Equivalents to be held as security for all
Obligations of the Borrower to the Banks hereunder in a cash collateral
account to be established and maintained (including the investments
made pursuant thereto) by the Agent pursuant to a cash collateral
agreement in form and substance satisfactory to the Agent.
(b) If any Borrowing Base Certificate shall disclose the
existence of a Borrowing Base Deficiency, the Borrower shall,
within one Business Day after the delivery thereof in accordance
with Section 8.01(j), (i) prepay the principal of Swingline Loans in
an amount equal to such Borrowing Base Deficiency, (ii) after the
Swingline Loans have been repaid in full, prepay the principal of
Revolving Loans in an amount equal to any remaining Borrowing
Base Deficiency and (iii) to the extent such Borrowing Base
Deficiency exceeds the principal amount of Swingline Loans and
Revolving Loans prepaid pursuant to the preceding clauses (i) and
(ii), pay an amount of cash or Cash Equivalents equal to such
excess (up to a maximum amount equal to the Letter of Credit
Outstandings at such time) to the Agent at the Payment Office, such
cash or Cash Equivalents to be held as security for all Obligations
of the Borrower hereunder in a cash collateral account established
and maintained (including the investments made pursuant thereto)
by the Agent pursuant to a cash collateral agreement in form and
substance satisfactory to the Agent.
(c) In addition to any other mandatory repayments pursuant
to this Section 4.02(A), on the Business Day after the receipt
thereof by the Borrower, an amount equal to (i) 100% of the cash
proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) from any sale or issuance of
equity of the Borrower (other than proceeds received from grants
or sales of common stock of the Borrower (including as a result of
the exercise of options or warrants) to management or key
employees of the Borrower pursuant to any employee stock option
plan or stock purchase plan ("Employee Stock Proceeds"), provided
that Employee Stock Proceeds shall not be required to be repaid on
the date of the receipt thereof (unless such date of receipt is also a
date specified below) but instead shall be required to be repaid on
each date on which the aggregate amount of such Employee Stock
Proceeds received during the period commencing on the later of (x)
the Effective Date and (y) the immediately preceding date on which
a mandatory repayment was made pursuant to this Section
4.02(A)(c) as a result of the receipt of Employee Stock Proceeds
and ending on the date of determination (the "Employee Stock
Proceeds Payment Period") equals or exceeds $250,000, with the
amount of the repayments required on each such date to equal 100%
of the aggregate amount of Employee Stock Proceeds received on
or before such date during the applicable Employee Stock Proceeds
Payment Period) and (ii) 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated
therewith) from any incurrence of any Indebtedness by the
Borrower (other than Indebtedness permitted by Section 9.05 as said
Section is in effect on the Effective Date), shall be applied as
provided in Section 4.02(B).
(d) In addition to any other mandatory repayments pursuant
to this Section 4.02(A), on each date after the Effective Date on
which the Borrower receives proceeds from any sale of assets
(including capital stock and securities other than capital stock the
proceeds from the sale of which are recaptured under Section
4.02(A)(c) (or will be recaptured once the $250,000 threshold set
forth in Section 4.02(A)(c) is achieved) but excluding (i) sales of
inventory in the ordinary course of business, (ii) sales of equipment
which, in the reasonable judgment of the Borrower have become
obsolete, worn out or uneconomic, in the ordinary course of
business, the proceeds of which are used, or irrevocably committed,
to purchase replacement equipment within 60 days from the date of
sale so long as the aggregate amount of Net Sale Proceeds excluded
pursuant to this clause (ii) does not exceed $250,000 in the aggregate
in any fiscal year of the Borrower, (iii) trade-ins of equipment
by the Borrower permitted to be made in accordance with Section
9.02(vi) and (iv) other sales of assets, provided (in the case of this
clause (iv) only) that the aggregate proceeds therefrom (the "Asset
Sale Proceeds") shall not be required to be repaid on the date of
receipt thereof (unless such date of receipt is also a date specified
below) but instead shall be required to be repaid on each date on
which the aggregate amount of such Asset Sale Proceeds received
during the period commencing on the later of (x) the Effective Date
and (y) the immediately preceding date on which a principal
repayment was made pursuant to this Section 4.02(A)(d) as a result
of the receipt of Asset Sale Proceeds and ending on the date of
determination (the "Asset Sale Proceeds Payment Period") equals
or exceeds $250,000, with the amount of the repayments required
on each such date to equal 100% of the aggregate amount of Asset
Sale Proceeds received on or before such date during the applicable
Asset Sale Proceeds Payment Period) an amount equal to 100% of
the Net Sale Proceeds thereof shall be applied as provided in
Section 4.02(B).
(e) In addition to any other mandatory repayments pursuant
to this Section 4.02(A), on the date of the receipt thereof by the
Borrower, an amount equal to 100% of the proceeds of any
Recovery Event (net of reasonable costs incurred in connection with
such Recovery Event (including the estimated marginal increase in
income taxes which will be payable as a result of such Recovery
Event)) shall be applied as provided in Section 4.02(B); provided
that, so long as there shall not exist a Default or an Event of
Default, proceeds from Recovery Events (other than proceeds from
Key-Man Life Insurance) not in excess of (x) $1,000,000 for any
one occurrence and (y) $3,000,000 for all occurrences after the
Effective Date and prior to the date on which there are no
outstanding Obligations shall not be required to be so applied on
such date to the extent that the Borrower delivers a certificate to the
Agent on or prior to such date stating that such proceeds shall be
used to replace or restore any properties or assets in respect of
which such proceeds were paid within a period specified in such
certificate not to exceed 120 days after the date of receipt of such
proceeds (which certificate shall set forth estimates of the proceeds
to be so expended); and provided further, that if all or any portion
of such proceeds not so applied to the repayment of the Loans are
not so used within the period specified in the relevant certificate
furnished pursuant to the preceding proviso, such remaining portion
shall be applied on the last day of such specified period as provided
in Section 4.02(B).
(f) If a Bank Default exists, the Borrower shall, within one
Business Day after the Borrower shall have received notice thereof,
pay an amount of cash or Cash Equivalents equal to the Percentage
of the Letter of Credit Outstandings and Swingline Loans then
outstanding of the Bank which is the subject of such Bank Default
to the Agent at the Payment Office, such cash or Cash Equivalents
to be held as security for such Bank's Percentage of the Letter of
Credit Outstandings and Swingline Loans then outstanding in a cash
collateral account established and maintained (including the
investments made pursuant thereto) by the Agent on a basis
satisfactory to the Agent; provided that such amounts shall, so long
as no Default or Event of Default then exists, be released at such
time as such Bank Default shall cease to exist.
(g) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) all then outstanding Swingline
Loans shall be repaid in full on the Swingline Expiry Date and (ii)
all then outstanding Revolving Loans shall be repaid in full on the
Revolving Loan Maturity Date.
(B) Application:
(a) Each mandatory repayment of Loans pursuant to Section
4.02(A)(c) through (e) shall be applied:
(i) first, to prepay the principal of outstanding
Swingline Loans;
(ii) second, to prepay the principal of outstanding
Revolving Loans; and
(iii) third, to cash collateralize Letter of Credit
Outstandings by depositing cash in a cash collateral account
to be established and maintained by the Agent pursuant to a
cash collateral agreement in form and substance satisfactory
to the Agent in an amount equal to such Letter of Credit
Outstandings.
(b) With respect to each repayment of Loans required by
this Section 4.02, the Borrower may designate the Types of Loans
which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made;
provided that: (i) repayments of Eurodollar Loans pursuant to this
Section 4.02 may only be made on the last day of an Interest Period
applicable thereto unless all Eurodollar Loans with Interest Periods
ending on such date of required repayment and all Base Rate Loans
have been paid in full; (ii) if any repayment of Eurodollar Loans
made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount
less than the applicable Minimum Borrowing Amount, such
Borrowing shall immediately be converted into Base Rate Loans;
and (iii) each repayment of any Loans made pursuant to a single
Borrowing shall be applied pro rata among such Loans. In the
absence of a designation by the Borrower as described in the
preceding sentence, the Agent shall, subject to the above, make such
designation in its sole discretion. Notwithstanding the foregoing
provisions of this Section 4.02, if at any time the mandatory
prepayment of Revolving Loans pursuant to Section 4.02(A)(c)
through (e) above would result, after giving effect to the procedures
set forth above, in the Borrower incurring breakage costs under
Section 1.11 as a result of Eurodollar Loans being prepaid other
than on the last day of an Interest Period applicable thereto (the
"Affected Eurodollar Loans"), then the Borrower may in its sole
discretion initially deposit a portion (up to 100%) of the amounts
that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Agent (which deposit must be equal in
amount to the amount of Affected Eurodollar Loans not
immediately prepaid) to be held as security for the obligations of the
Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Agent, with
such cash collateral to be directly applied upon the first occurrence
(or occurrences) thereafter of the last day of an Interest Period
applicable to the relevant Eurodollar Loans (or such earlier date or
dates as shall be requested by the Borrower), to repay an aggregate
principal amount of Revolving Loans equal to the Affected
Eurodollar Loans not initially repaid pursuant to this sentence;
provided, however, such cash collateral must be applied to repay
Revolving Loans (whether or not the Borrower would incur
breakage costs (which the Borrower shall be responsible for), (x) in
the case of cash collateral arising pursuant to Sections 4.02(A)(c)
(other than from Employee Stock Proceeds) or 4.02(A)(d), no later
than 29 days after receipt thereof and (y) in the case of cash
collateral arising pursuant to Section 4.02(A)(c) as a result of the
receipt of Employee Stock Proceeds or pursuant to Section
4.02(A)(e) no later than 89 days after receipt thereof.
Notwithstanding anything to the contrary contained in the
immediately preceding sentence, all amounts deposited as cash
collateral pursuant to the immediately preceding sentence shall be
held for the sole benefit of the Banks whose Revolving Loans would
otherwise have been immediately repaid with the amounts deposited
and upon the taking of any action by the Agent or the Banks
pursuant to the remedial provisions of Section 10, any amounts held
as cash collateral pursuant to this Section 4.02(B)(b) shall, subject
to the requirements of applicable law, be immediately applied to the
Revolving Loans.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or
any Note shall be made to the Agent for the account of the Bank or
Banks entitled thereto not later than 12:00 Noon (New York time)
on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office of the Agent. Whenever any
payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the
Borrower hereunder or under any Note will be made without setoff,
counterclaim or other defense. Except as provided in Section
4.04(b), all such payments will be made free and clear of, and
without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with
respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the
net income or profits of a Bank pursuant to the laws of the jurisdiction
in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located
or any subdivision thereof or therein) and all interest, penalties or
similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any
Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in
such Note. If any amounts are payable in respect of Taxes pursuant
to the preceding sentence, the Borrower agrees to reimburse each
Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or profits of such Bank pursuant to
the laws of the jurisdiction in which the principal office or applicable
lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in
which the principal office or applicable lending office of such Bank
is located and for any withholding of income or similar taxes
imposed by the United States of America as such Bank shall
determine are payable by, or withheld from, such Bank in respect
of such amounts so paid to or on behalf of such Bank pursuant to
the preceding sentence and in respect of any amounts paid to or on
behalf of such Bank pursuant to this sentence. The Borrower will
furnish to the Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower. The Borrower
agrees to indemnify and hold harmless each Bank, and reimburse
such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver
to the Borrower and the Agent on or prior to the Effective Date, or
in the case of a Bank that is an assignee or transferee of an interest
under this Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), on the date of such assignment or
transfer to such Bank, (i) two accurate and complete original signed
copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) dated the Effective Date or the date of such
assignment or transfer, as the case may be, certifying to such
Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this
Agreement and under any Note, or (ii) if the Bank is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant
to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 4.04(b)(ii) Certificate")
and (y) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 (or successor form) certifying to such
Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made
under this Agreement and under any Note. In addition, each Bank
agrees that from time to time after the Effective Date, when a lapse
in time or change in circumstances renders the previous certification
obsolete or inaccurate in any material respect, it will deliver to the
Borrower and the Agent two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001, or
Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be,
and such other forms as may be required in order to confirm or
establish the entitlement of such Bank to a continued exemption
from or reduction in United States withholding tax with respect to
payments under this Agreement and any Note, or it shall
immediately notify the Borrower and the Agent of its inability to
deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 4.04(a), but subject to Section
13.04(c) and the immediately succeeding sentence, (x) the Borrower
shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder for
the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S.
Federal income tax purposes to the extent that such Bank has not
provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding
and (y) the Borrower shall not be obligated pursuant to Section
4.04(a) hereof to gross-up payments to be made to a Bank in respect
of income or similar taxes imposed by the United States if (I) such
Bank has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this
Section 4.04(b) or (II) in the case of a payment, other than interest,
to a Bank described in clause (ii) above, to the extent that such
forms do not establish a complete exemption from withholding of
such taxes. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 4.04 and except
as set forth in Section 13.04(c), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set
forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of
any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the
Effective Date or, in the case of an assignee or transferee pursuant
to Section 1.13 or 13.04, after the date of such assignment or
transfer in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof,
relating to the deducting or withholding of income or similar Taxes.
(c) If any taxes imposed on any Bank are paid or
indemnified against by the Borrower under this Section 4.04, and
such Bank receives a refund of any amount of taxes paid or
reimbursed by such Borrower, such Bank shall pay to such
Borrower an amount equal to the reduction in taxes due and payable
by such Bank attributable to the amount of such refund; provided,
however, that (x) no Bank is under any obligation to seek a refund
of such taxes and (y) determinations as to whether a Bank has
received a tax refund and the amount thereof shall be in the sole
discretion of such Bank.
Section 5. Conditions Precedent to Credit Events on the
Initial Borrowing Date. The obligation of each Bank to make Loans
(if any) on the Initial Borrowing Date and the obligation of the
Issuing Bank to permit the Existing Letters of Credit to remain
outstanding on the Effective Date and to issue any other Letter of
Credit on the Initial Borrowing Date, is subject at the time of such
Credit Event to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the
Effective Date, (i) this Agreement shall have been executed and
delivered in accordance with Section 13.10 and (ii) there shall have
been delivered to the Agent for the account of each of the Banks the
appropriate Revolving Note executed by the Borrower, and to
Paribas the Swingline Note executed by the Borrower, in each case
in the amount, maturity and as otherwise provided herein.
5.02 Officer's Certificate. On or prior to the Effective
Date, the Agent shall have received a certificate dated the Effective
Date signed on behalf of the Borrower by the President, any Senior
Vice President or any Vice President of the Borrower stating that
all of the conditions in Sections 5.06 (subject to the satisfaction of
the Agent), 5.09 (subject to the determination of the Agent and the
Required Banks), 5.10, 5.13, 5.16, 6.01, 6.02 and 6.03 have been
satisfied on such date.
5.03 Opinions of Counsel. On or prior to the Effective
Date, the Agent shall have received from (i) Davis Polk &
Wardwell, special counsel to the Borrower, an opinion addressed
to the Agent and each of the Banks and dated the Effective Date
covering the matters set forth in Exhibit E-1 and such other matters
incident to the transactions contemplated herein as the Agent or the
Required Banks may reasonably request and (ii) general counsel of
the Borrower, an opinion addressed to the Agent and each of the
Banks and dated the Effective Date covering the matters set forth in
Exhibit E-2 and such other matters incident to the transactions
contemplated herein as the Agent or the Required Banks may
reasonably request.
5.04 Corporate Documents; Proceedings. (a) On or prior
to the Effective Date, the Agent shall have received a certificate,
dated the Effective Date, signed by the President, any Senior Vice
President or any Vice President of the Borrower, and attested to by
the Secretary or any Assistant Secretary of the Borrower, in the
form of Exhibit F with appropriate insertions, together with copies
of the certificate of incorporation and by-laws of the Borrower and
the resolutions of the Borrower referred to in such certificate, and
the foregoing shall be acceptable to the Agent and the Required
Banks in their sole discretion.
(b) All corporate and legal proceedings and all instruments
and agreements relating to the transactions contemplated by this
Agreement and the other Documents shall be satisfactory in form
and substance to the Agent and the Required Banks, and the Agent
and the Banks shall have received all information and copies of all
documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down
telegrams, if any, which the Agent or the Required Banks
reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper
corporate or governmental authorities.
5.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Employment Agreements; Collective
Bargaining Agreements; Existing Indebtedness Agreements; Tax
Sharing Agreements; Supply Agreements; Non-Compete
Agreements; Material Contracts. On or prior to the Effective Date,
there shall have been delivered to the Agent true and correct copies,
certified as true and complete by an appropriate officer of the
Borrower, of each of the following:
(i) all employee benefit plans, or any other similar
plans or arrangements for the benefit of employees of
the Borrower and any profit sharing plans and deferred
compensation plans of the Borrower (the "Employee Benefit
Plans");
(ii) all agreements entered into by the Borrower
governing the terms and relative rights of its capital stock
and any agreements entered into by shareholders relating to
any such entity with respect to their capital stock (the
"Shareholders' Agreements");
(iii) all agreements with members of, or with
respect to the, "management" (as identified on Form 10-K of
the Borrower for the fiscal year ending December 31, 1995)
of the Borrower other than Employment Agreements (the
"Management Agreements");
(iv) any employment agreement entered into by
the Borrower with any person identified as an officer or any
executive on Form 10-K of the Borrower for the fiscal year
ending December 31, 1995 (the "Employment Agreements");
(v) all collective bargaining agreements applying
or relating to any employee of the Borrower (the "Collective
Bargaining Agreements");
(vi) any agreement evidencing or relating to
Existing Indebtedness of the Borrower (the "Existing
Indebtedness Agreements");
(vii) all tax sharing, tax allocation and other
similar agreements entered into by the Borrower (the "Tax
Sharing Agreements");
(viii) all material supply contracts to which the
Borrower is a party (the "Supply Agreements");
(ix) all non-compete agreements entered into by
the Borrower (the "Non-Compete Agreements"); and
(x) all other material contracts and licenses of the
Borrower (the "Material Contracts");
all of which Employee Benefit Plans, Shareholders' Agreements,
Management Agreements, Employment Agreements, Collective
Bargaining Agreements, Existing Indebtedness Agreements, Tax
Sharing Agreements, Supply Agreements, Non-Compete
Agreements and Material Contracts shall be in form and substance
satisfactory to the Agent and the Required Banks; provided,
however, that only those Employee Benefit Plans, Shareholders'
Agreements, Management Agreements, Employment Agreements,
Collective Bargaining Agreements, Existing Indebtedness
Agreements, Tax Sharing Agreements, Supply Agreements, Non-
Compete Agreements and Material Contracts which were not in
existence on the Original Effective Date or, if in existence on the
Original Effective Date, have been materially modified since such
date, shall be required to be delivered pursuant to this Section 5.05.
5.06 Senior Notes. On or prior to the Effective Date, (i)
the Borrower shall have issued the Senior Notes and received gross
cash proceeds therefrom (before the payment of fees and expenses
in connection therewith) in an aggregate amount of at least
$120,000,000, (ii) the Banks shall have received copies of the
Senior Note Documents certified as true and correct by an
appropriate officer of the Borrower, and (iii) the Senior Note
Documents shall be in full force and effect and the terms and
conditions thereof shall be in form and substance satisfactory to the
Agent.
5.07 Initial Borrowing Base Certificate. On or prior to the
Effective Date, the Borrower shall have delivered to the Agent the
initial Borrowing Base Certificate meeting the requirements of
Section 8.01(j).
5.08 Security Agreement. On or prior to the Effective
Date, (i) the Borrower shall have duly authorized, executed and
delivered a Security Agreement in the form of Exhibit G (as
modified, supplemented or amended from time to time, the
"Security Agreement") covering all of the Borrower's present and
future Security Agreement Collateral, in each case together with:
(i) proper Financing Statements or amendments
thereto (Form UCC-1 or UCC-3 or such other financing
statements or similar notices as shall be required by local
law) fully executed for filing under the UCC or other
appropriate filing offices of each jurisdiction as may be necessary
or, in the opinion of the Collateral Agent, desirable to
perfect (or maintain the perfection of) the security interests
purported to be created (or maintained) by the Security
Agreement;
(ii) certified copies of Requests for Information
or Copies (Form UCC-11), or equivalent reports, listing all
effective financing statements that name the Borrower, or a
division or other operating unit of the Borrower, as debtor
and that are filed in the jurisdictions referred to in said
clause (i), together with copies of such other financing
statements (all of which shall constitute Permitted Liens or for
which the Collateral Agent shall receive termination
statements (Form UCC-3 or such other termination statements as
shall be required by local law) fully executed for filing);
(iii) evidence of the completion of all other
recordings and filings of, or with respect to, the Security
Agreement as may be necessary or, in the opinion of the
Collateral Agent, desirable to perfect (or maintain the
perfection of) the security interests intended to be created
(or maintained) by the Security Agreement; and
(iv) evidence that all other actions necessary or,
in the opinion of the Collateral Agent, desirable to perfect
and protect (or maintain the perfection of) the security
interests purported to be created (or maintained) by the
Security Agreement have been taken.
5.09 Adverse Change, etc. On the Effective Date, nothing
shall have occurred since December 31, 1995 (and the Banks shall
have become aware of no facts or conditions not previously known)
which the Agent or the Required Banks shall determine (a) could
reasonably be expected to have a material adverse effect on the
rights or remedies of the Banks or the Agent, or on the ability of
the Borrower to perform its obligations to the Agent and the Banks
under this Agreement or any other Credit Document or (b) could
reasonably be expected to have a Material Adverse Effect.
