-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IqUP60jS69ImuSiCbFR1s5Ea9+1U/2zQHlus0e4d242sbT04TTzC6Vyne51tGoHg ZNaFPT9ANdA5jsjAlGQNIQ== 0000012208-00-000002.txt : 20000411 0000012208-00-000002.hdr.sgml : 20000411 ACCESSION NUMBER: 0000012208-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIO RAD LABORATORIES INC CENTRAL INDEX KEY: 0000012208 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 941381833 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-07928 FILM NUMBER: 583380 BUSINESS ADDRESS: STREET 1: 1000 ALFRED NOBEL DR CITY: HERCULES STATE: CA ZIP: 94547 BUSINESS PHONE: 5107247000 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________ FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________________ Commission file number 1-7928 BIO-RAD LABORATORIES, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 94-1381833 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1000 Alfred Nobel Drive, Hercules, CA 94547 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (510) 724-7000 Securities registered pursuant to Section 12(b) of the Act:
Market Value on Name of Each Exchange Shares Outstanding March 1, 1999 of Stocks Title of Each Class on Which Registered March 1, 1999 Held by Non-Affiliates ------------------- --------------------- ------------------ ------------------------ Class A Common Stock Par Value $1.00 per share American Stock Exchange 9,977,862 $242,363,239 Class B Common Stock Par Value $1.00 per share American Stock Exchange 2,500,266 $ 10,215,330
Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Documents Incorporated by Reference Document Form 10-K Parts _________________________________________ ____________________ (1) Annual Report to Stockholders for the fiscal year ended December 31, 1999 (specified portions) I, II, IV (2) Definitive Proxy Statement to be mailed to stockholders in connection with the registrant's 2000 Annual Meeting of Stockholders (specified portions) III P A R T I ITEM 1. BUSINESS General Founded in 1957, Bio-Rad Laboratories, Inc. ("Bio-Rad" or the "Company") was initially engaged in the development and production of specialty chemicals used in biochemical, pharmaceutical and other life science research applications. In 1967, the Company entered the field of clinical diagnostics with the development of its first test kit based on separation techniques and materials developed for life science research. Recognizing that the fields of clinical diagnostics and life science research were evolving toward more automated techniques, Bio-Rad expanded into the field of analytical and measuring instrument systems through internal research and development efforts and acquisitions in the late 1970's and 1980's. As Bio-Rad broadened its product lines, it also expanded its geographical market. The Company controls its distribution channels in thirty countries outside the U.S.A. through subsidiaries whose primary focus is customer service and product distribution. During 1996 and 1997, the Company made five acquisitions. The assets acquired from Chiron Diagnostics Corporation and Chiron Corporation on December 5, 1997, enhanced the product line offering for diagnostic controls. The remaining acquisitions broadened product line offerings within the Analytical Instruments and Life Science segments. On October 1, 1999 Bio-Rad acquired the stock of Pasteur Sanofi Diagnostics ("PSD") and the rights to certain ancillary assets for $210 million. PSD was founded by the Institut Pasteur to commercialize its diagnostic research, and holds certain exclusive licenses from the Institut Pasteur in the HIV and infectious disease diagnostic product market. PSD also expanded the geographic reach and market penetration for the Company's product particularly in Latin America, Africa and France. Bio-Rad manufactures and supplies the life science research, healthcare, analytical chemistry, semiconductor and other markets with a broad range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. Description of Business Business Segments The Company operates in three industry segments designated Life Science, Clinical Diagnostics and Analytical Instruments. Each operates in both the U.S. and international markets. For a description of business and financial information on industry and geographic segments, see Note 13 on pages 19 through 22 of Exhibit 13.1, which is incorporated herein by reference. 1 Life Science Segment. Life science is the study of the characteristics, behavior, and structure of living organisms and their component systems. Life science researchers use a variety of products and systems-- including reagents, instruments, software and apparatus-- to advance the study of life processes, drug discovery and biotechnology, primarily within a laboratory setting. We focus on selected segments of the life science market-- laboratory devices, biomaterials, imaging products and microscopy systems-- for which we estimate 1999 worldwide sales totaled approximately $1.6 billion. The primary technological applications that we supply to these segments are diverse and consist of electrophoresis, image analysis and microplate readers, chromatography, gene transfer and sample preparation and amplification. The primary end-users in our sectors of the market are universities and medical schools, industrial research organizations, government agencies, pharmaceutical manufacturers and biotechnology researchers. Clinical Diagnostics Segment. The clinical diagnostics industry encompasses a broad array of technologies incorporated into a variety of tests used to detect, identify and quantify substances in blood or other bodily fluids and tissues. The test results are used as aids for medical diagnosis, detection, evaluation, monitoring and treatment of diseases and other medical conditions. The bulk of tests are performed in vitro (literally, "in glass"), while the remainder consists of in vivo ("in the body") tests. The most common type of in vitro tests are routine chemistry tests that measure important health parameters, such as glucose, cholesterol or sodium, as part of routine blood checks. A second type of diagnostic tests, on which we focus, are more specialized and require more sophisticated equipment and materials than do routine tests. These specialized tests are also lower-volume and higher-priced than routine tests. We estimate that in 1999, sales to the global clinical diagnostics industry totaled approximately $20 billion. The primary end-users in the areas of the clinical diagnostics industry we target are hospital laboratories, reference laboratories, physician office laboratories, government agencies and other diagnostics manufacturers. Analytical Instruments Segment. The analytical instruments segment develops, manufacturers, sells and services FT-IR spectroscopy systems, semiconductor tests and manufacturing instruments, spectral reference publications and software. Spectrometers measure the infrared spectra of materials, providing quantitative and qualitative information about their chemical composition. The primary end-users for spectrometers are scientists and researchers in a wide range of industries, 2 including chemicals, pharmaceuticals, biotechnology and food. Applications for the products are varied but range from general analytical purposes to research and development and quality control. Our semiconductor division designs, manufactures, and sells instruments and systems that measure the critical dimensions of integrated circuits ("ICs") and the characterization of silicon wafers and compound semiconductor materials. The primary end- users for these instruments and systems include IC, silicon substrate and compound semiconductor manufacturers, as well as universities and research institutes. The primary end-users for spectral databases, chemists and spectroscopists, use them to identify a sample through the spectrum it produces against a spectra of known compounds. A variety of market segments use these products, including the chemical, pharmaceutical, biotechnology, forensic and environmental chemistry industries, as well as academic researchers. Raw Materials and Components The Company utilizes a wide variety of chemicals, biological materials, electronic components, machined metal parts, optical parts, minicomputers and peripheral devices. Most of these materials and components are available from numerous sources and the Company has not experienced difficulty in securing adequate supplies. Patents and Trademarks We own numerous U.S. and international patents and patent licenses. We believe, however, that our ability to develop and manufacture our products depends primarily on our knowledge, technology and special skills. Under several patent license agreements, we pay royalties on the sales of certain products. We view these patents and license agreements as valuable assets. The clinical diagnostics segment has a broad portfolio of intellectual property which it uses to advance and promote its competitive position within the market of blood viruses, bacteriology, immuno-hematology, infectious diseases and cardiovascular testing. Its portfolio is comprised of owned patents, patent rights licensed from Institut Pasteur and other rights secured under third-party licensing agreements. Additionally, this segment has a wide array of patents and patent applications which are owned and licensed in the area of HIV testing. These include patents on purified virus proteins, antigens used for detection of HIV, monoclonal antibodies, cloned DNA sequences, primers and probes. Seasonal Operations and Backlog The Company's business is not inherently seasonal, however, the European custom of concentrating vacation during the summer 3 months usually has had a negative impact on third quarter sales volume and operating income. For the most part, the Company operates in markets characterized by short lead times and the absence of significant backlogs. The Company produces several analytical instruments against an order backlog. Management has concluded that backlog information is not material to the Company's business as a whole. Sales and Marketing Each of Bio-Rad's segments maintains a sales force to sell its products on a direct basis. Each sales force is technically trained in the disciplines associated with its products. Sales are also generated through direct mail advertising, exhibits at trade shows and technical meetings, telemarketing, and by extensive advertising in technical and trade publications. Sales and marketing efforts are augmented by technical service departments that assist customers in effective product utilization and in new product applications. Bio-Rad also produces and distributes technical literature and holds seminars for customers on the use of its products. Our customer base is broad and diversified. In 1999, no single customer accounted for more than 2% of our total net sales. Our sales are affected by certain external factors. For example, a number of our customers, particularly in the life science segment, are substantially dependent on government grants and research contracts for their funding, and a portion of the analytical instruments segment depends on contracts with large semiconductor manufacturers. Thus, the loss of government funding or a large contract or a severe downturn in the semiconductor market would have a detrimental effect on the results of these segments. Most of the Company's international sales are generated by wholly-owned subsidiaries and their branch offices in Australia, Austria, Belgium, Canada, Denmark, England, Finland, France, Germany, Hong Kong, Hungary, India, Israel, Italy, Japan, Korea, Mexico, the Netherlands, New Zealand, Norway, People's Republic of China, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland and Thailand. Certain of these subsidiaries also have manufacturing facilities. While Bio-Rad's international operations are subject to certain risks common to foreign operations in general, such as changes in governmental regulations, import restrictions and foreign exchange fluctuations, the Company's international operations are principally in developed nations, which the Company regards as presenting no significantly greater risks to its operations than are present in the United States. Competition Most markets served by our product groups are competitive. Our competitors range in size from start-ups to large multinational corporations. Reliable independent information on sales and market share of products produced by our competitors is not 4 generally available. We believe, however, based on our on marketing information, that while some competitors are dominant with respect to certain individual products, no one company, including us, is dominant with respect to a material portion of any segment of our business. Life Science Segment. Because of the breadth of its product lines, Life Science does not face the same competitor for all of its products. Competitors in this market include Amersham Pharmacia Biotech, Life Technologies, Qiagen, Zeiss and PE Applied Biosystems. We compete primarily on meeting performance specifications. Clinical Diagnostics Segment. Competitors in this segment range in size from small private companies to large multinational corporations. We compete only in very specific market niches and do not attempt to pursue the most competitive general diagnostics markets. We compete based on our technological ability to provide customers with very specific tests and believe we are usually a significant competitor within our market niche. Competitors include Abbott Laboratories, bioMerieux, Inc., Roche Diagnostics, BioChem Pharma, Inova, diaSorin and Medical Analysis Systems. Analytical Instruments Segment. We compete in the high-end analytical instruments market primarily on the basis of technology and features. Competitors in this segment include Nicolet Instruments (a division of Thermo Instruments) and EG&G (formerly Perkin-Elmer) in spectroscopy; and Hitachi and KLA- Tencor in semiconductor measurement instruments. Product Research and Development The Company conducts extensive product research and development activities in all areas of our business, employing approximately 475 people worldwide in these activities. Research and development have played a major role in Bio-Rad's growth and are expected to continue to do so in the future. Our research teams are continuously developing new products and new applications for existing products. In our development and testing of new products and applications, we consult with scientific and medical professionals at universities, hospitals and medical schools, and in industry, most notably with the Institut Pasteur. We spent approximately $51.2 million (excluding $15.5 million of purchased in-process research and development expense), $41.4 million and $46.4 million on research and development activities during the years ended December 31, 1999, 1998 and 1997, respectively. Regulatory Matters The manufacturing, marketing and labeling of certain of our products (primarily diagnostic products) are subject to regulation in the United States by the Center for Devices and Radiological Health of the United States Food and Drug Administration ("FDA") and in other jurisdictions by state and foreign government authorities. FDA regulations require that some new products have pre-marketing approval by the FDA and 5 require certain products to be manufactured in accordance with "good manufacturing practices," to be extensively tested and to be properly labeled to disclose test results and performance claims and limitations. As a multinational manufacturer and distributor of sophisticated instrumentation equipment, we must meet a wide array of electromagnetic compatibility and safety compliance requirements to satisfy regulations in the United States, the European Community and other jurisdictions. The FDA must approve an export permit application before companies can market products outside the U.S. prior to the products' receipts of FDA approval. The requirements relating to testing and trials, product licensing, pricing and reimbursement vary widely among countries. Our operations are subject to federal, state, local and foreign environmental laws and regulations that govern such activities as emissions to air and discharges to water, as well as handling and disposal practices for solid, hazardous and medical wastes. In addition to environmental laws that regulate our operations, we are also subject to environmental laws and regulations that create liabilities and clean-up responsibility for spills, disposals or other releases of hazardous substances into the environment as a result of our operations or otherwise impacting real property that we own or operate. The environmental laws and regulations also subject us to claims by third parties for damages resulting from any spills, disposals or releases resulting from our operations or at any of our properties. Employees At December 31, 1999, Bio-Rad had approximately 4,100 full-time employees. Fewer than 7% of Bio-Rad's 1,900 U. S. employees are covered by a collective bargaining agreement which will expire on November 7, 2002. Many of Bio-Rad's non-U.S. full-time employees, especially in France, are covered by collective bargaining agreements. The Company is currently working with the representative unions of these employees to achieve workforce reductions where duplication or redundancies exist as a result of the PSD acquisition. Bio-Rad considers its employee relations in general to be good. ITEM 2. PROPERTIES We own our Corporate headquarters located in Hercules, California. The principal manufacturing and research locations for each segment are as follows: Approximate Segment Location Square Ftg. Owned/Leased Life Science Richmond, California 191,000 Owned/Leased Hercules, California 95,400 Owned Hemel Hempstead, England 102,000 Leased Milan, Italy 50,000 Leased 6 Clinical Diagnostics Hercules, California 112,000 Owned/Leased Irvine, California 137,000 Leased Greater Seattle, Washington 127,600 Owned/Leased Lille, France 182,000 Owned Paris, France 162,000 Leased Munich, Germany 55,000 Leased Nazareth-Eke, Belgium 30,000 Leased Analytical Instruments Cambridge, Massachusetts 76,000 Owned York, England 144,000 Owned Philadelphia, Pennsylvania 28,000 Owned Most manufacturing and research facilities also house administration, sales and distribution activities. In addition, we lease office and warehouse facilities in a variety of locations around the world. The facilities are used principally for sales, service, distribution and administration for all three segments. The Life Science segment's Richmond, California distribution and instrument manufacturing facility lease expires in November 2000. While we are currently negotiating a renewal, the lease is not automatically renewable. The Marnes la Coquette facility near Paris, France which served as the corporate headquarters for PSD, as well as a significant manufacturing and research facility is currently being renegotiated as the lease expired December 31, 1999. In the interim, the space is being occupied on a month to month basis. We believe all of our other facilities are adequate to support our current and anticipated production requirements. Historically, adequate space to expand sales and distribution channels has been available and we have leased space as needed. We have received several offers to purchase our facility located in Cambridge, Massachusetts. This facility houses a portion of the manufacturing and distribution for the analytical instruments segment, which we will relocate if the building is sold. ITEM 3. LEGAL PROCEEDINGS Note 12, "Legal Proceedings," appearing on page 19 of Exhibit 13.1 is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year covered by this report. 7 P A R T II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Note 16, "Information Concerning Common Stock," appearing on page 23 of Exhibit 13.1 is incorporated herein by reference. The Company subsequent to year-end, effective February 17, 2000 has sold $150 million of 11-5/8% Senior Subordinated Notes ("Notes") due February 15, 2007. The initial purchasers for the Notes were Warburg Dillon Read LLC and ABN Amro Incorporated. The offering price was 98.832% and the initial purchaser's discount was 3%. Proceeds before expenses were $143.8 million and were used to repay the $100 million Senior Subordinated Credit Agreement, retire $20 million of the $100 million term loan and with substantially all of the residual proceeds, reduce the amount outstanding under the revolving facility. The obligations under the notes are not secured, rank junior to all of our existing and future senior debt, rank equally with all of our existing and future senior subordinated debt and rank senior to all our existing and future subordinated indebtedness. Our current and future domestic subsidiaries that are material to our business guarantee the notes, but our foreign subsidiaries do not. The Notes have not been registered under the Securities Act. Accordingly the initial purchasers will offer the Notes only to "Qualified Institutional Buyers" as defined under Rule 144A of the Securities Act and non-U.S. persons outside the United States in reliance upon Regulation S of the Securities Act. ITEM 6. SELECTED FINANCIAL DATA The table headed "Summary of Operations" appearing on page 1 of Exhibit 13.1 is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The section headed "Management's Discussion and Analysis of Results of Operations and Financial Condition" appearing on pages 25 through 33 of Exhibit 13.1 is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The section headed "Financial Risk Management" appearing on page 32 of Exhibit 13.1 is incorporated herein by reference. 8 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements and Notes thereto and the Report of Independent Public Accountants appearing on pages 1 through 33 of Exhibit 13.1 are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. P A R T III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The sections labeled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the definitive Proxy Statement mailed to stockholders in connection with the 2000 Annual Meeting of Stockholders ("the 2000 Proxy Statement") are incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The sections labeled "Executive Compensation and Other Information," "Compensation of Directors," "Compensation Committee Interlocks and Insider Participation," "Report of the Compensation Committee of the Board of Directors" and "Stock Performance Graph" of the 2000 Proxy Statement are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The section labeled "Principal and Management Stockholders" of the 2000 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The section labeled "Compensation of Directors" of the 2000 Proxy Statement is incorporated herein by reference. 9 P A R T IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Index to Financial Statements The following Consolidated Financial Statements are included in the 1999 Annual Report and are incorporated herein by reference pursuant to Item 8: Page in Exhibit 13.1 Consolidated Balance Sheets at December 31, 1999 and 1998 2-3 Consolidated Statements of Income for each of the three years in the period ended December 31, 1999 4 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1999 5 Consolidated Statements of Changes in Stockholders' Equity for each of the three years in the period ended December 31, 1999 6 Notes to Consolidated Financial Statements 7-23 Report of Independent Public Accountants 24 2. Index to Financial Statement Schedule Page in Form 10-K Schedule II Valuation and Qualifying Accounts 12 Report of Independent Public Accountants on Schedule II 13 All other financial statement schedules are omitted because they are not required or because the required information is included in the Consolidated Financial Statements or the Notes thereto. 3. Index to Exhibits The exhibits listed in the accompanying Index to Exhibits on pages 15 and 16 of this report are filed or incorporated by reference as part of this report. 10 (b) Reports on Form 8-K Bio-Rad filed Form 8-K dated October 1, 1999, announcing that Bio-Rad completed the acquisition of 100% of the capital stock of Pasteur Sanofi Diagnostics from Sanofi-Synthelabo S.A. and Institut Pasteur pursuant to the terms of the Purchase Agreement (previously filed as Exhibit 2.1 to Form 8-K dated July 15, 1999). 11 BIO-RAD LABORATORIES, INC,. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 1999, 1998 and 1997 (In thousands) Reserve for doubtful accounts receivable
Additions Balance at Charged to Balance Beginning Costs and at End of Year Expenses Deductions Other of Year 1999 . . . $3,629 $3,123 $(2,449) $5,279(A) $9,582 1998 . . . $3,374 $1,616 $(1,361) $ - $3,629 1997 . . . $3,688 $1,088 $(1,402) $ - $3,374
Valuation allowance for deferred tax assets
Deductions Balance at Charged to Balance Beginning Costs and at End of Year Additions Expenses Other of Year 1999 . . . . $5,342 $ -- $ (553) $19,342(A) $24,131 1998 . . . . $3,285 $2,057 $ -- $ -- $5,342 1997 . . . . $5,572 $ -- $(2,287) $ -- $3,285
