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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission file number 1-11353
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LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3757370
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
358 South Main Street, Burlington, North Carolina 27215
(Address of principal executive offices) (Zip Code)
336-229-1127
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
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Common Stock, $0.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
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State the aggregate market value of the voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $4,898,940,023 at February 28, 2002.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date: 70,829,522 shares as of
February 28, 2002, of which 10,705,074 shares are held by indirect wholly
owned subsidiaries of Roche Holdings Ltd.
PART I
Item 1. DESCRIPTION OF BUSINESS
Laboratory Corporation of America Holdings (the "Company"),
headquartered in Burlington, North Carolina, is the second largest
independent clinical laboratory company in the United States based on
2001 net revenues. Through a national network of laboratories, the
Company offers more than 4,000 different clinical laboratory tests which
are used by the medical profession in routine testing, patient diagnosis,
and in the monitoring and treatment of disease. Since its founding in
1971, the Company has grown into a network of 24 primary testing
facilities and approximately 1,200 service sites consisting of branches,
patient service centers and STAT laboratories, serving clients in 50
states.
The Clinical Laboratory Testing Industry
Laboratory tests and procedures are used generally by hospitals,
physicians and other health care providers and commercial clients to assist
in the diagnosis, evaluation, detection, monitoring and treatment of
diseases and other medical conditions through the examination of substances
in the blood, tissues and other specimens. Clinical laboratory testing is
generally categorized as either clinical testing, which is performed on
body fluids including blood and urine, or anatomical pathology testing,
which is performed on cytologic samples, tissue and other samples,
including human cells. Clinical and anatomical pathology procedures are
frequently ordered as part of regular physician office visits and hospital
admissions in connection with the diagnosis and treatment of illnesses.
Certain of these tests and procedures are used principally as tools in the
diagnosis and treatment of a wide variety of medical conditions such as
cancer, AIDS, endocrine disorders, cardiac disorders and genetic disease.
The most frequently requested tests include blood chemistry analyses,
urinalyses, blood cell counts, thin layer cytology Pap smears, HIV tests,
microbiology cultures and procedures and alcohol and other substance-abuse
tests.
The clinical laboratory industry consists primarily of three types of
providers: hospital-based laboratories, physician-office laboratories and
independent clinical laboratories, such as those owned by the Company.
The Company believes that in 2001 approximately 49% of the clinical
testing revenues in the United States were derived by hospital-based
laboratories, approximately 12% were derived by physicians in their offices
and laboratories, and approximately 39% were derived by independent
clinical laboratories. The Health Care Financing Administration ("HCFA")
of the Department of Health and Human Services ("HHS") has estimated that
in 2001 there were approximately 5,000 independent clinical laboratories in
the United States.
Effect of Market Changes on the Clinical Laboratory Business
Many market-based changes in the clinical laboratory business have
occurred over the past ten years, primarily as a result of the shift away
from traditional, fee-for-service medicine to managed-cost health care.
The growth of the managed care sector presents various challenges to the
Company and other independent clinical laboratories. Managed care
organizations typically contract with a limited number of clinical
laboratories and negotiate discounts to the fees charged by such
laboratories in an effort to control costs. Such discounts have
historically resulted in price erosion and have negatively impacted the
Company's operating margins. In addition, managed care organizations have
used capitated payment contracts in an attempt to fix the cost of
laboratory testing services for their enrollees. Under a capitated
payment contract, the clinical laboratory and the managed care
organization agree to a per member, per month payment to cover all
laboratory tests during the month, regardless of the number or cost of
the tests actually performed. Such contracts shift the risks of
additional testing beyond that covered by the capitated payment to the
clinical laboratory. For the year ended December 31, 2001 such capitated
contracts accounted for approximately $106.3 million of the Company's net
sales. The increase in managed care and insurance companies' attempts to
control utilization of medical services overall has also resulted in
declines in the utilization of laboratory testing services.
In addition, Medicare (which principally services patients 65 and
older), Medicaid (which principally serves indigent patients) and
insurers have increased their efforts to control the cost, utilization
and delivery of health care services. Measures to regulate health care
delivery in general and clinical laboratories in particular have resulted
in reduced prices, added costs and decreased test utilization for the
clinical laboratory industry by increasing complexity and adding new
regulatory and administrative requirements. From time to time, Congress
has also considered changes to the Medicare fee schedules in conjunction
with certain budgetary bills. The Company believes that reductions in
reimbursement for Medicare services will continue to be implemented from
time to time. Reductions in the reimbursement rates of other third-party
payors are likely to occur as well.
Despite the market changes discussed above, the Company believes
that the volume of clinical laboratory testing will be positively
influenced by several factors, including: the expanded base of genomics
knowledge, which has led to an enhanced appreciation of the value of
gene-based diagnostic assays for guiding both the development and
stratification of patient-related data for new therapeutics, as well as
an increased awareness by physicians that clinical laboratory testing is
a cost-effective means of prevention, early detection of disease and
monitoring of treatment. In an effort to better promote this
appreciation in the marketplace, the Company recently announced
partnerships with Myriad Genetics, Inc., to make Myriad's predictive
medicine products broadly available to primary care physicians throughout
the United States; and EXACT Sciences, to exclusively license EXACT's
proprietary technologies for the detection of colorectal cancer.
Additional factors which may lead to future volume growth include: an
increase in the number and types of tests which are readily available
(due to advances in technology and increased cost efficiencies) on a more
affordable basis to physicians; expanded substance-abuse testing by
corporations and governmental agencies; increased testing for sexually
transmitted diseases such as AIDS; and the general aging of the
population in the United States. The impact of these factors is expected
to be partially offset by declines in volume as a result of increased
controls over the utilization of laboratory services by Medicare and
other third-party payors, particularly managed care organizations.
Laboratory Testing Operations and Services
The Company has 24 primary testing facilities, and approximately 1,200
service sites consisting of branches, patient service centers and STAT
laboratories. A "branch" is a central office which collects specimens in a
region for shipment to one of the Company's laboratories for testing. Test
results can be printed at a branch and conveniently delivered to the
client. A branch also is used as a base for sales staff. Generally, a
"patient service center" is a facility maintained by the Company to serve
the physicians in a medical professional building or other strategic
location. The patient service center collects the specimens as requested
by the physician. The specimens are sent, principally through the
Company's in-house courier system (and, to a lesser extent, through
independent couriers), to one of the Company's major laboratories for
testing. Some of the Company's patient service centers also function as
"STAT labs", which are laboratories that have the ability to perform
certain routine tests quickly and report results to the physician
immediately. The Company processed an average of approximately 281,000
patient specimens per day in 2001. Patient specimens are delivered to the
Company accompanied by a test request form. These forms, which are
completed by the client, indicate the tests to be performed and provide the
necessary billing information.
Each specimen and related request form is checked for completeness and
then given a unique identification number. The unique identification
number assigned to each specimen helps to assure that the results are
attributed to the correct patient. The test request forms are sent to a
data entry terminal where a file is established for each patient and the
necessary testing and billing information is entered. Once this
information is entered into the computer system, the tests are performed
and the results are entered through computer interface or manually,
depending upon the tests and the type of equipment involved. Most of the
Company's computerized testing equipment is directly linked with the
Company's information systems. Most routine testing is completed by early
the next morning and test results are printed and prepared for distribution
by service representatives that day. Some clients have local printing
capability and have reports printed out directly in their offices. Clients
who request that they be called with a result are so notified in the
morning. It is Company policy to notify the client immediately if a life-
threatening result is found at any point during the course of the testing
process.
Testing Services
Routine Testing
The Company currently offers approximately 4,000 different clinical
laboratory tests or procedures. Several hundred of these are frequently
used in general patient care by physicians to establish or support a
diagnosis, to monitor treatment or medication, or to search for an
otherwise undiagnosed condition. The most frequently requested routine
tests include blood chemistry analyses, urinalyses, blood cell counts, Pap
smears and HIV tests. These routine procedures are most often used by
practicing physicians in their outpatient office practices. Physicians may
elect to send such procedures to an independent laboratory or they may
choose to establish an in-house laboratory to perform some of the tests.
The Company performs this core group of routine tests in each of its
24 primary testing facilities, which constitutes a majority of the testing
performed by the Company. The Company generally performs and reports most
routine procedures within 24 hours, utilizing a variety of sophisticated
and computerized laboratory testing instruments.
Specialty and Niche Testing
While the information provided by many routine tests may be used by
nearly all physicians, regardless of specialty, many other procedures are
more specialized in nature. One of the primary growth strategies of the
Company is the continued expansion of its specialty and niche businesses,
which involve certain types of unique testing capabilities and/or client
requirements. In general, the specialty and niche businesses are
designed to serve two market segments: (i) markets which are not served
by the routine clinical testing laboratory and therefore are subject to
less stringent regulatory and reimbursement constraints; and (ii) markets
which are served by the routine testing laboratory and offer the
possibility of adding related services from the same supplier. The
Company's research and development group continually seeks new and
improved technologies for early diagnosis. For example, the Company's
Center for Molecular Biology and Pathology (CMBP) is a leader in
molecular diagnostics and polymerase chain reaction (PCR) technologies
which are often able to provide earlier and more reliable information
regarding HIV, genetic diseases, cancer and many other viral and
bacterial diseases. In August 2000, the Company acquired Los Angeles-
based National Genetics Institute, Inc. (NGI), a leader in the
development of PCR assays for Hepatitis C (HCV). In June 2001, the
Company acquired Minneapolis-based Viro-Med, Inc which offers molecular
microbial testing using real time PCR platforms. Management believes
these technologies may represent a significant savings to managed care
organizations by increasing the detection of early stage (treatable)
diseases. The following are specialty and niche businesses in which the
Company offers testing and related services:
Infectious Disease. The Company provides complete viral load testing as
well as HIV genotyping and phenotyping. In 2000, the Company added HIV
GenoSure? to its portfolio of HIV resistance testing services. The
Company's use of this leading-edge technology puts it in the forefront of
HIV drug resistance testing-one of the most important issues surrounding
the treatment of HIV. Additionally, the Company provides comprehensive
testing for HCV including both PCR testing and genotyping at CMBP, NGI
and Viro-Med.
Allergy Testing. The Company offers an extensive range of allergen
testing services as well as computerized analysis and a treatment program
that enables primary care physicians to diagnose and treat many kinds of
allergic disorders.
Clinical Research Testing. The Company regularly performs clinical
laboratory testing for pharmaceutical companies conducting clinical
research trials on new drugs. This testing often involves periodic
testing of patients participating in the trial over several years.
Diagnostic Genetics. The Company offers cytogenetic, molecular
cytogenetic, biochemical and molecular genetic tests.
Identity Testing. The Company provides forensic identity testing used in
connection with criminal proceedings and parentage evaluation services
which are used to assist in the resolution of disputed parentage in child
support litigation. Parentage testing involves the evaluation of
immunological and genetic markers in specimens obtained from the child,
the mother and the alleged father. Management believes it is now the
largest provider of identity testing services in the United States.
Oncology Testing. The Company offers an extensive series of testing
technologies that aid in diagnosing and monitoring certain cancers and
predicting the outcome of certain treatments. At NGI, scientists have
novel assays for melanoma and breast cancer in varying stages of clinical
trials. During 2001, The Company began offering PreGen-26, a DNA-based
colorectal cancer test (using EXACT Sciences Corporation's proprietary
genomics-based technology). PreGen-26 is intended to detect colorectal
cancer earlier when treatment is most effective.
Occupational Testing Services. The Company provides urine and hair
testing for the detection of drugs of abuse for private and government
customers, and also provides blood testing services for the detection of
drug abuse and alcohol. These testing services are designed to produce
"forensic" quality test results that satisfy the rigorous requirements
for admissibility as evidence in legal proceedings. The Company also
provides other analytical testing and a variety of management support
services.
The specialized or niche testing services noted above, as well as
other complex procedures, are sent to designated facilities where the
Company has concentrated the people, instruments and related resources for
performing such procedures so that quality and efficiency can be most
effectively monitored. CMBP, NGI and Viro-Med also specialize in new test
development and education and training related thereto.
Clients
The Company provides testing services to a broad range of health
care providers. During the year ended December 31, 2001, no client or
group of clients under the same contract accounted for more than four
percent of the Company's net sales. The primary client groups serviced
by the Company include:
Independent Physicians and Physician Groups
Physicians requiring testing for their patients who are unaffiliated
with a managed care plan are one of the Company's primary sources of
testing services. Fees for clinical laboratory testing services rendered
for these physicians are billed either to the physician, to the patient
or the patient's third party payor such as insurance companies, Medicare
and Medicaid. Billings are typically on a fee-for-service basis. If the
billings are to the physician, they are based on the wholesale or
customer fee schedule and subject to negotiation. Otherwise, the patient
is billed at the laboratory's retail or patient fee schedule and subject
to third party payor limitations and negotiation by physicians on behalf
of their patients. Medicare and Medicaid billings are based on
government-set fee schedules.
Hospitals
The Company provides hospitals with services ranging from routine
and specialty testing to contract management services. Hospitals
generally maintain an on-site laboratory to perform immediately needed
testing on patients receiving care. However, they also refer less time
sensitive procedures, less frequently needed procedures and highly
specialized procedures to outside facilities, including independent
clinical laboratories and larger medical centers. The Company typically
charges hospitals for any such tests on a fee-for-service basis which is
derived from the Company's customer fee schedule. Fees for management
services are billed monthly at contractually agreed-upon rates.
HMOs and Other Managed Care Groups
The Company serves HMOs and other managed care organizations. These
medical service providers typically contract with a limited number of
clinical laboratories and then designate the laboratory or laboratories to
be used for tests ordered by participating physicians. The majority of the
Company's managed care testing is negotiated on a fee-for-service basis.
Testing is sometimes reimbursed on a capitated basis for managed care
organizations. Under a capitated payment contract, the Company agrees to
cover certain laboratory tests during a given month for which the managed
care organization agrees to pay a flat monthly fee for each covered member.
The tests covered under agreements of this type are negotiated for each
contract, but usually include routine tests and exclude highly specialized
tests. Many of the national and large regional managed care organizations
prefer to use large independent clinical labs such as the Company because
they can monitor service and performance on a national basis.
Other Institutions
The Company serves other institutions, including governmental
agencies, large employers and other independent clinical laboratories that
do not have the breadth of the Company's testing capabilities. The
institutions typically pay on a negotiated fee-for-service basis.
Payors
Most testing services are billed to a party other than the "client"
that ordered the test. In addition, tests performed by a single physician
may be billed to different payors depending on the medical benefits of a
particular patient. Payors other than the direct patient, include, among
others, insurance companies, managed care organizations, Medicare and
Medicaid. For the year ended December 31, 2001, billings to the Company's
respective payors (based on the total volume of accessions) are as follows:
Revenue
Accession Volume as per
a % of Total Accession
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Private Patients 3.5% $111.28
Medicare, Medicaid and
Insurance 17.0% $ 31.59
Commercial Clients 38.9% $ 24.46
Managed Care 40.6% $ 29.27
Affiliations and Alliances
The Company's development of hospital relationships through
traditional and non-traditional business models exceeded all prior year
outcomes. The Company increased its focus on the traditional business
model with a hospital, whereby the Company enters into a reference service
agreement and establishes a Hospital Territory Manger (HTM) role. The
addition of this sales/service position sets the Company at an advantage
with specialized and targeted attention for the Company's Hospital
customers. Significant growth also occurred due to laboratory technical
support (management) contracts and shared services agreements.
In 2001 the Company added a number of new traditional and
nontraditional relationships with hospitals. These new hospital
relationships represent approximately $48.5 million of new annualized
sales.
Reference agreements, or traditional business model, provide a means
for hospitals to outsource patient laboratory testing services that are not
time critical (e.g., test results reported within twenty-four hours of
drawing the specimen as opposed to those requiring two to four hour
turnaround). These agreements allow the hospital to maintain their own
stat/emergency lab on-site, while eliminating certain costs of maintaining
a full-service lab on their premises.
A non-traditional business model is where the Company provides
technical support services in a variety of health care settings. In these
relationships, the Company generally supplies the laboratory manager and
other laboratory personnel, as well as equipment and testing supplies, to
manage a laboratory that is owned by a hospital, managed care organization
or other health care provider. Under the typical laboratory technical
support agreement, the laboratory manager, who is employed by the Company,
reports to the hospital or clinic administration. Thus, the hospital or
clinic ("Provider") maintains control of the laboratory. A pathologist
designated by the Provider serves as medical director for the laboratory.
Hospitals are increasingly looking beyond their in-house patient base
and seek to provide services to outreach patients within their greater
local community. The Company has a focus to develop cooperative testing
relationships with such hospitals in which the parties combine efforts to
support the needs of a specific community. These non-traditional
relationships center around capitalizing on a partner hospital's excess
capacity and ability to perform rapid response testing and the Company's
ability to provide low cost, high quality esoteric testing. These service
agreements create ventures that provide communities with synergistic, high
quality testing services within a single infrastructure.
An important advantage the Company offers to its clients is the
flexibility of the Company's information systems used for contract
management services and for creating bi-directional interfaces to support
the Company's cooperative testing arrangements. In addition to the ability
to be customized for a particular user's needs, the Company's information
systems also interface with several hospital and clinic systems, giving the
user more efficient and effective information flow.
The Company's non-traditional business contracts typically have terms
between three and five years. However, most contracts contain a clause
that permits termination prior to the contract expiration date. The
termination terms vary but they generally fall into one of the following
categories: (1) termination without cause by either the Company or the
contracted Provider after written notice (generally 60 to 120 days prior to
termination); (2) termination by the contracted Provider only if there are
uncorrected deficiencies in the Company's performance under the contract
after notice by the contracted Provider; (3) termination by the contracted
Provider if there is a loss of accreditation held by any Company laboratory
that services the contracted Provider, which accreditation is not
reinstated within 30 days of the loss, or up to 30 days' notice if there is
a decline in the quality of services provided under such contract which
remains uncorrected after a 15-day period; or (4) should the Company or
Provider's service requirements change to the extent that the new service
requirements affect the profitability or stability of the alliance
relationship and the terms cannot be re-negotiated to the satisfaction of
both parties. While the Company believes that it will maintain and renew
its existing contracts, there can be no assurance of such maintenance or
renewal.
The Company has developed several different pricing formulas under its
non-traditional business contracts. The Company generally bills the
hospital a monthly contractually-determined management fee in addition to
different fixed on-site and off-site fees per test. Highly esoteric tests
are generally billed under a separate fee schedule. In certain cases,
profitability may depend on the Company's ability to accurately predict
test volumes, patient encounters or the number of admissions.
Sales and Marketing and Client Service
The Company offers its services through a combination of direct sales
generalists and specialists. Sales generalists market the mainstream or
traditional routine laboratory services primarily to physicians, while
specialists concentrate on individual market segments, such as hospitals or
managed care organizations, or on testing niches, such as identity testing
or genetic testing. Specialist positions are established when an in-depth
level of expertise is necessary to effectively offer the specialized
services. When the need arises, specialists and generalists work
cooperatively to address specific opportunities. At December 31, 2001, the
Company employed 235 generalists and 114 specialists. The Company's sales
generalists and specialists are compensated through a combination of
salaries, commissions and bonuses, at levels commensurate with each
individual's qualifications and responsibilities. Commissions are primarily
based upon the individual's productivity in generating new business for the
Company.
The Company also employs regional service managers and account
managers ("AMs") to interact with clients on an ongoing basis. AMs monitor
the status of the services being provided to clients, act as problem-
solvers, provide information on new testing developments and serve as the
client's regular point of contact with the Company. At December 31, 2001,
the Company employed 290 AMs. AMs are compensated through a combination
of salaries and bonuses commensurate with each individual's qualifications
and responsibilities.
The Company believes that the clinical laboratory service business is
shifting away from the traditional direct sales structure to one in which
the purchasing decisions for laboratory services are increasingly being
made by managed care organizations, insurance plans, employers and even by
patients themselves. In view of these changes, the Company has adapted its
sales and marketing structure to more appropriately address the
opportunities presented by this shift.
The Company competes primarily on the basis of the quality of its
testing, reporting and information systems, its reputation in the medical
community, the pricing of its services and its ability to employ
qualified personnel. During 2001, one of the Company's goals has been to
improve client service. An important factor in improving client service
includes the Company's initiatives to improve its billing process. See
"-Billing."
Information Systems
The Company has developed and implemented management information
systems to monitor operations and control costs. All financial functions
are centralized in Burlington, North Carolina including purchasing and
accounting. Management believes this provides greater control over
spending as well as increased supervision and monitoring of results of
operations.
The Company believes that the health care provider's need for data
will continue to place high demands on its information systems staff. The
Company operates several systems to handle laboratory, billing and
financial data and transactions. The Company believes that the efficient
handling of information involving clients, patients, payors and other
parties will be a critical factor in the Company's future success. The
Company's Corporate Information Systems Division manages its information
resources and programs on a consolidated basis in order to achieve greater
efficiency and economies of scale. The Company employs a Chief Information
Officer, whose responsibility is to integrate, manage and develop the
Company's information systems.
In 2001, the Company continued to focus on its information systems
activities and substantially completed the consolidation of its multiple
laboratory and billing systems to standardized laboratory testing and
billing systems. The Company has established regional data centers to more
effectively handle the information processing needs of the Company. The
Company believes that benefits have been realized from the conversion of
its multiple billing systems into a centralized system and these benefits
will continue in the future as the Company takes advantage of this
standardization.
Billing
Billing for laboratory services is a complex process. Laboratories
must bill many different payors such as doctors, patients, hundreds of
different insurance companies, Medicare, Medicaid and employer groups, all
of whom have different billing requirements. The Company believes that a
majority of its bad debt expense is the result of non-credit related issues
which slow the billing process. A primary cause of bad debt expense is
missing or incorrect billing information on requisitions. The Company
believes that this experience is similar to that of its primary
competitors. The Company performs the requested tests and returns back the
test results regardless of whether billing information has been provided at
all or has been provided incorrectly. The Company subsequently attempts to
obtain any missing information or rectify any incorrect billing information
received from the health care provider. Among the many other factors
complicating the billing process are more intricate billing arrangements
due to contracts with third-party administrators, disputes between payors
as to the party responsible for payment of the bill and auditing for
specific compliance issues.
During 2001, the Company's days sales outstanding (DSO) were reduced
10 days from December 31, 2000 levels to 58 days as a result of Company-
wide efforts to increase cash collections from all payors, as well as on-
going improvements to claim submission processes. The Company is
continuing to take the steps necessary to improve DSO and cash collections
by:
1) Conversion of decentralized billing locations to a centralized billing
system. During 2001, the Chicago, San Antonio and Dallas locations were
converted.
2) During the first quarter of 2000, the Company implemented an initiative
to reduce the number of requisitions received that are missing certain
billing information. This initiative involves measuring the number of
clinical requisitions received by ordering client, as well as what
specific information was not provided. The Company then identifies root
causes of why the information was missing and takes steps to ensure that
information is provided in the future. These steps include re-educating
clients as to what information is needed in order for the Company to bill
and collect for the test. During the year, the percentage of
requisitions received which were missing billing information was 6%.
Although there can be no assurance of success, the Company has
developed a number of initiatives to address the complexity of the billing
process and to improve collection rates. These initiatives include: i)
installation of personal computer based products in client offices and
Company locations to help with the accuracy and completeness of billing
information captured on the front-end; ii) establishment of a project group
to focus on improvements in order entry; and iii) development and
implementation of enhanced eligibility checking to compare information to
payor records before billing. Additionally, the Company believes that it
can benefit from the conversion of its multiple billing systems into a
centralized system. Currently, 90% of the Company's billing is performed
on this centralized system. By the end of 2002, the Company plans to have
approximately 95% of its billing performed on the centralized system.
Quality Assurance
The Company considers the quality of its tests to be of critical
importance, and it has established a comprehensive quality assurance
program for all of its laboratories and other facilities, designed to help
assure accurate and timely test results. In addition to the compulsory
external inspections and proficiency programs demanded by HCFA and other
regulatory agencies, Company-wide systems and procedures are in place to
emphasize and monitor quality assurance. All of the Company's regional
laboratories are subject to on-site evaluations, the College of American
Pathologists ("CAP") proficiency testing program, state surveys and the
Company's own internal quality control programs.
External Proficiency/ Accreditations. The Company participates in
numerous externally-administered, blind quality surveillance programs,
including the CAP program. The blind programs supplement all other quality
assurance procedures and give Company management the opportunity to review
its technical and service performance from the client's perspective.
Internal Quality Control. The Company regularly performs internal
quality control testing by running quality control samples with known
values with patient samples submitted for testing. All quality control
sample test results are entered into the Company's national laboratory
computer, which connects the Company's facilities nationwide to a common
on-line quality control database. This system helps technologists and
technicians check quality control values and requires further prompt
verification if any quality control value is out of range. The Company has
an extensive, internally administered program of blind sample proficiency
testing (i.e. the testing laboratory does not know the sample being tested
is a quality control sample), as part of which the Company's locations
receive specimens from the Company's Quality Assurance and Corporate
Technical Services departments for analysis.
The CAP accreditation program involves both on-site inspections of the
laboratory and participation in the CAP's proficiency testing program for
all categories in which the laboratory is accredited by the CAP. The CAP
is an independent non-governmental organization of board-certified
pathologists which offers an accreditation program to which laboratories
can voluntarily subscribe. The CAP has been accredited by HCFA to inspect
clinical laboratories to determine adherence to the Clinical Laboratory
Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments
of 1988 (collectively, as amended, "CLIA") standards. A laboratory's
receipt of accreditation by the CAP satisfies the Medicare requirement for
participation in proficiency testing programs administered by an external
source. All of the Company's major laboratories are accredited by the CAP.
The Company's forensic crime laboratory, located at CMBP, is
accredited by the American Society of Crime Laboratory Directors,
Laboratory Accreditation Board ("ASCLD/LAB") in the category of DNA
testing. Under the Crime Laboratory Accreditation Program managed by the
ASCLD/LAB, a crime laboratory undergoes a comprehensive and in-depth
inspection to demonstrate that its management, operations, employees,
procedures and instruments, physical plant and security, and personnel
safety procedures meet stringent quality standards. The Company is one of
223 ASCLD accredited crime laboratories worldwide, and is one of only six
private crime laboratories holding the accreditation. Accreditation is
granted for a period of five years provided that a laboratory continues to
meet the standards during that period.
Competition
The clinical laboratory business is intensely competitive. The
Company believes that in 2001 the entire United States clinical laboratory
testing industry had revenues exceeding $34 billion; approximately 49% of
such revenues were attributable to hospital-affiliated laboratories,
approximately 39% were attributable to independent clinical laboratories
and approximately 12% were attributable to physicians in their offices and
laboratories. There are presently two national independent clinical
laboratories: the Company; and Quest Diagnostics Incorporated ("Quest"),
which had approximately $3.6 billion in revenues from clinical laboratory
testing in 2001.
In addition to the other national clinical laboratory, the Company
competes on a regional basis with many smaller regional independent
clinical laboratories as well as laboratories owned by hospitals and
physicians. The Company believes that the following factors, among others,
are often used by health care providers in selecting a laboratory: i)
pricing of the laboratory's test services; ii) accuracy, timeliness and
consistency in reporting test results; iii) number and type of tests
performed; iv) service capability and convenience offered by the
laboratory; and v) its reputation in the medical community. The Company
believes that it competes favorably with its principal competitors in each
of these areas and is currently implementing strategies to improve its
competitive position.
The Company believes that consolidation will continue in the clinical
laboratory testing business. In addition, the Company believes that it and
the other large independent clinical laboratory testing companies will be
able to increase their share of the overall clinical laboratory testing
market due to a number of external factors including cost efficiencies
afforded by large-scale automated testing, Medicare reimbursement
reductions and the growth of managed health care entities which require
low-cost testing services and large service networks. In addition, legal
restrictions on physician referrals and the ownership of laboratories as
well as increased regulation of laboratories are expected to contribute to
the continuing consolidation of the industry.
Employees
At December 31, 2001, the Company had approximately 19,600 full-time
equivalent employees. A subsidiary of the Company has one collective
bargaining agreement which covers approximately 25 employees. The Company
believes that its overall relations with its employees are good.
Regulation and Reimbursement
General
The clinical laboratory industry is subject to significant
governmental regulation at the federal, state and sometimes local levels.
As described below, these regulations concern licensure and operation of
clinical laboratories, payment for laboratory services, health care fraud
and abuse, security and confidentiality of health information, and
environmental and occupational safety.
Regulation of Clinical Laboratories
The Clinical Laboratory Improvement Amendments of 1988 ("CLIA") extend
federal oversight to virtually all clinical laboratories by requiring that
they be certified by the federal government or by a federally-approved
accreditation agency. Pursuant to CLIA, clinical laboratories must meet
quality assurance, quality control and personnel standards. Laboratories
also must undergo proficiency testing and are subject to inspections.
Standards for testing under CLIA are based on the complexity of the
tests performed by the laboratory, with all tests classified as either high
complexity, moderate complexity, or waived. Laboratories performing high
complexity testing are required to meet more stringent requirements than
moderate complexity laboratories. Labs performing only waived tests, which
are tests determined by the Food and Drug Administration to have a low
potential for error and requiring little or no oversight, may apply for a
certificate of waiver indicating that they need not comply with most of the
requirements of CLIA. All major and many smaller Company facilities hold
CLIA certificates to perform high complexity testing. The Company's
remaining smaller testing sites hold CLIA certificates to perform moderate
complexity testing or have a certificate of waiver.
The sanction for failure to comply with CLIA requirements may be
suspension, revocation or limitation of a laboratory's CLIA certificate,
which is necessary to conduct business, as well as significant fines and/or
criminal penalties. The loss or suspension of a license, imposition of a
fine or other penalties, or future changes in the CLIA law or regulations
(or interpretation of the law or regulations) could have a material adverse
effect on the Company.
The Company also is subject to regulation by some states. CLIA
provides that a state may adopt regulations different from or more
stringent than those under federal law, and a number of states have
implemented their own laboratory regulatory schemes. State laws may
require that laboratory personnel meet certain qualifications, specify
certain quality controls, or require maintenance of certain records. For
example, some of the Company's laboratories are subject to the State of New
York's clinical laboratory regulations, which contain provisions that are
more stringent than those under federal law.
The Company believes that it is in compliance with federal and state
laboratory requirements, and the Company's laboratories have continuing
programs to ensure that their operations meet all applicable regulatory
requirements, but no assurances can be given that the Company's
laboratories will pass all future licensure or certification inspections.
Payment of Clinical Laboratory Services
In both 2001 and 2000, the Company derived approximately 16% of its
net sales from tests performed for beneficiaries of the Medicare and
Medicaid programs. In addition, the Company's other business depends
significantly on continued participation in these programs because clients
often want a single laboratory to perform all of their testing services.
Both governmental and private sector payors have made efforts to contain or
reduce health care costs, including payment for clinical laboratory
services, in recent years.
In 1984, Congress established a Medicare fee schedule for clinical
laboratory services performed for patients covered under Part B of the
Medicare program. Subsequently, Congress imposed a national ceiling on the
amount that can be paid under the fee schedule. Laboratories bill the
program directly and must accept the scheduled amount as payment in full
for covered tests performed on behalf of Medicare beneficiaries. In
addition, state Medicaid programs are prohibited from paying more than the
Medicare fee schedule limitation for clinical laboratory services furnished
to Medicaid recipients.
Since 1984, Congress has periodically reduced the ceilings on
Medicare payment to clinical laboratories from previously authorized
levels. In 1993, pursuant to provisions in the Omnibus Budget and
Reconciliation Act of 1993 ("OBRA '93"), Congress reduced, effective
January 1, 1994, the Medicare national limitations from 88% of the 1984
national median to 76% of the 1984 national median, which reductions were
implemented on a phased-in basis from 1994 through 1996 (to 84% in 1994,
80% in 1995 and 76% in 1996). The 1996 reduction to 76% was implemented as
scheduled on January 1, 1996. OBRA '93 also eliminated the provision for
annual fee schedule increases based upon the Consumer Price Index for 1994
and 1995. These reductions were partially offset, however, by annual
Consumer Price Index fee schedule increases of 3.2% and 2.7% in 1996 and
1997, respectively.
In August 1997, Congress passed and the President signed the Balanced
Budget Act of 1997 ("BBA"), which included a provision that reduced,
effective January 1, 1998, the Medicare national limitation from 76% of the
1984 national median to 74% of the 1984 national median. An additional
provision in the BBA froze the Consumer Price Index update for five years.
Because a significant portion of the Company's costs are relatively
fixed, Medicare payment reductions have a direct adverse effect on the
Company's net earnings and cash flows. The Company cannot predict whether
additional Medicare reductions will be implemented.
On April 1, 1997, Medicare's policy for billing of automated chemistry
profiles went into effect. The policy, which was developed by the Health
Care Financing Administration ("HCFA"), now known as the Center for
Medicare and Medicaid Services ("CMS"), working with the American Medical
Association, eliminated the old commonly used "19-22 test" automated
chemistry profile, sometimes referred to as a "SMAC" and replaced it with
four new panels of "clinically relevant" automated tests (each containing
from four to twelve chemistry tests). As a result of this policy, all
major laboratory companies, including the Company, were required to
eliminate the old chemistry profiles from their standard test requisition
forms and standard test offerings by July 1, 1998. The Company developed
and implemented a new "universal" test requisition and "standard test
offerings" which successfully incorporated all required changes by the July
1, 1998 deadline.
The automated chemistry profile billing policy is intended to reduce
the number of non-Medicare covered "screening tests" which Medicare
believes have in the past been inappropriately billed to Medicare. The BBA
also required the Department of Health and Human Services to adopt uniform
coverage, administration and payment policies for lab tests using a
negotiated rulemaking process. Consensus was reached by the negotiated
rulemaking committee which, among other things, established policies
limiting Medicare coverage for certain tests to patients with specified
medical conditions or diagnoses. These uniform policies will replace local
Medicare coverage policies. The final rules were published on November 23,
2001 and will become generally effective on November 25, 2002. Due to the
variety of new rules (including limited coverage rules) which have been
adopted or proposed recently, and the lead time before the negotiated
rulemaking rule becomes effective, the Company does not believe a meaningful
estimate of the potential revenue impact of these developments can be made at
this time. The Company will continue to monitor this issue going forward.
Future changes in federal, state and local regulations (or in the
interpretation of current regulations) affecting government payment for
clinical laboratory testing could have a material adverse effect on the
Company. However, based on currently available information, the Company is
unable to predict what type of legislation, if any, will be enacted into
law.
Security and Confidentiality of Health Information
The Health Insurance Portability and Accountability Act of 1996
("HIPAA") includes the following provisions: 1) Transactions and Code Sets
- - standardized format for all electronic claims processing maintained by a
health plan, health care provider or health care data clearinghouse. The
compliance date for this provision is October 16, 2002. However, Congress
has approved a twelve-month extension for covered entities wishing to file
a formal compliance extension plan. 2) Privacy: a) standardize the
protections that must be provided for Protected Health Information ("PHI")
covering all forms and types of PHI and all methods of receipt, delivery
and storage; b) establish a formal privacy program and designate a privacy
officer. The compliance date for this provision is April 14, 2003.
The Company's HIPAA project plans have two phases: 1) assessment of
current systems, applications, processes and procedure testing and
validation for HIPAA compliance and; 2) remediation of affected systems,
applications, processes and procedure testing and validation for HIPAA
compliance.
The Company has completed the assessment phase of the Transactions and
Code Sets provision. Remediation is currently in progress and the Company
expects to meet the October 2002 required implementation date, but will
file for an extension if testing cannot be completed with all carriers. It
is currently estimated that the total future expenditures relating to the
Transactions and Code Sets project will be approximately $13.8, with $0.6
having been spent through December 31, 2001. The Company believes that
approximately 80% of this project will add new functionality to existing
systems and plans to capitalize these expenditures as incurred.
The Company is in the later stage of the assessment phase of the
Privacy provision. Upon completion of the assessment phase, financial
projections will be completed and remediation will be initiated. The
Company expects to meet the April 2003 required implementation date. The
total cost associated with the requirements of HIPAA is not expected to be
material to the Company's operations or cash flows.
In addition to the HIPAA provisions described above, which have not
yet been implemented, there are a number of state laws regarding the
confidentiality of medical information, some of which apply to clinical
laboratories. These laws vary widely, and new laws in this area are
pending, but they most commonly restrict the use and disclosure of medical
information without patient consent. Penalties for violation of these laws
include sanctions against a laboratory's state licensure, as well as civil
and/or criminal penalties.
Fraud and Abuse Regulations
Existing federal laws governing Medicare and Medicaid, as well as
similar state laws, impose a variety of broadly described fraud and abuse
prohibitions on healthcare providers, including clinical laboratories.
These laws are interpreted liberally and enforced aggressively by multiple
government agencies, including the U.S. Department of Justice, the U.S.
Department of Health and Human Services Office of the Inspector General
("OIG"), and the states. The federal government's enforcement efforts have
been increasing, in part as a result of the enactment of the Health
Insurance Portability and Accountability Act of 1996, which, among other
things, provided for the establishment of a program to coordinate federal,
state and local law enforcement programs, and to conduct investigations,
audits and inspections relating to payment for healthcare, and for the
establishment of a federal anti-fraud and abuse account for enforcement
efforts, funded through collection of penalties and fines for violations of
the healthcare anti-fraud and abuse laws. Moreover, over the last several
years, the clinical laboratory industry has been the focus of major
governmental enforcement initiatives.
The Medicare and Medicaid anti-kickback laws prohibit intentionally
providing anything of value to influence the referral of Medicare and
Medicaid business. HHS has published safe harbor regulations which specify
certain business activities that, although literally covered by the laws,
will not violate the Medicare/Medicaid anti-kickback laws if all conditions
of the safe harbor are met. Failure to fall within a safe harbor does not
constitute a violation of the anti-kickback laws; rather, the arrangement
would remain subject to scrutiny by HHS. Most states have their own
Medicaid anti-kickback laws, and several states also have anti-kickback
laws that apply to attempts to gain referral of patients covered by private
insurance as well as federal programs.
In October 1994, the Office of the Inspector General ("OIG") of HHS
issued a Special Fraud Alert, which set forth a number of practices
allegedly engaged in by clinical laboratories and health care providers
that the OIG believes violate the federal anti-kickback laws. These
practices include providing employees to collect patient samples at
physician offices if the employees perform additional services for
physicians that are typically the responsibility of the physicians' staff;
selling laboratory services to renal dialysis centers at prices that are
below fair market value in return for referrals of Medicare tests which are
billed to Medicare at higher rates; providing free testing to a physician's
HMO patients in situations where the referring physicians benefit from such
reducing laboratory utilizations; providing free pick-up and disposal of
bio-hazardous waste for physicians for items unrelated to a laboratory's
testing services; providing facsimile machines or computers to physicians
that are not exclusively used in connection with the laboratory services
performed; and providing free testing for health care providers, their
families and their employees (professional courtesy testing). The OIG
stressed in the Special Fraud Alert that when one purpose of the
arrangements is to induce referral of program-reimbursed laboratory
testing, both the clinical laboratory and the health care provider or
physician may be liable under the anti-kickback laws, and may be subject to
criminal prosecution and exclusion from participation in the Medicare and
Medicaid programs.
Recently, the OIG has provided additional guidance regarding
arrangements that may violate the anti-kickback laws. In a 1999 Advisory
Opinion, the OIG concluded that a proposed arrangement whereby a laboratory
would offer physicians significant discounts on laboratory tests billed to
the physician might violate the anti-kickback act. The OIG reasoned that
if the discounts were greater than could otherwise be justified, the
proposed arrangement could be viewed as the laboratory providing discounts
to the physician in exchange for referral by the physician of non-
discounted Medicare program business. Similarly, in 1999 correspondence,
the OIG stated that if any direct or indirect link exists between a price
discount that a laboratory offers to a skilled nursing facility ("SNF") for
Prospective Payment System ("PPS")-covered services and referrals of
Medicare Part B business, the anti-kickback statute would be implicated.
Moreover, the OIG stated that it is continuing to monitor the situation
regarding potentially unlawful contracts between SNFs and service
providers, including laboratories.
Under another federal provision, known as the "Stark" law or "self-
referral" prohibition, physicians who have an investment or compensation
relationship with a clinical laboratory may not, unless a statutory
exception applies, refer Medicare or Medicaid patients for testing to the
laboratory, regardless of the intent of the parties. Similarly,
laboratories may not bill Medicare or Medicaid or any other party for
services furnished pursuant to a prohibited referral. There are federal
Stark law exceptions for fair market value compensation to a physician for
reasonable and necessary services, and for discounts to physicians
purchasing laboratory services. There is also an exception for physician
investment in a laboratory company so long as the company's stock is traded
on a public exchange, the company has stockholder equity exceeding
$75,000,000, and the physician's shares may be purchased on terms generally
available to the public. State self-referral laws exist as well, which
apply to all patient referrals, not just Medicare and Medicaid.
There are a variety of other types of federal and state anti-fraud and
abuse laws, including laws prohibiting submission of false or otherwise
improper claims to federal healthcare programs, and laws limiting the
extent of any differences between the Company's charges to Medicare and
Medicaid and its charges to other parties. The Company seeks to structure
its business to comply with the federal and state anti-fraud and abuse
laws. However, the Company is unable to predict how these laws will be
applied in the future, and no assurances can be given that its arrangements
will not be subject to scrutiny under them. Sanctions for violations of
these laws may include exclusion from participation in Medicare, Medicaid
and other federal healthcare programs, significant criminal and civil fines
and penalties, and loss of licensure. Any exclusion from participation in
a federal healthcare program, or any loss of licensure, arising from any
action by any federal or state regulatory or enforcement authority, would
have a material adverse affect on the Company's business. In addition, any
significant criminal or civil penalty resulting from such proceedings could
have a material adverse affect on the Company's business.
Environmental and Occupational Safety
The Company is subject to licensing and regulation under Federal,
state and local laws and regulations relating to the protection of the
environment and human health and safety, including laws and regulations
relating to the handling, transportation and disposal of medical specimens,
infectious and hazardous waste and radioactive materials as well as to the
safety and health of laboratory employees. All Company laboratories are
subject to applicable Federal and state laws and regulations relating to
biohazard disposal of all laboratory specimens and the Company utilizes
outside vendors for disposal of such specimens. In addition, the Federal
Occupational Safety and Health Administration ("OSHA") has established
extensive requirements relating to workplace safety for health care
employers, including clinical laboratories, whose workers may be exposed to
blood-borne pathogens such as HIV and the hepatitis B virus. These
regulations, among other things, require work practice controls, protective
clothing and equipment, training, medical follow-up, vaccinations and other
measures designed to minimize exposure to, and transmission of, blood-borne
pathogens.
On November 6, 2000, Congress passed the Needlestick Safety and
Prevention Act which required, among other things, that companies include
in their safety programs the evaluation and use of engineering controls
such as safety needles if found to be effective at reducing the risk of
needlestick injuries in the workplace. During 2001, the Company
voluntarily implemented the use of safety needles at all of its service
locations at a cost of over $6.0 million.
Although the Company is not aware of any current material non-
compliance with such Federal, state and local laws and regulations, failure
to comply could subject the Company to denial of the right to conduct
business, fines, criminal penalties and/or other enforcement actions.
Drug Testing
Drug testing for public sector employees is regulated by the Substance
Abuse and Mental Health Services Administration ("SAMSHA") (formerly the
National Institute on Drug Abuse), which has established detailed
performance and quality standards that laboratories must meet to be
approved to perform drug testing on employees of Federal government
contractors and certain other entities. To the extent that the Company's
laboratories perform such testing, each must be certified as meeting SAMSHA
standards. The Company's Research Triangle Park, North Carolina; Raritan,
New Jersey; Houston, Texas; San Diego, California and Southaven,
Mississippi laboratories are SAMSHA certified.
Controlled Substances
The use of controlled substances in testing for drugs of abuse is
regulated by the Federal Drug Enforcement Administration.
Compliance Program
Because of evolving interpretations of regulations and the national
debate over health care fraud and abuse, compliance with all Medicare,
Medicaid and other government-established rules and regulations has become
a significant factor throughout the clinical laboratory industry. The
Company has implemented a comprehensive company-wide compliance program, in
part mandated by a comprehensive five-year Corporate Integrity Agreement
with the federal government. This agreement was part of the Company's 1996
settlement of federal and state claims related to billings to Medicare and
other federal programs for tests performed by the Company and its
predecessors (the "1996 government settlement"). The agreement was similar
to corporate integrity agreements arising out of settlements of similar
claims by a number of other clinical laboratories following a broad-based
government investigation and enforcement initiative. Although the
Corporate Integrity Agreement expired on November 21, 2001, the Company
continues to operate pursuant to its compliance program. The objective of
the Company's compliance program is to develop, implement, and update
compliance safeguards as necessary. Emphasis is placed on developing
compliance policies and guidelines, personnel training programs and various
monitoring and audit procedures to attempt to achieve implementation of all
applicable rules and regulations.