5.10 Litigation. (a) On the Effective Date, no action, suit
or proceeding by any entity (private or governmental) shall be
pending or, to the best knowledge of the Borrower, threatened (i)
with respect to this Agreement, any other Document or any
documentation executed in connection herewith or with respect to
the transactions contemplated hereby or thereby, (ii) with respect to
any Indebtedness of the Borrower or (iii) which could reasonably be
expected to have a Material Adverse Effect.
(b) On the Effective Date, no material investigation by any
governmental entity (including, without limitation, the DHHS or
any agency of the State of California or any other state but
excluding legislative and regulatory investigations and proceedings
relating to the clinical laboratory industry in general which could
not reasonably be expected to have a Material Adverse Effect) with
respect to the business practices or procedures of the Borrower
(including, without limitation, sales and marketing, pricing or
billing practices) shall be pending or, to the best knowledge of the
Borrower, threatened.
5.11 Fees, etc. On the Effective Date, the Borrower shall
have paid in full (a) to the Agent and the Original Banks all costs,
fees, expenses (including, without limitation, all legal fees and
expenses) payable to the Agent and the Original Banks under the
Original Credit Agreement (whether or not same would otherwise
be due on such date thereunder) and (b) to the Agent and the Banks
all costs, fees and expenses (including, without limitation, all legal
fees and expenses) payable to the Agent and the Banks hereunder to
the extent then due.
5.12 Insurance Policies. On or prior to the Effective Date,
the Agent shall have received evidence (including, without
limitation, certificates with respect to each insurance policy listed
in Schedule II, naming (i) the Collateral Agent as loss payee with
respect to property policies and (ii) the Collateral Agent, the Agent
and each Bank as an additional insured, with respect to all policies
other than directors' and officers' fiduciary, crime, special coverage
(i.e., kidnap and ransom), medical professional or workmen's
compensation policies, and stating that any such insurance shall not
be cancelled or revised without 30 days prior written notice by the
insurer to the Agent) of insurance complying with the requirements
of Section 8.03 for the business and properties of the Borrower, in
form and substance satisfactory to the Agent and the Required
Banks.
5.13 Approvals. All necessary governmental and third
party approvals in connection with the transactions contemplated by
the Documents and otherwise referred to herein or therein shall
have been obtained and remain in effect. Additionally, there shall
not exist any judgment, order, injunctive or other restraint issued
or filed or a hearing seeking injunctive relief or other restraint
pending or notified with respect to the making of the Loans
hereunder or the consummation of the other transactions contemplated
by the Documents.
5.14 Financial Statements. On or prior to the Effective
Date, the Banks shall have received (i) the consolidated balance
sheet of the Borrower at December 31, 1993, 1994 and 1995 and
the related statements of income and retained earnings and changes
in financial position of the Borrower for the fiscal year ended as of
each such date, which have been examined by Arthur Andersen,
LLP, independent certified public accountants, who delivered an
unqualified opinion in respect thereto, and (ii) the pro forma (after
giving effect to the Transaction) consolidated balance sheet of the
Borrower as at December 31, 1995, all of which financial
statements shall be prepared in accordance with generally accepted
accounting principles and shall be in form and substance satisfactory
to the Agent and the Required Banks, and shall not disclose any
material adverse differences in the financial condition of the
Borrower from that previously disclosed to the Agent and the
Required Banks.
5.15 Projections. Prior to the Effective Date, the Banks
shall have received consolidated projections for the Borrower for
the fiscal years ended December 31, 1996 through 1998 (the
"Projections") certified by the chief financial officer or controller
of the Borrower, which Projections, and the supporting assumptions
and explanations thereto, shall be satisfactory in form and substance
to the Agent and the Required Banks.
5.16 Refinancing. On or prior to the Effective Date, and
after giving effect to the Transaction, the Borrower shall not have
any Indebtedness outstanding except for the Senior Notes, the Loans
and the Existing Indebtedness, which Existing Indebtedness shall
not exceed $11,500,000. All of the Existing Indebtedness shall
remain outstanding after the Transaction and the other transactions
contemplated hereby without any default or events of default
existing thereunder or arising as a result of the Transaction and the
other transactions contemplated hereby (except to the extent
amended or waived by the parties thereto on terms and conditions
satisfactory to the Agent and the Required Banks), and there shall
not be any amendments or modifications to the Existing
Indebtedness Agreements other than as requested or approved by
the Agent or the Required Banks. The Agent and the Required
Banks shall be satisfied with the amount of and the terms and
conditions of (i) all Existing Indebtedness and (ii) the repayment of all
Indebtedness repaid in connection with the transactions
contemplated hereby, including, without limitation, all amounts
owing pursuant to the Original Credit Agreement (collectively, the
"Refinanced Indebtedness") and the amount of all accrued interest,
premiums, fees, commissions and expenses owing in connection
with the repayment of such Refinanced Indebtedness and all Liens
in connection with such Refinanced Indebtedness shall have been
terminated (or, in the case of Liens under the Original Credit
Agreement, assigned or amended) (and all appropriate releases,
termination statements or other instruments of amendment or
assignment with respect thereto shall have been obtained) to the
satisfaction of the Agent and the Required Banks. The Agent shall
have received copies, certified as true and complete by an
appropriate officer of the Borrower of all documents executed in
connection with the repayment of the Refinanced Indebtedness and
the release, assignment or amendment, as the case may be, of the
Liens thereunder.
5.17 Consent Letter. The Agent shall have received a letter
from National Corporate Research, Ltd., currently located at 225
West 34th Street, Suite 2110, New York, New York 10122,
substantially in the form of Exhibit H hereto, indicating its consent
to its appointment by the Borrower as its agent to receive service of
process as specified in Section 13.08 of this Agreement.
5.18 Due Diligence. The Agent and the Banks shall have
completed, and be satisfied with the results of, their business and
legal due diligence review with respect to the Borrower and the
other transactions contemplated by the Documents, including,
without limitation, a due diligence review of the financials
(including an audit), tax status, environmental and insurance matters
and product liability and regulatory matters with respect to the
Borrower.
Section 6. Conditions Precedent to All Credit Events. The
obligation of each Bank to make Loans (including Loans on the
Initial Borrowing Date) and the obligation of the Issuing Bank to
permit the Existing Letters of Credit to remain outstanding on the
Effective Date and to issue any other Letter of Credit, is subject, at
the time of each such Credit Event (except as hereinafter indicated),
to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the
time of each such Credit Event and also after giving effect thereto
(i) there shall exist no Default or Event of Default and (ii) all
representations and warranties contained herein and in the other
Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties
had been made on the date of the making of such Credit Event (it
being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such
specified date).
6.02 Adverse Change, etc. At the time of each such Credit
Event, nothing shall have occurred (and the Banks shall have
become aware of no facts or conditions not previously known) since
December 31, 1995 which the Agent or the Required Banks shall
determine (i) could reasonably be expected to have a material
adverse effect on the rights or remedies of the Banks or the Agent,
or on the ability of the Borrower to perform its obligations to the
Banks under this Agreement or any other Credit Document or (ii)
which could reasonably be expected to have a Material Adverse
Effect.
6.03 Litigation. (a) At the time of each such Credit Event
and also after giving effect thereto, no action, suit or proceeding by
any entity (private or governmental) shall be pending or, to the best
knowledge of the Borrower, threatened with respect to this
Agreement or any other Document or the transactions contemplated
hereby or which could reasonably be expected to have a Material
Adverse Effect.
(b) At the time of each such Credit Event and also after
giving effect thereto, no material investigation by any governmental
entity (including, without limitation, the DHHS or any agency of
the State of California or any other state, but excluding legislative
and regulatory investigations and proceedings relating to the clinical
laboratory industry in general which could not reasonably be
expected to have a Material Adverse Effect) with respect to the
business practices or procedures of the Borrower (including,
without limitation, sales and marketing, pricing and billing
practices) shall be pending or, to the best knowledge of the
Borrower, threatened.
6.04 Notice of Borrowing; Letter of Credit Request. (a)
Prior to the making of each Loan (excluding Swingline Loans and
Mandatory Borrowings), the Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.03. Prior to the
making of any Swingline Loan, Paribas shall have received the
notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Issuing Bank shall have received a Letter of Credit Request meeting
the requirements of Section 2.03.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by the Borrower to each of
the Banks that all the conditions specified in this Section 6 (and with
respect to each Credit Event occurring on the Initial Borrowing
Date, the conditions specified in Section 5) exist as of that time.
All of the Notes, certificates, legal opinions and other documents
and papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Agent at the Notice
Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks and, unless
otherwise specified, shall be in form and substance satisfactory to
the Banks.
Section 7. Representations, Warranties and Agreements.
In order to induce the Banks to enter into this Agreement and to
make the Loans, and issue (or participate in) the Letters of Credit
as provided herein, the Borrower makes the following representations,
warranties and agreements, as of the Effective Date (both
before and after giving effect to the Transaction and the Credit
Events occurring on either such date) and as of the date of each
subsequent Credit Event which representations, warranties and
agreements shall survive the execution and delivery of this
Agreement and the Notes and any subsequent Credit Event (it being
understood and agreed that any representation or warranty which by
its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date):
7.01 Corporate Status. The Borrower (i) is a duly
organized and validly existing corporation in good standing under
the laws of the jurisdiction of its organization, (ii) has the power
and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and is in
good standing in each jurisdiction where the ownership, leasing or
operation of property or the conduct of its business requires such
qualifications except for failures to be so qualified which, in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect.
7.02 Corporate Power and Authority. The Borrower has
the corporate power to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has
taken all necessary corporate action to authorize the execution,
delivery and performance by it of each of such Documents. The
Borrower has duly executed and delivered each of the Documents
to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with
its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, or
other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in
equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by the Borrower of the Documents to which it is a
party, nor compliance by it with the terms and provisions thereof,
(i) will contravene any provision of any applicable law, statute, rule
or regulation or any order, writ, injunction or decree of any court
or governmental instrumentality, (ii) will conflict with or result in
any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except
pursuant to the Security Documents) upon any of the property or
assets of the Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, or any other agreement, contract or
instrument to which the Borrower is a party or by which it or any
of its property or assets is bound or to which it may be subject or
(iii) will violate any provision of the Certificate of Incorporation or
By-Laws (or similar organizational documents) of the Borrower.
7.04 Governmental Approvals. No order, consent,
approval, license, authorization or validation of, or filing, recording
or registration with (except as have been obtained or made on or
prior to the Effective Date and are in full force and effect and
except for any filings of financing statements and other documents
required by or in connection with the Security Documents and any
filings, registrations or approvals required under state blue sky
securities laws in connection with the sale of the Senior Notes), or
exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in
connection with, (i) the execution, delivery and performance of any
Document or (ii) the legality, validity, binding effect or
enforceability of any such Document.
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc. (a) (i) The consolidated
balance sheets of the Borrower at December 31, 1993, 1994 and
1995 and the related statements of income and retained earnings and
changes in financial position of the Borrower for the fiscal years
ended as of said dates, which have been examined by Arthur
Andersen, LLP, independent certified public accountants, who delivered
unqualified opinions in respect thereto and (ii) the pro forma
(after giving effect to the Transaction) consolidated balance sheet of
the Borrower as at December 31, 1995 copies of all of which
financial statements referred to in the preceding clauses (i) and (ii)
have heretofore been furnished to each Bank, present fairly the
financial position of the Borrower at the dates of said statements and
the results of operations for the period covered thereby (or, in the
case of the pro forma balance sheets, present a good faith estimate
of the pro forma financial condition of the Borrower (after giving
effect to the Transaction) at the date thereof). All such financial
statements have been prepared in accordance with generally
accepted accounting principles and practices consistently applied
except to the extent provided in the notes to said financial statements.
Since December 31, 1995, there has been no material adverse
change in the performance, business, assets, nature of assets,
contracts, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower.
(b) On and as of the Effective Date, on a pro forma basis
after giving effect to the Transaction: (a) the sum of the assets, at
a fair valuation, of the Borrower will exceed its debts; (b) the
Borrower has not incurred, does not intend to incur, nor believes
that it will incur, debts beyond its ability to pay such debts as such
debts mature; and (c) the Borrower will have sufficient capital with
which to conduct its business. For purposes of this Section 7.05(b)
"debt" means any liability on a claim, and "claim" means (i) right
to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such
breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully reflected in the financial statements and
the notes related thereto described in Section 7.05(a), there were as
of the Effective Date (and after giving effect to the Transaction) no
liabilities or obligations with respect to the Borrower of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate,
could reasonably be expected to be material to the Borrower. As
of the Effective Date, the Borrower does not know of any basis for
the assertion against the Borrower of any liability or obligation of
any nature whatsoever that is not fully reflected in the financial
statements and the notes related thereto described in Section 7.05(a)
which, either individually or in the aggregate, could reasonably be
expected to be material to the Borrower. As of the Effective Date
(and after giving effect to the Transaction) the Borrower will have
no outstanding Indebtedness other than the Loans, the Senior Notes
and the Existing Indebtedness.
(d) On and as of the Effective Date, the Projections have
been prepared on a basis consistent with the financial statements
referred to in Section 7.05(a) (other than as specifically described
in the notes to such Projections), and there are no statements or
conclusions in any of the Projections which are based upon or
include information known to the Borrower to be misleading in any
material respect or which fail to take into account material
information regarding the matters reported therein. On the Effective
Date, the Borrower believes that the Projections are reasonable and
attainable.
(e) On the Effective Date, the aggregate principal amount
of outstanding travel, relocation and other expenses advanced by the
Borrower to its employees for business related activities of the
Borrower does not exceed $100,000 (determined without regard to
any write-downs or write-offs of such loans and advances). On the
Effective Date, the aggregate principal amount of outstanding loans
and other advances (not including amounts covered by the preceding
sentence) to key operating employees and officers does not exceed
$700,000 (determined without regard for any write-downs or write-
offs of such loans or advances).
7.06 Litigation. (a) There are no actions, suits or
proceedings pending or, to the best knowledge of the Borrower,
threatened (i) with respect to any Document or the transactions
contemplated thereby, (ii) with respect to any Indebtedness of the
Borrower, or (iii) that could reasonably be expected to have a
Material Adverse Effect.
(b) There are no material investigations pending or, to the
best knowledge of the Borrower, threatened by any governmental
entity (including, without limitation, the DHHS or any agency of
the State of California or any other state, but excluding legislative
and regulatory investigations and proceedings relating to the clinical
laboratory industry in general which could not reasonably be
expected to have a Material Adverse Effect) with respect to the
business practices or procedures of the Borrower (including,
without limitation, sales and marketing, pricing and billing
practices).
7.07 True and Complete Disclosure. All factual
information (taken as a whole) heretofore or contemporaneously
furnished by the Borrower in writing to any Bank (including,
without limitation, all information contained in the Documents and
in the prospectus for the Senior Notes) for purposes of or in
connection with this Agreement or the Transaction is, and all other
such factual information (taken as a whole) hereafter furnished by
the Borrower in writing to any Bank will be, true and accurate in
all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the
circumstances under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All
proceeds of Revolving Loans and Swingline Loans incurred after
the Effective Date shall be used for the Borrower's working capital
purposes.
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the
making of any Loan nor the use of the proceeds thereof nor the
occurrence of any other Credit Event will violate or be inconsistent
with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. All Federal, state and
other material returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income,
properties or operations of the Borrower have been timely filed with
the appropriate taxing authority. The Returns accurately reflect all
liability for material taxes of the Borrower for the periods covered
thereby. The Borrower has paid all material taxes payable by it
other than taxes which are not yet due and payable, and other than
those contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with
GAAP. The Borrower has been verbally notified by the Tax and
Permit Division of the City of Los Angeles of a possible claim for
unpaid taxes based on the Borrower's gross receipts from 1991 to
1993 (inclusive) and the Borrower has submitted a claim for full
indemnification against any loss or expense arising therefrom
pursuant to the Agreement and Plan of Merger and Reorganization
between Corning Incorporated, various related entities and MetCal,
Inc., dated as of January 19, 1993. There is no material action,
suit, proceeding, investigation, audit, or claim now pending or, to
the best knowledge of the Borrower, threatened (including as
described in the previous sentence) by any authority regarding any
taxes relating to the Borrower. As of the Effective Date, the
Borrower has not entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute
of limitations relating to the payment or collection of taxes of the
Borrower, or is aware of any circumstances that would cause the
taxable years or other taxable periods of the Borrower not to be
subject to the normally applicable statute of limitations. The
Borrower has not provided, with respect to itself or property held
by it, any consent under Section 341 of the Code. The Borrower
has not incurred, and will not incur, any material tax liability in
connection with the Transaction and the other transactions
contemplated hereby.
7.10 Security Agreement. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral
Agent for the benefit of the Secured Creditors a legal, valid and
enforceable security interest in all right, title and interest of the
Borrower in the Security Agreement Collateral and the Collateral
Agent, for the benefit of the Secured Creditors, has a fully perfected
first lien on, and security interest in, all right, title and
interest of the Borrower, in all of the Security Agreement Collateral,
subject to no other Liens other than Permitted Liens. The Borrower
has good and marketable title to all Security Agreement Collateral,
free and clear of all Liens except Permitted Liens.
(b) Schedule III contains a true and complete list of each
Real Property owned or leased by the Borrower on the Effective
Date, and the type of interest therein held by the Borrower. On the
Effective Date, the Borrower does not own any interest in any Real
Property other than Leaseholds.
7.11 Capitalization. On the Effective Date, Schedule IV
contains a true and complete description of the capitalization of the
Borrower. All of such outstanding shares have been duly and
validly issued, are fully paid and nonassessable and are free of
preemptive rights. As of the Effective Date, except as provided on
Schedule IV, the Borrower does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock. Under the terms of
the Borrower Preferred Stock, Dividends are payable in respect of
the Borrower Preferred Stock in an aggregate amount not in excess
of $36,000 per fiscal quarterly period of the Borrower.
7.12 Subsidiaries. On the Effective Date, the Borrower has
no Subsidiaries.
7.13 Senior Notes. As of the Effective Date, the Senior
Notes have been duly authorized, issued and delivered in
accordance with applicable law and the prospectus relating thereto,
and such prospectus, as of the date of its issue, does not contain any
untrue statement of a material fact nor omit to state a material fact
necessary in order to make the statements contained therein, in the
light of the circumstances under which they were made, not
misleading.
7.14 Indebtedness. Schedule VI sets forth a true and
complete list of any Indebtedness (other than the Loans, the Letters
of Credit and the Senior Notes) of the Borrower to be outstanding
as of the Effective Date after giving effect to the Transaction (the
"Existing Indebtedness"), in each case showing the aggregate
amount thereof and the name of the respective obligor and any other
entity which directly or indirectly guaranteed such debt.
7.15 Compliance with Statutes, etc. (a) The Borrower is in
material compliance with all applicable material statutes, regulations
and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of (a) the
conduct of its business, including, without limitation, (i) the Social
Security Act and the amendments thereto, including the so-called
"Medicare/ Medicaid Anti-Kickback Statute," and the provisions of
42 U.S.C. Section 1320(a)(7b) and 42 U.S.C. Section 1395nn and related
regulations, (ii) applicable Medicare program regulations, including
the Health Care Financing Administration's carrier directives
prohibiting home health care providers from completing Certificates
of Medical Necessity on behalf of physicians, (iii) the federal Food,
Drug and Cosmetic Act and the so-called "pharmacy exemption"
contained therein and the U.S. Food and Drug Administration's
Compliance Policy Guide Number 7132.16 entitled "Manufacture,
Distribution, and Promotion of Adulterated, Misbranded, or
Unapproved New Drugs for Human Use by State-Licensed Pharma-
cies," (iv) the Food and Drug Administration guidelines and all
OSHA regulations including those in connection with any oxygen
filling stations maintained or operated by the Borrower and 29
C.F.R. 1910, 1030 Occupational Exposure to Bloodborne
Pathogens and (v) all federal, state and local fraud and abuse laws,
rules and regulations and (b) the ownership of its property (other
than applicable statutes, regulations, orders and restrictions relating
to environmental standards and controls which statutes, etc. are
covered by Section 7.17).
(b) On the Effective Date, to the best knowledge of the
Borrower and except as set forth in the prospectus relating to the
Senior Notes, there are no current proposals for adoption of new
statutes, regulations or orders of any governmental body, domestic
or foreign, affecting the clinical laboratory industry specifically and
applicable to the Borrower and no current proposals for, any
amendment to existing statutes, regulations or orders of any
governmental body, domestic or foreign, affecting the clinical
laboratory industry specifically and applicable to the Borrower,
which proposals, in either case, if adopted (in their current form or
otherwise), could have a Material Adverse Effect.
7.16 Compliance with ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has
occurred with respect to a Plan which has or could reasonably be
expected to result in material liability; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability in excess
of $250,000; no Plan has an accumulated or waived funding
deficiency or has applied for an extension of any amortization
period within the meaning of Section 412 of the Code; all
contributions required to be made with respect to a Plan have been
timely made; neither the Borrower nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant
to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980
of the Code or expects to incur any liability (including any indirect,
contingent, or secondary liability) under any of the foregoing
Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or
any ERISA Affiliate of incurring a material liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA
and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Borrower and its ERISA Affiliates to all
Plans which are multiemployer plans as defined in Section
4001(a)(3) of ERISA (a "Multiemployer Plan") in the event of a
complete withdrawal therefrom, as of the close of the most recent
fiscal year of each such Plan ended prior to the date of the most
recent Credit Event would not exceed $250,000; no lien imposed
under the Code or ERISA on the assets of the Borrower or any
ERISA Affiliate exists or is likely to arise on account of any Plan;
and the Borrower may by taking appropriate actions, including,
without limitation, the provision of appropriate notices, terminate
or cease contributions to any employee benefit plan maintained by
any of them without incurring any material liability.