(A) Valuation arising from the acquisition of PSD. 12 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE II To Bio-Rad Laboratories, Inc. We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Bio-Rad Laboratories, Inc.'s annual report to stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 9, 2000. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index, Item 14(a)2, is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP San Francisco, California February 9, 2000 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BIO-RAD LABORATORIES, INC. By: /s/ Sanford S. Wadler Sanford S. Wadler Secretary Date: March 28, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Principal Executive Officer: /s/ David Schwartz President and Director March 28, 2000 (David Schwartz) Principal Financial Officer: /s/ T. C. Chesterman Vice President, March 28, 2000 (Thomas C. Chesterman) Chief Financial Officer Principal Accounting Officer: /s/ James R. Stark Corporate Controller March 28, 2000 (James R. Stark) Other Directors: /s/ James J. Bennett Director March 28, 2000 (James J. Bennett) /s/ Albert J. Hillman Director March 28, 2000 (Albert J. Hillman) /s/ Philip L. Padou Director March 28, 2000 (Philip L. Padou) /s/ Alice N. Schwartz Director March 28, 2000 (Alice N. Schwartz) /s/ Norman Schwartz Director March 28, 2000 (Norman Schwartz) /s/ Burton A. Zabin Director March 28, 2000 (Burton A. Zabin) 14 BIO-RAD LABORATORIES, INC. INDEX TO EXHIBITS ITEM 14(a)3 The following documents are filed as part of this report: Exhibit No. 3.1 Restated Certificate of Incorporation, as of September 15, 1988. (1) 3.2 Bylaws of the Registrant, as amended February 19, 1980. (2) 4.1 Credit Agreement dated as of September 30, 1999 among Bio-Rad Laboratories, Inc., the lenders named therein, Bank One, N.A., as Administrative Agent, ABN Amro Bank N.V. as Syndication Agent and Union Bank of California, N.A. as Documentation Agent. (3) 4.1.1 Amendment dated as of January 31, 2000, to the Credit Agreement dated as of September 30, 1999, by and among Bio-Rad Laboratories, Inc. the lenders named therein, and Bank One, N.A. as Agent. 4.2 Senior Subordinated Credit Agreement dated as of September 30, 1999 among Bio-Rad Laboratories, Inc., the lenders named therein and Bank One Capital Markets, Inc., as agent. (3) 4.4 Senior Subordinated Credit Agreement dated as of January 31, 2000 among Bio-Rad Laboratories, Inc., the lenders names therein and UBS AG, Stamford Branch, as Agent. 4.5 The Indenture dated as of February 17, 2000 for 11.625% Senior Subordinated Notes due 2007 among Bio-Rad Laboratories, Inc., as Issuer, and Norwest Bank Minnesota, N.A., as Trustee. 4.6 The Registration Rights Agreement dated as of February 17, 2000 by and among Bio-Rad Laboratories, Inc. and Warburg Dillon Reed LLC and ABN AMRO Incorporated. 10.4 1994 Stock Option Plan. (4) 10.5 Amended and Restated 1988 Employee Stock Purchase Plan. (5) 10.6 Employees' Deferred Profit Sharing Retirement Plan (Amended and Restated effective January 1, 1997). (6) 10.10 Non-competition and employment continuation agreement with James J. Bennett. (7) 10.11 Employment and non-compete agreement with Dr. Burton A. Zabin. (8) 15 10.12 Split Dollar Life Insurance Agreement dated September 17, 1999 between the Schwartz Irrevocable Descendants Trust and Bio-Rad Laboratories, Inc. 13.1 Excerpt from Annual Report to Stockholders' for the fiscal year ended December 31, 1999, (to be deemed filed only to the extent required by the instructions to exhibits for reports on Form 10-K). 21.1 Listing of Subsidiaries. 23.1 Consent of Independent Public Accountants. 27.1 Financial Data Schedule. ________________________________________________________________ (1) Incorporated by reference from the Exhibits to the Company's Form 10-K filing for the fiscal year ended December 31, 1992, dated March 26, 1993. (2) Incorporated by reference from the Exhibits to the Company's Registration Statement on Form S-7 Registration No. 2-66797, which became effective April 22, 1980. (3) Incorporated by reference from Exhibits to the Company's Form 8-K dated October 1, 1999. (4) Incorporated by reference from the Exhibits to the Company's Form S-8 filing, dated April 28, 1994. (5) Incorporated by reference from the Exhibits to the Company's September 30, 1998, Form 10-Q filing dated November 10, 1998. (6) Incorporated by reference from the Exhibits to the Company's September 30, 1997, Form 10-Q filing dated November 13, 1997. (7) Incorporated by reference from the Exhibits to the Company's Form 10-K filing for the fiscal year ended December 31, 1996, dated March 26, 1997. (8) Incorporated by reference from the Exhibits to the Company's June 30, 1998, Form 10-Q filing dated August 6, 1998. 16 EX-4.1.1 2 EXHIBIT 14.1.1 - AMENDMENT TO CREDIT AGREEMENT Exhibit 4.1.1 EXECUTION COPY AMENDMENT NO. 1 TO CREDIT AGREEMENT This Amendment No. 1 (this "Amendment") is entered into as of January 31, 2000 by and among BIO-RAD LABORATORIES, INC., a Delaware corporation (the "Borrower"), the undersigned lenders (collectively, the "Lenders") and BANK ONE, NA, having its principal office in Chicago, Illinois, as one of the Lenders and in its capacity as contractual representative (the "Agent") on behalf of itself and the other Lenders. RECITALS: WHEREAS, the Borrower, the Lenders and the Agent have entered into that certain Credit Agreement dated as of September 30, 1999 (the "Credit Agreement"); WHEREAS, the Borrower seeks to amend the Credit Agreement to permit the refinancing of the Bridge Loan (as defined in the Credit Agreement); and WHEREAS, the Lenders and the Agent are willing to amend the Credit Agreement on the terms and conditions herein set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement. 2. Amendments to Credit Agreement. Upon the effectiveness of this Amendment in accordance with the provisions of Section 4 below, the Credit Agreement is hereby amended as follows: (a) Article I of the Credit Agreement is amended by adding thereto the following new definitions: "New Bridge Loan" means the bridge loan in the initial principal amount of $100,000,000 made to the Borrower on or about January 31, 2000 pursuant to the New Bridge Loan Agreement to refinance the Bridge Loan in its entirety, including any increase in such principal amount as a result of the capitalization of interest thereon and including any Rollover Bridge Notes and Exchange Notes, as defined in the New Bridge Loan Agreement; provided that the Exchange Notes shall be issued pursuant to an indenture all of the terms and conditions of which are reasonably acceptable to the Agent and the Required Lenders, and provided further that terms and conditions substantially similar to those contained in the Description of Notes shall be deemed to be reasonably acceptable. "New Bridge Loan Agreement" means the Senior Subordinated Credit Agreement dated as of January 31, 2000 among the Borrower, the lenders named therein and UBS AG, Stamford Branch, as agent for such lenders, together with any notes issued pursuant thereto. (b) Article I of the Credit Agreement is further amended by amending and restating in their entirety the following definitions as follows: "Consolidated EBITDA" means, with reference to any period, Consolidated Net Income for such period plus, to the extent deducted from revenues in determining Consolidated Net Income (without duplication), (i) Consolidated Interest Expense and all non-cash interest expense, (ii) expense for income taxes paid or accrued, (iii) depreciation, (iv) amortization, (v) extraordinary losses incurred other than in the ordinary course of business and losses from discontinued operations, (vi) any extraordinary, unusual or non-recurring non-cash expenses or non-cash losses, and (vii) non-recurring cash charges, including any capitalized non-recurring cash charges, taken on or prior to March 31, 2000 resulting from severance, integration and other adjustments made as a result of the PSD Acquisition (provided that the amounts referred to in this clause (vii) shall not, in the aggregate, exceed $25,000,000), and minus, to the extent included in Consolidated Net Income, extraordinary gains and gains from discontinued operations, all net of tax, realized other than in the ordinary course of business, all calculated for the Borrower and its Subsidiaries on a consolidated basis for such period; provided that the items to be added to and subtracted from Consolidated Net Income with respect to any Subsidiary shall be added or subtracted only to the extent and in the same proportions that (a) the net income of such Subsidiary was included in the calculation of Consolidated Net Income, if such Subsidiary is not a Wholly-Owned Subsidiary and (b) the Consolidated EBITDA of such Subsidiary (calculated as if such Subsidiary were the "Borrower") is permitted to be paid or distributed as a dividend, advance, loan or other distribution to the Borrower. "Consolidated Net Income" means, with reference to any period, the net income (or loss) of the Borrower and its Subsidiaries calculated on a consolidated basis for such period, provided that Consolidated Net Income shall exclude the net income, if positive, of any of the Borrower's consolidated Subsidiaries to the extent that the declaration or payment of dividends of similar distributions is not at the time permitted by operation of the terms of its charter or by-laws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary. "Description of Notes" means the Description of Notes attached hereto as Exhibit D, provided that the amount "$155 million" in clause (3) of the description of "Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock" in such Description of Notes shall be deleted and the amount "$180 million" substituted therefor. "Financing" means, with respect to any Person, the issuance or sale by such Person of any Equity Interests of such Person or any Indebtedness consisting of debt securities of such Person pursuant to a registered offering or private placement, but excluding the issuance or sale of (i) any Indebtedness permitted to be incurred pursuant to Section 6.11, including, without limitation, the Subordinated Indebtedness, except that the first $20,000,000 of Permitted Subordinated Indebtedness incurred in excess of the amount required to refinance the New Bridge Loan shall be deemed to be a Financing, (ii) Equity Interests by the Borrower to the extent that the proceeds thereof are used to refinance the New Bridge Loan in its entirety, (iii) Equity Interests by the Borrower to any officer, director or employee of the Borrower or any of its Subsidiaries pursuant to any incentive compensation plan or program and (iv) Equity Interests or Indebtedness by any Subsidiary of the Borrower to the Borrower or any Wholly-Owned Subsidiary of the Borrower. "Permitted Subordinated Indebtedness" means Indebtedness of the Borrower, the payment of which is subordinated to payment of the Secured Obligations and all of the terms and conditions of which are reasonably acceptable to the Agent and the Required Lenders, issued in an aggregate principal amount not to exceed $150,000,000, the proceeds of which are used, in whole or in part, to refinance the New Bridge Loan in its entirety; provided that terms and conditions substantially similar to those contained in the Description of Notes shall be deemed to be reasonably acceptable. "Subordinated Indebtedness" means the Bridge Loan, the New Bridge Loan and the Permitted Subordinated Indebtedness. (c) Section 6.1 of the Credit Agreement is amended by deleting the figure "100" in Section 6.1(i) and substituting the figure "90" therefor, by deleting the figure "60" in Section 6.1(ii) and substituting the figure "45" therefor, and by deleting the phrase "Together with the financial statements required under Sections 6.1(i) and (ii)," in Section 6.1(iv) and substituting the following phrase therefor: Within 10 days after the delivery of the financial statements required under Section 6.1(i) and within 15 days after the delivery of the financial statements required under Section 6.1(ii), (d) Section 6.21 of the Credit Agreement is amended by deleting the term "Bridge Loan Agreement" both places it appears in clause (i) thereof and substituting the term "New Bridge Loan Agreement" therefor and by deleting the term "Bridge Loan" in clause (ii) thereof and substituting the term "New Bridge Loan" therefor. (e) Section 6.22 of the Credit Agreement is amended by adding to the last sentence thereof after the phrase "the Bridge Loan" the phrase "and the New Bridge Loan". (f) Section 7.5 of the Credit Agreement is amended by amending and restating the parenthetical phrase in the third clause thereof in its entirety to read as follows: (other than by a regularly scheduled payment and other than in connection with the refinancing of the Bridge Loan with the proceeds of the New Bridge Loan and the refinancing of the New Bridge Loan with the proceeds of Permitted Subordinated Indebtedness or Equity Interests of the Borrower) (g) The Credit Agreement is amended by adding a new Exhibit D thereto in the form of Exhibit D attached to this Amendment. 3. Consent. The Lenders hereby consent to the terms of the Senior Subordinated Credit Agreement dated as of January 31, 2000 among the Borrower, the lenders named therein and UBS AG, Stamford Branch, as agent for such lenders (the "New Bridge Loan Agreement"), provided that such terms are substantially the same as those contained in the draft dated January 26, 2000 (12:50 P.M.) of such Senior Subordinated Credit Agreement furnished to the Lenders, and consent to the refinancing of the Bridge Loan with the proceeds of the loans made pursuant to the New Bridge Loan Agreement. 4. Conditions of Effectiveness. This Amendment shall become effective and be deemed effective as of the date hereof (the "Effective Date") if, and only if, the Agent shall have received duly executed originals of this Amendment from the Borrower and the Required Lenders. 5. Representations and Warranties of the Borrower. The Borrower represents and warrants to the Lenders that, as of the Effective Date: (a) there exists no Default or Unmatured Default; and (b) the representations and warranties contained in Article V of the Credit Agreement are true and correct as of the Effective Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty was true and correct on and as of such earlier date. 6. Reference to and Effect on the Credit Agreement. 6.1 Upon the effectiveness of this Amendment pursuant to Section 4 hereof, on and after the Effective Date each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import and each reference to the Credit Agreement in each Loan Document shall mean and be a reference to the Credit Agreement as modified hereby. 6.2 Except as specifically waived or amended herein, all of the terms, conditions and covenants of the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. 6.3 The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of (a) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the Loan Documents, or (b) any Default or Unmatured Default under the Credit Agreement. 7. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement. 9. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. [Signature Pages Follow] IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have executed this Amendment No. 1 as of the date first above written. BIO-RAD LABORATORIES, INC. By: /s/ Ronald W. Hutton Name: Ronald W. Hutton Title: Treasurer BANK ONE, NA, as a Lender and as Agent By: /s/ Kandis A. Jaffrey Name: Kandis A. Jaffrey Title: Vice President ABN AMRO BANK N.V., as a Lender By: /s/ Amanda C. Cox Name: Amanda C. Cox Title: Vice President By: /s/ Gina M. Brusatori Name: Gina M. Brusatori Title: Group Vice President UNION BANK OF CALIFORNIA, N.A., as a Lender By: /s/ Michael E. Cooper Name: Michael E. Cooper Title: Vice President THE BANK OF NOVA SCOTIA, as a Lender By: /s/ M. Van Otterloo Name: M. Van Otterloo Title: Managing Director, Corporate BANQUE NATIONALE DE PARIS, as a Lender By: /s/ Debra Wright Name: Debra Wright Title:Vice President By: /s/ Sandra Bertram Name: Sandra Bertram Title:Assistant Vice President COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as a Lender By:_________________________________ Name: Title: By:_________________________________ Name: Title: WELLS FARGO BANK, as a Lender By: /s/ Brian S. O'Melveny Name: Brian S. O'Melveny Title: Vice President COMERICA BANK-CALIFORNIA, as a Lender By: /s/ R. Michael Law Name: R. Michael Law Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By: /s/ Robert Ivosevich Name: Robert Ivosevich Title: Senior Vice President LLOYDS TSB BANK PLC, as a Lender By:/s/ Ian Dimmock Name: Ian Dimmock Title: Vice President By: /s/ Daivd Rodway Name: David Rodway Title: Assistant Director THE NORTHERN TRUST COMPANY, as a Lender By: /s/ Candelario Martinez Name: Candelario Martinez Title: Vice President U.S. BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Meredith N. Davis Name: Meredith N. Davis Title:Assistant Vice President EX-4.4 3 EXHIBIT 4.4 - SENIOR SUBORDINATED CREDIT AGREEMENT EXHIBIT 4.4 SENIOR SUBORDINATED CREDIT AGREEMENT dated as of January 31, 2000 among BIO-RAD LABORATORIES, INC., as Company, THE LENDERS named herein and UBS AG, STAMFORD BRANCH, as Agent TABLE OF CONTENTS Page SECTION 1. DEFINITIONS 1 1.1 Certain Defined Terms 1 1.2 Accounting Terms 28 1.3 Other Definitional Provisions; Anniversaries 28 SECTION 2.AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES 28 2.1 Bridge Loan and Bridge Note 28 2.2 Rollover Bridge Loan and Rollover Bridge Note 30 2.3 Interest on the Notes 32 2.4 Fees 33 2.5 Prepayments and Payments 33 2.6 Use of Proceeds 37 2.7 Interest Rate Unascertainable, Increased Costs, Illegality 37 2.8 Funding Losses. 39 2.9 Increased Capital 39 2.10 Taxes 40 SECTION 3. CONDITIONS 42 3.1 Conditions to Bridge Loan 42 3.2 Conditions to Rollover Bridge Loan 47 SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 48 4.1 Existence and Standing 48 4.2 Authorization and Validity 49 4.3 No Conflict; Government Consent 49 4.4 Financial Statements 50 4.5 Material Adverse Change 51 4.6 Taxes 51 4.7 Litigation and Contingent Obligations 51 4.8 Subsidiaries 51 4.9 ERISA 52 4.10 Accuracy of Information 52 4.11 Regulation U 52 i 4.12 Material Agreements 52 4.13 Compliance With Laws 52 4.14 Ownership of Properties 53 4.15 Plan Assets; Prohibited Transactions 53 4.16 Environmental Matters 53 4.17 Investment Company Act 54 4.18 Public Utility Holding Company Act 54 4.19 Year 2000 54 4.20 Post-Retirement Benefits 54 4.21 Insurance 54 4.22 Solvency 55 4.23 Termination of June 1999 Engagement Letter 55 SECTION 4A. REPRESENTATIONS AND WARRANTIES OF THE LENDERS 55 4A.1 Accredited Investor 56 4A.2 Knowledge and Experience 56 4A.3 Source of Funds 56 SECTION 5. AFFIRMATIVE COVENANTS 56 5.1 Financial Reporting 56 5.2 Use of Proceeds 58 5.3 Notice of Default 58 5.4 Conduct of Business 58 5.5 Taxes 59 5.6 Insurance 59 5.7 Compliance with Laws 59 5.8 Maintenance of Properties 60 5.9 Inspection 60 5.10 Year 2000 60 5.11 Additional Guarantors 60 5.12 Exchange of Rollover Bridge Notes 61 5.13 Permanent Securities 62 5.14 Lenders Meeting 62 5.15 Note Documents 63 5.16 Syndication 63 ii SECTION 6. NEGATIVE COVENANTS 64 6.1 Dividends 64 6.2 Indebtedness 64 6.3 Merger 66 6.4 Sale of Assets 66 6.5 Investments and Acquisitions 66 6.6 Liens 67 6.7 Capital Expenditures 69 6.8 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries 70 6.9 Affiliates 71 6.10 Unfunded Liabilities 72 6.11 Intentionally Omitted. 72 6.12 Sale and Leaseback Transactions 72 6.13 Contingent Obligations 72 6.14 Financial Contracts 72 6.15 Refinancing of the Loans in Part 73 6.16 Senior Subordinated Indebtedness 73 6.17 Leverage Ratio 73 SECTION 7. EVENTS OF DEFAULT 73 7.1 Events of Default 74 7.2 Acceleration 77 SECTION 8. SUBORDINATION 77 8.1 Obligations Subordinated to Senior Debt of the Company 77 8.2 Priority and Payment Over of Proceeds in Certain Events 78 8.3 Payments May Be Paid Prior to Dissolution 80 8.4 Rights of Holders of Senior Debt of the Company Not To Be Impaired 81 8.5 Subrogation 81 8.6 Obligations of the Company Unconditional 82 8.7 Lenders Authorize Agent To Effectuate Subordination 83 SECTION 9. THE AGENT 83 9.1 Appointment 83 9.2 Delegation of Duties 84 iii 9.3 Exculpatory Provisions 84 9.4 Reliance by Agent 85 9.5 Notice of Default 85 9.6 Non-Reliance on Agent and Other Lenders 86 9.7 Indemnification 86 9.8 Agent in Its Individual Capacity 87 9.9 Resignation of the Agent; Successor Agent 87 SECTION 10. GUARANTEE 88 10.1 Unconditional Guarantee 88 10.2 Subordination of Guarantee 89 10.3 Severability 89 10.4 Release of a Guarantor 89 10.5 Limitation of Guarantor's Liability 90 10.6 Guarantors May Consolidate, etc., on Certain Terms 90 10.7 Contribution 91 10.8 Waiver of Subrogation 91 10.9 Evidence of Guarantee 92 10.10 Waiver of Stay, Extension or Usury Laws 92 SECTION 11. SUBORDINATION OF GUARANTEE OBLIGATIONS 93 11.1 Guarantee Obligations Subordinated to Guarantor Senior Debt 93 11.2 Priority and Payment Over of Proceeds in Certain Events 93 11.3 Payments May Be Paid Prior to Dissolution 96 11.4 Rights of Holders of Guarantor Senior Debt Not To Be Impaired 96 11.5 Subrogation 97 11.6 Obligations of the Guarantors Unconditional 98 11.7 Lenders Authorize Agent To Effectuate Subordination 98 SECTION 12. MISCELLANEOUS 99 12.1 Participations in and Assignments of Loans and Notes 99 12.2 Expenses 100 12.3 Indemnity 101 12.4 Setoff 102 12.5 Amendments and Waivers 102 12.6 Independence of Covenants 103 12.7 Entirety 104 iv 12.8 Notices 104 12.9 Survival of Warranties and Certain Agreements 104 12.10 Failure or Indulgence Not Waiver; Remedies Cumulative 105 12.11 Severability 105 12.12 Headings 105 12.13 Applicable Law 105 12.14 Successors and Assigns; Subsequent Holders of Notes 105 12.15 Counterparts; Effectiveness 106 12.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial 106 12.17 Payments Pro Rata 107 12.18 Waiver of Stay, Extension or Usury Laws 108 12.19 Confidentiality 108 12.20 Register 109 v ANNEX I Lending Offices SCHEDULES Schedule 4.4 Pro Forma Financial Statements Schedule 4.7 Litigation Schedule 4.8 Subsidiaries Schedule 4.21 Insurance Schedule 6.2 Indebtedness Schedule 6.5 Investments Schedule 6.6 Liens EXHIBITS I FORM OF BRIDGE NOTE II FORM OF ROLLOVER BRIDGE NOTE III FORM OF COMPLIANCE CERTIFICATE IV-A FORM OF NOTICE OF BORROWING IV-B FORM OF ROLLOVER NOTICE V FORM OF OPINION OF LATHAM & WATKINS - COUNSEL FOR THE COMPANY VI FORM OF NOTATION ON NOTE RELATING TO GUARANTEES vi This Senior Subordinated Credit Agreement is dated as of January 31, 2000, and entered into by and between Bio-Rad Laboratories, Inc., a Delaware corporation (the "Company"), the Lenders named on the signature pages hereto (the "Lenders"), and UBS AG, Stamford Branch ("UBS"), as agent for the Lenders (in such capacity, the "Agent"). RECITALS WHEREAS, the Company has entered into that certain Senior Subordinated Credit Agreement dated as of September 30, 1999, among the Company, the lenders party thereto and Banc One Capital Markets, Inc., as agent for the lenders (as amended to date, the "Existing Bridge Agreement"); WHEREAS, the Company desires to refinance the Existing Bridge Agreement with the proceeds of borrowings under a new senior subordinated credit facility; WHEREAS, the Lenders have agreed to extend credit to the Company under the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Certain Defined Terms. The following terms used in this Agreement shall have the following meanings: "AAI" means ABN AMRO INCORPORATED. "Acquired Business" is defined in the definition of "PSD Acquisition." 1 "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person becomes a Subsidiary or is merged or consolidated into the Company or one of its Subsidiaries. "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding ownership interests of a partnership or limited liability company. "Adjusted Net Assets" shall have the meaning provided in Section 10.7. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 20% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. Any member of the Schwartz Group shall be deemed to be an Affiliate of the Company. "Agent" has the meaning ascribed to such term in the introduction to this Agreement. "Agreement" means this Senior Subordinated Credit Agreement dated as of January 31, 2000, as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof. "Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time. 2 "Applicable Margin" means, with respect to the Bridge Loan, 7% for the period from and including the Closing Date and to but excluding July 31, 2000, and for each Interest Period beginning on or after July 31, 2000, the Applicable Margin in effect for the immediately preceding Interest Period plus 0.50%. "Applicable Treasury Rate" means, with respect to the date to which such Applicable Treasury Rate relates, the average of the annual yield rate of the three most actively traded U.S. Treasury securities having a remaining duration to maturity closest to maturity of the Rollover Bridge Loan as such rate is published under "Treasury Constant Maturities" in Federal Reserve Statistical Release H.15(519). "Asset Sale" means, with respect to any Person, the sale, conveyance, disposition or other transfer by such Person of any of its assets (including by way of a sale-leaseback transaction and including the sale or other transfer of any of the Equity Interests of any Subsidiary of such Person), other than the sale of inventory in the ordinary course of business and of obsolete or worn-out property in the ordinary course of business, the exchange or trade-in of equipment and other assets for replacement assets and the granting of a nonexclusive license. "Asset Sale" shall not include (i) any casualty to or condemnation of Property to which Section 6.6 of the Senior Secured Credit Agreement applies, whether the proceeds thereof are Excluded Proceeds (as defined in the Senior Secured Credit Agreement) or otherwise, or (ii) the sale, conveyance, disposition or other transfer by a Foreign Subsidiary of any of its assets to the extent that the Net Cash Proceeds thereof are invested in assets or Property (other than Cash Equivalent Investments) in any Foreign Subsidiary's business within twelve months after such sale, conveyance disposition or other transfer. "Bankruptcy Law" means Title 11 of the United States Code entitled "Bankruptcy", as now and hereafter in effect, or any successor statute or any other United States federal, state or local law or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors, whether in effect on the date hereof or hereafter. "Board of Directors" means, as to any Person, the board of directors of such Person or any duly authorized committee of that Board. 3 "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification. "Bridge Loan" means, collectively, the loans made by the Lenders pursuant to Section 2.1(a) and shall include any Junior Securities and PIK Interest Amount. "Bridge Loan Commitment" means the commitment of the Lenders to make the Bridge Loan as set forth in Section 2.1(a). "Bridge Notes" has the meaning ascribed to such term in Section 2.1(d). "Bridge Payment Date" has the meaning ascribed to such term in Section 2.3(b). "Business Day" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of New York or is a day on which banking institutions therein located are authorized or required by law or other governmental action to close. "Capital Expenditures" means, without duplication, any expenditures for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with Agreement Accounting Principles, excluding (i) the trade-in value of equipment or other assets exchanged for replacement assets, (ii) expenditures of insurance proceeds to rebuild or replace any asset after a casualty loss and (iii) Permitted Acquisitions. "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a 4 liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Cash Equivalent Investments" means (i) direct obligations issued or fully guaranteed by the United States of America or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000 and (v) mutual funds that invest solely in one or more of the types of investments described in clauses (i)-(iv) above; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest. "Change in Control" means: (i) any merger or consolidation of the Company with or into any Person or any sale, transfer or other conveyance, whether direct or indirect, of all or substantially all of the Company's assets, on a consolidated basis, in one transaction or a series of related transactions, if, immediately after giving effect to such transaction(s), either (x) any "person" or "group" (other than a member of the Schwartz Group) is or becomes the "beneficial owner," directly or indirectly, of more than 40% of the Voting Equity Interests of the transferee(s) or surviving entity or entities, and the Schwartz Group shall cease to own beneficially at least a greater percentage of the Voting Equity Interests of the transferee(s) or surviving entity or entities or (y) the Schwartz Group shall cease to own beneficially (A) 30% of the Voting Equity Interests of such transferee(s) or surviving entity or entities or (B) a greater percentage of the Voting Equity Interests of such transferee(s) or surviving entity or entities than any other person or group, whichever is less; (ii) any "person" or "group" (other than a member of the Schwartz Group) is or becomes the "beneficial owner," directly or indirectly, of more than 40% of the Company's Voting Equity Interests, and the Schwartz Group shall cease to own beneficially at least a greater percentage of the Company's Voting Equity Interests; 5 (iii) the Continuing Directors cease for any reason to constitute a majority of the Company's Board of Directors then in office; or (iv) the Company adopts a plan of liquidation or dissolution. "Change of Control Offer" has the meaning ascribed to such term in Section 2.5(d)(i). "Closing Date" means the date on or before January 31, 2000 on which the initial Bridge Loan is made and the conditions set forth in Section 3.1 are satisfied or waived in accordance with Section 12.5. "Commitment Letter" means the letter agreement dated January 24, 2000 among the Company, UBS, WDR and ABN AMRO Bank N.V., as amended from time to time, pursuant to which UBS and ABN AMRO Bank N.V. committed to provide the Bridge Loan to the Company. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non- voting) of, such Person's common stock, whether outstanding on the Closing Date or issued after the Closing Date, and includes, without limitation, all series and classes of such common stock. "Company" has the meaning ascribed to such term in the introduction to this Agreement. "Consolidated EBITDA" means, with reference to any period, Consolidated Net Income for such period plus, to the extent deducted from revenues in determining Consolidated Net Income (without duplication), (i) Consolidated Interest Expense and all non-cash interest expense, (ii) expense for income taxes paid or accrued, (iii) depreciation, (iv) amortization, (v) extraordinary losses incurred other than in the ordinary course of business and losses from discontinued operations, (vi) any extraordinary, unusual or non-recurring non-cash expenses or non-cash losses, and (vii) non-recurring cash charges, including any capitalized non-recurring cash charges, taken on or prior to March 31, 2000 resulting from severance, integration and other adjustments made as a result of the PSD Acquisition (provided 6 that the amounts referred to in this clause (vii) shall not, in the aggregate, exceed $25,000,000), and minus, to the extent included in Consolidated Net Income, extraordinary gains and gains from discontinued operations, all net of tax, realized other than in the ordinary course of business, all calculated for the Company and its Subsidiaries on a consolidated basis for such period; provided, that the items to be added to and subtracted from Consolidated Net Income with respect to any Subsid iary shall be added or subtracted only to the extent and in the same proportions that (a) the net income of such Subsidiary was included in the calculation of Consolidated Net Income, if such Subsidiary is not a Wholly-Owned Subsidiary and (b) the Consolidated EBITDA of such Subsidiary (calculated as if such Subsidiary were the "Company") is permitted to be paid or distributed as a dividend, advance, loan or other distribution to the Company. "Consolidated Funded Indebtedness" means at any time, without duplication, the aggregate dollar amount of (i) Indebtedness (other than Rate Management Obligations and similar obligations under other Financial Contracts) of the Company and its Subsidiaries which has actually been funded and is outstandingat such time, whether or not such amount is due and payable at such time, plus (ii) undrawn amounts available under standby letters of credit, all calculated on a consolidated basis as of such time. "Consolidated Interest Expense" means, with reference to any period, the cash interest expense of the Company and its Subsidiaries calculated on a consolidated basis for such period. "Consolidated Net Income" means, with reference to any period, the net income (or loss) of the Company and its Subsidiaries calculated on a consolidated basis for such period, provided that Consolidated Net Income shall exclude the net income, if positive, of any of the Company's consolidated Subsidiaries to the extent that the declaration or payment of dividends or similar distributions is not at the time permitted by operation of the terms of its charter or by-laws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise 7 becomes or is contingently liable upon, the Indebtedness of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter or material take-or-pay contract. "Continuing Directors" means, during any period of 12 consecutive months after the Closing Date, individuals who at the beginning of any such 12-month period constituted the Company's Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the Company's shareholders was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, transfer or other conveyance, of all or substantially all of the assets of the Company, if such agreement was approved by a vote of such majority of directors). "Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Internal Revenue Code. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Dollars" or the sign "$" means the lawful money of the United States of America. "Domestic Lending Office" shall mean, as to any Lender, the office of such Lender designated as such on Annex I, or such other office designated by such Lender from time to time by written notice to the Agent and the Company. "Domestic Subsidiary" means a Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia. 8 "Eligible Assignee" means (A) (i) a commercial bank organized under the laws of the United States of America or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (iv) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses including, but not limited to, insurance companies, mutual funds and lease financing companies, in each case (under clauses (i) through (iv) above) that is reasonably acceptable to the Agent and, so long as no Event of Default exists, the Company; and (B) any Lender and any Affiliate of any Lender. "Engagement Letter" means that engagement letter, dated as of January 24, 2000, among the Company, WDR and ABN AMRO Bank N.V. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants,contaminants, hazardous substances or hazardous wastes or the clean-up or other remediation thereof. "Equity Interests" means (i) in the case of a corporation, common and preferred stock, (ii) in the case of a limited liability company, association or business entity, any and all shares, interests, participations, ownership or voting rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, in each case regardless of 9 class or designation, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character with respect thereto. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "Eurodollar Lending Office" shall mean, as to any Lender, the office of such Lender designated as such on Annex I, or such other office designated by such Lender from time to time by written notice to the Agent and the Company. "Event of Default" means each of the events set forth in Section 7. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any successor statute or statutes thereto. "Exchange Notes" has the meaning ascribed to it in Section 5.12(b). "Exchange Request" has the meaning ascribed to it in Section 5.12. "Existing Bridge Agreement" means that certain Senior Subordinated Credit Agreement dated as of September 30, 1999, among the Company, the lenders party thereto and Banc One Capital Markets, Inc., as agent for the lenders, as amended to date. "fair market value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Agent. "Fee Letter" means that Fee Letter dated January 24, 2000 among the Company, UBS, WDR and ABN AMRO Bank N.V. 10 "Financial Contract" of a Person means (i) any exchange-traded or over-the-counter futures, forward, swap or option contract or other financial instrument with similar characteristics or (ii) any Rate Management Transaction. "Financing" means, with respect to any Person, the issuance or sale by such Person of any Equity Interests of such Person or any Indebtedness consisting of debt securities of such Person pursuant to a registered offering or private placement, but excluding the issuance or sale of (i) any Indebtedness permitted to be incurred pursuant to Section 6.2, (ii) Equity Interests by the Borrower to any officer, director or employee of the borrower or any of its Subsidiaries pursuant to any incentive compensation plan or program and (iii) Equity Interests or Indebtedness by any Subsidiary of the Borrower to the Borrower or any Wholly- Owned Subsidiary of the Borrower. "Fiscal Year" means the fiscal year of the Company and each Guarantor for accounting and tax purposes, which for all years after the Closing Date shall end on December 31. "Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary. "fully diluted" means all the shares of Common Stock of the Company then outstanding or to be issued, calculated as if all shares of Common Stock of the Company issuable upon conversion or exercise of any outstanding warrants, options or similar rights (including upon conversion or exchange of convertible or exchangeable debt) are outstanding, and assuming that all options that may be granted under employee benefit plans for the benefit of the Company's employees are deemed to have been granted and exercised, and assuming that any other Common Stock of the Company issuable pursuant to any security, plan or arrangement of the Company has been issued. "Funding Guarantor" shall have the meaning provided in Section 10.7. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America. 11 "Genetic Systems" means Genetic Systems Corporation, a Delaware corporation. "Governmental Authority" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee Obligations" shall have the meaning provided in Section 11.1. "Guarantees" means, collectively, the guarantees delivered to the Lenders by the Guarantors pursuant to Section 10 which are evidenced by notations of guarantee substantially in the form of Exhibit VI hereto. "Guarantor" means each of the Company's Domestic Subsidiaries which constitutes a Material Subsidiary that in the future executes a supplement or amendment to this Agreement in which such Subsidiary agrees to be bound by the terms of the Loan Documents as a Guarantor; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Loan Documents. Notwithstanding the above, no direct or indirect Foreign Subsidiary of the Company will be considered a Guarantor. "Guarantor Junior Securities" means, with respect to a Guarantor, securities of such Guarantor subordinated to the Guarantor Senior Debt to the same extent as the Guarantee Obligations and which, in any case, do not mature or become subject to a mandatory redemption obligation prior to the one-year anniversary of the maturity of the Guarantor Senior Debt or of any securities distributed in any proceeding on account of the Guarantor Senior Debt. "Guarantor Payment Blockage Period" shall have the meaning provided in Section 11.2. "Guarantor Senior Debt" means the Senior Debt of a Guarantor. 12 "Incur" means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings correlative to the foregoing); provided, however, that any amendment, modification or waiver of any document pursuant to which Indebtedness was previously Incurred shall only be deemed to be an Incurrence of Indebtedness if and to the extent such amendment, modification or waiver (i) increases the principal thereof or interest rate or premium payable thereon or (ii) changes to an earlier date the stated maturity thereof or the date of any scheduled or required principal payment thereon or the time or circumstances under which such Indebtedness shall be redeemed; provided, further, that any Indebtedness of a Person existing at the time such Person becomes (after the Closing Date) a Subsidiary of the Company (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary of the Company. "Indebtedness" of a Person means, without duplication, such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations which are evidenced by notes, acceptances, or other instruments, (iv) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (v) Capitalized Lease Obligations, (vi) reimbursement obligations with respect to standby letters of credit, whether drawn or undrawn, (vii) Rate Management Obligations, (viii) Off-Balance Sheet Liabilities, (ix) all liabilities and obligations of the type described in the preceding clauses (i) through (viii) of any other Person that such Person has assumed or guaranteed or that are secured by a Lien on any Property of such Person (provided that if any such liability or obligation of such other Person is not the legal liability of such Person, the amount thereof shall be deemed to be the lesser of (1) the actual amount of such liability or obligation and (2) the book value of such Person's Property security such liability or obligation, and (x) any other obligation for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person. 13 "indemnified liabilities" has the meaning ascribed to such term in Section 12.3. "Indemnitees" has the meaning ascribed to such term in Section 12.3. "Interest Period" means, for each Bridge Note, the period commencing on the Closing Date and ending on the immediately succeeding Bridge Payment Date, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the immediately succeeding Bridge Payment Date. "Interest Rate Determination Date" means, with respect to any Interest Period, the second Business Day on which banks in New York and London are open prior to the first Business Day of such Interest Period. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor code or statute. "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts or notes receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities (other than treasury stock) owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person. Payment by a Person under a guaranty by such Person of Indebtedness of another Person shall be deemed to be an Investment by such Person in such other Person in the amount of such payment. "Junior Securities" means securities of the Company subordinated to the Senior Debt to the same extent as the Obligations and which, in any case, do not mature or become subject to a mandatory redemption obligation prior to the one-year anniversary of the maturity of the Senior Debt or of any securities distributed in any proceeding on account of the Senior Debt. 14 "Lenders" has the meaning ascribed to that term in the introduction to this Agreement and shall include any assignee of any Loan, Note or Loan Commitment to the extent of such assignment. "Leverage Ratio" means, as of any date of calculation, the ratio of (i) Consolidated Funded Indebtedness outstanding on such date to (ii) Consolidated EBITDA for the Company's then most-recently ended four fiscal quarters. "LIBO Base Rate" shall mean, with respect to each day during an Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "LIBO Base Rate" shall mean, with respect to each day during an Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). In the event that neither of such rates is available, the Agent shall refer to the alternative rate set forth in Section 2.7(a). "LIBO Rate" shall mean with respect to each day during an Interest Period for the Bridge Loan, a rate per annum determined for such day in accordance with the following formula (rounded upwards to the nearest whole multiple of one-sixteenth of one percent): LIBO Base Rate --------------------------------- 1.00 - LIBOR Reserve Requirements "LIBOR Reserve Requirements" shall mean, with respect to each day during an Interest Period for the Bridge Loan, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Federal Reserve Board or other governmental authority or agency having jurisdiction with respect thereto for determining the maximum reserves (including, without limitation, basic, 15 supplemental, marginal and emergency reserves) for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D) maintained by a member bank of the Federal Reserve System. "Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan Commitment" means the Bridge Loan Commitment and the Rollover Bridge Loan Commitment. "Loan Documents" means this Agreement, the Bridge Notes, the Rollover Bridge Notes, the Note Documents and the Registration Statement. "Loans" means the Bridge Loan and the Rollover Bridge Loan as each may be outstanding. "Loan Parties" means the Company and any Guarantor. "Margin Stock" has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Material Adverse Effect" means a material adverse effect on (i) the business, Property, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company and the Guarantors collectively to perform their obligations under the Loan Documents, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. "Material Domestic Subsidiary" means any Domestic Subsidiary having assets (other than non-U.S. domiciled assets and Equity Interests in Foreign Subsidiaries) with a book value of $10,000,000 or more or any group of Domestic Subsidiaries on a combined basis having such assets with a book value of $15,000,000 or more. 16 "Material Indebtedness" is defined in Section 7.1(e). "Material Subsidiary" means any Subsidiary, or group of Subsidiaries on a combined basis, that constitutes a Substantial Portion of the Property of the Company and its Subsidiaries. "Maturity Date" means the one year anniversary of the Closing Date. "Maximum Cash Interest Rate" means an interest rate of 14% per annum; provided that in computing such interest rate, fees paid to the Lenders shall not be deemed an interest payment. "Moody's" mean Moody's Investors Service, Inc. "Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA and to which the Company or any member of the Controlled Group is obligated to make contributions. "Net Cash Proceeds" means, with respect to any Asset Sale or Financing by any Person or the issuance of the Permanent Securities, (a) cash received by such Person or any Subsidiary of such Person from such Asset Sale (including cash received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale) or Financing or the issuance of the Permanent Securities, after (i) provision for all income or other taxes measured by or resulting from such Asset Sale or Financing or the issuance of the Permanent Securities, (ii) payment of all brokerage commissions and other fees and expenses related to such Asset Sale or Financing or the issuance of the Permanent Securities, (iii) repayment of Indebtedness secured by a Lien on any asset disposed of in such Asset Sale, (iv) deduction of appropriate amounts to be provided by such Person or a Subsidiary of such Person as a reserve, in accordance with Agreement Accounting Principles, against any liabilities associated with the assets sold or disposed of in such Asset Sale and retained by such Person or a Subsidiary of such Person after such Asset Sale, including, without limitation, liabilities related to environmental matters, or against any indemnification obligations associated with the assets sold or disposed of in such Asset Sale, and (v) in the case of a sale of a facility, the costs of relocating the operations of the Borrower and its Subsidiaries from that facility; and (b) cash payments in respect of 17 any Indebtedness, Equity Interest or other consideration received by such Person or any Subsidiary of such Person from such Asset Sale upon receipt of such cash payments by such Person or such Subsidiary. "Non-Payment Default" means any event (other than a Payment Default) the occurrence of which entitles one or more Persons to act to accelerate the maturity of any Senior Debt. "Note Documents" means the Exchange Notes, the Permanent Securities, the Senior Subordinated Indenture, the indenture governing the Permanent Securities and any guarantee related thereto. "Notes" means, collectively, the Bridge Notes and the Rollover Bridge Notes. "Notice of Borrowing" means a notice substantially in the form of Exhibit IV-A annexed hereto with respect to a proposed borrowing. "Obligations" means all obligations of every nature of the Company from time to time owed to the Lenders and the Agent under the Loan Documents, whether for principal, premiums, reimbursements, interest, fees, expenses, indemnities or otherwise, and whether primary, secondary, direct, indirect, contingent, fixed or otherwise (including obligations of performance). "Off-Balance Sheet Liability" of a Person means (i) any repurchase obligation or recourse liability of such Person with respect to the collectability of accounts or notes receivable sold by such Person, (ii) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (iii) any liability under any so-called "synthetic lease" transaction entered into by such Person, or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of borrowing but which does not constitute a liability on the balance sheet of such Person, but excluding from this clause (iv) any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more. 18 "Offer Payment Date" has the meaning ascribed to such term in Section 2.5(d)(iii). "Officer" means, with respect to any Person, the Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Controller, the Treasurer or the Secretary of such Person. "Officers' Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by two Officers; provided, however, that every Officers' Certificate with respect to the compliance with a condition precedent to the making of the Loans hereunder shall include (i) a statement that the officer or officers making or giving such Officers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signers, they have made or have caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signers, such condition has been complied with. "Original Bridge Notes" has the meaning ascribed to such term in Section 2.1(d). "Original Rollover Bridge Notes" has the meaning ascribed to such term in Section 2.2(e). "Payment Blockage Period" has the meaning ascribed to such term in Section 8.2(b). "Payment Default" means any default in the payment of principal, premium, if any, or interest on any Senior Debt beyond any applicable grace period with respect thereto. "Payment Office" shall mean the office of the Agent located at 677 Washington Blvd., 6th Floor Tower, Stamford, Connecticut 06901 or such other office as the Agent may designate to the Company and the Lenders from time to time. 19 "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "Permanent Securities" means any Securities of the Company and/or the Guarantors, the proceeds of which are used to repay the Notes in full. If the Permanent Securities consist of debt Securities, such Permanent Securities shall be governed by an indenture or other instrument which contains covenants, events of default and subordination provisions substantially similar to those described in the "Description of Notes" set forth in the January 27, 2000 draft of the Company's Preliminary Offering Memorandum with respect to $150,000,000 in principal amount of __% Senior Subordinated Notes due 2007. "Permitted Acquisition" means any Acquisition made by the Company or any of its Subsidiaries, provided that (i) as of the date of the consummation of such Acquisition, no Default or Event of Default shall have occurred and be continuing or would result from such Acquisition, and the representation and warranty contained in Section 4.11 shall be true both before and after giving effect to such Acquisition, (ii) such Acquisition is consummated on a non-hostile basis pursuant to a negotiated acquisition agreement approved by the board of directors or other applicable governing body of the seller or entity to be acquired, and no material challenge to such Acquisition (excluding the exercise of appraisal rights) shall be pending or threatened by any shareholder or director of the seller or entity to be acquired, (iii) the business to be acquired in such Acquisition is reasonably related to one or more of the fields of enterprise in which the Company and its Subsidiaries are engaged on the Closing Date, (iv) as of the date of the consummation of such Acquisition, all material approvals required in connection therewith shall have been obtained, and (v) from the period beginning on the Closing Date and ending on the date the Bridge Notes are exchanged for Rollover Notes, as of the date of the consummation of such Acquisition, the Company shall be in compliance with the financial covenants contained in the Senior Secured Credit Agreement as in effect on the Closing Date, both prior to and after giving effect to such Acquisition. "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. 20 "PIK Interest Amount" has the meaning ascribed to such term in Section 2.3(b). "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code as to which the Company or any member of the Controlled Group could reasonably be expected to incur any liability. "Prepayment Date" has the meaning set forth in Section 2.5(c). "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person, including, without limitation, Equity Interests of Subsidiaries of such Person. "PSD" means Pasteur Sanofi Diagnostics S.A. "PSD Acquisition" means the acquisition by the Company of the outstanding capital stock of PSD and certain related assets (the "Acquired Business") pursuant to the PSD Purchase Agreement. "PSD Purchase Agreement" means the Purchase Agreement dated July 3, 1999 among the Company, Sanofi Synthelabo and Institut Pasteur. "Rate Management Transaction" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into for bona fide hedging purposes (and not for speculative purposes), which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures. 21 "Rate Management Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Rate Management Transactions, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Management Transactions. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Register" has the meaning ascribed to such term in Section 12.20. "Registration Statement" means a registration statement of the Company and the Guarantors with respect to the Exchange Notes, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Internal Revenue Code. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Senior Debt; provided that if, and for so long as, any Senior Debt lacks such a representative, then the Representative for such Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Senior Debt in respect of any Senior Debt. 22 "Required Lenders" means Lenders holding in the aggregate more than 50% of the outstanding principal amount of Notes. "Rollover Bridge Loan Commitment" has the meaning ascribed to such term in Section 2.2(a). "Rollover Bridge Notes" has the meaning ascribed to such term in Section 2.2(c). "Rollover Bridge Loan Rate" means, for the period from and including the Maturity Date and to but excluding the three-month anniversary of the Maturity Date, a rate of interest per annum equal to the greater of (i) 14%, (ii) the Applicable Treasury Rate on the Maturity Date plus 6.25%, and (iii) the rate of interest on the Bridge Loan in effect on the Maturity Date. For each subsequent three month period the Rollover Bridge Loan Rate means the Rollover Bridge Loan Rate in effect for the immediately preceding three month period plus 0.50%. "Rollover Loan" has the meaning ascribed to such term in Section 2.2(a). "Rollover Notice" means a notice substantially in the form of Exhibit IV-B annexed hereto with respect to a proposed conversion. "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "Sale and Leaseback Transaction" means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee. "Schwartz Group" means David and Alice Schwartz, their family and heirs, and corporations, partnerships and limited liability companies 100% owned by any of the foregoing and trusts for the benefit of any of the foregoing. "Securities" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, bonds, debentures, options, warrants, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or 23 otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended, and any successor statute or statutes thereto. "Senior Debt" means up to $220 million of the following: the principal of, premium, if any, and interest (including any interest accruing subsequent to an event specified in Section 7.1(f) or Section 7.1(g) hereof at the rate provided for in the documentation governing such Senior Debt, whether or not such interest is an allowed claim under applicable law) on, and all other obligations (including reimbursements, fees, expenses, indemnities or otherwise, and whether primary, secondary, direct, indirect, contingent, fixed or otherwise) with respect to (i) all Indebtedness under or in respect of the Senior Secured Credit Agreement and any guaranty of any Indebtedness under or in respect of the Senior Secured Credit Agreement and (ii) all Rate Management Transactions and any cancellation, buyback, reversal, termination or assignment of any Rate Management Transaction. "Senior Financing" means the initial borrowing by the Company under the Senior Secured Credit Agreement. "Senior Officers" means each of the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of the Company. "Senior Secured Credit Agreement" means the Credit Agreement dated as of September 30, 1999, among Bio-Rad Laboratories, Inc., the lenders party thereto in their capacities as lenders thereunder, Bank One, NA, as agent, ABN AMRO Bank N.V., as syndication agent, and Union Bank of California, as documentation agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented, replaced, refinanced or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided that such increase in borrowings is permitted by Section 6.2 24 hereof) or adding or deleting Subsidiaries as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "Senior Subordinated Indenture" means an indenture, under which the Exchange Notes will be issued, that complies with the Trust Indenture Act of 1939 between the Company and a trustee conforming to the terms and conditions of the Rollover Loan (except as described below) and containing such other terms and conditions typical for publicly traded high yield debt securities. The covenants, events of default and subordination provisions of the Senior Subordinated Indenture shall be substantially similar to those described in the "Description of Notes" set forth in the January 27, 2000 draft of the Company's Preliminary Offering Memorandum with respect to $150,000,000 in principal amount of __% Senior Subordinated Notes due 2007. The Senior Subordinated Indenture shall have mandatory redemption provisions typical for publicly traded high yield debt securities. The Exchange Notes shall initially bear interest at the Rollover Bridge Loan Rate. For so long as the Exchange Notes bear interest at an increasing rate of interest, the Exchange Notes will be redeemable at the option of the Company, in whole or in part at any time, at par plus accrued and unpaid interest to the redemption date. Each holder of the Exchange Notes shall have the option to fix the interest rate on the Exchange Notes at a rate that is equal to the then applicable rate of interest borne by the Exchange Notes (but in no event in excess of 18% per annum). The Maximum Cash Interest Rate shall apply to the Exchange Notes, with all interest in excess of the Maximum Cash Interest Rate payable at the option of the Company in additional Exchange Notes. In such event, such Exchange Notes will be noncallable until the third anniversary of the Closing Date and will be callable thereafter at par plus accrued interest plus a premium equal to one-half of the coupon in effect on the date on which the interest rate was fixed declining ratably to par on the date that is one year prior to maturity of the Exchange Notes. The trustee shall be appointed by the Company and shall be acceptable to the Lenders receiving the Exchange Notes. The bank or trust company acting as trustee under the Senior Subordinated Indenture shall at all times be a corporation organized and doing business under the laws of the United States of America or the State of New York, in good standing and having its principal offices in the Borough of Manhattan, in The City of New York, which is authorized under such laws to exercise corporate trust powers and is subject to 25 supervision or examination by Federal or State authority and which has a combined capital and surplus of not less than $50,000,000. "Single Employer Plan" means a Plan (other than a Multiemployer Plan) maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "Subordinated Indebtedness" means Indebtedness of the Company or any Guarantor which is expressly subordinated in right of payment to the Notes or the Guarantee of such Guarantor, as the case may be. "Subsequent Bridge Note" has the meaning ascribed to such term in Section 2.1(d). "Subsequent Rollover Bridge Note" has the meaning ascribed to such term in Section 2.2(c). "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Company. "Substantial Portion" means, with respect to the Property of the Company and its Subsidiaries, Property which (i) represents more than 10% of the consolidated assets of the Company and its Subsidiaries as shown in the consolidated financial statements of the Company and its Subsidiaries as at the end of the four fiscal quarter period ending immediately prior to the fiscal quarter in which such determination is made, or (ii) is responsible for more than 10% of the consolidated net income of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "Synthetic Lease" is defined in Section 6.2(h). 