The Company seeks to structure its business to comply in all material
respects with all statutes, regulations, and other requirements applicable
to its clinical laboratory operations. The clinical laboratory testing
industry is, however, subject to extensive regulation, and many of these
statutes and regulations have not been interpreted by the courts. There
can be no assurance therefore that applicable statutes and regulations
might not be interpreted or applied by a prosecutorial, regulatory or
judicial authority in a manner that would adversely affect the Company.
Potential sanctions for violation of these statutes and regulations include
significant fines and the loss of various licenses, certificates, and
authorizations, which could have a material adverse affect on the Company's
business.
Item 2. PROPERTIES
The following table summarizes certain information as to the Company's
principal operating and administrative facilities as of December 31, 2001.
Approximate
Area Nature of
Location (in square feet) Occupancy
-------------------- ---------------- -----------
Operating Facilities:
Birmingham, Alabama 100,000 Lease expires 2005
Phoenix, Arizona 55,000 Lease expires 2009
Los Angeles, California 16,000 Lease expires 2002;
one 5 year
renewal option
19,000 Lease expires 2004
San Diego, California 48,000 Lease expires 2007
14,000 Lease expires 2002
Denver, Colorado 20,000 Lease expires 2002
Tampa, Florida 95,000 Lease expires 2010;
one 5 year
renewal option
Chicago, Illinois 45,000 Lease expires 2003;
two 5 year
renewal options
Louisville, Kentucky 60,000 Lease expires 2002;
three 5 year
renewal options
Detroit, Michigan 32,000 Lease expires 2004;
one 10 year
renewal option
Eden Prairie, Minnesota 49,000 Lease expires 2014
Kansas City, Missouri 78,000 Owned
Reno, Nevada 16,000 Owned
14,000 Lease expires 2003;
one 2 year
renewal option
Portsmouth, New Hampshire 43,000 Lease expires 2006;
one 5 year
renewal option
Raritan, New Jersey 187,000 Owned
Uniondale, New York 108,000 Lease expires 2007;
two 5 year
renewal options
Burlington, North Carolina 275,000 Owned
Charlotte, North Carolina 25,000 Lease expires 2003
Research Triangle Park,
North Carolina 71,000 Lease expires 2008;
three 5 year
renewal options
111,000 Lease expires 2011;
three 5 year
renewal options
Dublin, Ohio 82,000 Owned
Southaven, Mississippi 17,000 Owned
Dallas, Texas 60,000 Lease expires 2004;
two 5 year
renewal option
Houston, Texas 70,000 Lease expires 2012;
two 5 year
renewal options
San Antonio, Texas 44,000 Lease expires 2004;
two 5 year
renewal option
Salt Lake City, Utah 20,000 Lease expires 2002;
two 5 year
renewal options
Chesapeake, Virginia 21,000 Lease expires 2002;
three 5 year
renewal options
Herndon, Virginia 80,000 Lease expires 2004
Richmond, Virginia 34,000 Lease expires 2006
Kent, Washington 42,000 Lease expires 2005;
one 5 year
renewal option
Fairmont, West Virginia 25,000 Lease expires 2005;
three 5 year
renewal options
Mechelen, Belgium 20,000 Lease expires 2007
Administrative facilities:
Raritan, New Jersey 53,000 Owned
Burlington, North Carolina 293,000 Owned
246,000 Leases expire
2002-2010;
various options to
purchase or renew
All of the Company's major laboratory facilities have been built or
improved for the single purpose of providing clinical laboratory testing
services. The Company believes that these facilities are suitable and
adequate and have sufficient production capacity for its currently
foreseeable level of operations. The Company believes that if it were to
lose the lease on any of the facilities it presently leases, it could find
alternate space at competitive market rates and readily relocate its
operations to such new locations without material disruption to its
operations.
Item 3. LEGAL PROCEEDINGS
The Company is involved in litigation purporting to be a nation-wide
class action involving the alledged overbilling of patients who are covered
by private insurance. The Company has reached a settlement with the class
that will not exceed existing reserves or have a material adverse affect on
the Company. On January 9, 2001, the Company was served with a complaint
in North Carolina which purports to be a class action and makes claims
similar to those referred to above. The claim has been stayed pending
appeal of the court approval of the settlement discussed above. The
outcome cannot be presently predicted.
The Company is also involved in various claims and legal actions
arising in the ordinary course of business. These matters include, but are
not limited to, professional liability, employee related matters, and
inquiries from governmental agencies and Medicare or Medicaid carriers
requesting comment on allegations of billing irregularities that are
brought to their attention through billing audits or third parties. In the
opinion of management, based upon the advice of counsel and consideration
of all facts available at this time, the ultimate disposition of these
matters is not expected to have a material adverse effect on the financial
position, results of operations or liquidity of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock trades on the New York Stock Exchange ("NYSE") under
the symbol "LH". The following table sets forth for the calendar periods
indicated the high and low sales prices for the Common Stock reported on
the NYSE Composite Tape.
High Low
------- -------
2000
First Quarter 23.438 15.625
Second Quarter 40.500 19.688
Third Quarter 66.250 38.125
Fourth Quarter 91.500 54.125
High Low
------- -------
2001
First Quarter 87.500 49.750
Second Quarter 82.500 56.450
Third Quarter 91.350 66.840
Fourth Quarter 90.000 73.000
High Low
------- -------
2002
First Quarter (through February 28, 2002) 88.800 76.300
During May 2000, the Company's shareholders approved a 1-for-10
reverse stock split and on June 11, 2001, the Company effected a 2-for-1
stock split. The reported sales prices reflect such stock splits.
On February 28, 2002 there were 653 holders of record of the Common
Stock.
It is currently the Company's policy not to pay dividends on its
common stock in order to increase its flexibility with respect to its
acquisition strategy. In addition, the Company's new $300 million senior
credit facilities, will place certain limits on the payment of dividends.
Item 6. SELECTED FINANCIAL DATA
The selected financial data presented below under the captions
"Statement of Operations Data" and "Balance Sheet Data" as of and for the
five-year period ended December 31, 2001 are derived from consolidated
financial statements of the Company, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. This data should be
read in conjunction with the accompanying notes, the Company's consolidated
financial statements and the related notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
all included elsewhere herein.
Year Ended December 31,
-----------------------------------
2001 2000 1999
---------- ---------- ----------
(Dollars in millions, except per share amounts)
Statement of Operations Data:
- -----------------------------
Net sales $ 2,199.8 $ 1,919.3 $ 1,698.7
Gross profit 925.6 766.6 629.1
Operating income (loss) 367.6 245.6(b) 149.7
Earnings (loss) before
extraordinary loss 182.7 112.1 65.4
Extraordinary loss, net of
tax benefit 3.2 -- --
Net earnings (loss) 179.5(a) 112.1 65.4
Basic earnings (loss)
per common share before
extraordinary loss $ 2.63 $ 1.65 $ 0.59
Extraordinary loss per
common share, net
of tax benefit $ 0.05 $ -- $ --
Basic earnings (loss)
per common share $ 2.58 $ 1.65 $ 0.59
Diluted earnings (loss)
per common share before
extraordinary loss $ 2.59 $ 1.61 $ 0.58
Extraordinary loss per
common share, net
of tax benefit $ 0.05 $ -- $ --
Diluted earnings (loss)
per common share $ 2.54 $ 1.61 $ 0.58
Basic weighted average common
shares outstanding
(in thousands) 69,419 47,081 25,332
Diluted weighted average common
shares outstanding
(in thousands) 70,539 48,150 25,754
Balance Sheet Data:
- -------------------
Cash and cash
equivalents $ 149.2 $ 48.8 $ 40.3
Intangible assets, net 968.5 865.7 803.9
Total assets 1,929.6 1,666.9 1,590.2
Long-term obligations and
redeemable preferred
stock (c) 509.2 355.8 1,041.5
Total shareholders'
equity 1,085.4 877.4 175.5
1998 1997
---------- ----------
(Dollars in millions, except per share amounts)
Statement of Operations Data:
- -----------------------------
Net sales $ 1,612.6 $ 1,579.9
Gross profit 563.4 499.4
Operating income (loss) 127.6 (92.0)(d)
Earnings (loss) before
extraordinary loss 68.8 (106.9)
Extraordinary loss, net of
tax benefit -- --
Net earnings (loss) 68.8 (106.9)
Basic earnings (loss)
per common share before
extraordinary loss $ 0.98 $ (5.30)
Extraordinary loss, net
of tax benefit $ -- $ --
Basic earnings (loss)
per common share $ 0.98 $ (5.30)
Diluted earnings (loss)
per common share before
extraordinary loss $ 0.98 $ (5.30)
Extraordinary loss, net
of tax benefit $ -- $ --
Diluted earnings (loss)
per common share $ 0.98 $ (5.30)
Basic weighted average common
shares outstanding
(in thousands) 24,969 24,648
Diluted weighted average common
shares outstanding
(in thousands) 24,969 24,648
Balance Sheet Data:
- -------------------
Cash and cash
equivalents $ 22.7 $ 23.3
Intangible assets, net 836.2 851.3
Total assets 1,640.9 1,658.5
Long-term obligations and
redeemable preferred
stock (c) 1,110.0 1,200.1
Total shareholders'
equity 154.4 129.1
(a) During the third quarter of 2001, the Company recorded an
extraordinary loss of $3.2 million (net of tax benefit) relating to the
write-off of unamortized bank fees associated with the Company's term debt,
which was repaid in September of 2001. The Company also recorded a charge
of $8.9 million as a result of a payment made to a bank to terminate an
interest rate swap agreement tied to the Company's term loan.
(b) In the fourth quarter of 2000, the Company recorded a $4.5 million
restructuring charge relating to the closing of its Memphis drug testing
facility.
(c) Long-term obligations include capital lease obligations of $6.1
million, $7.2 million, $4.4 million, $4.2 million and $5.8 million at
December 31, 2001, 2000, 1999, 1998 and 1997, respectively. Long-term
obligations also include the long-term portion of the expected value of
future contractual amounts to be paid to the former principals of acquired
laboratories. Such payments are principally based on a percentage of
future revenues derived from the acquired customer lists or specified
amounts to be paid over a period of time. At December 31, 2001, 2000,
1999, 1998 and 1997, such amounts were $0.3 million, $2.1 million, $0.0
million, $7.7 million and $9.6 million, respectively. Long-term
obligations exclude amounts due to affiliates. On June 6, 2000, the
Company called for redemption all of its outstanding redeemable preferred
stock, resulting in the conversion of substantially all of the preferred
stock into common stock. During 2001, the Company sold $744.0 aggregate
principal amount at maturity of its zero coupon convertible subordinated
notes due 2021 in a private placement. The Company received approximately
$488.6 in net proceeds from the offering. The Company used a portion of
the proceeds to repay $412.5 million of its term loan outstanding
under its credit agreement
(d) During the fourth quarter of 1997 the Company recorded a provision for
doubtful accounts of $182.0 million, which was approximately $160.0 million
greater than the amount recorded in the fourth quarter of 1996 and a $22.7
million provision for restructuring certain laboratory operations.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
During 2001, the Company experienced strong growth, primarily as a
result of continued implementation of its strategic plan. The Company
further expanded its managed care business while strengthening its
scientific expertise and market share through acquisitions and strategic
partnerships.
The Company completed two important acquisitions during the current
year. Path Lab Holdings, Inc., acquired in May 2001, is the largest
regional laboratory in New England with annual revenues in 2000 of
approximately $51.6 million. This acquisition not only expanded the
Company's geographic coverage, but also helped leverage the Company's
expertise in esoteric testing. Path Lab has particular skill in servicing
hospitals in the New England market. Hospitals generally have a need for
higher-value esoteric testing. The acquisition of Minneapolis-based Viro-
Med Inc. in June 2001, further strengthened the Company's leadership
position in infectious disease testing. In addition, Viro-Med's
specialized laboratory space provides significant additional esoteric
testing capacity and the flexibility to more efficiently direct testing
workflow throughout the country. Viro-Med had clinical laboratory revenues
for the twelve months ended December 31, 2000 of approximately $25.2
million.
In December 2001, the Company entered into exclusive licensing and
marketing relationships with EXACT Sciences and Myriad Genetics. Under
the agreement with EXACT Sciences, the Company will be the only national
clinical laboratory to offer testing services based on certain of EXACT
Sciences' proprietary technologies for the detection of colorectal cancer.
The agreement with Myriad Genetics allows the Company to market Myriad's
predictive medicine markers for hypertension, melanoma, breast, ovarian and
colorectal cancers to the Company's more than 200,000 primary care
physicians. While the Company believes both of these agreements will have
a favorable impact on its operating results going forward, it is too early
in each relationship to reliably quantify their impact in 2002.
In addition to the acquisitions and relationships discussed above, the
Company believes future performance will be positively affected by several
factors: 1) The expansion of higher-value genomic tests such as Cystic
Fibrosis, HCV and HIV genotyping is occurring, along with the continued
growth of HIV viral loads and HPV testing; 2) Continued conversion of
traditional pap smears to the newer, high value monolayer technology; 3)
Additional product licensing and business relationships (such as Myriad
Genetics and Exact Sciences); 4) The Company's ongoing business acquisition
strategy; 5) Growing demand for genomic testing will create a positive
shift in test mix to higher value testing; and 6) Improving regulatory and
reimbursement environment in Washington.
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets", is expected to have a positive impact on the 2002
financial statements. The application of this new statement will result in
a decrease in amortization expense of approximately $26.0 million for 2002.
During 2001, the Company was involved in several transactions
affecting its capital structure. On May 24, 2001, the Company's
shareholders approved an amendment to the restated certificate of
incorporation to increase the number of common shares authorized from 52
million shares to 265 million shares. On June 11, 2001, the Company
effected a two-for-one stock split through the issuance of a stock dividend
of one new share of common stock for each share of common stock held by
shareholders of record on June 4, 2001. The Company also assisted in the
successful placement of 12.0 million shares of the Company's common stock
formerly owned by Roche, and increased the number of shares traded in the
open market and available for purchase by other investors. During
September and October 2001, the Company sold $744.0 million aggregate
principal amount at maturity of its zero coupon convertible subordinated
notes (the "Notes") due 2021 in a private placement. The Company received
approximately $488.6 million net of approximately $11.2 million in
underwriting fees. See "Note 9 to the Consolidated Financial Statements"
for a further discussion of the Notes.
In early 2002, Standard & Poor's upgraded the Company's corporate
credit and bank loan ratings from BBB to BBB+. This investment-grade
rating offers the Company additional financial flexibility as growth
opportunities are identified.
On February 21, 2002, the Company filed a Registration Statement on
Form S-3, seeking to register approximately 7.7 million shares (including
700,000 shares subject to an overallotment option) of the Company's common
stock, currently owned by Roche. It is anticipated that the offering of
these shares will be consummated sometime during March 2002 subject to
prevailing market conditions. The sale by Roche of these shares will
reduce their ownership interest in the Company's common stock to 5.24%
(4.25% if the overallotment option is exercised in full) compared to 15.13%
as of December 31, 2001.
Seasonality
Volume of testing generally declines during the year-end holiday
periods and other major holidays. In addition, volume declines due to
inclement weather may reduce net revenues and cash flows. Therefore,
comparison of the results of successive quarters may not accurately reflect
trends or results for the full year.
Critical Accounting Policies
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported periods. Significant estimates include the
allowances for doubtful accounts and deferred tax assets, amortization
lives for intangible assets and accruals for self-insurance reserves.
The allowance for doubtful accounts is determined based on
historical collection trends, the aging of accounts, current economic
conditions and regulatory changes.
The deferred tax valuation allowance brings the Company's net
deferred tax assets to a level where management believes that it is more
likely than not the tax benefits will be realized.
Intangible assets are amortized on a straight-line basis over the
expected periods to be benefited, generally ranging from 20 to 40 years
for goodwill, legal life for patents and technology, 10 to 25 years for
customer lists and contractual lives for non-compete agreements.
Management periodically reviews the Company's operating and financial
performance in order to determine whether it should revise its estimates
of the useful lives or whether circumstances exist that indicate that the
carrying amount of the Company's goodwill or other long-lived assets may
not be recoverable.
Accruals for self-insurance reserves (including workers
compensation, auto, employee medical and professional liability) are
determined based on historical payment trends and claims history, along
with current and estimated future economic conditions.
While management believes these estimates are reasonable and
consistent; they are, by their very nature, estimates of amounts that
will depend on future events. Accordingly, actual results could differ
from these estimates. See "Note 1 to the Consolidated Financial
Statements" for further discussion of significant accounting policies.
Results of Operations
Year ended December 31, 2001 compared with Year ended December 31, 2000.
Net sales for 2001 were $2,199.8 million, an increase of 14.6% from
$1,919.3 million reported in the comparable 2000 period. Sales increased
approximately 8.2% due to an increase in volume and 5.9% due to an
increase in price per accession (which reflects actual price increases
and changes in the mix of tests performed). These increases occurred as
a result of the Company's success in winning new business as well as
retaining and increasing business from existing customers. Excluding
acquisitions, revenues would have increased 10.6%.
Cost of sales, which includes primarily laboratory and distribution
costs, was $1,274.2 million for 2001 compared to $1,152.7 million in the
corresponding 2000 period, an increase of 10.5%. The majority of the
increase in cost of sales is due to an increase in volume (approximately
$95.0 million), with an additional increase of $13.0 million due to
increases in the volume of pap smear tests performed using monolayer
technology. In addition, the Company incurred incremental costs of
approximately $6.0 million as it implemented a self-mandated safety
needle program in all of its patient service centers. Cost of sales as a
percentage of net sales was 57.9% for 2001 and 60.0% in the corresponding
2000 period. The decrease in the cost of sales as a percentage of net
sales primarily resulted from higher margin test mix, continued cost
reduction efforts and economies of scale achieved through volume growth.
Selling, general and administrative expenses increased to $516.5
million in 2001 from $483.0 million in the same period in 2000 representing
an increase of $33.5 million or 6.9%. Selling, general and administrative
expenses were 23.5% and 25.2% as a percentage of net sales in 2001 and
2000, respectively. The increase in selling, general and administrative
expenses is primarily the result of the Company's acquisitions during the
year combined with additional bad debt expense as a result of the increase
in net sales.
Interest expense was $27.0 million in 2001 compared to $38.5 million
in 2000. During September 2001, the Company repaid its outstanding term
loan balance of $412.5 million with the proceeds from the sale of zero
coupon-subordinated notes. During the third quarter of 2001, the Company
recorded an $8.9 million loss relating to a payment made to terminate an
interest rate swap agreement tied to the Company's term loan. In addition,
the Company recorded a $3.2 million extraordinary loss, net of tax benefit,
representing the write-off of unamortized bank fees associated with the
retired term debt. See "Note 9 to Consolidated Financial Statements" for a
further discussion of zero coupon-subordinated notes. Also, see "Liquidity
and Capital Resources."
Provision for income taxes was $149.6 million in 2001 compared to
$95.5 million in 2000. The effective tax rate was 45.0% in 2001 and 46.0%
in 2000. The decrease in the effective rate reflects the increase in the
Company's pre-tax earnings relative to the amount of non-deductible
amortization of intangible assets. See "Note 14 to Consolidated Financial
Statements" for a further discussion of income taxes.
Year ended December 31, 2000 compared with Year ended December 31, 1999.
Net sales for 2000 were $1,919.3 million, an increase of 13.0% from
$1,698.7 million reported in the comparable 1999 period. Sales increased
approximately 9.0% due to an increase in volume and 4.0% due to an
increase in price per accession (which reflects actual price increases
and changes in the mix of tests performed). These increases occurred as
a result of the Company's ability to win new business and successfully
retain and increase business from existing customers. Excluding
acquisitions, revenues would have increased 11.6%.
Cost of sales, which includes primarily laboratory and distribution
costs, was $1,152.7 million for 2000 compared to $1,069.6 million in the
corresponding 1999 period, an increase of 7.8%. Cost of sales increased
approximately $91.0 million due to an increase in volume offset by labor
efficiencies due to streamlining of operations. Cost of sales as a
percentage of net sales was 60.0% for 2000 and 63.0% in the corresponding
1999 period. The decrease in the cost of sales as a percentage of net
sales primarily resulted from continued cost reduction efforts and
economies of scale achieved through volume growth.
Selling, general and administrative expenses increased to $483.0
million in 2000 from $448.2 million in the same period in 1999 representing
an increase of $34.8 million or 7.8%. Selling, general and
administrative expenses were 25.2% and 26.4% as a percentage of net sales
in 2000 and 1999, respectively. The increase in selling, general and
administrative expenses is primarily the result of the Company's
acquisitions during the year combined with billing conversion-related costs
such as salaries and telephone expenses.
During the fourth quarter of 2000, the Company recorded a $4.5 million
restructuring charge relating to the closing of its Drug Testing laboratory
in Memphis, Tennessee. These operations were absorbed by other Company
facilities. This restructuring was completed during the second quarter of
2001 and resulted in annualized cost reductions of approximately $7.0
million.
Interest expense was $38.5 million in 2000 compared to $41.6 million
in 1999. This decrease is related to the Company's reduction in its
outstanding debt of approximately $95.0 million.
Provision for income taxes was $95.5 million in 2000 compared to $40.1
million in 1999. The effective rate was 46.0% in 2000 and 38.0% in 1999.
The increase in the effective rate was due primarily to the Company's
reduction in its deferred tax asset valuation allowance in 1999. See "Note
14 to Consolidated Financial Statements".
Liquidity and Capital Resources
Net cash provided by operating activities was $316.0 million, $246.7
million and $180.5 million, in 2001, 2000 and 1999, respectively. The
increase in cash flow from operations in both 2001 and 2000 primarily
resulted from overall improved operating results.
Capital expenditures were $88.1 million, $55.5 million and $69.4
million for 2001, 2000 and 1999, respectively. The Company expects capital
expenditures of approximately $85.0 million in 2002. These expenditures
are intended to continue to improve information systems and further
automate laboratory processes. Such expenditures are expected to be funded
by cash flow from operations as well as borrowings under the Company's new
senior credit facilities.
The Company's DSO at the end of 2001 improved to 58 days as compared
to 68 days at the end of 2000. This improvement was due to Company-wide
efforts to increase cash collections from all payors, as well as on-going
improvements to claim submission processes. In addition, the Company
continued to take steps necessary to improve DSO and cash collections by:
1. Substantially completing the conversion of decentralized billing
locations to a centralized billing system. During 2001, the Chicago,
San Antonio, and Dallas locations were converted.
2. Implementing an initiative to reduce the number of requisitions
received that are missing certain billing information.
The billing system conversions, combined with improvements in front-
end processes that enhance data capture for billing, are expected to
reduce DSO to the mid 50s by the end of 2002.
During September 2001, the Company repaid its outstanding balance of
$412.5 million on its term loan facility with the proceeds from the
issuance of zero coupon-subordinated notes. Interest expense on the zero
coupon-subordinated notes in the financial statements is computed based on
the notes' original issue discount amortization for an effective rate of 2%
per year. This non-cash interest expense will total approximately $12.0
million in 2002 as compared to interest expense of $27.0 million in 2001
(primarily related to the Company's retired term debt). As the Company
does not pay any interest on the zero coupon-subordinated notes prior to
their maturity on September 11, 2021 (unless certain contingencies are
met), the replacement of the Company's long-term debt with the zero coupon-
subordinated notes will result in increases to the Company's available
cash.
This reduction in cash interest expense and the resulting retention
of operating cash flows in the business is expected to provide the
Company increased flexibility in pursuing strategic investments through
possible acquisitions, technology purchases and key business
relationships.
In February 2002, the Company entered into two new senior credit
facilities with Credit Suisse First Boston, acting as Administrative
Agent, and a group of financial institutions totaling $300 million. The
new facilities will consist of a 364-day revolving credit facility in the
principal amount of $100 million and a three-year revolving credit
facility in the principal amount of $200 million. The new facilities
will be used for general corporate purposes, including working capital,
capital expenditures, funding or share repurchases and other payments,
and acquisitions.
Contractual Cash Obligations
Payments Due by Period
-------------------------------------
1 Yr 2-3 Yrs 4-5 Yrs > 5 Yrs
------- ------- -------- --------
Capital lease obligations $ 3.0 $ 5.4 $ 5.7 $ 1.2
Operating leases 43.7 60.2 33.1 38.9
Contingent future acquisition
Payments 17.5 7.0 -- --
Zero coupon-subordinated notes -- 530.5(a) -- --
------ ----- ----- -----
Total contractual cash
obligations $ 64.2 $603.1 $ 38.8 $ 40.1
===== ===== ===== =====
(a) Holders of the zero coupon-subordinated notes may require the Company
to purchase all or a portion of their notes on September 11, 2004,
2006 and 2011 at prices ranging from $712.97 to $819.54 per note. The
Company may choose to pay the purchase price in cash or common stock
or a combination of cash and common stock. If the holders elect to
require the Company to purchase their notes, it is the Company's
current intention to retire the notes by a cash payment. Based upon
current market conditions, the Company believes that the possibility
of the holders of the notes exercising this put feature of the notes
is remote. However, future market conditions are subject to change.
Should the holders put the notes to the Company on any of the dates
above, the Company believes that it will be able to obtain alternate
financing to satisfy this contingent cash obligation.
Other Commercial Commitments
At December 31, 2001, the Company provided letters of credit
aggregating approximately $36.6 million, primarily in connection with
certain insurance programs. These letters of credit are secured by the
Company's senior credit facilities and are renewed annually, around mid-
year.
Based on current and projected levels of operations, coupled with
availability under its new senior credit facilities, the Company believes
it has sufficient liquidity to meet both its short-term and long-term
cash needs. For a discussion of the Company's zero coupon-subordinated
notes, see "Note 9 to Consolidated Financial Statements." For a
discussion of the Company's new senior credit facilities, see "Note 10 to
Consolidated Financial Statements."
FORWARD-LOOKING STATEMENTS
The Company has made in this report, and from time to time may
otherwise make in its public filings, press releases and discussions with
Company management, forward-looking statements concerning the Company's
operations, performance and financial condition, as well as its strategic
objectives. Some of these forward-looking statements can be identified by
the use of forward-looking words such as "believes", "expects", "may",
"will", "should", "seeks", "approximately", "intends", "plans",
"estimates", or "anticipates" or the negative of those words or other
comparable terminology. Such forward-looking statements are subject to
various risks and uncertainties and the Company claims the protection
afforded by the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those currently anticipated due to a number of
factors in addition to those discussed elsewhere herein and in the
Company's other public filings, press releases and discussions with Company
management, including:
1. future changes in federal, state, local and third party payor regulations
or policies (or in the interpretation of current regulations) affecting
governmental and third-party reimbursement for clinical laboratory
testing.
2. adverse results from investigations of clinical laboratories by the
government, which may include significant monetary damages and/or
exclusion from the Medicare and Medicaid programs.
3. loss or suspension of a license or imposition of a fine or penalties
under, or future changes in, the law or regulations of the Clinical
Laboratory Improvement Act of 1967, and the Clinical Laboratory
Improvement Amendments of 1988, or those of Medicare, Medicaid or other
federal, state or local agencies.
4. failure to comply with the Federal Occupational Safety and Health
Administration requirements and the Needlestick Safety and Prevention Act
which may result in penalties and loss of licensure.
5. failure to comply with HIPAA, which could result in significant fines and
up to ten years in prison.
6. increased competition, including price competition.
7. changes in payor mix, including an increase in capitated managed-cost
health care.
8. our failure to obtain and retain new customers and alliance partners, or
a reduction in tests ordered or specimens submitted by existing
customers.
9. our failure to integrate newly acquired businesses and the cost related
to such integration.
10.adverse results in litigation matters.
11.our ability to attract and retain experienced and qualified personnel.
12.failure to maintain our days sales outstanding levels.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company addresses its exposure to market risks, principally the
market risk associated with changes in interest rates, through a controlled
program of risk management that has included in the past, the use of
derivative financial instruments such as interest rate swap agreements.
There were no interest rate swap agreements outstanding as of December 31,
2001. The Company does not hold or issue derivative financial instruments
for trading purposes. The Company does not believe that its exposure to
market risk is material to the Company's financial position or results of
operations. There were no interest rate swap agreements outstanding as of
December 31, 2001.
The Company's zero coupon-subordinated notes contain the following
three features that are considered to be embedded derivative instruments
under FAS No. 133:
1) The Company will pay contingent cash interest on the zero coupon
subordinated notes after September 11, 2006, if the average market
price of the notes equals 120% or more of the sum of the issue price,
accrued original issue discount and contingent additional principal,
if any, for a specified measurement period.
2) Contingent additional principal will accrue on the zero coupon-
subordinated notes during the two year period from September 11, 2004
to September 11, 2006, if the Company's stock price is at or below
specified thresholds.
3) Holders may surrender zero coupon-subordinated notes for conversion
during any period in which the rating assigned to the zero coupon-
subordinated notes by Standard & Poor's Ratings Services is BB- or
lower.
Based upon independent appraisals, these embedded derivatives had no
fair market value at December 31, 2001.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Index on Page F-1 of the
Financial Report included herein.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
The information required by Part III, Items 10 through 13, of Form 10-
K is incorporated by reference to the registrant's definitive proxy
statement for its 2002 annual meeting of stockholders, which is to be filed
pursuant to Regulation 14A not later than April 30, 2002.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) List of documents filed as part of this Report:
(1) Consolidated Financial Statements and Independent
Auditors' Reports included herein:
See Index on page F-1
(2) Financial Statement Schedules:
See Index on page F-1
All other schedules are omitted as they are inapplicable or the
required information is furnished in the Consolidated Financial
Statements or notes thereto.
(3) Index to and List of Exhibits
Exhibits:
Exhibits 10.3 through 10.8 and 10.14 through 10.18 are
management contracts or compensatory plans or arrangements.
3.1 - Amended and Restated Certificate of Incorporation of the
Company dated May 24, 2001 (incorporated herein by reference
to the Company's Registration Statement on Form S-3, filed
with the Commission on October 19, 2001, File No. 333-
71896).
3.2 - Amended and Restated By-Laws of the Company dated April 28,
1995 (incorporated herein by reference to the Company's
report on Form 8-K, filed with the Commission on May 12
1995).
4.1* - Specimen of the Company's Common Stock Certificate.
4.2 - Indenture dated September 11, 2001 between the Company and
Bank of New York, as trustee (incorporated herein by
reference to the Company's Registration Statement on Form S-
3, filed with the Commission on October 19, 2001, File No.
333-71896).
4.3 - Registration Rights Agreement dated September 11, 2001
between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (incorporated herein by reference to the
Company's Registration Statement on Form S-3, filed with the
Commission on October 19, 2001, File No. 333-71896).
4.4 - Rights Agreement dated December 13, 2001 between the Company
and American Stock Transfer & Trust Company, as rights Agent
(incorporated herein by reference to the Company's
Registration Statement on Form 8-A, filed with the
Commission on December 21, 2001, File No. 001-11353).
10.1 - National Health Laboratories Incorporated Pension
Equalization Plan (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992).
10.2 - Settlement Agreement dated November 21, 1996 between the
Company and the United States of America.
10.3 - National Health Laboratories 1988 Stock Option Plan, as
amended (incorporated herein by reference to the Company's
Registration Statement on Form S-1, filed with the
Commission on July 9, 1990, File No. 33-35782).
10.4 - National Health Laboratories 1994 Stock Option Plan
(incorporated herein by reference to the Company's
Registration Statement on Form S-8, filed with the
Commission on August 12, 1994, File No. 33-55065).
10.5 - Laboratory Corporation of America Holdings Master Senior
Executive Severance Plan (incorporated herein by reference
to the report on Form 8-K dated October 24, 1996 (the
"October 24, 1996 8-K") filed with the Commission on October
24, 1996, File No. 1-11353).
10.6 - Special Severance Agreement dated June 28, 1996 between the
Company and Timothy J. Brodnik (incorporated herein by
reference to the October 24, 1996 8-K).
10.7 - Special Severance Agreement dated July 12, 1996 between the
Company and John F. Markus (incorporated herein by reference
to the October 24, 1996 8-K).
10.8 - Special Severance Agreement dated June 28, 1996 between the
Company and Robert E. Whalen (incorporated herein by
reference to the October 24, 1996 8-K).
10.9 - Tax Allocation Agreement dated as of June 26, 1990 between
MacAndrews & Forbes Holding Inc., Revlon Group Incorporated,
New Revlon Holdings, Inc. and the subsidiaries of Revlon set
forth on Schedule A thereto (incorporated herein by
reference to the 1990 S-1).
10.10 - Stockholder Agreement dated as of April 28, 1995 among the
Company, HLR Holdings Inc., Hoffmann-La Roche Inc. and Roche
Holdings, Inc. (incorporated herein by reference to the
April 28, 1995 Form 8-K).
10.11 - Exchange Agent Agreement dated as of April 28, 1995 between
the Company and American Stock Transfer & Trust Company
(incorporated herein by reference to the April 28, 1995 Form
8-K).
10.12*- Three-Year Credit Agreement dated February 20, 2002 among
the Company, the lenders named therein and Credit Suisse
First Boston, as administrative agent.
10.13*- 364-Day Credit Agreement dated February 20, 2002 among the
Company, the lenders named therein and Credit Suisse First
Boston, as administrative agent.
10.14 - Laboratory Corporation of America Holdings 1995 Stock Plan
for Non-Employee Directors dated September 26, 1995
(incorporated herein by reference to the Company's
Registration Statement on Form S-8, filed with the
Commission on September 26, 1995, File No. 33-62913).
10.15 - Laboratory Corporation of America Holdings 1997 Employee
Stock Purchase Plan (incorporated herein by reference to
Annex I of the Company's 1996 Annual Proxy Statement filed
with the Commission on October 25, 1996).
10.16 - Amendments to the Laboratory Corporation of America Holdings
1997 Employee Stock Purchase Plan (incorporated herein by
reference to Annex II of the Company's 1999 Annual Proxy
Statement filed with the Commission on June 16, 1999).
10.17 - Laboratory Corporation of America Holdings Amended and
Restated 1999 Stock Incentive Plan (incorporated herein by
reference to Annex I of the Company's 1999 Annual Proxy
Statement filed with the Commission of June 16, 1999).
10.18 - Laboratory Corporation of America Holdings 2000 Stock
Incentive Plan (incorporated herein by reference to Annex I
of the Company's 2000 Annual Proxy Statement filed with the
Commission on April 7, 2000).
10.19 - Support Agreement between Roche Biomedical Laboratories,
Inc. and Hoffmann-La Roche Inc., dated as of April 27, 1995.
10.20 - First Amendment to Support Agreement between Roche
Biomedical Laboratories, Inc. and Hoffmann-La Roche Inc.,
dated as of July 26, 1995.
10.21 - Second Amendment to Support Agreement between Laboratory
Corporation of America Holdings, Hoffmann-La Roche Inc.,
Roche Molecular Systems, Inc. and Roche Diagnostic Systems,
Inc., dated as of January 1, 1997.
10.22 --Third Amendment to Support Agreement between Laboratory
Corporation of America Holdings, Hoffmann-La Roche Inc.,
Roche Molecular Systems, Inc. and Roche Diagnostic Systems,
Inc., dated as of October 1, 1997.
21* - List of Subsidiaries of the Company
23.1*- Consent of PricewaterhouseCoopers LLP
24.1*- Power of Attorney of Jean-Luc Belingard
24.2*- Power of Attorney of Wendy E. Lane
24.3*- Power of Attorney of Robert E. Mittelstaedt, Jr.
24.4*- Power of Attorney of James B. Powell, M.D.
24.5*- Power of Attorney of David B. Skinner
24.6*- Power of Attorney of Andrew G. Wallace, M.D.
* Filed herewith.
(b) Reports on Form 8-K
(1) A current report on Form 8-K dated November 14, 2001 was filed on
November 14, 2001 by the registrant, in connection with the press
release dated November 14, 2001 which announced that Thomas P. Mac
Mahon, chairman and chief executive officer, was scheduled to speak
at the CSFB Health Care Conference in Phoenix, AZ on Thursday,
November 15 at 9:30 a.m. Mountain Time.
(2) A current report on Form 8-K date November 28, 2001 was filed on
November 28, 2001 by the registrant, in connection with the press
release dated November 28, 2001 which announced that Bradford T.
Smith, executive vice president of public affairs, was scheduled to
speak at the SG Cowen Global Health Care Conference in Paris, France
on Thursday, November 29 at 10:20 a.m. (4:20 a.m. EST).
(3) A current report on Form 8-K dated December 4, 2001 was filed on
December 4, 2001 by the registrant and Myriad Genetics, Inc., in
connection with the press release dated December 4, 2001 which
announced their new partnership to make Myriad's predictive medicine
products broadly available to primary care physicians throughout the
United States.
(4) A current report on Form 8-K date December 6, 2001 was filed on
December 6, 2001 by the registrant, in connection with the press
release dated December 6, 2001, which announced that PreGen-26? - a
DNA-based colorectal cancer test - is now available through its
nationwide network to physicians and their patients.
(5) A current report on Form 8-K dated December 12, 2001 was filed on
December 13, 2001 by the registrant, in connection with the press
release dated December 12, 2001 which announced that its Board of
Directors adopted a Stockholder Rights Plan.
(6) A current report on Form 8-K dated January 4, 2002 was filed on
January 7, 2002 by the registrant, in connection with the press
release dated January 4, 2002 which announced that Bradford T. Smith,
executive vice president of public affairs, was scheduled to speak at
the JPMorgan H&Q Healthcare Conference in San Francisco on Monday,
January 7 at 3:30 p.m. PST (6:30 p.m. EST).
(7) A current report on Form 8-K dated January 15, 2002 was filed on
January 16, 2002 by the registrant, in connection with the press
release dated January 15, 2002 which announced that the Securities
and Exchange Commission declared effective its registration statement
on Form S-3 for the registration of the resale by the securityholders
listed in the prospectus contained in the registration statement from
time to time of up to $744,000,000 aggregate principal amount at
maturity of its zero coupon convertible subordinated notes due 2021
and the shares of its common stock issuable upon conversion of the
notes and the preferred stock purchase rights included in such shares
of common stock.
(8) A current report on Form 8-K dated January 28, 2002 was filed on
January 29, 2002 by the registrant, in connection with the press
release dated January 28, 2002 which announced that Thomas P. Mac
Mahon, chairman and chief executive officer, was scheduled to speak
at the US Bancorp Piper Jaffray Healthcare Conference in New York
City on Tuesday, January 29, 2002 at 8:30 a.m. Eastern Time.
(9) A current report on Form 8-K dated February 5, 2002 was filed on
February 5, 2002 by the registrant, in connection with the press
release dated February 5, 2002 which announced that Thomas P. Mac
Mahon, chairman and chief executive officer, was scheduled to speak
at the UBS Warburg Global Healthcare Services Conference in New York
City on Monday, February 6, 2002 at 3:00 p.m. Eastern Time.
(10) A current report on Form 8-K dated February 13, 2002 was filed on
February 13, 2002 by the registrant, in connection with the press
release dated February 13, 2002 which contained summary information
relating to the Company.
(11) A current report on Form 8-K dated February 13, 2002 was filed on
February 13, 2002 by the registrant, in connection with the press
release dated February 13, 2002 which announced results for the
quarter ended December 31, 2001.
(12) A current report on Form 8-K dated February 22, 2002 was filed on
February 22, 2002 by the registrant, in connection with the press
release dated February 22, 2002 which announced that it has entered
into $300 million of new senior credit facilities with Credit Suisse
First Boston, acting as Administrative Agent, and a group of
financial institutions.
(13) A current report on Form 8-K dated February 26, 2002 was filed on
February 26, 2002 by the registrant, in connection with the press
release dated February 26, 2002 which announced that it had signed an
expanded agreement with Aetna Inc. to provide clinical laboratory
testing and certain additional services to Aetna's Commercial HMO and
Quality Point-of-Service members in New York and New Jersey.
(14) A current report on Form 8-K/A dated February 13, 2002 was filed on
March 6, 2002 by the registrant which amended Form 8-K filed on
February 13, 2002.
(15) A current report on Form 8-K dated March 12, 2002 was filed on March
12, 2002 by the registrant, in connection with the press release
dated March 12, 2002 which announced an advanced suite of molecular
assays developed to improve the management of patients diagnosed with
the hepatitis B and/or hepatitis C virus.
(16) A current report on Form 8-K dated March 12, 2002 was filed on March
12, 2002 by the registrant, in connection with the press release
dated March 12, 2002 which announced that Bradford T. Smith,
executive vice president of public affairs, is scheduled to speak at
the SG Cowen Annual Healthcare Conference in Boston on Wednesday,
March 13 at 1:15 p.m. Eastern Time.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
------------------------------------------------
Registrant
By: /s/ THOMAS P. MAC MAHON
---------------------------------
Thomas P. Mac Mahon
Chairman of the Board, President
and Chief Executive Officer
Dated: March 18, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on March 18, 2002 in the
capacities indicated.
Signature Title
- ----------------------- ---------------------
/s/ THOMAS P. MAC MAHON Chairman of the Board,
- ------------------------------------------ President and Chief
Thomas P. Mac Mahon Executive Officer
(Principal Executive Officer)
/s/ WESLEY R. ELINGBURG Executive Vice President,
- ------------------------------------------ Chief Financial Officer
Wesley R. Elingburg and Treasurer
(Principal Financial
Officer and Principal
Accounting Officer
/s/ JEAN-LUC BELINGARD* Director
- ------------------------------------------
Jean-Luc Belingard
/s/ WENDY E. LANE* Director
- ------------------------------------------
Wendy E. Lane
/s/ ROBERT E. MITTELSTAEDT, JR.* Director
- ------------------------------------------
Robert E. Mittelstaedt, Jr.
/s/ JAMES B. POWELL, M.D.* Director
- ------------------------------------------
James B. Powell, M.D.
/s/ DAVID B. SKINNER, M.D.* Director
- ------------------------------------------
David B. Skinner, M.D.
/s/ ANDREW G. WALLACE, M.D.* Director
- ------------------------------------------
Andrew G. Wallace, M.D.
* Bradford T. Smith, by his signing his name hereto, does hereby sign this
report on behalf of the directors of the Registrant after whose typed names
asterisks appear, pursuant to powers of attorney duly executed by such
directors and filed with the Securities and Exchange Commission.