7.17 Environmental Matters. (a) The Borrower has
complied in all material respects with, and on the date of each
Credit Event is in compliance in all material respects with, all
applicable Environmental Laws and the requirements of any permits
issued under such Environmental Laws. There are no past, pending
or, to the best knowledge of the Borrower, threatened material
Environmental Claims against the Borrower or any Real Property
owned or operated by the Borrower. There are no facts,
circumstances, conditions or occurrences on any Real Property
owned or operated by the Borrower or, to the best knowledge of the
Borrower, on any property adjoining or in the vicinity of any such
Real Property that could reasonably be expected (i) to form the
basis of a material Environmental Claim against the Borrower or
any Real Property owned or operated by the Borrower or (ii) to
cause any such Real Property to be subject to any material
restrictions on the ownership, occupancy, use or transferability of such
Real Property under any applicable Environmental Law.
(b) Except in small amounts necessary in the ordinary
course of business of the Borrower and in compliance in all material
respects with applicable Environmental Laws, the Borrower has
not, at any time, generated, used, treated, stored, transported or
released Hazardous Materials on, to or from any Real Property
owned, leased or at any time operated by the Borrower.
(c) Except as set forth on Schedule VIII, there are not now
and, to the best knowledge of the Borrower, never have been any
underground storage tanks located on any Real Property owned or
operated by the Borrower.
(d) No Real Property owned or at any time operated by the
Borrower is located on any site listed on, or proposed in the Federal
Register for listing on, the Superfund National Priorities List, or
listed on the Comprehensive Environmental Response
Compensation and Liability Information System or their state
equivalents.
7.18 Labor Relations. The Borrower is not engaged in any
unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (i) no significant unfair labor
practice complaint pending against the Borrower or, to the best
knowledge of the Borrower, threatened against it, before the
National Labor Relations Board, and no significant grievance or
significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Borrower
or, to the best knowledge of the Borrower, threatened against it, (ii)
no significant strike, labor dispute, slowdown or stoppage pending
against the Borrower or, to the best knowledge of the Borrower,
threatened against it, and (iii) no union representation question
existing with respect to the employees of the Borrower, except
(with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) those matters which could
not reasonably be expected to have a Material Adverse Effect.
7.19 Patents, Licenses, Franchises and Formulas. (a) The
Borrower owns, has a license to use or otherwise has the right to
use, free and clear of pending or threatened Liens, all the patents,
patent applications, trademarks, service marks, trade names, trade
secrets, copyrights, proprietary information and knowledge,
technology, computer programs, data bases, licenses, franchises and
formulas, or rights with respect to the foregoing (collectively,
"Intellectual Property"), and has obtained assignments of all leases,
all licenses and other rights of whatever nature, necessary for the
present conduct of its business, without any known conflict with the
rights of others which, or as a failure to obtain which, as the case
may be, could reasonably be expected to have a Material Adverse
Effect.
(b) The Borrower has no knowledge of any claim by any
third party contesting the validity, enforceability, use or ownership
of the Intellectual Property, nor of any existing state of facts that
would support a claim that use by the Borrower of any such
Intellectual Property has infringed or otherwise violated any
Intellectual Property right of any other Person, and, to the best
knowledge of the Borrower, no such claim is threatened other than
claims which could not reasonably be expected to have a Material
Adverse Effect.
7.20 Properties; Insurance. (a) The Borrower has good
and marketable or merchantable, as the case may be, title to all
material properties owned by it, including all property reflected as
owned in the consolidated balance sheet of the Borrower at
December 31, 1995 referred to in Section 7.05(a) (except as sold or
otherwise disposed of since the date of such balance sheets in the
ordinary course of business or, in the case of any sale or disposition
after the Effective Date, as permitted by Section 9.02), free and
clear of all Liens, other than (i) as referred to in such consolidated
balance sheets or in the notes thereto or in the pro forma balance
sheet or (ii) as otherwise permitted by Section 9.01.
(b) Schedule II sets forth a true and complete list of all
insurance policies maintained with respect to the Borrower as of the
Effective Date. The insurance policies listed on Schedule II are
maintained with financially sound and reputable insurance
companies in at least such amounts and against at least such risks as
is consistent and in accordance with industry practice for companies
similarly situated.
7.21 Investment Company Act. The Borrower is not an
"investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended.
7.22 Public Utility Holding Company Act. The Borrower
is not a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
7.23 Leases. With respect to any lease or rental agreement
to which the Borrower is a party as lessee (i) such lease or rental
agreement is in full force and effect, (ii) such lessee has complied
in all respects with all of the terms of such lease or rental
agreement, (iii) there exists no event of default or an event, act or
condition which with notice or lapse of time, or both, would
constitute an event of default thereunder by either such lessee, or to
the best knowledge of the Borrower, the landlord thereunder and
(iv) such lessee is in possession of the premises demised under all
such leases and rental agreements and is conducting business on
such premises, except where all such failures to be in full force and
effect, non-compliances, events of default and defaults and non-
possessions as could not reasonably be expected to have a Material
Adverse Effect.
Section 8. Affirmative Covenants. The Borrower covenants
and agrees that on and after the Effective Date and until the Total
Revolving Loan Commitment and all Letters of Credit have
terminated and the Loans, Notes and Unpaid Drawings, together
with interest, Fees and all other Obligations are paid in full:
8.01 Information Covenants. The Borrower will furnish to
the Agent and each Bank:
(a) Monthly Reports. Within 30 days after the end
of each fiscal month other than the last such month of any
fiscal quarter of the Borrower the consolidated balance sheet
of the Borrower as at the end of such month and the related
consolidated statement of operations and retained earnings
and statement of cash flows for such month and for the
elapsed portion of the fiscal year ended with the last day of
such month, and (x) in the case of the statement of
operations and retained earnings setting forth comparative
figures for the corresponding month in the prior fiscal year
and comparable budgeted figures for the current period, and
(y) and in the case of the balance sheet, setting forth
comparative figures for the immediately preceding audited
period, all of which shall be certified by the chief financial
officer or controller of the Borrower, subject to normal
year-end audit adjustment.
(b) Quarterly Financial Statements. Within 45 days
after the close of the first three quarterly accounting periods
in each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower as at the end of such quarterly period
and the related consolidated statement of operations,
retained earnings and cash flows, in each case for such
quarterly period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, and
(x) in the case of the statement of operations and retained
earnings setting forth comparative figures for the related
periods in the prior fiscal year and comparable budgeted
figures for the current period and (y) in the case of the
balance sheet, setting forth comparative figures for the
immediately preceding audited period, all of which shall be
certified by the chief financial officer of the Borrower,
subject to normal year-end audit adjustments.
(c) Annual Financial Statements. Within 90 days
after the close of each fiscal year of the Borrower, the
consolidated and consolidating balance sheets of the Borrower
as at the end of such fiscal year and the related consolidated
and consolidating statements of operations and retained
earnings and related consolidated statements of cash flows
for such fiscal year and setting forth comparative figures for
the preceding fiscal year and comparable budgeted figures
for such period and certified by Arthur Andersen LLP or
other independent certified public accountants of recognized
national standing reasonably acceptable to the Required
Banks, together with a signed opinion of such accounting
firm (which opinion shall not be qualified in any respect)
stating that in the course of its regular audit of the financial
statements of the Borrower which audit was conducted in
accordance with generally accepted auditing standards, such
accounting firm obtained no knowledge of any Default or
Event of Default which has occurred and is continuing as a
result of a failure to comply with Section 9 or, if in the
opinion of such accounting firm such a Default or Event of
Default has occurred and is continuing, a statement as to the
nature thereof.
(d) Budgets. As soon as available but no later than
60 days following the first day of each fiscal year of the
Borrower, a budget for the Borrower in form satisfactory to
the Agent and the Required Banks (including budgeted
statements of operations and sources and uses of cash and
balance sheets) prepared by the Borrower for (x) each
calendar month of such fiscal year in the case of the
budgeted statement of operations and (y) the entire fiscal
year, in the case of the statements of operations and cash
flows and the balance sheet, in each case, prepared in
reasonable detail with appropriate presentation and
discussion of the principal assumptions upon which such
budgets are based, accompanied by the statement of the
chief financial officer of the Borrower to the effect that, to
the best of his knowledge, the budget is a reasonable
estimate for the period covered thereby.
(e) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
8.01(a), (b) and (c), a certificate of the chief financial
officer of the Borrower to the effect that no Default or Event
of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing,
specifying the nature and extent thereof, which certificate,
in the case of certificates delivered pursuant to Section
8.01(b) or (c), shall set forth the Leverage Ratio for the
most recent Reduction Test Period, together with, in
reasonable detail, the calculations required to establish such
ratio and whether the Borrower was in compliance with the
provisions of Sections 4.02, 9.04 through 9.06, inclusive,
and 9.08 through 9.11, inclusive, 9.16 and 9.17 at the end
of such fiscal quarter or year, as the case may be. In
addition, not more than 45 days after the close of each fiscal
year of the Borrower, a certificate of the chief financial
officer of the Borrower, which certificate shall set forth the
Leverage Ratio for such fiscal year, together with, in
reasonable detail, the calculations required to establish such
ratio.
(f) Notice of Default or Litigation. Promptly, and
in any event within two Business Days after an officer of the
Borrower obtains knowledge thereof, written notice of (i)
the occurrence of any event which constitutes a Default or
Event of Default, (ii) any litigation or proceeding pending
(x) against the Borrower which could reasonably be
expected to have a Material Adverse Effect or (y) with
respect to any Document, (iii) any litigation or investigation
or proceeding brought by any governmental entity pending
against the Borrower (other than tax inquiries and quality
assurance inspections, in each case, in the ordinary course
of business) and (iv) any other event which could reasonably
be expected to have a Material Adverse Effect.
(g) Other Reports and Filings. Promptly upon
transmission thereof, copies of any financial information,
proxy materials and other information and reports, if any,
which the Borrower (x) has filed with the Securities and
Exchange Commission or any successor thereto (the "SEC")
or (y) has delivered to holders of, or any agent or trustee
with respect to, Indebtedness of the Borrower in its capacity
as such a holder, agent, or trustee.
(h) Environmental Matters. Promptly upon, and in
any event within two Business Days after an officer of the
Borrower obtains knowledge thereof, notice of any of the
following environmental matters: (i) any pending or
threatened material Environmental Claim against the
Borrower or any Real Property owned or operated at any
time by the Borrower; (ii) any condition or occurrence on or
arising from any Real Property owned or operated at any
time by the Borrower that (a) results in a material
noncompliance by the Borrower with any applicable
Environmental Law, or (b) could reasonably be anticipated
to form the basis of a material Environmental Claim against
the Borrower or with respect to any such Real Property; (iii)
any condition or occurrence on any Real Property owned or
operated by the Borrower or any property adjoining or in
the vicinity of such Real Property that could reasonably be
anticipated to cause such Real Property to be subject to any
material restrictions on the ownership, occupancy, use or
transferability of such Real Property under any
Environmental Law; and (iv) the taking of any removal or
remedial action in response to the actual or alleged presence
of any Hazardous Material on any Real Property owned or
at any time operated by the Borrower as required by any
Environmental Law or any governmental or other
administrative agency. All such notices shall describe in
reasonable detail the nature of the claim, investigation,
condition, occurrence or removal or remedial action and the
Borrower's response thereto. In addition, the Borrower will
provide the Banks with copies of all communications with
any government or governmental agency or any other
Person relating to material Environmental Claims, and such
detailed reports of any Environmental Claim as may
reasonably be requested by the Banks.
(i) Annual Meetings with Banks. Within 120 days
after the close of each fiscal year of the Borrower, the
Borrower shall, at the request of the Agent or the Required
Banks, hold a meeting with all of the Banks at which
meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of the
Borrower and the budgets presented for the current fiscal
year of the Borrower.
(j) Borrowing Base Certificate. (i) On the Effective
Date and (ii) thereafter, not later than 12:00 Noon (New
York time) on the twentieth day after the end of each fiscal
month, a borrowing base certificate substantially in the form
of Exhibit I (each, a "Borrowing Base Certificate"), with
respect to the Eligible Receivables and the Eligible
Inventory of the Borrower as of (x) in the case of clause (i),
January 31, 1996 and (y) in the case of clause (ii), the last
day of the immediately preceding fiscal month, and in each
case, certified by the chief financial officer or controller of
the Borrower.
(k) Other Information. From time to time, such
other information or documents (financial or otherwise) with
respect to the Borrower, as the Agent or the Required Banks
may reasonably request.
8.02 Books, Records and Inspections. The Borrower will
keep proper books of record and account in which full, true and
correct entries in conformity with United States generally accepted
accounting principles and all requirements of law shall be made of
all dealings and transactions in relation to its business and activities.
The Borrower will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Agent or any
Bank to visit and inspect, under guidance of officers of the
Borrower, any of the properties of the Borrower, and to examine
the books of account of the Borrower and discuss the affairs,
finances and accounts of the Borrower with, and be advised as to
the same by, its and their officers, all at such reasonable times and
intervals and to such reasonable extent as the Agent or such Bank
may request.
8.03 Maintenance of Property, Insurance. (a) The
Borrower will (i) keep all material property useful and necessary in
its business in good working order and condition (ordinary wear
and tear excepted), (ii) maintain with financially sound and
reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks as are described
on Schedule II and (iii) furnish to each Bank, upon written request,
full information as to the insurance carried. The provisions of this
Section 8.03 shall be deemed to be supplemental to, but not duplicative
of, the provisions of any of the Security Documents that require
the maintenance of insurance.
(b) The Borrower will at all times keep all of its properties
covered by the insurance described on Schedule II insured in favor
of the Collateral Agent, and all policies or certificates (or certified
copies thereof) with respect to such insurance (and any other
insurance maintained by the Borrower) (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral
Agent (including, without limitation, by naming (x) the Collateral
Agent as loss payee with respect to property policies and (y) the
Collateral Agent, the Agent and each Bank as an additional insured
with respect to all policies other than directors' and officers',
fiduciary, crime, special coverage (i.e., kidnap and ransom),
medical professional or workmen's compensation policies) with
respect to Collateral, (ii) shall state that such insurance policies
shall not be cancelled or revised without 30 days' prior written
notice thereof by the respective insurer to the Collateral Agent, (iii)
shall provide that the respective insurers irrevocably waive any and
all rights of subrogation, if applicable, with respect to the Collateral
Agent, (iv) shall contain the standard noncontributory mortgagee
clause endorsement in favor of the Collateral Agent with respect to
hazard insurance coverage, (v) shall, except in the case of public
liability insurance and workers' compensation insurance, provide
that any losses shall be payable notwithstanding (A) any act or
neglect of the Borrower (absent fraud), (B) the occupation or use of
the properties for purposes more hazardous than those permitted by
the terms of the respective policy if such coverage is obtainable at
commercially reasonable rates and is of the kind from time to time
customarily insured against by Persons owning or using similar
property and in such amounts as are customary, (C) any foreclosure
or other proceeding relating to the insured properties or (D) any
change in the title to or ownership or possession of the insured
properties and (vi) shall be deposited with the Collateral Agent. If
the Borrower shall fail to insure its property in accordance with this
Section 8.03, or if the Borrower shall fail to endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent
shall have the right (but shall be under no obligation), upon at least
five Business Days' prior notice to the Borrower to procure such
insurance and the Borrower agrees to reimburse the Collateral
Agent for all costs and expenses of procuring such insurance.
8.04 Corporate Franchises. The Borrower will do, or cause
to be done, all things necessary to preserve and keep in full force
and effect its existence and its material rights, franchises, licenses
and patents, provided, however, nothing in this Section 8.04 shall
prevent (i) any transaction permitted in accordance with Section
9.02 or (ii) the withdrawal by the Borrower of its qualification as
a foreign corporation in a jurisdiction in which such withdrawal
could not have a Material Adverse Effect.
8.05 Compliance with Statutes, etc. The Borrower will
comply in all material respects with all applicable material statutes,
regulations and orders of, and all applicable material restrictions
imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its
property (including, without limitation, the laws and regulations
referred to in Section 7.15(a)).
8.06 Compliance with Environmental Laws. (a) The
Borrower will comply in all material respects with all
Environmental Laws applicable to ownership or use of the Real
Property, will promptly pay all costs and expenses incurred in such
compliance, and will keep or cause to be kept all such Real
Properties free and clear of any Liens imposed pursuant to such
Environmental Laws. The Borrower will not generate, use, treat,
store, release or dispose of, or permit the generation, use,
treatment, storage, release or disposal of Hazardous Materials on
any Real Property, or transport or permit the transportation of
Hazardous Materials to or from any Real Property except as
required in connection with the normal operation, use and
maintenance of such Real Property and in material compliance with
all applicable Environmental Laws.
(b) At the request of the Agent or the Required Banks, at
any time and from time to time during the existence of this
Agreement: (i) if an Event of Default exists under this Agreement
and it is reasonably likely that the Required Banks will declare the
Obligations due and payable pursuant to Section 10 and the
Required Banks believe that an environmental site assessment report
is necessary or appropriate in connection with any exercise of
remedies under the Credit Documents, (ii) upon the reasonable
belief by the Agent that the Borrower is not in material compliance
with Environmental Law or (iii) circumstances exist that reasonably
could be expected to form the basis of a material Environmental
Claim against the Borrower, the Borrower will provide, at its sole
cost and expense, an environmental site assessment report
reasonable in scope concerning any Real Property of the Borrower,
prepared by an environmental consulting firm approved by the
Agent and the Required Banks, indicating the presence or Release
of Hazardous Materials on or from any of the Real Property and the
potential cost of any removal or remedial action in connection with
any Hazardous Materials on such Real Property. If the Borrower
fails to provide the same, after sixty (60) days' notice, the Agent
may order the same, and the Borrower shall grant and hereby grants
to the Agent and the Banks and their agents access to such Real
Property and specifically grants to the Agent and the Banks and
their agents an irrevocable non-exclusive license, subject to the
rights of tenants, to undertake such an assessment, all at the
Borrower's expense.
8.07 ERISA. As soon as possible and, in any event, within
10 days after the Borrower or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, the
Borrower will deliver to each of the Banks a certificate of the chief
financial officer of the Borrower setting forth details as to such
occurrence and the action, if any, that the Borrower or such ERISA
Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the
Borrower, the ERISA Affiliate, the PBGC, a Plan participant or the
Plan administrator with respect thereto: that a Reportable Event has
occurred which may result in material liability; that an accumulated
funding deficiency within the meaning of Section 412 of the Code
has been incurred or an application may be or has been made to the
Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment
payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a contribution required
to be made to a Plan has not been timely made; that a Plan has been
or may be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; that
proceedings may be or have been instituted to terminate or appoint
a trustee to administer a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower or any ERISA Affiliate will or
may incur any liability (including any indirect, contingent, or
secondary liability) to or on account of the termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409
or 502(i) or 502(l) of ERISA; or that the Borrower may incur any
material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by
Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA). The Borrower will deliver to
each of the Banks a complete copy of the annual report (Form 5500)
of each Plan (other than a Multiemployer Plan) required to be filed
with the Internal Revenue Service. In addition to any certificates or
notices delivered to the Banks pursuant to the first sentence hereof,
copies of annual reports and any material notices received by the
Borrower or any ERISA Affiliate with respect to any Plan shall be
delivered to the Banks no later than 20 days after the date such
report has been filed with the Internal Revenue Service or such
notice has been received by the Borrower or the ERISA Affiliate,
as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. The Borrower
will cause its fiscal years to end on December 31, and each of its
first three fiscal quarters to end on March 31, June 30 and
September 30.
8.09 Performance of Obligations. The Borrower will
perform all of its obligations under the terms of each mortgage,
indenture, security agreement and other debt instrument by which
it is bound, except such instances of non-performance as could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
8.10 Payment of Taxes. The Borrower will pay and
discharge all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties
would otherwise attach thereto, and all lawful claims which, if
unpaid, might become a lien or charge upon any properties of the
Borrower; provided, that the Borrower shall not be required to pay
any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance
with generally accepted accounting principles.
8.11 Use of Proceeds. All proceeds of the Loans shall be
used as provided in Section 7.08.
8.12 UCC Searches. On or prior to the 60th day following
the Effective Date, the Borrower shall deliver to the Agent (at the
Borrower's own cost) copies of Request for Information or Copies
(UCC-11), or equivalent reports verifying that all financing
statements necessary or, in the opinion of the Collateral Agent
desirable, to perfect (or maintain the perfection of) the security
interests purported to be created (or maintained) by the Security
Agreement shall have been properly recorded and filed.