26 "Taxes" has the meaning ascribed to such term in Section 2.10. "Transactions" means the borrowings of the Loans and the repayment of the amounts outstanding under the Existing Bridge Agreement. "Tribunal" means any government, any arbitration panel, any court or any governmental department, commission, board, bureau, agency, authority or instrumentality of the United States or any state, province, commonwealth, nation, territory, possession, county, parish, town, township, village or municipality, whether now or hereafter constituted and/or existing. "UBS" means UBS AG, Stamford Branch. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "U.S. Legal Tender" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Voting Equity Interests" means Equity Interests which at the time are entitled to vote in the election of, as applicable, directors, members or partners generally. "WDR" means Warburg Dillon Read. "Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than in the case of a Foreign Subsidiary, directors' qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly Owned Subsidiary of such Person. Unless otherwise specified, all references to a "Wholly Owned Subsidiary" shall mean a Wholly Owned Subsidiary of the Company. 27 "Year 2000 Issues" means anticipated costs, problems and uncertainties associated with the inability of certain computer applications (whether of the Company, any of its Subsidiaries, or any of the Company's or any of its Subsidiaries' material customers, suppliers or vendors) to effectively handle data including dates on and after January 1, 2000, as such inability affects the business, operations and financial condition of the Company and its Subsidiaries. "Year 2000 Program" is defined in Section 4.19. 1.2 Accounting Terms. For the purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. 1.3 Other Definitional Provisions; Anniversaries. Any of the terms defined in Section 1.1 may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. For purposes of this Agreement, a monthly anniversary of the Closing Date shall occur on the same day of the applicable month as the day of the month on which the Closing Date occurred; provided, however, that if the applicable month has no such day (i.e., 29, 30 or 31), the monthly anniversary shall be deemed to occur on the last day of the applicable month. SECTION 2. AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES 2.1 Bridge Loan and Bridge Note. (a) Bridge Loan Commitment. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Company herein set forth, the Lenders hereby agree to lend to the Company on the Closing Date $100,000,000.00 (one hundred million dollars) in the aggregate (the "Bridge Loan"), each such Lender committing, severally and not jointly, to lend the amount set forth next to such Lender's name on the signature pages hereto. The Lenders' commitments to make the Bridge Loan to the Company pursuant to this Section 2.1(a) are herein called individually, a "Bridge Loan Commitment" and collectively, the "Bridge Loan Commitments." 28 (b) Notice of Borrowing. When the Company desires to borrow under this Section 2.1, it shall deliver to the Agent a Notice of Borrowing no later than 12:00 P.M. (New York time), at least three Business Days in advance of the Closing Date or such later date as shall be agreed to by the Agent. The Notice of Borrowing shall specify the applicable date of borrowing (which shall be a Business Day). Upon receipt of such Notice of Borrowing, the Agent shall promptly notify each Lender of its share of the Bridge Loan and the other matters covered by the Notice of Borrowing. (c) Disbursement of Funds. No later than 1:00 P.M. (New York time) on the Closing Date, each Lender will make available its pro rata share of the Bridge Loan requested to be made on such date in the manner provided below. All amounts shall be made available to the Agent in U.S. Legal Tender and immediately available funds at the Payment Office and the Agent promptly will make available to the Company by depositing to its account at the Payment Office the aggregate of the amounts so made available in the type of funds received. Unless the Agent shall have been notified by any Lender prior to the Closing Date that such Lender does not intend to make available to the Agent its portion of the Bridge Loan to be made on such date, the Agent may assume that such Lender has made such amount available to the Agent on such date, and the Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Company a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender and the Agent has made available same to the Company, the Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify the Company, and the Company shall immediately pay such corresponding amount to the Agent. The Agent shall also be entitled to recover from the Lender or the Company, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Company to the date such corresponding amount is recovered by the Agent, at a rate per annum equal to (x) if paid by such Lender, the overnight Federal Funds Rate or (y) if paid by the Company, the then applicable rate of interest on the Loans. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any rights 29 which the Company may have against any Lender as a result of any default by such Lender hereunder. (d) Bridge Notes. The Company shall execute and deliver to each Lender on the Closing Date a Bridge Note dated the Closing Date substantially in the form of Exhibit I annexed hereto to evidence the portion of the Bridge Loan made on such date by such Lender and with appropriate insertions ("Original Bridge Notes"). On each interest payment date prior to the Maturity Date on which the Company elects to pay a PIK Interest Amount pursuant to Section 2.3(b), the Company shall execute and deliver to each Lender on such interest payment date a Bridge Note dated such interest payment date substantially in the form of Exhibit I annexed hereto in a principal amount equal to such Lender's pro rata portion of such PIK Interest Amount and with other appropriate insertions (each a "Subsequent Bridge Note" and, together with the Original Bridge Notes, the "Bridge Notes"). A Subsequent Bridge Note shall bear interest from the date of its issuance at the same rate borne by all Bridge Notes. (e) Scheduled Payment of Bridge Loan. Subject to Section 2.2, the Company shall pay in full the outstanding amount of the Bridge Loan and all other Obligations owing hereunder no later than the Maturity Date. (f) Termination of Bridge Loan Commitment. The Bridge Loan Commitment hereunder shall terminate on the earlier of (i) immediately after the Closing Date, provided the Bridge Loan has been made, or (ii) 5:00 p.m., New York time, on January 31, 2000. The Company shall have the right, without premium or penalty, to reduce or terminate the Bridge Loan Commitment of the Lenders hereunder at any time. Any Loan repaid may not be redrawn. (g) Pro Rata Borrowings. The Bridge Loan made under this Agreement shall be made by the Lenders pro rata on the basis of their respective Bridge Loan Commitments. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make its portion of the Bridge Loan hereunder and that each Lender shall be obligated to make its portion of the Bridge Loan hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder. 2.2 Rollover Bridge Loan and Rollover Bridge Note. 30 (a) Rollover Bridge Loan Commitment. Subject to the terms and conditions of this Agreement, including without limitation the conditions precedent set forth in Section 3.2, and in reliance upon the representations and warranties of the Company herein set forth, the Lenders hereby agree, upon the request of the Company, to convert on the Maturity Date the then outstanding principal amount of the Bridge Notes into a Rollover Bridge Loan (the "Rollover Bridge Loan"), such Rollover Bridge Loan to be in the aggregate principal amount of the then outstanding principal amount of the Bridge Notes. The Company's request shall be evidenced by a Rollover Notice delivered to the Lenders no later than 12:00 P.M. (New York time), at least two Business Days in advance of the Maturity Date. The Lenders' commitments under this Section 2.2(a) are herein called collectively, the "Rollover Bridge Loan Commitment." (b) Making of Rollover Bridge Loan. Upon satisfaction or waiver of the conditions precedent specified in Section 3.2 hereof, each Lender shall extend to the Company the Rollover Bridge Loan to be issued on the Maturity Date by such Lender by canceling on its records a corresponding principal amount of the Bridge Notes held by such Lender. (c) Maturity of Rollover Bridge Loan. The Rollover Bridge Loan shall mature and the Company shall pay in full the outstanding principal amount thereof and accrued interest thereon on September 30, 2005 (the "Final Maturity Date"). (d) Rollover Bridge Notes. The Company, as borrower, shall execute and deliver to each Lender on the Maturity Date a Rollover Bridge Note dated the Maturity Date substantially in the form of Exhibit II annexed hereto to evidence the Rollover Bridge Loan made on such date, in the principal amount of the Bridge Notes held by such Lender on such date and with other appropriate insertions (collectively the "Original Rollover Bridge Notes"). On or after the Maturity Date, on each interest payment date on which the Company elects to pay a PIK Interest Amount pursuant to Section 2.3(b), the Company shall execute and deliver to each Lender on such interest payment date a Rollover Bridge Note dated such interest payment date substantially in the form of Exhibit II annexed hereto in a principal amount equal to such Lender's pro rata portion of such PIK Interest Amount and with other appropriate insertions (each a "Subsequent Rollover Bridge Note" and, together with the Original Rollover Bridge Notes, the "Rollover Bridge Notes"). A 31 Subsequent Rollover Bridge Note shall bear interest at the same rate borne by all Rollover Bridge Notes. 2.3 Interest on the Notes. (a) Rate of Interest. The Notes shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by prepayment, acceleration or otherwise) at a rate determined as set forth below. (i) Bridge Notes. Subject to Section 2.3(a)(iii) and Section 2.7, the Bridge Notes shall bear interest for each Interest Period at a rate per annum equal to the LIBO Rate for such period plus the Applicable Margin. (ii) Rollover Bridge Notes. At any time after the Maturity Date, the Rollover Bridge Notes shall bear interest at a rate per annum equal to the Rollover Bridge Loan Rate. (iii) Maximum Interest. Notwithstanding clause (i) or (ii) of this Section 2.3(a) or any other provision herein, other than Section 2.3(c), in no event will the combined sum of interest (cash or otherwise) on the Bridge Notes or the Rollover Bridge Notes exceed the lower of 18.00% per annum or the maximum interest rate permitted by law. (b) Interest Payments. Interest shall be payable (i) with respect to the Bridge Notes, in arrears on April 30, 2000 and every one, two or three months thereafter as the Company may elect with the Agent's consent (each of the preceding dates, a "Bridge Payment Date") and upon any prepayment of the Bridge Notes (to the extent accrued on the amount being prepaid) and on the Maturity Date in respect of the principal amount of any Subsequent Bridge Notes and (ii) with respect to the Rollover Bridge Notes, in arrears on each March 31, June 30, September 30 and December 31 of each year, commencing on the first of such dates to follow the Maturity Date, upon any prepayment of the Rollover Bridge Notes (to the extent accrued on the amount being prepaid) and on the Final Maturity Date; provided, however, that if, on any interest payment date, the interest rate borne by the Bridge Notes or the Rollover Bridge Notes, as the case may be, exceeds the Maximum Cash Interest Rate, the Company may pay all or a portion of the interest payable in excess of the amount of interest that would be payable on such date at the Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes or Subsequent Rollover Bridge 32 Notes, as the case may be, in an aggregate principal amount equal to the amount of such interest being so paid (the "PIK Interest Amount"). (c) Post-Maturity Interest. Upon the occurrence and during the continuance of any Event of Default, the Company shall pay interest on the unpaid principal amount of each Note owing to each Lender, payable on demand, at a rate per annum equal to the rate which is (i) if any Rollover Bridge Notes are outstanding, 2.0% per annum in excess of the rate per annum then borne by such Rollover Bridge Notes and (ii) if any Bridge Notes are outstanding, the LIBO Rate plus 2% per annum plus the Applicable Margin with respect to such Bridge Notes. With respect to the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, the Company shall pay interest thereon, to the extent permitted under applicable law, in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal to the rate which is (i) if any Rollover Bridge Notes are outstanding, 2.0% per annum in excess of the rate per annum then borne by such Rollover Bridge Notes and (ii) if any Bridge Notes are outstanding, the LIBO Rate plus 2% per annum plus the Applicable Margin with respect to such Bridge Notes. (d) Computation of Interest. Interest on the Loans shall be computed on the basis of a 360-day year and, with respect to the Bridge Loan, the actual number of days elapsed in the period during which it accrues or, with respect to the Rollover Loan, twelve 30-day months. In computing interest on the Loans, the date of the making of the Loans shall be included and the date of payment shall be excluded; provided, however, that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. 2.4 Fees. The Company agrees to pay to WDR, the Agent, and the Lenders all fees and other obligations in accordance with, and at the times specified by, the Fee Letter. 2.5 Prepayments and Payments. (a) Voluntary Prepayments. Prior to the Final Maturity Date, the Company may, upon five days' prior written notice to each of the Lenders, prepay the Loans at any time, in whole or in part, on a pro rata basis, by paying to each applicable Lender an amount equal to 100% of such Lender's pro rata share of the 33 aggregate principal amount of the Loan to be prepaid, plus accrued and unpaid interest thereon to the Prepayment Date and all other amounts then due and owing hereunder; provided, however, that in connection with any prepayment of a Bridge Note made on a date other than the expiration of the Interest Period applicable thereto, the Company shall compensate each Lender in accordance with Section 2.8. (b) Mandatory Prepayments. The Company shall prepay the Loans ratably in accordance with the aggregate outstanding principal balances thereof, with 100% of the Net Cash Proceeds of: (i) the issuance of the Permanent Securities, (ii) any Asset Sale and (iii) any Financing; provided, however, that if any Indebtedness is outstanding under the Senior Secured Credit Agreement, then any amounts received pursuant to clauses (ii) and (iii) shall first be used for (A) any required repayment of such Indebtedness or (B) with respect to the Net Cash Proceeds of any Asset Sale, if permitted by the Senior Secured Credit Agreement, investment in assets or Property (other than Cash Equivalent Investments) in the Company's or any Subsidiary's business within twelve months after such Asset Sale. The Company shall, not later than the next Business Day following the receipt of any Net Cash Proceeds required to be applied to prepayment of the Loans pursuant to the immediately preceding paragraph, apply such Net Cash Proceeds on a pro rata basis to prepay the Loans by paying to each Lender an amount equal to 100% of such Lender's pro rata share of the aggregate principal amount of the Loans to be prepaid, plus accrued and unpaid interest thereon to the Prepayment Date and any other amounts then due and owing hereunder. Concurrently with any prepayment of the Loans pursuant to this Section 2.5(b), the Company shall deliver to the Agent an Officer's Certificate demonstrating the calculation of the amount of the applicable net proceeds that gave rise to such prepayment. (c) Effect of Notice of Prepayment. The Company shall notify the Lenders in writing at their addresses shown in the Register of any date set for mandatory or optional prepayment (each such day, a "Prepayment Date") of applicable Loans. Once such notice is sent or mailed, the Loans to be prepaid shall become due and payable on the Prepayment Date set forth in such notice. Such notice may not be conditional. (d) Purchase of Notes Upon a Change of Control. 34 (i) Upon the occurrence of a Change of Control, the Company shall offer to prepay all or any part of the principal amount of each Lender's Bridge Notes or Rollover Bridge Notes pursuant to the offer described below (the "Change of Control Offer") at a prepayment price in cash equal to 101% of the aggregate principal amount thereof, plus accrued interest thereon to the date of repurchase. (ii) At least ten days prior to any Change of Control, the Company shall mail a notice to each Lender stating: (1) that the Change of Control Offer is being made pursuant to this Section 2.5(d) and that all Notes validly tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be the date on which such Change of Control occurs (the "Offer Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Offer Payment Date unless the Company shall default in the payment of the repurchase price of the Notes; (5) that if a Lender elects to have a Note purchased pursuant to the Change of Control Offer it will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Company prior to 5:00 p.m. New York time on the Offer Payment Date; (6) that a Lender will be entitled to withdraw its election if the Company receives, not later than 5:00 p.m. New York time on the Business Day preceding the Offer Payment Date, a telegram, telex, facsimile transmission or letter setting forth the principal amount of Notes such Lender delivered for purchase, and a statement that such Lender is withdrawing its election to have such Note purchased; and (7) that if Notes are purchased only in part, a new Note of the same type will be issued in principal amount equal to the unpurchased portion of the Notes surrendered. 35 (iii) On or before the Offer Payment Date, the Company shall (1) accept for payment Notes or portions thereof which are to be purchased in accordance with the above, and (2) deposit at the Payment Office U.S. Legal Tender sufficient to pay the purchase price of all Notes to be purchased. The Agent shall promptly mail or, if provided with appropriate instructions, send by wire transfer to the Lenders whose Notes are so accepted payment in an amount equal to the purchase price unless such payment is prohibited pursuant to Section 8 hereof or otherwise. (e) Manner and Time of Payment. All payments of principal, interest, and any other amounts due hereunder and under the Notes by the Company or the Guarantors shall be made without defense, set-off or counterclaim and in same-day funds and delivered to the Agent, unless otherwise specified, not later than 1:00 P.M. (New York time) on the date due at the Payment Office for the account of the Lenders; funds received by the Agent after that time shall be deemed to have been paid by the Company on the next succeeding Business Day. Other than with respect to PIK Interest Amounts, all payments of any Obligations to be made hereunder or under the Notes by the Company or any other obligor with respect thereto shall be made solely in U.S. Legal Tender or such other currency as is then legal tender for public and private debts in the United States of America. (f) Payments on Non-Business Days. Whenever any payment to be made hereunder or under the Notes shall be stated to be due on a day which is not a Business Day, the payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or under the Notes or of the commitment fees and other amounts due hereunder, as the case may be. (g) Notation of Payment. Each Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), such Lender will make a notation thereon of all principal payments previously made thereon and of the date to which interest thereon has been paid and will notify the Company of the name and address of the transferee of that Note; provided, however, that the failure to make (or any error in the making of) such a notation or to notify the Company of the name and address of such transferee shall not limit or otherwise affect the obligation of the Company hereunder or under such Notes with respect to the Loans and payments of principal or interest on any such Note. 36 2.6 Use of Proceeds. (a) Bridge Loan. The proceeds of the Bridge Loan shall be applied by the Company to the repayment of amounts outstanding under the Existing Bridge Agreement. (b) Rollover Bridge Loan. The proceeds of the Rollover Bridge Loan shall be used to repay and cancel any outstanding amount of Bridge Notes converted to Rollover Bridge Notes on such date. (c) Margin Regulations. No portion of the proceeds of any borrowing under this Agreement shall be used by the Company in any manner which might cause the borrowing or the application of such proceeds to violate the applicable requirements of Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of the Board of Governors or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. In addition, following application of the proceeds of any borrowing under this Agreement, not more than 25% of the value of the assets (either of the Company only or of the Company and its Subsidiaries or a consolidated basis) will be Margin Stock 2.7 Interest Rate Unascertainable, Increased Costs, Illegality. (a) In the event that the Agent, in the case of clause (i) below, or any Lender, in the case of clauses (ii) and (iii) below, shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto): (i) on any date for determining the LIBO Rate for any Interest Period, that by reason of any changes arising after the date of this Agreement affecting the London interbank market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of the LIBO Rate; or (ii) at any time, that the relevant LIBO Rate applicable to any of its Notes shall not represent the effective pricing to such Lender for maintaining a Bridge Loan, or such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder in respect of any Bridge Note, in 37 any such case because of (x) any change since the date of this Agreement in any applicable law or governmental rule, regulation, guideline or order or any interpretation thereof and including the introduction of any new law or governmental rule, regulation, guideline or order (such as for example but not limited to a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D of the Federal Reserve Board to the extent included in the computation of the LIBO Rate), whether or not having the force of law and whether or not failure to comply therewith would be unlawful, and/or (y) other circumstances affecting such Lender or the London interbank market or the position of such Lender in such market; or (iii) at any time, that the making or continuance by it of any Bridge Loan has become unlawful by compliance by such Lender in good faith with any law or governmental rule, regulation, guideline or order (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) or has become impracticable as a result of a contingency occurring after the date of this Agreement which materially and adversely affects the London interbank market; then, and in any such event, the Agent or such Lender shall, promptly after making such determination, give notice (by telephone promptly confirmed in writing) to the Company and (if applicable) the Agent of such deter mination (which notice the Agent shall promptly transmit to each of the other Lenders). Thereafter in the case of clause (i), (ii) and (iii) above, each Bridge Note shall bear interest at a rate equal to the Applicable Treasury Rate plus the Applicable Margin; provided, however, that in the case of clause (ii) above, the Company shall have the option of paying interest at a rate equal to the LIBO Rate (if the Bridge Loan is then outstanding) plus the Applicable Margin if it pays to such Lender, upon such Lender's delivery of written demand therefor to the Company with a copy to the Agent, such additional amounts (in the form of an increased rate of interest, or a different method of calculating interest, or otherwise, as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reduction in amounts received or receivable hereunder. (b) In the event that the Agent determines at any time following its giving of notice based on the conditions described in clause (a)(i) above that none of such condi tions exist, the Agent shall promptly give notice thereof to the 38 Company and the Lenders, whereupon the Bridge Notes will again bear interest pursuant to Section 2.3. (c) In the event that a Lender determines at any time following its giving of a notice based on the conditions described in clause (a)(iii) above that none of such conditions exist, such Lender shall promptly give notice thereof to the Company and the Agent, whereupon the Bridge Notes held by such Lender shall bear interest pursuant to Section 2.3. 2.8 Funding Losses. The Company shall compensate each Lender, upon such Lender's delivery of a written demand therefor to the Company, with a copy to the Agent (which demand shall set forth the basis for requesting such amounts and shall, absent manifest error, be final and conclusive and binding upon all of the parties hereto), for all reasonable losses, expenses and liabilities (including,without limitation, any loss, expense or liability incurred by such Lender in connection with the liquidation or reemployment of deposits or funds required by it to make or carry its Bridge Notes), that such Lender sustains: (i) if for any reason (other than a default by such Lender) a borrowing of Bridge Notes does not occur on a date specified therefor in a Notice of Borrowing (whether or not rescinded, cancelled or withdrawn or deemed rescinded, cancelled or withdrawn,), (ii) if any repayment (including, without limitation, payment after acceleration) or conversion of any of its Bridge Notes occurs on a date which is not the last day of the Interest Period applicable thereto, (iii) if any prepayment of any of its Bridge Notes is not made on any date specified in a notice of prepayment given by the Company, or (iv) as a consequence of any default by the Company in repaying its Bridge Notes or any other amounts owing hereunder in respect of its Bridge Notes when required by the terms of this Agreement. Calculation of all amounts payable to a Lender under this Section 2.8 shall be made on the assumption that such Lender has funded its relevant Bridge Notes through the purchase of a Eurodollar deposit bearing interest at the LIBO Rate in an amount equal to the amount of such Bridge Notes with a maturity equivalent to the Interest Period applicable to such Bridge Notes, and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America, provided that each Lender may fund its Eurodollar Loans in any manner that it in its sole discretion chooses and the foregoing assumption shall only be made in order to calculate amounts payable under this Section 2.8. 