By:/s/ BRADFORD T. SMITH
----------------------
Bradford T. Smith
Attorney-in-fact
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULE
Page
----
Report of Independent Accountants F-2
Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 31, 2001 and 2000 F-3
Consolidated Statements of Operations for
the three-year period ended December 31, 2001 F-4
Consolidated Statements of Changes in Shareholders'
Equity for the three-year period ended
December 31, 2001 F-6
Consolidated Statements of Cash Flows for the
three-year period ended December 31, 2001 F-7
Notes to Consolidated Financial Statements F-9
Financial Statement Schedule:
II - Valuation and Qualifying Accounts and Reserves F-30
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Laboratory Corporation of America Holdings
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects, the
financial position of Laboratory Corporation of America Holdings and
its subsidiaries (the Company) at December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements and financial
statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 8, 2002, except for Note 10,
as to which the date is February 20, 2002
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions, Except Per Share Data)
December 31, December 31,
2001 2000
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 149.2 $ 48.8
Accounts receivable, net 365.5 368.0
Supplies inventories 38.7 31.6
Prepaid expenses and other 16.7 18.5
Deferred income taxes 54.4 44.8
------- -------
Total current assets 624.5 511.7
Property, plant and equipment, net 309.3 272.8
Intangible assets, net 968.5 865.7
Other assets, net 27.3 16.7
--------- --------
$ 1,929.6 $ 1,666.9
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 60.2 $ 52.8
Accrued expenses and other 141.0 127.1
Current portion of long-term debt -- 132.0
--------- --------
Total current liabilities 201.2 311.9
Zero coupon-subordinated notes 502.8 --
Long-term debt, less current portion -- 346.5
Capital lease obligations 6.1 7.2
Other liabilities 134.1 123.9
Commitments and contingent liabilities -- --
Shareholders' equity:
Common stock, $0.10 par value; 265,000,000
shares authorized;70,553,718 and
69,739,246 shares issued and outstanding
at December 31, 2001 and December 31,
2000, respectively 7.1 7.0
Additional paid-in capital 1,088.8 1,048.2
Retained earnings (deficit) 11.5 (168.0)
Unearned restricted stock compensation (13.2) (9.4)
Accumulated other comprehensive loss (8.8) (0.4)
--------- --------
Total shareholders' equity 1,085.4 877.4
--------- --------
$ 1,929.6 $ 1,666.9
========= ========
The accompanying notes are an integral part of these consolidated
financial statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Data)
Years Ended December 31,
------------------------------------
2001 2000 1999
--------- --------- ---------
Net sales $ 2,199.8 $ 1,919.3 $ 1,698.7
Cost of sales 1,274.2 1,152.7 1,069.6
------- ------- -------
Gross profit 925.6 766.6 629.1
Selling, general and
administrative expenses 516.5 483.0 448.2
Amortization of intangibles
and other assets 41.5 33.5 31.2
Restructuring charge -- 4.5 --
-------- ------- -------
Operating income 367.6 245.6 149.7
Other income (expenses):
Loss on sale of assets (1.8) (1.0) (1.7)
Net investment income (loss) 2.4 1.5 (0.9)
Termination of interest rate
swap agreement (8.9) -- --
Interest expense (27.0) (38.5) (41.6)
-------- -------- --------
Earnings before income taxes
and extraordinary loss 332.3 207.6 105.5
Provision for income taxes 149.6 95.5 40.1
-------- -------- --------
Earnings before
extraordinary loss 182.7 112.1 65.4
Extraordinary loss, net of
tax benefit 3.2 -- --
-------- -------- --------
Net earnings 179.5 112.1 65.4
Less preferred stock dividends -- (34.3) (49.6)
Less accretion of mandatorily
redeemable preferred stock -- (0.3) (0.8)
-------- -------- --------
Net earnings attributable to
common shareholders $ 179.5 $ 77.5 $ 15.0
======== ======== ========
Basic earnings per
common share before
extraordinary loss $ 2.63 $ 1.65 $ 0.59
Extraordinary loss, net of
tax benefit 0.05 -- --
--------- --------- ---------
Basic earnings per
common share $ 2.58 $ 1.65 $ 0.59
========= ========= =========
Diluted earnings per
common share before
extraordinary loss $ 2.59 $ 1.61 $ 0.58
Extraordinary loss, net of
tax benefit 0.05 -- --
Diluted earnings per --------- --------- ---------
common share $ 2.54 $ 1.61 $ 0.58
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in Millions)
Additional Retained
Common Paid-in Earnings
Stock Capital (Deficit)
-------- ---------- ---------
BALANCE AT DECEMBER 31, 1998 $ 2.4 $ 414.5 $ (260.5)
Comprehensive earnings:
Net earnings -- -- 65.4
Other comprehensive earnings:
Change in valuation allowance
on securities, net of tax -- -- --
Foreign currency translation
adjustments -- -- --
----- ------- -------
Comprehensive earnings -- -- 65.4
Issuance of common stock 0.2 3.6 --
Issuance of restricted stock
awards -- 4.5 --
Amortization of unearned
restricted stock compensation -- -- --
Preferred stock dividends -- -- (49.6)
Accretion of mandatorily
redeemable preferred stock -- -- (0.8)
----- ------- -------
BALANCE AT DECEMBER 31, 1999 2.6 422.6 (245.5)
Comprehensive earnings:
Net earnings -- -- 112.1
Other comprehensive earnings:
Foreign currency translation
adjustments -- -- --
----- ------- -------
Comprehensive earnings -- -- 112.1
Issuance of common stock 0.2 17.6 --
Issuance of restricted stock
awards -- 9.3 --
Amortization of unearned
restricted stock compensation -- -- --
Income tax benefit from stock
options exercised -- 19.0 --
Conversion of preferred stock
into common stock 4.2 579.7 --
Preferred stock dividends -- -- (34.3)
Accretion of mandatorily
redeemable preferred stock -- -- (0.3)
----- ------- -------
BALANCE AT DECEMBER 31, 2000 7.0 1,048.2 (168.0)
Comprehensive earnings:
Net earnings -- -- 179.5
Other comprehensive earnings:
Cumulative effect of change
in accounting principle
(net of tax) -- -- --
Unrealized derivative loss
on cash flow hedge
(net of tax) -- -- --
Termination of interest
rate swap agreement -- -- --
Foreign currency translation
adjustments -- -- --
Minimum pension liability
adjustment -- -- --
----- ------- -------
Comprehensive earnings -- -- 179.5
Issuance of common stock 0.1 14.9 --
Issuance of restricted stock
awards -- 11.3 --
Amortization of unearned
restricted stock compensation -- -- --
Income tax benefit from stock
options exercised -- 14.4 --
----- ------- --------
BALANCE AT DECEMBER 31, 2001 $ 7.1 $1,088.8 $ 11.5
===== ======= ========
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in Millions)
Unearned Accumulated
Restricted Other Total
Stock Comprehensive Shareholders'
Compensation Loss Equity
------------- ------------- ------------
BALANCE AT DECEMBER 31, 1998 $ -- $ (2.0) $ 154.4
Comprehensive earnings:
Net earnings -- -- 65.4
Other comprehensive earnings:
Change in valuation allowance
on securities, net of tax -- 2.0 2.0
Foreign currency translation
adjustments -- (0.1) (0.1)
-------- --------- ---------
Comprehensive earnings -- 1.9 67.3
Issuance of common stock -- -- 3.8
Issuance of restricted stock
awards (4.5) -- --
Amortization of unearned
restricted stock compensation 0.4 -- 0.4
Preferred stock dividends -- -- (49.6)
Accretion of mandatorily
redeemable preferred stock -- -- (0.8)
-------- --------- ---------
BALANCE AT DECEMBER 31, 1999 ( 4.1) (0.1) 175.5
Comprehensive earnings:
Net earnings -- -- 112.1
Other comprehensive earnings:
Foreign currency translation
adjustments -- (0.3) (0.3)
-------- --------- ---------
Comprehensive earnings -- (0.3) 111.8
Issuance of common stock -- -- 17.8
Issuance of restricted stock
awards (9.3) -- --
Amortization of unearned
restricted stock compensation 4.0 -- 4.0
Income tax benefit from stock
options exercised -- -- 19.0
Conversion of preferred stock
into common stock -- -- 583.9
Preferred stock dividends -- -- (34.3)
Accretion of mandatorily
redeemable preferred stock -- -- (0.3)
-------- --------- ---------
BALANCE AT DECEMBER 31, 2000 (9.4) (0.4) 877.4
Comprehensive earnings:
Net earnings -- -- 179.5
Other comprehensive earnings:
Cumulative effect of change
in accounting principle
(net of tax) -- 0.6 0.6
Unrealized derivative loss
on cash flow hedge
(net of tax) -- (9.5) (9.5)
Termination of interest
rate swap agreement -- 8.9 8.9
Foreign currency translation
adjustments -- (0.6) (0.6)
Minimum pension liability
adjustment -- (7.8) (7.8)
-------- --------- --------
Comprehensive earnings -- (8.4) 171.1
Issuance of common stock -- -- 15.0
Issuance of restricted stock
awards (11.3) -- --
Amortization of unearned
restricted stock compensation 7.5 -- 7.5
Income tax benefit from stock
options exercised -- -- 14.4
-------- -------- --------
BALANCE AT DECEMBER 31, 2001 $ (13.2) $ (8.8) $ 1,085.4
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Years Ended December 31,
-----------------------------
2001 2000 1999
--------- --------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 179.5 $ 112.1 $ 65.4
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 104.0 89.6 83.8
Deferred compensation 7.5 4.0 0.4
Net losses on sale of assets 1.8 1.0 1.7
Accreted interest on zero coupon-
subordinated notes 3.0 -- --
Extraordinary loss, net of
tax benefit 3.2 -- --
Termination of interest rate
swap agreement 8.9 -- --
Deferred income taxes 1.6 (3.2) 37.0
Investment loss -- -- 4.2
Change in assets and liabilities:
Net change in restructuring reserves (5.5) (1.2) (6.2)
Decrease (increase) in accounts
receivable, net 16.2 (15.9) 27.4
(Increase) decrease in inventories (3.6) (2.1) 1.6
Decrease (increase) in prepaid
expenses and other 5.8 21.3 (24.6)
Change in income taxes receivable -- -- 11.2
(Decrease) increase in accounts payable (3.4) 7.9 (6.2)
Increase (decrease) in accrued
expenses and other (2.0) 32.9 (15.4)
Other, net (1.0) 0.3 0.2
------ ------ ------
Net cash provided by operating activities 316.0 246.7 180.5
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (88.1) (55.5) (69.4)
Proceeds from sale of assets 4.4 1.4 1.1
Deferred payments on acquisitions (5.2) (1.0) (8.7)
Acquisition of businesses (141.1) (94.9) --
------ ------ ------
Net cash used for investing activities (230.0) (150.0) (77.0)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit
facilities $ 75.0 $ -- $ 40.0
Payments on revolving credit facilities (75.0) -- (40.0)
Proceeds from zero coupon-subordinated
notes 499.8 -- --
Payments on long-term debt (478.5) (95.0) (70.3)
Debt issuance costs (11.2) -- --
Termination of interest rate swap
agreement (8.9) -- --
Payments on long-term lease obligations (1.1) (1.2) (0.8)
Payment of preferred stock dividends -- (9.5) (18.5)
Net proceeds from issuance of stock to
employees 14.9 17.8 3.8
------ ------ ------
Net cash provided by (used for)
financing activities 15.0 (87.9) (85.8)
------ ------ ------
Effect of exchange rate changes on cash
and cash equivalents (0.6) (0.3) (0.1)
Net increase in cash and
cash equivalents 100.4 8.5 17.6
Cash and cash equivalents at
beginning of period 48.8 40.3 22.7
------ ------ ------
Cash and cash equivalents at
end of period $ 149.2 $ 48.8 $ 40.3
====== ====== ======
Supplemental schedule of cash
flow information:
Cash paid during the period for:
Interest $ 23.2 $ 40.7 $ 41.8
Income taxes, net of refunds 127.7 48.8 23.9
Disclosure of non-cash financing
and investing activities:
Preferred stock dividends -- 24.8 31.1
Accretion of mandatorily redeemable
preferred stock -- 0.3 0.8
Conversion of preferred stock into
common stock -- 583.9 --
The accompanying notes are an integral part of these consolidated financial
statements.
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation:
Laboratory Corporation of America Holdings and its subsidiaries
("Company") is the second largest independent clinical laboratory company
in the United States based on 2001 net revenues. Through a national
network of laboratories, the Company offers a broad range of testing
services used by the medical profession in the diagnosis, monitoring and
treatment of disease and other clinical states. Since its founding in
1971, the Company has grown into a network of 24 primary testing facilities
and approximately 1,200 service sites consisting of branches, patient
service centers and STAT laboratories, serving clients in 50 states. The
Company operates in one business segment.
The consolidated financial statements include the accounts of
Laboratory Corporation of America Holdings and its subsidiaries after
elimination of all material intercompany accounts and transactions. During
2001, the Company added two new subsidiaries through acquisitions: Path Lab
Holdings, Inc. and Viro-Med Inc. Disclosure of certain business
combination transactions is included in Note 2 - Business Acquisitions.
The financial statements of the Company's foreign subsidiary are
measured using the local currency as the functional currency. Assets and
liabilities are translated at exchange rates as of the balance sheet date.
Revenues and expenses are translated at average monthly exchange rates
prevailing during the year. Resulting translation adjustments are included
in "Accumulated other comprehensive loss".
Cash Equivalents:
Cash equivalents (primarily investments in money market funds, time
deposits, commercial paper and Eurodollars which have original maturities
of three months or less at the date of purchase) are carried at cost which
approximates market. As a result of the Company's cash management system,
checks issued but not presented to the banks for payment may create
negative book cash balances. Such negative balances are included in trade
accounts payable and totaled $9.3 and $11.6 at December 31, 2001 and 2000,
respectively.
Inventories:
Inventories, consisting primarily of purchased laboratory supplies,
are stated at the lower of cost (first-in, first-out) or market.
Derivative Financial Instruments:
Interest rate swap agreements, which have been used by the Company
from time to time in the management of interest rate exposure, are
accounted for on an accrual basis. Amounts to be paid or received under
such agreements are recognized as interest income or expense in the periods
in which they accrue. The Company had no interest rate swap agreements in
place at December 31, 2001.
The Company's zero coupon-subordinated notes contain
the following three features that are considered to be embedded
derivative instruments under FAS No. 133:
1) The Company will pay contingent cash interest on the zero coupon-
subordinated notes after September 11, 2006, if the average
market price of the notes equals 120% or more of the sum of the
issue price, accrued original issue discount and contingent
additional principal, if any, for a specified measurement period.
2) Contingent additional principal will accrue on the zero coupon-
subordinated notes during the two year period from September 11, 2004
to September 11, 2006, if the Company's stock price is at or below
specified thresholds.
3) Holders may surrender zero coupon-subordinated notes for
conversion during any period in which the rating assigned to the
zero coupon-subordinated notes by Standard & Poor's Ratings
Services is BB- or lower.
Based upon independent appraisals, these embedded derivatives had no
fair market value at December 31, 2001.
Property, Plant and Equipment:
Property, plant and equipment are recorded at cost. The cost of
properties held under capital leases is equal to the lower of the net
present value of the minimum lease payments or the fair value of the leased
property at the inception of the lease. Depreciation and amortization
expense is computed on all classes of assets based on their estimated
useful lives, as indicated below, using principally the straight-line
method.
Years
-------
Buildings and building improvements 35
Machinery and equipment 3-10
Furniture and fixtures 5-10
Leasehold improvements and assets held under capital leases are
amortized over the shorter of their estimated lives or the period of the
related leases. Expenditures for repairs and maintenance are charged to
operations as incurred. Retirements, sales and other disposals of assets
are recorded by removing the cost and accumulated depreciation from the
related accounts with any resulting gain or loss reflected in operations.
Capitalized Software Costs:
The Company capitalizes purchased software which is ready for service
and capitalizes software development costs incurred on significant projects
starting from the time that the preliminary project stage is completed and
management commits to funding a project until the project is substantially
complete and the software is ready for its intended use. Capitalized
costs include direct material and service costs and payroll and payroll-
related costs. Research and development costs and other computer software
maintenance costs related to software development are expensed as incurred.
Capitalized software costs are amortized using the straight-line method
over the estimated useful life of the underlying system, generally five
years.
Fair Value of Financial Instruments:
The carrying amounts of cash and cash equivalents, accounts
receivable, income taxes receivable and accounts payable are
considered to be representative of their respective fair values due to
their short-term nature. The fair market value of the zero coupon-
subordinated notes, based on market pricing, was approximately $529.2 as of
December 31, 2001.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents
and accounts receivable.
The Company maintains cash and cash equivalents with various major
financial institutions. The total cash balances on deposit that exceeded
the balances insured by the F.D.I.C., was approximately $12.0 at December
31, 2001. Cash equivalents at December 31, 2001, totaled $131.7, which
includes amounts invested in treasury bills and short-term bonds.
Substantially all of the Company's accounts receivable are with
companies and individuals in the health care industry. However,
concentrations of credit risk are limited due to the number of the
Company's clients as well as their dispersion across many different
geographic regions.
Accounts receivable balances (gross) from Medicare and Medicaid were
$91.2 and $87.3 at December 31, 2001 and 2000, respectively.
Revenue Recognition:
Sales are recognized on the accrual basis at the time test results are
reported, which approximates when services are provided. Services are
provided to certain patients covered by various third-party payor programs
including the Medicare and Medicaid programs. Billings for services under
third-party payor programs are included in sales net of allowances for
contractual discounts and allowances for differences between the amounts
billed and estimated program payment amounts. Adjustments to the estimated
payment amounts based on final settlement with the programs are recorded
upon settlement as an adjustment to revenue. In 2001, 2000 and 1999,
approximately 16%, 16% and 20%, respectively, of the Company's revenues
were derived from tests performed for beneficiaries of Medicare and
Medicaid programs.
Income Taxes:
The Company accounts for income taxes utilizing the asset and
liability method. Under this method deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and for tax loss carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. Future tax benefits, such
as net operating loss carryforwards, are recognized to the extent that
realization of such benefits are more likely than not.
Stock Splits:
On May 2, 2000, the Company effected a one-for-ten common stock
reverse split whereby the number of authorized shares of common stock
decreased from 520 million to 52 million and the par value increased from
$0.01 to $0.10.
On May 24, 2001, the Company's shareholders approved an amendment
to the restated certificate of incorporation to increase the number of
common shares authorized from 52 million shares to 265 million shares.
On June 11, 2001, the Company effected a two-for-one stock split
through the issuance of a stock dividend of one new share of common
stock for each share of common stock held by shareholders of record on
June 4, 2001. All references to common stock, common shares
outstanding, average number of common shares outstanding, stock
options, restricted shares and per share amounts in the Consolidated
Financial Statements and Notes to Consolidated Financial Statements
have been restated to reflect the June 11,2001 two-for-one stock split
on a retroactive basis.
Stock Compensation Plans:
The Company accounts for its employee stock option plans using the
intrinsic method under APB Opinion No. 25 and related Interpretations.
Accordingly, compensation for stock options is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of grant
over the amount an employee must pay to acquire the stock. The Company's
employee stock purchase plan is also accounted for under APB Opinion No.
25 and is treated as non-compensatory. The Company provides supplementary
disclosures using the fair value method under SFAS No. 123.
Compensation cost for restricted stock awards is recorded by
allocating their aggregate grant date fair value over their vesting
period.
Earnings per Share:
Basic earnings per share is computed by dividing net income, less
preferred stock dividends and accretion, by the weighted average
number of common shares outstanding. Dilutive earnings per share is
computed by dividing net earnings, by the weighted average number of
common shares outstanding plus potentially dilutive shares, as if they
had been issued at the beginning of the period presented. Potentially
dilutive common shares result primarily from the Company's mandatorily
redeemable preferred stock (redeemed in 2000), restricted stock awards
and outstanding stock options.
The following represents a reconciliation of the weighted average
shares used in the calculation of basic and diluted earnings per share:
Years ended December 31,
2001 2000 1999
----------------------------------------
Basic 69,418,875 47,080,668 25,332,376
Assumed conversion/exercise
of:
Stock options 558,199 710,500 245,296
Restricted stock awards 561,647 358,358 176,646
---------- ---------- ----------
Diluted 70,538,721 48,149,526 25,754,318
========== ========== ==========
The effect of conversion of the Company's redeemable preferred stock,
or exercise of certain of the Company's stock options was not included in
the computation of diluted earnings per common share for the years ended
December 31, 2001, 2000 and 1999, as it would have been antidilutive.
The following table summarizes the potential common shares not
included in the computation of diluted earnings per share because their
impact would have been antidilutive:
December 31,
2001 2000 1999
-------- -------- ---------
Stock Options 14,869 234,924 1,745,842
Series A convertible exchangeable
Preferred stock -- -- 15,866,086
Series B convertible pay-in-kind
Preferred stock -- -- 25,352,592
The Company's zero-coupon subordinated notes are contingently
convertible into 4,988,818 shares of common stock and are not currently
included in the earnings per share calculation.
Investments:
Investments in equity securities are reported at fair value with
unrealized gains or losses, net of tax, recorded as a separate component of
shareholders' equity. During 1999, the Company recorded an other than
temporary loss on its investments in equity securities totaling $4.2.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported periods. Significant estimates include the allowances
for doubtful accounts and deferred tax assets, amortization lives for
intangible assets and accruals for self-insurance reserves. The allowance
for doubtful accounts is determined based on historical collection trends,
the aging of accounts, current economic conditions and regulatory changes.
Actual results could differ from those estimates.
Long-Lived Assets:
Long-lived assets, including goodwill, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amounts may not be recoverable. Recoverability of assets to be held and
used is determined by the Company at the entity level by a comparison of
the carrying amount of the assets to future undiscounted net cash flows
before interest expense and income taxes expected to be generated by the
assets. Impairment, if any, is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets (based on
market prices in an active market or on discounted cash flows). Assets to
be disposed of are reported at the lower of the carrying amount or net
realizable value.
Intangible Assets:
Intangible assets, consisting of goodwill and other intangibles
(patents and technology, customer lists and non-compete agreements), are
amortized on a straight-line basis over the expected periods to be
benefited, generally ranging from 20 to 40 years for goodwill, legal life
for patents and technology, 10 to 25 years for customer lists and
contractual lives for non-compete agreements.
Effective January 1 2002, the Company will adopt Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible
Assets". This standard requires that goodwill and other intangibles that
are acquired in business combinations and that have indefinite useful lives
are not to be amortized and are to be reviewed for impairment annually
based on an assessment of fair value. The adoption of this new standard is
expected to result in a reduction in annual amortization expense of
approximately $26.0.
2. BUSINESS ACQUISITIONS
The Company acquired two important companies in 2001, as described
below. Both companies acquired have been accounted for as purchases with
the excess of the purchase price over the estimated fair value of the net
assets acquired recorded as goodwill. The results of each operation have
been included in the consolidated financial results of the Company from the
date of acquisition. The impact of these acquisitions is not considered
significant to the Company's operations.
On April 30, 2001, the Company completed the acquisition of all of the
outstanding stock of Path Lab Holdings, Inc. (Path Lab), which is based in
Portsmouth, New Hampshire for approximately $83.0 in cash and contingent
future payments of $25.0 ($5.5 earned and paid in 2001) based upon
attainment of specific earnings targets. Path Lab's revenues for the year
ended December 31, 2000 were approximately $51.6.
On June 4, 2001, the Company completed the acquisition of Minneapolis-
based Viro-Med Inc. for approximately $31.7 in cash and contingent future
payments of $12.0 ($7.9 earned and paid in 2001) based upon attainment of
specific earnings targets. Viro-Med's revenues for the year ended December
31, 2000 were approximately $25.2.
3. RESTRUCTURING AND NON-RECURRING CHARGES
The following represents the Company's restructuring activities for
each of the years in the three years ended December 31, 2001:
Lease and
Severance Other Facility
Costs Costs Total
---------- -------------- ------
Balance at January 1, 1999 $ 2.5 $ 30.5 $ 33.0
Cash payments (2.0) (4.2) (6.2)
------ ------ ------
Balance at December 31, 1999 0.5 26.3 26.8
Memphis closure 3.0 1.5 4.5
Reclassifications and
non-cash items -- (3.7) (3.7)
Cash payments (1.6) (4.0) (5.6)
------ ------ ------
Balance at December 31, 2000 1.9 20.1 22.0
Reclassifications and
non-cash items (0.7) 0.2 (0.5)
Cash payments (1.0) (4.5) (5.5)
------ ------ ------
Balance at December 31, 2001 $ 0.2 $ 15.8 $ 16.0
====== ====== ======
Current $ 8.6
Non-current 7.4
------
$ 16.0
======
4. ACCOUNTS RECEIVABLE, NET
December 31, December 31,
2001 2000
------------ ------------
Gross accounts receivable $ 485.0 $ 491.0
Less allowance for doubtful accounts (119.5) (123.0)
-------- --------
$ 365.5 $ 368.0
======== ========
The provision for doubtful accounts was $202.5, $195.9 and $191.9 in 2001,
2000 and 1999, respectively.
5. PROPERTY, PLANT AND EQUIPMENT, NET
December 31, December 31,
2001 2000
------------ ------------
Land $ 9.9 $ 9.5
Buildings and building improvements 79.2 68.5
Machinery and equipment 367.5 323.4
Leasehold improvements 66.4 63.0
Furniture and fixtures 19.9 17.8
Construction in progress 22.4 35.6
Buildings under capital leases 5.4 5.4
Equipment under capital leases 3.8 3.8
-------- --------
574.5 527.0
Less accumulated depreciation
and amortization of capital lease assets (265.2) (254.2)
-------- --------
$ 309.3 $ 272.8
======== ========
Depreciation expense and amortization of capital lease assets was
$59.6, $56.1 and $52.6 for 2001, 2000 and 1999, respectively.
6. INTANGIBLE ASSETS, NET
December 31, December 31,
2001 2000
------------ ------------
Goodwill $ 911.3 $ 860.5
Other intangibles, principally patents,
customer lists, non-compete
agreements, and technology 338.8 245.6
------- -------
1,250.1 1,106.1
Less accumulated amortization (281.6) (240.4)
------- -------
$ 968.5 $ 865.7
======= =======
Amortization of intangible assets was $41.5, $33.5 and $31.2 in 2001,
2000 and 1999, respectively.
7. ACCRUED EXPENSES AND OTHER
December 31, December 31,
2001 2000
------------ ------------
Employee compensation and benefits $ 72.6 $ 57.5
Acquisition related accruals 6.9 13.3
Restructuring reserves 8.6 12.4
Accrued taxes 4.2 10.1
Self-insurance reserves 31.5 21.1
Interest payable 0.2 3.7
Royalty payable 5.5 5.1
Other 11.5 3.9
------- -------
$ 141.0 $ 127.1
======= =======
8. OTHER LIABILITIES
December 31, December 31,
2001 2000
------------ ------------
Acquisition related accruals $ 2.0 $ 8.8
Restructuring reserves 7.4 9.6
Deferred income taxes 63.5 28.5
Post-retirement benefit obligation 40.2 36.9
Self-insurance reserves 20.7 37.8
Other 0.3 2.3
------- -------
$ 134.1 $ 123.9
======= =======
9. ZERO COUPON-SUBORDINATED NOTES
In September 2001, the Company sold $650.0 aggregate principal
amount at maturity of its zero coupon convertible subordinated notes (the
"notes") due 2021 in a private placement. The Company received
approximately $426.8 (net of underwriter's fees of approximately $9.8) in
net proceeds from the offering. In October 2001, the underwriters exercised
their rights to purchase an additional $94.0 aggregate principal amount
pursuant to an overallotment option from which the Company received
approximately $61.8 in net proceeds (net of underwriters fees of approximately
$1.4). The notes, which are subordinate to the Company's bank debt, were sold
at an issue price of $671.65 per $1,000 principal amount at maturity
(representing a yield to maturity of 2.0% per year). Each one thousand dollar
principal amount at maturity of the notes is convertible into 6.7054 shares of
the Company's common stock, subject to adjustment in certain circumstances,
if one of the following conditions occurs:
1) If the sales price of the Company's common stock reaches specified
thresholds during specified measurement periods.
2) If the credit rating assigned to the notes by Standard & Poor's
Ratings Services is at or below BB-.
3) If the notes are called for redemption.
4) If specified corporate transactions have occurred.
Holders of the notes may require the Company to purchase all or a
portion of their notes on September 11, 2004, 2006 and 2011 at prices
ranging from $712.97 to $819.54, plus any accrued contingent additional
principal and any accrued original issue discount thereon. The Company may
choose to pay the purchase price in cash, common stock or a combination of cash
and common stock. If the holders elect to require the Company to purchase
their notes it is the Company's current intention to retire the notes by a
cash payment.
The Company may redeem for cash all or a portion of the notes at any
time on or after September 11, 2006 at specified redemption prices per one
thousand dollar principal amount at maturity of the notes ranging from $741.92
at September 11, 2001 to $1,000.00 at September 11, 2021 (assuming no
contingent additional principal accrues on the notes).
The Company used a portion of the proceeds to repay $412.5 of its term
loan outstanding under its credit agreement and to pay $8.9 to terminate the
interest rate swap agreement tied to the Company's term loan. The Company
recorded an extraordinary loss of $3.2 (net of taxes of $2.3) relating to the
write-off of unamortized bank fees associated with the Company's term debt.
The Company has registered the notes and the shares of common
stock issuable upon conversion of the notes with the Securities and
Exchange Commission.
10. SENIOR CREDIT FACILITIES
In February 2002, the Company entered into two new senior credit
facilities with Credit Suisse First Boston, acting as Administrative
Agent, and a group of financial institutions totaling $300.0. The new
facilities will consist of a 364-day revolving credit facility in the
principal amount of $100.0 and a three-year revolving credit facility
in the principal amount of $200.0. The new facilities will be used
for general corporate purposes, including working capital, capital
expenditures, funding or share repurchases and other payments, and
acquisitions. The Company's existing $450.0 revolving
credit facility with a major financial institution had no amounts
outstanding and was terminated on the effective date of the new credit
facilities.
The new senior credit facilities agreements bear interest at varying
rates based upon the Company's credit rating with Standard & Poor's Rating
Services. Based upon the Company's current rating, the effective rate under
these agreements is LIBOR plus 75 basis points.
The agreements contain certain debt covenants which require that the
Company maintain leverage and interest coverage ratios.
11. STOCKHOLDER RIGHTS PLAN
The Company adopted a stockholder rights plan effective as of
December 13, 2001 that provides that each common stockholder of record
on December 21, 2001, received a dividend of one right for each share
of common stock held. Each right entitles the holder to purchase from
the Company one-hundredth of a share of a new series of participating
preferred stock at an initial purchase price of four hundred dollars.
These rights will become exercisable and will detach from the
Company's common stock if any person becomes the beneficial owner of
15% or more of the Company's common stock. In that event, each right
will entitle the holder, other than the acquiring person, to purchase,
for the initial purchase price, shares of the Company's common stock
having a value of twice the initial purchase price. The rights
will expire on December 13, 2011, unless earlier exchanged or
redeemed.
12. LOSS ON INTEREST RATE SWAP AGREEMENT
In conjunction with the early retirement of its long-term debt, the
Company terminated its interest rate swap agreement with a bank by making a
settlement payment of $8.9 with a portion of the proceeds from the sale of
zero coupon-subordinated notes. In accordance with the provisions of
SFAS No. 133, as amended, this interest rate swap agreement had been
designated as a cash flow hedge and carried on the balance sheet at
fair value with a corresponding offset in accumulated other
comprehensive loss.
13. MANDATORILY REDEEMABLE PREFERRED STOCK
On June 6, 2000, the Company called for redemption all of its
outstanding Series A and Series B preferred stock at $52.83 per share, in
accordance with the terms of the Preferred Stock Offering, by July 6, 2000.
Substantially all of the holders of the Series A and Series B preferred
stock elected to convert their shares into common stock. As of July 31,
2000, the Series A preferred stock was converted into 7,930,174 shares of
common stock and the Series B preferred stock was converted into 13,241,576
shares of common stock.
14. INCOME TAXES
The provisions for income taxes in the accompanying consolidated
statements of operations consist of the following:
Years Ended December 31,
----------------------------
2001 2000 1999
Current: ------ ------ ------
Federal $ 122.8 $ 85.2 $ 0.5
State 25.2 13.5 2.6
------ ------ ------
148.0 98.7 3.1
------ ------ ------
Deferred:
Federal $ (2.3) $ (8.6) $ 29.1
State 3.9 5.4 7.9
------ ------ ------
$ 1.6 $ (3.2) $ 37.0
------ ------ ------
$ 149.6 $ 95.5 $ 40.1
====== ====== ======
The tax benefit associated with dispositions from stock plans reduced
taxes currently payable by approximately $14.3 and $19.0 in 2001 and 2000,
respectively. Tax benefits related to stock plans in 1999 were immaterial.
Such benefits are credited to additional paid-in-capital.
The effective tax rates on earnings before income taxes is reconciled
to statutory federal income tax rates as follows:
Years Ended December 31,
----------------------------
2001 2000 1999
------ ------ ------
Statutory federal rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax effect 4.9 5.0 5.1
Non-deductible amortization of
intangible assets 2.3 3.1 5.7
Change in valuation allowance -- -- (9.5)
Other 2.8 2.9 1.7
----- ----- -----
Effective rate 45.0% 46.0% 38.0%
===== ===== =====
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as
follows:
December 31, December 31,
2001 2000
Deferred tax assets: ------------ ------------
Accounts receivable 25.9 12.0
Self-insurance reserves 20.4 21.7
Postretirement benefit obligation 15.8 13.9
Acquisition and restructuring reserves 9.8 18.8
State net operating loss carryforwards 1.6 6.1
Employee benefits 8.2 7.4
Other 10.8 10.2
-------- --------
92.5 90.1
Less valuation allowance (4.5) (4.5)
-------- --------
Net deferred tax assets 88.0 85.6
-------- --------
Deferred tax liabilities:
Intangible assets (64.0) (46.9)
Property, plant and equipment (29.4) (22.7)
Zero coupon-subordinated notes (4.1) --
Other (1.2) (1.2)
-------- --------
Total gross deferred tax liabilities (98.7) (70.8)
--------- --------
Net deferred tax assets (liabilities) $ (10.7) $ 14.8
======== ========
The current valuation allowance brings the Company's net deferred tax
assets to a level where management believes that it is more likely than not
the tax benefits will be realized.
The years 2000, 1999 and 1998 are currently under examination by the
Internal Revenue Service. Management believes that adequate provisions
have been recorded relating to the current examinations. The Company has
state tax loss carryforwards of approximately $27.1 which expire 2002
through 2018.
15. STOCK COMPENSATION PLANS
The Company has a number of stock option plans which authorize and
reserve shares of common stock for issuance pursuant to options and stock
appreciation rights that may be granted under these plans.
In May 2000, the shareholders approved the 2000 Stock Incentive Plan.
The principal purpose of the 2000 Stock Incentive Plan was to authorize 3.4
million additional shares for issuance under the plan. The effect of the
2000 Incentive Plan was to increase to an aggregate of 5.2 million shares
available for issuance under all stock option plans (the 2000 Stock
Incentive Plan, the Amended and Restated 1999 Stock Incentive Plan and the
1994 Stock Option Plan).
During 2001, there were 1,048,088 options granted to officers and
key employees of the Company. The exercise price for these options
ranged from $66.125 to $68.50 per share. Also, during 2001, 170,200
shares of restricted stock were issued to senior management under
the 2000 Incentive Plan at a market value on the date of grant of
$66.575. Restrictions limit the sale or transfer of these shares
during a six-year period when the restrictions lapse. Upon issuance
of stock under the 2000 Incentive Plan, unearned compensation of $11.3
was recorded as additional paid-in capital and an opposite amount was
charged to shareholders' equity as unearned restricted stock
compensation. The plan provides for accelerated vesting of outstanding
shares in percentages of 33.3%, 66.7% or 100%, if certain predefined
three-year profitability targets are achieved as of December 31, 2003.
The unearned restricted stock compensation is being amortized to
expense over the applicable vesting periods. For 2001, 2000 and 1999,
total restricted stock compensation expense was $7.5, $4.0 and $0.4,
respectively. Total restricted shares granted in 2000 and 1999 were
262,800 and 324,000, respectively. At December 31, 2001, there were
1,589,251 additional shares available for grant under the Company's Stock
Option Plans.
The proforma weighted average fair values at date of grant for
options issued during 2001, 2000 and 1999 were $39.44, $22.36 and
$8.40 respectively, and were estimated using the Black-Scholes option
pricing model. Weighted average assumptions for the expected life in
years, volatility and dividend yield were 7 years (5 years in 1999),
.5, and 0% for each of the three years ended December 31, 2001.
Interest rate assumptions were 4.3%, 5.0% and 6.0% for the years ended
December 31, 2001, 2000 and 1999, respectively.
The Company has an employee stock purchase plan, begun in 1997 and
amended in 1999, with 1,500,000 shares of common stock for authorized
issuance. The plan permits substantially all employees to purchase a
limited number of shares of the Corporation stock at 85% of market value.
The Company issues shares to participating employees semi annually in
January and July of each year. A summary of shares issued is as follows:
1999 2000 2001 2002
------- ------- ------ ------
January 192,226 105,176 51,314 36,757
July 173,548 91,044 30,876
Pro-forma compensation expense is calculated for the fair value of the
employee's purchase right using the Black-Scholes model. Assumptions
include a weighted average life of approximately one-half year, dividend
yield of 0%, risk free interest rates for each six month period as follows:
2001 - 5.8% and 3.5%; 2000 - 5.5% and 6.1%; and 1999 - 5.5% and 4.9% and
volatility rates for each of the following six month periods: 2001 - .4 and
.3; 2000 - .5 and .5; and 1999 - .5 and .4.
The per share weighted average grant date fair value of the benefits
under the employee stock purchase plan for the first and second six-month
periods is as follows:
2001 2000 1999
------ ------ ------
First six months $23.02 $ 5.09 $1.98
Second six months $17.58 $10.43 $3.74
The Company applies the provisions of APB Opinion No. 25 in accounting
for its plans and, accordingly, no compensation cost has been recognized
for its stock compensation plans in the financial statements. Had the
Company determined compensation cost based on the fair value method as
defined in SFAS No. 123, the impact on the Company's net earnings on a pro
forma basis is indicated below:
Years ended
December 31,
2001 2000 1999
------- ------- -------
Net earnings As reported $ 179.5 $ 112.1 $ 65.4
Pro forma 167.3 108.0 62.8
Basic earnings per
common share As reported $ 2.58 $ 1.65 $ 0.59
Pro forma 2.41 1.56 0.49
Diluted earnings per
common share As reported $ 2.54 $ 1.61 $ 0.58
Pro forma 2.37 1.53 0.48
Pro forma net earnings reflects options granted in 1998 through 2001.
Therefore, the full impact of calculating compensation cost for stock
options under SFAS No. 123 is not reflected in the pro forma amounts
presented above because compensation cost for options granted prior to
January 1, 1996 is not considered.
The following table summarizes grants of non-qualified options made by
the Company to officers and key employees under all plans. Stock options
are generally granted at an exercise price equal to or greater than the
fair market price per share on the date of grant. Also, for each grant,
options vest ratably over a period of two to three years on the
anniversaries of the grant date, subject to their earlier expiration or
termination.
Changes in options outstanding under the plans for the periods
indicated were as follows:
Weighted-Average
Number Exercise Price
of Options per Option
---------- ----------------
Outstanding at January 1, 1999 1,942,899 $16.278
(564,992 exercisable)
Options granted 178,472 $13.786
Canceled (115,178) $20.813
Exercised (5,028) $11.267
---------
Outstanding at December 31, 1999 2,001,165 $15.807
(1,088,413 exercisable)
Options granted 829,498 $36.696
Canceled (70,724) $23.890
Exercised (1,194,562) $12.738
---------
Outstanding at December 31, 2000 1,565,377 $28.852
(335,969 exercisable)
Options granted 1,048,088 $66.138
Canceled (96,062) $43.363
Exercised (560,952) $19.935
---------
Outstanding at December 31, 2001 1,956,451 $50.671
=========
Exercisable at December 31, 2001 364,786 $31.978
=========
The weighted-average remaining life of options outstanding at December
31, 2001 is approximately 8.4 years.
The following table summarizes information concerning currently
outstanding and exercisable options.
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
- ---------------------------------------------------------------------------
$ 9.69 - 13.75 204,217 6.66 $12.145 160,084 $11.703
$14.69 - 31.56 190,879 7.98 $20.954 20,915 $19.969
$35.38 - 35.38 248,921 8.43 $35.375 62,710 $35.375
$53.41 - 65.00 283,470 7.58 $55.708 118,501 $58.913
$66.13 - 68.50 1,028,964 9.09 $66.142 2,576 $67.655
--------- -------
1,956,451 364,786
========= =======
16. RELATED PARTY TRANSACTIONS
At December 31, 2001 and 2000, 10,705,074 and 22,705,074 shares of the
Company's outstanding common stock, or approximately 15.2% at December 31,
2001 and 32.6% at December 31, 2000, were owned by Roche Holdings, Inc.
(Roche). The reduction in Roche's ownership of the Company's common stock
is a result of the sale by Roche of 12.0 million shares in 2001.
The Company purchases certain items, primarily laboratory testing
supplies from various affiliates of Roche. Total purchases from these
affiliates, which are recorded in cost of sales, were $62.3, $42.7, and
$38.3 in 2001, 2000 and 1999, respectively. In addition, the Company made
royalty payments to Roche in the amounts of $4.4 in 2001, $2.8 in 2000 and
$2.9 in 1999. Revenue received from Roche for laboratory services was $2.6
in 2001, $1.3 in 2000 and $0.9 in 1999. Amounts owed to Roche and its
affiliates at December 31, 2001 and 2000 were $4.6 and $1.4, respectively.
17. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is involved in litigation purporting to be a nation-wide
class action involving the alleged overbilling of patients who are covered by
private insurance. The Company has reached a settlement with the class that
will not exceed existing reserves or have a material adverse affect on the
Company. On January 9, 2001, the Company was served with a complaint in North
Carolina which purports to be a class action and makes claims similar to those
referred to above. The Claim has been stayed pending appeal of the court
approval of the settlement discussed above. The outcome cannot be presently
predicted.
The Company is also involved in various claims and legal actions
arising in the ordinary course of business. These matters include,
but are not limited to, professional liability, employee related
matters, and inquiries from governmental agencies and Medicare or Medicaid
carriers requesting comment on allegations of billing irregularities
that are brought to their attention through billing audits or third
parties. In the opinion of management, based upon the advice of
counsel and consideration of all facts available at this time, the
ultimate disposition of these matters will not have a material adverse
effect on the financial position, results of operations or liquidity
of the Company.
The Company believes that it is in compliance in all material respects
with all statutes, regulations and other requirements applicable to its
clinical laboratory operations. The clinical laboratory testing industry
is, however, subject to extensive regulation, and many of these statutes
and regulations have not been interpreted by the courts. There can be no
assurance therefore that applicable statutes and regulations might not be
interpreted or applied by a prosecutorial, regulatory or judicial authority
in a manner that would adversely affect the Company. Potential sanctions
for violation of these statutes and regulations include significant fines
and the loss of various licenses, certificates and authorizations.
Under the Company's present insurance programs, coverage is obtained
for catastrophic exposures as well as those risks required to be insured by
law or contract. The Company is responsible for the uninsured portion of
losses related primarily to general, professional and vehicle liability,
certain medical costs and workers' compensation. The self-insured
retentions are on a per occurrence basis without any aggregate annual
limit. Provisions for losses expected under these programs are recorded
based upon the Company's estimates of the aggregated liability of claims
incurred. At December 31, 2001 and 2000, the Company had provided letters
of credit aggregating approximately $36.6 and $28.2, respectively,
primarily in connection with certain insurance programs.
The Company leases various facilities and equipment under non-
cancelable lease arrangements. Future minimum rental commitments for
leases with noncancellable terms of one year or more at December 31, 2001
are as follows:
Operating Capital
--------- -------
2002 $ 43.7 $ 3.0
2003 34.2 2.8
2004 26.0 2.6
2005 19.4 2.8
2006 13.7 2.9
Thereafter 38.9 1.2
----- -----
Total minimum lease payments 175.9 15.3
Less:
Amounts included in
restructuring accruals -- 3.9
Amount representing interest -- 4.2
Total minimum operating ----- -----
lease payments and
present value of minimum
capital lease payments $175.9 $ 7.2
===== =====
Current $ 1.1
Non-current 6.1
-----
$ 7.2
=====
Rental expense, which includes rent for real estate, equipment and
automobiles under operating leases, amounted to $74.8, $71.3 and $67.0 for
the years ended December 31, 2001, 2000 and 1999, respectively.
18. PENSION AND POSTRETIREMENT PLANS
The Company maintains a defined contribution pension plan for all
eligible employees. Eligible employees are defined as individuals who are
age 21 or older and have been employed by the Company for at least six
consecutive months and completed 1,000 hours of service. Company
contributions to the plan are based on a percentage of employee
contributions. The cost of this plan was $8.3, $7.5 and $7.5 in 2001, 2000
and 1999, respectively.
In addition, substantially all employees of the Company are covered by
a defined benefit retirement plan (the "Company Plan"). The benefits to be
paid under the Company Plan are based on years of credited service and
average final compensation. The Company's policy is to fund the Company
Plan with at least the minimum amount required by applicable regulations.
The Company has a second defined benefit plan which covers its senior
management group that provides for the payment of the difference, if any,
between the amount of any maximum limitation on annual benefit payments
under the Employee Retirement Income Security Act of 1974 and the annual
benefit that would be payable under the Company Plan but for such
limitation. This plan is an unfunded plan.
The components of net periodic pension cost for both of the defined
benefit plans are summarized as follows:
Company Plans
------------------------
Years ended
December 31,
2001 2000 1999
------------------------
Components of net periodic benefit cost
Service cost $ 11.2 $ 10.6 $ 10.5
Interest cost 11.4 10.6 9.2
Expected return on plan assets (13.5) (12.3) (12.1)
Net amortization and deferral (1.5) (1.5) (1.6)
----- ----- -----
Net periodic pension cost $ 7.6 $ 7.4 $ 6.0
===== ===== =====
Company Plans
----------------
December 31,
2001 2000
----------------
Change in benefit obligation
Benefit obligation at beginning of year $152.3 $138.3
Service cost 11.2 10.6
Interest cost 11.4 10.6
Actuarial loss 9.0 2.1
Benefits paid (10.2) (9.4)
----- -----
Benefit obligation at end of year 173.7 152.2
----- -----
Change in plan assets
Fair value of plan assets at beginning of year 151.1 138.1
Actual return on plan assets -- 13.8
Employer contributions 10.2 8.6
Benefits paid (10.2) (9.4)
----- -----
Fair value of plan assets at end of year 151.1 151.1
----- -----
Funded status, end of year 22.6 1.2
Unrecognized net actuarial loss (33.7) (11.2)
Unrecognized prior service cost 5.5 7.0
Additional minimum liability 15.4 --
----- -----
Accrued pension liability (asset) $ 9.8 $ (3.0)
===== =====
At December 31, 2001, the additional minimum liability of the
Company's Cash Balance Retirement Plan exceeded the unrecognized prior
service cost by $7.8. This amount has been recorded as an increase to
accumulated other comprehensive loss.