8.13 Intellectual Property Rights. The Borrower will
maintain in full force and effect all Intellectual Property rights
necessary or appropriate to the business of the Borrower and take
no action (including, without limitation, the licensing of Intellectual
Property), or fail to take an action, as the case may be, in
connection with such Intellectual Property rights which could
reasonably be expected to result in a Material Adverse Effect. The
Borrower will diligently prosecute all pending applications filed in
connection with seeking or seeking to perfect the Intellectual
Property rights and take all other reasonable actions necessary for
the protection and maintenance of the Intellectual Property rights
necessary or appropriate to the business of the Borrower at all times
from and after the Effective Date except where the failure to do any
of the foregoing is not reasonably likely to have a Material Adverse
Effect.
8.14 Registry. The Borrower hereby designates the Agent
to serve as the Borrower's agent, solely for purposes of this Section
8.14, to maintain a register (the "Register") on which it will record
the Revolving Loan Commitments from time to time of each of the
Banks, the Loans made by each of the Banks and each repayment
in respect of the principal amount of the Loans of each Bank.
Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of
such Loans. With respect to any Bank, the transfer of the
Revolving Loan Commitment of such Bank and the rights to the
principal of, and interest on, any Loan made pursuant to such
Revolving Loan Commitment shall not be effective until such
transfer is recorded on the Register maintained by the Agent with
respect to ownership of such Revolving Loan Commitment and
Loans and prior to such recordation all amounts owing to the
transferor with respect to such Revolving Loan Commitment and
Loans shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Revolving Loan
Commitment and Loans shall be recorded by the Agent on the
Register only upon the acceptance by the Agent of a properly
executed and delivered Assignment and Assumption Agreement
pursuant to Section 13.04(b). Coincident with the delivery of such
an Assignment and Assumption Agreement to the Agent for
acceptance and registration of assignment or transfer of all or part
of a Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Note evidencing such Loan, and
thereupon one or more new Notes in the same aggregate principal
amount shall be issued to the assigning or transferor Bank and/or
the new Bank. The Borrower agrees to indemnify the Agent from
and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or
incurred by the Agent in performing its duties under this Section
8.14.
8.15 Further Actions. The Borrower shall at its own
expense, make, execute, endorse, acknowledge, file and/or deliver
to the Collateral Agent from time to time such conveyances,
financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments or executed
counterparts to the Security Agreement and take such further steps
relating to perfecting (or maintaining the perfection of) the security
interest of the Secured Creditors in the Security Agreement
Collateral as the Collateral Agent may reasonably require and in
each case within 60 days from the date such action is requested to
be taken. Furthermore, not later than 60 days from the date of any
such request by the Agent or the Required Banks the Borrower shall
cause to be delivered to the Collateral Agent such opinions of
counsel and other documents as may be reasonably requested by the
Agent or the Required Banks to assure themselves that this Section
8.15 has been complied with.
8.16 Permitted Acquisitions. (a) Subject to the remaining
provisions of this Section 8.16 applicable thereto and the
requirements contained in the definition of Permitted Acquisition,
the Borrower may from time to time, on or after the Effective Date,
effect Permitted Acquisitions so long as:
(i) with respect to each Permitted Acquisition, (x)
no Default or Event of Default is in existence at the time of
the consummation of such Permitted Acquisition or would
exist after giving effect thereto (in determining compliance
with financial covenants hereunder after giving effect to the
proposed Permitted Acquisition, the Borrower's historical
results for the relevant period set forth in such financial
covenants shall be adjusted for all Indebtedness incurred in
connection with the proposed Permitted Acquisition but
shall not otherwise be adjusted for the effects of such
proposed Permitted Acquisition), (y) such Permitted
Acquisition shall comply with the terms of the Senior Notes
Indenture and the Borrower shall furnish the Agent and the
Banks with an officer's certificate executed by the President
or the Chief Financial Officer certifying as to compliance
with this clause (y) and (z) in the case of any Permitted
Acquisition for which the aggregate purchase price payable
by the Borrower is $500,000 or more, the Borrower shall
furnish the Agent and the Banks with an officer's certificate
executed by the President or the Chief Financial Officer
certifying as to compliance with clause (x) above;
(ii) with respect to all Permitted Acquisitions on and
after the Effective Date, during each Permitted Acquisition
Period, the total purchase price of all such Permitted
Acquisitions shall not exceed in the aggregate (x)
$5,000,000 in cash paid, or to be paid, by the Borrower in
connection with such Permitted Acquisitions and (y)
$5,000,000 in fair market value of all common stock of the
Borrower issued, or to be issued, in connection with such
Permitted Acquisition (such fair market value to be
determined by taking the average closing price of such stock
on the Nasdaq Stock Market/Nasdaq National Market or on
another national securities exchange for the 10 trading days
immediately preceding the date of the applicable Permitted
Acquisition or if the common stock is not trading on such
market or exchange such other fair market value as shall be
acceptable to the Agent (the "Fair Market Value")); and
(iii) in the case of any Permitted Acquisition for
which the aggregate purchase price payable by the Borrower
is $500,000 or more, the amount of the Consolidated
EBITDA of the assets being acquired in connection with the
Permitted Acquisition for the period of four consecutive
fiscal quarters (taken as one accounting period) last ended
prior to the date of such Permitted Acquisition shall be
greater than zero, provided that in determining such
EBITDA the Borrower may take into account such cost
savings as shall reasonably be expected to be obtained in
connection with the acquisition, and provided further that,
the amount of Consolidated EBITDA and the cost savings,
if any, resulting from such acquisition shall each be
reasonably verifiable to the satisfaction of the Agent.
(b) The Borrower shall, on the date of a Permitted Acquisition,
grant to the Collateral Agent, for the benefit of the Secured
Creditors, a first priority perfected security interest in all inventory
and receivables of the Borrower acquired in connection with the
Permitted Acquisition and, within three Business Days of the date
of such Permitted Acquisition, shall take all actions requested by the
Agent or the Required Banks (including, without limitation, the
obtaining of UCC-11's and the filing of UCC-1's) in connection
with the granting of such security interests. All security interests
required to be granted pursuant to this Section 8.16 shall be granted
pursuant to the Security Agreement, including by way of an
amendment (satisfactory in form and substance to the Agent) to the
Security Agreement, if necessary, and shall (except as otherwise
consented to by the Agent and the Required Banks) constitute valid
and enforceable perfected security interests prior to the rights of all
third Persons and subject to no other Liens except such Liens as are
permitted by Section 9.01. Any required financing statements shall
be duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the
Liens, in favor of the Collateral Agent for the benefit of the Secured
Creditors, granted pursuant to the Security Agreement and all taxes,
fees and other charges payable in connection therewith shall be paid
in full by the Borrower. At the time of the execution and delivery
of any amendment to the Security Agreement or of any financing
statements in connection with a Permitted Acquisition, the Borrower
shall cause to be delivered to the Collateral Agent such opinions of
counsel and other related documents as may be reasonably requested
by the Collateral Agent or the Required Banks to assure themselves
that this Section has been complied with. Except as specifically set
forth above, all actions required by this Section 8.16(b) shall be
completed no later than the date on which the Permitted Acquisition
is effected.
(c) The consummation of each Permitted Acquisition shall
be deemed to be a representation and warranty by the Borrower that
all conditions thereto have been satisfied and that same is permitted
in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a representation
and warranty for all purposes hereunder, including, without
limitation, Sections 6 and 10.
Section 9. Negative Covenants. The Borrower covenants
and agrees that on and after the Effective Date and until the Total
Revolving Loan Commitment and all Letters of Credit have terminated
and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other Obligations, are paid in full:
9.01 Liens. (a) The Borrower will not create, incur,
assume or suffer to exist any Lien upon or with respect to any property
or assets (real or personal, tangible or intangible) of the
Borrower, whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to the
Borrower), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute;
provided, that the provisions of this Section 9.01 shall not prevent
the creation, incurrence, assumption or existence of the following
(liens described below are herein referred to as "Permitted Liens"):
(i) Liens with respect to taxes, assessments, levies
or other governmental charges not yet due or which are
being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in
accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of the
Borrower imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness
for borrowed money, such as carriers', warehousemen's,
materialmen's, mechanics' and landlords' and other similar
Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract from the
value of such property or assets or materially impair the use
thereof in the operation of the business of the Borrower or
(y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Effective Date which
are listed, and the property subject thereto described, in
Schedule VII, but only to the respective date, if any, set
forth in such Schedule VII for the removal and termination
of any such Liens;
(iv) Liens created pursuant to this Agreement and the
Security Documents;
(v) easements, rights-of-way, restrictions, encroachments
and other similar charges or encumbrances on the
property of the Borrower arising in the ordinary course of
business and not materially interfering with the conduct of
the business of the Borrower;
(vi) Liens on property of the Borrower subject to,
and securing only, Capitalized Lease Obligations to the
extent such Capitalized Lease Obligations are permitted by
Section 9.05(ii); provided that such Liens only secure the
payment of Indebtedness arising under such Capitalized
Lease Obligation and the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation and the proceeds
thereof do not encumber any other asset of the Borrower;
(vii) Liens (other than any Lien imposed by ERISA)
on property of the Borrower incurred or deposits made in
the ordinary course of business (x) in connection with
workers' compensation, unemployment insurance and other
types of social security or (y) to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance
and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money), provided that the aggregate amount of cash and the
fair market value of the property encumbered by Liens
described in this clause (vii)(y) shall not exceed $250,000;
(viii) Liens placed upon equipment or machinery used
in the ordinary course of the business of the Borrower at the
time of purchase thereof by the Borrower to secure
Indebtedness incurred to pay all or a portion of the purchase
price thereof, provided that (x) the aggregate principal
amount of all Indebtedness secured by Liens permitted by
this clause (viii) does not exceed at any one time outstanding
$250,000 with respect to all machinery and equipment and
(y) in all events, the Lien encumbering the equipment or
machinery so acquired does not encumber any other asset of
the Borrower;
(ix) Liens created by leases or subleases granted to
others not interfering in any material respect with the
business of the Borrower;
(x) Liens arising from precautionary UCC-1 financing
statement filings regarding operating or other equipment
leases otherwise permitted under this Agreement;
(xi) Liens (where there has been no execution or
levy and no pledge or delivery of collateral, except that the
pledge and delivery of collateral not in excess of $250,000
in the aggregate at any time shall be permitted) arising from
and out of judgments or decrees in existence at such time
not constituting an Event of Default;
(xii) statutory landlords' liens under leases to which
the Borrower is a party; and
(xiii) Liens granted to the Trustee (as defined in the
Senior Notes Indenture) pursuant to Section 7.07 of the
Senior Notes Indenture.
9.02 Consolidation, Merger, Purchase or Sale of Assets,
etc. The Borrower will not wind up, liquidate or dissolve its affairs
or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time) all or any part of its property or
assets, or enter into any partnerships, joint ventures or sale-
leaseback transactions, or purchase or otherwise acquire (in one or
a series of related transactions) any part of the property or assets
(other than purchases or other acquisitions of inventory, materials
and equipment in the ordinary course of business) of any Person,
except that:
(i) Capital Expenditures by the Borrower shall be
permitted to the extent not in violation of Section 9.08;
(ii) the Borrower may, in the ordinary course of
business, sell equipment which, in the reasonable judgment
of the Borrower has become obsolete, worn out or
uneconomic the proceeds of which are applied in accordance
with Section 4.02(A)(d), or are used, or irrevocably
committed, to purchase replacement equipment within 60
days from the date of such sale so long as the aggregate
amount of Net Sale Proceeds from such sales in any one
fiscal year do not exceed $250,000;
(iii) the Borrower may make sales of inventory in the
ordinary course of business;
(iv) the Borrower may lease (as lessee) real or
personal property to the extent permitted by Section 9.04 (so
long as such lease does not create Capitalized Lease
Obligations) and (in the cases of such leases that do create
Capitalized Lease Obligations) Section 9.08;
(v) investments may be made to the extent permitted
by Section 9.06;
(vi) the Borrower may, in the ordinary course of
business, trade-in equipment for replacement equipment
similar to the equipment traded-in, so long as the fair market
value of such replacement equipment is equal to or greater
than the fair market value of the equipment which the
Borrower traded-in;
(vii) other sales of assets for cash so long as (x) the
aggregate amount of Net Sale Proceeds from such sales does
not exceed $500,000 in any one fiscal year and (y) the Net
Sale Proceeds are applied in accordance with Section
4.02(A)(d); and
(viii) Permitted Acquisitions shall be permitted in
accordance with Section 8.16.
9.03 Dividends. The Borrower will not declare or pay any
Dividends, except that, so long as there exists no Default or Event
of Default prior to and after giving effect to such payment, the
Borrower may pay Dividends in respect of Borrower Preferred
Stock in an amount not to exceed $36,000 per fiscal quarterly
period of the Borrower.
9.04 Leases. The Borrower will not permit the aggregate
payments (including, without limitation, any property taxes paid as
additional rent or lease payments) made by the Borrower under any
agreement to rent or lease any real or personal property (or any
extension or renewal thereof) (excluding Capitalized Lease
Obligations) to exceed at any time during the following fiscal years
the amounts set forth opposite said fiscal years: 1996 -
$20,000,000; 1997 - $22,000,000; 1998 - $24,000,000; and 1999 -
$26,000,000.
9.05 Indebtedness. The Borrower will not contract, create,
incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement
and the other Credit Documents;
(ii) Indebtedness evidenced by Capitalized Lease
Obligations to the extent permitted pursuant to Section 9.08,
provided that the aggregate amount of Indebtedness
evidenced by Capitalized Lease Obligations shall not exceed
at any time $1,000,000 (excluding Capitalized Lease
Obligations listed on Schedule VI, and any refinancings or
renewals thereof so long as the same is permitted under the
Senior Notes Indenture and the principal component thereof
is not increased);
(iii) Existing Indebtedness listed on Schedule VI
(other than Indebtedness evidenced by Capitalized Lease
Obligations) but without giving effect to any refinancings,
renewals or increases in the principal amount thereof other
than as set forth on Schedule VI;
(iv) Indebtedness in amounts, and subject to Liens,
permitted under Section 9.01(viii);
(v) Indebtedness of the Borrower (other than any
Indebtedness permitted pursuant to clause (v) above)
consisting of guarantees of loans incurred by key executives
of the Borrower in connection with relocation for work
purposes in an amount not to exceed $500,000 at any one
time outstanding;
(vi) Indebtedness of the Borrower represented by the
Fixed Payments and Contingent Payments as defined in the
CSL Acquisition Agreement; and
(vii) the Senior Notes.
9.06 Advances, Investments and Loans. The Borrower will
not directly or indirectly lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities
of, or any other interest in, or make any capital contribution
to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract
or hold any cash or Cash Equivalents, except that the following
shall be permitted:
(i) the Borrower may acquire and hold receivables
owing to any of them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance
with customary terms;
(ii) the Borrower may acquire and hold cash and
Cash Equivalents;
(iii) the Borrower may enter into Interest Rate
Protection Agreements, provided that the aggregate notional
amount of the Interest Rate Protection Agreements
outstanding at any time shall not exceed the notional amount
thereof outstanding on the Effective Date;
(iv) the Borrower may make Capital Expenditures to
the extent permitted by Section 9.08;
(v) the Borrower may make or maintain travel,
relocation and other expense advances to employees for
business related activities of the Borrower in the ordinary
course of business and consistent with past practice and not
exceeding $500,000 in aggregate principal amount at any
one time amount outstanding (determined without regard to
any write-downs or write-offs of such loans and advances);
(vi) the Borrower may make loans and other
advances to key operating employees and officers not to
exceed $500,000 at any one time outstanding (determined
without regard to any write-downs or write-offs of such
loans and advances);
(vii) the Borrower may make loans and advances to
the extent the Indebtedness evidenced thereby is permitted
by Section 9.05; and
(viii) the Borrower may hold the UGL Note.
9.07 Transactions with Affiliates. The Borrower will not
enter into any transaction or series of related transactions, whether
or not in the ordinary course of business, with any Affiliate of the
Borrower other than transactions by the Borrower in the ordinary
course of business and on terms and conditions substantially as
favorable to the Borrower as would be obtainable by the Borrower
at that time in a comparable arm's-length transaction with a Person
other than an Affiliate, except that:
(i) the Borrower may pay customary fees (whether
in the form of cash or the common stock of the Borrower) to
non-officer directors of the Borrower;
(ii) dividends may be paid to the extent provided in
Section 9.03;
(iii) loans may be made and other transactions may
be entered into by the Borrower to the extent permitted by
Section 9.06;
(iv) options to purchase common stock, or restricted
stock, of the Borrower may be granted to or acquired from
officers, directors and employees of the Borrower in the
ordinary course of business; and
(v) the Borrower may enter into employment
arrangements with their respective officers and key employees
in the ordinary course of business.
9.08 Capital Expenditures. The Borrower will not make any
expenditure for fixed or capital assets (including, without limitation,
expenditures for maintenance and repairs which should be
capitalized in accordance with generally accepted accounting
principles and including Capitalized Lease Obligations)
(collectively, "Capital Expenditures"), except that during the period
(taken as one accounting period) commencing on January 1, 1996
and ending on December 31, 1996 and during each fiscal year
thereafter, the Borrower may make Capital Expenditures so long as
the aggregate amount thereof does not exceed $5,000,000 in any
such period.
Notwithstanding anything to the contrary contained above, to the
extent that Capital Expenditures made during any period set forth
above are less than the amount set forth for such period above,
50% of such amount may be carried forward to the immediately
succeeding fiscal year and utilized to make Capital Expenditures in
excess of the amount permitted above in the following period,
provided, that (x) any amount carried forward from the immediately
preceding fiscal year, if any, shall not be utilized during a fiscal
year to make Capital Expenditures unless and until the relevant
amount set forth above for such fiscal year shall have been utilized
in full to make Capital Expenditures during such fiscal year and (y)
no amounts once carried forward to the next period may be carried
forward to periods again thereafter. For purposes of this Section
9.08, (I) amounts expended or irrevocably committed to purchase
replacement assets which relates to a Recovery Event within 120
days after such event shall constitute Capital Expenditures only to
the extent that such expenditures exceed (x) the amount of the net
proceeds of insurance recoveries which are required to be applied
to the repayment of Loans pursuant to Section 4.02(A)(e) or (y) the
net proceeds of insurance recoveries which were received in
connection with such Recovery Event and (II) Permitted
Acquisitions made in accordance with Section 8.16 shall not
constitute Capital Expenditures for purposes of determining
compliance with this Section 9.08.
9.09 Fixed Charge Coverage Ratio. The Borrower will not
permit the Fixed Charge Coverage Ratio for any Test Period ended
on the last day of a fiscal quarter set forth below to be less than the
ratio set forth below opposite such date:
Fiscal Quarter
Ended Ratio
June 30, 1996 1.15:1.00
September 30, 1996 1.25:1.00
December 31, 1996 1.25:1.00
March 31, 1997 1.30:1.00
June 30, 1997 1.30:1.00
September 30, 1997 1.30:1.00
December 31, 1997 1.30:1.00
March 31, 1998 1.30:1.00
June 30, 1998 1.30:1.00
September 30, 1998 1.30:1.00
December 31, 1998 1.30:1.00
March 31, 1999 1.30:1.00
June 30, 1999 1.30:1.00
9.10 Interest Coverage Ratio. The Borrower will
not permit the ratio of its Consolidated EBITDA to its Consolidated
Net Interest Expense for any Test Period ended on the last day of
a fiscal quarter set forth below to be less than the ratio set forth
below opposite such date:
Fiscal Quarter
Ended Ratio
June 30, 1996 1.80:1.00
September 30, 1996 1.90:1.00
December 31, 1996 2.00:1.00
March 31, 1997 2.05:1.00
June 30, 1997 2.10:1.00
September 30, 1997 2.15:1.00
December 31, 1997 2.20:1.00
March 31, 1998 2.25:1.00
June 30, 1998 2.30:1.00
September 30, 1998 2.40:1.00
December 31, 1998 2.50:1.00
March 31, 1999 2.50:1.00
June 30, 1999 2.50:1.00
9.11 Consolidated Indebtedness to Consolidated
EBITDA. The Borrower will not permit at any time during any
Test Period ending on a date set forth below the ratio of (x)
Consolidated Indebtedness (net of the Borrower's cash on-hand) at
such time to (y) Consolidated EBITDA for the Test Period then last
ended prior to such time to be greater than the ratio set forth below
opposite such date:
Fiscal Quarter
Ended Ratio
June 30, 1996 12.00:1.00
September 30, 1996 7.00:1.00
December 31, 1996 5.25:1.00
March 31, 1997 5.00:1.00
June 30, 1997 4.50:1.00
September 30, 1997 4.25:1.00
December 31, 1997 4.25:1.00
March 31, 1998 4.00:1.00
June 30, 1998 4.00:1.00
September 30, 1998 4.00:1.00
December 31, 1998 4.00:1.00
March 31, 1999 4.00:1.00
June 30, 1999 4.00:1.00
9.12 Limitation on Voluntary Payments and Modifications
of Indebtedness; Modifications of Certificate of Incorporation, By-
Laws and Certain Other Agreements; etc. The Borrower will not:
(i) make (or give any notice in respect thereof)
any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including, without
limitation, by way of depositing with the trustee with respect
thereto money or securities before due for the purpose of
paying when due) or exchange of the Senior Notes or any
Existing Indebtedness;
(ii) amend or modify, or permit the amendment
or modification of, any provision of the Senior Notes, the
Senior Notes Indenture, the Existing Indebtedness or the
Existing Indebtedness Agreements;
(iii) amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or
modification of any certificate of designation) or by-laws, or
any agreement entered into by it with respect to its capital
stock, or enter into any new agreements with respect to its
capital stock, except for such amendments to the Certificate
of Incorporation of, or changes, modifications or new
agreements entered into by, the Borrower with respect to its
capital stock which, in the aggregate or individually, do not
impose any monetary liability on the Borrower or grant any
put or similar rights to any Person and do not otherwise
adversely affect any Bank in its capacity as such;
(iv) amend, modify or change, or enter into any
new Tax Sharing Agreement;
(v) amend, modify or change, or enter into any
new, shareholders' agreement, registration rights agreement
or stock subscription agreement, except for such
amendments, modifications or changes which, in the
aggregate or individually, do not adversely affect any Bank
in its capacity as such; or
(vi) amend, modify or change, or enter into any
new, employee benefit plans or employment agreements
except if the aggregate cost to the Borrower as a result of
such amendment, modification or change could not be
reasonably likely to have a Material Adverse Effect.