2.9 Increased Capital. 39 (a) If any Lender shall have determined that compliance with any applicable law, rule, regulation, guideline, request or directive (whether or not having the force of law) of any governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital or assets of such Lender or any Person controlling such Lender as a consequence of its commitments or obligations here under, then from time to time, upon such Lender's delivery of a written demand therefor to the Agent and the Company (with a copy to the Agent), the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or Person for such reduction. (b) In the event that any change in law occurring after the date that any lender becomes a Lender party to this Agreement shall, in the opinion of such Lender, require that any Bridge Loan Commitment of such Lender be treated as an asset or otherwise be included for purposes of calculating the appropriate amount of capital to be maintained by such Lender or any Person controlling such Lender, and such change in law shall have the effect of reducing the rate of return on the capital or assets of such Lender or any Person controlling such Lender as a consequence of its commitments or obligations hereunder, then from time to time, upon such Lender's delivery of a written demand therefor to the Agent and the Company (with a copy to the Agent), the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or Person for such reduction. 2.10 Taxes. (a) All payments made by the Company under this Agreement and the other Loan Documents shall be made free and clear of, and without reduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority excluding, in the case of the Agent and each Lender, net income and franchise taxes imposed on the Agent or such Lender by the jurisdiction under the laws of which the Agent or such Lender is organized or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which such Lender's Domestic Lending Office or Eurodollar Lending Office, as the case may be, is located or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, deductions, charges or withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any 40 amounts payable to the Agent or any Lender hereunder or under the Notes, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. The Company agrees to indemnify and hold harmless the Agent and any Lender for the full amount of Taxes paid by the Agent or such Lender and any incremental taxes, interest or penalties arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date the Agent or any Lender makes written demand therefor. Whenever any Taxes are payable by the Company, as promptly as possible thereafter, and in any event within 30 days, the Company shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Company shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this Section 2.10 shall survive the termination of this Agreement and the payment of the Notes and all other Obligations. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (including each assignee, transferee or recipient that becomes a party to this Agreement pursuant to Section 12.1) agrees that, prior to the first date on which any payment is due to it hereunder, it will deliver to the Company and the Agent (i) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, certifying in each case that such Lender is entitled to benefits under an income tax treaty to which the United States is a party that reduces the rate of withholding tax on payments under this Agreement or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. If the form provided by a Lender prior to the first date on which a payment is due to it hereunder indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides 41 the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes; provided, however, that, if at the date of an assignment under Section 12.1(a) pursuant to which such Lender assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection 2.10(a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includible in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. Each Lender which delivers to the Company and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the preceding sentence further undertakes to deliver to the Company and the Agent two further copies of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it to the Company, and such extensions or renewals thereof as may reasonably be requested by the Company, certifying in the case of a Form 1001 or 4224 that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such letter or form with respect to it and such Lender advises the Company that it is not capable of receiving payments without any deduction or withholding of United States federal income tax, and in the case of a Form W-8 or W-9, establishing an exemption from United States backup withholding tax. SECTION 3. CONDITIONS 3.1 Conditions to Bridge Loan. The obligation of the Agent and each Lender to make the Bridge Loan is subject to the prior or concurrent satisfaction of each of the following conditions: (a) Document Delivery. On or before the Closing Date, all corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by the Agent shall be reasonably satisfactory in form and substance 42 to the Agent, and the Agent shall have received on behalf of the Lenders the following items, each of which shall be in form and substance satisfactory to the Agent and, unless otherwise noted below or in the definition thereof, dated the Closing Date: (i) executed copies of this Agreement and the Bridge Notes substantially in the form of Exhibit I annexed hereto executed in accordance with Section 2.1(d) drawn to the order of the Lenders and with appropriate insertions; (ii) a certified copy of the Company's charter or an officer's certificate stating that there has been no change to the Company's charter since September 30, 1999, together with a certificate of status, compliance, good standing or like certificate with respect to the Company issued by the appropriate government officials of the jurisdiction of its incorporation and of each jurisdiction in which it owns any material assets or carries on any material business, each to be dated a recent date prior to the Closing Date; (iii) a copy of the Company's bylaws, certified as of the Closing Date by its Secretary or one of its Assistant Secretaries, or an officer's certificate stating that there has been no change to the Company's bylaws since September 30, 1999; (iv) intentionally omitted; (v) Board Resolutions of the Company approving and authorizing the execution, delivery and performance of this Agreement, each of the other Loan Documents and any other documents, instruments and certificates required to be executed by the Company in connection herewith and therewith and approving and authorizing the execution, delivery and payment of the Notes and the consummation of the Transactions; (vi) signature and incumbency certificates of the Company's officers executing this Agreement and the Bridge Notes; (vii) an originally executed Notice of Borrowing substantially in the form of Exhibit IV-A annexed hereto, signed by the President or 43 a Vice President of the Company on behalf of the Company and delivered to the Agent; (viii) originally executed copies of one or more favorable written opinions of (I) Latham and Watkins, counsel for the Company, substantially in the form of Exhibit V annexed hereto and addressed to the Lenders and (II) such other opinions of counsel and such certificates or opinions of accountants, appraisers or other professionals as the Agent shall have reasonably requested; (ix) a certificate of the Chief Financial Officer or the Treasurer of the Company addressed to the Agent and the Lenders and in form and substance satisfactory to the Agent and the Lenders, attesting that the Company and its Subsidiaries (individually or in the aggregate) are solvent; (x) an executed payoff letter with respect to Indebtedness outstanding under the Existing Bridge Agreement; (xv) satisfactory evidence that all amounts due and payable to Banc One Capital Markets, Inc. pursuant to that certain engagement letter dated June 16, 1999 between the Company and Banc One Capital Markets, Inc. have been paid in full and such engagement letter and the engagement of Banc One Capital Markets, Inc. thereunder has been terminated; (xi) a funds flow memorandum satisfactory in form and substance to the Agent; and (xii) such other documents, certificates and opinions as the Agent may reasonably request. (b) Consent under Senior Secured Credit Agreement. The Company shall have obtained the consent of the Agent and the Required Lenders under the Senior Secured Credit Agreement to (i) the terms and conditions of this Agreement and (ii) the issuance of up to $150 million of Permanent Securities. (c) Capitalization; Etc. The corporate, capital and ownership structure (including articles of incorporation and bylaws), stockholders' agreements and management of the Company and its Subsidiaries shall be satisfactory to the Agent in all respects. 44 (d) No Inconsistent Information. The information disclosed to WDR, the Agent or the Lenders prior to the date of the Commitment Letter shall not have proven to be materially false or inaccurate, nor shall the Agent and the Lenders have discovered or otherwise become aware of information not previously disclosed to them that is materially inconsistent with information disclosed to WDR, the Agent or the Lenders prior to the date of the Commitment Letter with respect to the business, assets, liabilities (actual and contingent), operations, condition (financial or otherwise), management, prospects or value of the Company or its Subsidiaries. (e) Financial Statements. The Agent shall have received and, in each case, approved all audited, unaudited and pro forma financial statements described in Section 4.4 and all completed, probable and pending acquisitions (including the PSD Acquisition), all meeting the requirements of Regulation S-X under the Securities Act, applicable to a Registration Statement under the Securities Act on Form S-1, except that the Agent and the Lenders acknowledge and agree that such financial statements shall not include interim 1998 financial data for PSD. All such financial statements of PSD shall be prepared in accordance with GAAP. (f) Material Adverse Change. No material adverse change (including any event which, in the opinion of the Agent, is reasonably likely to result in such a material adverse change) in the business, assets, liabilities (actual and contingent), operations, condition (financial or otherwise), management, prospects or value of the Company and its Subsidiaries, taken as a whole, shall have occurred since the date of the most recent audited annual financial statements of the Company and PSD described in Section 4.4 and delivered to the Agent as of the Closing Date, and no material inaccuracy in such financial statements shall exist. (g) Market Conditions. No material adverse change in the financial or capital markets generally, or in the market for high yield debt or bridge loans in particular, shall have occurred which, in the judgment of the Agent, would make it impractical or inadvisable to proceed with the funding of the Bridge Loan or the sale of the Permanent Securities. No banking moratorium shall have been declared by Federal or New York banking officials. (h) Other Obligations. On or prior to the Closing Date, (A) all fees and expenses due and payable to the Agent, WDR, any Lender and/or their affiliates pursuant to the Engagement Letter or the Fee Letter shall have been paid in full as contemplated therein, and (B) the Company shall have complied with all of its 45 obligations under the Engagement Letter and the Fee Letter, and each such agreement shall be in full force and effect. (i) Consents. All governmental, shareholder and third- party consents and approvals necessary or reasonably advisable in connection with the Transactions and the other transactions contemplated hereby shall have been obtained; all such consents and approvals shall be in full force and effect; and all applicable waiting periods shall have expired without any action being taken or threatened by any authority that could restrain, prevent or impose any material adverse conditions on the Transactions or such other transactions. (j) Judgments, Etc. There shall not exist (A) any order, decree, judgment, ruling or injunction which restrains the consummation of the Transactions or (B) any pending or threatened action, suit, investigation or proceeding before any Tribunal that, if adversely determined, could have a Material Adverse Effect. (k) Intellectual Property. The Company shall provide a schedule of all United States registered patents and United States registered trademarks for the Company. (l) Other Reports. The Agent shall have received, in form and substance reasonably satisfactory to it, all environmental reports, Year 2000 questionnaires and such other reports as it may reasonably request. (m) Officer's Certificate. Simultaneously with the making of the Bridge Loan by the Lenders, the Company shall have delivered to the Agent an Officers' Certificate from the Company in form and substance satisfactory to the Agent to the effect that (i) the representations and warranties in Section 4 are true, correct and complete in all material respects on and as of the Closing Date to the same extent as though made on and as of that date and (ii) on or prior to the Closing Date, the Company has performed and complied in all material respects with all covenants and conditions required to be performed and observed by the Company on or prior to the Closing Date. (n) No Default. No event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by the Notice of Borrowing which would constitute a Default or Event of Default. 46 (o) Regulatory Requirements The making of the Bridge Loan in the manner contemplated in this Agreement shall not violate the applicable provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve Board or any other regulation of the Board. (p) Offering Memorandum. The Company shall have delivered to WDR (i) a preliminary offering memorandum to be distributed at the direction of WDR to potential purchasers, containing all relevant information about the Transactions and any other matters which WDR may deem necessary to a successful offering or which WDR or the Company may consider necessary or appropriate for accurate, complete and adequate disclosure, (ii) management's projections for the Company after giving pro forma effect to the Transactions and (iii) such other information as may be reasonably requested by any rating agency or by WDR or their counsel. (q) Repayment of Existing Indebtedness. The Company shall have paid (or made arrangements to pay concurrently with the making of the Bridge Loan hereunder) all principal, interest, fees and premiums, if any, on all Indebtedness outstanding under the Existing Bridge Agreement and all expenses and other amounts payable with respect thereto. (r) Credit Ratings. The Company shall have received a rating on the Permanent Securities of at least "B2" from Moody's and "B" from S&P. 3.2 Conditions to Rollover Bridge Loan. The obligation of the Lenders to make the Rollover Bridge Loan on the Maturity Date is subject to the prior or concurrent satisfaction or waiver of the following conditions precedent: (a) No Default. There shall exist no Default or Event of Default on the Maturity Date. (b) Fees, etc. All fees due to the Agent, WDR and/or the Lenders shall have been paid in full and all other requirements and obligations under the Fee Letter and the Engagement Letter shall have been satisfied or fulfilled. (c) No Injunction, Etc. No order, decree, injunction or judgment enjoining the issuance of any Rollover Bridge Loan shall be in effect. 47 (d) Senior Subordinated Indenture. At least thirty (30) days prior to the Maturity Date, the Company shall have delivered a draft of the Senior Subordinated Indenture reasonably acceptable to the Lenders, and such Senior Subordinated Indenture shall be in full force and effect on or prior to the Maturity Date. (e) Registration Statement. A Registration Statement shall be in effect for the issuance of Exchange Notes to the Lenders. (f) Rollover Notice. The Agent shall have received in accordance with the provisions of Section 2.2(a) an originally executed Rollover Notice. (g) Officer's Certificate. On the Maturity Date, the Agent shall have received an Officers' Certificate from the Company dated the Maturity Date and satisfactory in form and substance to the Agent, to the effect that the conditions in this Section 3.2 are satisfied on and as of the Maturity Date. (h) Rollover Bridge Notes. The Company shall have executed and delivered to the Agent on the Maturity Date for delivery to the Lenders, Rollover Bridge Notes dated the Maturity Date substantially in the form of Exhibit II annexed hereto to evidence the Rollover Bridge Loan, in the principal amount of the Rollover Bridge Loan (which principal amount shall be the aggregate principal amount of the Bridge Loan outstanding on the Maturity Date, including the principal amount of any Subsequent Bridge Notes), and with other appropriate insertions. (i) Certain Regulations. The making of the Rollover Bridge Loan shall not violate Regulation T, U or X of the Board of Governors of the Federal Reserve Board or any other regulation of the Board. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY In order to induce the Lenders to enter into this Agreement and to make the Loans, the Company represents and warrants to the Lenders that, at the time of execution hereof and on the Closing Date, the following statements are true, correct and complete: 4.1 Existence and Standing. Each of the Company and its Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or limited 48 liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to own, operate and encumber its Property and to conduct its business as presently conducted in each jurisdiction in which its business is conducted, except for any failure to be so authorized that could not reasonably be expected to have a Material Adverse Effect. 4.2 Authorization and Validity. Each Loan Party has the power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by each Loan Party of the Loan Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper corporate (or equivalent) proceedings, and the Loan Documents to which such Loan Party is a party constitute legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). 4.3 No Conflict; Government Consent. Neither the execution and delivery by the Loan Parties of the Loan Documents, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Company or any of its Subsidiaries or (ii) the Company's or any Subsidiary's articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which the Company or any of its Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of the Company or any Subsidiary pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any Governmental Authority which has not been obtained by the Company or any of its Subsidiaries, is 49 required to be obtained by the Company or any of its Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Company of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents, except filings, consents or notices which have been made, obtained or given, or which, if not made, obtained or given, individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. 4.4 Financial Statements. (a) The December 31, 1998 audited consolidated financial statements and the March 31, 1999, June 30, 1999 and September 30, 1999 unaudited consolidated financial statements of the Company and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Company and its Subsidiaries at such dates and the consolidated results of their operations for the periods then ended, subject, in the case of such unaudited financial statements, to normal year-end adjustments and the absence of notes. (b) The December 31, 1998, financial statements of the Acquired Business and any additional financial statements of the Acquired Business required by the Securities and Exchange Commission heretofore delivered to the Lenders were prepared in accordance with GAAP in effect on the date such statements were prepared and fairly present the financial condition and operations of the Acquired Business at such dates and the results of its operations for the periods then ended. Notwithstanding the foregoing, the Company has submitted to Sanofi Synthelabo and Institut Pasteur, the prior owners of the Acquired Business, suggested adjustments to the certain previously prepared financial statements of the Acquired Business, which adjustments may revise the December 31, 1998 financial statements and any additional financial statements of the Acquired Business; provided, however, that the Company does not believe that any such adjustments could result in a Material Adverse Effect. (c) The pro forma financial statements of the Company and its Subsidiaries, copies of which are attached hereto as Schedule 4.4, present on a pro forma basis the financial condition of the Company and its Subsidiaries as of such date, and reflect on a pro forma basis those liabilities reflected in the notes thereto and resulting from consummation of the PSD Acquisition, the transactions contemplated by this Agreement and the Senior Secured Credit Agreement, and the 50 payment or accrual of all costs and expenses with respect to any of the foregoing. The projections and assumptions expressed in such pro forma financials were prepared in good faith and represent good faith assumptions and estimates on the part of the Company based on the information available to the Company at the time so prepared. 4.5 Material Adverse Change. Since December 31, 1998 there has been no change in the business, Property, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole, including, without limitation, the Acquired Business, which could reasonably be expected to have a Material Adverse Effect. 4.6 Taxes. The Company and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Company or any of its Subsidiaries, except such taxes, if any, as are not yet due and payable or are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles. The United States income tax returns of the Company and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended December 31, 1994. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any taxes are adequate in accordance with Agreement Accounting Principles. 4.7 Litigation and Contingent Obligations. Except as set forth on Schedule 4.7, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Company or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Loans. Other than any liability incident to any litigation, arbitration or proceeding which (i) could not reasonably be expected to have a Material Adverse Effect or (ii) is set forth on Schedule 4.7, the Company and its Subsidiaries have no material contingent obligations not provided for or disclosed in the financial statements referred to in Section 4.4. 4.8 Subsidiaries. Schedule 4.8 contains an accurate list of all Subsidiaries of the Company as of the date of this Agreement, setting forth their 51 respective jurisdictions of organization and the percentage of their respective Equity Interests owned by the Company or other Subsidiaries. All of the issued and outstanding Equity Interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable. 4.9 ERISA. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect: there are no Unfunded Liabilities under any Single Employer Plans; neither the Company nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans; each Plan complies in all material respects with all applicable requirements of law and regulations; no Reportable Event has occurred with respect to any Plan; neither the Company nor any other member of the Controlled Group has withdrawn from any Plan or initiated steps to do so; and no steps have been taken to reorganize or terminate any Plan. 4.10 Accuracy of Information. No information, exhibit or report furnished by the Company or any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not materially misleading in a manner relied upon by the Lenders to their detriment. 4.11 Regulation U. Neither the Company nor any of its Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock. 4.12 Material Agreements. Neither the Company nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement (other than agreements or instruments evidencing or governing Indebtedness) to which it is a party, which default could reasonably be expected to have a Material Adverse Effect. 4.13 Compliance With Laws. The Company and its Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions 52 of any Governmental Authority having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property, except for any failure to comply with any of the foregoing which could not reasonably be expected to have a Material Adverse Effect. 4.14 Ownership of Properties. Except as set forth on Schedule 6.6, on the date of this Agreement, the Company and its Subsidiaries will have good title, free of all Liens other than those permitted by Section 6.6, to all of the Property and assets reflected in the Company's most recent consolidated financial statements provided to the Agent as owned by the Company and its Subsidiaries and all other Property material to the Company's and its Subsidiaries' businesses, except as sold or otherwise disposed of in the ordinary course of business. The Company and each Subsidiary (i) owns and/or possesses all the patents, trademarks, trade names, service marks, copyrights, licenses and rights with respect to the foregoing necessary for the present conduct of its business without any known conflict with the rights of others, and (ii) owns and/or possesses and/or has applied for all the patents, trademarks, trade names, service marks, copyrights, licenses and rights with respect to the foregoing necessary for the planned conduct of its business for the next six months, without any known conflict with the rights of others, except, with respect to clauses (i) and (ii), where the failure to own and/or possess any patents, trademarks, trade names, service marks, copyrights, licenses and/or rights could not reasonably be expected to have a Material Adverse Effect and/or subject the Company or any Subsidiary to any material liability in connection with any infringement and/or similar cause of action related to any of the foregoing. 4.15 Plan Assets; Prohibited Transactions. The Company is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Internal Revenue Code), and neither the execution of this Agreement nor the making of Loans hereunder gives rise to a prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code) with respect to "plan assets" of the Company and its Subsidiaries. 4.16 Environmental Matters. In the ordinary course of its business, the officers of the Company consider the effect of Environmental Laws on the business of the Company and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Company due to 53 Environmental Laws. On the basis of this consideration, the Company has concluded that Environmental Laws could not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect. 4.17 Investment Company Act. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 4.18 Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 4.19 Year 2000. The Company has generally completed its assessment of Year 2000 Issues and has a realistic program (the "Year 2000 Program") for completing required remediations and replacements of its assets on a timely basis. Based on its assessment and Year 2000 Program the Company does not anticipate that Year 2000 Issues will have a Material Adverse Effect. 4.20 Post-Retirement Benefits. As of the Closing Date, neither the Company nor any of its Subsidiaries has any expected costs of post-retirement medical and insurance benefits payable to their employees and former employees, as estimated by the Company in accordance with Financial Accounting Standards Board Statement No. 106. 