Assumptions used in the accounting for the defined benefit plans
were as follows:
Company Plans
---------------
2001 2000
---------------
Weighted-average discount rate 7.25% 7.75%
Weighted-average rate of increase
in future compensation levels 4.0% 4.0%
Weighted-average expected long-
term rate of return 9.0% 9.0%
The Company assumed obligations under a subsidiary's
postretirement medical plan. Coverage under this plan is restricted to
a limited number of existing employees of the subsidiary. This plan
is unfunded and the Company's policy is to fund benefits as claims are
incurred. The components of postretirement benefit expense are as
follows:
Year ended Year ended Year ended
December 31, December 31, December 31,
2001 2000 1999
------------ ------------ ------------
Service cost $ 1.0 $ 0.8 $ 1.0
Interest cost 3.4 2.5 2.6
Net amortization and deferral (1.1) (0.6) (0.1)
Actuarial loss 0.7 -- --
------- ------- -------
Postretirement benefit costs $ 4.0 $ 2.7 $ 3.5
======= ======= =======
A summary of the components of the accumulated postretirement
benefit obligation follows:
December 31,
2001 2000
--------------
Retirees $ 13.1 $ 11.3
Fully eligible active plan participants 12.5 12.4
Other active plan participants 20.0 19.4
----- -----
$ 45.6 $ 43.1
===== =====
Reconciliation of the funded status of the December 31,
postretirement benefit plan and accrued liability 2001 2000
-------------
Accumulated postretirement benefit obligation,
beginning of year $ 43.1 $ 31.9
Changes in benefit obligation due to:
Service cost 1.0 0.8
Interest cost 3.4 2.5
Plan participants contributions 0.2 0.2
Actuarial (gain) loss (1.1) 11.9
Amendments -- (3.0)
Benefits paid (1.0) (1.2)
----- -----
Accumulated post retirement benefit obligation,
end of year 45.6 43.1
Unrecognized net actuarial loss (10.4) (12.2)
Unrecognized prior service cost 5.0 6.0
----- -----
Accrued postretirement benefit obligation $ 40.2 $ 36.9
===== =====
The weighted-average discount rates used in the calculation of the
accumulated postretirement benefit obligation was 7.3% and 7.8% as of
December 31, 2001 and 2000, respectively. The health care cost trend rate-
medical was assumed to be 7.5% and the trend rate-prescription was assumed
to be 12.0% as of December 31, 2001 and 2000, declining gradually to 5.0%
in the year 2011. The health care cost trend rate has a significant effect
on the amounts reported. Increasing the assumed health care cost trend
rates by a percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 2001 by $7.7. The
impact of a percentage point change on the aggregate of the service cost
and interest cost components of the net periodic postretirement benefit
cost results in an increase of $0.8 or decrease of $0.6.
19. QUARTERLY DATA (UNAUDITED)
The following is a summary of unaudited quarterly data:
Year ended December 31, 2001
--------------------------------------------------
1st 2nd 3rd 4th Full
Quarter Quarter Quarter Quarter Year
-------- -------- -------- -------- --------
Net sales $ 525.4 $ 549.7 $ 560.9 $ 563.8 $2,199.8
Gross profit 221.6 240.9 238.0 225.1 925.6
Net earnings 43.5 52.1 43.1 40.8 179.5
Basic earnings per
common share 0.63 0.75 0.62 0.59 2.58
Diluted earnings per
common share 0.62 0.74 0.61 0.58 2.54
Year ended December 31, 2000
---------------------------------------------------
1st 2nd 3rd 4th Full
Quarter Quarter Quarter Quarter Year
------- -------- -------- -------- --------
Net sales $ 462.7 $ 482.4 $ 488.1 $ 486.1 $1,919.3
Gross profit 183.5 201.2 196.7 185.2 766.6
Net earnings 25.7 32.7 32.8 20.9 112.1
Less preferred dividends 14.7 19.6 -- -- 34.3
Less accretion of mandatorily
redeemable preferred stock 0.2 0.1 -- -- 0.3
Net earnings attributable
to common shareholders 10.8 13.0 32.8 20.9 77.5
Basic earnings per common
share 0.42 0.49 0.49 0.30 1.65
Diluted earnings per
common share 0.38 0.47 0.47 0.30 1.61
20. NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations," was issued. This Statement supersedes APB
Opinion No. 16, "Business Combinations" and SFAS No. 38. "Accounting for
Preacquisition Contingencies of Purchased Enterprises" and eliminates the
pooling method of accounting for business acquisitions. This Statement
requires all business combinations to be accounted for using the purchase
method for all transactions initiated after June 30, 2001.
In June 2001, SFAS No. 142 "Goodwill and Other Intangible Assets" was
also issued. This Statement supersedes APB No. 17 "Intangible Assets" and
addresses how intangible assets that are acquired individually or with a
group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition.
This Statement also addresses how goodwill and other intangible assets
should be accounted for after they have been initially recognized in the
financial statements. Goodwill and intangible assets that have indefinite
useful lives will not be amortized but rather will be reviewed at least
annually for impairment.
Intangible assets that have finite lives will continue to be amortized
over their useful lives, but without the constraint of the 40-year useful
life amortization ceiling. The provisions of this Statement are required to
be applied starting with fiscal years beginning after December 15, 2001,
however, goodwill and intangible assets acquired after June 30, 2001, will
be subject immediately to the nonamortization and amortization provisions
of this Statement. The impact of the adoption of SFAS No. 142 on the 2002
financial statements, will be a decrease to amortization expense of
approximately $26.0.
In June 2001, SFAS No. 143, "Accounting for Asset Retirement
Obligations" was issued. This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-
lived assets and the associated legal obligations of such asset retirement
costs. This Statement is effective for fiscal years beginning after June
15, 2002. The Company does not expect that implementation of this standard
will have a significant financial impact.
In August 2001, SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" was issued. This Statement supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of" and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions". This Statement
retains the requirements of SFAS No. 121 to recognize an impairment
loss only if the carrying amount of a long-lived asset is not
recoverable from its undiscounted cash flows and to measure an
impairment loss as the difference between the carrying amount and the
fair value of the asset. However, this standard removes goodwill from
its scope and revises the approach for evaluating impairment. This
Statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company is evaluating the impact of
the adoption of SFAS No. 144.
Schedule II
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended December 31, 2001, 2000 and 1999
(Dollars in Millions)
- ---------------------------------------------------------------------------
Balance Charged Other
at to (Deduct- Balance
beginning Costs and ions) at end
of year Expenses Additions of year
- ---------------------------------------------------------------------------
Year ended December 31, 2001:
Applied against asset
accounts:
Allowance for
doubtful accounts $ 123.0 $ 202.5 $ (206.0) $ 119.5
======= ======= ======= =======
Valuation allowance-
deferred tax assets $ 4.5 $ -- $ -- $ 4.5
======= ======= ======= =======
Year ended December 31, 2000:
Applied against asset
accounts:
Allowance for
doubtful accounts $ 147.1 $ 195.9 $ (220.0) $ 123.0
======= ======= ======= =======
Valuation allowance-
deferred tax assets $ 4.5 $ -- $ -- $ 4.5
======= ======= ======= =======
Year ended December 31, 1999:
Applied against asset
accounts:
Allowance for
doubtful accounts $ 194.0 $ 191.9 $ (238.8) $ 147.1
======= ======= ======= =======
Valuation allowance-
deferred tax assets $ 14.5 $ (10.0) $ -- $ 4.5
======= ======= ======= =======
35
64
1
FRONT OF STOCK CERTIFICATE
LABORATORY
CORPORATION SHARES
OF AMERICA INCORPORATED UNDER THE LAWS
HOLDINGS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
PAR VALUE $0.10
CUSIP 50540R 40 9
THIS CERTIFIES THAT
- ------------------------------------------------------------------------
IS THE OWNER OF
FULLY PAID AND NON-ASSESSSABLE SHARES OF THE COMMON STOCK OF
Laboratory Corporation of America Holdings (hereinafter called the
"Corporation") transferable on the books of the Corporation by said
owner in person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Certificate of Incorporation and all amendments thereto, and the holder
hereof, by acceptance of this certificate, consents to and agrees to be
bound by all of said provisions. This certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and by facsimile the
signature of its duly authorized officers.
Dated
COUNTERSIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.)
BY:/s/ TRANSFER AGENT
----------------------------------------------------
Authorized Signature
Transfer Agent and Registrar
BY:/s/ THOMAS P. MAC MAHON
----------------------------------------------------
Thomas P. Mac Mahon
President
BY:/s/ BRADFORD T. SMITH
----------------------------------------------------
Bradford T. Smith
Secretary
BACK OF STOCK CERTIFICATE
LABORATORY CORPORATION OF AMERICA HOLDINGS
The within named Corporation will furnish without charge to each stockholder
who so requests a description of the powers, designations, preferences and
relative, participating, optional or other special rights of each class or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights. Such request may be made to the office of the
Secretary of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - Custodian
-------------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
---------------------
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell(s), assign(s) and
-------------------------------
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------
- ------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ---------------------------------------------------------------------Shares
of the capital stock represented by the within Certificate, and do(es)
hereby irrevocably constitute(s) and appoint(s)
- ----------------------------------------------------------------------Attorney
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated
-------------------------
- -------------------------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER.
Signature(s) Guaranteed:
- ------------------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCK-BROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
This certificate also evidences certain Rights as set forth in a Rights
Agreement between Laboratory Corporation of America Holdings (the "Company")
and American Stock Transfer & Trust Company dated as of December 13, 2001 and
as amended from time to time (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive officers of the Company. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
evidenced by separate certificates and no longer be evidenced by this
this certificate, may be redeemed or exchanged or may expire. As set
forth in the Rights Agreement, Rights issued or transferred to, or held by,
any Person who is, was or becomes an Acquiring Person or an Affiliate or
associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
be null and void.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN,
MUTILIATED OR DESTROYED, THE CORPORATION WILL REQUIRE
A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
EXECUTION COPY
$200,000,000
THREE-YEAR CREDIT AGREEMENT
dated as of February 20, 2002,
among
LABORATORY CORPORATION OF AMERICA HOLDINGS,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
______________________
CREDIT SUISSE FIRST BOSTON,
as Sole Bookrunner and
Sole Lead Arranger
BANK OF AMERICA, N.A.,
DEUTSCHE BANC ALEX. BROWN,
UBS WARBURG LLC AND
WACHOVIA SECURITIES,
as Co-Syndication Agents
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms 1
SECTION 1.02. Terms Generally 15
SECTION 1.03. Classification of Loans and
Borrowings 15
ARTICLE II
The Credits
SECTION 2.01. Commitments 15
SECTION 2.02. Loans 15
SECTION 2.03. Competitive Bid Procedure 17
SECTION 2.04. Borrowing Procedure 19
SECTION 2.05. Evidence of Debt; Repayment
of Loans 19
SECTION 2.06. Fees 20
SECTION 2.07. Interest on Loans 21
SECTION 2.08. Default Interest 22
SECTION 2.09. Alternate Rate of Interest 22
SECTION 2.10. Termination and Reduction of
Commitments 23
SECTION 2.11. Conversion and Continuation of
Borrowings 23
SECTION 2.12. Optional Prepayment 24
SECTION 2.13. Reserve Requirements; Change
in Circumstances 25
SECTION 2.14. Change in Legality 26
SECTION 2.15. Break Funding 27
SECTION 2.16. Pro Rata Treatment 27
SECTION 2.17. Sharing of Setoffs 28
SECTION 2.18. Payments 28
SECTION 2.19. Taxes 28
SECTION 2.20. Assignment of Commitments
Under Certain Circumstances;
Duty to Mitigate 30
SECTION 2.21. Letters of Credit 31
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers 35
SECTION 3.02. Authorization 35
SECTION 3.03. Enforceability 36
SECTION 3.04. Governmental Approvals 36
SECTION 3.05. Financial Statements 36
SECTION 3.06. No Material Adverse Change 36
SECTION 3.07. Subsidiaries 36
SECTION 3.08. Litigation; Compliance
with Laws 36
SECTION 3.09. Federal Reserve Regulations 37
SECTION 3.10. Investment Company Act; Public
Utility Holding Co. Act 37
SECTION 3.11. Use of Proceeds 37
SECTION 3.12. Tax Returns 37
SECTION 3.13. No Material Misstatements 37
SECTION 3.14. Employee Benefit Plans 37
SECTION 3.15. Environmental Matters 38
SECTION 3.16. Senior Indebtedness 38
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events 38
SECTION 4.02. Closing Date 39
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and
Properties 40
SECTION 5.02. Insurance 40
SECTION 5.03. Obligations and Taxes 40
SECTION 5.04. Financial Statements,
Reports, et 41
SECTION 5.05. Litigation and Other Notices 42
SECTION 5.06. Maintaining Records; Access
to Properties and
Inspections 42
SECTION 5.07. Use of Proceeds 42
ARTICLE VI
Negative Covenants
SECTION 6.01. Subsidiary Indebtedness 43
SECTION 6.02. Liens 44
SECTION 6.03. Sale and Lease-Back
Transactions 45
SECTION 6.04. Mergers, Consolidations and
Sales of Assets 45
SECTION 6.05. Restricted Payments 45
SECTION 6.06. Business of Borrower
and Subsidiaries 46
SECTION 6.07. Interest Coverage Ratio 46
SECTION 6.08. Maximum Leverage Ratio 46
SECTION 6.09. Hedging Agreements 46
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices 50
SECTION 9.02. Survival of Agreement 50
SECTION 9.03. Binding Effect 51
SECTION 9.04. Successors and Assigns 51
SECTION 9.05. Expenses; Indemnity 54
SECTION 9.06. Right of Setoff 55
SECTION 9.07. Applicable Law 56
SECTION 9.08. Waivers; Amendment 56
SECTION 9.09. Interest Rate Limitation 57
SECTION 9.10. Entire Agreement 57
SECTION 9.11. WAIVER OF JURY TRIAL 57
SECTION 9.12. Severability 57
SECTION 9.13. Counterparts 58
SECTION 9.14. Headings 58
SECTION 9.15. Jurisdiction; Consent to
Service of Process 58
SECTION 9.16. Confidentiality 58
SECTION 9.17. Termination of Existing
Credit Agreement 59
Schedule 1.01(a) Existing Letters of Credit
Schedule 2.01 Lenders and Commitments
Schedule 3.07 Subsidiaries
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D-1 Form of Competitive Bid Request
Exhibit D-2 Form of Notice of Competitive Bid Request
Exhibit D-3 Form of Competitive Bid
Exhibit D-4 Form of Competitive Bid Accept/Reject Letter
Exhibit E-1 Form of Opinion of Chief Legal Counsel of the
Borrower
Exhibit E-2 Form of Opinion of Davis Polk & Wardwell
CREDIT AGREEMENT dated as of February 20, 2002, among
LABORATORY CORPORATION OF AMERICA HOLDINGS, a
Delaware corporation (the "Borrower"), the Lenders (as defined in
Article I), and CREDIT SUISSE FIRST BOSTON, a bank organized
under the laws of Switzerland, acting through its New York branch, as
administrative agent (in such capacity, the "Administrative Agent") for
the Lenders.
The Borrower has requested the Lenders to extend credit in the
form of Revolving Loans (such term and each other capitalized term used
but not defined herein having the meaning given it in Article I) at any time
and from time to time prior to the Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of $200,000,000. The
Borrower has also requested the Lenders to provide a procedure pursuant
to which the Borrower may invite the Lenders to bid on an uncommitted
basis on short-term borrowings by the Borrower. The Borrower has
requested the Issuing Bank to issue Letters of Credit, in an aggregate face
amount at any time outstanding not in excess of $75,000,000, to support
payment obligations incurred in the ordinary course of business by the
Borrower and its Subsidiaries. The proceeds of the Loans are to be used
solely for general corporate purposes of the Borrower and its Subsidiaries,
including (a) working capital, (b) capital expenditures, (c) the funding of
share repurchases and other Restricted Payments permitted hereunder, (d)
acquisitions and (e) the repayment of all amounts outstanding or due
under the Existing Credit Agreement.
The Lenders are willing to extend such credit to the Borrower and
the Issuing Bank is willing to issue Letters of Credit for the account of the
Borrower, in each case on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions tc \l1 "ARTICLE IDefinitions
SECTION 1.01. Defined Terms tc \l2 "SECTION 1.01.
Defined Terms . As used in this Agreement, the following terms shall
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Alternate Base
Rate.
"Administrative Agent Fees" shall have the meaning assigned to
such term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as may be
supplied from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the person specified.
"Aggregate Revolving Credit Exposure" shall mean the
aggregate amount of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Percentage" shall mean, for any day, with respect
to any Eurodollar Loan (other than any Eurodollar Competitive Loan) or
ABR Loan, or with respect to the Facility Fees, as the case may be, the
applicable percentage set forth below under the caption "Eurodollar
Spread", "ABR Spread" or "Facility Fee Percentage", as the case may be,
based upon the rating by S&P applicable on such date to the Index Debt:
Eurodollar Facility Fee
S&P Rating Spread ABR Spread Percentage
- ----------- ----------- ---------- -------------
Category 1
Equal to or 0.500% 0.00% 0.125%
Greater than A-
Category 2
BBB+ 0.600% 0.00% 0.150%
Category 3
BBB 0.825% 0.00% 0.175%
Category 4
BBB- 1.150% 0.150% 0.225%
Category 5
Less than
BBB- 1.400% 0.400% 0.350%
For purposes of the foregoing, (i) if S&P shall not have in effect
a rating for the Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then S&P shall be
deemed to have established a rating in Category 5; and (ii) if the rating
established or deemed to have been established by S&P for the Index Debt
shall be changed (other than as a result of a change in the rating system of
S&P), such change shall be effective as of the date on which it is first
announced by S&P. Each change in the Applicable Percentage shall apply
during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next
such change. If the rating system of S&P shall change, or if S&P shall
cease to be in the business of rating corporate debt obligations, the
Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the non-availability of
a rating from S&P and, pending the effectiveness of any such amendment,
the Applicable Percentage shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee (with the consent of
any party whose consent is required by Section 9.04), and accepted by the
Administrative Agent, in the form of Exhibit B or such other form as shall
be approved by the Administrative Agent.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean (a) Loans of the same Type made,
converted or continued on the same date and, in the case of Eurodollar
Loans, as to which a single Interest Period is in effect or (b) a Borrowing
described in the definition of the term "Competitive Borrowing".
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.04.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks in New York City are authorized or
required by law to close; provided, however, that when used in connection
with a Eurodollar Loan, the term "Business Day" shall also exclude any
day on which banks are not open for dealings in dollar deposits in the
London interbank market.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such
person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if
(a) any person or group (within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934 as in effect on the date hereof) shall own
directly or indirectly, beneficially or of record, shares representing more
than 40% of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Borrower or (b) a majority of
the seats (other than vacant seats) on the board of directors of the
Borrower shall at any time be occupied by persons who were neither
(i) nominated by the board of directors of the Borrower nor (ii) appointed
by directors so nominated.
"Change in Law" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section
2.13, by any lending office of such Lender or by such Lender's or Issuing
Bank's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
"Closing Date" shall mean February 20, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans and to acquire participations
in Letters of Credit hereunder as set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender assumed its
Commitment, as applicable, as the same may be (a) reduced from time to
time pursuant to Section 2.10 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03(b) in the form of Exhibit D-3.
"Competitive Bid Accept/Reject Letter" shall mean a notification
made by the Borrower pursuant to Section 2.03(d) in the form of
Exhibit D-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurodollar Loan, the Margin, and (ii) in the case of a
Fixed Rate Loan, the fixed rate of interest offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" shall mean a request made by the
Borrower pursuant to Section 2.03(a).
"Competitive Borrowing" shall mean a Borrowing consisting of
a Competitive Loan or concurrent Competitive Loans from the Lender or
Lenders whose Competitive Bids for such Borrowing have been accepted
by the Borrower under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender to the
Borrower pursuant to the bidding procedure described in Section 2.03.
Each Competitive Loan shall be a Eurodollar Competitive Loan or a Fixed
Rate Loan.
"Confidential Information Memorandum" shall mean the
Confidential Information Memorandum of the Borrower dated January
2002.
"Consolidated EBITDA" shall mean, for any period,
Consolidated Net Income for such period plus (a) without duplication and
to the extent deducted in determining such Consolidated Net Income, the
sum of (i) consolidated interest expense net of interest income for such
period, (ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation and amortization for such period and
(iv) any extraordinary charges and all non-cash write-offs and write-
downs of amortizable and depreciable items for such period, and minus
(b) without duplication, to the extent included in determining such
Consolidated Net Income, any extraordinary gains and all non-cash items
of income for such period, all determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the
interest expense (including (a) imputed interest expense in respect of
Capital Lease Obligations and (b) the amortization of original issue
discount in connection with the Subordinated Notes and other
Indebtedness issued with original issue discount) of the Borrower and the
Subsidiaries for such period, net of interest income, in each case
determined on a consolidated basis in accordance with GAAP. For
purposes of the foregoing, interest expense shall be determined after
giving effect to any net payments made or received by the Borrower or any
Subsidiary with respect to interest rate Hedging Agreements.
"Consolidated Net Income" shall mean, for any period, the net
income or loss of the Borrower and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have
meanings correlative thereto.
"Credit Event" shall have the meaning assigned to such term in
Section 4.01.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Environmental Laws" shall mean all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments or injunctions issued,
promulgated or entered into by any Governmental Authority, relating to
the environment, the preservation or reclamation of natural resources, the
management or release of Hazardous Materials or to the effect of the
environment on human health and safety.
"Environmental Liability" shall mean liabilities, obligations,
claims, actions, suits, judgments or orders under or relating to any
Environmental Law for any damages, injunctive relief, losses, fines,
penalties, fees, expenses (including fees and expenses of attorneys and
consultants) or costs, whether contingent or otherwise, including those
arising from or relating to (a) any action to address the on- or off-site
presence, release of, or exposure to, Hazardous Materials, (b) permitting
and licensing, governmental administrative oversight and financial
assurance requirements, (c) any personal injury (including death), any
property damage (real or personal) or natural resource damage and (d) the
violation of any Environmental Law.
"Equity Interests" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity interests in any person, or any
obligations convertible into or exchangeable for, or giving any person a
right, option or warrant to acquire such equity interests or such convertible
or exchangeable obligations; provided that the Subordinated Notes are
deemed not to constitute Equity Interests of the Borrower.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes
of Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan (other than an event for which the 30-day notice period
is waived); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any
Plan or the withdrawal or partial withdrawal of the Borrower or any of its
ERISA Affiliates from any Plan or Multiemployer Plan; (e) the receipt by
the Borrower or any of its ERISA Affiliates from the PBGC or a plan
administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the adoption of
any amendment to a Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (g)
the receipt by the Borrower or any of its ERISA Affiliates of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected
to be, insolvent or in reorganization, within the meaning of Title IV of
ERISA; or (h) the occurrence of a "prohibited transaction" with respect
to which the Borrower or any of the Subsidiaries is a "disqualified person"
(within the meaning of Section 4975 of the Code) or with respect to which
the Borrower or any such Subsidiary could otherwise be liable.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the LIBO Rate.
"Event of Default" shall have the meaning assigned to such term
in Article VII.
"Excluded Taxes" shall mean, with respect to the Administrative
Agent, any Lender, the Issuing Bank or any other recipient of any payment
to be made by or on account of any obligation of the Borrower hereunder,
(a) income, franchise or similar taxes imposed on (or measured by) its net
income by the United States of America, the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
(or, in the case of any Lender, in which its applicable lending office is
located), or, in the case of a jurisdiction that imposes taxes on the basis of
management or control or other concept or principle of residence, the
jurisdiction in which such recipient is so resident, (b) Taxes imposed by
reason of any present or former connection between such person and the
jurisdiction imposing such Taxes, other than solely as a result of the
execution and delivery of this Agreement, the making of any Loans
hereunder or the performance of any action provided for hereunder, (c) any
branch profits taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which the Borrower is
located and (d) in the case of a Foreign Lender (other than as an assignee
pursuant to a request by the Borrower under Section 2.20(a)), any
withholding tax that (i) is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of
a new lending office (or assignment), to receive additional amounts from
the Borrower with respect to such withholding tax pursuant to Section
2.19(a) or (ii) is attributable to such Foreign Lender's failure to comply
with Section 2.19(e).
"Existing Credit Agreement" shall mean the Amended and
Restated Credit Agreement dated as of March 31, 1997, as amended,
among the Borrower, the lenders from time to time party thereto, and
Credit Suisse First Boston, as administrative agent.
"Existing Letter of Credit" shall mean each Letter of Credit
previously issued for the account of the Borrower that (a) is outstanding
on the Closing Date and (b) is listed on Schedule 1.01(a).
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of
1%) of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is
a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for the day for such transactions received
by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
"Fees" shall mean the Facility Fees, the Administrative Agent
Fees, the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any person shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
person.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of a
decimal to no more than four decimal places) specified by the Lender
making such Loan in its Competitive Bid.
"Foreign Lender" shall mean any Lender that is organized under
the laws of a jurisdiction other than that in which the Borrower is located.
For purposes of this definition, the United States of America, each State
thereof and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" shall mean generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Granting Lender" shall have the meaning assigned to such term
in Section 9.04(i).
"Guarantee" of or by any person (the "guarantor") shall mean
any obligation, contingent or otherwise, of such person guaranteeing or
having the economic effect of guaranteeing any Indebtedness of any other
person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for
the purpose of assuring the owner of such Indebtedness of the payment of
such Indebtedness or other obligation, (c) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such
Indebtedness or (d) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness; provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Materials" shall mean (a) petroleum products and
byproducts, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, radon gas, chlorofluorocarbons and all other ozone-depleting
substances and (b) any chemical, material, substance, waste, pollutant or
contaminant that is prohibited, limited or regulated by or pursuant to any
Environmental Law.
"Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price
protection agreement or other interest or currency exchange rate or
commodity price hedging arrangement.
"Indebtedness" of any person shall mean, without duplication,
(a) all obligations of such person for borrowed money, (b) all obligations
of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person under conditional sale or
other title retention agreements relating to property or assets purchased by
such person, (d) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (f) all
Guarantees by such person of Indebtedness of others, (g) all Capital Lease
Obligations of such person, (h) all obligations, contingent or otherwise,
of such person as an account party in respect of letters of credit and letters
of guaranty, (i) all obligations, contingent or otherwise, of such person in
respect of bankers' acceptances and (j) all obligations of such person to
make contingent cash payments in respect of any acquisition, to the extent
such obligations are or are required to be shown as liabilities on the
balance sheet of such person in accordance with GAAP. The
Indebtedness of any person shall include the Indebtedness of any other
entity (including any partnership in which such person is a general
partner) to the extent such person is liable therefor as a result of such
person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such
person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded
Taxes.
"Index Debt" shall mean the senior, unsecured, non-credit
enhanced, long-term indebtedness for borrowed money of the Borrower.
"Interest Coverage Ratio" shall mean, for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Interest Payment Date" shall mean (a) with respect to any ABR
Loan, the last Business Day of each March, June, September and
December and (b) with respect to any Eurodollar Loan or Fixed Rate
Borrowing, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part or such Fixed Rate Borrowing, as the case
may be, and, in the case of a Eurodollar Borrowing with an Interest Period
of more than three months' duration or a Fixed Rate Borrowing with an
Interest Period of more than 90 days' duration, each day that would have
been an Interest Payment Date had successive Interest Periods of three
months' or 90 days' duration, respectively, been applicable to such
Borrowing.
"Interest Period" shall mean, (a) with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or
6 months thereafter, as the Borrower may elect, and (b) with respect to
any Fixed Rate Borrowing, the period commencing on the date of such
Borrowing and ending on the date specified in the Competitive Bids in
which the offers to make the Fixed Rate Loans comprising such
Borrowing were extended, which shall not be earlier than 30 days after the
date of such Borrowing or later than 360 days after the date of such
Borrowing; provided, however, that if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of such Interest
Period. For purposes hereof, the date of a Borrowing initially shall be the
date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"Issuing Bank" shall mean, as the context may require, (a) Credit
Suisse First Boston, in its capacity as the issuer of Letters of Credit
hereunder, (b) with respect to each Existing Letter of Credit, the Lender
that issued such Existing Letter of Credit, and (c) any other Lender that
may become an Issuing Bank pursuant to Section 2.21(i) or 2.21(k), with
respect to Letters of Credit issued by such Lender. The Issuing Bank may,
in its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
"Issuing Bank Fees" shall have the meaning assigned to such
term in Section 2.06(c).
"L/C Commitment" shall mean the commitment of the Issuing
Bank to issue Letters of Credit pursuant to Section 2.21.
"L/C Disbursement" shall mean a payment or disbursement
made by the Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such
time and (b) the aggregate principal amount of all L/C Disbursements that
have not yet been reimbursed at such time. The L/C Exposure of any
Lender at any time shall equal its Pro Rata Percentage of the aggregate
L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such
term in Section 2.06(c).
"Lenders" shall mean (a) the persons listed on Schedule 2.01
(other than any such person that has ceased to be a party hereto pursuant
to an Assignment and Acceptance) and (b) any person that has become a
party hereto pursuant to an Assignment and Acceptance.
"Letter of Credit" shall mean any letter of credit issued pursuant
to Section 2.21 and any Existing Letter of Credit.
"Leverage Ratio" shall mean, for any period, the ratio of Total
Debt on the last day of such period to Consolidated EBITDA for such
period.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m., London time, on the
date that is two Business Days prior to the commencement of such Interest
Period by reference to the British Bankers' Association Interest Settlement
Rates for deposits in dollars (as set forth by the Bloomberg Information
Service or any successor thereto or any other service selected by the
Administrative Agent which has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of
displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO Rate" shall be the
interest rate per annum determined by the Administrative Agent to be the
average of the rates per annum at which dollar deposits of $10,000,000
are offered for such relevant Interest Period to major banks in the London
interbank market in London, England by the Administrative Agent at
approximately 11:00 a.m. (London time) on the date that is two Business
Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or
on such asset or (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any
of the foregoing) relating to such asset.
"Loans" shall mean the Revolving Loans and the Competitive
Loans.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal
to no more than four decimal places) to be added to or subtracted from the
LIBO Rate in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a materially adverse effect
on the financial condition, results of operations or business of the
Borrower and the Subsidiaries, taken as a whole.
"Material Indebtedness" shall mean Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more
Hedging Agreements, of any one or more of the Borrower and the
Subsidiaries in an aggregate principal amount exceeding $50,000,000.
For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Borrower or any Subsidiary in respect
of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.
"Material Subsidiary" shall mean at any time any Subsidiary,
except Subsidiaries which, if aggregated and considered as a single
Subsidiary, would not meet the definition of a "significant subsidiary"
contained as of the date hereof in Regulation S-X of the Securities and
Exchange Commission.
"Maturity Date" shall mean February 18, 2005.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or
similar levies arising from any payment made under this Agreement or
from the execution, delivery or enforcement of, or otherwise with respect
to, this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the
United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) investments in foreign and domestic commercial
paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the
date of acquisition thereof issued or guaranteed by or placed with,
and money market deposit accounts issued or offered by, the
Administrative Agent or any domestic office of any commercial
bank organized under the laws of the United States of America or
any State thereof that has a combined capital and surplus and
undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause
(a) above and entered into with a financial institution satisfying
the criteria of clause (c) above;
(e) investments in "money market funds" within the
meaning of Rule 2a-7 of the Investment Company Act of 1940,
as amended, substantially all of whose assets are invested in
investments of the type described in clauses (a) through (d)
above;
(f) investments in so-called market auction securities
rated Aa2 or higher by Moody's or AA or higher by S&P and
which have a reset date not more than 365 days from the date of
acquisition thereof; and
(g) investments in readily-marketable obligations of
Indebtedness of any State of the United States or any municipality
organized under the laws of any State of the United States or any political
subdivision thereof which, at the time of acquisition, are accorded either
of the two highest ratings by S&P, Moody's or another nationally
recognized credit rating agency of similar standard, in any such case
maturing no later than one year after the date of acquisition thereof.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, limited liability company,
partnership, Governmental Authority or other entity.
"Plan" shall mean any employee pension benefit plan (other than
a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of ERISA, and in respect of which
the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate
in effect at its principal office in New York City; each change in the Prime
Rate shall be effective on the date such change is publicly announced as
being effective.
"Pro Rata Percentage" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's
Commitment. In the event the Commitments shall have expired or been
terminated, the Pro Rata Percentages shall be determined on the basis of
the Commitments most recently in effect.
"Register" shall have the meaning assigned to such term in
Section 9.04(d).
"Regulation T" shall mean Regulation T of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Related Parties" shall mean, with respect to any specified
person, such person's Affiliates and the respective directors, officers,
employees, agents and advisors of such person and such person's
Affiliates.
"Required Lenders" shall mean, at any time, Lenders having
Commitments (or, if the Commitments have terminated, Loans)
representing at least a majority of the Total Commitment (or if the
Commitments have terminated, the aggregate amount of Loans
outstanding) at such time or, for purposes of acceleration pursuant to
clause (ii) of the last paragraph of Article VII, Lenders having Loans, L/C
Exposures and unused Commitments representing at least a majority of
the sum of all Loans outstanding, L/C Exposure and unused
Commitments.
"Restricted Payment" shall mean (a) any dividend or other
distribution (whether in cash, securities or other property) with respect to
any Equity Interests in the Borrower or any Subsidiary, or (b) any
payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, other than a payment to the extent
consisting of Equity Interests of equal or junior ranking, on account of the
purchase, redemption, retirement, acquisition, cancelation or termination
of any Equity Interests in the Borrower or any Subsidiary. It is understood
that the withholding of shares, and the payment of cash to the Internal
Revenue Service in an amount not to exceed the value of the withheld
shares, by the Company in connection with any of its stock incentive plans
shall not constitute Restricted Payments.
"Revolving Credit Borrowing" shall mean a Borrowing
comprised of Revolving Loans.
"Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Loans of such Lender, plus the aggregate amount
at such time of such Lender's L/C Exposure.
"Revolving Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to Section 2.01. Each Revolving Loan
shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"S&P" shall mean Standard & Poor's Ratings Service.
"SPC" shall have the meaning assigned to such term in Section
9.04(i).
"Subordinated Notes" shall mean the Borrower's Zero Coupon
Liquid Yield Option (Subordinated Convertible) Notes due 2021, in an
aggregate principal amount at maturity of $744,000,000.
"Subordinated Note Documents" shall mean the indenture under
which the Subordinated Notes were issued and all other instruments,
agreements and other documents evidencing or governing the
Subordinated Notes or providing for any Guarantee or other right in
respect thereof.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association or
other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held, or (b) that is, at the time any determination is made,
otherwise Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Synthetic Purchase Agreement" shall mean any swap,
derivative or other agreement or combination of agreements pursuant to
which the Borrower or any Subsidiary is or may become obligated to make
(a) any payment in connection with a purchase by any third party from a
person other than the Borrower or any Subsidiary of any Equity Interest
or (b) any payment (other than on account of a permitted purchase by it
of any Equity Interest) the amount of which is determined by reference to
the price or value at any time of any Equity Interest; provided that no
phantom stock or similar plan providing for payments only to current or
former directors, officers or employees of the Borrower or the Subsidiaries
(or to their heirs or estates) shall be deemed to be a Synthetic Purchase
Agreement.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges, liabilities or withholdings imposed
by any Governmental Authority.
"364-Day Credit Agreement" shall mean the 364-Day Credit
Agreement dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time), among the Borrower, the lenders
from time to time party thereto, and Credit Suisse First Boston, as
administrative agent.
"Total Debt" shall mean, at any time, the total Indebtedness of
the Borrower and the Subsidiaries at such time (excluding Indebtedness
of the type described in clause (h) of the definition of such term, except to
the extent of any unreimbursed drawings thereunder).
"Total Commitment" shall mean, at any time, the aggregate
amount of the Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the
Loans comprising such Borrowing is determined. For purposes hereof,
the term "Rate" shall include the LIBO Rate and the Alternate Base Rate.
"wholly owned Subsidiary" of any person shall mean a
subsidiary of such person of which securities (except for directors'
qualifying shares) or other ownership interests representing 100% of the
Equity Interests are, at the time any determination is being made, owned,
controlled or held by such person or one or more wholly owned
Subsidiaries of such person or by such person and one or more wholly
owned Subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E of
Title IV of ERISA.
SECTION 1.02. Terms Generally tc \l2 "SECTION 1.02.
Terms Generally . The definitions in Section 1.01 shall apply equally to
both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding mascu-
line, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning
and effect as the word "shall"; and the words "asset" and "property" shall
be construed as having the same meaning and effect and to refer to any
and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles
and Sections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided,
however, that if the Borrower notifies the Administrative Agent that the
Borrower wishes to amend any covenant in Article VI or any related
definition to eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Lenders
wish to amend Article VI or any related definition for such purpose), then
the Borrower's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Borrower and the Required
Lenders.
SECTION 1.03. Classification of Loans and Borrowings tc \l2
"SECTION 1.03. Classification of Loans and Borrowings . For
purposes of this Agreement, Loans may be classified and referred to by
Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan")
or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings
also may be classified and referred to by Class (e.g., a "Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and
Type (e.g., a "Eurodollar Revolving Borrowing").
ARTICLE II
The Credits tc \l1 "ARTICLE IIThe Credits
SECTION 2.01. Commitments tc \l2 "SECTION 2.01.
Commitments . Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Revolving Loans to the Borrower, at any
time and from time to time on or after the date hereof, and until the earlier
of the Maturity Date and the termination of the Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in such Lender's
Revolving Credit Exposure exceeding such Lender's Commitment minus
the amount by which the outstanding Competitive Borrowings shall be
deemed to have utilized such Commitment in accordance with
Section 2.16. Within the limits set forth in the preceding sentence and
subject to the terms, conditions and limitations set forth herein, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans.
SECTION 2.02. Loans tc \l2 "SECTION 2.02. Loans .
(a) Each Loan (other than Competitive Loans) shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments; provided, however, that
the failure of any Lender to make any Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood,
however, that no Lender shall be responsible for the failure of any other
Lender to make any Loan required to be made by such other Lender).
Each Competitive Loan shall be made in accordance with the procedures
set forth in Section 2.03. Except for Loans deemed made pursuant to
Section 2.02(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $1,000,000
and not less than $10,000,000 or (ii) equal to the remaining available
balance of the Commitments.
(b) Subject to Sections 2.09 and 2.14, each Competitive
Borrowing shall be comprised entirely of Eurodollar Competitive Loans
or Fixed Rate Loans, and each other Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03 or 2.04, as applicable. Each Lender may at its
option make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time;
provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than 15 Eurodollar
Borrowings outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods, regardless of
whether they commence on the same date, shall be considered separate
Borrowings.
(c) Except with respect to Loans made pursuant to
Section 2.02(f), each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately
available funds to such account in New York City as the Administrative
Agent may designate not later than 11:00 a.m., New York City time, and
the Administrative Agent shall promptly credit the amounts so received
to an account in the name of the Borrower and designated by the Borrower
in the applicable Borrowing Request or Competitive Bid Request or, if a
Borrowing shall not occur on such date because any condition precedent
herein specified shall not have been met, return the amounts so received
to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's portion of such
Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent on the date of
such Borrowing in accordance with paragraph (c) above and the
Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If the
Administrative Agent shall have so made funds available then, to the
extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from
the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising
such Borrowing and (ii) in the case of such Lender, a rate determined by
the Administrative Agent to represent its cost of overnight or short-term
funds (which determination shall be conclusive absent manifest error). If
such Lender shall repay to the Administrative Agent such corresponding
amount, such amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower
the payment required to be made by Section 2.21(e) within the time
specified in such Section, the Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative
Agent will promptly notify each Lender of such L/C Disbursement and its
Pro Rata Percentage thereof. Each Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent not later than
2:00 p.m., New York City time, on such date (or, if such Lender shall have
received such notice later than 12:00 (noon), New York City time, on any
day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Pro Rata
Percentage of such L/C Disbursement (it being understood that such
amount shall be deemed to constitute an ABR Loan of such Lender and
such payment shall be deemed to have reduced the L/C Exposure), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so
received by it from the Lenders. The Administrative Agent will promptly
pay to the Issuing Bank any amounts received by it from the Borrower
pursuant to Section 2.21(e) prior to the time that any Lender makes any
payment pursuant to this paragraph (f); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the
Administrative Agent to the Lenders that shall have made such payments
and to the Issuing Bank, as their interests may appear. If any Lender shall
not have made its Pro Rata Percentage of such L/C Disbursement
available to the Administrative Agent as provided above, such Lender and
the Borrower severally agree to pay interest on such amount, for each day
from and including the date such amount is required to be paid in
accordance with this paragraph to but excluding the date such amount is
paid, to the Administrative Agent for the account of the Issuing Bank at
(i) in the case of the Borrower, a rate per annum equal to the interest rate
applicable to Revolving Loans pursuant to Section 2.07(a), and (ii) in the
case of such Lender, for the first such day, the Federal Funds Effective
Rate, and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Competitive Bid Procedure tc \l2
"SECTION 2.03. Competitive Bid Procedure . (a) In order to request
Competitive Bids, the Borrower shall notify the Administrative Agent of
such request by telephone (i) in the case of a Eurodollar Competitive
Borrowing, not later than 11:00 a.m., New York City time, four Business
Days before the proposed date of such Borrowing and (ii) in the case of
a Fixed Rate Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the proposed date of such Borrowing. Provided
that no two Competitive Bid Requests submitted on the same day shall be
identical, the Borrower may submit up to (but not more than) three
Competitive Bid Requests on the same day, but a Competitive Bid
Request shall not be made within five Business Days after the date of any
previous Competitive Bid Request unless such previous Competitive Bid
Request shall have been rejected by the Administrative Agent, as provided
below. No ABR Loan shall be requested in, or made pursuant to, a
Competitive Bid Request. Each such telephonic Competitive Bid Request
shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Competitive Bid Request substantially
in the form of Exhibit D-1. A Competitive Bid Request that does not
conform substantially to the format of Exhibit D-1 may be rejected by the
Administrative Agent and the Administrative Agent shall notify the
Borrower of such rejection as promptly as practicable. Each Competitive
Bid Request shall refer to this Agreement and specify (i) whether the
Borrowing being requested is to be a Eurodollar Borrowing or a Fixed
Rate Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day); (iii) the number and the location of the account to which
funds are to be disbursed (which shall be an account that complies with
the requirements of Section 2.02(c)); (iv) the aggregate principal amount
of such Borrowing, which shall be a minimum of $10,000,000 and an
integral multiple of $1,000,000, and in any event shall not result in the
sum of the Aggregate Revolving Credit Exposure and the aggregate
outstanding principal amount of Competitive Loans, after giving effect to
such Borrowing, exceeding the Total Commitment; and (v) the Interest
Period with respect thereto (which may not end after the Maturity Date).
Promptly after its receipt of a Competitive Bid Request that is not re-
jected, the Administrative Agent shall invite the Lenders in the form set
forth as Exhibit D-2 to bid to make Competitive Loans pursuant to the
Competitive Bid Request.
(b) Each Lender may make one or more Competitive Bids to the
Borrower responsive to a Competitive Bid Request. Each Competitive
Bid by a Lender must be received by the Administrative Agent by
telecopy, (i) in the case of a Eurodollar Competitive Borrowing, not later
than 9:30 a.m., New York City time, three Business Days before the
proposed date of such Competitive Borrowing, and (ii) in the case of a
Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on
the proposed date of such Competitive Borrowing. Competitive Bids that
do not conform substantially to the format of Exhibit D-3 may be rejected
by the Administrative Agent, and the Administrative Agent shall notify
the applicable Lender as promptly as practicable. Each Competitive Bid
shall refer to this Agreement and specify (x) the principal amount (which
shall be a minimum of $5,000,000 and an integral multiple of $1,000,000
and which may equal the entire principal amount of the Competitive Bor-
rowing requested by the Borrower) of the Competitive Loan or Loans that
the Lender is willing to make, (y) the Competitive Bid Rate or Rates at
which the Lender is prepared to make such Loan or Loans and (z) the
Interest Period applicable to such Loan or Loans and the last day thereof.