9.13 Limitation on Issuance of Capital Stock. The
Borrower will not issue any capital stock (including by way of sales
of treasury stock) or any options or warrants to purchase, or
securities convertible into, capital stock, except (i) for transfers and
replacements of then outstanding shares and (ii) for stock splits,
stock dividends and similar issuances which do not decrease the
percentage ownership of any person in the Borrower in any class of
the capital stock of the Borrower and (iii) shares of common stock
of the Borrower (or options with respect thereto) (v) for cash or (w)
in connection with Permitted Acquisitions or (x) in connection with
issuances to the Borrower's Employee Benefit Plans or (y) as
permitted pursuant to Section 9.07(iv), or (z) in connection with the
remaining installment payments under the CRL Agreement where
in any such case, after giving effect to such issuance, no Event of
Default will exist under Section 10.09 and immediately after such
issuance, to the extent so required, the Borrower complies with
Section 4.02(A)(c).
9.14 Business. The Borrower will not engage (directly or
indirectly) in any line of business other than the lines of business in
which it is engaged on the Effective Date and any other reasonably
related extensions thereof.
9.15 Limitation on Creation of Subsidiaries. The Borrower
will not establish, create or acquire any new Subsidiary.
9.16 Account Receivable Days. The Borrower will not
permit the number of Account Receivable Days for any period of
three consecutive months, in each case taken as one accounting
period, ending on the last day of any month to be greater than 85
(with the first such determination to be made as of June 30, 1996
and subsequent determinations to be made on the last day of each
month thereafter).
9.17 Account Payable Days. The Borrower will not
permit the number of Account Payable Days for any period of three
consecutive months, in each case taken as one accounting period,
ending on the last day of any month to be greater than 50 (with the
first such determination to be made as of June 30, 1996 and
subsequent determinations to be made on the last day of each month
thereafter).
Section 10. Events of Default. Upon the occurrence of any
of the following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the
payment when due of any principal of any Loan or Note or Unpaid
Drawing or (ii) default, and such default shall continue unremedied
for two or more Business Days, in the payment when due of any
interest on any Loan or Note or Unpaid Drawing, or any Fees or
any other amounts owing by it hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty
or statement made by the Borrower herein or in any other Credit
Document or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
10.03 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or
agreement contained in Section 8.01(f)(i), 8.08, 8.15 or 9 or (ii)
default in the due performance or observance by it of any other term,
covenant or agreement contained in this Agreement and such
default shall continue unremedied for a period of 30 days after
written notice to the Borrower by the Agent or any Bank; or
10.04 Default Under Other Agreements. The Borrower
shall (i) default in any payment of any Indebtedness (other than the
Indebtedness referred to in Section 10.01) beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness was created, (ii) default
in the observance or performance of any agreement or condition
relating to any Indebtedness (other than the Indebtedness referred
to in Section 10.01) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice
is required), any Indebtedness to become due prior to its stated
maturity, or (iii) any Indebtedness (other than the Indebtedness
referred to in Section 10.01) of the Borrower shall be declared to
be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated
maturity thereof, provided, that it shall not constitute an Event of
Default pursuant to this Section 10.04 unless the aggregate amount
of all Indebtedness referred to in the preceding clauses (i) through
(iii) above exceeds $500,000 at any one time; or
10.05 Bankruptcy, etc. The Borrower shall commence a
voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against the Borrower and the petition is not
controverted within 10 days, or is not dismissed or discharged,
within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower, or the
Borrower commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower, or there
is commenced against the Borrower any such proceeding which
remains undismissed or undischarged for a period of 60 days, or the
Borrower is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is
entered; or the Borrower suffers any appointment of any custodian
or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower
makes a general assignment for the benefit of creditors or generally
fails to pay its debts as such debts become due or admits in writing
its inability to pay its debts as such debts become due; or any
corporate action is taken by the Borrower for the purpose of
effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part
thereof or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the
Code, any Plan shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan is, shall have been or
is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded
Current Liability, a contribution required to be made to a Plan has
not been timely made, the Borrower or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
4980 of the Code, or the Borrower has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans
(as defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as required
by Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA); (b) there shall result from any
such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a
liability; and (c) which lien, security interest or liability,
individually, and/or in the aggregate, in the reasonable opinion of
the Required Banks, will have a Material Adverse Effect; or
10.07 Security Documents. At any time after the execution
and delivery thereof, any of the Security Documents shall cease to
be in full force and effect or shall cease to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights, powers
and privileges purported to be created thereby (including, without
limitation, a perfected security interest in, and Lien on, all of the
Security Agreement Collateral), in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons (except as
permitted by Section 7.10), and subject to no other Liens (except as
permitted by Section 7.10), or the Borrower shall default in the due
performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to any of the Security
Documents and such default shall continue beyond any grace period
specifically applicable thereto pursuant to the terms of the
respective Security Document; or
10.08 Judgments. One or more judgments or decrees shall
be entered against the Borrower involving in the aggregate for the
Borrower a liability (not paid or fully covered by a reputable
insurance company) of $500,000 or more and all such judgments or
decrees shall not be vacated, discharged or stayed or bonded
pending appeal for any period of 30 consecutive days; or
10.09 Change of Control. A Change of Control shall
occur; or
10.10 Approvals. Any government approval or clearance
shall be revoked, rescinded, cancelled or modified which
revocation, recision, cancellation or modification could reasonably
be expected to have a Material Adverse Effect; or
10.11 Debarment or Suspension. The Borrower shall at
any time be debarred or suspended from any government
contracting;
then, and in any such event, and at any time thereafter, if any Event
of Default shall then be continuing, the Agent, upon the written
request of the Required Banks, shall by written notice to the
Borrower, take any or all of the following actions, without
prejudice to the rights of the Agent, any Bank or the holder of any
Note to enforce its claims against the Borrower (provided, that, if
an Event of Default specified in Section 10.05 shall occur with
respect to the Borrower, the result which would occur upon the
giving of written notice by the Agent to the Borrower as specified
in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Revolving Loan
Commitment terminated, whereupon all Revolving Loan
Commitments of each Bank shall forthwith terminate immediately
and any Commitment Commission and other Fees shall forthwith
become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all
Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; (iii)
terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with
respect to the Borrower, it will pay) to the Collateral Agent at the
Payment Office such additional amount of cash, to be held as
security by the Collateral Agent, as is equal to the aggregate Stated
Amount of all Letters of Credit issued for the account of the
Borrower and then outstanding; and (v) direct the Collateral Agent
to enforce all of the Liens and security interests created pursuant to
the Security Documents to the extent permitted thereunder.
Section 11. Definitions And Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the
terms defined):
"Account Payable Days" shall mean, as of the last day of
any period of three consecutive months, the number of account
payable days determined by multiplying (i) the quotient obtained by
dividing (x) the total face amount of the net account payables
balance of the Borrower as of such last day by (y) the net revenues
of the Borrower for such period by (ii) 90 days.
"Account Receivable Days" shall mean, as of the last day of
any period of three consecutive months, the number of account
receivable days determined by multiplying (i) the quotient obtained
by dividing (x) the total face amount of the net account receivables
balance of the Borrower as of such last day by (y) the net revenues
of the Borrower for such period by (ii) 90 days.
"Affected Eurodollar Loans" shall have the meaning
provided in Section 4.02(B)(b).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited
to all directors and officers of such Person), controlled by, or under
direct or indirect common control with, such Person; provided,
however, that for purposes of Section 9.07, an Affiliate of the
Borrower shall include any Person that directly or indirectly owns
more than 5% of any class of the capital stock of the Borrower and
for all purposes of this Agreement, neither the Agent, the Collateral
Agent, any Bank or any of their respective Affiliates shall be
considered an Affiliate of the Borrower. A Person shall be deemed
to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall mean Paribas in its capacity as Agent for the
Banks hereunder, and shall include any successor to the Agent
appointed pursuant to Section 12.09.
"Agreement" shall mean this Credit Agreement, as
modified, supplemented or amended from time to time.
"Applicable Base Rate Margin" shall mean 2%, less the then
applicable Leverage Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 3%, less the
then applicable Leverage Reduction Discount, if any.
"Applicable L/C Percentage" shall mean 2-7/8%, less the
then applicable Leverage Reduction Discount, if any.
"Asset Sale Proceeds" shall have the meaning provided in
Section 4.02(A)(d).
"Asset Sale Proceeds Payment Period" shall have the
meaning provided in Section 4.02(A)(d).
"Assignee" shall have the meaning provided in Section
13.04(c).
"Assignment and Assumption Agreement" shall have the
meaning provided in Section 13.04(b).
"Bank" shall mean each financial institution listed on
Schedule I, as well as any institution which becomes a "Bank"
hereunder pursuant to Section 13.04.
"Bank Default" shall mean (i) the refusal (which has not
been retracted) of a Bank to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its
portion of any unreimbursed payment under Section 2.04(c) or (ii) a
Bank having notified in writing the Borrower and/or the Agent that
it does not intend to comply with its obligations under Section
1.01(a) or 2, in either case as a result of the takeover of such Bank
by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in
Section 10.05.
"Base Rate" shall mean the higher of (i) 1/2 of 1% in excess
of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean any Loan designated or
deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower Bankruptcy Default" shall mean any Default or
Event of Default existing with respect to the Borrower pursuant to
Section 10.05.
"Borrower Preferred Stock" shall mean the non-voting
preferred stock of the Borrower issued and outstanding on the
Effective Date.
"Borrowing" shall mean the borrowing by the Borrower of
one Type of Revolving Loan from all the Banks (or from Paribas in
the case of Swingline Loans) on a pro rata basis on a given date (or
resulting from a conversion or conversions on such date) having in
the case of Eurodollar Loans the same Interest Period; provided,
that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of the related Borrowing of Eurodollar Loans.
"Borrowing Base" shall mean, as at any date on which the
amount thereof is being determined, an amount equal to the sum of
80% of Eligible Receivables and 50% of Eligible Inventory.
"Borrowing Base Certificate" shall have the meaning
provided in Section 8.01(j).
"Borrowing Base Deficiency" shall mean, at any time, the
amount, if any, by which the sum of the aggregate principal amount
of Revolving Loans and Swingline Loans then outstanding plus the
Letter of Credit Outstandings at such time exceeds the Borrowing
Base then in effect.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and
any day which shall be in New York City a legal holiday or a day
on which banking institutions are authorized or required by law or
other government action to close and (ii) with respect to all notices
and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by
and between banks in the New York interbank Eurodollar market.
"Capital Expenditures" shall have the meaning provided in
Section 9.08.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting
principles, are or will be required to be capitalized on the books of
such Person, in each case taken at the amount thereof accounted for
as Indebtedness in accordance with such principles.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the
United States or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than six months from
the date of acquisition, (ii) time deposits and certificates of deposit
of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company having, (x) capital and
surplus of $500 million and (y) a long-term unsecured debt rating
of at least "A" or the equivalent thereof from Standard & Poor's
Ratings Services or "A2" or the equivalent thereof from Moody's
Investors Service, Inc. with maturities of not more than three
months from the date of acquisition by such Person and (iii)
commercial paper issued by any Person incorporated in the United
States having the highest rating available from Standard & Poor's
Ratings Services or Moody's Investors Service, Inc.
"CERCLA" shall mean the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as the same has
been or may be amended from time to time, 42 U.S.C. Section 9601 et
seq.
"Change of Control" shall mean (i) the direct or indirect
acquisition by any Person or a group (as such term is defined in
Section 13(d)(3) of the Securities Exchange Act) of beneficial
ownership (as such term is defined in Rule 13D-3 promulgated
under the Securities Exchange Act) of 20% or more of the
outstanding shares of the common stock of the Borrower or (ii) the
Board of Directors of the Borrower shall not consist of a majority
of Continuing Directors.
"Charges" shall have the meaning provided in Section
13.16.
"Claims" shall have the meaning provided in the definition
of "Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and
the rulings issued thereunder. Section references to the Code are
to the Code, as in effect at the date of this Agreement and any
subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been
granted (or purport to be granted) pursuant to any Security
Document, including, without limitation, all Security Agreement
Collateral and all cash and Cash Equivalents delivered as collateral
pursuant to this Agreement or any other Credit Document.
"Collateral Agent" shall mean the Agent acting as collateral
agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 5.05.
"Commitment Commission" shall have the meaning provided
in Section 3.01(a).
"Consolidated EBIT" shall mean, for any period, the
Consolidated Net Income before interest income, Consolidated Interest
Expense, and provisions for taxes and without giving effect to
extraordinary gains or losses or gains or losses from sales of assets
other than inventory sold in the ordinary course of business.
"Consolidated EBITDA" for any period shall mean
Consolidated EBIT, adjusted by adding thereto the amount of all
amortization of intangibles and depreciation that were deducted in
arriving at Consolidated Net Income for such period.
"Consolidated Indebtedness" shall mean Indebtedness of the
Borrower excluding the amount of Indebtedness of the Borrower
identified as item 1 on Schedule VI in an amount not to exceed the
amount set forth thereon and as such amount may be reduced from
time to time.
"Consolidated Interest Expense" shall mean, for any Person
for any period, the total consolidated interest expense of such
Person and its Subsidiaries for such period (calculated without
regard to any limitations on the payment thereof) payable during such
period in respect of all Indebtedness of such Person and its
Subsidiaries, on a consolidated basis, for such period (including,
without duplication, that portion of Capitalized Lease Obligations
of such Person and its Subsidiaries representing the interest factor
for such period).
"Consolidated Liabilities" shall mean, at any time, all
liabilities and obligations of any Person and its Subsidiaries which
would be included in determining total liabilities as shown on the
liabilities portion of a balance sheet (including, without limitation,
all Indebtedness, all trade payables, all accrued expenses, all
deferred tax liabilities and the principal component of Capitalized
Lease Obligations, but excluding all Indebtedness of the type
described in clause (vii) of the definition thereof, except to the
extent amounts are owing with respect thereto upon the termination
of the respective agreement constituting such Indebtedness, and
excluding the amount of Indebtedness of the Borrower identified as
item 1 on Schedule VI in an amount not to exceed the amount set
forth thereon and as such amount may be reduced from time to
time).
"Consolidated Net Income" shall mean, for any Person for
any period, net income of such Person and its Subsidiaries for such
period determined on a consolidated basis (after provision for
taxes); provided, however, the net income of any Subsidiary of such
Person, which is not a Wholly-Owned Subsidiary of such Person
and for which the investment of such Person therein is accounted
for by the equity method of accounting, shall have its net income
included in the Consolidated Net Income of such Person and its
Subsidiaries only to the extent of the amount of cash dividends or
distributions paid by such Subsidiary to such Person; provided
further that for any period prior to December 31, 1996, the amount
of Consolidated Net Income shall not be reduced by the one-time
write-off (not involving any cash expenditures) in an amount not to
exceed $3,200,000 of the financing fee incurred in connection with
the Original Credit Agreement.
"Consolidated Net Interest Expense" shall mean, for any
Person for any period, Consolidated Interest Expense less the
amount of interest income derived from investments in cash and
Cash Equivalents of such Person and its consolidated Subsidiaries
for such period.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of any
such primary obligation or (y) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided, however, that
the term Contingent Obligation should not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" shall mean the directors of the
Borrower on the Effective Date and each other director, if such
other director's nomination for election to the Board of Directors of
the Borrower is recommended by a majority of the then Continuing
Directors.
"Credit Documents" shall mean this Agreement, each Note,
each Notice of Borrowing, each Notice of Conversion, each Letter
of Credit, each Letter of Credit Request and the Security
Documents.
"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit (including the continuation on the
Effective Date of the Existing Letters of Credit).
"CRL Agreement" shall mean the Asset Purchase
Agreement, dated October 13, 1993, by and among Hooshang
Dalavarian, Inc., Mr. Hooshang Dalavarian and the Borrower, as
in effect on the Effective Date.
"CSL Acquisition Agreement" shall mean the Asset
Purchase Agreement, dated as of November 3, 1995, by and among
Clinical Science, Inc., Alan Marsh, Harvey Lippman and the
Borrower, as in effect on the Effective Date.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"Defaulting Bank" shall mean any Bank with respect to
which a Bank Default is in effect.
"DHHS" shall mean the Department of Health and Human
Services of the United States of America.
"Dividend" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity
capital to its stockholders or authorized or made any other
distribution, payment or delivery of property (other than common
stock of such Person) or cash to its stockholders in their capacity as
stockholders, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of
any class of its capital stock outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect
to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase
or otherwise acquire for a consideration any shares of any class of
the capital stock of such Person outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends"
with respect to any Person shall also include all cash payments
made or required to be made by such Person with respect to any
stock appreciation rights, plans, equity incentive or achievement
plans or any similar plans or setting aside of any funds for the
foregoing purposes.
"Documents" shall mean the Credit Documents and the
Senior Notes Documents.
"Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States.
"Drawing" shall have the meaning provided in Section
2.05(b).
"Effective Date" shall have the meaning provided in Section
13.10.
"Eligible Inventory" shall mean the gross dollar value
(valued at the lower of cost (determined on a first-in, first-out basis)
or market value) of the inventory of the Borrower which conforms
to the representations and warranties contained in the Security
Agreement (including, without limitation, that the Collateral Agent
shall have and maintain a first priority perfected security interest in
such inventory), constitutes raw materials, work-in-progress or
finished goods and which is not, in the Borrower's good faith
opinion and consistent with past practice, excess, obsolete or
unmerchantable and excluding:
(a) any supplies (other than raw materials,
including, without limitation, all chemicals, chemical
products, needles, test tubes and other testing supplies),
spare parts and goods returned to suppliers;
(b) any market reserves maintained by the
Borrower;
(c) inventory on lease or consignment from or to
any Person to or from the Borrower;
(d) inventory which is unsellable, damaged,
obsolete, or otherwise not readily saleable at market value
in the ordinary course of business, consistent with past
practice;
(e) inventory which is not subject to an
enforceable and duly perfected first priority security interest in
favor of the Collateral Agent;
(f) work-in-progress that is not readily marketable
in its current form;
(g) finished goods which do not meet the specifications
of the purchase order for such goods; and
(h) inventory produced in violation of the Fair
Labor Standards Act and subject to the so-called "hot
goods" provisions contained in Title 25 U.S.C. 215(a)(i).
"Eligible Receivables" shall mean the total face amount of
all receivables of the Borrower which conform to the
representations and warranties contained in the Security Agreement
(including, without limitation, that the Collateral Agent shall have
and maintain a first priority security interest in all such receivables)
and excluding:
(a) returns, discounts, claims, credits, and
allowances;
(b) reserves for any other matter affecting the
creditworthiness of account debtors owing the receivables:
(c) bill and hold (deferred shipment) transactions;
(d) contracts or sales to any Affiliate;
(e) all receivables not paid in full within 120
days of the invoice date thereof or within 90 days of the due
date thereof or which have been disputed by the account
debtor;
(f) receivables owed by an account debtor more
than 50% of whose receivables are not Eligible Receivables
on account of clause (e) above and whose receivables
constitute at least 1% of the total receivables of the
Borrower at such time;
(g) sales to account debtors outside the United
States;
(h) receivables evidenced by an instrument (as
defined in Article 9 of the New York UCC) not in the
possession of the Collateral Agent;
(i) receivables with respect to which the Collateral
Agent does not have a valid, first priority and perfected
security interest;
(j) receivables with respect to which the
customer's obligation to pay is conditional or subject to a
repurchase obligation or right of return, guaranteed sales,
sale or return transactions, sales on approval or consignment
sales;
(k) receivables of any account debtor with respect
to which any action or event of the types described in
Section 10.05 has occurred;
(l) any receivable the goods giving rise to which
have not been shipped to the account debtor thereof, or the
services giving rise to which have not been performed by
the Borrower, or which otherwise does not represent a complete
sale or performance;
(m) any receivable subject to a Lien (other than
Liens granted to the Collateral Agent as contemplated
hereunder); and
(n) any receivable owed by an account debtor
which is also a creditor or supplier of the Borrower but only
to the extent any amounts are owed to such creditor or
supplier or which has made any claim with respect to such
receivable, or any receivable which otherwise is or may
become subject to any right of setoff by the account debtor
thereof in any such case to the extent of such claim or
setoff.
"Eligible Transferee" shall mean and include a commercial
bank, financial institution, other "accredited investor" (as defined
in Regulation D of the Securities Act) or a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act.
"Employee Benefit Plans" shall have the meaning provided
in Section 5.05.