4.21 Insurance. Schedule 4.21 accurately sets forth as of the Closing Date all insurance policies and programs currently in effect with respect to the respective properties and assets and business of the Company and its Domestic Subsidiaries, specifying, for each such policy and program, (i) the amount thereof, (ii) the risks insured against thereby, (iii) the name of the insurer and each insured party thereunder, (iv) the policy or other identification number thereof, (v) the 54 expiration date thereof, (vi) the annual premium with respect thereto, and (vii) any reserves relating to any self-insurance program that is in effect. 4.22 Solvency. (a) Immediately after the consummation of the transactions to occur on the date hereof and immediately following the making of each Loan, if any, made on the date hereof and after giving effect to the application of the proceeds of such Loans, (i) the fair value of the assets of the Company and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, subordinated, contingent or otherwise, of the Company and its Subsidiaries on a consolidated basis; (ii) the present fair saleable value of the Property of the Company and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Company and its Subsidiaries on a consolidated basis on their debts and other liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; (iii) the Company and its Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Company and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted after the date hereof. (b) The Company does not intend to, or to permit any of its Subsidiaries to, and does not believe that it or any of its Subsidiaries will, Incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary. 4.23 Termination of June 1999 Engagement Letter. The Company has terminated that certain engagement letter dated June 16, 1999 between the Company and Banc One Capital Markets, Inc. and the engagement of Banc One Capital Markets, Inc. thereunder as exclusive underwriter, arranger or placement agent with respect to the Permanent Securities. SECTION 4A. REPRESENTATIONS AND WARRANTIES OF THE LENDERS 55 Each of the Lenders represents and warrants to the Company that, at the time of execution hereof and on the Closing Date, the following statements are true, correct and complete: 4A.1 Accredited Investor. Such Lender is an institutional "accredited investor" within the meaning of Regulation D of the Securities Act and the Notes to be acquired by it pursuant to this Agreement are being acquired for its own account and without a view to, or for resale in connection with, any distribution thereof or any interest therein; provided that the provisions of this Section shall not prejudice such Lender's right at all times to sell or otherwise dispose of all or any part of the Notes so acquired pursuant to the terms of this Agreement, a registration under the Securities Act or an exemption from such registration available under the Securities Act. 4A.2 Knowledge and Experience. Such Lender has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Notes, such Lender is capable of bearing the economic risks of such investment and such Lender has had the opportunity to conduct its own due diligence investigation in relation to its making of the Loans and the acquisition of the Notes hereunder. 4A.3 Source of Funds. No part of the funds used by such Lender to make the Loans hereunder constitutes assets of any "plan" (as defined in Section 4975 of the Internal Revenue Code). SECTION 5. AFFIRMATIVE COVENANTS The Company covenants and agrees that, until the Loans and the Notes and all other amounts due under this Agreement have been indefeasibly paid in full, it shall perform all covenants in this Section 5 required to be performed by it. 5.1 Financial Reporting. The Company will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Lenders: 56 (a) Within 90 days after the close of each of its Fiscal Years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted accounting principles and required or approved by the Company's independent certified public accountants) audit report certified by independent certified public accountants acceptable to the Required Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows. (b) Within 45 days after the close of the first three quarterly periods of each of its Fiscal Years, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of surplus statements and a statement of cash flows for the period from the beginning of such Fiscal Year to the end of such quarter, all certified by its chief financial officer. (c) As soon as available, but in any event within 90 days after the beginning of each Fiscal Year of the Company, a copy of the plan and forecast (including a projected consolidated balance sheet, income statement and funds flow statement) of the Company and its Subsidiaries for such Fiscal Year. (d) Within 10 days after the delivery of the financial statements required under Section 5.1(a) and within 15 days after the delivery of the financial statements required under Section 5.1(b), a compliance certificate in substantially the form of Exhibit III signed by its Chief Financial Officer or Treasurer showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Event of Default exists, or if any Default or Event of Default exists, stating the nature and status thereof. (e) Within 270 days after the close of each Fiscal Year, a statement of the Unfunded Liabilities of each Single Employer Plan, certified as correct by an actuary enrolled under ERISA. (f) As soon as possible and in any event within 20 days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the Chief Financial Officer or Treasurer of the Company, 57 describing said Reportable Event and the action which the Company proposes to take with respect thereto. (g) As soon as possible and in any event within 20 days after receipt by the Company, a copy of (a) any notice or claim to the effect that the Company or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Company, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Company or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (h) Promptly upon the furnishing thereof to the shareholders of the Company, copies of all financial statements, reports and proxy statements so furnished. (i) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Company or any of its Subsidiaries files with the Securities and Exchange Commission. (j) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 5.2 Use of Proceeds. The Company will, and will cause each Subsidiary to, use the proceeds of the Loans in accordance with Section 2.6. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any Margin Stock. 5.3 Notice of Default. The Company will give prompt notice in writing to the Lenders of the occurrence of any Default or Event of Default and of any other development, financial or otherwise (including, without limitation, developments with respect to Year 2000 Issues), which could reasonably be expected to have a Material Adverse Effect. 5.4 Conduct of Business. The Company will, and will cause each Subsidiary to, carry on and conduct its business only in fields of enterprise substantially the same as or reasonably related to the fields of enterprise in which it 58 is presently conducted and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, in each case, except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect. 5.5 Taxes. The Company will, and will cause each Subsidiary to, timely file complete and correct United States federal, if applicable, and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property which if unpaid might become a Lien on any of its Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside if and to the extent required by Agreement Accounting Principles. 5.6 Insurance. The Company shall maintain for itself and its Domestic Subsidiaries, or shall cause each of its Domestic Subsidiaries to maintain, in full force and effect the insurance policies and programs listed on Schedule 4.21 or substantially similar policies and programs or other policies and programs as reflect coverage that is reasonably consistent with prudent industry practice. In the event the Company or any of its Domestic Subsidiaries, at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto within ten days after written notice from the Agent, then the Agent, without waiving or releasing any obligations or resulting Event of Default hereunder, may at any time or times thereafter so long as such failure shall continue (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which the Agent deems advisable. All sums so disbursed by the Agent shall constitute part of the Obligations, payable as provided in this Agreement. 5.7 Compliance with Laws. The Company will, and will cause each Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, the violation of which could reasonably be 59 expected to have a Material Adverse Effect and/or result in the creation of any Lien not permitted by Section 6.6. 5.8 Maintenance of Properties. The Company will, and will cause each Subsidiary to, do all things necessary and commercially reasonable to maintain, preserve, protect and keep its Property in good repair, working order and condition, ordinary wear and tear excepted, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times, in each case except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect. 5.9 Inspection. The Company will, and will cause each Subsidiary to, permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, books and financial records of the Company and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Company and each Subsidiary, and to discuss the affairs, finances and accounts of the Company and each Subsidiary with, and to be advised as to the same by, their respective officers, in each case upon reasonable advance notice and at such reasonable times (during normal business hours) and intervals as the Agent may designate. 5.10 Year 2000. The Company will take and will cause each of its Subsidiaries to take all such actions as are reasonably necessary to successfully implement the Year 2000 Program and to assure that Year 2000 Issues will not have a Material Adverse Effect. At the request of the Agent, the Company will provide a description of the Year 2000 Program, together with any updates or progress reports with respect thereto. 5.11 Additional Guarantors. If at any time on or after the Closing Date, any one or more Domestic Subsidiaries shall constitute a Material Domestic Subsidiary, the Company shall promptly notify the Agent thereof, which notice shall specify the date as of which such Domestic Subsidiary or Subsidiaries became a Material Domestic Subsidiary. (Each reference hereafter in this Section 5.11 to a Material Domestic Subsidiary shall mean each Subsidiary constituting such Material Domestic Subsidiary.) Within 90 days after the date specified in such notice, the Company shall cause such Material Domestic Subsidiary to execute and deliver to the Agent a Guaranty, together with such supporting documentation, including corporate resolutions and/or opinions of counsel with respect to such additional 60 Guaranty, as may be reasonably required by the Agent. Notwithstanding the foregoing, (i) if the Company acquires a Material Domestic Subsidiary pursuant to a Permitted Acquisition, the Company may, as an alternative to complying with the preceding sentence, within 90 days after the consummation of such Permitted Acquisition, cause such Material Domestic Subsidiary to merge into, or to transfer all or substantially all of its assets to, the Company or a Guarantor, and (ii) the Company shall comply with the preceding sentence or, in the alternative, the preceding clause (i), with respect to Sanofi Diagnostics Pasteur, Inc. and Genetic Systems no later than March 31, 2000. In addition, if any Subsidiary of the Company guarantees the obligations of the Company under the Senior Secured Credit Agreement, such Subsidiary shall also deliver a Guaranty to the Agent, together with such supporting documentation, including corporate resolutions and/or opinions of counsel with respect to such additional Guaranty, as may be reasonably required by the Agent. 5.12 Exchange of Rollover Bridge Notes. The Company will, on or before the fifth Business Day following the written request (the "Exchange Request") of the holder of any Rollover Bridge Note (or beneficial owner of a portion thereof): (a) Execute and deliver, cause each Guarantor to execute and deliver, and cause a bank or trust company acting as trustee thereunder to execute and deliver, the Senior Subordinated Indenture, if such Senior Subordinated Indenture has not previously been executed and delivered, and (b) Execute and deliver to such holder or beneficial owner in accordance with the Senior Subordinated Indenture a note in the form attached to the Senior Subordinated Indenture (the "Exchange Notes") bearing an increasing interest rate equal to the Rollover Bridge Loan Rate in exchange for such Rollover Bridge Note dated the date of the issuance of such Exchange Note, payable to the order of such holder or owner, as the case may be, in the same principal amount as such Rollover Bridge Note (or portion thereof) being exchanged, and cause each Guarantor to endorse its guarantee thereon. The Exchange Request shall specify the principal amount of the Rollover Bridge Notes to be exchanged pursuant to this Section 5.12 which shall be at least $5,000,000 and integral multiples of $500,000 in excess thereof (or, in the case any Lender holds Rollover Bridge Notes with an outstanding amount less than 61 $5,000,000, such remaining amount). Rollover Bridge Notes delivered to the Company under this Section 5.12 in exchange for Exchange Notes shall be cancelled by the Company and the corresponding amount of the Rollover Bridge Loan deemed repaid and the Exchange Notes shall be governed by and construed in accordance with the terms of the Senior Subordinated Indenture. 5.13 Permanent Securities. Upon the request of WDR, the Company will issue Permanent Securities in such amount as will generate gross proceeds equal to up to $150,000,000, which shall be used to repay (i) all outstanding Bridge Notes, Rollover Bridge Notes and Exchange Notes and all related fees and expenses and (ii) otherwise be applied as required under the Senior Secured Credit Agreement. Such securities shall have such form, term, guarantees, covenants, default and subordination provisions and other terms as are customary for securities of the type issued and may be issued in one or more tranches, all as determined by WDR, in its sole discretion; provided, however, that the Permanent Securities will bear interest at a rate per annum not greater than 18% and shall be subject to the Maximum Cash Interest Rate. WDR will act as the exclusive lead underwriter, lead arranger or lead placement agent (as it shall determine in its sole discretion) and AAI will act as the exclusive co- underwriter, co-arranger or co-placement agent, in connection with such issuance of Permanent Securities pursuant to the provisions of the Engagement Letter. The Company will do all things reasonably required in the opinion of WDR and AAI in connection with the sale of the Permanent Securities. In addition, WDR and AAI may require the Company to execute an underwriting or purchase agreement providing for the issuance of Permanent Securities contemplated by this Section 5.13 substantially in the form of WDR's standard underwriting or purchase agreement, modified as appropriate to reflect the terms of the transactions contemplate thereby and containing such terms, covenants, conditions, representations, warranties and indemnities as are customary in similar transactions and providing for the delivery of legal opinions, comfort letters and officers' certificates, all in form and substance reasonably satisfactory to WDR and AAI, as well as such other terms and conditions as WDR and AAI reasonably consider appropriate in light of the then prevailing market conditions applicable to similar financings. 5.14 Lenders Meeting. The Company will participate in a meeting with the Lenders once during each Fiscal Year to be held at a location and a time selected by the Company and reasonably satisfactory to the Lenders. 62 5.15 Note Documents. Each of the Company and the Guarantors shall, on the date it executes and delivers any Note Document, have the full corporate (or equivalent) power, authority and capacity to do so and to perform all of its obligations to be performed thereunder; all corporate (or equivalent) and other acts, conditions and things required to be done and performed or to have occurred prior to such execution and delivery to constitute them as valid and legally binding obligations of the Company enforceable against the Company and the Guarantors in accordance with their respective terms except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), shall have been done and performed and shall have occurred in due compliance with all applicable laws; on the date of such execution and delivery by the Company and the Guarantors, each Note Document shall constitute a legal, valid, binding and unconditional obligation of the Company or the Guarantor, as the case may be, enforceable against the Company or such Guarantors, as the case may be, in accordance with its respective terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). 5.16 Syndication. The Company shall actively assist WDR in achieving syndication of the Bridge Loan Commitment and the Bridge Loan in a manner reasonably satisfactory to WDR. In the event that such syndication cannot be achieved in a manner reasonably satisfactory to WDR under the terms and conditions set forth herein, the Company shall cooperate with WDR in developing an alternative structure that will permit syndication of the Bridge Loan Commitment and the Bridge Loan in a manner reasonably satisfactory to WDR and the Company. Syndication of the Bridge Loan Commitment and the Bridge Loan will be accomplished by a variety of means, including direct contact during the syndication between senior management and advisors of the Company and the proposed Lenders. To assist WDR in its syndication efforts, the Company shall (a) provide and cause its advisors to provide WDR and the other Lenders upon request with all information reasonably deemed necessary by WDR to complete syndication, including but not limited to information and evaluations prepared by the Company and its advisors, or on its behalf, relating to the Transactions, provided that the Company does not 63 hereby waive its attorney-client privilege, (b) assist WDR in the preparation of the Offering Memorandum described in Section 3.1(o) and (c) otherwise assist WDR in its syndication efforts, including making available officers and advisors of the Company from time to time to attend and make presentations regarding the business and prospects of the Company at a meeting or meetings of prospective Lenders. It is understood and agreed that WDR, after consultation with the Company, will manage and control all aspects of the syndication, including decisions as to the selection of proposed Lenders and any titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders. WDR agrees to use its reasonable efforts to satisfy the Company's preferences with respect to the selection of proposed Lenders and the final allocation of the commitments among the Lenders. SECTION 6. NEGATIVE COVENANTS The Company covenants and agrees that until the satisfaction in full of the Loans and the Notes and all other Obligations due under this Agreement it will fully and timely perform all covenants in this Section 6. 6.1 Dividends. The Company will not, nor will it permit any Subsidiary to, declare or pay any dividends or make any distributions on its capital stock (other than dividends payable in its own capital stock) or redeem, repurchase or otherwise acquire or retire any of its Equity Interests at any time outstanding, except that any Subsidiary may declare and pay dividends or make distributions to the Company or to a Wholly-Owned Subsidiary and excluding share repurchases of the Company's capital stock used solely to fund employee stock purchase plans and employee stock option plans, provided such share repurchases do not exceed $5,000,000 in the aggregate in any fiscal year. 6.2 Indebtedness. The Company will not, nor will it permit any Subsidiary to, Incur any Indebtedness, except: (a) The Loans. (b) Indebtedness under the Senior Secured Credit Agreement in an amount not to exceed $220,000,000. 64 (c) Indebtedness (other than Indebtedness of Foreign Subsidiaries) existing on the date hereof and described in Schedule 6.2. (d) Indebtedness arising under Rate Management Transactions and other Financial Contracts permitted by Section 6.14. (e) Indebtedness of Foreign Subsidiaries not exceeding $25,000,000 (or equivalent in foreign currencies) in aggregate principal amount at any one time outstanding. (f) Factoring of accounts and notes receivable of Foreign Subsidiaries, provided that (i) such receivables sold without recourse to the selling Foreign Subsidiary shall be sold on commercially reasonable terms and (ii) the liabilities of such Foreign Subsidiaries with respect to such receivables sold with recourse to the selling Foreign Subsidiary shall not exceed $10,000,000 (or equivalent in foreign currencies) in the aggregate at any time. (g) Indebtedness constituting Contingent Obligations permitted by Section 6.13. (h) Indebtedness incurred pursuant to so-called "synthetic lease" transactions ("Synthetic Leases") and Sale and Leaseback Transactions, provided that at the time such transaction is entered into (A) no Default or Event of Default exists and (B) the Leverage Ratio as of the last day of the most recent fiscal quarter for which the Company has delivered financial statements pursuant to Section 5.1 on a pro forma basis as if such Synthetic Lease or Sale and Leaseback Transaction were entered into at the beginning of the four-fiscal quarter period ending on such day would have been equal to or less than 3.00 to 1. (i) Indebtedness of the Company to any Subsidiary or of any Guarantor to the Company or any other Guarantor or of any Subsidiary that is not a Guarantor to any other Subsidiary that is not a Guarantor; provided that if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness shall be expressly subordinate to the payment in full of the Obligations in a manner satisfactory in form and substance to the Agent. 65 (j) Other Indebtedness, not otherwise permitted by clauses (a) through (i) above, not exceeding $15,000,000 in the aggregate outstanding at any one time. 6.3 Merger. The Company will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that a Subsidiary may merge (i) into the Company or a Wholly-Owned Subsidiary or (ii) in connection with a Permitted Acquisition. 6.4 Sale of Assets. The Company will not, nor will it permit any Subsidiary to, lease, sell or otherwise dispose of its Property to any other Person, except: (a) Sales of inventory in the ordinary course of business. (b) Sales by Foreign Subsidiaries of accounts receivable and notes receivable permitted by Section 6.2(f). (c) Sales or other dispositions of Property in connection with Synthetic Leases and Sale and Leaseback Transactions permitted by Section 6.2(h). (d) Equipment or other assets traded in or exchanged for replacement assets. (e) Leases, sales or other dispositions of its Property (excluding leases, sales or other dispositions permitted under clauses (a) through (d) above) that, together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of as permitted by this clause (e) during the four-fiscal quarter period ending with the fiscal quarter in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Company and its Subsidiaries, provided that during the continuance of a Default or an Event of Default, any disposition of Property constituting Collateral (as defined in the Senior Secured Credit Agreement) pursuant to this clause (e) shall be for consideration consisting only of cash and Cash Equivalent Investments. 6.5 Investments and Acquisitions. The Company will not, nor will it permit any Subsidiary to, make or suffer to exist any Investments (including without limitation, loans and advances to, and other Investments in, Subsidiaries), or 66 commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except: (a) Cash Equivalent Investments. (b) Existing Investments in Subsidiaries and other Investments in existence on the date hereof and described in Schedule 6.5. (c) Investments by the Company or any Guarantor in Subsidiaries other than Guarantors, in addition to Investments permitted by clause (b) above, not to exceed in the aggregate during the term of this Agreement the sum of (i) $15,000,000 (or equivalent in foreign currencies) plus (ii) the cumulative amount of repayments of principal, returns of capital and dividends received by the Company or any Guarantor from Subsidiaries other than Guarantors on Investments (including existing Investments) in such Subsidiaries. (d) Investments in the Company and in Subsidiaries that are Guarantors, and Investments by Subsidiaries that are not Guarantors in other Subsidiaries that are not Guarantors. (e) Investments constituting Rate Management Transactions and Financial Contracts permitted by Section 6.14. (f) Permitted Acquisitions and Investments in joint ventures, provided that no Default or Event of Default exists before or after giving effect to such Permitted Acquisition or such joint venture Investment. (g) Other Investments not otherwise permitted by clauses (a) through (f) above, not exceeding in the aggregate during the term of this Agreement the sum of (i) $10,000,000 plus (ii) the cumulative amount of repayments of principal, returns of capital and dividends received by the Company or any Guarantor on Investments made pursuant to this clause (g). 6.6 Liens. The Company will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Company or any of its Subsidiaries, except: (a) Liens securing Indebtedness and other obligations under the Senior Secured Credit Agreement. 67 (b) Liens for taxes, assessments or governmental charges (other than Liens imposed by the PBGC) or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves shall have been set aside on its books if and to the extent required by Agreement Accounting Principles. (c) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books if and to the extent required by Agreement Accounting Principles. (d) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation. (e) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Company or its Subsidiaries. (f) Liens granted to or for the benefit of any of the agent or any lender under the Senior Secured Credit Agreement, or any of their respective Affiliates, pursuant to any Rate Management Transaction. (g) Liens on property of Foreign Subsidiaries in connection with banker's acceptances with maturities not in excess of 180 days. (h) Liens on accounts and notes receivable of Foreign Subsidiaries securing loans and advances to Foreign Subsidiaries permitted by Section 6.2. (i) Liens against equipment, property, or plant leased by the Company or any Subsidiary in favor of the lessor thereof. 68 (j) Purchase money Liens to secure Indebtedness permitted hereunder, and extensions, renewals and refinancing thereof so long as the principal amounts thereof are not increased. (k) Liens to secure the performance of tenders, statutory obligations, bids, leases, government contracts, performance and surety bonds and other similar obligations in the ordinary course of business. (l) Liens on documents and related property arising in connection with trade letters of credit in the ordinary course of business. (m) Liens (excluding liens permitted under clauses (a) through (l) above) existing on the date hereof, the aggregate amount of liabilities secured by which does not exceed $5,000,000. All such Liens securing liabilities in excess of $250,000 are listed on Schedule 6.6 hereto. (n) Liens (excluding Liens permitted under clauses (a) through (m) above) to secure obligations of the Company or any Subsidiary, the principal amount of which does not exceed $15,000,000 at any one time. 6.7 Capital Expenditures. The Company will not, nor will it permit any Subsidiary to, expend, or be committed to expend, in excess of $40,000,000 for Capital Expenditures during any one Fiscal Year, commencing with Fiscal Year 1999, in the aggregate for the Company and its Subsidiaries on a consolidated basis; provided, however, that for each Fiscal Year after 1999, such aggregate amount shall be increased by an amount (the "Carryover Amount") that is the lesser of (i) the excess, if any, of (A) the maximum aggregate amount of Capital Expenditures (including any Carryover Amount) permitted pursuant to this Section 6.7 for the immediately preceding fiscal year over (B) the aggregate amount of actual Capital Expenditures during such preceding Fiscal Year and (ii) $40,000,000. Notwithstanding the foregoing and in addition thereto, the Company and its Subsidiaries may make Capital Expenditures (1) in an amount equal to Available Net Cash Proceeds (as defined in the Senior Secured Credit Agreement) in accordance with Section 2.7.2(a) of the Senior Secured Credit Agreement and (2) in an amount equal to Excess Cash Flow (as defined in the Senior Secured Credit Agreement) on a cumulative basis to the extent not required to be applied as a mandatory prepayment of the loans under the Senior Secured Credit Agreement. 