(c) The Administrative Agent shall promptly notify the Borrower
by telecopy of the Competitive Bid Rate and the principal amount of each
Competitive Loan in respect of which a Competitive Bid shall have been
made and the identity of the Lender that shall have made each bid.
(d) The Borrower may, subject only to the provisions of this
paragraph (d), accept or reject any Competitive Bid. The Borrower shall
notify the Administrative Agent by telephone, confirmed by telecopy in
the form of a Competitive Bid Accept/Reject Letter, whether and to what
extent it has decided to accept or reject each Competitive Bid, (x) in the
case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m.,
New York City time, three Business Days before the date of the proposed
Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing,
not later than 10:30 a.m., New York City time, on the proposed date of the
Competitive Borrowing; provided, however, that (i) the failure of the
Borrower to give such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) the Borrower shall not accept a Competitive Bid
made at a particular Competitive Bid Rate if the Borrower has decided to
reject a Competitive Bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall
not exceed the principal amount specified in the Competitive Bid Request,
(iv) if the Borrower shall accept a Competitive Bid or Bids made at a
particular Competitive Bid Rate but the amount of such Competitive Bid
or Bids would cause the total amount to be accepted by the Borrower to
exceed the amount specified in the Competitive Bid Request, then the
Borrower shall accept a portion of such Competitive Bid or Bids in an
amount equal to the amount specified in the Competitive Bid Request less
the amount of all other Competitive Bids so accepted, which acceptance,
in the case of multiple Competitive Bids at such Competitive Bid Rate,
shall be made pro rata in accordance with the amount of each such Bid,
and (v) except pursuant to clause (iv) above, no Competitive Bid shall be
accepted for a Competitive Loan unless such Competitive Loan is in a
minimum principal amount of $5,000,000 and an integral multiple of
$1,000,000; provided further, however, that if a Competitive Loan must
be in an amount less than $5,000,000 because of the provisions of clause
(iv) above, such Competitive Loan may be for a minimum of $1,000,000
or any integral multiple thereof, and in calculating the pro rata allocation
of acceptances of portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded
to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph (d)
shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding
Lender by telecopy whether or not its Competitive Bid has been accepted
(and, if so, in what amount and at what Competitive Bid Rate), and each
successful bidder will thereupon become bound, upon the terms and
subject to the conditions hereof, to make the Competitive Loan in respect
of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such
Competitive Bid directly to the Borrower at least one quarter of an hour
earlier than the time by which the other Lenders are required to submit
their Competitive Bids to the Administrative Agent pursuant to paragraph
(b) above.
(g) Within the limits set forth in this Section 2.03 and subject to
the terms, conditions and limitations set forth herein, the Borrower may
borrow, pay and reborrow Competitive Loans.
SECTION 2.04. Borrowing Procedure tc \l2 "SECTION 2.04.
Borrowing Procedure . In order to request a Borrowing (other than a
Competitive Borrowing or a deemed Borrowing pursuant to
Section 2.02(f), as to which this Section 2.04 shall not apply), the
Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before a proposed
Borrowing, and (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the day of a proposed Borrowing. Each
Borrowing Request shall be irrevocable, shall be confirmed promptly by
hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request substantially in the form of Exhibit C or such other
form as shall be acceptable to the Administrative Agent and shall specify
the following information: (i) whether the Borrowing then being requested
is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Borrowing (which shall be a Business Day); (iii) the number and
location of the account to which funds are to be disbursed (which shall be
an account that complies with the requirements of Section 2.02(c));
(iv) the amount of such Borrowing; and (v) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto; provided,
however, that, notwithstanding any contrary specification in any
Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing
shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower
shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall promptly advise the Lenders of
any notice given pursuant to this Section 2.04 (and the contents thereof),
and of each Lender's portion of the requested Borrowing.
SECTION 2.05. Evidence of Debt; Repayment of Loans tc \l2
"SECTION 2.05. Evidence of Debt; Repayment of Loans . (a) The
Borrower hereby unconditionally promises to pay to the Administrative
Agent for the account of each Lender (i) the then unpaid principal amount
of each Competitive Loan of such Lender on the last day of the Interest
Period applicable to such Loan and (ii) the then unpaid principal amount
of each Revolving Loan of such Lender on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender
from time to time, including the amounts of principal and interest payable
and paid to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from the Borrower and
each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; provided,
however, that the failure of any Lender or the Administrative Agent to
maintain such accounts or any error therein shall not in any manner affect
the obligations of the Borrower to repay the Loans in accordance with
their terms.
(e) Any Lender may request that Loans made by it hereunder be
evidenced by a promissory note. In such event, the Borrower shall execute
and deliver to such Lender a promissory note payable to such Lender and
its registered assigns and in a form and substance reasonably acceptable
to the Administrative Agent and the Borrower. Notwithstanding any other
provision of this Agreement, in the event any Lender shall request and
receive such a promissory note, the interests represented by such note
shall at all times (including after any assignment of all or part of such
interests pursuant to Section 9.04) be represented by one or more
promissory notes payable to the payee named therein or its registered
assigns.
SECTION 2.06. Fees tc \l2 "SECTION 2.06. Fees . (a) The
Borrower agrees to pay to each Lender, through the Administrative Agent,
on the last Business Day of March, June, September and December in
each year, and on the date on which the Commitment of such Lender shall
expire or be terminated as provided herein, a facility fee (a "Facility Fee")
equal to the Applicable Percentage per annum in effect from time to time
on the daily amount of the Commitment of such Lender (whether used or
unused) during the preceding quarter (or shorter period commencing with
the date hereof or ending with the Maturity Date or the date on which the
Commitment of such Lender shall expire or be terminated); provided that,
if such Lender continues to have any Revolving Credit Exposure after its
Commitment terminates, then the Facility Fee shall continue to accrue
(and be payable on demand) on the daily amount of such Lender's
Revolving Credit Exposure from and including the date on which its
Commitment terminates to and including the date on which such Lender
ceases to have any Revolving Credit Exposure. All Facility Fees shall be
computed on the basis of the actual number of days elapsed (including the
first day but excluding the last day) in a year of 360 days. The Facility
Fee due to each Lender shall commence to accrue on the date of this
Agreement and shall cease to accrue on the later of the date on which the
Commitment of such Lender shall expire or be terminated as provided
herein and such Lender shall have no Revolving Credit Exposure.
(b) The Borrower agrees to pay to the Administrative Agent, for
its own account, the administrative fees separately agreed to in writing
from time to time by the Borrower and the Administrative Agent (the
"Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Lender, through the
Administrative Agent, on the last Business Day of March, June,
September and December of each year and on the date on which the
Commitment of such Lender shall be terminated as provided herein, a fee
(an "L/C Participation Fee") at a rate per annum equal to the Applicable
Percentage from time to time used to determine the interest rate on
Revolving Credit Borrowings comprised of Eurodollar Loans pursuant to
Section 2.07, calculated on such Lender's Pro Rata Percentage of the
daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or
shorter period commencing with the date hereof or ending with the
Maturity Date or the date on which the Commitment of such Lender shall
expire or be terminated); provided that, if such Lender continues to have
any L/C Exposure after its Commitment terminates, then the L/C
Participation Fee shall continue to accrue (and be payable on demand) on
such Lender's Pro Rata Percentage of the daily aggregate L/C Exposure
from and including the date on which its Commitment terminates to and
including the date on which such Lender ceases to have any
L/C Exposure) and (ii) to the Issuing Bank with respect to each Letter of
Credit, on the last Business Day of March, June, September, and
December of each year and on the date on which the L/C Commitment of
the Issuing Bank shall be terminated as provided herein (or later date on
which all the Letters of Credit issued by such Issuing Bank shall have
been terminated or expired), (x) a fronting fee equal to 0.125% per annum
on the aggregate outstanding face amount of such Letter of Credit and
(y) the standard issuance and drawing fees specified from time to time by
the Issuing Bank (the "Issuing Bank Fees"). All L/C Participation Fees
and Issuing Bank Fees shall be computed on the basis of the actual
number of days elapsed (including the first day but excluding the last day)
in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Issuing Bank Fees shall
be paid directly to the Issuing Bank. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.07. Interest on Loans tc \l2 "SECTION 2.07.
Interest on Loans . (a) Subject to the provisions of Section 2.08, the
Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed (including the first day but
excluding the last day) over a year of 365 or 366 days, as the case may be,
when the Alternate Base Rate is determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal
to the Alternate Base Rate plus the Applicable Percentage in effect from
time to time.
(b) Subject to the provisions of Section 2.08, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed (including the first day but
excluding the last day) over a year of 360 days) at a rate per annum equal
to (i) in the case of each Revolving Loan, the LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Percentage in
effect from time to time, and (ii) in the case of each Competitive Loan, the
LIBO Rate for the Interest Period in effect for such Borrowing plus the
Margin offered by the Lender making such Loan and accepted by the
Borrower pursuant to Section 2.03.
(c) Subject to the provisions of Section 2.08, each Fixed Rate
Loan shall bear interest (computed on the basis of the actual number of
days elapsed (including the first day but excluding the last day) over a
year of 360 days) at a rate per annum equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise provided in
this Agreement; provided that (i) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Loan),
accrued interest on the principal amount repaid or prepaid shall be payable
on the date of such repayment or prepayment and (ii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion. The applicable Alternate Base Rate or
LIBO Rate for each Interest Period or day within an Interest Period, as the
case may be, shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.08. Default Interest tc \l2 "SECTION 2.08.
Default Interest . If the Borrower shall default in the payment of the
principal of or interest on any Loan or any other amount becoming due
hereunder, by acceleration or otherwise, the Borrower shall on demand
from time to time pay interest, to the extent permitted by law, on such
defaulted amount to but excluding the date of actual payment (after as
well as before judgment) (a) in the case of overdue principal, at the rate
otherwise applicable to such Loan pursuant to Section 2.07 plus 2.00%
per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed (including the first day but
excluding the last day) over a year of 365 or 366 days, as the case may be,
when determined by reference to the Prime Rate and over a year of 360
days at all other times) equal to the rate that would be applicable to an
ABR Revolving Loan plus 2.00%.
SECTION 2.09. Alternate Rate of Interest tc \l2 "SECTION
2.09. Alternate Rate of Interest . In the event, and on each occasion, that
on the day two Business Days prior to the commencement of any Interest
Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London
interbank market, or that reasonable means do not exist for ascertaining
the LIBO Rate, or the Administrative Agent shall have been informed by
the Required Lenders (or, in the case of a Eurodollar Competitive Loan,
any Lender required to make such Loan) that the rates at which such dollar
deposits are being offered will not adequately and fairly reflect the cost to
the Required Lenders (or such Lender) of making or maintaining their or
its Eurodollar Loan during such Interest Period, the Administrative Agent
shall, as soon as practicable thereafter, give written or telecopy notice
thereof to the Borrower and the Lenders. In the event of any such notice,
until the Administrative Agent shall have advised the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist,
(i) any request by the Borrower for a Eurodollar Revolving Credit
Borrowing pursuant to Section 2.04 shall be deemed to be a request for an
ABR Borrowing and (ii) any request by the Borrower for a Eurodollar
Competitive Borrowing pursuant to Section 2.03 shall be of no force and
effect and shall be denied by the Administrative Agent; provided that if
the circumstances giving rise to such notice do not affect all the Lenders,
then the Borrower may make requests for Eurodollar Competitive
Borrowings to Lenders that are not affected thereby. Each determination
by the Administrative Agent under this Section 2.09 shall be conclusive
absent manifest error.
SECTION 2.10. Termination and Reduction of
Commitments tc \l2 "SECTION 2.10. Termination and Reduction of
Commitments . (a) The Commitments and the L/C Commitment shall
automatically terminate on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written
or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) to the Administrative Agent, the Borrower may at any
time in whole permanently terminate, or from time to time in part
permanently reduce, the Commitments; provided, however, that (i) each
partial reduction of the Commitments shall be in an integral multiple of
$1,000,000 and in a minimum amount of $10,000,000 and (ii) the Total
Commitment shall not be reduced to an amount that is less than the sum
of the Aggregate Revolving Credit Exposure and the aggregate
outstanding principal amount of the Competitive Loans at the time.
(c) Each reduction in the Commitments hereunder shall be made
ratably among the Lenders in accordance with their respective
Commitments. The Borrower shall pay to the Administrative Agent for
the account of the applicable Lenders, on the date of each termination or
reduction, the Facility Fees on the amount of the Commitments so
terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.11. Conversion and Continuation of
Borrowings tc \l2 "SECTION 2.11. Conversion and Continuation of
Borrowings . The Borrower shall have the right at any time upon prior
irrevocable written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent
(a) not later than 11:00 a.m., New York City time, on the day of
conversion, to convert any Eurodollar Borrowing into an ABR Borrowing,
(b) not later than 11:00 a.m., New York City time, three Business Days
prior to conversion or continuation, to convert any ABR Borrowing into
a Eurodollar Revolving Credit Borrowing or to continue any Eurodollar
Revolving Credit Borrowing as a Eurodollar Revolving Credit Borrowing
for an additional Interest Period, and (c) not later than 11:00 a.m., New
York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Revolving Credit Borrowing
to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective
principal amounts of the Loans comprising the converted or
continued Borrowing;
(ii) if less than all the outstanding principal amount of
any Borrowing shall be converted or continued, then each
resulting Borrowing shall satisfy the limitations specified in
Sections 2.02(a) and 2.02(b) regarding the principal amount and
maximum number of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender
and the Administrative Agent by recording for the account of
such Lender the new Loan of such Lender resulting from such
conversion and reducing the Loan (or portion thereof) of such
Lender being converted by an equivalent principal amount;
accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of
conversion;
(iv) if any Eurodollar Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the
Lenders pursuant to Section 2.15;
(v) any portion of a Borrowing maturing or required to
be repaid in less than one month may not be converted into or
continued as a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot
be converted into or continued as a Eurodollar Borrowing by
reason of the immediately preceding clause shall be automatically
converted at the end of the Interest Period in effect for such
Borrowing into an ABR Borrowing; and
(vii) upon notice to the Borrower from the
Administrative Agent given at the request of the Required
Lenders, after the occurrence and during the continuance of a
Default or Event of Default, no outstanding Revolving Loan may
be converted into, or continued as, a Eurodollar Loan and, unless
repaid, each Eurodollar Revolving Borrowing shall be converted
into an ABR Borrowing at the end of the Interest Period
applicable thereto.
Each notice pursuant to this Section 2.11 shall refer to this
Agreement and specify (i) the identity and amount of the Borrowing that
the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing
or an ABR Borrowing, (iii) if such notice requests a conversion, the date
of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurodollar Borrowing,
the Interest Period with respect thereto. If no Interest Period is specified
in any such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Administrative Agent shall
advise the Lenders of any notice given pursuant to this Section 2.11 and
of each Lender's portion of any converted or continued Borrowing. If the
Borrower shall not have given notice in accordance with this Section 2.11
to continue any Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.11 to
convert such Borrowing), such Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into an ABR Borrowing. The Borrower shall
not have the right to continue or convert the Interest Period with respect
to any Competitive Borrowing pursuant to this Section 2.11.
SECTION 2.12. Optional Prepayment tc \l2 "SECTION 2.12.
Optional Prepayment . (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing (other than a
Competitive Borrowing), in whole or in part, upon at least three Business
Days' prior written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) in the case of Eurodollar Loans,
or written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) on the day of prepayment in the case of ABR
Loans, to the Administrative Agent before 11:00 a.m., New York City
time; provided, however, that each partial prepayment shall be in an
amount that is an integral multiple of $1,000,000 and not less than
$10,000,000. The Borrower shall not have the right to prepay any
Competitive Borrowing.
(b) In the event of any termination of all the Commitments, the
Borrower shall repay or prepay all its outstanding Revolving Credit
Borrowings on the date of such termination. If as a result of any partial
reduction of the Commitments the sum of the Aggregate Revolving Credit
Exposure and the aggregate outstanding principal amount of the
Competitive Loans at the time would exceed the Total Commitment after
giving effect thereto, then the Borrower shall, on the date of such
reduction, repay or prepay Revolving Credit Borrowings in an amount
sufficient to eliminate such excess.
(c) Each notice of prepayment shall specify the prepayment date
and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay
such Borrowing by the amount stated therein on the date stated therein.
All prepayments under this Section 2.12 shall be subject to Section 2.15
but otherwise without premium or penalty. All prepayments under this
Section 2.12 (other than prepayment of an ABR Loan that does not occur
in connection with, or as a result of, the reduction or termination of the
Commitments) shall be accompanied by accrued and unpaid interest on
the principal amount to be prepaid to but excluding the date of payment.
SECTION 2.13. Reserve Requirements; Change in
Circumstances tc \l2 "SECTION 2.13. Reserve Requirements; Change
in Circumstances . (a) Notwithstanding any other provision of this
Agreement, if any Change in Law shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any
Lender or the Issuing Bank or shall impose on such Lender or the Issuing
Bank or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans or Fixed Rate Loans made by such Lender
or any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or main-
taining any Eurodollar Loan or Fixed Rate Loan or increase the cost to any
Lender or the Issuing Bank of issuing or maintaining any Letter of Credit
or purchasing or maintaining a participation therein or to reduce the
amount of any sum received or receivable by such Lender or the Issuing
Bank hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender or the Issuing Bank to be material, then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be,
upon demand such additional amount or amounts as will compensate such
Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that
any Change in Law regarding capital adequacy has or would have the
effect of reducing the rate of return on such Lender's or the Issuing Bank's
capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made
or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto
to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but
for such Change in Law (taking into consideration such Lender's or the
Issuing Bank's policies and the policies of such Lender's or the Issuing
Bank's holding company with respect to capital adequacy) by an amount
deemed by such Lender or the Issuing Bank to be material, then from time
to time the Borrower shall pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as applicable, as specified in paragraph (a)
or (b) above shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender or the Issuing
Bank the amount shown as due on any such certificate delivered by it
within 15 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital shall not constitute
a waiver of such Lender's or the Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be under any
obligation to compensate any Lender or the Issuing Bank under paragraph
(a) or (b) above with respect to increased costs or reductions with respect
to any period prior to the date that is 120 days prior to such request if such
Lender or the Issuing Bank knew or could reasonably have been expected
to know of the circumstances giving rise to such increased costs or
reductions and of the fact that such circumstances could reasonably be
expected to result in a claim for increased compensation by reason of such
increased costs or reductions; provided further that the foregoing
limitation shall not apply to any increased costs or reductions arising out
of the retroactive application of any Change in Law within such 120-day
period. The protection of this Section shall be available to each Lender
and the Issuing Bank regardless of any possible contention of the
invalidity or inapplicability of the Change in Law that shall have occurred
or been imposed. Notwithstanding any other provision of this Section, no
Lender shall be entitled to demand compensation hereunder in respect of
any Competitive Loan if it shall have been aware of the event or
circumstance giving rise to such demand at the time it submitted the
Competitive Bid pursuant to which such Loan was made.
SECTION 2.14. Change in Legality tc \l2 "SECTION 2.14.
Change in Legality . (a) Notwithstanding any other provision of this
Agreement, if any Change in Law shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will
not thereafter (for the duration of such unlawfulness) be made by
such Lender hereunder (or be continued for additional Interest
Periods and ABR Loans will not thereafter (for such duration) be
converted into Eurodollar Loans), whereupon such Lender shall
not submit a Competitive Bid in response to a request for a
Eurodollar Competitive Loan and any request for a Eurodollar
Borrowing (or to convert an ABR Borrowing to a Eurodollar
Borrowing or to continue a Eurodollar Borrowing for an
additional Interest Period) shall, as to such Lender only, be
deemed a request for an ABR Loan (or a request to continue an
ABR Loan as such for an additional Interest Period or to convert
a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all
such Eurodollar Loans shall be automatically converted to ABR
Loans as of the effective date of such notice as provided in
paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu of, or result-
ing from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower
by any Lender shall be effective as to each Eurodollar Loan made by such
Lender, if lawful, on the last day of the Interest Period then applicable to
such Eurodollar Loan; in all other cases such notice shall be effective on
the date of receipt by the Borrower.
SECTION 2.15. Break Funding tc \l2 "SECTION 2.15. Break
Funding . The Borrower shall compensate each Lender for any loss or
expense that such Lender may sustain or incur as a consequence of (a)
such Lender receiving or being deemed to receive any amount on account
of the principal of any Fixed Rate Loan or Eurodollar Loan prior to the
end of the Interest Period in effect therefor, (b) the conversion of any
Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period
with respect to any Eurodollar Loan, in each case other than on the last
day of the Interest Period in effect therefor or (c) the failure of the
Borrower to borrow, convert, continue or prepay any Fixed Rate Loan or
Eurodollar Loan made or to be made by such Lender (including any
Eurodollar Loan to be made pursuant to a conversion or continuation
under Section 2.11) after notice of such borrowing, conversion,
continuation or prepayment shall have been given by the Borrower
hereunder (any of the events referred to in this sentence being called a
"Breakage Event"). In the case of any Breakage Event, such loss shall
include an amount equal to the excess, as reasonably determined by such
Lender, of (i) its cost of obtaining funds for the Fixed Rate Loan or
Eurodollar Loan that is the subject of such Breakage Event for the period
from the date of such Breakage Event to the last day of the Interest Period
in effect (or that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in redeploying the
funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts
which such Lender is entitled to receive pursuant to this Section 2.15 shall
be delivered to the Borrower and shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount due within 15 days of the
receipt of any such certificate.
SECTION 2.16. Pro Rata Treatment tc \l2 "SECTION 2.16.
Pro Rata Treatment . Except as provided below in this Section 2.16 with
respect to Competitive Borrowings and as required under Section 2.14,
each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Facility Fees and the L/C Participation Fees, each reduction of the
Commitments and each conversion of any Borrowing to or continuation
of any Borrowing as a Borrowing of any Type shall be allocated pro rata
among the Lenders in accordance with their respective Commitments (or,
if such Commitments shall have expired or been terminated, in accordance
with the respective principal amounts of their outstanding Loans). Each
payment of principal of and interest on any Competitive Borrowing shall
be allocated pro rata among the Lenders participating in such Borrowing
in accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. For purposes of
determining the available Commitments of the Lenders at any time, each
outstanding Competitive Borrowing shall be deemed to have utilized the
Commitments of the Lenders (including those Lenders which shall not
have made Loans as part of such Competitive Borrowing) pro rata in
accordance with such respective Commitments. Each Lender agrees that
in computing such Lender's portion of any Borrowing to be made
hereunder, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing to the next higher or lower whole
dollar amount.
SECTION 2.17. Sharing of Setoffs tc \l2 "SECTION 2.17.
Sharing of Setoffs . Each Lender agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim against the
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Loan
or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Loans and participations in L/C Disbursements shall be
proportionately less than the unpaid principal portion of the Loans and
participations in L/C Disbursements of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for,
a participation in the Loans and L/C Exposure of such other Lender, so
that the aggregate unpaid principal amount of the Loans and L/C
Exposure and participations in Loans and L/C Exposure held by each
Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Loans and L/C Exposure then outstanding as the principal
amount of its Loans and L/C Exposure prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal amount of
all Loans and L/C Exposure outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; provided, however, that if any
such purchase or purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded
to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding a
participation in a Loan or L/C Disbursement deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower
to such Lender by reason thereof as fully as if such Lender had made a
Loan directly to the Borrower in the amount of such participation.
SECTION 2.18. Payments tc \l2 "SECTION 2.18. Payments .
(a) The Borrower shall make each payment (including principal of or
interest on any Borrowing or any L/C Disbursement or any Fees or other
amounts) hereunder not later than 12:00 (noon), New York City time, on
the date when due in immediately available dollars, without setoff, defense
or counterclaim. Each such payment (other than Issuing Bank Fees, which
shall be paid directly to the Issuing Bank), shall be made to the
Administrative Agent at its offices at Eleven Madison Avenue, New York,
NY 10010 or as otherwise instructed by the Administrative Agent.
(b) Except as otherwise expressly provided herein, whenever any
payment (including principal of or interest on any Borrowing or any Fees
or other amounts) hereunder shall become due, or otherwise would occur,
on a day that is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such
case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes tc \l2 "SECTION 2.19. Taxes .
(a) Any and all payments by the Borrower hereunder shall be made free
and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or such Lender (as the case
may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes not paid
pursuant to Section 2.19(a)(iii) to the relevant Governmental Authority in
accordance with applicable law. As of the Closing Date, each Foreign
Lender intends to make Loans hereunder out of an office located in the
United States of America or out of an office so that such Loans would not
be subject to Other Taxes.
(c) The Borrower shall indemnify the Administrative Agent and
each Lender, within 15 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent or such Lender, as the case may be, on or with
respect to any payment by or on account of any obligation of the Borrower
hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant
Governmental Authority; provided, however, that the Borrower shall not
be obligated to make a payment pursuant to this Section 2.19 in respect
of penalties, interest and other liabilities attributable to any Indemnified
Taxes or Other Taxes, if (i) such penalties, interest and other liabilities are
attributable to the failure of the Administrative Agent or such Lender, as
the case may be, to pay amounts paid to the Administrative Agent or such
Lender by the Borrower (for Indemnified Taxes or Other Taxes) to the
appropriate taxing authority in a timely manner after receipt of such
payment from the Borrower or (ii) such penalties, interest and other
liabilities are attributable to the gross negligence or wilful misconduct of
the Administrative Agent or such Lender, as the case may be. After the
Administrative Agent or a Lender learns of the imposition of Indemnified
Taxes or Other Taxes, such person will act in good faith to promptly
notify the Borrower of its obligations hereunder. A certificate as to the
amount of such payment or liability delivered to the Borrower by a
Lender, or by the Administrative Agent on its behalf or on behalf of a
Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the
Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the
Administrative Agent.
(e) Any Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect
to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation
prescribed by applicable law and reasonably requested by the Borrower
as will permit such payments to be made without withholding or at a
reduced rate. Each Foreign Lender, before it signs and delivers this
Agreement if listed on the signature pages hereof and before it becomes
a Lender in the case of each other Foreign Lender, and from time to time
thereafter, before the date any such form expires or becomes obsolete or
invalid, shall provide the Borrower and the Administrative Agent with
Internal Revenue Service form W-8BEN or W-8ECI (or other appropriate
or successor form prescribed by the Internal Revenue Service) in
duplicate, certifying that such Foreign Lender is entitled to benefits under
an income tax treaty to which the United States of America is a party
which exempts the Foreign Lender from U.S. withholding tax on
payments of interest for the account of such Foreign Lender or certifying
that the income receivable pursuant to this Agreement is effectively
connected with the conduct by such Foreign Lender of a trade or business
in the United States of America and exempt from United States
withholding tax.
(f) If the Administrative Agent or a Lender determines that it has
received a refund or credit in respect of and specifically associated with
any Indemnified Taxes or Other Taxes as to which it has been indemnified
by the Borrower, or with respect to which the Borrower has paid
additional amounts, it shall promptly notify the Borrower of such refund
or credit and shall within 15 days from the date of receipt of such refund
or benefit of such credit pay over the amount of such refund or benefit of
such credit (including any interest paid or credited by the relevant taxing
authority or Governmental Authority with respect to such refund or credit)
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower with respect to the Indemnified
Taxes or Other Taxes giving rise to such refund of credit), net of all out-
of-pocket expenses of such person. If the Administrative Agent or a
Lender shall become aware that it is entitled to receive a refund or credit
in respect of Indemnified Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has
paid additional amounts, it shall promptly notify the Borrower of the
availability of such refund or credit and shall, within 15 days after receipt
of a request for such by the Borrower (whether as a result of notification
that it has made of such to the Borrower or otherwise), make a claim to
such taxing authority or Governmental Authority for such refund or credit
and contest such Indemnified Taxes, Other Taxes or liabilities if (i) such
Lender or the Administrative Agent determines, in its sole discretion, that
it would not be materially disadvantaged or prejudiced as a result of such
contest (it being understood that the mere existence of fees, charges, costs
or expenses that the Borrower has offered to and agreed to pay on behalf
of a Lender or the Administrative Agent shall not be deemed to be
materially disadvantageous to such person) and (ii) the Borrower
furnishes, upon request of the Lender or the Administrative Agent, an
opinion of reputable tax counsel (such opinion and such counsel to be
acceptable to such Lender or the Administrative Agent) to the effect that
such Indemnified Taxes or Other Taxes were wrongfully or illegally
imposed.
SECTION 2.20. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate tc \l2 "SECTION 2.20. Assignment of
Commitments Under Certain Circumstances; Duty to Mitigate . (a) In
the event (i) any Lender or the Issuing Bank delivers a certificate
requesting compensation pursuant to Section 2.13, (ii) any Lender or the
Issuing Bank delivers a notice described in Section 2.14 or (iii) the
Borrower is required to pay any additional amount to any Lender or the
Issuing Bank or any Governmental Authority on account of any Lender or
the Issuing Bank pursuant to Section 2.19, the Borrower may, at its sole
expense and effort (including with respect to the processing and
recordation fee referred to in Section 9.04(b)), upon notice to such Lender
or the Issuing Bank and the Administrative Agent, require such Lender or
the Issuing Bank to transfer and assign, without recourse (in accordance
with and subject to the restrictions contained in Section 9.04), all of its
interests, rights and obligations under this Agreement to an assignee that
shall assume such assigned obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such
assignment shall not conflict with any law, rule or regulation or order of
any court or other Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Commitment is being assigned, of the
Issuing Bank), which consent shall not unreasonably be withheld, and (z)
the Borrower or such assignee shall have paid to the affected Lender or the
Issuing Bank in immediately available funds an amount equal to the sum
of the principal of and interest accrued to the date of such payment on the
outstanding Loans or L/C Disbursements of such Lender or the Issuing
Bank, respectively, plus all Fees and other amounts accrued for the
account of such Lender or the Issuing Bank hereunder (including any
amounts under Section 2.13 and Section 2.15); provided further that, if
prior to any such transfer and assignment the circumstances or event that
resulted in such Lender's or the Issuing Bank's claim for compensation
under Section 2.13 or notice under Section 2.14 or the amounts paid
pursuant to Section 2.19, as the case may be, cease to cause such Lender
or the Issuing Bank to suffer increased costs or reductions in amounts
received or receivable or reduction in return on capital, or cease to have
the consequences specified in Section 2.14, or cease to result in amounts
being payable under Section 2.19, as the case may be (including as a result
of any action taken by such Lender or the Issuing Bank pursuant to
paragraph (b) below), or if such Lender or the Issuing Bank shall waive
its right to claim further compensation under Section 2.13 in respect of
such circumstances or event or shall withdraw its notice under
Section 2.14 or shall waive its right to further payments under
Section 2.19 in respect of such circumstances or event, as the case may be,
then such Lender or the Issuing Bank shall not thereafter be required to
make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request
compensation under Section 2.13, (ii) any Lender or the Issuing Bank
delivers a notice described in Section 2.14 or (iii) the Borrower is required
to pay any additional amount or indemnity payment to any Lender or the
Issuing Bank or any Governmental Authority on account of any Lender or
the Issuing Bank, pursuant to Section 2.19, then such Lender or the
Issuing Bank shall use reasonable efforts (which shall not require such
Lender or the Issuing Bank to incur an unreimbursed loss or unreimbursed
cost or expense or otherwise take any action inconsistent with its internal
policies or legal or regulatory restrictions or suffer any disadvantage or
burden deemed by it to be significant) (x) to file any certificate or
document reasonably requested in writing by the Borrower or (y) to assign
its rights and delegate and transfer its obligations hereunder to another of
its offices, branches or affiliates, if such filing or assignment would reduce
its claims for compensation under Section 2.13 or enable it to withdraw
its notice pursuant to Section 2.14 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any
Lender or the Issuing Bank in connection with any such filing or
assignment, delegation and transfer.
SECTION 2.21. Letters of Credit tc \l2 "SECTION 2.21.
Letters of Credit . (a) General. The Borrower may request the issuance
of a Letter of Credit for its own account or for the account of any of its
Subsidiaries (in which case the Borrower and such Subsidiary shall be co-
applicants with respect to such Letter of Credit), in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time
and from time to time while the Commitments remain in effect. This
Section shall not be construed to impose an obligation upon the Issuing
Bank to issue any Letter of Credit that is inconsistent with the terms and
conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of Credit
(or to amend, renew or extend an existing Letter of Credit), the Borrower
shall hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the Issuing Bank) to
the Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension, the date on which such Letter
of Credit is to expire (which shall comply with paragraph (c) below), the
amount of such Letter of Credit, the name and address of the beneficiary
thereof and such other information as shall be necessary to prepare such
Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of
each Letter of Credit the Borrower shall be deemed to represent and
warrant that, after giving effect to such issuance, amendment, renewal or
extension (i) the L/C Exposure shall not exceed $75,000,000 and (ii) the
sum of the Aggregate Revolving Credit Exposure and the aggregate
principal amount of outstanding Competitive Borrowings shall not exceed
the Total Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the
close of business on the earlier of the date one year after the date of the
issuance of such Letter of Credit and the date that is five Business Days
prior to the Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date; provided, however, that a Letter of Credit may,
upon the request of the Borrower, include a provision whereby such Letter
of Credit shall be renewed automatically for additional consecutive
periods of 12 months or less (but not beyond the date that is five Business
Days prior to the Maturity Date) unless the Issuing Bank notifies the
beneficiary thereof at least 30 days prior to the then-applicable expiration
date that such Letter of Credit will not be renewed.
(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the Issuing Bank or the Lenders,
the Issuing Bank hereby grants to each Lender, and each such Lender
hereby acquires from the Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate
amount available to be drawn under such Letter of Credit, effective upon
the issuance of such Letter of Credit (or, in the case of the Existing Letters
of Credit, effective upon the Closing Date). In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account
of the Issuing Bank, such Lender's Pro Rata Percentage of each L/C
Disbursement made by the Issuing Bank and not reimbursed by the
Borrower forthwith on the date due as provided in Section 2.02(f). Each
Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an
Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to
the Administrative Agent an amount equal to such L/C Disbursement not
later than 5:00 p.m., New York City time, on the day on which the
Borrower shall have received notice from the Issuing Bank that payment
of such draft will be made, or, if the Borrower shall have received such
notice later than 11:00 a.m., New York City time, on any Business Day,
not later than 12:00 noon, New York City time, on the immediately
following Business Day.
(f) Obligations Absolute. The Borrower's obligations to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all
circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein;
(ii) any amendment or waiver of this Agreement;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or
otherwise obligated with, the Borrower, any Subsidiary or other
Affiliate thereof or any other person may at any time have against
the beneficiary under any Letter of Credit, the Issuing Bank, the
Administrative Agent or any Lender or any other person, whether
in connection with this Agreement or any other related or
unrelated agreement or transaction;
(iv) any draft or other document presented under a 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;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind
of the Issuing Bank, the Lenders, the Administrative Agent or any
other person or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of
the Borrower hereunder to reimburse L/C Disbursements will not be
excused by the gross negligence or wilful misconduct of the Issuing Bank.
However, the foregoing shall not be construed to excuse the Issuing Bank
from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank's gross
negligence or wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms
thereof; it is understood that the Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and,
in making any payment under any Letter of Credit (i) the Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including reliance on the
amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary thereunder equals the amount of such
draft and whether or not any document presented pursuant to such Letter
of Credit proves to be insufficient in any respect, if such document on its
face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be
forged or invalid or any statement therein proves to be inaccurate or
untrue in any respect whatsoever and (ii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute
wilful misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing
Bank shall as promptly as possible give telephonic notification, confirmed
by telecopy, to the Administrative Agent and the Borrower of such
demand for payment and whether the Issuing Bank has made or will make
an L/C Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation
to reimburse the Issuing Bank and the Lenders with respect to any such
L/C Disbursement. The Administrative Agent shall promptly give each
Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower
shall reimburse such L/C Disbursement in full on such date, the unpaid
amount thereof shall bear interest for the account of the Issuing Bank, for
each day from and including the date of such L/C Disbursement, to but
excluding the earlier of the date of payment by the Borrower or the date
on which interest shall commence to accrue thereon as provided in
Section 2.02(f), at the rate per annum that would apply to such amount if
such amount were an ABR Revolving Loan.
(i) Resignation or Removal of the Issuing Bank. The Issuing
Bank may resign at any time by giving 30 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed
at any time by the Borrower by notice to the Issuing Bank, the
Administrative Agent and the Lenders. Subject to the next succeeding
paragraph, upon the acceptance of any appointment as the Issuing Bank
hereunder by a Lender that shall agree to serve as successor Issuing Bank,
such successor shall succeed to and become vested with all the interests,
rights and obligations of the retiring Issuing Bank and the retiring Issuing
Bank shall be discharged from its obligations to issue additional Letters
of Credit hereunder. At the time such removal or resignation shall become
effective, the Borrower shall pay all accrued and unpaid fees pursuant to
Section 2.06(c)(ii). The acceptance of any appointment as the Issuing
Bank hereunder by a successor Lender shall be evidenced by an agreement
entered into by such successor, in a form satisfactory to the Borrower and
the Administrative Agent, and, from and after the effective date of such
agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and (ii)
references herein to the term "Issuing Bank" shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and
all previous Issuing Banks, as the context shall require. After the
resignation or removal of the Issuing Bank hereunder, the retiring Issuing
Bank shall remain a party hereto and shall continue to have all the rights
and obligations of an Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such resignation or removal, but
shall not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur
and be continuing, the Borrower shall, on the Business Day it receives
notice from the Administrative Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Lenders holding participations
in outstanding Letters of Credit representing greater than 50% of the
aggregate undrawn amount of all outstanding Letters of Credit) thereof
and of the amount to be deposited, deposit in an account with the
Administrative Agent, for the benefit of the Lenders, an amount in cash
equal to the L/C Exposure as of such date, provided, however that the
obligation to deposit such cash shall become effective immediately, and
such deposit shall become immediately due and payable, without demand
or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (g) or (h) of Article VII.
Such deposit shall be held by the Administrative Agent as collateral for
the payment and performance of the obligations of the Borrower under
this Agreement. The Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such
account. Other than any interest earned on the investment of such
deposits in Permitted Investments, which investments shall be made at the
option and sole discretion of the Administrative Agent, such deposits shall
not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i)
automatically be applied by the Administrative Agent to reimburse the
Issuing Bank for L/C Disbursements for which it has not been reimbursed,
(ii) be held for the satisfaction of the reimbursement obligations of the
Borrower for the L/C Exposure at such time and (iii) if the maturity of the
Loans has been accelerated (but subject to the consent of Lenders holding
participations in outstanding Letters of Credit representing greater than
50% of the aggregate undrawn amount of all outstanding Letters of
Credit), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to
the Borrower within three Business Days after all Events of Default have
been cured or waived.
(k) Additional Issuing Banks. The Borrower may, at any time
and from time to time with the consent of the Administrative Agent
(which consent shall not be unreasonably withheld or delayed) and such
Lender, designate one or more additional Lenders to act as an issuing bank
under the terms of the Agreement. Any Lender designated as an issuing
bank pursuant to this paragraph (k) shall be deemed to be an "Issuing
Bank" (in addition to being a Lender) in respect of Letters of Credit issued
or to be issued by such Lender, and, with respect to such Letters of Credit,
such term shall thereafter apply to the other Issuing Bank and such
Lender.
ARTICLE III
Representations and Warranties tc \l1 "ARTICLE IIIRepresentations
and Warranties
The Borrower represents and warrants to the Administrative
Agent, the Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization; Powers tc \l2 "SECTION 3.01.
Organization; Powers . The Borrower and each of the Subsidiaries
(a) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as
now conducted and (c) is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result
in a Material Adverse Effect.
SECTION 3.02. Authorization tc \l2 "SECTION 3.02.
Authorization . The execution, delivery and performance by the
Borrower of this Agreement and the transactions contemplated hereby
(including the Borrowings hereunder) (collectively, the "Transactions")
(a) are within the Borrower's corporate powers and have been duly
authorized by all requisite corporate and, if required, stockholder action
and (b) will not (i) violate (A) any provision of law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of the Borrower or any Subsidiary,
(B) any order of any Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property is
or may be bound, the effect of which could reasonably be expected to
result in a Material Adverse Effect, (ii) result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under, or give rise
to any right to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture, agreement or other
instrument, the effect of which could reasonably be expected to result in
a Material Adverse Effect, or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or
hereafter acquired by the Borrower or any Subsidiary.
SECTION 3.03. Enforceability tc \l2 "SECTION 3.03.
Enforceability . This Agreement has been duly executed and delivered
by the Borrower and constitutes a legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforceability of creditors' rights
generally and to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 3.04. Governmental Approvals tc \l2
"SECTION 3.04. Governmental Approvals . No action, consent or
approval of, registration or filing with or any other action by any
Governmental Authority is or will be required in connection with the
Transactions, except for such as have been made or obtained and are in
full force and effect.
SECTION 3.05. Financial Statements tc \l2 "SECTION 3.05.
Financial Statements . The Borrower has heretofore furnished to the
Lenders its consolidated balance sheets and related statements of income,
stockholders' equity and cash flows (i) as of and for the fiscal year ended
December 31, 2000, audited by and accompanied by the opinion of
PricewaterhouseCoopers LLP, independent public accountants, and (ii) as
of and for the fiscal quarter and the portion of the fiscal year ended
September 30, 2001, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial condition
and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to normal year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
SECTION 3.06. No Material Adverse Change tc \l2
"SECTION 3.06. No Material Adverse Change . Since December 31,
2000, there has been no material adverse change in the financial condition,
results of operations or business of the Borrower and the Subsidiaries,
taken as a whole.
SECTION 3.07. Subsidiaries tc \l2 "SECTION 3.07.
Subsidiaries . Schedule 3.07 sets forth as of the Closing Date a list of all
Subsidiaries and the percentage ownership interest of the Borrower
therein.
SECTION 3.08. Litigation; Compliance with Laws tc \l2
"SECTION 3.08. Litigation; Compliance with Laws . (a) There are not
any actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary
or any business, property or rights of any such person (i) that involve this
Agreement or the Transactions or (ii) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries is in
violation of any law, rule or regulation, or is in default with respect to any
judgment, writ, injunction, decree or order of any Governmental
Authority, where such violation or default could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.09. Federal Reserve Regulations tc \l2
"SECTION 3.09. Federal Reserve Regulations . (a) The Borrower is
not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of buying or carrying Margin
Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation T, U or X.
SECTION 3.10. Investment Company Act; Public Utility
Holding Company Act tc \l2 "SECTION 3.10. Investment Company Act;
Public Utility Holding Company Act . None of the Borrower or any of
the Subsidiaries is (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.11. Use of Proceeds tc \l2 "SECTION 3.11. Use
of Proceeds . The Borrower will use the proceeds of the Loans and will
request the issuance of Letters of Credit only for the purposes specified
in the preamble to this Agreement.
SECTION 3.12. Tax Returns tc \l2 "SECTION 3.12. Tax
Returns . Each of the Borrower and the Subsidiaries has filed or caused
to be filed all Federal, state, local and foreign tax returns or materials
required to have been filed by it and has paid or caused to be paid all
Taxes due and payable by it and all assessments received by it, except
(a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable,
shall have set aside on its books adequate reserves or (b) to the extent that
the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.13. No Material Misstatements tc \l2
"SECTION 3.13. No Material Misstatements . None of (a) the
Confidential Information Memorandum or (b) any other information,
report, financial statement, exhibit or schedule furnished by or on behalf
of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation of this Agreement contains any material misstate-
ment of fact or omits to state any material fact necessary to make the
statements therein taken as a whole, in the light of the circumstances under
which they were made, not misleading; provided that to the extent any
such information, report, financial statement, exhibit or schedule was
based upon or constitutes a forecast or projection, the Borrower represents
only that it acted in good faith and utilized reasonable assumptions and
due care in the preparation of such information, report, financial
statement, exhibit or schedule.
SECTION 3.14. Employee Benefit Plans tc \l2
"SECTION 3.14. Employee Benefit Plans . No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with
all other such ERISA Events, could reasonably be expected to result in a
Material Adverse Effect. The accumulated benefit obligations (as defined
in Statement of Financial Accounting Standards No. 87) under all Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the last annual valuation
dates applicable thereto, exceed by more than $50,000,000 the fair market
value of the assets of all such Plans.
SECTION 3.15. Environmental Matters tc \l2 "SECTION 3.15.
Environmental Matters . Except with respect to any matters that,
individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect, neither the Borrower nor any of the
Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) is subject to any
Environmental Liability, (iii) has received written notice of any claim with
respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability of the Borrower or the Subsidiaries.