"Employee Stock Proceeds" shall have the meaning provided
in Section 4.02(A)(c).
"Employee Stock Proceeds Payment Period" shall have the
meaning provided in Section 4.02(A)(c).
"Employment Agreements" shall have the meaning provided
in Section 5.05.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand
letters, directives, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law, and (b) any and all Claims
by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Law" shall mean any Federal, state or local
statute, law, rule, regulation, ordinance, code, guideline, policy or
rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative decision, order, consent
decree or judgment, relating to the environment, health, safety or
Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Hazardous Materials Transportation Act, as amended,
49 U.S.C. Section 1801 et seq.; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. Section 1251 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, 42
U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
Section 2701 et seq.; the Emergency Planning and Community
Right-To-Know-Act of 1986, 42 U.S.C. Section 11001 et seq.;
any applicable state and local counterparts or equivalents;
and the terms and conditions of any environmental permit issued
pursuant to any Environmental Law to the Borrower.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this
Agreement and to any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower would be
deemed to be a "single employer" (i) within the meaning of Section
414(b), (c), (m) or (o) of the Code or (ii) as a result of the
Borrower being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan (excluding
Swingline Loans) designated as such by the Borrower at the time of
the incurrence thereof or conversion thereto.
"Event of Default" shall have the meaning provided in
Section 10.
"Existing Indebtedness" shall have the meaning provided in
Section 7.14.
"Existing Indebtedness Agreements" shall have the meaning
provided in Section 5.05.
"Existing Letters of Credit" shall have the meaning provided
in Section 2.01(a)(ii).
"Facing Fee" shall have the meaning provided in Section
3.01(b).
"Fair Market Value" shall have the meaning provided in
Section 8.16(a).
"Federal Funds Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged
by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent
from three Federal Funds brokers of recognized standing selected
by the Agent.
"Fees" shall mean all amounts payable pursuant to or
referred to in Section 3.01.
"Fixed Charge Coverage Ratio" for any period shall mean
the ratio of (x) Consolidated EBITDA less (i) the amount of all
Capital Expenditures (exclusive of Capital Expenditures made with
the proceeds of Indebtedness permitted to be incurred under Section
9.05) made by the Borrower for any such period and (ii) taxes paid
by the Borrower or accrued for such period to (y) Fixed Charges
for such period.
"Fixed Charges" for any period shall mean the sum of
(i) Consolidated Interest Expense and amortization of debt discounts
in respect of all Indebtedness for such period, (ii) the aggregate
principal amount of all scheduled payments of Indebtedness
(including, without limitation, the principal component of all
Capitalized Lease Obligations but excluding Revolving Loan
repayments not accompanied by a reduction to the Revolving Loan
Commitment) required to be made during such period and (iii) the
amount of all Dividends paid pursuant to Section 9.03(ii) during
such period.
"GAAP" shall have the meaning provided in Section
13.07(a).
"Hazardous Materials" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is friable, urea formaldehyde foam insulation, transformers or other
equipment that contain, dielectric fluid containing levels of poly-
chlorinated biphenyls, and radon gas; (b) any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any applicable Environmental Law; (c)
"Medical Waste," as defined in Section 25023.2 of the California Medical
Waste Management Act or in any other applicable federal, state or
local act, regulation or ordinance; and (d) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any Environmental Law.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees
and charges) of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) the maximum
amount available to be drawn under all letters of credit issued for
the account of such Person and all unpaid drawings in respect of
such letters of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) secured by any Lien on any
property owned by such Person, whether or not such Indebtedness
has been assumed by such Person, (iv) all Capitalized Lease Obligations
of such Person, (v) all obligations of such Person to pay a
specified purchase price for goods or services, whether or not delivered
or accepted, i.e., take-or-pay and similar obligations, (vi) all
Contingent Obligations of such Person and (vii) all obligations
under any Interest Rate Protection Agreements or under any similar
type of agreement, provided, that Indebtedness shall not include
trade payables and accrued expenses, in each case arising in the
ordinary course of business.
"Indemnified Matters" shall have the meaning provided in
Section 13.01.
"Indemnitee" shall have the meaning provided in Section
13.01.
"Initial Borrowing Date" shall mean the date on which the
initial Credit Event occurs.
"Intellectual Property" shall have the meaning provided in
Section 7.19(a).
"Interest Determination Date" shall mean, with respect to
any Eurodollar Loan, the second Business Day prior to the
commencement of any Interest Period relating to such Eurodollar
Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall have the meaning
provided in the Security Agreement.
"Issuing Bank" shall mean Paribas.
"Key-Man Life Insurance" shall mean the key-man life
insurance policy or any similar insurance policy maintained by the
Borrower on Andrew Baker and Richard Michaelson.
"L/C Supportable Indebtedness" shall mean (i) obligations
of the Borrower incurred in the ordinary course of business with
respect to workers compensation, surety bonds, and other similar
statutory obligations, (ii) obligations of the Borrower incurred in the
ordinary course of business with respect to insurance policies of the
Borrower and (iii) such other obligations of the Borrower as are
reasonably acceptable to the Issuing Bank and otherwise permitted
to exist pursuant to the terms of this Agreement.
"Leasehold" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under any
lease or license of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of
Credit and (ii) the aggregate amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided
in Section 2.03(a).
"Leverage Ratio" shall mean, as determined on any Test
Date, the ratio of (i) Consolidated Indebtedness at such time to (ii)
Consolidated EBITDA for the Reduction Test Period then last
ended. In calculating the Leverage Ratio for the Reduction Test
Periods ending on June 30, 1996 and September 30, 1996, the
applicable Consolidated EBITDA shall be multiplied by 2.00 and
1.33, respectively.
"Leverage Reduction Discount" shall mean initially zero and
from and after the first day of any Margin Reduction Period to and
including the last day of such Margin Reduction Period, the
Leverage Reduction Discount shall be the respective percentage per
annum set forth in clause (A) or (B) below if, but only if, as of the
last day of the most recent Reduction Test Period of the Borrower
ended immediately prior to such Margin Reduction Period (the
"Test Date") the conditions in clause (A) or (B) below are met:
(A) 1/4 of 1% if, but only if, as of the Test Date for
such Margin Reduction Period the Leverage Ratio for the
Reduction Test Period ended on such Test Date shall be less
than or equal to 3.50:1.00 but greater than 3.00:1.00; or
(B) 1/2 of 1% if, but only if, as of the Test Date for
such Margin Reduction Period the Leverage Ratio for the
Reduction Test Period ended on such Test Date shall be less
than or equal to 3.00:1.00.
The Leverage Ratio shall be determined as of each Test Date by
delivery of an officer's certificate of the Borrower to the Banks
pursuant to Section 8.01(e), which certificate shall set forth the
calculation of the Leverage Ratio. The Leverage Reduction
Discount so determined shall apply, except as set forth below, from
the date on which such officer's certificate is delivered to the Agent
to the earlier of (x) the date on which the next certificate is
delivered to the Agent pursuant to Section 8.01(e) and (y) the 45th
day following the first day of the fiscal quarter immediately
following the delivery of such certificate to the Agent (the "Margin
Reduction Period"). Notwithstanding anything to the contrary
contained above, the Leverage Reduction Discount shall be zero if no
officer's certificate has been delivered to the Banks pursuant to
Section 8.01(e) which sets forth the Leverage Ratio for the relevant
Reduction Test Period or the financial statements upon which any
such calculations are based have not been delivered, until such a
certificate and/or financial statements are delivered.
Notwithstanding anything to the contrary above in this definition,
the Leverage Reduction Discount shall be zero at all times when
there shall exist a Default or Event of Default. It is understood and
agreed that the Leverage Reduction Discount as provided above
shall in no event be cumulative and only the Leverage Reduction
Discount available pursuant to either clause (A) or (B), if any,
contained in this definition shall be applicable.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any kind
or nature whatsoever which has the practical effect of creating a
security interest (including, without limitation, any conditional sale
or other title retention agreement, any financing or similar statement
or notice filed under the UCC or any other similar recording or
notice statute, and any lease having substantially the same effect as
any of the foregoing).
"Loan" shall mean each and every Loan made by any Bank
hereunder, including Revolving Loans or Swingline Loans.
"Management Agreements" shall have the meaning provided
in Section 5.05.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(c).
"Margin Reduction Period" shall have the meaning provided
in the definition of Leverage Reduction Discount.
"Margin Stock" shall have the meaning provided in
Regulation U.
"Material Adverse Effect" shall mean a material adverse
effect on the performance, business, assets, nature of assets,
contracts, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower.
"Material Contracts" shall have the meaning provided in
Section 5.05.
"Maturity Date" shall mean either the Revolving Loan
Maturity Date or the Swingline Expiry Date, as the case may be.
"Maximum Rate" shall have the meaning provided in
Section 13.16.
"Maximum Swingline Amount" shall mean $2,000,000.
"Minimum Borrowing Amount" shall mean (i) for Base Rate
Loans (other than Swingline Loans), $1,000,000, (ii) for Eurodollar
Loans, $1,000,000 and (iii) for Swingline Loans, $250,000.
"Net Sale Proceeds" shall mean for any sale of assets, the
gross cash proceeds (including any cash received by way of
deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received from any sale
of assets, net of (i) reasonable transaction costs, (ii) the amount of
such gross cash proceeds required to be used to repay any
Indebtedness which is secured by the respective assets which were
sold and (iii) the estimated marginal increase in income taxes which
will be payable by the Borrower's consolidated group as a result of
such sale.
"Non-Compete Agreements" shall have the meaning
provided in Section 5.05.
"Note" shall mean each Revolving Note and the Swingline
Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent located
at 787 Seventh Avenue, New York, New York 10019, Attention:
Eric Green, telephone (212) 841-2000; facsimile (212) 841-2333,
or such other office as the Agent may hereafter designate in writing
as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Agent,
the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Bank" shall mean each Person which was a Bank
under, and as defined in, the Original Credit Agreement
immediately prior to the Effective Date.
"Original Credit Agreement" shall mean the Credit
Agreement, dated as of May 16, 1995, among the Borrower, the
Original Banks and Banque Paribas, as agent, as such agreement
shall have been amended to the Effective Date.
"Original Effective Date" shall mean the Effective Date
under, and as defined in, the Original Credit Agreement.
"Original Loans" shall mean the Loans under, and as
defined in, the Original Credit Agreement.
"Paribas" shall mean Banque Paribas, a French banking
organization acting through its New York Branch.
"Participant" shall have the meaning provided in Section
2.04(a).
"Payment Office" shall mean the office of the Agent located
at 787 Seventh Avenue, New York, New York 10019, Attention:
Eric Green or such other office as the Agent may hereafter
designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA, or any
successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving
Loan Commitment of such Bank at such time and the denominator
of which is the Total Revolving Loan Commitment at such time;
provided, that if the Percentage of any Bank is to be determined
after the Total Revolving Loan Commitment has been terminated,
then the Percentage of such Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Permitted Acquisition" shall mean the acquisition by the
Borrower of assets (but no liabilities of any type (contingent or
otherwise) except trade payables and the assumption of contracts
acquired in the Permitted Acquisition so long as such contracts were
not entered into in contemplation of such Permitted Acquisition)
constituting an entire business, division or product line of any
Person, although any such acquisition shall only be a Permitted
Acquisition so long as: (i) the consideration therefor consists solely
of cash (including proceeds from Revolving Loans incurred in
accordance with the provisions hereof) and/or common stock of the
Borrower, (ii) the assets acquired shall consist solely of assets of the
type already used in the business of the Borrower (and shall not
include any Real Property other than Leaseholds) and (iii) an
acquisition shall be a Permitted Acquisition only if all requirements
of Section 8.16 are met with respect thereto.
"Permitted Acquisition Period" shall mean each period (x)
from the Effective Date to the first anniversary of the Effective
Date, (y) from the first anniversary of the Effective Date to the
second anniversary of the Effective Date and (z) from the second
anniversary of the Effective Date to the Revolving Loan Maturity
Date.
"Permitted Liens" shall have the meaning provided in
Section 9.01.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or
any government or political subdivision or any agency, department
or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer
plan as defined in Section 4001 of ERISA, which is maintained or
contributed to by (or to which there is an obligation to contribute
of) the Borrower or an ERISA Affiliate, and each such plan for the
five year period immediately following the latest date on which the
Borrower or an ERISA Affiliate maintained, contributed to or had
an obligation to contribute to such plan.
"Prime Lending Rate" shall mean the rate which The Chase
Manhattan Bank, N.A. announces from time to time as its prime
lending rate, the Prime Lending Rate to change when and as such
prime lending rate changes.
"Projections" shall have the meaning provided in Section
5.15.
"Quarterly Payment Date" shall mean the third, sixth, ninth
and twelfth month anniversary of the Effective Date and each yearly
anniversary of such third, sixth, ninth and twelfth month
anniversary of the Effective Date.
"Quoted Rate" shall mean (a) the offered quotation to first-
class banks in the New York interbank Eurodollar market by the
Agent for U.S. dollar deposits of amounts in immediately available
funds comparable to the outstanding principal amount of the
Eurodollar Loan of the Agent for which an interest rate is then
being determined with maturities comparable to the Interest Period
applicable to such Eurodollar Loan determined as of 10:00 A.M.
(New York time) on the date which is two Business Days prior to
the commencement of such Interest Period, divided (and rounded
upward to the next whole multiple of 1/16 of 1%) by (b) a
percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under
Regulation D).
"RCRA" shall mean the Resource Conservation and
Recovery Act, as the same may be amended from time to time, 42
U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and
fixtures, including Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower of
any cash insurance or condemnation proceeds (including, without
limitation, errors and omissions policies), payable (i) by reason of
theft, physical destruction or damage or any other similar event
with respect to any properties or assets of the Borrower, (ii) by
reason of any condemnation, taking or seizing or similar event with
respect to any properties or assets of the Borrower and (iii) under
any other policy of insurance required to be maintained under
Section 8.03 (including Key-Man Life Insurance and business
interruption insurance).
"Reduction Test Period" shall mean each of the following
(each taken as one accounting period): (i) the period beginning on
January 1, 1996 and ending on June 30, 1996, (ii) the period
beginning on January 1, 1996 and ending on September 30, 1996
and (iii) for each other period ending on a date after September 30,
1996, the four consecutive fiscal quarterly periods of the Borrower
then ended.
"Refinanced Indebtedness" shall have the meaning provided
in Section 5.16.
"Register" shall have the meaning provided in Section 8.14.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof establishing
reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Release" shall mean disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping,
emptying, seeping, placing, pouring and the like, into or upon any
land or water or air, or otherwise entering into the indoor or
outdoor environment or into or out of any Real Property, including
the movement of Hazardous Materials through or in the air, soil,
service water, ground water or property.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in
Section 1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan other than those events as
to which the 30-day notice period is waived under subsection .13,
.14, .16, .18, .19 or .20 of PBGC Regulation Section 2615.
"Required Banks" shall mean Banks the sum of whose
outstanding Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding
Revolving Loans, Swingline Loans and Percentage of Letter of
Credit Outstandings) constitute greater than 50% of the Total
Revolving Loan Commitment (or, if after the Total Revolving Loan
Commitment has been terminated, the sum of the total outstanding
Revolving Loans, Swingline Loans and Letter of Credit
Outstandings at such time).
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto
directly below the column entitled "Revolving Loan Commitment,"
as same may be (x) reduced from time to time pursuant to Sections
3.02, 3.03 and/or 10 or (y) adjusted from time to time as a result
of assignments to or from such Bank pursuant to Section 13.04.
"Revolving Loan Maturity Date" shall mean, with respect
to each Bank, the third anniversary of the Effective Date.
"Revolving Loans" shall have the meaning provided in
Section 1.01(a).
"Revolving Note" shall have the meaning provided in
Section 1.05(a).
"SEC" shall have the meaning provided in Section 8.01(g).
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b).
"Secured Creditors" shall mean the Banks, the Agent and the
Collateral Agent.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
"Security Agreement" shall have the meaning provided in
Section 5.08.
"Security Agreement Collateral" shall mean all "Collateral"
as defined in any Security Document.
"Security Documents" shall mean the Security Agreement
and any other security documents entered into from time to time in
accordance with this Agreement.
"Senior Notes" shall mean the 11.00% Senior Notes due
2006, issued by the Borrower, as in effect of the Effective Date and
after giving effect to any changes, amendments or supplements
thereto effected in accordance with Section 9.12.
"Senior Notes Change of Control" shall mean a Change of
Control under, and as defined in, the Senior Notes Indenture.
"Senior Notes Documents" shall mean and include each of
the Senior Notes, the Senior Notes Indenture and all securities
purchase agreements and other documents and agreements related
thereto, as in effect of the Effective Date and after giving effect to
any changes, amendments or supplements thereto effected in
accordance with Section 9.12.
"Senior Notes Indenture" shall mean the Indenture, dated as
of March 14, 1996 between the Borrower and Marine Midland
Bank, as trustee, as in effect on the Effective Date and after giving
effect to any changes, amendments or supplements thereto effected
in accordance with Section 9.12.
"Shareholders' Agreements" shall have the meaning
provided in Section 5.05.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder at
such time (in each case determined without regard to whether any
conditions to drawing could then be met).
"Subsidiary" shall mean, as to any Person, (i) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a
50% equity interest at the time.
"Supply Agreements" shall have the meaning provided in
Section 5.05.
"Swingline Expiry Date" shall mean the date which is two
Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in
Section 1.01(b).
"Swingline Note" shall have the meaning provided in
Section 1.05(a).
"Tax Sharing Agreements" shall have the meaning provided
in Section 5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Date" shall have the meaning provided in the
definition of Leverage Reduction Discount.
"Test Period" shall mean each of the following (each taken
as one accounting period): (i) the period beginning on January 1,
1996 and ending on June 30, 1996, (ii) the period beginning on
January 1, 1996 and ending on September 30, 1996 and (iii) for
each other period ending on or after September 30, 1996, the four
consecutive fiscal quarterly periods of the Borrower then ended.
"Total Revolving Loan Commitment" shall mean, at any
time, the sum of the Revolving Loan Commitments of each of the
Banks.
"Total Unutilized Revolving Loan Commitment" shall mean,
at any time, an amount equal to the remainder of (x) the then Total
Revolving Loan Commitment less (y) the sum of the aggregate
principal amount of Revolving Loans and Swingline Loans then
outstanding and the then aggregate amount of Letter of Credit
Outstandings.
"Transaction" shall mean collectively, (i) the incurrence of
Loans and issuance of Letters of Credit (including the continuation
of the Existing Letters of Credit) hereunder, if any, on the Effective
Date, (ii) the issuance of the Senior Notes, (iii) the repayment of all
Original Loans, together with all accrued interest, premiums, fees,
commissions and expenses owing in connection therewith, and (iv)
the payment of the transaction fees and expenses in connection
therewith.
"Type" shall mean the type of Loan determined with regard
to the interest option applicable thereto, i.e., a Base Rate Loan or
a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from
time to time in effect in the relevant jurisdiction.
"UGL" shall mean Unilabs Group Limited, a British Virgin
Islands corporation.
"UGL Note" shall mean the promissory note issued by UGL
and UniHolding Corp. dated June 30, 1995 in the principal amount
of $15,000,000 and maturing one year from the date of issuance, as
in effect on the Effective Date.
"Unfunded Current Liability" of any Plan means the
amount, if any, by which the actuarial present value of the
accumulated plan benefits under the Plan as of the close of its most
recent plan year exceeds the fair market value of the assets allocable
thereto, each determined in accordance with Statement of Financial
Accounting Standards No. 87, based upon the actuarial assumptions
used by the Plan's actuary in the most recent annual valuation of the
Plan.
"United States" and "U.S." shall each mean the United
States of America.
"Unpaid Drawing" shall have the meaning provided for in
Section 2.05(a).
"Unutilized Revolving Loan Commitment" for any Bank, at
any time, shall mean the Revolving Loan Commitment of such Bank
at such time less the sum of the aggregate principal amount of
Revolving Loans made by such Bank and then outstanding and such
Bank's Percentage of the Letter of Credit Outstandings.
"Wholly-Owned Subsidiary" shall mean, as to any Person,
(i) any corporation 100% of whose capital stock is at the time
owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association,
joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
Section 12. The Agent and the Collateral Agent.
12.01 Appointment. The Banks hereby designate Paribas
as Agent (for purposes of this Section 12.01, the term "Agent" shall
include Paribas in its capacity as Collateral Agent pursuant to the
Security Documents) pursuant to the Credit Documents to act as
specified herein and in the other Credit Documents. Each Bank
hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize,
the Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments
and agreements referred to herein or therein and to exercise
such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Agent by the
terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent may perform any of its respective
duties hereunder by or through their respective officers, directors,
agents or employees.
12.02 Nature of Duties. The Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement
and the Security Documents. Neither the Agent nor any of its
officers, directors, agents or employees shall be liable for any
action taken or omitted by it or them hereunder or under any other
Credit Document or in connection herewith or therewith, unless
caused by its or their gross negligence or willful misconduct. The
duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any
other Credit Document a fiduciary relationship in respect of any
Bank or the holder of any Note; and nothing in this Agreement or
any other Credit Document, expressed or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement or any other Credit Document except
as expressly set forth herein. In no event shall the Agent be
required to take any action in contravention of applicable law or if
such action would cause it, in its sole determination, to incur any
risk or liability for which it is not adequately indemnified for to its
sole satisfaction.