69 6.8 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. (a) The Company shall not (and shall not suffer or permit any of its Domestic Subsidiaries to), directly or indirectly, enter into any agreement with any Person which prohibits or limits the ability of any of the Company or any of its Domestic Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its Property or revenues, whether now owned or hereafter acquired, other than (i) this Agreement and the other Loan Documents, (ii) the Senior Secured Credit Agreement, (iii) Lien restrictions in a Capitalized Lease or other purchase money financing arrangement permitted hereunder relating to the asset financed thereunder and (iv) purchase agreements, license agreements, leases and other similar agreements entered into in the ordinary course of business that prohibit a Lien on the asset or assets subject to such agreements. (b) The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, assume or suffer to exist any consensual restriction on the ability of any of its Subsidiaries to pay dividends or make other distributions to or on behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer assets or Property to or on behalf of, or make or pay loans or advances to or on behalf of, the Company or any of its Subsidiaries, except: (i) restrictions imposed by this Agreement and the other Loan Documents; (ii) restrictions imposed by the Senior Credit Agreement; (iii) restrictions imposed by applicable law; (iv) existing restrictions under Indebtedness of any Subsidiary outstanding on the Closing Date; (v) restrictions under any Acquired Indebtedness not Incurred in violation of any agreement (including any Equity Interest) relating to any Property, asset or business acquired by the Company or any of its Subsidiaries, which restrictions in each case existed at the time of the Acquisition, were not put in place in connection with or in anticipation of such Acquisition and are not applicable to any Person, other than the Person acquired, or to any Property, asset or business, other than the Property, assets and business so acquired; 70 (vi) restrictions with respect solely to any of its Subsidiaries imposed pursuant to a binding agreement which has been entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Subsidiary; provided, that such restrictions apply solely to the Equity Interests or assets of such Subsidiary which are being sold; (vii) restrictions on transfer contained in purchase money Indebtedness; provided, that such restrictions relate only to the transfer of the Property acquired with the proceeds of such purchase money Indebtedness; (viii) provisions with respect to the disposition or distribution of assets or Property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; (ix) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (x) in connection with and pursuant to permitted Refinancings, replacements of restrictions imposed pursuant to clauses (ii), (iv), (v) or (vii) above or this clause (ix) that are not more restrictive taken as a whole than those being replaced and do not apply to any other Person or assets than those that would have been covered by the restrictions in the Indebtedness so Refinanced; and (xi) restrictions contained in Indebtedness Incurred by a Foreign Subsidiary in accordance with this Agreement; provided, that such restrictions relate only to one or more Foreign Subsidiaries. Notwithstanding the foregoing, (A) customary provisions restricting subletting or assignment of any lease entered into in the ordinary course of business, consistent with industry practice and (B) any asset subject to a Lien which is not prohibited to exist with respect to such asset pursuant to the terms of this Agreement may be subject to customary restrictions on the transfer or disposition thereof pursuant to such Lien. 6.9 Affiliates. The Company will not, and will not permit any Subsidiary to, enter into any transaction (including, without limitation, the purchase 71 or sale of any Property or service) with, or make any payment or transfer to, any Affiliate (other than the Company and its Wholly-Owned Subsidiaries) except in the ordinary course of business and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than the Company or such Subsidiary would obtain in a comparable arms-length transaction. 6.10 Unfunded Liabilities. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the Company will not permit any Unfunded Liabilities to exist under any Plan. 6.11 Intentionally Omitted. 6.12 Sale and Leaseback Transactions. The Company will not, nor will it permit any Subsidiary to, enter into or suffer to exist any Sale and Leaseback Transaction other than Sale and Leaseback Transactions and Synthetic Leases permitted by Section 6.2(h). 6.13 Contingent Obligations. The Company will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (i) by endorsement of instruments for deposit or collection in the ordinary course of business, (ii) guaranties of Indebtedness permitted by Section 6.2, (iii) guaranties by the Company or any Subsidiary of employee credit card obligations in the ordinary course of business, (iv) recourse obligations in connection with the factoring of accounts and notes receivable of Foreign Subsidiaries, (v) guaranties and other Contingent Obligations of the Company or any Subsidiary with respect to obligations of any Subsidiary and (vi) other Contingent Obligations not otherwise permitted by clauses (i) through (v) above not exceeding $2,000,000 in the aggregate outstanding at any one time. 6.14 Financial Contracts. The Company will not, nor will it permit any Subsidiary to, enter into or remain liable upon any Financial Contract, except (i) Rate Management Transactions required pursuant to the terms of the Senior Secured Credit Agreement and (ii) other Financial Contracts pursuant to which the Company or any Subsidiary has hedged its reasonably estimated interest rate, foreign currency or commodity exposure. 72 6.15 Refinancing of the Loans in Part. The Company shall not, nor shall the Company cause or permit any of its Subsidiaries to, Incur any Indebtedness to Refinance the Loans in part other than the Permanent Securities or the Exchange Notes. 6.16 Senior Subordinated Indebtedness. Neither the Company nor any of the Guarantors shall, directly or indirectly, Incur any Indebtedness (other than the Notes, the Exchange Notes, the Permanent Securities and Indebtedness between the Company and its Wholly Owned Subsidiaries) that is by its terms (or by the terms of any agreement governing such Indebtedness) subordinated in right of payment to any other Indebtedness of the Company or of such Guarantor unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the Loans and the Notes and the Guarantees to the same extent and in the same manner as such Loans and Notes and Guarantees are subordinated to the Senior Secured Credit Agreement. 6.17 Leverage Ratio. (a) The Company will not permit the ratio, determined as of the end of each of its fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated EBITDA for the then most-recently ended four fiscal quarters to be greater than 5.00 to 1. (b) In the event that the Company or any Subsidiary shall have consummated a Permitted Acquisition or Investment in a joint venture during any four fiscal quarter period for which the Leverage Ratio covenant contained in this Section 6.17 is calculated, the Leverage Ratio shall be calculated as if such Permitted Acquisition or Investment (including any Indebtedness Incurred in connection therewith) had been consummated on the first day of such four fiscal quarter period, provided that the Company shall not include such Permitted Acquisition or Investment in the calculation of Consolidated EBITDA, unless the Company shall have delivered to the Lenders, at or prior to the time financial statements as of the last day of such four fiscal quarter period are delivered to the Lenders pursuant to Section 5.1, audited financial statements of the acquired business or Person or joint venture, as the case may be, stated in Dollars and presented in conformity with GAAP, and covering the period from the first day of such four fiscal quarter period to the actual date of the consummation of such Permitted Acquisition or Investment. SECTION 7. EVENTS OF DEFAULT 73 7.1 Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default: (aa) Any representation or warranty made or deemed made by or on behalf of the Company or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made. (b) Nonpayment of principal of any Loan when due, or nonpayment of interest upon any Loan or of any commitment fee or other obligations under any of the Loan Documents within five days after the same becomes due. (c) The breach by the Company of any of the terms or provisions of Section 5.2 or Section 6; or the breach by the Company of any of the terms and conditions of Section 5.1, 5.3, 5.6 or 5.9 which is not remedied within ten days. (d) The breach by the Company (other than a breach which constitutes an Event of Default under another subsection of this Section 7) of any of the terms or provisions of this Agreement or any other Loan Document which is not remedied within thirty days after written notice from the Agent or the Required Lenders. (e) (i) Failure of the Company or any of its Subsidiaries to pay when due any Indebtedness (other than Indebtedness owing by the Company to any Subsidiary or by any Subsidiary to the Company or another Subsidiary and other than Rate Management Obligations) outstanding in a principal amount aggregating in excess of $5,000,000 ("Material Indebtedness"); or the default by the Company or any of its Subsidiaries in the performance (beyond the applicable grace period with respect thereto, if any) of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Company or any of its Subsidiaries then outstanding in a principal amount in excess of $2,500,000 shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled 74 payment and other than in connection with the refinancing of the Bridge Loan with the proceeds of the Permanent Securities) prior to the stated maturity thereof; or the Company or any of its Subsidiaries shall not pay, or shall admit in writing its inability to pay, its debts generally as they become due; or (ii) the occurrence of an early termination under any Rate Management Transaction resulting from (A) any event of default under such Rate Management Transaction as to which the Company or any Subsidiary is the defaulting party or (B) any termination event as to which the Company or any Subsidiary is an affected party and, in either event, the termination value or other similar obligation owed by the Company or such Subsidiary as a result thereof is in excess of $5,000,000 and remains unpaid. (f) The Company or any of its Material Subsidiaries shall (i) have an order for relief entered with respect to it under the Bankruptcy Law as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Bankruptcy Law as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any Bankruptcy Law or fail to file (by the deadline for such filing) an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.1(f) or (vi) fail to contest in good faith and in a reasonably timely manner any appointment or proceeding described in Section 7.1(g). (g) Without the application, approval or consent of the Company or any of its Material Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Company or any of its Material Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.1(f)(iv) shall be instituted against the Company or any of its Material Subsidiaries and in each case such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. (h) Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Company and its Subsidiaries which, when taken together with all other Property of the Company and its Subsidiaries so condemned, 75 seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. (i) The Company or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money (except to the extent covered by insurance as to which the insurer has not disclaimed coverage) in excess of $5,000,000 (or the equivalent thereof in currencies other than Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith in a reasonably timely manner. (j) The Company or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Company or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), could reasonably be expected to have a Material Adverse Effect. (k) The Company or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of the Company and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount which could reasonably be expected to have a Material Adverse Effect. (l) The Company or any of its Subsidiaries shall (i) be the subject of any order by any Governmental Authority or any judicial determination of liability pertaining to the release by the Company, any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, or 76 (ii) violate any Environmental Law, which, in the case of an event described in clause (i) or clause (ii), could reasonably be expected to have a Material Adverse Effect, taking into account amounts to be paid by third parties. (m) Any Guarantor shall take any action to revoke or discontinue or to assert the invalidity or unenforceability of any Guarantee, or any Guarantor shall deny that it has any further liability under any Guarantee to which it is a party, or shall give notice to such effect. 7.2 Acceleration. If any Event of Default described in Section 7.1(f) or 7.1(g) occurs with respect to the Company, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Event of Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Company hereby expressly waives. If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Event of Default (other than any Event of Default as described in Section 7.1(f) or 7.1(g) with respect to the Company) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Agent shall, by notice to the Company, rescind and annul such acceleration and/or termination. SECTION 8. SUBORDINATION 8.1 Obligations Subordinated to Senior Debt of the Company. The Lenders covenant and agree that payments of the Obligations by the Company shall be subordinated in accordance with the provisions of this Section 8 to the prior indefeasible payment in full, in cash or Cash Equivalent Investments, of all amounts payable in respect of Senior Debt of the Company, whether now outstanding or hereafter created, that the subordination is for the benefit of the holders of Senior Debt of the Company, and that each holder of Senior Debt of the Company whether 77 now outstanding or hereafter Incurred shall be deemed to have acquired Senior Debt of the Company in reliance upon the covenants and provisions contained in this Agreement. 8.2 Priority and Payment Over of Proceeds in Certain Events. (a) Subordination on Dissolution, Liquidation or Reorganization of the Company. Upon any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities, upon any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all Senior Debt of the Company shall first be indefeasibly paid in full in cash or Cash Equivalent Investments (or such payment shall first be duly provided for to the satisfaction of the holders of Senior Debt), before the Lenders shall be entitled to receive any payment by the Company of any Obligations (other than Junior Securities), and upon any such dissolution or winding up or liquidation or reorganization, any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities (other than Junior Securities), to which the Lenders would be entitled except for the provisions of this Section 8 shall be made by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, directly to the holders of the Senior Debt of the Company or their representatives to the extent necessary to pay all of the Senior Debt of the Company to the holders of such Senior Debt of the Company. (b) Subordination on Default on Senior Debt. Upon the maturity of any Senior Debt of the Company by lapse of time, acceleration or otherwise, all Senior Debt of the Company then due and payable shall first be indefeasibly paid in full in cash or Cash Equivalent Investments (or such payment shall first be duly provided for to the satisfaction of the holders of Senior Debt), before any payment is made by the Company or any Person acting on behalf of the Company with respect to the Obligations (other than Junior Securities). No direct or indirect payment by the Company or any Person acting on behalf of the Company of any Obligations whether pursuant to the terms of the Loans or upon acceleration or otherwise shall be made (other than Junior Securities), if at the time of such payment, there exists a default (as defined in the document governing any Senior Debt of the Company) in the payment of all or any portion of any Senior Debt of the Company and such default shall not have been cured or waived in writing or the benefits of this sentence 78 waived in writing by or on behalf of the holders of such Senior Debt. In addition, during the continuation of any other event of default with respect to the Senior Debt of the Company pursuant to which the maturity thereof may be accelerated, upon the receipt by the Agent of written notice from the Representative of the holders of such Senior Debt, no such payment may be made by the Company upon or in respect of the Obligations (other than Junior Securities), for a period (a "Payment Blockage Period") commencing on the date of receipt of such notice and ending 179 days after receipt of such notice (unless such Payment Blockage Period shall be terminated by written notice to the Agent from such Representative). Notwithstanding anything herein to the contrary, (x) in no event will a Payment Blockage Period or successive Payment Blockage Periods with respect to the same payment on the Obligations extend beyond 179 days from the date the payment on the Obligations was due and (y) only one such Payment Blockage Period may be commenced within any 360 consecutive days. For all purposes of this Section 8.2(b), no event of default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Senior Debt of the Company initiating such Payment Blockage Period shall be, or be made, the basis for the commencement of a second Payment Blockage Period by the holders or by the Representative of such Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days. (c) Rights and Obligations of the Lenders. In the event that, notwithstanding the foregoing provisions prohibiting such payment or distribution, the Agent or any Lender shall have received any payment on account of any Obligation (other than as permitted by Sections (a) and (b) of this Section 8.2) at a time when such payment is prohibited by this Section 8.2, then and in such event such payment or distribution shall be received and held in trust for the Representative of the holders of the Senior Debt of the Company and shall be paid over or delivered to Representative of the holders of the Senior Debt of the Company remaining unpaid to the extent necessary to pay in full in cash or Cash Equivalent Investments all Senior Debt of the Company in accordance with their terms after giving effect to any concurrent payment or distribution to the holders of such Senior Debt of the Company. If payment of the Obligations is accelerated because of an Event of Default, the Company shall promptly notify the Representative of the holders of 79 Senior Debt of the Company of the acceleration. If any Senior Debt is outstanding, the Company may not make any payment on account of such accelerated Obligations until five Business Days after such Representative receives notice of such acceleration and, thereafter, may pay the Obligations only if this Section 8 otherwise permits payment at that time. Upon any payment or distribution of assets or securities referred to in this Section 8, the Lenders (notwithstanding any other provision of this Agreement) shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making any such payment or distribution, delivered to the Lenders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 8. The Company shall give written notice to each of the Lenders of any default or event of default under any Senior Debt of the Company or under any agreement pursuant to which Senior Debt of the Company may have been issued, and, in the event of any such event of default, shall provide to the Agent the names and addresses of the Representatives of holders of such Senior Debt of the Company. With respect to the holders and owners of Senior Debt of the Company, each Lender undertakes to perform only such obligations on the part of such Lender as are specifically set forth in this Section 8, and no implied covenants or obligations with respect to the holders or owners of Senior Debt of the Company shall be read into this Agreement against the Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the holders or owners of Senior Debt of the Company or to the agent under the Senior Secured Credit Agreement or any Representative of the holders of the Senior Debt of the Company. 8.3 Payments May Be Paid Prior to Dissolution. Nothing contained in this Section 8 or elsewhere in this Agreement shall prevent or delay (a) the Company, except under the conditions described in Section 8.2, from making payments at any time for the purpose of paying Obligations, or from depositing with the Agent any moneys for such payments, or (b) subject to Section 8.2, the 80 application by the Agent of any moneys deposited with it for the purpose of paying Obligations. 8.4 Rights of Holders of Senior Debt of the Company Not To Be Impaired. No right of any present or future holder of any Senior Debt of the Company to enforce subordination as provided in this Section 8 shall at any time in any way be prejudiced or impaired by any act or failure to act by any such holder (other than an express waiver of subordination or an amendment of this Section 8.4), or by any noncompliance by the Company with the terms and provisions and covenants herein, regardless of any knowledge thereof any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing sentence, such holders of Senior Debt of the Company may, at any time and from time to time without impairing or releasing the subordination provided in this Section 8 or the obligations of the Lender hereunder to the holders of Senior Debt of the Company, do any one or more of the following: (a) change the manner, place, terms or time of payment of, or renew or alter, Senior Debt of the Company or otherwise amend or supplement in any manner Senior Debt of the Company or any instrument evidencing the same or any agreement under which any Senior Debt of the Company is outstanding; (b) sell, exchange, release, or otherwise deal with any property pledged, mortgaged, or otherwise securing Senior Debt of the Company or fail to perfect or delay in the perfection of the security interest in such property; (c) release any Person liable in any manner for the collection of Senior Debt of the Company; and (d) exercise or refrain from exercising any rights against the Company or any other Person. Each Lender by purchasing or accepting a Note waives any and all notice of the creation, modification, renewal, extension or accrual of any Senior Debt of the Company and notice of or proof of reliance by any holder or owner of Senior Debt of the Company upon this Section 8 and the Senior Debt of the Company shall conclusively be deemed to have been Incurred in reliance upon this Section 8, and all dealings between the Company and the holders and owners of the Senior Debt of the Company shall be deemed to have been consummated in reliance upon this Section 8. The provisions of this Section 8 are intended to be for the benefit of, and shall be enforceable directly by, the holders of the Senior Debt of the Company. 8.5 Subrogation. Upon the indefeasible payment in full in accordance with the terms of Section 8.2 of all amounts payable under or in respect of the Senior Debt of the Company, the Lenders shall be subrogated to the rights of 81 the holders of such Senior Debt of the Company to receive payments or distributions of assets of the Company made on such Senior Debt of the Company until the Obligations shall be paid in full in cash or Cash Equivalent Investments to the extent set forth herein; and for purposes of such subrogation no payments or distributions to holders of such Senior Debt of the Company of any cash, property or securities to which the Lenders would be entitled except for the provisions of this Section 8, and no payment over pursuant to the provisions of this Section 8 to holders of such Senior Debt of the Company by the Lenders, shall, as between the Company, its creditors other than holders of such Senior Debt of the Company and the Lenders, be deemed to be a payment by the Company to or on account of such Senior Debt of the Company, it being understood that the provisions of this Section 8 are solely for the purpose of defining the relative rights of the holders of such Senior Debt of the Company, on the one hand, and the Lenders, on the other hand. A release of any claim by any holder of Senior Debt of the Company shall not limit the Lenders' rights of subrogation under this Section 8.5. If any payment or distribution to which the Lenders would otherwise have been entitled but for the provisions of this Section 8 shall have been applied, pursuant to the provisions of this Section 8, to the payment of all amounts payable under the Senior Debt of the Company, then and in such case, the Lenders shall be entitled to receive from the holders of such Senior Debt of the Company at the time outstanding the amount of any such payments or distributions received by such holders of Senior Debt of the Company in excess of the amount sufficient to pay all Senior Debt of the Company payable under or in respect of the Senior Debt of the Company in full in cash or Cash Equivalent Investments in accordance with the terms of Section 8.2. 8.6 Obligations of the Company Unconditional. Nothing contained in this Section 8 or elsewhere in this Agreement is intended to or shall impair as between the Company and the Lenders the obligations of the Company, which are absolute and unconditional, to pay to the Lenders the Obligations as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Lenders and creditors of the Company other than the holders of the Senior Debt of the Company, nor shall anything herein or therein prevent the Lenders from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to the rights, if any, under this Section 8 of the holders of such Senior Debt of the 82 Company in respect of cash, property or securities of the Company received upon the exercise of any such remedy. The failure to make a payment on account of Obligations by reason of any provision of this Section 8 shall not prevent the occurrence of an Event of Default under Section 7. 