SECTION 3.16. Senior Indebtedness tc \l2 "SECTION 3.16.
Senior Indebtedness . The Loans and other obligations hereunder
constitute "Senior Indebtedness" under and as defined in the Subordinated
Note Documents.
ARTICLE IV
Conditions of Lending tc \l1 " ARTICLE IV Conditions of
Lending
The obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder are subject to the satisfaction of
the following conditions:
SECTION 4.01. All Credit Events tc \l2 "SECTION 4.01. All
Credit Events . On the date of each Borrowing or issuance, amendment,
extension or renewal of a Letter of Credit (each such event being called a
"Credit Event"):
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or 2.04, as applicable (or
such notice shall have been deemed given in accordance with
Section 2.04), or, in the case of the issuance, amendment, extension or
renewal of a Letter of Credit, the Issuing Bank and the Administrative
Agent shall have received a notice requesting the issuance, amendment,
extension or renewal of such Letter of Credit as required by
Section 2.21(b).
(b) The representations and warranties set forth in Article III
hereof shall be true and correct in all material respects on and as of the
date of such Credit Event with the same effect as though made on and as
of such date, except to the extent such representations and warranties
expressly relate to an earlier date.
(c) At the time of and immediately after such Credit Event, no
Event of Default or Default shall have occurred and be continuing.
Each Credit Event shall be deemed to constitute a representation
and warranty by the Borrower on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Closing Date tc \l2 "SECTION 4.02. Closing
Date . On the Closing Date:
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include
telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this
Agreement.
(b) The Administrative Agent shall have received, on
behalf of itself, the Lenders and the Issuing Bank, a favorable
written opinion of each of (i) Bradford T. Smith, Chief Legal
Counsel of the Borrower, substantially to the effect set forth in
Exhibit E-1, and (ii) Davis Polk & Wardwell, special counsel for
the Borrower, substantially to the effect set forth in Exhibit E-2,
(A) dated the Closing Date, (B) addressed to the Issuing Bank,
the Administrative Agent and the Lenders, and (C) covering such
other matters relating to this Agreement and the Transactions as
the Administrative Agent shall reasonably request, and the
Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received (i) a
copy of the certificate of incorporation, including all amendments
thereto, of the Borrower, certified as of a recent date by the
Secretary of State of the State of Delaware, and a certificate as to
the good standing of the Borrower as of a recent date, from such
Secretary of State; (ii) a certificate of the Secretary or Assistant
Secretary of the Borrower dated the Closing Date and certifying
(A) that attached thereto is a true and complete copy of the by-
laws of the Borrower as in effect on the Closing Date and at all
times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and performance of
this Agreement and the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are
in full force and effect, (C) that the certificate of incorporation of
the Borrower has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (D) as to the
incumbency and specimen signature of each officer executing this
Agreement or any other document delivered in connection
herewith on behalf of the Borrower; (iii) a certificate of another
officer as to the incumbency and specimen signature of the Secre-
tary or Assistant Secretary executing the certificate pursuant to
(ii) above; and (iv) such other documents relating to the
Borrower, this Agreement or the Transactions as the Lenders, the
Issuing Bank or the Administrative Agent may reasonably
request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial
Officer of the Borrower, confirming compliance with the
conditions precedent set forth in paragraphs (b) and (c) of
Section 4.01.
(e) The Administrative Agent shall have received all
Fees and other amounts due and payable on or prior to the
Closing Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.
(f) The 364-Day Credit Agreement shall have been
executed and delivered and the conditions precedent set forth in
Section 4.02 thereof satisfied or waived.
(g) All principal, interest, fees and other amounts
outstanding or due under the Existing Credit Agreement shall
have been paid in full, the commitments thereunder terminated
and all guarantees thereof released and discharged, and the
Administrative Agent shall have received satisfactory evidence
thereof.
(h) The credit facilities provided for by this Agreement
and the 364-Day Credit Agreement shall be rated not lower than
BBB by S&P, and the Administrative Agent shall have received
satisfactory evidence thereof.
ARTICLE V
Affirmative Covenants tc \l1 "ARTICLE VAffirmative Covenants
The Borrower covenants and agrees with each Lender that until
the Commitments have been terminated and the principal of and interest
on each Loan, all Fees and all other expenses or amounts payable
hereunder shall have been paid in full and all Letters of Credit have been
canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, the Borrower will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties tc \l2
"SECTION 5.01. Existence; Businesses and Properties . (a) Do or
cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly
permitted under Section 6.04.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect its rights,
licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names, and comply in all material respects with all
applicable laws, rules, regulations and decrees and orders of any
Governmental Authority, in each case except where the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.02. Insurance tc \l2 "SECTION 5.02. Insurance .
Maintain with responsible and reputable insurance companies insurance,
to such extent and against such risks as is customary with companies in
the same or similar businesses operating in the same or similar locations.
SECTION 5.03. Obligations and Taxes tc \l2 "SECTION 5.03.
Obligations and Taxes . Pay its Indebtedness and other obligations,
including Taxes, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof shall be contested in good
faith by appropriate proceedings and the Borrower shall have set aside on
its books adequate reserves with respect thereto in accordance with GAAP
or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.04. Financial Statements, Reports, etc tc \l2
"SECTION 5.04. Financial Statements, Reports, etc . In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each fiscal year, its
consolidated balance sheet and related statements of income,
stockholders' equity and cash flows as of the close of and for
such fiscal year, together with comparative figures for the
immediately preceding fiscal year, all audited by
PricewaterhouseCoopers LLP or other independent public
accountants of recognized national standing and accompanied by
an opinion of such accountants (which shall not be qualified in
any material respect) to the effect that such consolidated financial
statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet
and related statements of income, stockholders' equity and cash
flows as of the close of and for such fiscal quarter and the then
elapsed portion of the fiscal year, and comparative figures for the
same periods in the immediately preceding fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations
of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial
Officer (A) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto, (B) setting
forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the
covenants contained in Sections 6.07 and 6.08 and (C) stating
whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements
referred to in Section 3.05 and, if any such change has occurred,
specifying the effect of such change on the financial statements
accompanying such certificate;
(d) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and
other materials filed by the Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be;
(e) promptly after the receipt thereof by the Borrower or
any of its Subsidiaries, a copy of any "management letter"
received by any such person from its certified public accountants
and the management's response thereto; and
(f) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms
of this Agreement, as the Administrative Agent or any Lender
may reasonably request.
SECTION 5.05. Litigation and Other Notices tc \l2 "SECTION
5.05. Litigation and Other Notices . In the case of the Borrower, furnish
to the Administrative Agent, the Issuing Bank and each Lender prompt
written notice of the following:
(a) any Event of Default or Default, specifying the
nature and extent thereof and the corrective action (if any) taken
or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or
notice of intention of any person to file or commence, any action,
suit or proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Affiliate
thereof that could reasonably be expected to result in a Material
Adverse Effect;
(c) any change in the rating by S&P of the Index Debt;
and
(d) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintaining Records; Access to Properties
and Inspections tc \l2 "SECTION 5.06. Maintaining Records; Access
to Properties and Inspections . Keep books of record and account in
conformity with GAAP and all requirements of law in relation to its
business and activities. The Borrower will, and will cause each of its
Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect the financial records and the properties of the Borrower or any
Subsidiary at reasonable times and as often as reasonably requested and
to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to
discuss the affairs, finances and condition of the Borrower or any Subsid-
iary with the officers thereof and independent accountants therefor.
SECTION 5.07. Use of Proceeds tc \l2 "SECTION 5.07. Use
of Proceeds . Use the proceeds of the Loans and request the issuance of
Letters of Credit only for the purposes set forth in the preamble to this
Agreement.
ARTICLE VI
Negative Covenants tc \l1 "ARTICLE VINegative Covenants
The Borrower covenants and agrees with each Lender that, until
the Commitments have been terminated and the principal of and interest
on each Loan, all Fees and all other expenses or amounts payable
hereunder have been paid in full and all Letters of Credit have been
canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, the Borrower will not, and will not cause or permit any of the
Subsidiaries to:
SECTION 6.01. Subsidiary Indebtedness tc \l2 "SECTION
6.01. Subsidiary Indebtedness . With respect to the Subsidiaries, incur,
create, issue, assume or permit to exist any Indebtedness or preferred
stock, except:
(a) Indebtedness or preferred stock existing on the date
hereof and having an aggregate principal amount (or, in the case
of preferred stock, an aggregate liquidation preference) of less
than $25,000,000 in the aggregate and, in the case of any such
Indebtedness, any extensions, renewals or replacements thereof
to the extent the principal amount of such Indebtedness is not
increased, and such Indebtedness, if subordinated to the Loans,
remains so subordinated on terms no less favorable to the
Lenders, and the original obligors in respect of such Indebtedness
remain the only obligors thereon;
(b) Indebtedness created or existing (i) hereunder or
(ii) under the 364-Day Credit Agreement;
(c) intercompany Indebtedness or preferred stock to the
extent owing to or held by the Borrower or another Subsidiary;
(d) Indebtedness of any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or
capital assets, and extensions, renewals and replacements of any
such Indebtedness that do not increase the outstanding principal
amount thereof; provided that (i) such Indebtedness is incurred
prior to or within 180 days after such acquisition or the
completion of such construction or improvement and (ii) the
aggregate principal amount of Indebtedness permitted by this
Section 6.01(d), when combined with the aggregate principal
amount of all Capital Lease Obligations incurred pursuant to
Section 6.01(e) and all Indebtedness incurred pursuant to Section
6.01(f), shall not exceed $100,000,000 at any time outstanding;
(e) Capital Lease Obligations in an aggregate principal
amount, when combined with the aggregate principal amount of
all Indebtedness incurred pursuant to Section 6.01(d) and
Section 6.01(f), not in excess of $100,000,000 at any time
outstanding;
(f) Indebtedness of any person that becomes a
Subsidiary after the date hereof; provided that (i) such
Indebtedness exists at the time such person becomes a Subsidiary
and is not created in contemplation of or in connection with such
person becoming a Subsidiary, (ii) immediately before and after
such person becomes a Subsidiary, no Event of Default or
Default shall have occurred and be continuing and (iii) the
aggregate principal amount of Indebtedness permitted by this
clause (f), when combined with the aggregate principal amount
of all Indebtedness incurred pursuant to Section 6.01(d) and all
Capital Lease Obligations incurred pursuant to Section 6.01(e),
shall not exceed $100,000,000 at any time outstanding;
(g) Indebtedness under performance bonds or with
respect to workers' compensation claims, in each case incurred in
the ordinary course of business; and
(h) additional Indebtedness or preferred stock of the
Subsidiaries to the extent not otherwise permitted by the
foregoing clauses of this Section 6.01 in an aggregate principal
amount (or, in the case of preferred stock, with an aggregate
liquidation preference), when combined (without duplication)
with the amount of obligations of the Borrower and its
Subsidiaries secured by Liens pursuant to Section 6.02(j), not to
exceed $100,000,000 at any time outstanding.
SECTION 6.02. Liens tc \l2 "SECTION 6.02. Liens . Create,
incur, assume or permit to exist any Lien on any property or assets
(including Equity Interests or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the date hereof and encumbering
property or assets with a fair market value, and securing
obligations having an aggregate principal amount, in each case
less than $25,000,000 in the aggregate; provided that (x) such
Liens shall secure only those obligations which they secure on the
date hereof and extensions, renewals and replacements thereof
permitted hereunder and (y) such Liens shall not apply to any
other property or assets of the Borrower or any of the
Subsidiaries;
(b) any Lien existing on any property or asset prior to
the acquisition thereof by the Borrower or any Subsidiary or
existing on any property or asset of any person that becomes a
Subsidiary after the date hereof prior to the time such person
becomes a Subsidiary; provided that (i) such Lien is not created
in contemplation of or in connection with such acquisition or such
person becoming a Subsidiary, as the case may be, (ii) such Lien
does not apply to any other property or assets of the Borrower or
any Subsidiary and (iii) such Lien shall secure only those
obligations which it secures on the date of such acquisition or the
date such person becomes a Subsidiary, as the case may be and
extensions, renewals and replacements thereof permitted
hereunder;
(c) Liens for taxes not yet due or which are being
contested in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business and securing obligations that are not
overdue by more than 90 days or which are being contested in
compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation,
unemployment insurance and other social security laws or
regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature,
in each case in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto
or interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(h) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the
case of improvements, constructed) by the Borrower or any
Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by Section 6.01, (ii) such security
interests are incurred, and the Indebtedness secured thereby is
created, within 180 days after such acquisition (or construction)
and (iii) such security interests do not apply to any other property
or assets of the Borrower or any Subsidiary;
(i) Liens in respect of judgments that do not constitute
an Event of Default; and
(j) Liens not otherwise permitted by the foregoing
clauses of this Section 6.02 securing obligations otherwise
permitted by this Agreement in an aggregate principal and face
amount, when combined (without duplication) with the amount
of Indebtedness or preferred stock of Subsidiaries incurred
pursuant to Section 6.01(h), not to exceed $100,000,000 at any
time outstanding.
SECTION 6.03. Sale and Lease-Back Transactions tc \l2
"SECTION 6.03. Sale and Lease-Back Transactions . Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell
or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which it intends to use for substantially the
same purpose or purposes as the property being sold or transferred unless
(a) the sale of such property is permitted by Section 6.04 and (b) any
Capital Lease Obligations or Liens arising in connection therewith are
permitted by Sections 6.01 and 6.02, respectively.
SECTION 6.04. Mergers, Consolidations and Sales of
Assets tc \l2 "SECTION 6.04. Mergers, Consolidations and Sales of
Assets . Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all
or substantially all the assets (whether now owned or hereafter acquired)
of the Borrower, except that, if at the time thereof and immediately after
giving effect thereto no Event of Default or Default shall have occurred
and be continuing, (a) any person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation and (b) any
person, other than the Borrower, may merge into or consolidate with any
Subsidiary in a transaction in which the surviving entity is a Subsidiary.
SECTION 6.05. Restricted Payments tc \l2 "SECTION 6.05.
Restricted Payments . Declare or make, or agree to declare or make,
directly or indirectly, any Restricted Payment (including pursuant to any
Synthetic Purchase Agreement), or incur any obligation (contingent or
otherwise) to do so; provided, however, that (i) any Subsidiary may
declare and pay dividends or make other distributions ratably to holders
of Equity Interests in it, (ii) the Borrower may declare and pay dividends
or make other distributions of its Equity Interests and (iii) so long as no
Default or Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower and the Subsidiaries may declare
and make, directly or indirectly, additional Restricted Payments to the
extent not otherwise permitted by the foregoing clauses of this
Section 6.05 in an aggregate amount not to exceed $300,000,000.
SECTION 6.06. Business of Borrower and Subsidiaries tc \l2
"SECTION 6.06. Business of Borrower and Subsidiaries . Engage to
any material extent in any business or business activity other than
businesses of the type currently conducted by the Borrower and the
Subsidiaries and business activities reasonably related thereto.
SECTION 6.07. Interest Coverage Ratio tc \l2 "SECTION
6.07. Interest Coverage Ratio . Permit the Interest Coverage Ratio for
any period of four consecutive fiscal quarters, in each case taken as one
accounting period, to be less than 5.0 to 1.0.
SECTION 6.08. Maximum Leverage Ratio tc \l2 "SECTION
6.08. Maximum Leverage Ratio . Permit the Leverage Ratio for any
period of four consecutive fiscal quarters, in each case taken as one
accounting period, to be greater than 2.5 to 1.0.
SECTION 6.09. Hedging Agreements tc \l2 "SECTION 6.09.
Hedging Agreements . Enter into any Hedging Agreement other than
non-speculative Hedging Agreements entered into to hedge or mitigate
risks to which the Borrower or a Subsidiary is exposed in the ordinary
course of the conduct of its business or the management of its liabilities.
ARTICLE VII
Events of Default tc \l1 "ARTICLE VIIEvents of Default
In case of the happening of any of the following events ("Events
of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement or the Borrowings or issuances of Letters
of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to this
Agreement, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan or the reimbursement with respect to any L/C Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof
or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or any Fee or L/C Disbursement or any other amount (other than an
amount referred to in (b) above) due under this Agreement, when and as
the same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) (with respect to the Borrower),
5.05(a) or 5.07 or in Article VI;
(e) default shall be made in the due observance or performance by
the Borrower or any Subsidiary of any covenant, condition or agreement
contained in this Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
(f) (i) the Borrower or any Material Subsidiary shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Material Indebtedness, when and as the same shall become due and
payable (after giving effect to any applicable grace period), or (ii) any
other event or condition occurs (after giving effect to any applicable grace
period) that results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (ii) shall not apply to
secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of the Borrower or any Material Subsidiary, or
of a substantial part of the property or assets of the Borrower or a
Material Subsidiary, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Material Subsidiary or for a substantial
part of the property or assets of the Borrower or a Material Subsidiary or
(iii) the winding-up or liquidation of the Borrower or any Material
Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(h) the Borrower or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or
any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Material Subsidiary or for a substantial part of the
property or assets of the Borrower or any Material Subsidiary, (iv) file an
answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
amount in excess of $50,000,000 individually or $75,000,000 in the
aggregate shall be rendered against the Borrower, any Material Subsidiary
or any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any Material
Subsidiary to enforce any such judgment; provided, however, that any
such judgment shall not be an Event of Default under this paragraph (i) if
and for so long as (i) the entire amount of such judgment is covered by a
valid and binding policy of insurance between the defendant and the
insurer covering payment thereof and (ii) such insurer, which shall be
rated at least "A" by A.M. Best Company, has been notified of, and has
not disputed the claim made for payment of the amount of such judgment;
(j) one or more ERISA Events shall have occurred that results in
liability of the Borrower and its ERISA Affiliates exceeding $50,000,000
individually or $75,000,000 in the aggregate; or
(k) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the
Borrower described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments and (ii) declare
the Loans then outstanding to be forthwith due and payable in whole or in
part, whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued
Fees and all other liabilities of the Borrower accrued hereunder, shall
become forthwith due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived
by the Borrower, anything contained hereinto the contrary notwithstand-
ing; and in any event with respect to the Borrower described in para-
graph (g) or (h) above, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived by the Borrower, anything contained
herein to the contrary notwithstanding.
ARTICLE VIII
The Administrative Agent tc \l1 "ARTICLE VIIIThe Administrative
Agent
Each of the Lenders and the Issuing Bank hereby irrevocably
appoints the Administrative Agent its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise
such powers as are delegated to the Administrative Agent by the terms of
this Agreement, together with such actions and powers as are reasonably
incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or other Affiliate thereof as if it were
not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth in this Agreement. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative
Agent shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers
expressly contemplated by this Agreement that the Administrative Agent
is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.08), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating
to the Borrower or any of the Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders
as shall be necessary under the circumstances as provided in Section 9.08)
or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall not be deemed to have knowledge of any
Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.
The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it
to be genuine and to have been signed or sent by the proper person. The
Administrative Agent may also rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper
person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by it. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the
Related Parties of each Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as
Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower. Upon any such resignation, the Required Lenders shall have
the right, with the consent of the Borrower (such consent not to be
unreasonably withheld or delayed), to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank,
appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank, that is
acceptable to the Borrower (which shall not unreasonably withhold its
approval). Upon the acceptance of its appointment as Administrative
Agent hereunder by a successor, such successor shall succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. The fees payable
by the Borrower to a successor Administrative shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation
hereunder, the provisions of this Article and Section 9.05 shall continue
in effect for the benefit of such retiring Administrative Agent, its sub-
agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while acting as Administrative
Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance
upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous tc \l1 "ARTICLE IXMiscellaneous
SECTION 9.01. Notices tc \l2 "SECTION 9.01. Notices .
Notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 231 Maple Avenue,
Burlington, NC 27215, Attention of Wesley R. Elingburg
(Telecopy No. (336) 436-1066);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, Eleven Madison Avenue, New York, NY 10010,
Attention of Ronald Davis, Agency Group (Telecopy No.
(212) 325-8304, with a copy to Credit Suisse First Boston, at
Eleven Madison Avenue, New York, NY 10010, Attention of
Agency Group Manager (Telecopy No. (212) 325- 8304); and
(c) if to a Lender, to it at its address (or telecopy
number) set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have become a
party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt.
SECTION 9.02. Survival of Agreement tc \l2 "SECTION 9.02.
Survival of Agreement . All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Lenders
and the Issuing Bank and shall survive the making by the Lenders of the
Loans and the issuance of Letters of Credit by the Issuing Bank,
regardless of any investigation made by the Lenders or the Issuing Bank
or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not
been terminated. The provisions of Sections 2.13, 2.15, 2.19 and 9.05
shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement,
or any investigation made by or on behalf of the Administrative Agent,
any Lender or the Issuing Bank.
SECTION 9.03. Binding Effect tc \l2 "SECTION 9.03.
Binding Effect . This Agreement shall become effective when it shall
have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other
parties hereto.
SECTION 9.04. Successors and Assigns tc \l2 "SECTION
9.04. Successors and Assigns . (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the
Administrative Agent, the Issuing Bank or the Lenders that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time
owing to it); provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate of a Lender, (x) the Borrower and
the Administrative Agent (and, in the case of any assignment of a
Commitment, the Issuing Bank) must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld or
delayed); provided, however, that the consent of the Borrower shall not
be required to any such assignment during the continuance of any Event
of Default described in paragraph (g) or (h) of Article VII, and (y) the
amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent)
shall not be less than $5,000,000 (or, if less, the entire remaining amount
of such Lender's Commitment), (ii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's rights
and obligations under this Agreement, (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation
fee of $3,500 and (iv) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire and
applicable tax forms. Upon acceptance and recording pursuant to
paragraph (e) of this Section 9.04, from and after the effective date speci-
fied in each Assignment and Acceptance, (A) the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as to any Fees
accrued for its account and not yet paid). Notwithstanding the foregoing,
any Lender assigning its rights and obligations under this Agreement may
retain any Competitive Loans made by it outstanding at such time, and in
such case shall retain its rights hereunder in respect of any such Loans so
retained until such Loans have been repaid in full in accordance with this
Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be
deemed to confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim and that its Commitment, and the outstanding
balances of its Revolving Loans and Competitive Loans, in each case
without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except
as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto, or the financial condition of the
Borrower or any Subsidiary or the performance or observance by the
Borrower or any Subsidiary of any of its obligations under this Agreement
or any other instrument or document furnished pursuant hereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements referred to in Section 3.05 or delivered pursuant to
Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Administrative Agent, such assigning Lender or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee
appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as
are delegated to the Administrative Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of
New York a copy of each Assignment and Acceptance delivered to it and
a register for the recordation of the names and addresses of the Lenders,
and the Commitment of, and principal amount of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the "Register").
The entries in the Register shall be conclusive and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each
person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an
Administrative Questionnaire completed in respect of the assignee (unless
the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above and, if required, the
written consent of the Borrower, the Issuing Bank and the Administrative
Agent to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance and (ii) record the information contained
therein in the Register. No assignment shall be effective unless it has been
recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the
Issuing Bank or the Administrative Agent sell participations to one or
more banks or other entities in all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and
the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.13, 2.15 and 2.19 to the same extent as if they
were Lenders (but, with respect to any particular participant, to no greater
extent than the Lender that sold the participation to such participant) and
(iv) the Borrower, the Administrative Agent, the Issuing Bank and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans or L/C Disbursements
and to approve any amendment, modification or waiver of any provision
of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the
rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the
Loans or increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation
pursuant to this Section 9.04, disclose to the assignee or participant or
proposed assignee or participant any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that,
prior to any such disclosure of information designated by the Borrower as
confidential, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or
participant shall agree (subject to customary exceptions) to preserve the
confidentiality of such confidential information on terms no less restrictive
than those applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement to secure extensions of credit to such Lender
or in support of obligations owed by such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Loan that such Granting
Lender would otherwise be obligated to make to the Borrower pursuant to
this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan and (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part of such
Loan, the Granting Lender shall be obligated to make such Loan pursuant
to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall
remain with the Granting Lender). In furtherance of the foregoing, each
party hereto hereby agrees (which agreement shall survive the termination
of this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the
United States or any State thereof. In addition, notwithstanding anything
to the contrary contained in this Section 9.04, any SPC may (i) with notice
to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender
or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for
the account of such SPC to support the funding or maintenance of Loans
and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancement to
such SPC.
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative
Agent, the Issuing Bank and each Lender, and any attempted assignment
without such consent shall be null and void.
(k) In the event that S&P, Moody's and Thompson's
BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders
that are insurance companies (or Best's Insurance Reports, if such
insurance company is not rated by Insurance Watch Ratings Service))
shall, after the date that any Lender becomes a Lender, downgrade the
long-term certificate deposit ratings of such Lender, and the resulting
ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender
that is an insurance company (or B, in the case of an insurance company
not rated by InsuranceWatch Ratings Service)), then the Issuing Bank
shall have the right, but not the obligation, at its own expense, upon notice
to such Lender and the Administrative Agent, to replace (or to request the
Borrower to use its reasonable efforts to replace) such Lender with an
assignee (in accordance with and subject to the restrictions contained in
paragraph (b) above), and such Lender hereby agrees to transfer and
assign without recourse (in accordance with and subject to the restrictions
contained in paragraph (b) above) all its interests, rights and obligations
in respect of its Commitment to such assignee; provided, however, that
(i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) the Issuing Bank or such
assignee, as the case may be, shall pay to such Lender in immediately
available funds on the date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by such Lender
hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.
SECTION 9.05. Expenses; Indemnity tc \l2 "SECTION 9.05.
Expenses; Indemnity . (a) The Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent and the
Issuing Bank in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this
Agreement or in connection with any amendments, modifications or
waivers of the provisions hereof (whether or not the transactions hereby
or thereby contemplated shall be consummated) or incurred by the
Administrative Agent or any Lender in connection with the enforcement
or protection of its rights in connection with this Agreement or in
connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent, and, in
connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel for the Administrative
Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent,
each Lender, the Issuing Bank and each Related Party of any of the
foregoing persons (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable
counsel fees, charges and disbursements, incurred by or asserted against
any Indemnitee (other than Taxes, Other Taxes or amounts that would be
Other Taxes if imposed by the United States of America or any political
subdivision thereof) arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or any agreement
or instrument contemplated thereby, the performance by the parties thereto
of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use
of the proceeds of the Loans or issuance of Letters of Credit, or (iii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and
nonappealable judgment (a "Final Judgment") to have resulted from the
gross negligence or wilful misconduct of such Indemnitee or (y) arise from
any legal proceedings commenced against any Lender by any other Lender
(other than legal proceedings against the Administrative Agent or the
Issuing Bank in its capacity as such) or in which a Final Judgment is
rendered in the Borrower's favor against such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or the Issuing Bank
under paragraph (a) or (b) of this Section, each Lender severally agrees to
pay to the Administrative Agent or the Issuing Bank, as the case may be,
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent or the Issuing
Bank in its capacity as such. For purposes hereof, a Lender's "pro rata
share" shall be determined based upon its share of the sum of the
Aggregate Revolving Credit Exposure and unused Commitments at the
time.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with,
or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the
use of the proceeds thereof.
(e) All amounts due under this Section 9.05 shall be payable not
later than 15 days after written demand therefor.
SECTION 9.06. Right of Setoff tc \l2 "SECTION 9.06. Right
of Setoff . If an Event of Default shall have occurred and be continuing,
each Lender is hereby authorized at any time and from time to time, except
to the extent prohibited by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any of and all the obligations
of the Borrower now or hereafter existing under this Agreement held by
such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section 9.06 are in
addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.07. Applicable Law tc \l2 "SECTION 9.07.
Applicable Law . THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED,
THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON
THE DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE
INTERNATIONAL CHAMBER OF COMMERCE (THE "UNIFORM
CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE
UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment tc \l2 "SECTION 9.08.
Waivers; Amendment . (a) No failure or delay of the Administrative
Agent, any Lender or the Issuing Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which
given. No notice 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.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required
Lenders; provided, however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any Loan or any
date for reimbursement of an L/C Disbursement, or waive or excuse any
such payment or any part thereof, or decrease the rate of interest on any
Loan or L/C Disbursement, without the prior written consent of each
Lender affected thereby, (ii) increase or extend the Commitment or
decrease or extend the date for payment of any Fees of any Lender without
the prior written consent of such Lender, (iii) amend or modify the pro rata
requirements of Section 2.16, the provisions of Section 9.04(j), the
provisions of this Section or the definition of the term "Required
Lenders", without the prior written consent of each Lender or (iv) modify
the protections afforded to an SPC pursuant to the provisions of Section
9.04(i) without the written consent of such SPC; provided further that no
such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent or the Issuing Bank hereunder without
the prior written consent of the Administrative Agent or the Issuing Bank.
SECTION 9.09. Interest Rate Limitation tc \l2 "SECTION
9.09. Interest Rate Limitation . Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and
other amounts which are treated as interest on such Loan or participation
in such L/C Disbursement under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved
by the Lender holding such Loan or participation in accordance with
applicable law, the rate of interest payable in respect of such Loan or
participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such
Loan or participation but were not payable as a result of the operation of
this Section 9.09 shall be cumulated and the interest and Charges payable
to such Lender in respect of other Loans or participations or periods shall
be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.
SECTION 9.10. Entire Agreement tc \l2 "SECTION 9.10.
Entire Agreement . This Agreement and the Fee Letter dated
November 29, 2001, between the Borrower and Credit Suisse First
Boston, constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement.
Nothing in this Agreement, expressed or implied, is intended to confer
upon any person (other than the parties hereto, their respective successors
and assigns permitted hereunder (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Bank and the Lenders) any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
SECTION 9.11. WAIVER OF JURY TRIAL tc \l2 "SECTION
9.11. WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability tc \l2 "SECTION 9.12.
Severability . In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected
or impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13. Counterparts tc \l2 "SECTION 9.13.
Counterparts . This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute
a single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
SECTION 9.14. Headings tc \l2 "SECTION 9.14. Headings .
Article and Section headings and the Table of Contents used herein are
for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process tc
\l2 "SECTION 9.15. Jurisdiction; Consent to Service of Process .
(a) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing
in this Agreement shall affect any right that the Administrative Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its proper-
ties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in
any New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in
any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. Confidentiality tc \l2 "SECTION 9.16.
Confidentiality . Each of the Administrative Agent, the Issuing Bank and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' officers, directors, employees and agents, including
accountants, legal counsel and other advisors who need to know such
Information in connection with its role as Administrative Agent, Issuing
Bank or Lender (as the case may be) hereunder (it being understood that
the persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority or quasi-regulatory authority (such as the National Association
of Insurance Commissioners) (provided that, to the extent permitted by
applicable law and practicable under the circumstances, such person will
first inform the Borrower of any such request), (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal
process (provided that, to the extent permitted by applicable law, such
person will promptly notify the Borrower of such requirement as far in
advance of its disclosure as is practicable to enable the Borrower to seek
a protective order and, to the extent practicable, such person will
cooperate with the Borrower in seeking any such order), (d) in connection
with the exercise of any remedies hereunder or any suit, action or
proceeding relating to the enforcement of its rights hereunder, (e) subject
to an agreement containing provisions substantially the same as those of
this Section 9.16, to (i) any actual or prospective assignee of or participant
in any of its rights or obligations under this Agreement or (ii) any actual
or prospective counterparty (or its advisors) to any credit default swap or
similar credit derivative transaction relating to the obligations of the
Borrower under this Agreement, (f) with the consent of the Borrower or
(g) to the extent such Information becomes publicly available other than
as a result of a breach of this Section 9.16. For the purposes of this
Section, "Information" shall mean all information received from the
Borrower and related to the Borrower or its business, other than any such
information that was available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis prior to its disclosure by
the Borrower. Each of the Administrative Agent, the Issuing Bank and the
Lenders agrees that, except as expressly provided in this Section 9.16, it
will use Information only in connection with its role as Administrative
Agent, Issuing Bank or Lender (as the case may be) hereunder.
SECTION 9.17. Termination of Existing Credit Agreement.
The Borrower and each of the Lenders that is also a Lender (as defined in
the Existing Credit Agreement) party to the Existing Credit Agreement
agree that the Commitments (as defined in the Existing Credit Agreement)
shall be terminated in their entirety on the Closing Date in accordance with
the terms thereof, subject only to this Section 9.17. Each of such Lenders
waives (a) any requirement of notice of such termination pursuant to
Section 2.04(a) of the Existing Credit Agreement and (b) any claim to any
facility fees under the Existing Credit Agreement for any day on or after
the Closing Date. The Borrower (i) represents and warrants that (x) after
giving effect to the preceding sentences of this Section 9.17, the
commitments under the Existing Credit Agreement will be terminated
effective not later than the Closing Date and (y) no loans will be, as of the
Closing Date, outstanding under the Existing Credit Agreement and (ii)
covenants that all accrued and unpaid facility fees and other amounts due
and payable under the Existing Credit Agreement shall have been paid on
or prior to the Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.
LABORATORY
CORPORATION OF
AMERICA
HOLDINGS,
by:
__________________
___
Name:
Title:
CREDIT SUISSE
FIRST BOSTON, as
Administrative Agent
and Issuing Bank,
by:
__________________
___
Name:
Title:
by:
__________________
___
Name:
Title:
CREDIT SUISSE
FIRST
BOSTON,
CAYMAN ISLANDS BRANCH,
by:
__________________
__
Name:
Title:
by:
__________________
___
Name:
Title:
SIGNATURE PAGE TO LABORATORY
CORPORATION OF AMERICA HOLDINGS
THREE-YEAR CREDIT AGREEMENT DATED AS
OF FEBRUARY 20, 2002
NAME OF LENDER: ________________________________
by ________________________________
Name:
Title:
<>
Page
<>
81
EXECUTION COPY
$100,000,000
364-DAY CREDIT AGREEMENT
dated as of February 20, 2002,
among
LABORATORY CORPORATION OF AMERICA HOLDINGS,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
______________________
CREDIT SUISSE FIRST BOSTON,
as Sole Bookrunner and
Sole Lead Arranger
BANK OF AMERICA, N.A.,
DEUTSCHE BANC ALEX. BROWN,
UBS WARBURG LLC AND
WACHOVIA SECURITIES,
as Co-Syndication Agents
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. 1
SECTION 1.02. Terms Generally. 11
SECTION 1.03. Classification of Loans and Borrowings. 12
ARTICLE II
The Credits
SECTION 2.01. Commitments. 12
SECTION 2.02. Loans. 12
SECTION 2.03. Competitive Bid Procedure. 13
SECTION 2.04. Borrowing Procedure. 15
SECTION 2.05. Evidence of Debt; Repayment of Loans. 15
SECTION 2.06. Fees. 16
SECTION 2.07. Interest on Loans. 16
SECTION 2.08. Default Interest. 17
SECTION 2.09. Alternate Rate of Interest. 17
SECTION 2.10. Termination and Reduction of Commitments 17
SECTION 2.11. Conversion and Continuation of
Borrowings 18
SECTION 2.12. Optional Prepayment. 19
SECTION 2.13. Reserve Requirements; Change in
Circumstances 19
SECTION 2.14. Change in Legality. 20
SECTION 2.15. Break Funding. 20
SECTION 2.16. Pro Rata Treatment. 21
SECTION 2.17. Sharing of Setoffs. 21
SECTION 2.18. Payments. 22
SECTION 2.19. Taxes. 22
SECTION 2.20. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate. 23
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers. 24
SECTION 3.02. Authorization. 24
SECTION 3.03. Enforceability. 25
SECTION 3.04. Governmental Approvals. 25
SECTION 3.05. Financial Statements. 25
SECTION 3.06. No Material Adverse Change. 25
SECTION 3.07. Subsidiaries. 25
SECTION 3.08. Litigation; Compliance with Laws. 25
SECTION 3.09. Federal Reserve Regulations. 25
SECTION 3.10. Investment Company Act; Public Utility
Holding Company Act. 26
SECTION 3.11. Use of Proceeds. 26
SECTION 3.12. Tax Returns. 26
SECTION 3.13. No Material Misstatements. 26
SECTION 3.14. Employee Benefit Plans. 26
SECTION 3.15. Environmental Matters. 26
SECTION 3.16. Senior Indebtedness. 26
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Borrowings. 26
SECTION 4.02. Closing Date. 27
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties. 28
SECTION 5.02. Insurance. 28
SECTION 5.03. Obligations and Taxes. 28
SECTION 5.04. Financial Statements, Reports, etc. 28
SECTION 5.05. Litigation and Other Notices. 29
SECTION 5.06. Maintaining Records; Access to
Properties and Inspections. 29
SECTION 5.07. Use of Proceeds. 30
ARTICLE VI
Negative Covenants
SECTION 6.01. Subsidiary Indebtedness. 30
SECTION 6.02. Liens. 31
SECTION 6.03. Sale and Lease-Back Transactions. 32
SECTION 6.04. Mergers, Consolidations and Sales
of Assets. 32
SECTION 6.05. Restricted Payments. 32
SECTION 6.06. Business of Borrower and Subsidiaries. 32
SECTION 6.07. Interest Coverage Ratio. 32
SECTION 6.08. Maximum Leverage Ratio. 33
SECTION 6.09. Hedging Agreements 33
ARTICLE VII
Events of Default
ARTICLE VIIIThe Administrative Agent
ARTICLE IXMiscellaneous
SECTION 9.01. Notices. 36
SECTION 9.02. Survival of Agreement. 36
SECTION 9.03. Binding Effect. 37
SECTION 9.04. Successors and Assigns. 37
SECTION 9.05. Expenses; Indemnity. 39
SECTION 9.06. Right of Setoff. 40
SECTION 9.07. Applicable Law. 40
SECTION 9.08. Waivers; Amendment. 40
SECTION 9.09. Interest Rate Limitation. 41
SECTION 9.10. Entire Agreement. 41
SECTION 9.11. WAIVER OF JURY TRIAL. 41
SECTION 9.12. Severability. 42
SECTION 9.13. Counterparts. 42
SECTION 9.14. Headings. 42
SECTION 9.15. Jurisdiction; Consent to Service
of Process. 42
SECTION 9.16. Confidentiality. 42
SECTION 9.17. Termination of Existing Credit Agreement 43
Schedule 2.01 Lenders and Commitments
Schedule 3.07 Subsidiaries
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D-1 Form of Competitive Bid Request
Exhibit D-2 Form of Notice of Competitive Bid Request
Exhibit D-3 Form of Competitive Bid
Exhibit D-4 Form of Competitive Bid Accept/Reject Letter
Exhibit E-1 Form of Opinion of Chief Legal Counsel of the
Borrower
Exhibit E-2 Form of Opinion of Davis Polk & Wardwell
CREDIT AGREEMENT dated as
of February 20, 2002, among
LABORATORY CORPORATION OF
AMERICA HOLDINGS, a Delaware
corporation (the "Borrower"), the Lenders
(as defined in Article I), and CREDIT
SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland,
acting through its New York branch, as
administrative agent (in such capacity, the
"Administrative Agent") for the Lenders.
The Borrower has requested the Lenders to extend credit in
the form of Revolving Loans (such term and each other
capitalized term used but not defined herein having the
meaning given it in Article I) at any time and from time to
time prior to the Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of
$100,000,000. The Borrower has also requested the Lenders
to provide a procedure pursuant to which the Borrower may
invite the Lenders to bid on an uncommitted basis
on short-term borrowings by the Borrower. The proceeds of
the Loans are to be used solely for general corporate
purposes of the Borrower and its Subsidiaries, including
(a) working capital, (b) capital expenditures, (c) the
funding of share repurchases and other Restricted Payments
permitted hereunder, (d) acquisitions and (e) the repayment
of all amounts outstanding or due under the Existing Credit
Agreement.
The Lenders are willing to extend such credit to the
Borrower on the terms and subject to the conditions set
forth herein. Accordingly, the parties hereto agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement,
the following terms shall have the meanings specified
below:
"ABR", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.
"Administrative Agent Fees" shall have the meaning assigned
to such term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form
as may be supplied from time to time by the Administrative
Agent.
"Affiliate" shall mean, when used with respect to a
specified person, another person that directly, or
indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control
with the person specified.
"Aggregate Revolving Credit Exposure" shall mean the
aggregate amount of the Lenders' Revolving Credit
Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greater of (a) the Prime Rate in effect
on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or
the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Applicable Percentage" shall mean, for any day, with
respect to any Eurodollar Loan (other than any Eurodollar
Competitive Loan) or ABR Loan, or with respect to the
Facility Fees, as the case may be, the applicable
percentage set forth below under the caption "Eurodollar
Spread", "ABR Spread" or "Facility Fee Percentage", as the
case may be, based upon the rating by S&P applicable on
such date to the Index Debt:
Eurodollar Facility Fee
S&P Rating Spread ABR Spread Percentage
- ----------- ----------- ---------- -------------
Category 1
Equal to or 0.545% 0.00% 0.080%
Greater than A-
Category 2
BBB+ 0.650% 0.00% 0.100%
Category 3
BBB 0.875% 0.00% 0.125%
Category 4
BBB- 1.200% 0.200% 0.175%
Category 5
Less than
BBB- 1.525% 0.525% 0.225%
For purposes of the foregoing, (i) if S&P shall not have in
effect a rating for the Index Debt (other than by reason of
the circumstances referred to in the last sentence of this
definition), then S&P shall be deemed to have established a
rating in Category 5; and (ii) if the rating established or
deemed to have been established by S&P for the Index Debt
shall be changed (other than as a result of a change in the
rating system of S&P), such change shall be effective as of
the date on which it is first announced by S&P. Each
change in the Applicable Percentage shall apply during the
period commencing on the effective date of such change and
ending on the date immediately preceding the effective date
of the next such change. If the rating system of S&P shall
change, or if S&P shall cease to be in the business of
rating corporate debt obligations, the Borrower and the
Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the
non-availability of a rating from S&P and, pending the
effectiveness of any such amendment, the Applicable
Percentage shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee (with
the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in
the form of Exhibit B or such other form as shall
be approved by the Administrative Agent.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean (a) Loans of the same Type made,
converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is
in effect or (b) a Borrowing described in the definition of
the term "Competitive Borrowing".
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.04.
"Business Day" shall mean any day other than a Saturday,
Sunday or day on which banks in New York City are
authorized or required by law to close; provided, however,
that when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in
the London interbank market.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts
under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination
thereof, which obligations are required to be classified
and accounted for as capital leases on a balance sheet of
such person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in
accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if
(a) any person or group (within the meaning of Rule 13d-5
of the Securities Exchange Act of 1934 as in effect on the
date hereof) shall own directly or indirectly, beneficially
or of record, shares representing more than 40% of
the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Borrower or (b)
a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time
be occupied by persons who were neither (i) nominated by
the board of directors of the Borrower, nor (ii) appointed
by directors so nominated.
"Change in Law" shall mean (a) the adoption of any law,
rule or regulation after the date of this Agreement, (b)
any change in any law, rule or regulation or in the
interpretation or application thereof by any
Governmental Authority after the date of this Agreement or
(c) compliance by any Lender (or, for purposes of Section
2.13, by any lending office of such Lender or by such
Lender's holding company, if any) with any request,
guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the
date of this Agreement.
"Closing Date" shall mean February 20, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans hereunder as set
forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender assumed its Commitment, as
applicable, as the same may be (a) reduced from time to
time pursuant to Section 2.10 and (b) reduced or
increased from time to time pursuant to assignments by or
to such Lender pursuant to Section 9.04.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03(b) in the form of
Exhibit D-3.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section
2.03(d) in the form of Exhibit D-4.
"Competitive Bid Rate" shall mean, as to any Competitive
Bid, (i) in the case of a Eurodollar Loan, the Margin, and
(ii) in the case of a Fixed Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made by the
Borrower pursuant to Section 2.03(a).
"Competitive Borrowing" shall mean a Borrowing consisting
of a Competitive Loan or concurrent Competitive Loans from
the Lender or Lenders whose Competitive Bids for such
Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender to the
Borrower pursuant to the bidding procedure described in
Section 2.03. Each Competitive Loan shall be a Eurodollar
Competitive Loan or a Fixed Rate Loan.
"Confidential Information Memorandum" shall mean the
Confidential Information Memorandum of the Borrower dated
January 2002.