12.03 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank and the holder of each
Note, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the
financial condition and affairs of the Borrower in connection with
the making and the continuance of the Loans and the participation
in Letters of Credit and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the credit-
worthiness of the Borrower and, except as expressly provided in
this Agreement, the Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the
holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Loans, the participation in the Letters of Credit or at any time or
times thereafter. The Agent shall not be responsible to any Bank or
the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate
or other writing delivered in connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability, perfection,
priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower or be required
to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition
of the Borrower or the existence or possible existence of any
Default or Event of Default.
12.04 Certain Rights of the Agent. If the Agent shall
request instructions from the Required Banks with respect to any act
or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action unless and
until the Agent shall have received written instructions from the
Required Banks; and the Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing,
no Bank and no holder of any Note shall have any right of action
whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder or under any other Credit Document
in accordance with the instructions of the Required Banks.
12.05 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or facsimile
message, cablegram, radiogram, legal opinion, order or other
document or telephone message signed, sent or made by any Person
that the Agent believed to be the proper Person, and, with respect
to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon
advice of counsel selected by it.
12.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by the Borrower, the Banks will
reimburse and indemnify the Agent, in proportion to their
respective "percentages" as used in determining the Required
Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs,
expenses or disbursements of whatsoever kind or nature which may
be imposed on, asserted against or incurred by the Agent in
performing its duties hereunder or under any other Credit
Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful
misconduct.
12.07 The Agent in Its Individual Capacity. With respect
to its obligation to make Loans under this Agreement, the Agent
shall have the rights and powers specified herein for a "Bank" and
may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks,"
"Required Banks," "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or
other business with the Borrower or any Affiliate of the Borrower
as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower for services
in connection with this Agreement and otherwise without having to
account for the same to the Banks.
12.08 Holders. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement
thereof, as the case may be, shall have been filed with the Agent,
as the case may be. Any request, authority or consent of any
Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes
issued in exchange therefor.
12.09 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder
and/or under the other Credit Documents at any time by giving 15
Business Days' prior written notice to the Borrower and the Banks.
Such resignation shall take effect upon the appointment of a successor
Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Required
Banks shall appoint a successor Agent hereunder or thereunder who
shall be a commercial bank or trust company reasonably acceptable
to the Borrower (it being understood and agreed that any Bank is
deemed to be acceptable to the Borrower).
(c) If a successor Agent shall not have been so appointed
within such 15 Business Day period, the Agent, with the consent of
the Borrower, shall then appoint a successor Agent who shall serve
as Agent hereunder or thereunder until such time, if any, as the
Banks appoint a successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) above by the 20th Business Day after the date such
notice of resignation was given by the Agent, the Agent's
resignation shall become effective and the Banks shall thereafter
perform all the duties of the Agent hereunder and/or under any
other Credit Document until such time, if any, as the Banks appoint
a successor Agent as provided above.
Section 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower agrees to:
(i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Agent and the Collateral Agent (including, without limitation, the
reasonable fees and disbursements of White & Case) in connection
with the preparation, execution and delivery of this Agreement and
the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or
consent relating hereto or thereto, of the Agent in connection with
its syndication efforts with respect to this Agreement (including,
without limitation, the reasonable fees and disbursements of counsel
for the Agent) and of the Agent, the Collateral Agent and each of
the Banks in connection with the enforcement of this Agreement and
the other Credit Documents and the documents and instruments
referred to herein and therein (including, without limitation, the
reasonable fees and disbursements of counsel for the Agent, the
Collateral Agent and for each of the Banks); (ii) pay and hold each
of the Banks harmless from and against any and all present and
future stamp, excise and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such
Bank) to pay such taxes; and (iii) defend, protect, indemnify and
hold harmless the Agent, the Collateral Agent and each Bank, and
each of their respective officers, directors, employees,
representatives and agents (collectively called the "Indemnitees")
from and against any and all liabilities, obligations (including
removal or remedial actions), losses, damages (including
foreseeable and unforeseeable consequential damages and punitive
damages), penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' and
consultants fees and disbursements) of any kind or nature whatsoever
that may at any time be incurred by, imposed on or assessed
against the Indemnitees directly or indirectly based on, or arising or
resulting from, (a) any investigation, litigation or other proceeding
(whether or not the Agent, the Collateral Agent or any Bank is a
party thereto) related to the entering into and/or performance of this
Agreement or any other Credit Document or the use of any Letter
of Credit or the proceeds of any Loans hereunder or the
consummation of any transactions contemplated herein (including,
without limitation, the issuance of the Senior Notes) or in any other
Credit Document, (b) the actual or alleged generation, presence or
Release of Hazardous Materials on or from, or the transportation of
Hazardous Materials to or from, any Real Property owned or
operated at any time by the Borrower or; (c) any Environmental
Claim relating to the Borrower or any Real Property owned or at
any time operated by the Borrower or; (d) the exercise of the rights
of the Agent, the Collateral Agent and of any Bank under any of the
provisions of this Agreement, any Security Document or any other
Document or any Letter of Credit or any Loans hereunder; or,
(e) the consummation of any transaction contemplated herein
(including, without limitation, the issuance of the Senior Notes) or
in any other Credit Document (the "Indemnified Matters"); regardless
of when such Indemnified Matter arises, but excluding any such
liability, obligation, loss, damage, penalty, claim, action, judgment,
suit, cost, expense or disbursement relating to any Indemnified
Matter resulting from the gross negligence or willful misconduct of
any Indemnitee.
13.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way
of limitation of any such rights, upon the occurrence and during the
continuance of an Event of Default, each Bank is hereby authorized
at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off
and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such
Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of
the Borrower against and on account of the Obligations and
liabilities of the Borrower to such Bank under this Agreement or
under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank
pursuant to Section 13.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any
other Document, irrespective of whether or not such Bank shall
have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or
unmatured.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
or cable communication) and mailed, telegraphed, telexed,
facsimilied, cabled or delivered: if to the Borrower, at its address
specified opposite its signature below; if to any Bank, at its address
specified on Schedule I; and if to the Agent, at its Notice Office; or,
as to the Agent, at such other address as shall be designated by the
Agent in a written notice to the other parties hereto and, as to each
Bank, at such other address as shall be designated by such Bank in
a written notice to the Borrower and the Agent. All such notices
and communications shall, when mailed, telegraphed, telexed,
facsimilied, or cabled or sent by overnight courier, be effective
when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by
telex or facsimile device, except that notices and communications
to the Agent and the Borrower shall not be effective until received
by the Agent and the Borrower, as the case may be.
13.04 Benefit of Agreement; Assignments; Participations.
(a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of
the parties hereto; provided, however, the Borrower may not assign
or transfer any of its rights, obligations or interest hereunder or
under any other Credit Document without the prior written consent
of the Banks; and provided further, that although any Bank may
transfer, assign or grant participations in its rights hereunder, such
Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Commitments
hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not
constitute a "Bank" hereunder; and provided further, that no Bank
shall transfer or grant any participation under which the participant
shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such
amendment or waiver would: (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter
of Credit is not extended beyond the Revolving Loan Maturity
Date) in which such participant is participating, or reduce the rate
or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or
increase the Revolving Loan Commitment in which such participant
is participating over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of
a mandatory reduction in the Total Revolving Loan Commitment or
of a mandatory prepayment shall not constitute a change in the
terms of such participation, and that an increase in any Revolving
Loan Commitment shall be permitted without the consent of any
participant if the participant's participation is not increased as a
result thereof); (ii) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement;
or (iii) release all or substantially all of the Collateral under the
Security Documents (except as expressly provided in the Credit
Documents) supporting the Loans hereunder in which such participant
is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of
the other Credit Documents (the participant's rights against such
Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall
be determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) (A) pledge its
Loans and/or Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank
or (B) assign all or a portion of its Revolving Loan Commitment
and related outstanding Obligations hereunder to its parent
company, principal office and/or any Affiliate of such Bank which
is at least 50% owned by such Bank or its parent company or to one
or more other Banks or (y) assign all, or if less than all, a portion
equal to at least $5,000,000 in the aggregate for the assigning Bank
or assigning Banks (provided that the $5,000,000 limitation shall
not apply to assignments to an assignee who was a Bank
immediately prior to the assignment), of such Loans or Revolving
Loan Commitment and related outstanding Obligations hereunder
to one or more Eligible Transferees each of which assignees shall
become a party to this Agreement as a Bank by execution of an
assignment and assumption agreement (the "Assignment and
Assumption Agreement") substantially in the form of Exhibit J
(appropriately completed); provided that: (i) at such time Schedule
I shall be deemed modified to reflect the Revolving Loan Commitment
of such new Bank and of the existing Banks; (ii) new Notes
will be issued to such new Bank and to the assigning Bank upon the
request of such new Bank or assigning Bank, such new Notes to be
in conformity with the requirements of Section 1.05 to the extent
needed to reflect the revised Revolving Loan Commitments; (iii) the
consent of Paribas shall be required; (iv) the Agent shall receive at
the time of each such assignment, from the assigning Bank, the
payment of a non-refundable assignment fee of $3,000. To the
extent of any assignment pursuant to this Section 13.04(b), the
assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Revolving Loan Commitment.
(c) To the extent that at the time of any assignment pursuant
to Section 13.04(b) to a Person not already a Bank hereunder, if the
Person purchasing such assignment (the "Assignee") would be
entitled to charge the Borrower for the reimbursement of Taxes
pursuant to Section 4.04 in excess of the aggregate of such amounts
permitted to be charged by the assigning Bank immediately prior to
such assignment (which differences may arise, for among other
reasons, because of differences between the assignee and the
assigning Bank, or because of the different laws, treaties or
regulations, or interpretations thereof, applicable to such Persons),
the Borrower shall not be obligated to pay such excess Taxes, it
being understood and agreed, however, that the Borrower shall be
obligated to pay to such assignee all other Taxes which are
otherwise required to be reimbursed pursuant to said Section 4.04
(including, without limitation, all such Taxes payable as a result of
events occurring after the date of the respective assignment).
13.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Agent, the Collateral Agent or any Bank or
any holder of any Note in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of
dealing between the Borrower and the Agent, the Collateral Agent
or any Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The
rights, powers and remedies herein or in any other Credit Document
expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent, the Collateral Agent
or any Bank or the holder of any Note would otherwise have. No
notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the
Agent, the Collateral Agent or any Bank or the holder of any Note
to any other or further action in any circumstances without notice
or demand.
13.06 Payments Pro Rata. (a) The Agent agrees that
promptly after its receipt of each payment from or on behalf of the
Borrower in respect of any Obligations hereunder, it shall distribute
such payment to the Banks pro rata based upon their respective
shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization
upon security, by the exercise of the right of setoff or banker's lien,
by counterclaim or cross action, by the enforcement of any right
under the Credit Documents, or otherwise), which is applicable to
the payment of the principal of, or interest on, the Loans, Unpaid
Drawings, Commitment Commission or Fees, of a sum which with
respect to the related sum or sums received by other Banks is in a
greater proportion than the total of such Obligation then owed and
due to such Bank bears to the total of such Obligation then owed
and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the
Obligations of the Borrower to such Banks in such amount as shall
result in a proportional sharing by all the Banks in such amount;
provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest.
13.07 Calculations; Computations; Accounting Terms.
(a) The financial statements to be furnished to the Banks pursuant
hereto shall be made and prepared in accordance with generally
accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower
to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Section
9 shall utilize accounting principles and policies in conformity with
those used to prepare the historical financial statements delivered to
the Banks pursuant to Section 7.05(a) (with the foregoing generally
accepted accounting principles, subject to the preceding provision,
herein called "GAAP").
(b) All computations of interest and Fees hereunder shall be
made on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day) occurring
in the period for which such interest or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE. (A) THIS AGREEMENT AND
THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREE-
MENT, THE BORROWER HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE
BORROWER HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS NATIONAL CORPORATE
RESEARCH, LTD. WITH OFFICES ON THE DATE HEREOF
AT 225 WEST 34TH STREET, SUITE 2110, NEW YORK,
NEW YORK 10022, AS ITS DESIGNEE, APPOINTEE AND
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS
WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAIL-
ABLE TO ACT AS SUCH, THE BORROWER AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT
IN NEW YORK CITY ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE
AGENT UNDER THIS AGREEMENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER
OF ANY NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDIC-
TION.
(B) THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(A) ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
13.09 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower
and the Agent.
13.10 Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which (i) the
Borrower, the Agent and each of the Banks shall have signed a copy
hereof (whether the same or different copies) and shall have
delivered the same to the Agent at its Notice Office or, in the case
of the Banks, shall have given to the Agent telephonic (confirmed
in writing), written or telex notice (actually received) at such office
that the same has been signed and mailed to it and (ii) the conditions
contained in Sections 5 and 6 are met to the satisfaction of the
Agent and the Required Banks. Unless the Agent has received
actual notice from any Bank that the conditions described in the
preceding sentence have not been met to its satisfaction, then after
the Effective Date and upon the Agent's good faith determination
that the conditions described in the preceding sentence have been
met, the Effective Date shall be deemed to have occurred,
regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the
Effective Date shall not release the Borrower from any liability or
prevent the existence of an Event of Default based upon failure to
satisfy one or more of the applicable conditions contained in
Sections 5 and 6).
13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
13.12 Amendment or Waiver. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may
be changed, waived, discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the
Borrower and the Required Banks; provided that no such change,
waiver, discharge or termination shall, without the consent of each
Bank (with Obligations of the respective types in the case of
following clause (i)): (i) extend the final scheduled maturity of any
Loan or Note or extend the stated maturity of any Letter of Credit
beyond the Revolving Loan Maturity Date, or reduce the rate or
extend the time of payment of interest or Fees thereon, or reduce
the principal amount thereof; (ii) release all or substantially all of
the Collateral (except as expressly provided in the Security
Documents); (iii) amend, modify or waive any provision of this Section
13.12; (iv) reduce the percentage specified in, or otherwise modify,
the definition of Required Banks (it being understood that, with the
consent of the Required Banks, additional extensions of credit
pursuant to this Agreement may be included in the determination of
the Required Banks on substantially the same basis as the extensions
of Revolving Loan Commitments were included on the Effective
Date); or (v) consent to the assignment or transfer by the Borrower
of any of their rights and obligations under this Agreement;
provided further, that no such change, waiver, discharge or termination
shall: (w) increase the Revolving Loan Commitment of any Bank
over the amount thereof then in effect (it being understood that a
waiver of any conditions precedent, covenants, Defaults or Events
of Default or of a mandatory reduction in the Total Revolving Loan
Commitment or of a mandatory prepayment shall not constitute an
increase of the Revolving Loan Commitment of any Bank, and that
an increase in the available portion of the Revolving Loan Commitment
of any Bank shall not constitute an increase in the Revolving
Loan Commitment of such Bank) without the consent of such Bank;
(x) without the consent of Paribas, amend, modify or waive any
provision of Section 2 or alter its rights or obligations with respect
to Letters of Credit or Swingline Loans; or (y) without the consent
of the Agent, amend, modify or waive any provision of Section 12
or any other provision relating to the rights or obligations of the
Agent; or (z) without the consent of the Collateral Agent, amend,
modify or waive any provision of Section 12 or any other provision
relating to the rights or obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement
as contemplated by clause (a)(i) through (v), inclusive, of the first
proviso to Section 13.12(a), the consent of the Required Banks is
obtained but the consent of one or more of such other Banks whose
consent is required is not obtained, then the Borrower shall have the
right to replace each such non-consenting Bank or Banks (so long
as all non-consenting Banks are so replaced) with one or more
Replacement Banks pursuant to Section 1.13 so long as at the time
of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination, provided that
the Borrower shall not have the right to replace a Bank solely as a
result of the exercise of such Bank's rights (and the withholding of
any required consent by such Bank) pursuant to the second proviso
to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 8.15, 12.06
and 13.01 shall survive the execution and delivery of this
Agreement and the Notes and the making and repayment of the
Loans and Letters of Credit.
13.14 Domicile of Loans. Each Bank may transfer and
carry its Loans at, to or for the account of any office, Subsidiary or
Affiliate of such Bank. Notwithstanding anything to the contrary
contained herein, to the extent that a transfer of Loans pursuant to
this Section 13.14 would, at the time of such transfer, result in
increased costs under Section 1.10, 1.11 or 4.04 from those being
charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any increased costs
of the type described above resulting from changes after the date of
the respective transfer).
13.15 Waiver of Jury Trial. Each of the Parties to this
Agreement hereby irrevocably waives all rights to a trial by jury in
any action, proceeding or counterclaim arising out of or relating to
this Agreement, the other Credit Documents or the transactions
contemplated hereby or thereby.
13.16 Interest Rate Limitation. Notwithstanding anything
contained in this Agreement or in the Notes to the contrary, if at
any time the applicable interest rate, together with all fees and
charges which are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other
document executed in connection herewith, or otherwise contracted
for, charged, received, taken or reserved by any Bank, shall exceed
the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such Bank
in accordance with applicable law, the rate of interest payable under
this Agreement and the Note held by such Bank, together with all
Charges payable to such Bank, shall be limited to the Maximum
Rate.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this Agreement
as of the date first above written.
Address:
UNILAB CORPORATION
18448 Oxnard Street
Tarzana, California 91356
By /s/ Richard Michaelson
Title: Senior Vice President/Finance
BANQUE PARIBAS
Individually and as Agent
By /s/ Eric Green
Title: Vice President
By /s/ Jeffery Youle
Title: Senior Vice President
Exhibit 10.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as
of the 27th day of February, 1996, between Unilab
Corporation, a Delaware corporation (hereinafter called the
"Corporation"), and Andrew H. Baker, a key employee of
the Corporation (hereinafter called the "Option Holder").
1. Grant of Option. (a) In accordance with the
Stock Option Program for Key Executives adopted by the
Corporation's Board of Directors, the Corporation hereby
grants to the Option Holder the right and option, hereinafter
called the "Option", to purchase an aggregate of 60,000
shares (the "Shares") of the Corporation's $0.01 par value
common stock (such number being subject to adjustment as
provided in paragraph 7 hereof), on the terms and
conditions herein set forth. Such Option shall vest as
follows: Twenty-Five (25%) Percent of the Option herein
granted (for up to 15,000 shares) shall vest and may be
exercised on or after February 27, 1997; Twenty-Five
(25%) Percent of the Option herein granted (for up to
15,000 shares) shall vest and may be exercised on or after
February 27, 1998; Twenty-Five (25%) Percent of the
Option herein granted (for up to 15,000 shares) shall vest
and may be exercised on or after February 27, 1999;
Twenty-Five (25%) Percent of the Option herein granted
(for up to 15,000 shares) shall vest and may be exercised on
or after February 27, 2000 (unless terminated earlier
pursuant to paragraph 6 hereof).
(b) Notwithstanding anything stated in Section
1(a) above, no Option may be exercised by the option
Holder unless and until a stock option and performance
incentive plan for employees is submitted to and approved
by stockholders of the Corporation at the Corporation's
1996 Annual Meeting of Stockholders, or otherwise at a
Special Meeting of Stockholders duly called for such
purpose. If such a stock option and performance incentive
plan for employees is not approved by the Corporation's
stockholders at such Annual or special Meeting, the option
granted herein shall be rescinded and cancelled, effective as
of the date of such meeting.
2. Purchase Price. The purchase price of the Shares
covered by the Option shall be two and three-sixteenths
dollars ($2.1875) per Share.
3. Term of Option. Subject to paragraph 8 hereof,
the Option granted hereby shall be exercisable as to a
portion of the total Shares in accordance with paragraph 1.
The Option Holder's right to exercise the aforementioned
Option shall expire ten (10) years from the date hereof.
Unless terminated earlier pursuant to paragraph 6 hereof,
any Option not exercised within such time specified of the
date hereof shall terminate.
4. Nontransferability. The Option shall not be
transferable otherwise than (i) by will or the laws of descent
and distribution and (ii) to parents, siblings, spouses or
children of the Option Holder or to any trust or similar
device intended for any of such persons' respective benefit
(a "Permitted Transferee"), and the Option may be
exercised, during the lifetime of the Option Holder, only by
him or such Permittee Transferree. More particularly (but
without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided
herein), pledged, or hypothecated in any way, shall not be
assignable by operation of law, and shall not be subject to
execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof,
and the levy of any execution, attachment, or similar
process upon the Option shall be null and void and without
effect.
5. Disclosure and Risk. The Option Holder
represents and warrants to the Corporation as follows:
(a) The Shares will be acquired by the Option
Holder for the Option Holder's own account, for
investment and not with a view to, or for resale in
connection with, any distribution or public offering
thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").
(b) As of the date of the grant and of exercise,
because of his position with the Corporation, and as
a result of inquiries made by him and information
furnished to him by the Corporation, Option Holder
has and will have all information necessary for him
to make an informed investment decision.
Each certificate representing the Shares shall, if
applicable, be endorsed with the following or a substantially
similar legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT'), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE
CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES, REASONABLY SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION MAY BE MADE PURSUANT TO RULE 144,
PROMULGATED UNDER THE SECURITIES ACT, OR IS OTHERWISE
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS."
The Corporation need not allow a transfer of any of
the Shares unless one of the conditions specified in the
foregoing legend is satisfied. The Corporation may also
instruct its transfer agent not to allow the transfer of any of
the Shares unless one of the conditions specified in the
foregoing legend is satisfied.