"Consolidated EBITDA" shall mean, for any period,
Consolidated Net Income for such period plus (a) without
duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of (i) consolidated
interest expense net of interest income for such period,
(ii) consolidated income tax expense for such period, (iii)
all amounts attributable to depreciation and amortization
for such period and (iv) any extraordinary charges and all
non-cash write-offs and write-downs of amortizable and
depreciable items for such period, and minus (b) without
duplication, to the extent included in determining such
Consolidated Net Income, any extraordinary gains and all
non-cash items of income for such period, all determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period,
the interest expense (including (a) imputed interest
expense in respect of Capital Lease Obligations and (b) the
amortization of original issue discount in connection with
the Subordinated Notes and other Indebtedness issued with
original issue discount) of the Borrower and the
Subsidiaries for such period, net of interest income, in
each case determined on a consolidated basis in accordance
with GAAP. For purposes of the foregoing, interest expense
shall be determined after giving effect to any net payments
made or received by the Borrower or any Subsidiary with
respect to interest rate Hedging Agreements.
"Consolidated Net Income" shall mean, for any period, the
net income or loss of the Borrower and the Subsidiaries for
such period determined on a consolidated basis in ccordance
with GAAP.
"Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction
of the management or policies of a person, whether through
the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled"
shall have meanings correlative thereto.
"Default" shall mean any event or condition which upon
notice, lapse of time or both would constitute an Event of
Default.
"dollars" or "$" shall mean lawful money of the United
States of America.
"Environmental Laws" shall mean all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments
or injunctions issued, promulgated or entered into by any
Governmental Authority, relating to the environment, the
preservation or reclamation of natural resources, the
management or release of Hazardous Materials or to the
effect of the environment on human health and safety.
"Environmental Liability" shall mean liabilities,
obligations, claims, actions, suits, judgments or orders
under or relating to any Environmental Law for any damages,
injunctive relief, losses, fines, penalties, fees,
expenses (including fees and expenses of attorneys and
consultants) or costs, whether contingent or otherwise,
including those arising from or relating to (a) any action
to address the on- or off-site presence, release of, or
exposure to, Hazardous Materials, (b) permitting and
licensing, governmental administrative oversight and
financial assurance requirements, (c) any personal injury
(including death), any property damage (real or personal)
or natural resource damage and (d) the violation of any
Environmental Law.
"Equity Interests" shall mean shares of capital stock,
partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other
equity interests in any person, or any obligations
convertible into or exchangeable for, or giving any person
a right, option or warrant to acquire such equity interests
or such convertible or exchangeable obligations; provided
that the Subordinated Notes are deemed not to constitute
Equity Interests of the Borrower.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether
or not incorporated) that, together with the Borrower, is
treated as a single employer under Section 414(b) or (c) of
the Code, or solely for purposes of Section 302 of ERISA
and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued
thereunder, with respect to a Plan (other than an event for
which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section
303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the
incurrence by the Borrower or any of its ERISA Affiliates
of any liability under Title IV of ERISA with respect to
the termination of any Plan or the withdrawal or
partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; (e) the
receipt by the Borrower or any of its ERISA Affiliates from
the PBGC or a plan administrator of any notice relating to
the intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (f) the adoption of any
amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA; (g) the receipt by the
Borrower or any of its ERISA Affiliates of any notice, or
the receipt by any Multiemployer Plan from the Borrower or
any of its ERISA Affiliates of any notice, concerning
the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title
IV of ERISA; or (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of
the Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to
which the Borrower or any such Subsidiary could otherwise
be liable.
"Eurodollar", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate
determined by reference to the LIBO Rate.
"Event of Default" shall have the meaning assigned to such
term in Article VII.
"Excluded Taxes" shall mean, with respect to the
Administrative Agent, any Lender or any other recipient of
any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income, franchise or similar
taxes imposed on (or measured by) its net income by the
United States of America, the jurisdiction under the laws
of which such recipient is organized or in which its
principal office is located (or, in the case of any Lender,
in which its applicable lending office is located), or, in
the case of a jurisdiction that imposes taxes on the basis
of management or control or other concept or principle of
residence, the jurisdiction in which such recipient is so
resident, (b) Taxes imposed by reason of any present or
former connection between such person and the jurisdiction
imposing such Taxes, other than solely as a result of the
execution and delivery of this Agreement, the making of any
Loans hereunder or the performance of any action provided
for hereunder, (c) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (d)
in the case of a Foreign Lender (other than as an assignee
pursuant to a request by the Borrower under Section
2.20(a)), any withholding tax that (i) is imposed on
amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or
designates a new lending office), except to the
extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from
the Borrower with respect to such withholding tax pursuant
to Section 2.19(a) or (ii) is attributable to such Foreign
Lender's failure to comply with Section 2.19(e).
"Existing Credit Agreement" shall mean the Amended and
Restated Credit Agreement dated as of March 31, 1997, as
amended, among the Borrower, the lenders from time to time
party thereto, and Credit Suisse First Boston, as
administrative agent.
"Facility Fee" shall have the meaning assigned to such term
in Section 2.06(a).
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%)
of the quotations for the day for such transactions
received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Fees" shall mean the Facility Fees and the Administrative
Agent Fees.
"Financial Officer" of any person shall mean the chief
financial officer, principal accounting officer, Treasurer
or Controller of such person.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in
the form of a decimal to no more than four decimal places)
specified by the Lender making such Loan in its Competitive
Bid.
"Foreign Lender" shall mean any Lender that is organized
under the laws of a jurisdiction other than that in which
the Borrower is located. For purposes of this definition,
the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" shall mean generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Granting Lender" shall have the meaning assigned to such
term in Section 9.04(i).
"Guarantee" of or by any person (the "guarantor") shall
mean any obligation, contingent or otherwise, of such
person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person
(the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or other
obligation, (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to
pay such Indebtedness or (d) as an account party in respect
of any letter of credit or letter of guaranty issued to
support such Indebtedness; provided, however, that the term
"Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business.
"Hazardous Materials" shall mean (a) petroleum products and
byproducts, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, radon gas, chlorofluorocarbons
and all other ozone-depleting substances and (b) any
chemical, material, substance, waste, pollutant or
contaminant that is prohibited, limited or regulated by or
pursuant to any Environmental Law.
"Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity
price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement.
"Indebtedness" of any person shall mean, without
duplication, (a) all obligations of such person for
borrowed money, (b) all obligations of such person
evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person under
conditional sale or other title retention agreements
relating to property or assets purchased by such person,
(d) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding
trade accounts payable and accrued obligations incurred in
the ordinary course of business), (e) all Indebtedness
of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations
secured thereby have been assumed, (f) all Guarantees by
such person of Indebtedness of others, (g) all Capital
Lease Obligations of such person, (h) all obligations,
contingent or otherwise, of such person as an account
party in respect of letters of credit and letters of
guaranty, (i) all obligations, contingent or otherwise, of
such person in respect of bankers' acceptances and (j) all
obligations of such person to make contingent cash payments
in respect of any acquisition, to the extent such
obligations are or are required to be shown as liabilities
on the balance sheet of such person in accordance with
GAAP. The Indebtedness of any person shall include the
Indebtedness of any other entity (including any partnership
in which such person is a general partner) to the extent
such person is liable therefor as a result of such person's
ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness
provide that such person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded
Taxes.
"Index Debt" shall mean the senior, unsecured, non-credit
enhanced, long-term indebtedness for borrowed money of the
Borrower.
"Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b)
Consolidated Interest Expense for such period.
"Interest Payment Date" shall mean (a) with respect to any
ABR Loan, the last Business Day of each March, June,
September and December and (b) with respect to any
Eurodollar Loan or Fixed Rate Borrowing, the last day of
the Interest Period applicable to the Borrowing of which
such Loan is a part or such Fixed Rate Borrowing, as the
case may be, and, in the case of a Eurodollar Borrowing
with an Interest Period of more than three months' duration
or a Fixed Rate Borrowing with an Interest Period of more
than 90 days' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of
three months' or 90 days' duration, respectively, been
applicable to such Borrowing.
"Interest Period" shall mean, (a) with respect to any
Eurodollar Borrowing, the period commencing on the date of
such Borrowing and ending on the numerically corresponding
day (or, if there is no numerically corresponding day, on
the last day) in the calendar month that is 1, 2, 3 or
6 months thereafter, as the Borrower may elect, and (b)
with respect to any Fixed Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the
date specified in the Competitive Bids in which the offers
to make the Fixed Rate Loans comprising such Borrowing were
extended, which shall not be earlier than 30 days after the
date of such Borrowing or later than 360 days after the
date of such Borrowing; provided, however, that if any
Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would
fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business
Day. Interest shall accrue from and including the first
day of an Interest Period to but excluding the last day of
such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such
Borrowing.
"Lenders" shall mean (a) the persons listed on Schedule
2.01 (other than any such person that has ceased to be a
party hereto pursuant to an Assignment and Acceptance) (b)
any person that has become a party hereto pursuant to an
Assignment and Acceptance.
"Leverage Ratio" shall mean, for any period, the ratio of
Total Debt on the last day of such period to Consolidated
EBITDA for such period.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate per annum
determined by the Administrative Agent at approximately
11:00 a.m., London time, on the date that is two
Business Days prior to the commencement of such Interest
Period by reference to the British Bankers' Association
Interest Settlement Rates for deposits in dollars (as set
forth by the Bloomberg Information Service or any
successor thereto or any other service selected by the
Administrative Agent which has been nominated by the
British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for
a period equal to such Interest Period; provided that, to
the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition,
the "LIBO Rate" shall be the interest rate per annum
determined by the Administrative Agent to be the average of
the rates per annum at which dollar deposits of $10,000,000
are offered for such relevant Interest Period to major
banks in the London interbank market in London, England
by the Administrative Agent at approximately 11:00 a.m.
(London time) on the date that is two Business Days prior
to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge
or security interest in or on such asset or (b) the
interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement
(or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such
asset.
"Loans" shall mean the Revolving Loans and the Competitive
Loans.
"Margin" shall mean, as to any Eurodollar Competitive Loan,
the margin (expressed as a percentage rate per annum in the
form of a decimal to no more than four decimal places) to
be added to or subtracted from the LIBO Rate in order to
determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to such term
in Regulation U.
"Material Adverse Effect" shall mean a materially adverse
effect on the financial condition, results of operations or
business of the Borrower and the Subsidiaries, taken as a
whole.
"Material Indebtedness" shall mean Indebtedness (other than
the Loans), or obligations in respect of one or more
Hedging Agreements, of any one or more of the Borrower and
the Subsidiaries in an aggregate principal amount exceeding
$50,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of
the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower
or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
"Material Subsidiary" shall mean at any time any
Subsidiary, except Subsidiaries which, if aggregated and
considered as a single Subsidiary, would not meet the
definition of a "significant subsidiary" contained as of
the date hereof in Regulation S-X of the Securities and
Exchange Commission.
"Maturity Date" shall mean February 19, 2003.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Other Taxes" shall mean any and all present or future
stamp or documentary taxes or any other excise or property
taxes, charges or similar levies arising from any payment
made under this Agreement or from the execution, delivery
or enforcement of, or otherwise with respect to, this
Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by,
the United States of America (or by any agency thereof to
the extent such obligations are backed by the full faith
and credit of the United States of America), in each case
maturing within one year from the date of acquisition
thereof;
(b) investments in foreign and domestic commercial paper
maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from
the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or
offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the
United States of America or any State thereof that has a
combined capital and surplus and undivided profits of not
less than $500,000,000;
(d) fully collateralized repurchase agreements with a term
of not more than 30 days for securities described in clause
(a) above and entered into with a financial institution
satisfying the criteria of clause (c) above;
(e) investments in "money market funds" within the
meaning of Rule 2a-7 of the Investment Company Act of 1940,
as amended, substantially all of whose assets are invested
in investments of the type described in clauses (a) through
(d) above;
(f) investments in so-called market auction securities
rated Aa2 or higher by Moody's or AA or higher by S&P and
which have a reset date not more than 365 days from the
date of acquisition thereof; and
(g) investments in readily-marketable obligations of
Indebtedness of any State of the United States or any
municipality organized under the laws of any State of the
United States or any political subdivision thereof which,
at the time of acquisition, are accorded either of the two
highest ratings by S&P, Moody's or another nationally
recognized credit rating agency of similar standard, in any
such case maturing no later than one year after the date of
acquisition thereof.
"person" shall mean any natural person, corporation,
business trust, joint venture, association, company,
limited liability company, partnership, Governmental
Authority or other entity.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Code or Section 307
of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as
being effective.
"Pro Rata Percentage" of any Lender at any time shall mean
the percentage of the Total Commitment represented by such
Lender's Commitment. In the event the Commitments shall
have expired or been terminated, the Pro Rata Percentages
shall be determined on the basis of the Commitments most
recently in effect.
"Register" shall have the meaning assigned to such term in
Section 9.04(d)."Regulation T" shall mean Regulation T of
the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from
time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Related Parties" shall mean, with respect to any specified
person, such person's Affiliates and the respective
directors, officers, employees, agents and advisors of such
person and such person's Affiliates.
"Required Lenders" shall mean, at any time, Lenders having
Commitments (or, if the Commitments have terminated, Loans)
representing at least a majority of the Total Commitment
(or if the Commitments have terminated, the aggregate
amount of Loans outstanding) at such time or, for
purposes of acceleration pursuant to clause (ii) of the
last paragraph of Article VII, Lenders having Loans and
unused Commitments representing at least a majority of the
sum of all Loans outstanding and unused
Commitments.
"Restricted Payment" shall mean (a) any dividend or other
distribution (whether in cash, securities or other
property) with respect to any Equity Interests in the
Borrower or any Subsidiary, or (b) any payment
(whether in cash, securities or other property), including
any sinking fund or similar deposit, other than a payment
to the extent consisting of Equity Interests of equal or
junior ranking, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any
Equity Interests in the Borrower or any Subsidiary. It is
understood that the withholding of shares, and the payment
of cash to the Internal Revenue Service in an amount not to
exceed the value of the withheld shares, by the Company in
connection with any of its stock incentive plans shall not
constitute Restricted Payments.
"Revolving Credit Borrowing" shall mean a Borrowing
comprised of Revolving Loans.
"Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the aggregate principal amount at such
time of all outstanding Revolving Loans of such Lender.
"Revolving Loans" shall mean the revolving loans made by
the Lenders to the Borrower pursuant to Section 2.01. Each
Revolving Loan shall be a Eurodollar Revolving Loan or an
ABR Revolving Loan.
"S&P" shall mean Standard & Poor's Ratings Service.
"SPC" shall have the meaning assigned to such term in
Section 9.04(i).
"Subordinated Notes" shall mean the Borrower's Zero Coupon
Liquid Yield Option (Subordinated Convertible) Notes due
2021, in an aggregate principal amount at maturity of
$744,000,000.
"Subordinated Note Documents" shall mean the indenture
under which the Subordinated Notes were issued and all
other instruments, agreements and other documents
evidencing or governing the Subordinated Notes or providing
for any Guarantee or other right in respect thereof.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership,
association or other business entity (a) of which
securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership
interests are, at the time any determination is being made,
owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Synthetic Purchase Agreement" shall mean any swap,
derivative or other agreement or combination of agreements
pursuant to which the Borrower or any Subsidiary is or may
become obligated to make (a) any payment in connection with
a purchase by any third party from a person other than the
Borrower or any Subsidiary of any Equity Interest or (b)
any payment (other than on account of a permitted purchase
by it of any Equity Interest) the amount of which is
determined by reference to the price or value at any time
of any Equity Interest; provided that no phantom stock or
similar plan providing for payments only to current or
former directors, officers or employees of the Borrower or
the Subsidiaries (or to their heirs or estates) shall be
deemed to be a Synthetic Purchase Agreement.
"Taxes" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges, liabilities
or withholdings imposed by any Governmental Authority.
"Three-Year Credit Agreement" shall mean the Three-Year
Credit Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time),
among the Borrower, the lenders from time to time party
thereto, and Credit Suisse First Boston, as administrative
agent.
"Total Debt" shall mean, at any time, the total
Indebtedness of the Borrower and the Subsidiaries at such
time (excluding Indebtedness of the type described in
clause (h) of the definition of such term, except to the
extent of any unreimbursed drawings thereunder).
"Total Commitment" shall mean, at any time, the aggregate
amount of the Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term
in Section 3.02.
"Type", when used in respect of any Loan or Borrowing,
shall refer to the Rate by reference to which interest on
such Loan or on the Loans comprising such Borrowing is
determined. For purposes hereof, the term "Rate" shall
include the LIBO Rate and the Alternate Base Rate.
"wholly owned Subsidiary" of any person shall mean a
subsidiary of such person of which securities (except for
directors' qualifying shares) or other ownership interests
representing 100% of the Equity Interests are, at the time
any determination is being made, owned, controlled or held
by such person or one or more wholly owned Subsidiaries of
such person or by such person and one or more wholly owned
Subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in
Section 1.01 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed
by the phrase "without limitation". The word "will" shall
be construed to have the same meaning and effect as the
word "shall"; and the words "asset" and "property" shall be
construed as having the same meaning and effect and to
refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and
contract rights. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time
to time; provided, however, that if the Borrower notifies
the Administrative Agent that the Borrower wishes to amend
any covenant in Article VI or any related definition to
eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such
covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Article VI
or any related definition for such purpose), then the
Borrower's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant is amended
in a manner satisfactory to the Borrower and the Required
Lenders.
"SECTION 1.03. Classification of Loans and Borrowings.
For purposes of this Agreement, Loans may be classified and
referred to by Class (e.g., a "Revolving Loan") or by Type
(e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or
by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and
conditions and relying upon the representations and
warranties herein set forth, each Lender agrees,
severally and not jointly, to make Revolving Loans to the
Borrower, at any
time and from time to time on or after the date hereof, and
until the earlier of the Maturity Date and the termination
of the Commitment of such Lender in accordance with the
terms hereof, in an aggregate principal amount at any
time outstanding that will not result in such Lender's
Revolving Credit Exposure exceeding such Lender's
Commitment minus the amount by which the outstanding
Competitive Borrowings shall be deemed to have utilized
such Commitment in accordance with Section 2.16. Within
the limits set forth in the preceding sentence and subject
to the terms, conditions and limitations set forth herein,
the Borrower may borrow, pay or prepay and reborrow
Revolving Loans.
SECTION 2.02. Loans. (a) Each Loan (other than
Competitive Loans) shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments; provided,
however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such
other Lender). Each Competitive Loan shall be made in
accordance with the procedures set forth in Section 2.03.
The Loans
comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $1,000,000 and
not less than $10,000,000 or (ii) equal to the remaining
available balance of the Commitments.
(b) Subject to Sections 2.09 and 2.14, each Competitive
Borrowing shall be comprised entirely of Eurodollar
Competitive Loans or Fixed Rate Loans, and each other
Borrowing shall be comprised entirely of ABR Loans
or Eurodollar Loans as the Borrower may request pursuant to
Section 2.03 or 2.04, as applicable. Each Lender may at
its option make any Eurodollar Loan by causing any domestic
or foreign branch or Affiliate of such Lender
to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the
Borrower shall not be entitled to request any Borrowing
that, if made, would result in more than 15 Eurodollar
Borrowings outstanding hereunder at any time. For purposes
of the foregoing, Borrowings having different Interest
Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account in New York
City as the Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the Administrative
Agent shall promptly credit the amounts so received to an
account in the name of the Borrower and designated by the
Borrower in the applicable Borrowing Request or Competitive
Bid Request or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not
have been met, return the amounts so received to the
respective Lenders.
(d) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Borrowing
that such Lender will not make available to the
Administrative Agent such Lender's portion of such
Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the
Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative
Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If
the Administrative Agent shall have so made funds available
then, to the extent that such Lender shall not have made
such portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from
the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative
Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, a rate
determined by the Administrative Agent to represent its
cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender
shall repay to the Administrative Agent such corresponding
amount, such amount shall constitute such Lender's Loan as
part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request any Borrowing
if the Interest Period requested with respect thereto would
end after the Maturity Date.
"SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, the Borrower shall notify the
Administrative Agent of such request by telephone (i) in
the case of a Eurodollar Competitive Borrowing , not later
than 11:00 a.m., New York City time, four Business
Days before the proposed date of such Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the
proposed date of such Borrowing. Provided that no two
Competitive Bid Requests submitted on the same day shall be
identical, the Borrower may submit up to (but not more
than) three Competitive Bid Requests on the same day, but a
Competitive Bid Request shall not be made within five
Business Days after the date of any previous
Competitive Bid Request unless such previous Competitive
Bid Request shall have been rejected by the Administrative
Agent, as provided below. No ABR Loan shall be requested
in, or made pursuant to, a Competitive Bid Request. Each
such telephonic Competitive Bid Request shall be confirmed
promptly by hand delivery or telecopy to the Administrative
Agent of a written Competitive Bid Request substantially in
the form of Exhibit D-1. A Competitive Bid Request that
does not conform substantially to the format of Exhibit D-1
may be rejected by the Administrative Agent and the
Administrative Agent shall notify the Borrower of such
rejection as promptly as practicable. Each Competitive Bid
Request shall refer to this Agreement and specify (i)
whether the Borrowing being requested is to be a Eurodollar
Borrowing or a Fixed Rate Borrowing; (ii) the date of such
Borrowing (which shall be a Business Day); (iii) the number
and the location of the account to which funds are to be
disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the aggregate
principal amount of such Borrowing, which shall be a
minimum of $10,000,000 and an integral multiple of
$1,000,000, and in any event shall not result in the sum of
the Aggregate Revolving Credit Exposure and the aggregate
outstanding principal amount of Competitive Loans, after
giving effect to such Borrowing, exceeding the Total
Commitment; and (v) the Interest Period with respect
thereto (which may not end after the Maturity
Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected, the Administrative Agent
shall invite the Lenders in the form set forth as Exhibit
D-2 to bid to make Competitive Loans pursuant to the
Competitive Bid Request.
(b) Each Lender may make one or more Competitive Bids to
the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the
Administrative Agent by telecopy, (i) in the case of a
Eurodollar Competitive Borrowing, not later than 9:30 a.m.,
New York City time, three Business Days before the proposed
date of such Competitive Borrowing, and (ii) in the case of
a Fixed Rate Borrowing, not later than 9:30 a.m., New York
City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform
substantially to the format of Exhibit D-3 may be rejected
by the Administrative Agent, and the Administrative Agent
shall notify the applicable Lender as promptly as
practicable. Each Competitive Bid shall refer to this
Agreement and specify (x) the principal amount (which shall
be a minimum of $5,000,000 and an integral multiple of
$1,000,000 and which may equal the entire principal amount
of the Competitive Borrowing requested by the Borrower)
of the Competitive Loan or Loans that the Lender is willing
to make, (y) the Competitive Bid Rate or Rates at which the
Lender is prepared to make such Loan or Loans and (z) the
Interest Period applicable to such Loan or Loans
and the last day thereof.
(c) The Administrative Agent shall promptly notify the
Borrower by telecopy of the Competitive Bid Rate and the
principal amount of each Competitive Loan in respect of
which a Competitive Bid shall have been made and the
identity of the Lender that shall have made each bid.
(d) The Borrower may, subject only to the provisions of
this paragraph (d), accept or reject any Competitive Bid.
The Borrower shall notify the Administrative Agent by
telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what
extent it has decided to accept or reject each Competitive
Bid, (x) in the case of a Eurodollar Competitive Borrowing,
not later than 10:30 a.m., New York City time, three
Business Days before the date of the proposed Competitive
Borrowing, and (y) in the case of a Fixed Rate Borrowing,
not later than 10:30 a.m., New York City time, on the
proposed date of the Competitive Borrowing; provided,
however, that (i) the failure of the Borrower to give
such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate
if the Borrower has decided to reject a Competitive
Bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the
Borrower shall not exceed the principal amount specified in
the Competitive Bid Request, (iv) if the Borrower shall
accept a Competitive Bid or Bids made at a particular
Competitive Bid Rate but the amount of such Competitive Bid
or Bids would cause the total amount to be accepted by the
Borrower to exceed the amount specified in the Competitive
Bid Request, then the Borrower shall accept a portion of
such Competitive Bid or Bids in an amount equal to the
amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids so accepted, which
acceptance, in the case of multiple Competitive Bids at
such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such Bid, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be
accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of $5,000,000 and an
integral multiple of $1,000,000; provided further, however,
that if a Competitive Loan must be in an amount less than
$5,000,000 because of the provisions of clause (iv) above,
such Competitive Loan may be for a minimum of $1,000,000 or
any integral multiple thereof, and in calculating
the pro rata allocation of acceptances of portions of
multiple Competitive Bids at a particular Competitive Bid
Rate pursuant to clause (iv) the amounts shall be rounded
to integral multiples of $1,000,000 in a manner determined
by the Borrower. A notice given by the Borrower pursuant
to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender by telecopy whether or not its Competitive
Bid has been accepted (and, if so, in what amount and at
what Competitive Bid Rate), and each successful bidder will
thereupon become bound, upon the terms and subject to the
conditions hereof, to make the Competitive Loan in respect
of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall
submit such Competitive Bid directly to the Borrower at
least one quarter of an hour earlier than the time by
which the other Lenders are required to submit their
Competitive Bids to the Administrative Agent pursuant to
paragraph (b) above.
(g) Within the limits set forth in this Section 2.03 and
subject to the terms, conditions and limitations set forth
herein, the Borrower may borrow, pay and reborrow
Competitive Loans.
SECTION 2.04. Borrowing Procedure. In order to request a
Borrowing (other than a Competitive Borrowing, as to which
this Section 2.04 shall not apply), the Borrower shall
notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business
Days before a proposed Borrowing, and (b) in the case of an
ABR Borrowing, not later than 11:00 a.m., New York City
time, on the day of a proposed Borrowing. Each Borrowing
Request shall be irrevocable, shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of
a written Borrowing Request substantially in the form of
Exhibit C or such other form as shall be acceptable to the
Administrative Agent and shall specify the following
information: (i) whether the Borrowing then being requested
is to be a Eurodollar Borrowing or an ABR Borrowing; (ii)
the date of such Borrowing (which shall be a Business Day);
(iii) the number and location of the account to which funds
are to be disbursed (which shall be an account that
complies with the requirements of Section 2.02(c)); (iv)
the amount of such Borrowing; and (v) if such Borrowing is
to be a Eurodollar Borrowing, the Interest Period with
respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set
forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the
requested Borrowing shall be an ABR Borrowing. If
no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall promptly advise
the Lenders of any notice given pursuant to this
Section 2.04 (and the contents thereof), and of each
Lender's portion of the requested Borrowing.
"SECTION 2.05. Evidence of Debt; Repayment of Loans. (a)
The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender (i) the
then unpaid principal amount of each Competitive Loan of
such Lender on the last day of the Interest Period
applicable to such Loan and (ii) the then unpaid principal
amount of each Revolving Loan of such Lender on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in
which it will record (i) the amount of each Loan made
hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal
or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant
to paragraphs (b) and (c) above shall be prima facie
evidence of the existence and amounts of the obligations
therein recorded; provided, however, that the failure of
any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner
affect the obligations of the Borrower to repay the Loans
in accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder
be evidenced by a promissory note. In such event, the
Borrower shall execute and deliver to such Lender a
promissory note payable to such Lender and its registered
assigns and in a form and substance reasonably acceptable
to the Administrative Agent and the Borrower.
Notwithstanding any other provision of this Agreement, in
the event any Lender shall request and receive such a
promissory note, the interests represented by such note
shall at all times (including after any assignment of all
or part of such interests pursuant to Section 9.04) be
represented by one or more promissory notes
payable to the payee named therein or its registered
assigns.
SECTION 2.06. Fees. (a) The Borrower agrees to pay to
each Lender, through the Administrative Agent, on the last
Business Day of March, June, September and December in each
year, and on the date on which the Commitment of such
Lender shall expire or be terminated as provided herein, a
facility fee (a "Facility Fee") equal to the Applicable
Percentage per annum in effect from time to time on the
daily amount of the Commitment of such Lender (whether used
or unused) during the preceding quarter (or shorter period
commencing with the date hereof or ending with the Maturity
Date or the date on which the Commitment of such Lender
shall expire or be terminated); provided that, if such
Lender continues to have any Revolving Credit Exposure
after its Commitment terminates, then the Facility Fee
shall continue to accrue (and be payable on demand) on the
daily amount of such Lender's Revolving Credit Exposure
from and including the date on which its Commitment
terminates to and including the date on which such Lender
ceases to have any Revolving Credit Exposure. All Facility
Fees shall be computed on the basis of the actual number of
days elapsed (including the first day but excluding the
last day) in a year of 360 days. The Facility Fee due to
each Lender shall commence to accrue on the date of this
Agreement and shall cease to accrue on the later of the
date on which the Commitment of such Lender shall expire or
be terminated as provided herein and such Lender shall have
no Revolving Credit Exposure.
(b) The Borrower agrees to pay to the Administrative
Agent, for its own account, the administrative fees
separately agreed to in writing from time to time by the
Borrower and the Administrative Agent (the "Administrative
Agent Fees").
(c) All Fees shall be paid on the dates due, in
immediately available funds, to the Administrative Agent
for distribution, if and as appropriate,among the Lenders.
Once paid, none of the Fees shall be refundable under
any circumstances.
SECTION 2.07. Interest on Loans. (a) Subject to the
provisions of Section 2.08, the Loans comprising each ABR
Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed (including the first day but
excluding the last day) over a year of 365 or 366 days, as
the case may be, when the Alternate Base Rate is determined
by reference to the Prime Rate and over a year of 360 days
at all other times) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Percentage in
effect from time to time.
(b) Subject to the provisions of Section 2.08, the Loans
comprising each Eurodollar Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed
(including the first day but excluding the last day) over a
year of 360 days) at a rate per annum equal to (i) in the
case of each Revolving Loan, the LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable
Percentage in effect from time to time, and (ii) in the
case of each Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the
Margin offered by the Lender making such Loan and accepted
by the Borrower pursuant to Section 2.03.
(c) Subject to the provisions of Section 2.08, each Fixed
Rate Loan shall bear interest (computed on the basis of the
actual number of days elapsed (including the first day but
excluding the last day) over a year of 360 days) at a rate
per annum equal to the fixed rate of interest offered by
the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise
provided in this Agreement; provided that (i) in the event
of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Loan), accrued interest on the
principal amount repaid or prepaid shall be payable on the
date of such repayment or prepayment and (ii) in the event
of any conversion of any Eurodollar Loan prior to the end
of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such
conversion. The applicable Alternate Base Rate or LIBO
Rate for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.08. Default Interest. If the Borrower shall
default in the payment of the principal of or interest on
any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrower shall on demand
from time to time pay interest, to the extent permitted by
law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) (a) in
the case of overdue principal, at the rate otherwise
applicable to such Loan pursuant to Section 2.07 plus 2.00%
per annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days
elapsed (including the first day but excluding the last
day) over a year of 365 or 366 days, as the case may be,
when determined by reference to the Prime Rate and over a
year of 360 days at all other times) equal to the rate that
would be applicable to an ABR Revolving Loan plus 2.00%.
SECTION 2.09. Alternate Rate of Interest. In the event,
and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a
Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of
the Loans comprising such Borrowing are not generally
available in the London interbank market, or that
reasonable means do not exist for ascertaining the LIBO
Rate, or the Administrative Agent shall have been informed
by the Required Lenders (or, in the case of a Eurodollar
Competitive Loan, any Lender required to make such Loan)
that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to
the Required Lenders (or such Lender) of making or
maintaining their or its Eurodollar Loan during such
Interest Period, the Administrative Agent shall, as soon as
practicable thereafter, give written or telecopy notice
thereof to the Borrower and the Lenders. In the event of
any such notice, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances
giving rise to such notice no longer exist, (i) any request
by the Borrower for a Eurodollar Revolving Credit Borrowing
pursuant to Section 2.04 shall be deemed to be a request
for an ABR Borrowing and (ii) any request by the Borrower
for a Eurodollar Competitive Borrowing pursuant to Section
2.03 shall be of no force and effect and shall be denied by
the Administrative Agent; provided that if the ircumstances
giving rise to such notice do not affect all the Lenders,
then the Borrower may make requests for Eurodollar
Competitive Borrowings to Lenders that are not affected
thereby. Each determination by the Administrative Agent
under this Section 2.09 shall be conclusive absent manifest
error.
"SECTION 2.10. Termination and Reduction of Commitments.
(a) The Commitments shall automatically terminate on the
Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the
administrative Agent, the Borrower may at any time
in whole permanently terminate, or from time to time in
part permanently reduce, the Commitments; provided,
however, that (i) each partial reduction of the Commitments
shall be in an integral multiple of $1,000,000 and in a
minimum amount of $10,000,000 and (ii) the Total Commitment
shall not be reduced to an amount that is less than the sum
of the Aggregate Revolving Credit Exposure and the
aggregate outstanding principal amount of the Competitive
Loans at the time.
(c) Each reduction in the Commitments hereunder shall be
made ratably among the Lenders in accordance with their
respective Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable
Lenders, on the date of each termination or reduction, the
Facility Fees on the amount of the Commitments so
terminated or reduced accrued to but excluding the date of
such termination or reduction.
"SECTION 2.11. Conversion and Continuation of Borrowings.
The Borrower shall have the right at any time upon prior
irrevocable written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) to the
Administrative Agent (a) not later than 11:00 a.m.,
New York City time, on the day of conversion, to convert
any Eurodollar Borrowing into an ABR Borrowing, (b) not
later than 11:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any
ABR Borrowing into a Eurodollar Revolving Credit Borrowing
or to continue any Eurodollar Revolving Credit Borrowing as
a Eurodollar Revolving Credit Borrowing for an additional
Interest Period, and (c) not later than 11:00 a.m., New
York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar
Revolving Credit Borrowing to another permissible Interest
Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective
principal amounts of the Loans comprising the converted or
continued Borrowing;
(ii) if less than all the outstanding principal amount of
any Borrowing shall be converted or continued, then each
resulting Borrowing shall satisfy the limitations specified
in Sections 2.02(a) and 2.02(b) regarding the principal
amount and maximum number of Borrowings of the relevant
Type;
(iii) each conversion shall be effected by each Lender and
the Administrative Agent by recording for the account of
such Lender the new Loan of such Lender resulting from such
conversion and reducing the Loan (or portion thereof) of
such Lender being converted by an equivalent principal
amount; accrued interest on any Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time
other than the end of the Interest Period applicable
thereto, the Borrower shall pay, upon demand, any amounts
due to the Lenders pursuant to Section 2.15;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or
continued as a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by
reason of the immediately preceding clause shall be
automatically converted at the end of the Interest Period
in effect for such Borrowing into an ABR Borrowing; and
(vii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders, after
the occurrence and during the continuance of a Default or
Event of Default, no outstanding Revolving Loan may be
converted into, or continued as, a Eurodollar Loan and,
unless repaid, each Eurodollar Revolving Borrowing shall be
converted into an ABR Borrowing at the end of the Interest
Period applicable thereto.
Each notice pursuant to this Section 2.11 shall refer to
this Agreement and specify (i) the identity and amount of
the Borrowing that the Borrower requests be converted or
continued, (ii) whether such Borrowing is to be converted
to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and
(iv) if such Borrowing is to be converted to or continued
as a Eurodollar Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such
notice with respect to any conversion to or continuation as
a Eurodollar Borrowing, the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.11 and of each
Lender's portion of any converted or continued Borrowing.
If the Borrower shall not have given notice in accordance
with this Section 2.11 to continue any Borrowing into
a subsequent Interest Period (and shall not otherwise have
given notice in accordance with this Section 2.11 to
convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be
continued into an ABR Borrowing. The Borrower shall not
have the right to continue or convert the Interest Period
with respect to any Competitive Borrowing pursuant to this
Section 2.11.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall
have the right at any time and from time to time to prepay
any Borrowing (other than a Competitive Borrowing), in
whole or in part, upon at least three Business Days' prior
written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) in the case of
Eurodollar Loans, or written or telecopy notice (or
telephone notice promptly confirmed by written or
telecopy notice) on the day of prepayment in the case of
ABR Loans, to the Administrative Agent before 11:00 a.m.,
New York City time; provided, however, that each partial
prepayment shall be in an amount that is an integral
multiple of $1,000,000 and not less than $10,000,000. The
Borrower shall not have the right to prepay any Competitive
Borrowing.
(b) In the event of any termination of all the
Commitments, the Borrower shall repay or prepay all its
outstanding Revolving Credit Borrowings on the date of such
termination. If as a result of any partial reduction of the
Commitments the sum of the Aggregate Revolving Credit
Exposure and the aggregate outstanding principal amount of
the Competitive Loans at the time would exceed the Total
Commitment after giving effect thereto, then the Borrower
shall, on the date of such reduction, repay or prepay
Revolving Credit Borrowings in an amount sufficient to
eliminate such excess.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion
thereof) to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments
under this Section 2.12 shall be subject to Section 2.15
but otherwise without premium or penalty. All prepayments
under this Section 2.12 (other than prepayment of an ABR
Loan that does not occur in connection with, or as a result
of, the reduction or termination of the Commitments) shall
be accompanied by accrued and unpaid interest on the
principal amount to be prepaid to but excluding the date of
payment.
"SECTION 2.13. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision of
this Agreement, if any Change in Law shall impose, modify
or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of or credit extended by any Lender or shall impose
on such Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans or
Fixed Rate Loans made by such Lender, and the result of any
of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan or
Fixed Rate Loan or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of
principal, interest or otherwise) by an amount deemed by
such Lender to be material, then the Borrower will pay to
such Lender upon demand such additional amount or amounts
as will compensate such Lender for such additional costs
incurred or reduction suffered.(b) If any Lender shall
have determined that any Change in Law regarding capital
adequacy has or would have the effect of reducing the rate
of return on such Lender's capital or on the capital of
such Lender's holding company, if any, as a consequence of
this Agreement or the Loans made to a level below that
which such Lender or such Lender's holding company
could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be
material, then from time to time the Borrower shall pay to
such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for
any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding
company, as applicable, as specified in paragraph (a) or
(b) above shall be delivered to the Borrower
and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on
any such certificate delivered by it within 15 days after
its receipt of the same.
(d) Failure or delay on the part of any Lender to demand
compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on
capital shall not constitute a waiver of such Lender's
right to demand such compensation; provided that the
Borrower shall not be under any obligation to compensate
any Lender under paragraph (a) or (b) above with respect to
increased costs or reductions with respect to any period
prior to the date that is 120 days prior to such request
if such Lender knew or could reasonably have been expected
to know of the circumstances giving rise to such increased
costs or reductions and of the fact that such circumstances
could reasonably be expected to result in a claim for
increased compensation by reason of such increased costs or
reductions; provided further that the foregoing limitation
shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change
in Law within such 120-day period. The protection of this
Section shall be available to each Lender regardless of any
possible contention of the invalidity or inapplicability of
the Change in Law that shall have occurred or been imposed.
Notwithstanding any other provision of this Section, no
Lender shall be entitled to demand compensation hereunder
in respect of any Competitive Loan if it shall have been
aware of the event or circumstance giving rise to such
demand at the time it submitted the Competitive Bid
pursuant to which such Loan was made.
"SECTION 2.14. Change in Legality. (a) Notwithstanding
any other provision of this Agreement, if any Change in Law
shall make it unlawful for any Lender to make or maintain
any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the Borrower and to the
Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made
by such Lender hereunder (or be continued for additional
Interest Periods and ABR Loans will not thereafter (for
such duration) be converted into Eurodollar Loans),
whereupon such Lender shall not submit a Competitive Bid in
response to a request for a Eurodollar Competitive Loan and
any request for a Eurodollar Borrowing (or to convert an
ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period)
shall, as to such Lender only, be deemed a request for an
ABR Loan (or a request to continue an ABR Loan as such for
an additional Interest Period or to convert a Eurodollar
Loan into an ABR Loan, as the case may be), unless such
declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in
which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective
date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i)
or (ii) above, all payments and prepayments of principal
that would otherwise have been applied to repay the
Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender
shall instead be applied to repay the ABR Loans made by
such Lender in lieu of, or resulting from the conversion
of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the
Borrower by any Lender shall be effective as to each
Eurodollar Loan made by such Lender, if lawful, on the last
day of the Interest Period then applicable to such
Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrower.
"SECTION 2.15. Break Funding. The Borrower shall
compensate each Lender for any loss or expense that such
Lender may sustain or incur as a consequence of (a) such
Lender receiving or being deemed to receive any amount on
account of the principal of any Fixed Rate Loan or
Eurodollar Loan prior to the end of the Interest Period in
effect therefor, (b) the conversion of any Eurodollar Loan
to an ABR Loan, or the conversion of the Interest Period
with respect to any Eurodollar Loan, in each case other
than on the last day of the Interest Period in effect
therefor or (c) the failure of the Borrower to borrow,
convert, continue or prepay any Fixed Rate Loan or
Eurodollar Loan made or to be made by such Lender
(including any Eurodollar Loan to be made pursuant to a
conversion or continuation under Section 2.11) after notice
of
such borrowing, conversion, continuation or prepayment
shall have been given by the Borrower hereunder (any of the
events referred to in this sentence being called a
"Breakage Event"). In the case of any Breakage
Event, such loss shall include an amount equal to the
excess, as reasonably determined by such Lender, of (i) its
cost of obtaining funds for the Fixed Rate Loan or
Eurodollar Loan that is the subject of such Breakage Event
for the period from the date of such Breakage Event to the
last day of the Interest Period in effect (or that would
have been in effect) for such Loan over (ii) the amount of
interest likely to be realized by such Lender in
redeploying the funds released or not utilized by reason of
such Breakage Event for such period. A certificate of any
Lender setting forth any amount or amounts which such
Lender is entitled to receive pursuant to this
Section 2.15 shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall
pay such Lender the amount due within 15 days of the
receipt of any such certificate.
"SECTION 2.16. Pro Rata Treatment. Except as provided
below in this Section 2.16 with respect to Competitive
Borrowings and as required under Section 2.14, each
Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each
payment of the Facility Fees, each reduction of the
Commitments and each conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type
shall be allocated pro rata among the Lenders in accordance
with their respective Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with
the respective principal amounts of their outstanding
Loans). Each payment of principal of and interest on any
Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with
the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing.
For purposes of determining the available Commitments of
the Lenders at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments
of the Lenders (including those Lenders which shall not
have made Loans as part of such Competitive Borrowing) pro
rata in accordance with such respective Commitments. Each
Lender agrees that in computing such Lender's portion of
any Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Lender's
percentage of such Borrowing to the next higher or lower
whole dollar amount.
"SECTION 2.17. Sharing of Setoffs. Each Lender agrees that
if it shall, through the exercise of a rightof banker's
lien, setoff or counterclaim against the Borrower, or
pursuant to a secured claim under Section 506 of Title 11
of the United States Code or other security or interest
arising from, or in lieu of, such secured claim,received by
such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any
Loan or Loans as a result of which the unpaid principal
portion of its Loans shall be proportionately less
than the unpaid principal portion of the Loans of any other
Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly
pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender, so that
the aggregate unpaid principal amount of the Loans and
participations in Loans held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of
all Loans then outstanding as the principal amount of its
Loans prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of
all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.17 and
the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall
be rescinded to the extent of such recovery and the
purchase price or prices or adjustment restored without
interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a
participation in a Loan deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by
the Borrower to such Lender by reason thereof as fully
as if such Lender had made a Loan directly to the Borrower
in the amount of such participation.
"SECTION 2.18. Payments. (a) The Borrower shall make each
payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder not later
than 12:00 (noon), New York City time, on the date when due
in immediately available dollars, without setoff, defense
or counterclaim. Each such payment shall be made to the
Administrative Agent at its offices at Eleven Madison
Avenue, New York, NY 10010 or as otherwise instructed by
the Administrative Agent.
(b) Except as otherwise expressly provided herein,
whenever any payment (including principal of or interest on
any Borrowing or any Fees or other amounts) hereunder shall
become due, or otherwise would occur, on a day that is not
a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall
in such case be included in the computation of interest or
Fees, if applicable.
"SECTION 2.19. Taxes. (a) Any and all payments by the
Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments,
then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including
deductions applicable to additional sums payable under this
Section) the Administrative Agent or such Lender (as the
case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes
not paid pursuant to Section 2.19(a)(iii) to the relevant
Governmental Authority in accordance with applicable law.
As of the Closing Date, each Foreign Lender intends to make
Loans hereunder out of an office located in the
United States of America or out of an office so that such
Loans would not be subject to Other Taxes.
(c) The Borrower shall indemnify the Administrative Agent
and each Lender, within 15 days after written demand
therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower
hereunder (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and
reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority; provided, however, that
the Borrower shall not be obligated to make a payment
pursuant to this Section 2.19 in respect of penalties,
interest and other liabilities attributable to any
Indemnified Taxes or Other Taxes, if (i) such penalties,
interest and other liabilities are attributable to the
failure of the Administrative Agent or such Lender, as the
case may be, to pay amounts paid to the Administrative
Agent or such Lender by the Borrower (for Indemnified Taxes
or Other Taxes) to the appropriate taxing authority in a
timely manner after receipt of such payment from the
Borrower or (ii) such penalties, interest and other
liabilities are attributable to the gross negligence or
wilful misconduct of the Administrative Agent or such
Lender, as the case may be. After the Administrative Agent
or a Lender learns of the imposition of Indemnified Taxes
or Other Taxes, such person will act in good faith to
promptly notify the Borrower of its obligations hereunder.