Any legend endorsed on a certificate pursuant to the
foregoing language and the stop transfer instructions with
respect to such Shares shall be removed and the Corporation
shall promptly issue a certificate without such legend to the
holder thereof if the Shares are registered under the
Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available or if the holder
provides the Corporation with an opinion of counsel for
such holder of the Shares reasonably satisfactory to the
Corporation, to the effect that a public sale, transfer or
assignment of such Shares may be made without
registration.
6. Termination of Employment; Death.
(a) In the event that the Option Holder shall
cease to be an employee of the Corporation or any of
its subsidiaries for any reason whatsoever, the
Option may be exercised by the Option Holder (to
the extent that the Option Holder shall have been
entitled to do so as of the date of his termination of
employment with the Corporation or any of its
subsidiaries) at any time within 365 days after such
termination but in any event not later than the date of
expiration of the Option term. So long as the Option
Holder shall continue to be an employee of the
Corporation or any of its subsidiaries, the Option
shall not be affected by any change of duties or
position. Nothing in this Option Agreement shall
confer upon the Option Holder any right to continue
as an employee of the Corporation or any of its
subsidiaries.
(b) In the event that the Option Holder dies prior
to exercising all or any portion of the Option, the
Option may be exercised by the estate of the Option
Holder (to the extent that the Option Holder shall
have been entitled to do so) at any time within 365
days after the death of the Option Holder, but in any
event not later than the date of expiration of the
Option term.
7. Changes in Capital Structure. If all or any
portion of the Option shall be exercised subsequent to any
share dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares,
separation, reorganization, or liquidation occurring after the
date hereof, as a result of which shares of any class shall be
issued in respect of outstanding Shares or Shares shall be
changed into the same or a different number of shares of the
same or another class or classes, the person or persons
exercising the Option shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of
shares which, if the Shares (as authorized at the date hereof)
had been purchased at the date hereof for the same
aggregate price (on the basis of the price per share set forth
in paragraph 2 hereof) and had not been disposed of, such
person or persons would be holding at the time of such
exercise as a result of such purchase and all such share
dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidations; provided,
however, that no fractional shares shall be issued upon any
such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not
issued. In no event shall any adjustments be made to the
Option as a result of the issuance or redemption of securities
of the Corporation for cash or other consideration, or upon
the exercise of any conversion rights of any securities of the
Corporation.
8. Method of Exercising Option. Subject to the
terms and conditions of this Option Agreement, the Option
may be exercised by written notice to the Secretary of the
Corporation, at its principal office or such other location as
may be designated by the Secretary of the Corporation.
Such notice shall state the election to exercise the Option
and the number of Shares in respect of which it is being
exercised, and shall be signed by the person or persons so
exercising the Option. The notice of election shall be
accompanied by this Agreement and payment of the full
purchase price for the Shares being purchased. The
Corporation shall deliver a certificate or certificates
representing Shares as soon as practicable after the notice of
election has been received. In the event the Option shall be
exercised by any person or persons other than the Option
Holder, the notice of election shall be accompanied by
appropriate proof of the right of such person or persons to
exercise the Option. All Shares that shall be purchased
upon the exercise of the Option as provided herein shall be
fully paid and nonassessable.
9. Mergers, Recapitalizations and Dissolutions.
As long as Optionee is an employee of the Corporation or
any of its subsidiaries, the "acquisition" of the Corporation
by another entity or a "change in control" of the
Corporation shall cause each outstanding option: (i) in the
event of an acquisition, to become an option to purchase
shares of the acquiring entity, for the balance of the term of
the option without regard to any nonsatisfied vesting
provisions or condition precedent which may be contained
in paragraph 1 of this Agreement, at a price and for a
number of shares as is consistent with the acquisition terms;
and (ii) in the event of a change in control, to become
exercisable in whole or in part, without regard to any
vesting provisions or condition precedent which may be
contained in paragraph 1 of this Agreement. The
"acquisition" of the Corporation by another entity shall be
defined to be either a merger or consolidation with an
acquiring entity (or subsidiary or affiliate thereof) in which
the Corporation is not the surviving entity or in which the
Corporation becomes a subsidiary of an acquiring entity; the
sale of substantially all of the Corporation's assets; or the
dissolution or liquidation of the Corporation. For purposes
of this paragraph, a "change in control" shall mean a change
of control of a nature that would be required to be reported
in response to Item 1(a) of the Current Report on Form 8-K,
pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have
occurred at such time as any "person", within the meaning
of Section 14(d) of the Exchange Act, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
outstanding capital stock of the Corporation.
10. Optionee Not a Shareholder. The Option
Holder under this Option, as such, shall not be entitled by
any reason of this Option to any rights whatsoever as a
shareholder of the Corporation.
11. General Provisions.
(a) The Corporation shall at all times during the
term of the Option reserve and keep available such
number of Shares as will be sufficient to satisfy the
requirements of this Option Agreement, shall pay all
fees and expenses necessarily incurred by the
Corporation in connection therewith, and shall use
its best efforts to comply with all laws and
regulations which, in the reasonable opinion of
counsel for the Corporation, are applicable thereto.
(b) This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware other than its conflicts of laws provisions.
(c) Any notice to be given hereunder by either
party to the other shall be in writing and shall be
given either by personal delivery or by mail,
registered or certified, postage prepaid, return
receipt requested, addressed to the other party at the
respective addresses set forth below their signatures
to this Agreement, or at any other address as such
party may hereafter specify in writing.
(d) This Agreement sets forth the entire
agreement of the parties concerning the subject
matter hereto, and no other representations or
warranties, express or implied, other than those
contained herein, and no amendments or
modifications hereto, shall be binding unless made in
writing and signed by the parties hereto.
(e) The waiver by either party of a breach of any
term or provision of this Agreement shall not
operate or be construed as a waiver of a subsequent
breach of the same provision or of the breach of any
other term or provision of this Agreement.
(f) As used herein, the masculine gender shall
include the feminine and the neuter genders, the
neuter shall include the masculine and the feminine
genders, the singular shall include the plural, and the
plural shall include the singular.
(g) The headings in this Agreement are solely for
convenience of reference and shall be given no effect
in the construction or interpretation of this
Agreement.
(h) The invalidity or enforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the Corporation has
caused this Option Agreement to be duly executed by its
officer thereunto duly authorized, and the Option Holder has
hereunto set his hand and seal, all as of the day and year
first above written.
OPTION HOLDER
______________________________
Name: Andrew H. Baker
Address: 636 Winding Hollow Drive
Franklin Lakes, NJ 07417
UNILAB CORPORATION
By:_______________________________
Name: Richard A. Michaelson
Title: Senior Vice President-Finance,
Address: 18448 Oxnard Street
Tarzana, CA 91356
Exhibit 10.3
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as
of the 27th day of February, 1996, between Unilab
Corporation, a Delaware corporation (hereinafter called the
"Corporation"), and Richard A. Michaelson, a key
employee of the Corporation (hereinafter called the "Option
Holder").
1. Grant of Option. (a) In accordance with the
Stock Option Program for Key Executives adopted by the
Corporation's Board of Directors, the Corporation hereby
grants to the Option Holder the right and option, hereinafter
called the "Option", to purchase an aggregate of 35,000
shares (the "Shares") of the Corporation's $0.01 par value
common stock (such number being subject to adjustment as
provided in paragraph 7 hereof), on the terms and
conditions herein set forth. Such Option shall vest as
follows: Twenty-Five (25%) Percent of the Option herein
granted (for up to 8,750 shares) shall vest and may be
exercised on or after February 27, 1997; Twenty-Five
(25%) Percent of the Option herein granted (for up to 8,750
shares) shall vest and may be exercised on or after February
27, 1998; Twenty-Five (25%) Percent of the Option herein
granted (for up to 8,750 shares) shall vest and may be
exercised on or after February 27, 1999; Twenty-Five
(25%) Percent of the Option herein granted (for up to 8,750
shares) shall vest and may be exercised on or after February
27, 2000 (unless terminated earlier pursuant to paragraph 6
hereof).
(b) Notwithstanding anything stated in Section
1(a) above, no Option may be exercised by the Option
Holder unless and until a stock option and performance
incentive plan for employees is submitted to and approved
by stockholders of the Corporation at the Corporation's
1996 Annual Meeting of Stockholders, or otherwise at a
Special Meeting of Stockholders duly called for such
purpose. If such a stock option and performance incentive
plan for employees is not approved by the Corporation's
stockholders at such Annual or special Meeting, the option
granted herein shall be rescinded and cancelled, effective as
of the date of such meeting.
2. Purchase Price. The purchase price of the Shares
covered by the Option shall be two and three-sixteenths
dollars ($2.1875) per Share.
3. Term of Option. Subject to paragraph 8 hereof,
the Option granted hereby shall be exercisable as to a
portion of the total Shares in accordance with paragraph 1.
The Option Holder's right to exercise the aforementioned
Option shall expire ten (10) years from the date hereof.
Unless terminated earlier pursuant to paragraph 6 hereof,
any Option not exercised within such time specified of the
date hereof shall terminate.
4. Nontransferability. The Option shall not be
transferable otherwise than (i) by will or the laws of descent
and distribution and (ii) to parents, siblings, spouses or
children of the Option Holder or to any trust or similar
device intended for any of such persons' respective benefit
(a "Permitted Transferee"), and the Option may be
exercised, during the lifetime of the Option Holder, only by
him or such Permittee Transferree. More particularly (but
without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided
herein), pledged, or hypothecated in any way, shall not be
assignable by operation of law, and shall not be subject to
execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof,
and the levy of any execution, attachment, or similar
process upon the Option shall be null and void and without
effect.
5. Disclosure and Risk. The Option Holder
represents and warrants to the Corporation as follows:
(a) The Shares will be acquired by the Option
Holder for the Option Holder's own account, for
investment and not with a view to, or for resale in
connection with, any distribution or public offering
thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").
(b) As of the date of the grant and of exercise,
because of his position with the Corporation, and as
a result of inquiries made by him and information
furnished to him by the Corporation, Option Holder
has and will have all information necessary for him
to make an informed investment decision.
Each certificate representing the Shares shall, if
applicable, be endorsed with the following or a substantially
similar legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT'), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE
CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES, REASONABLY SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION MAY BE MADE PURSUANT TO RULE 144,
PROMULGATED UNDER THE SECURITIES ACT, OR IS OTHERWISE
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS."
The Corporation need not allow a transfer of any of
the Shares unless one of the conditions specified in the
foregoing legend is satisfied. The Corporation may also
instruct its transfer agent not to allow the transfer of any of
the Shares unless one of the conditions specified in the
foregoing legend is satisfied.
Any legend endorsed on a certificate pursuant to the
foregoing language and the stop transfer instructions with
respect to such Shares shall be removed and the Corporation
shall promptly issue a certificate without such legend to the
holder thereof if the Shares are registered under the
Securities Act and a prospectus meeting the requirements of
Section 10 of the Securities Act is available or if the holder
provides the Corporation with an opinion of counsel for
such holder of the Shares reasonably satisfactory to the
Corporation, to the effect that a public sale, transfer or
assignment of such Shares may be made without
registration.
6. Termination of Employment; Death.
(a) In the event that the Option Holder shall
cease to be an employee of the Corporation or any of
its subsidiaries for any reason whatsoever, the
Option may be exercised by the Option Holder (to
the extent that the Option Holder shall have been
entitled to do so as of the date of his termination of
employment with the Corporation or any of its
subsidiaries) at any time within 365 days after such
termination but in any event not later than the date of
expiration of the Option term. So long as the Option
Holder shall continue to be an employee of the
Corporation or any of its subsidiaries, the Option
shall not be affected by any change of duties or
position. Nothing in this Option Agreement shall
confer upon the Option Holder any right to continue
as an employee of the Corporation or any of its
subsidiaries.
(b) In the event that the Option Holder dies prior
to exercising all or any portion of the Option, the
Option may be exercised by the estate of the Option
Holder (to the extent that the Option Holder shall
have been entitled to do so) at any time within 365
days after the death of the Option Holder, but in any
event not later than the date of expiration of the
Option term.
7. Changes in Capital Structure. If all or any
portion of the Option shall be exercised subsequent to any
share dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares,
separation, reorganization, or liquidation occurring after the
date hereof, as a result of which shares of any class shall be
issued in respect of outstanding Shares or Shares shall be
changed into the same or a different number of shares of the
same or another class or classes, the person or persons
exercising the Option shall receive, for the aggregate price
paid upon such exercise, the aggregate number and class of
shares which, if the Shares (as authorized at the date hereof)
had been purchased at the date hereof for the same
aggregate price (on the basis of the price per share set forth
in paragraph 2 hereof) and had not been disposed of, such
person or persons would be holding at the time of such
exercise as a result of such purchase and all such share
dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares,
separations, reorganizations, or liquidations; provided,
however, that no fractional shares shall be issued upon any
such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not
issued. In no event shall any adjustments be made to the
Option as a result of the issuance or redemption of securities
of the Corporation for cash or other consideration, or upon
the exercise of any conversion rights of any securities of the
Corporation.
8. Method of Exercising Option. Subject to the
terms and conditions of this Option Agreement, the Option
may be exercised by written notice to the Secretary of the
Corporation, at its principal office or such other location as
may be designated by the Secretary of the Corporation.
Such notice shall state the election to exercise the Option
and the number of Shares in respect of which it is being
exercised, and shall be signed by the person or persons so
exercising the Option. The notice of election shall be
accompanied by this Agreement and payment of the full
purchase price for the Shares being purchased. The
Corporation shall deliver a certificate or certificates
representing Shares as soon as practicable after the notice of
election has been received. In the event the Option shall be
exercised by any person or persons other than the Option
Holder, the notice of election shall be accompanied by
appropriate proof of the right of such person or persons to
exercise the Option. All Shares that shall be purchased
upon the exercise of the Option as provided herein shall be
fully paid and nonassessable.
9. Mergers, Recapitalizations and Dissolutions.
As long as Optionee is an employee of the Corporation or
any of its subsidiaries, the "acquisition" of the Corporation
by another entity or a "change in control" of the
Corporation shall cause each outstanding option: (i) in the
event of an acquisition, to become an option to purchase
shares of the acquiring entity, for the balance of the term of
the option without regard to any nonsatisfied vesting
provisions or condition precedent which may be contained
in paragraph 1 of this Agreement, at a price and for a
number of shares as is consistent with the acquisition terms;
and (ii) in the event of a change in control, to become
exercisable in whole or in part, without regard to any
vesting provisions or condition precedent which may be
contained in paragraph 1 of this Agreement. The
"acquisition" of the Corporation by another entity shall be
defined to be either a merger or consolidation with an
acquiring entity (or subsidiary or affiliate thereof) in which
the Corporation is not the surviving entity or in which the
Corporation becomes a subsidiary of an acquiring entity; the
sale of substantially all of the Corporation's assets; or the
dissolution or liquidation of the Corporation. For purposes
of this paragraph, a "change in control" shall mean a change
of control of a nature that would be required to be reported
in response to Item 1(a) of the Current Report on Form 8-K,
pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have
occurred at such time as any "person", within the meaning
of Section 14(d) of the Exchange Act, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the
outstanding capital stock of the Corporation.
10. Optionee Not a Shareholder. The Option
Holder under this Option, as such, shall not be entitled by
any reason of this Option to any rights whatsoever as a
shareholder of the Corporation.
11. General Provisions.
(a) The Corporation shall at all times during the
term of the Option reserve and keep available such
number of Shares as will be sufficient to satisfy the
requirements of this Option Agreement, shall pay all
fees and expenses necessarily incurred by the
Corporation in connection therewith, and shall use
its best efforts to comply with all laws and
regulations which, in the reasonable opinion of
counsel for the Corporation, are applicable thereto.
(b) This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware other than its conflicts of laws provisions.
(c) Any notice to be given hereunder by either
party to the other shall be in writing and shall be
given either by personal delivery or by mail,
registered or certified, postage prepaid, return
receipt requested, addressed to the other party at the
respective addresses set forth below their signatures
to this Agreement, or at any other address as such
party may hereafter specify in writing.
(d) This Agreement sets forth the entire
agreement of the parties concerning the subject
matter hereto, and no other representations or
warranties, express or implied, other than those
contained herein, and no amendments or
modifications hereto, shall be binding unless made in
writing and signed by the parties hereto.
(e) The waiver by either party of a breach of any
term or provision of this Agreement shall not
operate or be construed as a waiver of a subsequent
breach of the same provision or of the breach of any
other term or provision of this Agreement.
(f) As used herein, the masculine gender shall
include the feminine and the neuter genders, the
neuter shall include the masculine and the feminine
genders, the singular shall include the plural, and the
plural shall include the singular.
(g) The headings in this Agreement are solely for
convenience of reference and shall be given no effect
in the construction or interpretation of this
Agreement.
(h) The invalidity or enforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the Corporation has
caused this Option Agreement to be duly executed by its
officer thereunto duly authorized, and the Option Holder has
hereunto set his hand and seal, all as of the day and year
first above written.
OPTION HOLDER
______________________________
Name: Richard A. Michaelson
Address: 11-18 Fairhaven Place
Fair Lawn, NJ 07410
UNILAB CORPORATION
By:_____________________________
Name: Andrew H. Baker
Title: Chairman, President and
Chief Executive Officer
Address: 18448 Oxnard Street
Tarzana, CA 91356
Exhibit 99.1
Investor Relations: Richard A. Michaelson
Senior Vice President, Finance
Unilab Corporation
(818) 758-6607
Betsy Brod/Alex Gleeson
FOR IMMEDIATE RELEASE Media: Miriam Adler
Morgen-Walke Associates
(212) 850-5600
UNILAB CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Tarzana, CA, April 30, 1996 -- Unilab Corporation (Nasdaq:ULAB)
announced today that net sales for the quarter ended March 31, 1996
increased 22% to $51.5 million from $42.2 million for the same period last
year. The Company reported a net loss for the first quarter of 1996
of $5.3 million, or $0.15 per common share, which included a
previously announced extraordinary charge of $3.5 million for the
early extinguishment of debt resulting from its recently completed
$120 million senior note offering. Excluding the effect of the
charge, the net loss would have been $1.9 million, or $0.05 per common
share. Net income in the first quarter of 1995 was $0.6 million,
or $0.02 per share, which included a legal charge of $1.2 million.
Commenting on results, Unilab Chairman and Chief Executive
Officer Andrew Baker noted, "Unilab again experienced strong
growth in volume and sales. This quarter's revenues improved
both sequentially and year-over-year, despite the rate of growth
being tempered by a more than 4% pricing decline resulting
primarily from third party reimbursement pressures including
Medicare. Nonetheless, our core operations, excluding the MLN
business acquired last May, reported a healthy 8% increase in
revenue from continued market share gains in Southern California
and accelerating volume trends in our Northern California regions.
Results also demonstrate that we are making important initial
progress towards reducing Unilab's cost structure. During the
quarter we managed to moderately lower expenses in key areas
while increasing specimen throughput, gaining increased operating
efficiencies from reduced staffing levels and implementing more
efficient supplies utilization."
Mr. Baker continued, "We are confident that our leadership
position and strategic focus will enable us to successfully manage
operations through this challenging market environment. Despite
continued pricing pressure, we are proud of our strong sales
growth, balanced by our increasing attention to cost control and
more efficient utilization of our staffing and resources. While we
still have significant strides to make, we are committed not only to
strengthening our competitive position, but to doing so profitably."
Unilab Corporation is the largest provider of clinical
laboratory testing services in California through its primary testing
facilities in Los Angeles, San Jose and Sacramento and over 200
regional service and testing facilities located throughout the state.
-Financial Tables Follow-
<PAGE>
<TABLE>
Unilab Corporation
Consolidated Statement of Operations
(amounts in thousands, except per share data)
<CAPTION>
For Three Months Ended March 31,
1996 1995
<S> <C> <C>
Revenue $51,541 $42,242
Operating Expenses, Excluding Legal Charge 51,041 38,962
Legal Charge --- 1,200
Operating Income 500 2,080
Income (Loss) Before Income Taxes and
Extraordinary Item (1,890) 590
Extraordinary Item - Loss on Early
Extinguishment of Debt 3,451 ---
Net Income (Loss) (5,341) 590
Preferred Stock Dividends 36 36
Net Income (Loss) Available to
Common Shareholders ($5,377) $554
Net Income (Loss) per share:
Income (Loss) Before Extraordinary Item ($0.05) $0.02
Extraordinary Item ($0.10) ---
Net Income (Loss) ($0.15) $0.02
Weighted Average Common
Shares Outstanding 36,551 35,599
</TABLE>
<PAGE>
<TABLE>
Unilab Corporation
Consolidated Balance Sheet
(amounts in thousands)
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
Cash and Cash Equivalents $ 9,795 $70
Accounts Receivable, net 43,748 40,334
Amounts Due from UGL/UniHolding 15,375 15,000
Other Current Assets 4,848 4,180
Total Current Assets 73,766 59,584
Fixed Assets, net 18,153 18,326
Goodwill and Other Intangible Assets 111,595 113,019
Other Assets 6,702 5,245
Total Assets $210,216 $196,174
Total Current Liabilities $27,556 $49,273
Long-term Debt, net of current portion 127,498 87,207
Other Liabilities 3,149 3,364
Total Shareholder's Equity 52,013 56,330
Total Liabilities and Shareholders' Equity $210,216 $196,174
</TABLE>