A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender, or by the
Administrative Agent on its behalf or on behalf of a
Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a
Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of
a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect
to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by
applicable law and reasonably requested by the Borrower as
will permit such payments to be made without withholding or
at a reduced rate. Each Foreign Lender, before it signs
and delivers this Agreement if listed on the signature
pages hereof and before it becomes a Lender in the case of
each other Foreign Lender, and from time to time
thereafter, before the date any such form expires or
becomes obsolete or invalid, shall provide the
Borrower and the Administrative Agent with Internal Revenue
Service form W-8BEN or W-8ECI (or other appropriate or
successor form prescribed by the Internal Revenue Service)
in duplicate, certifying that such Foreign Lender is
entitled to benefits under an income tax treaty to which
the United States of America is a party which exempts the
Foreign Lender from U.S. withholding tax on payments of
interest for the account of such Foreign Lender or
certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct by such
Foreign Lender of a trade or business in the United States
of America and exempt from United States withholding tax.
(f) If the Administrative Agent or a Lender determines
that it has received a refund or credit in respect of and
specifically associated with any Indemnified Taxes or Other
Taxes as to which it has been indemnified by the Borrower,
or with respect to which the Borrower has paid additional
amounts, it shall promptly notify the Borrower of such
refund or credit and shall within 15 days from the date of
receipt of such refund or benefit of such credit pay over
the amount of such refund or benefit of such credit
(including any interest paid or credited by the
relevant taxing authority or Governmental Authority with
respect to such refund or credit) to the Borrower (but only
to the extent of indemnity payments made, or additional
amounts paid, by the Borrower with respect to the
Indemnified Taxes or Other Taxes giving rise to such refund
of credit), net of all out-of-pocket expenses of such
person. If the Administrative Agent or a Lender shall
become aware that it is entitled to receive a refund or
credit in respect of Indemnified Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts,
it shall promptly notify the Borrower of the availability
of such refund or credit and shall, within 15 days after
receipt of a request for such by the Borrower (whether as a
result of notification that it has made of such to the
Borrower or otherwise), make a claim to such taxing
authority or Governmental Authority for such refund or
credit and contest such Indemnified Taxes, Other Taxes or
liabilities if (i) such Lender or the Administrative Agent
determines, in its sole discretion, that it would not be
materially disadvantaged or prejudiced as a result of such
contest (it being understood that the mere existence of
fees, charges, costs or expenses that the Borrower has
offered to and agreed to pay on behalf of a Lender or
the Administrative Agent shall not be deemed to be
materially disadvantageous to such person) and (ii) the
Borrower furnishes, upon request of the Lender or the
Administrative Agent, an opinion of reputable tax counsel
(such opinion and such counsel to be acceptable to such
Lender or the Administrative Agent) to the effect that such
Indemnified Taxes or Other Taxes were wrongfully or
illegally imposed.
"SECTION 2.20. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate. (a) In the event (i) any
Lender delivers a certificate requesting compensation
pursuant to Section 2.13, (ii) any Lender delivers a
notice described in Section 2.14 or (iii) the Borrower is
required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender pursuant
to Section 2.19, the Borrower may, at its sole expense
and effort (including with respect to the processing and
recordation fee referred to in Section 9.04(b)), upon
notice to such Lender and the Administrative Agent, require
such Lender to transfer and assign, without recourse (in
accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights
and obligations under this Agreement to an assignee that
shall assume such assigned obligations (which assignee may
be another Lender, if a Lender accepts such assignment);
provided that (x) such assignment shall not conflict with
any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the
Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not
unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender in
immediately available funds an amount equal to the sum of
the principal of and interest accrued to the date of such
payment on the outstanding Loans of such Lender,
respectively, plus all Fees and other amounts accrued for
the account of such Lender hereunder (including any
amounts under Section 2.13 and Section 2.15); provided
further that, if prior to any such transfer and assignment
the circumstances or event that resulted in such Lender's
claim for compensation under Section 2.13 or notice under
Section 2.14 or the amounts paid pursuant to Section 2.19,
as the case may be, cease to cause such Lender to suffer
increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to
have the consequences specified in Section 2.14, or cease
to result in amounts being payable under Section 2.19, as
the case may be (including as a result of any action taken
by such Lender pursuant to paragraph (b) below), or if
such Lender shall waive its right to claim further
compensation under Section 2.13 in respect of such
circumstances or event or shall withdraw its notice under
Section 2.14 or shall waive its right to further payments
under Section 2.19 in respect of such circumstances or
event, as the case may be, then such Lender shall not
thereafter be required to make any such transfer and
assignment hereunder.
(b) If (i) any Lender shall request compensation under
Section 2.13, (ii) any Lender delivers a notice described
in Section 2.14 or (iii) the Borrower is required to pay
any additional amount or indemnity payment to any Lender
or any Governmental Authority on account of any Lender,
pursuant to Section 2.19, then such Lender shall
use reasonable efforts (which shall not require such Lender
to incur an unreimbursed loss or unreimbursed cost or
expense or otherwise take any action inconsistent with its
internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document
reasonably requested in writing by the Borrower or (y) to
assign its rights and delegate and transfer its obligations
hereunder to another of its offices, branches or
affiliates, if such filing or assignment would reduce its
claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would
reduce amounts payable pursuant to Section 2.19, as the
case may be, in the future. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any
Lender in connection with any such filing or assignment,
delegation and transfer.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative
Agent and each of the Lenders that:
"SECTION 3.01. Organization; Powers. The Borrower and
each of the Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite
power and authority to own its property and assets and to
carry on its business as now conducted and (c) is qualified
to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect.
"SECTION 3.02. Authorization. The execution, delivery and
performance by the Borrower of this Agreement and the
transactions contemplated hereby (including the Borrowings
hereunder) (collectively, the "Transactions") (a) are
within the Borrower's corporate powers and have been duly
authorized by all requisite corporate and, if required,
stockholder action and (b) will not (i) violate (A) any
provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other
constitutive documents or by-laws of the
Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any
indenture, agreement or other instrument to which the
Borrower or any Subsidiary is a party or by which any of
them or any of their property is or may be bound, the
effect of which could reasonably be expected to result in a
Material Adverse Effect, (ii) result in a breach of or
constitute (alone or with notice or lapse of time or both)
a default under, or give rise to any right to accelerate or
to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other
instrument, the effect of which could reasonably be
expected to result in a Material Adverse Effect, or (iii)
result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or
hereafter acquired by the Borrower or any Subsidiary.
"SECTION 3.03. Enforceability. This Agreement has been
duly executed and delivered by the Borrower and constitutes
a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and to
general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
"SECTION 3.04. Governmental Approvals. No action, consent
or approval of, registration or filing with or any other
action by any Governmental Authority is or will be required
in connection with the Transactions, except for such as
have been made or obtained and are in full force and
effect.
"SECTION 3.05. Financial Statements. The Borrower has
heretofore furnished to the Lenders its consolidated
balance sheets and related statements of income,
stockholders' equity and cash flows (i) as of and for the
fiscal year ended December 31, 2000, audited by and
accompanied by the opinion of PricewaterhouseCoopers LLP,
independent public accountants, and (ii) as of and for the
fiscal quarter and the portion of the fiscal year ended
September 30, 2001, certified by its chief financial
officer. Such financial statements present fairly, in all
material respects, the financial condition and results of
operations and cash flows of the Borrower and its
consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to normal year-end
audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
"SECTION 3.06. No Material Adverse Change. Since December
31, 2000, there has been no material adverse change in the
financial condition, results of operations or business of
the Borrower and the Subsidiaries, taken as a whole.
"SECTION 3.07. Subsidiaries. Schedule 3.07 sets forth as
of the Closing Date a list of all Subsidiaries and the
percentage ownership interest of the Borrower therein.
"SECTION 3.08. Litigation; Compliance with Laws. (a)
There are not any actions, suits or proceedings at law or
in equity or by or before any Governmental Authority now
pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary or any
business, property or rights of any such person (i) that
involve this Agreement or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries is in
violation of any law, rule or regulation, or is in default
with respect to any judgment, writ, injunction, decree or
order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a
Material Adverse Effect.
"SECTION 3.09. Federal Reserve Regulations. (a) The
Borrower is not engaged principally, or as one of its
important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used,
whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions
of the Regulations of the Board, including Regulation T,
U or X.
"SECTION 3.10. Investment Company Act; Public Utility
Holding Company Act. None of the Borrower or any of the
Subsidiaries is (a) an "investment company" as defined in,
or subject to regulation under, the Investment Company Act
of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding
Company Act of 1935.
"SECTION 3.11. Use of Proceeds. The Borrower will use the
proceeds of the Loans only for the purposes specified in
the preamble to this Agreement.
"SECTION 3.12. Tax Returns. Each of the Borrower and the
Subsidiaries has filed or caused to be filed all Federal,
state, local and foreign tax returns or materials required
to have been filed by it and has paid or caused to be paid
all Taxes due and payable by it and all assessments
received by it, except (a) Taxes that are being contested
in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary, as applicable, shall have set
aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.
"SECTION 3.13. No Material Misstatements. None of (a) the
Confidential Information Memorandum or (b) any other
information, report, financial statement, exhibit or
schedule furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the
negotiation of this Agreement contains any material
misstatement of fact or omits to state any material fact
necessary to make the statements therein taken as a whole,
in the light of the circumstances under which they were
made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast or
projection, the Borrower represents only that it acted in
good faith and utilized reasonable assumptions and due care
in the preparation of such information, report, financial
statement, exhibit or schedule.
"SECTION 3.14. Employee Benefit Plans. No ERISA Event has
occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events, could
reasonably be expected to result in a Material Adverse
Effect. The accumulated benefit obligations (as defined in
Statement of Financial Accounting Standards No. 87) under
all Plans (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87)
did not, as of the last annual valuation dates applicable
thereto, exceed by more than $50,000,000 the fair market
value of the assets of all such Plans.
"SECTION 3.15. Environmental Matters. Except with respect
to any matters that, individually or in the aggregate,
could not reasonably be expected to result in a Material
Adverse Effect, neither the Borrower nor any of the
Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any
Environmental Law, (ii) is subject to any Environmental
Liability, (iii) has received written notice of any claim
with respect to any Environmental Liability or (iv) knows
of any basis for any Environmental Liability of the
Borrower or the Subsidiaries.
"SECTION 3.16. Senior Indebtedness. The Loans and other
obligations hereunder constitute "Senior Indebtedness"
under and as defined in the Subordinated Note
Documents.
ARTICLE IV
IV Conditions of Lending
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
"SECTION 4.01. All Borrowings. On the date of each
Borrowing:
(a) The Administrative Agent shall have received a notice
of such Borrowing as required by Section 2.03 or 2.04, as
applicable.
(b) The representations and warranties set forth in
Article III hereof shall be true and correct in all
material respects on and as of the date of such
Borrowing with the same effect as though made on and as of
such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing,
no Event of Default or Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a
representation and warranty by the Borrower on the date of
such Borrowing as to the matters specified in paragraphs
(b) and (c) of this Section 4.01.
"SECTION 4.02. Closing Date. On the Closing Date:
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of
this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed
signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received, on
behalf of itself and the Lenders a favorable written
opinion of each of (i) Bradford T. Smith, Chief Legal
Counsel of the Borrower, substantially to the effect set
forth in Exhibit E-1, and (ii) Davis Polk & Wardwell,
special counsel for the Borrower, substantially
to the effect set forth in Exhibit E-2, (A) dated the
Closing Date, (B) addressed to the Administrative Agent and
the Lenders, and (C) covering such other matters relating
to this Agreement and the Transactions as the
Administrative Agent shall reasonably request, and the
Borrower hereby requests such counsel to deliver such
opinions.
(c) The Administrative Agent shall have received (i) a
copy of the certificate of incorporation, including all
amendments thereto, of the Borrower, certified as of a
recent date by the Secretary of State of the State of
Delaware, and a certificate as to the good standing of the
Borrower as of a recent date, from such Secretary of State;
(ii) a certificate of the Secretary or Assistant
Secretary of the Borrower dated the Closing Date and
certifying (A) that attached thereto is a true and complete
copy of the by-laws of the Borrower as in effect on the
Closing Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B)
that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of the
Borrower authorizing the execution, delivery and
performance of this Agreement and the borrowings hereunder,
and that such resolutions have not been modified, rescinded
or amended and are in full force and effect, (C) that the
certificate of incorporation of the Borrower has not been
amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen
signature of each officer executing this Agreement or
any other document delivered in connection herewith on
behalf of the Borrower; (iii) a certificate of another
officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate
pursuant to (ii) above; and (iv) such other documents
relating to the Borrower, this Agreement or the
Transactions as the Lenders or the Administrative Agent may
reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a
Financial Officer of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (b)
and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees
and other amounts due and payable on or prior to the
Closing Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower
hereunder.
(f) The Three-Year Credit Agreement shall have been
executed and delivered and the conditions precedent set
forth in Section 4.02 thereof satisfied or waived.
(g) All principal, interest, fees and other amounts
outstanding or due under the Existing Credit Agreement
shall have been paid in full, the commitments thereunder
terminated and all guarantees thereof released and
discharged, and the Administrative Agent shall have
received satisfactory evidence thereof.
(h) The credit facilities provided for by this Agreement
and the Three-Year Credit Agreement shall be rated not
lower than BBB by S&P, and the Administrative Agent shall
have received satisfactory evidence thereof.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that
until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all
other expenses or amounts payable hereunder shall
have been paid in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and will
cause each of the Subsidiaries to:
"SECTION 5.01. Existence; Businesses and Properties. (a)
Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal
existence, except as otherwise expressly permitted under
Section 6.04.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect
its rights, licenses, permits, franchises, authorizations,
patents, copyrights, trademarks and trade names,
and comply in all material respects with all applicable
laws, rules, regulations and decrees and orders of any
Governmental Authority, in each case except where the
failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
"SECTION 5.02. Insurance. Maintain with responsible and
reputable insurance companies insurance, to such extent and
against such risks as is customary with companies in the
same or similar businesses operating in the same or similar
locations.
"SECTION 5.03. Obligations and Taxes. Pay its Indebtedness
and other obligations, including Taxes, before the same
shall become delinquent or in default, except where (a) the
validity or amount thereof shall be contested in good faith
by appropriate proceedings and the Borrower shall have set
aside on its books adequate reserves with respect thereto
in accordance with GAAP or (b) to the extent that the
failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
"SECTION 5.04. Financial Statements, Reports, etc. In the
case of the Borrower, furnish to the Administrative Agent
and each Lender:
(a) within 105 days after the end of each fiscal year, its
consolidated balance sheet and related statements of
income, stockholders' equity and cash flows as of the close
of and for such fiscal year, together with comparative
figures for the immediately preceding fiscal year, all
audited by PricewaterhouseCoopers LLP or other independent
public accountants of recognized national standing and
accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the
effect that such consolidated financial statements present
fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated
balance sheet and related statements of income,
stockholders' equity and cash flows as of the close of and
for such fiscal quarter and the then elapsed portion of the
fiscal year, and comparative figures for the same
periods in the immediately preceding fiscal year, all
certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a
Financial Officer (A) certifying that no Event of Default
or Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be
taken with respect thereto, (B) setting forth computations
in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the covenants contained
in Sections 6.07 and 6.08 and (C) stating whether any
change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred
to in Section 3.05 and, if any such change has occurred,
specifying the effect of such change on the financial
statements accompanying such certificate;
(d) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary
with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as
the case may be;
(e) promptly after the receipt thereof by the Borrower or
any of its Subsidiaries, a copy of any "management letter"
received by any such person from its certified public
accountants and the management's response thereto; and
(f) promptly, from time to time, such other information
regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance
with the terms of this Agreement, as the Administrative
Agent or any Lender may reasonably request.
"SECTION 5.05. Litigation and Other Notices. In the case
of the Borrower, furnish to the Administrative Agent and
each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature
and extent thereof and the corrective action (if any) taken
or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice
of intention of any person to file or commence, any action,
suit or proceeding, whether at law or in equity or by or
before any Governmental Authority, against the Borrower or
any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect;
(c) any change in the rating by S&P of the Index Debt; and
(d) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred,
could reasonably be expected to result in a Material
Adverse Effect.
"SECTION 5.06. Maintaining Records; Access to Properties
and Inspections. Keep books of record and account in
conformity with GAAP and all requirements of law in
relation to its business and activities. The Borrower
will, and will cause each of its Subsidiaries to, permit
any representatives designated by the Administrative Agent
or any Lender, upon reasonable prior notice, to visit and
inspect the financial records and the properties of the
Borrower or any Subsidiary at reasonable times and as often
as reasonably requested and to make extracts from and
copies of such financial records, and permit any
representatives designated by the Administrative Agent or
any Lender to discuss the affairs, finances and condition
of the Borrower or any Subsidiary with the officers thereof
and independent accountants therefor.
"SECTION 5.07. Use of Proceeds. Use the proceeds of the
Loans only for the purposes set forth in the preamble to
this Agreement.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that,
until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all
other expenses or amounts payable hereunder have
been paid in full, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, and
will not cause or permit any of the Subsidiaries to:
"SECTION 6.01. Subsidiary Indebtedness. With respect to
the Subsidiaries, incur, create, issue, assume or permit to
exist any Indebtedness or preferred stock, except:
(a) Indebtedness or preferred stock existing on the date
hereof and having an aggregate principal amount (or, in the
case of preferred stock, an aggregate liquidation
preference) of less than $25,000,000 in the aggregate and,
in the case of any such Indebtedness, any extensions,
renewals or replacements thereof to the extent the
principal amount of such Indebtedness is not increased, and
such Indebtedness, if subordinated to the Loans, remains so
subordinated on terms no less favorable to the Lenders,
and the original obligors in respect of such Indebtedness
remain the only obligors thereon;
(b) Indebtedness created or existing (i) hereunder or
(ii) under the Three-Year Credit Agreement;
(c) intercompany Indebtedness or preferred stock to the
extent owing to or held by the Borrower or another
Subsidiary;
(d) Indebtedness of any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or
capital assets, and extensions, renewals and replacements
of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (i)
such Indebtedness is incurred prior to or within 180 days
after such acquisition or the completion of such
construction or improvement and (ii) the aggregate
principal amount of Indebtedness permitted by this Section
6.01(d), when combined with the aggregate principal amount
of all Capital Lease Obligations incurred pursuant to
Section 6.01(e) and all Indebtedness incurred pursuant to
Section 6.01(f), shall not exceed $100,000,000 at any
time outstanding;
(e) Capital Lease Obligations in an aggregate principal
amount, when combined with the aggregate principal amount
of all Indebtedness incurred pursuant to Section 6.01(d)
and Section 6.01(f), not in excess of $100,000,000 at any
time outstanding;
(f) Indebtedness of any person that becomes a Subsidiary
after the date hereof; provided that (i) such Indebtedness
exists at the time such person becomes a Subsidiary and is
not created in contemplation of or in connection with such
person becoming a Subsidiary, (ii) immediately before and
after such person becomes a Subsidiary, no Event of Default
or Default shall have occurred and be continuing and (iii)
the aggregate principal amount of Indebtedness permitted by
this clause (f), when combined with the aggregate principal
amount of all Indebtedness incurred pursuant to Section
6.01(d) and all Capital Lease Obligations incurred pursuant
to Section 6.01(e), shall not exceed $100,000,000 at any
time outstanding;
(g) Indebtedness under performance bonds or with respect
to workers' compensation claims, in each case incurred in
the ordinary course of business; and
(h) additional Indebtedness or preferred stock of the
Subsidiaries to the extent not otherwise permitted by the
foregoing clauses of this Section 6.01 in an aggregate
principal amount (or, in the case of preferred stock, with
an aggregate liquidation preference), when combined
(without duplication) with the amount of obligations of the
Borrower and its Subsidiaries secured by Liens pursuant to
Section 6.02(j), not to exceed $100,000,000 at any time
outstanding.
"SECTION 6.02. Liens. Create, incur, assume or permit to
exist any Lien on any property or assets (including Equity
Interests or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof,
except:
(a) Liens on property or assets of the Borrower and its
Subsidiaries existing on the date hereof and encumbering
property or assets with a fair market value, and securing
obligations having an aggregate principal amount, in each
case less than $25,000,000 in the aggregate; provided that
(x) such Liens shall secure only those obligations which
they secure on the date hereof and extensions, renewals and
replacements thereof permitted hereunder and (y) such
Liens shall not apply to any other property or assets of
the Borrower or any of the Subsidiaries;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or
existing on any property or asset of any person that
becomes a Subsidiary after the date hereof prior to the
time such person becomes a Subsidiary; provided that (i)
such Lien is not created in contemplation of or in
connection with such acquisition or such person becoming a
Subsidiary, as the case may be, (ii) such Lien does not
apply to any other property or assets of the Borrower or
any Subsidiary and (iii) such Lien shall secure only those
obligations which it secures on the date of such
acquisition or the date such person becomes a Subsidiary,
as the case may be and extensions, renewals and
replacements thereof permitted hereunder;
(c) Liens for taxes not yet due or which are being
contested in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary
course of business and securing obligations that are not
overdue by more than 90 days or which are being contested
in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation,
unemployment insurance and other social security laws or
regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than
Capital Lease Obligations), statutory obligations, surety
and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of
business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and
do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries;
(h) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or,
in the case of improvements, constructed) by the Borrower
or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by Section 6.01,
(ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 180 days
after such acquisition (or construction) and (iii) such
security interests do not apply to any other property or
assets of the Borrower or any Subsidiary;
(i) Liens in respect of judgments that do not constitute an
Event of Default; and
(j) Liens not otherwise permitted by the foregoing clauses
of this Section 6.02 securing obligations otherwise
permitted by this Agreement in an aggregate principal and
face amount, when combined (without duplication) with the
amount of Indebtedness or preferred stock of Subsidiaries
incurred pursuant to Section 6.01(h), not to exceed
$100,000,000 at any time outstanding.
"SECTION 6.03. Sale and Lease-Back Transactions. Enter
into any arrangement, directly or indirectly, with any
person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease
such property or other property which it intends to use for
substantially the same purpose or purposes as the property
being sold or transferred unless (a) the sale of such
property is permitted by Section 6.04 and (b) any Capital
Lease Obligations or Liens arising in connection therewith
are permitted by Sections 6.01 and 6.02, respectively.
"SECTION 6.04. Mergers, Consolidations and Sales of Assets.
Merge into or consolidate with any other person, or permit
any other person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or
substantially all the assets (whether now owned or
hereafter acquired) of the Borrower, except that, if at the
time thereof and immediately after giving effect thereto no
Event of Default or Default shall have occurred and be
continuing, (a) any person may merge into the Borrower in a
transaction in which the Borrower is the surviving
corporation and (b) any person, other than the Borrower,
may merge into or consolidate with any Subsidiary in a
transaction in which the surviving entity is a Subsidiary.
"SECTION 6.05. Restricted Payments. Declare or make, or
agree to declare or make, directly or indirectly, any
Restricted Payment (including pursuant to any Synthetic
Purchase Agreement), or incur any obligation (contingent or
otherwise) to do so; provided, however, that (i) any
Subsidiary may declare and pay dividends or make other
distributions ratably to holders of Equity Interests in it,
(ii) the Borrower may declare and pay dividends or make
other distributions of its Equity Interests and (iii) so
long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, the Borrower
and the Subsidiaries may declare and make, directly or
indirectly, additional Restricted Payments to the extent
not otherwise permitted by the foregoing clauses of this
Section 6.05 in an aggregate amount not to exceed
$300,000,000.
"SECTION 6.06. Business of Borrower and Subsidiaries.
Engage to any material extent in any business or business
activity other than businesses of the type currently
conducted by the Borrower and the Subsidiaries and
business activities reasonably related thereto.
"SECTION 6.07.Interest Coverage Ratio. Permit the
Interest Coverage Ratio for any period of four consecutive
fiscal quarters, in each case taken as one accounting
period, to be less than 5.0 to 1.0.
"SECTION 6.08. Maximum Leverage Ratio. Permit the
Leverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period, to
be greater than 2.5 to 1.0.
"SECTION 6.09. Hedging Agreements . Enter into any Hedging
Agreement other than non-speculative Hedging Agreements
entered into to hedge or mitigate risks to which the
Borrower or a Subsidiary is exposed in the ordinary course
of the conduct of its business or the management of its
liabilities.
ARTICLE VII
Events of Default
In case of the happening of any of the following events
("Events of Default"):
(a) any representation or warranty made or deemed made in
or in connection with this Agreement or the Borrowings
hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial
statement or other instrument furnished in connection
with or pursuant to this Agreement shall prove to have been
false or misleading in any material respect when so made,
deemed made or furnished;
(b) default shall be made in the payment of any principal
of any Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an
amount referred to in (b) above) due under this Agreement,
when and as the same shall become due and payable, and such
default shall continue unremedied for a period of
five Business Days;
(d) default shall be made in the due observance or
performance by the Borrower or any Subsidiary of any
covenant, condition or agreement contained in Section
5.01(a) (with respect to the Borrower), 5.05(a) or 5.07
or in Article VI;
(e) default shall be made in the due observance or
performance by the Borrower or any Subsidiary of any
covenant, condition or agreement contained in this
Agreement (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a
period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be
given at the request of any Lender);
(f) (i) the Borrower or any Material Subsidiary shall (i)
fail to pay any principal or interest, regardless of
amount, due in respect of any Material Indebtedness, when
and as the same shall become due and payable (after giving
effect to any applicable grace period), or (ii) any other
event or condition occurs (after giving effect to any
applicable grace period) that results in any Material
Indebtedness becoming due prior to its scheduled
maturity or that enables or permits the holder or holders
of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (ii) shall not apply to
secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets
securing such Indebtedness;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower
or any Material Subsidiary, or of a substantial
part of the property or assets of the Borrower or a
Material Subsidiary, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Material
Subsidiary or for a substantial part of the property or
assets of the Borrower or a Material Subsidiary or (iii)
the winding-up or liquidation of the Borrower or any
Material Subsidiary; and such proceeding or petition
shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be
entered;
(h) the Borrower or any Material Subsidiary shall (i)
voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding
or the filing of any petition described in (g) above, (iii)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any Material Subsidiary or for
a substantial part of the property or assets of the
Borrower or any Material Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
amount in excess of $50,000,000 individually or $75,000,000
in the aggregate shall be rendered against the Borrower,
any Material Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30
consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by
a judgment creditor to levy upon assets or properties of
the Borrower or any Material Subsidiary to enforce
any such judgment; provided, however, that any such
judgment shall not be an Event of Default under this
paragraph (i) if and for so long as (i) the entire amount
of such judgment is covered by a valid and binding policy
of insurance between the defendant and the insurer covering
payment thereof and (ii) such insurer, which shall be rated
at least "A" by A.M. Best Company, has been notified of,
and has not disputed the claim made for payment of the
amount of such judgment;.
(j) one or more ERISA Events shall have occurred that
results in liability of the Borrower and its ERISA
Affiliates exceeding $50,000,000 individually or
$75,000,000 in the aggregate; or
(k) there shall have occurred a Change in Control;then, and
in every such event (other than an event with respect to
the Borrower described in paragraph (g) or (h) above), and
at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take
either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments
and (ii) declare the Loans then outstanding to be forthwith
due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower
accrued hereunder, shall become forthwith due and payable,
without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by
the Borrower, anything contained hereinto the contrary
notwithstanding; and in any event with respect to the
Borrower described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything
contained herein to the contrary notwithstanding.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the
Administrative Agent its agent and authorizes the
Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the
Administrative Agent by the terms of this Agreement,
together with such actions and powers as are reasonably
incidental thereto.
The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as
though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the
borrower or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth in this
Agreement. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be
subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and
powers expressly contemplated by this Agreement that the
Administrative Agent is required to exercise in writing
by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the
circumstances as provided in Section 9.08),
and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose,
and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of the
Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent
shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in
Section 9.08) or in the absence of its own gross negligence
or wilful misconduct. The Administrative Agent shall not
be deemed to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent
by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this
Agreement, (ii) the contents of any certificate,
report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this
Agreement or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to
be genuine and to have been signed or sent by the proper
person. The Administrative Agent may also rely upon any
statement made to it orally or by telephone and believed by
it to have been made by the proper person, and shall not
incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants
and other experts selected by it, and shall not be liable
for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or
more sub-agents appointed by it. The Administrative Agent
and any such sub-agent may perform any and all its duties
and exercise its rights and powers by or through their
respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent
and to the Related Parties of each Administrative Agent and
any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit
facilities provided for herein as well as activities as
Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative
Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required
Lenders shall have the right, with the consent
of the Borrower (such consent not to be unreasonably
withheld or delayed), to appoint a successor. If no
successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint
a
successor Administrative Agent which shall be a bank with
an office in New York, New York, or an Affiliate of any
such bank, that is acceptable to the Borrower (which shall
not unreasonably withhold its approval). Upon the
acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. The fees payable
by the Borrower to a successor Administrative shall be the
same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor.
After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.05 shall
continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted
to be taken by any of them while acting as Administrative
Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender
and based on such documents and information as it shall
from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or
based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
"SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as
follows:
(a) if to the Borrower, to it at 231 Maple Avenue,
Burlington, NC 27215, Attention of Wesley R. Elingburg
(Telecopy No. (336) 436-1066);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, Eleven Madison Avenue, New York, NY 10010,
Attention of Ronald Davis, Agency Group (Telecopy No. (212)
325-8304, with a copy to Credit Suisse First Boston, at
Eleven Madison Avenue, New York, NY 10010, Attention of
Agency Group Manager (Telecopy No. (212) 325-8304); and
(c) if to a Lender, to it at its address (or telecopy
number) set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have become
a party hereto.
All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
"SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
Borrower herein and in the certificates or other
instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been
relied upon by the Lenders and shall survive the making by
the Lenders of the Loans, regardless of any investigation
made by the Lenders or on their behalf, and shall continue
in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount
payable under this Agreement is outstanding and unpaid and
so long as the Commitments have not been terminated. The
provisions of Sections 2.13, 2.15, 2.19 and 9.05 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of
the Commitments, the invalidity or unenforceability of any
term or provision of this Agreement, or any investigation
made by or on behalf of the Administrative Agent or any
Lender.
"SECTION 9.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower
and the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other
parties hereto.
"SECTION 9.04. Successors and Assigns. (a) Whenever in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower,
the Administrative Agent or the Lenders that are contained
in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or
a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it);
provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate of a Lender, (x) the
Borrower and the Administrative Agent must give their prior
written consent to such assignment (which consent shall not
be unreasonably withheld or delayed); provided, however,
that the consent of the Borrower shall not be required to
any such assignment during the continuance of any Event of
Default described in paragraph (g) or (h) of Article VII,
and (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent)
shall not be less than $5,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment), (ii) each
such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights
and obligations under this Agreement, (iii) the parties to
each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500 and (iv)
the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire
and applicable tax forms. Upon acceptance and recording
pursuant to paragraph (e) of this Section 9.04, from and
after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations
of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case
of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease
to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well
as to any Fees accrued for its account and not yet paid).
Notwithstanding the foregoing, any Lender assigning its
rights and obligations under this Agreement may retain any
Competitive Loans made by it outstanding at such time, and
in such case shall retain its rights hereunder in respect
of any such Loans so retained until such Loans have been
repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the
assignee thereunder shall be deemed to confirm to and agree
with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Revolving
Loans and Competitive Loans, in each case without giving
effect to assignments thereof which have not become
effective, are as set forth in such Assignment and
Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with
this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished
pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the
Borrower or any Subsidiary of any of its obligations under
this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms
that it has received a copy of this Agreement, together
with copies of the most recent financial statements
referred to in Section 3.05 or delivered pursuant to
Section 5.04 and such other documents and information as it
has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v)
such assignee will independently and without reliance upon
the Administrative Agent, such assigning Lender or
any other Lender and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not
taking action under this Agreement; (vi) such assignee
appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance
with their terms all the obligations which by the terms
of this Agreement are required to be performed by it as a
Lender.
(d) The Administrative Agent, acting for this purpose as
an agent of the Borrower, shall maintain at one of its
offices in The City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall
be conclusive and the Borrower, the Administrative Agent
and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower and any Lender,
at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee,
an Administrative Questionnaire completed in respect of the
assignee (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written
consent of the Borrower and the Administrative Agent to
such assignment, the Administrative Agent shall (i) accept
such Assignment and Acceptance and (ii) record the
information contained therein in the Register.
No assignment shall be effective unless it has been
recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower or
the Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights
and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to
the benefit of the cost protection provisions contained in
Sections 2.13, 2.15 and 2.19 to the same extent as if they
were Lenders (but, with respect to any particular
participant, to no greater extent than the Lender that sold
the participation to such participant) and (iv) the
Borrower, the Administrative Agent and the Lenders shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right
to enforce the obligations of the Borrower relating to the
Loans and to approve any amendment, modification
or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees
payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, extending any
scheduled principal payment date or date fixed for the
payment of interest on the Loans or increasing or extending
the Commitments).
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or
participation pursuant to this Section 9.04, disclose to
the assignee or participant or proposed assignee or
participant any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower;
provided that, prior to any such disclosure of information
designated by the Borrower as confidential, each such
assignee or participant or proposed assignee or participant
shall execute an agreement whereby such assignee or
participant shall agree (subject to customary exceptions)
to preserve the confidentiality of such confidential
information on terms no less restrictive than those
applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion
of its rights under this Agreement to secure extensions of
credit to such Lender or in support of obligations owed by
such Lender; provided that no such assignment shall release
a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party
hereto.
(i) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle (an "SPC"), identified as
such in writing from time to time by the Granting Lender to
the Administrative Agent and the Borrower, the option
to provide to the Borrower all or any part of any Loan that
such Granting Lender would otherwise be obligated to make
to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC
to make any Loan and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or
any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof.
The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and
as if, such Loan were made by such Granting Lender. Each
party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the
Granting Lender). In furtherance of the foregoing, each
party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date
that is one year and one day after the payment in full of
all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the
United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this
Section 9.04, any SPC may (i) with notice to, but without
the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial
institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to
its Loans to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity
enhancement to such SPC.
(j) The Borrower shall not assign or delegate any of its
rights or duties hereunder without the prior written
consent of the Administrative Agent and each Lender, and
any attempted assignment without such consent
shall be null and void.
SECTION 9.05. Expenses; Indemnity. tc \l2 "SECTION 9.05.
Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the syndication of
the credit facilities provided for herein and the
preparation and administration of this Agreement or in
connection with any amendments, modifications or waivers of
the provisions hereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or
incurred by the Administrative Agent or any Lender in
connection with the enforcement or protection of its rights
in connection with this Agreement or in connection with the
Loans made hereunder, including the reasonable fees,
charges and disbursements of Cravath, Swaine & Moore,
counsel for the Administrative Agent, and, in connection
with any such enforcement or protection, the reasonable
fees, charges and disbursements of any other counsel for
the Administrative Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative
Agent, each Lender and each Related Party of any of the
foregoing persons (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against
any Indemnitee (other than Taxes, Other Taxes or amounts
that would be Other Taxes if imposed by the United States
of America or any political subdivision thereof) arising
out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any
agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective
obligations thereunder or the consummation of the
Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans, or
(iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities
or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment
(a "Final Judgment") to have resulted from the gross
negligence or wilful misconduct of such Indemnitee or (y)
arise from any legal proceedings
commenced against any Lender by any other Lender (other
than legal proceedings against the Administrative Agent in
its capacity as such) or in which a Final Judgment is
rendered in the Borrower's favor against such Indemnitee.
(c) To the extent that the Borrower fails to pay any
amount required to be paid by it to the Administrative
Agent under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to the Administrative
Agent such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent in
its capacity as such. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the
sum of the Aggregate Revolving Credit Exposure and unused
Commitments at the time.
(d) To the extent permitted by applicable law, the
Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section 9.05 shall be
payable not later than 15 days after written demand
therefor.
SECTION 9.06. Right of Setoff. tc \l2 "SECTION 9.06. Right
of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender is hereby authorized at any time
and from time to time, except to the extent prohibited by
law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now
or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender
under this Section 9.06 are in addition to other rights and
remedies (including other rights of setoff) which such
Lender may have.
"SECTION 9.07. Applicable Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
"SECTION 9.08. Waivers; Amendment. (a) No failure or
delay of the Administrative Agent or any Lender in
exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and
remedies of the Administrative Agent and the Lenders
hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any
departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose
for which given. No notice 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.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement
or agreements in writing entered into by the Borrower and
the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any
Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender affected
thereby, (ii) increase or extend the Commitment or decrease
or extend the date for payment of any Fees of any Lender
without the prior written consent of such Lender, (iii)
amend or modify the pro rata requirements of Section 2.16,
the provisions of Section 9.04(j), the provisions of this
Section or the definition of the term "Required Lenders",
without the prior written consent of each Lender or (iv)
modify the protections afforded to an SPC pursuant to the
provisions of Section 9.04(i) without the written consent
of such SPC; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder without the prior
written consent of the Administrative Agent.
SECTION 9.09. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all
fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively
the "Charges"), shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan
or participation in accordance with applicable law, the
rate of interest payable in respect of such Loan or
participation hereunder, together with all Charges payable
in respect thereof, shall be limited to the Maximum Rate
and, to the extent lawful, the interest and Charges that
would have been payable in respect of such Loan or
participation but were not payable as a result of the
operation of this Section 9.09 shall be cumulated and the
interest and Charges payable to such Lender in respect of
other Loans or participations or periods shall be
increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
"SECTION 9.10. Entire Agreement. This Agreement and the
Fee Letter dated November 29, 2001, between the Borrower
and Credit Suisse First Boston, constitute the entire
contract between the parties relative to the subject matter
hereof. Any other previous agreement among the parties
with respect to the subject matter hereof is superseded by
this Agreement. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person (other than
the parties hereto, their respective successors and assigns
permitted hereunder and, to the extent expressly
contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
"SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11.
"SECTION 9.12. Severability. In the event any one or more
of the provisions contained in this Agreement should be
held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any
way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or
unenforceable provisions.
"SECTION 9.13. Counterparts. This Agreement may be
executed in counterparts (and by different parties hereto
on different counterparts), each of which shall
constitute an original but all of which when taken together
shall constitute a single contract, and shall become
effective as provided in Section 9.03. Delivery of an
executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
"SECTION 9.14. Headings. Article and Section headings and
the Table of Contents used herein are for convenience of
reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
"SECTION 9.15. Jurisdiction; Consent to Service of Process.
(a) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court
of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or
for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that
the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this
Agreement against the Borrower or its properties in the
courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement
in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in
any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in
Section 9.01. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in
any other manner permitted by law.
"SECTION 9.16. Confidentiality. Each of the
administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its
Affiliates' officers, directors, employees and agents,
including accountants, legal counsel and other advisors who
need to know such Information in connection with its role
as Administrative Agent or Lender (as the case may be)
hereunder (it being understood that the persons to whom
such disclosure is made will be informed of the
confidential nature of such Information and instructed to
keep such Information confidential), (b) to the extent
requested by any regulatory authority or quasi-regulatory
authority (such as the National Association of Insurance
Commissioners) (provided that, to the extent permitted by
applicable law and practicable under the circumstances,
such person will first inform the Borrower of any such
request), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process
(provided that, to the extent permitted by applicable law,
such person will promptly notify the Borrower of such
requirement as far in advance of its disclosure as is
practicable to enable the Borrower to seek a protective
order and, to the extent practicable, such person will
cooperate with the Borrower in seeking any such order), (d)
in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to the
enforcement of its rights hereunder, (e) subject to an
agreement containing provisions substantially the same as
those of this Section 9.16, to (i) any actual or
prospective assignee of or participant in any of its rights
or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any credit
default swap or similar credit derivative transaction
relating to the obligations of the Borrower under this
Agreement, (f) with the consent of the Borrower or (g) to
the extent such Information becomes publicly available
other than as a result of a breach of this Section 9.16.
For the purposes of this Section, "Information" shall
mean all information received from the Borrower and related
to the Borrower or its business, other than any such
information that was available to the Administrative Agent
or any Lender on a nonconfidential basis prior to its
disclosure by the Borrower. Each of the Administrative
Agent and the Lenders agrees that, except as expressly
provided in this Section 9.16, it will use Information only
in connection with its role as Administrative Agent or
Lender (as the case may be) hereunder.
"SECTION 9.17. Termination of Existing Credit Agreement .
The Borrower and each of the Lenders that is also a Lender
(as defined in the Existing Credit Agreement) party to the
Existing Credit Agreement agree that the Commitments (as
defined in the Existing Credit Agreement) shall be
terminated in their entirety on the Closing Date in
accordance with the terms thereof, subject only to this
Section 9.17. Each of such Lenders waives (a)
any requirement of notice of such termination pursuant to
Section 2.04(a) of the Existing Credit Agreement and (b)
any claim to any facility fees under the Existing Credit
Agreement for any day on or after the Closing Date.
The Borrower (i) represents and warrants that (x) after
giving effect to the preceding sentences of this Section
9.17, the commitments under the Existing Credit Agreement
will be terminated effective not later than the
Closing Date and (y) no loans will be, as of the Closing
Date, outstanding under the Existing Credit Agreement and
(ii) covenants that all accrued and unpaid facility fees
and other amounts due and payable under the Existing
Credit Agreement shall have been paid on or prior to the
Closing Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
LABORATORY CORPORATION OF AMERICA HOLDINGS,
by
_________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Administrative Agent,
by:_______________________
Name:
Title:
by:______________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH,
by:______________________
Name:
Title:
by:_____________________
Name:
Title:
SIGNATURE PAGE TO LABORATORY
CORPORATION OF AMERICA HOLDINGS
364-DAY CREDIT AGREEMENT DATED
AS OF FEBRUARY 20, 2002
NAME OF LENDER: __________________________
by:____________________________
Name:
Title:
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES SUBSIDIARY LISTING EXHIBIT 21 The following table sets forth the subsidiaries of Laboratory Corporation of America Holdings on December 31, 2001. The financial statements of all subsidiaries are included in the consolidated statements of Laboratory Corporation of America Holdings and Subsidiaries. Organized under the laws of the state of: Laboratory Corporation of America Holdings Delaware Laboratory Corporation of America Delaware Tower Collection Center, Inc. Delaware Executive Tower Travel, Inc. Delaware Lab Delivery Service of New York City, Inc. New York LabCorp Delaware, Inc. Delaware LabCorp Limited United Kingdom LabCorp, BVBA Belgium PoisonLAB, Inc. California National Genetics Institute, Inc. California Path Lab Holdings, Inc. Delaware Path Lab, Inc. New Hampshire LTC Services & Holdings, Inc. New Hampshire Center for Genetic Services, Inc. Texas Viro-Med Laboratories, Inc. Minnesota MWorld, Inc. New York Burt Medical Laboratory, Inc. Connecticut
EXHIBIT 23.1 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-71896) and Forms S-8 (No. 33-43006, No. 33-55065, No. 333-38608, No. 333-39731, No. 333-39735, No. 333-94329, and No. 333-94331) of Laboratory Corporation of America Holdings of our report dated February 8, 2002, except for Note 10, as to which the date is February 20, 2002 relating to the financial statements and financial statement schedule, which appear in this Form 10-K. PricewaterhouseCoopers LLP Charlotte, North Carolina March 18, 2002
EXHIBIT 24.1
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 28th day of February, 2002.
By:/s/ JEAN-LUC BELINGARD
--------------------------
Jean-Luc Belingard
EXHIBIT 24.2
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 26th day of February, 2002.
By:/s/ WENDY E. LANE
---------------------
Wendy E. Lane
EXHIBIT 24.3
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 21st day of February, 2002.
By: /s/ ROBERT E. MITTELSTAEDT
-------------------------------
Robert E. Mittelstaedt
EXHIBIT 24.4
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 21st day of February, 2002.
By:/s/ JAMES B. POWELL, MD
---------------------------
James B. Powell, MD
EXHIBIT 24.5
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 21st day of February, 2002.
By:/s/ DAVID B. SKINNER, MD
----------------------------
David B. Skinner, MD
EXHIBIT 24.6
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these
presents this 26th day of February, 2002.
By:/s/ ANDREW G. WALLACE, MD
-----------------------------
Andrew G. Wallace, MD