8.7 Lenders Authorize Agent To Effectuate Subordination. Each Lender hereby authorizes and expressly directs the Agent on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Section 8 and appoints the Agent its attorney in fact for such purpose, including, without limitation, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or any other similar remedy or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of the Obligations in the form required in said proceedings and causing said claim to be approved or the actions required to negotiate and/or effectuate a restructuring of the Indebtedness represented hereby. If the Agent does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Debt of the Company are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Lenders. In the event of any such proceeding, until the Senior Debt of the Company is paid in full in cash or Cash Equivalent Investments, without the consent of the holders of a majority in principal amount outstanding of Senior Debt of the Company, no Lender shall waive, settle or compromise any such claim or claims relating to the Obligations that such Lender now or hereafter may have against the Company. SECTION 9. THE AGENT 9.1 Appointment. Each Lender hereby irrevocably designates and appoints UBS AG, Stamford Branch as Agent of such Lender to act as specified herein and in the other Loan Documents, and each Lender hereby irrevocably authorizes UBS AG, Stamford Branch as the Agent to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to 83 exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Agent. The provisions of this Section 9 are solely for the benefit of the Agent and the Lenders, and neither the Company nor any of its Subsidiaries shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, the Agent shall act solely as agent of the Lenders and the Agent does not assume and shall not be deemed to have assumed any obligation or relationship of agent or trust with or for the Company or any of its Subsidiaries. 9.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 9.3 Exculpatory Provisions. The Agent shall not be (a) liable for any action lawfully taken or omitted to be taken by it or any Person described in Section 9.2 under or in connection with this Agreement or the other Loan Documents (except for its or such Person's own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction). (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Company or any of its Subsidiaries or any of their respective officers contained in this Agreement, any other Loan Document, or in any certificate, report, oral or written statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, (c) responsible in any manner to any of the Lenders for any failure of the Company or any of its Subsidiaries or any of their respective officers to perform its obligations hereunder or under any other Loan Document, (d) responsible in any manner to any of the Lenders for the effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any other Loan Document, (e) 84 required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or in any other Loan Document or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default, or (f) required to inspect the properties, books or records of the Company or any of its Subsidiaries. 9.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including, without limitation, counsel to the Company or any of its Subsidiaries), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless the Agent shall have received an executed assignment and assumption agreement pursuant to Section 12.1(a) in respect thereof. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. 9.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from a Lender or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or 85 refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Company or any of its Subsidiaries shall be deemed to constitute any representation or warranty by the Agent. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other condition, prospects and creditworthiness of the Company or its Subsidiaries and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other condition, prospects and creditworthiness of the Company and its Subsidiaries. The Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, liabilities, property, prospects, financial and other condition or creditworthiness of the Company or any of its Subsidiaries which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 9.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such and its officers, directors, employees, representatives and agents ratably according to their respective "percentages" as used in determining the Required Lenders at such time, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the fees and disbursements of counsel for the Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Agent or such Person shall be designated a party thereto) which 86 may at any time (including, without limitation, at any time following the payment of the Obligations) be imposed on, incurred by or asserted against the Agent or such Person in any way as a result of, relating to or by reason of, or arising out of the execution, delivery or performance of this Agreement or any other Loan Document, or any documents contemplated by or referred to herein or the transactions contemplated hereby of any action taken or omitted to be taken by the Agent under or in connection with any of the foregoing, but only to the extent that any of the foregoing is not paid by the Company or any of its Subsidiaries; provided, that no Lender shall be liable to the Agent or such Person for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Agent or such Person as finally determined by a court of competent jurisdiction. If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section 9.7 shall survive the payment of all Obligations. 9.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Company and its Subsidiaries as though the Agent were not the Agent hereunder. With respect to the Loans made by it and all Obligations owing to it, the Agent shall have the same rights and powers under this Agreement as any Lender and may exercise the same as though it were not the Agent and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. 9.9 Resignation of the Agent; Successor Agent. The Agent may resign as the Agent upon 20 days' notice to the Lenders and the Company. If the Agent shall resign as Agent under this Agreement and the other Loan Documents, the Required Lenders shall appoint from among the Lenders during such 20-day period a successor Agent which is a bank or a trust company, whereupon such successor agent shall succeed to the rights, powers and duties of the Agent, and the term "Agent" shall mean such successor Agent effective upon its appointment, and the resigning Agent's rights, powers and duties as the Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement. If the Required Lenders are not able to appoint a successor Agent during such 20- day period, then the Required Lenders shall carry 87 out the duties of Agent under the provisions of this Agreement and the other Loan Documents until a successor Agent is appointed. After the resignation of the Agent hereunder, the provisions of this Section 9 and of Sections 12.2 and 12.3 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 10. GUARANTEE 10.1 Unconditional Guarantee. Each Guarantor hereby unconditionally, jointly and severally, guarantees (such guarantee to be referred to herein as the "Guarantee"), subject to Section 11, to each of the Lenders and to the Agent and their respective successors and assigns, that: (a) the principal of and interest on the Loans will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal, if any, and interest on any interest, to the extent lawful, of the Loans and all other obligations of the Company to the Lenders or the Agent hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any of the Loans or of any such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (a) and (b) above, to the limitations set forth in Section 10.5. Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Loans or this Agreement, the absence of any action to enforce the same, any waiver or consent by any of the Lenders with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in the Loans, this Agreement and in this Guarantee. If any Lender or the Agent is required by any court or otherwise to return to the Company, any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any 88 Guarantor, any amount paid by the Company or any Guarantor to the Agent or such Lender, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Lenders and the Agent, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7 for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Section 7, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. 10.2 Subordination of Guarantee. The obligations of each Guarantor to the Lenders and to the Agent pursuant to the Guarantee of such Guarantor and the other sections of this Agreement are expressly subordinate and subject in right of payment to the prior payment in full of all Guarantor Senior Debt of such Guarantor, to the extent and in the manner provided in Section 11. 10.3 Severability. In case any provision of this Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10.4 Release of a Guarantor. Upon (a) the release by the lenders under the Senior Secured Credit Agreement of all obligations of a Guarantor under the Senior Secured Credit Agreement and all Liens on the property and assets of such Guarantor relating to such Indebtedness, or (b) the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or all or substantially all its assets) to an entity which is not a Subsidiary of the Company and which sale or disposition is otherwise in compliance with the terms of this Agreement, such Guarantor shall be deemed released from all obligations under this Section 10 without any further action required on the part of the Agent or any Lender; provided, however, that any such termination shall occur only to the extent that all obligations of such Guarantor under the Senior Secured Credit Agreement, and under all of its pledges of assets or other security interests which secure such Indebtedness, shall also terminate upon such release, sale or transfer. The Agent shall deliver an appropriate instrument evidencing such release upon receipt of a request by the Company accompanied by an Officers' 89 Certificate certifying as to the compliance with this Section 10.4. Any Guarantor not so released remains liable for the Obligations as provided in this Section 10. 10.5 Limitation of Guarantor's Liability. Each Guarantor and, by its acceptance hereof each of the Lenders, hereby confirms that it is the intention of all such parties that this Guarantee not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To effectuate the foregoing intention, the Lenders and such Guarantor hereby irrevocably agree that the obligations of such Guarantor under the Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including, but not limited to, the Guarantor Senior Debt of such Guarantor) and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to Section 10.7, result in the obligations of such Guarantor under the Guarantee not constituting such fraudulent transfer or conveyance. 10.6 Guarantors May Consolidate, etc., on Certain Terms. (a) Nothing contained in this Agreement or in the Loans shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor or shall prevent any sale or conveyance of the Property of a Guarantor as an entirety or substantially as an entirety, to the Company or another Guarantor. Upon any such consolidation, merger, sale or conveyance, the Guarantee given by such Guarantor shall no longer have any force or effect. (b) Except as set forth in Section 6.3, nothing contained in this Agreement or in the Loans shall prevent any consolidation or merger of a Guarantor with or into a corporation or corporations other than the Company or another Guarantor (whether or not affiliated with the Guarantor); provided, however, that, subject to Sections 10.4 and 10.6(a), (i) immediately after such transaction, and giving effect thereto, no Default or Event of Default shall have occurred as a result of such transaction and be continuing, and (ii) upon any such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor set forth in this Section 10, and the due and punctual performance and observance of all of the covenants and conditions of this Agreement to be performed by such Guarantor, shall be expressly assumed (in the event that the Guarantor is not the surviving corporation in the 90 merger), in writing satisfactory in form to the Agent, executed and delivered to the Agent, by the corporation formed by such consolidation, or into which the Guarantor shall have merged, or by the corporation that shall have acquired such Property. In the case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation in writing executed and delivered to the Agent and satisfactory in form to the Agent of the due and punctual performance of all of the covenants and conditions of this Agreement to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. 10.7 Contribution. In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree, inter se, that in the event any payment or distribution is made by any Guarantor (a "Funding Guarantor") under its Guarantee, such Funding Guarantor shall be entitled to a contribution from all other Guarantors in a pro rata amount based on the Adjusted Net Assets of each Guarantor (including the Funding Guarantor) for all payments, damages and expenses incurred by that Funding Guarantor in discharging the Company's obligations with respect to the Obligations. "Adjusted Net Assets" of such Guarantor at any date shall mean the lesser of (x) the amount by which the fair value of the Property of such Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities Incurred on such date (other than liabilities of such Guarantor under Subordinated Indebtedness)), but excluding liabilities under the Guarantee, of such Guarantor at such date and (y) the amount by which the present fair salable value of the assets of such Guarantor at such date exceeds the amount that will be required to pay the probable liabilities of such Guarantor on its debts including, without limitation, Guarantor Senior Debt (after giving effect to all other fixed and contingent liabilities Incurred on such date and after giving effect to any collection from any Subsidiary of such Guarantor in respect of the obligations of such Subsidiary under the Guarantee), excluding debt in respect of the Guarantee of such Guarantor, as they become absolute and matured. 10.8 Waiver of Subrogation. Until such time as all Obligations on the Loans are paid in full, each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under its Guarantee and the other sections of this Agreement, including, 91 without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Lender against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other Property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Loans shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall, subject to the provisions of Section 8, Section 10.2 and Section 11, forthwith be paid to the Agent for the benefit of such Lenders to be credited and applied upon the Loans, whether matured or unmatured, in accordance with the terms of this Agreement. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Agreement and that the waiver set forth in this Section 10.8 is knowingly made in contemplation of such benefits. 10.9 Evidence of Guarantee. To evidence their guarantees to the Lenders set forth in this Section 10, each of the Guarantors hereby agrees to execute the notation of Guarantee in substantially the form included in Exhibit VI. Each such notation of Guarantee shall be signed on behalf of each Guarantor by two Officers, or an Officer and an Assistant Secretary or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to such notation of Guarantee. 10.10 Waiver of Stay, Extension or Usury Laws. Each Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive such Guarantor from performing its Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Agreement; and (to the extent that it may lawfully do so) each Guarantor hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Agent, but will suffer and permit the execution of every such power as though no such law had been enacted. 92 SECTION 11. SUBORDINATION OF GUARANTEE OBLIGATIONS 11.1 Guarantee Obligations Subordinated to Guarantor Senior Debt. The Lenders covenant and agree that payments of the obligations by a Guarantor in respect of its Guarantee (collectively, as to any Guarantor, its "Guarantee Obligations") shall be subordinated in accordance with the provisions of this Section 11 to the prior indefeasible payment in full, in cash or Cash Equivalent Investments, of all amounts payable in respect of Guarantor Senior Debt of such Guarantor, whether now outstanding or hereafter created, that the subordination is for the benefit of the holders of Guarantor Senior Debt of such Guarantor, and that each holder of Guarantor Senior Debt of such Guarantor whether now outstanding or hereafter Incurred shall be deemed to have acquired Guarantor Senior Debt of such Guarantor in reliance upon the covenants and provisions contained in this Agreement. 11.2 Priority and Payment Over of Proceeds in Certain Events. (a) Subordination of Guarantee Obligations on Dissolution, Liquidation or Reorganization of Such Guarantor. Upon any payment or distribution of assets or securities of any Guarantor of any kind or character, whether in cash, Property or securities, upon any dissolution or winding up or total or partial liquidation or reorganization of such Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings (other than a liquidation or dissolution of such Guarantor into the Company or another Guarantor), all Guarantor Senior Debt of such Guarantor shall first be indefeasibly paid in full in cash or Cash Equivalent Investments (or such payment shall first be duly provided for to the satisfaction of the holders of Guarantor Senior Debt), before the Lenders shall be entitled to receive any payment with respect to any Guarantee Obligations of such Guarantor (other than Guarantor Junior Securities), and upon any such dissolution or winding up or liquidation or reorganization, any payment or distribution of assets or securities (other than Guarantor Junior Securities) of such Guarantor of any kind or character, whether in cash, Property or securities, to which the Lenders would be entitled except for the provisions of this Section 11, shall be made by such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, directly to the holders of the Guarantor Senior Debt of such Guarantor or their representatives to 93 the extent necessary to pay all of the Guarantor Senior Debt of such Guarantor to the holders of such Guarantor Senior Debt. (b) Subordination of Guarantee Obligations on Default on Guarantor Senior Debt. Upon the maturity of any Guarantor Senior Debt of a Guarantor by lapse of time, acceleration or otherwise, all Guarantor Senior Debt of such Guarantor then due and payable shall first be indefeasibly paid in full in cash or Cash Equivalent Investments (or such payment shall first be duly provided for to the satisfaction of the holders of Guarantor Senior Debt), before any payment is made by such Guarantor or any Person acting on behalf of such Guarantor with respect to the Guarantee Obligations of such Guarantor (other than Guarantor Junior Securities). No direct or indirect payment by any Guarantor or any Person acting on behalf of such Guarantor of any Guarantee Obligations of such Guarantor whether pursuant to the terms of the Loans or upon acceleration or otherwise shall be made (other than Guarantor Junior Securities), if at the time of such payment, there exists a default (as defined in the document governing any Guarantor Senior Debt of such Guarantor) in the payment of all or any portion of any Guarantor Senior Debt of such Guarantor and such default shall not have been cured or waived in writing or the benefits of this sentence waived in writing by or on behalf of the holders of such Guarantor Senior Debt. In addition, during the continuation of any other event of default with respect to any Guarantor Senior Debt of such Guarantor pursuant to which the maturity thereof may be accelerated, upon the receipt by the Agent of written notice from the Representative of the holders of such Guarantor Senior Debt, no such payment may be made by such Guarantor under its Guarantee (other than Guarantor Junior Securities) for a period (a "Guarantor Payment Blockage Period") commencing on the date of receipt of such notice and ending 179 days after receipt of such written notice by the Agent (unless such Guarantor Payment Blockage Period shall be terminated by written notice to the Agent from such Representative). Notwithstanding anything herein to the contrary, (x) in no event will a Guarantor Payment Blockage Period or successive Guarantor Payment Blockage Periods with respect to the same payment on such Guarantee extend beyond 179 days from the date the payment on such Guarantee was due and (y) only one such Payment Blockage Period may be commenced within any 360 consecutive days. For all purposes of this Section 11.2(b), no event of default which existed or was continuing on the date of the commencement of any Guarantor Payment Blockage Period with respect to the Guarantor Senior Debt initiating such Guarantor 94 Payment Blockage Period shall be, or be made, the basis for the commencement of a second Guarantor Payment Blockage Period by the holders or by the Representative of such Guarantor Senior Debt whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days. (c) Rights and Obligations of the Lenders. In the event that, notwithstanding the foregoing provisions prohibiting such payment or distribution, the Agent or any Lender shall have received any payment on account of any Guarantee Obligation (other than as permitted by Sections (a) and (b) of this Section 11.2) at a time when such payment is prohibited by this Section 11.2, then and in such event such payment or distribution shall be received and held in trust for the Representative of the holders of the Guarantor Senior Debt and shall be paid over or delivered to the Representative of the holders of the Guarantor Senior Debt remaining unpaid to the extent necessary to pay in full in cash or Cash Equivalent Investments all Guarantor Senior Debt in accordance with their terms after giving effect to any concurrent payment or distribution to the holders of such Guarantor Senior Debt. Nothing contained in this Section 11 will limit the right of the Lenders to take any action to accelerate the maturity of the Loans pursuant to Section 7 or to pursue any rights or remedies hereunder or otherwise; provided, however, that if any Guarantor Senior Debt is outstanding, no Guarantor shall make any payment on account of the Guarantee Obligations until five Business Days after the Representative of the holders of the Guarantor Senior Debt receives notice of such acceleration and, thereafter, such Guarantor may pay the Guarantee Obligations only if this Section 11 otherwise permits payment at that time. Upon any payment or distribution of assets or securities referred to in this Section 11, the Lenders (notwithstanding any other provision of this Agreement) shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, and upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making any such payment or distribution, delivered to the Lenders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of Guarantor Senior Debt, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 11. 95 The Guarantors shall give written notice to each of the Lenders of any default or event of default under any Guarantor Senior Debt or under any agreement pursuant to which Guarantor Senior Debt may have been issued, and, in the event of any such event of default, shall provide to the Agent the names and addresses of the Representatives of holders of such Guarantor Senior Debt. With respect to the holders and owners of Guarantor Senior Debt, each Lender undertakes to perform only such obligations on the part of the Lenders as are specifically set forth in this Section 11, and no implied covenants or obligations with respect to the holders or owners of Guarantor Senior Debt shall be read into this Agreement against the Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the holders or owners of Guarantor Senior Debt or to the agent under the Senior Secured Credit Agreement or any Representative of the holders of the Guarantor Senior Debt. 11.3 Payments May Be Paid Prior to Dissolution. Nothing contained in this Section 11 or elsewhere in this Agreement shall prevent or delay (a) the Guarantors, except under the conditions described in Section 11.2, from making payments at any time for the purpose of paying Guarantee Obligations, or from depositing with the Agent any moneys for such payments, or (b) subject to Section 11.2, the application by the Agent of any moneys deposited with it for the purpose of paying Guarantee Obligations. 11.4 Rights of Holders of Guarantor Senior Debt Not To Be Impaired. No right of any present or future holder of any Guarantor Senior Debt to enforce subordination as provided in this Section 11 shall at any time in any way be prejudiced or impaired by any act or failure to act by any such holder (other than an express waiver of subordination or an amendment of this Section 11.4), or by any noncompliance by any Guarantor with the terms and provisions and covenants herein, regardless of any knowledge thereof any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing sentence, such holders of Guarantor Senior Debt may, at any time and from time to time without impairing or releasing the subordination provided in this Section 11 or the obligations of the Lenders hereunder to the holders of Guarantor Senior Debt, do any one or more of the following: (a) change the manner, place, terms or time of payment of, or renew or alter, Guarantor Senior Debt or otherwise amend or supplement in any manner Guarantor Senior Debt or any instrument evidencing the same or any agreement under which any Guarantor Senior Debt is outstanding; 96 (b) sell, exchange, release, or otherwise deal with any property pledged, mortgaged, or otherwise securing Guarantor Senior Debt or fail to perfect or delay in the perfection of the security interest in such property; (c) release any Person liable in any manner for the collection of Guarantor Senior Debt; and (d) exercise or refrain from exercising any rights against the Guarantors or any other Person. Each Lender by purchasing or accepting a Note waives any and all notice of the creation, modification, renewal, extension or accrual of any Guarantor Senior Debt and notice of or proof of reliance by any holder or owner of Guarantor Senior Debt upon this Section 11 and the Guarantor Senior Debt shall conclusively be deemed to have been Incurred in reliance upon this Section 11, and all dealings between the Guarantors and the holders and owners of the Guarantor Senior Debt shall be deemed to have been consummated in reliance upon this Section 11. The provisions of this Section 11 are intended to be for the benefit of, and shall be enforceable directly by, the holders of the Guarantor Senior Debt. 11.5 Subrogation. Upon the indefeasible payment in full in accordance with the terms of Section 11.2 of all amounts payable under or in respect of the Guarantor Senior Debt, the Lenders shall be subrogated to the rights of the holders of such Guarantor Senior Debt to receive payments or distributions of assets of the Guarantors made on such Guarantor Senior Debt until the Guarantee Obligations shall be paid in full in cash or Cash Equivalent Investments to the extent set forth herein; and for purposes of such subrogation no payments or distributions to holders of such Guarantor Senior Debt of any cash, Property or securities to which the Lenders would be entitled except for the provisions of this Section 11, and no payment over pursuant to the provisions of this Section 11 to holders of such Guarantor Senior Debt by the Lenders, shall, as between such Guarantor, its creditors other than holders of such Guarantor Senior Debt and the Lenders, be deemed to be a payment by such Guarantor to or on account of such Guarantor Senior Debt, it being understood that the provisions of this Section 11 are solely for the purpose of defining the relative rights of the holders of such Guarantor Senior Debt, on the one hand, and the Lenders, on the other hand. A release of any claim by any holder of Guarantor Senior Debt shall not limit the Lenders' rights of subrogation under this Section 11.5. If any payment or distribution to which the Lenders would otherwise have been entitled but for the provisions of this Section 11 shall have been applied, pursuant to the provisions of this Section 11, to the payment of all amounts payable 97 under the Guarantor Senior Debt, then and in such case, the Lenders shall be entitled to receive from the holders of such Guarantor Senior Debt at the time outstanding the amount of any payments or distributions received by such holders of Guarantor Senior Debt in excess of the amount sufficient to pay all Guarantor Senior Debt payable under or in respect of the Guarantor Senior Debt in full in cash or Cash Equivalent Investments in accordance with the terms of Section 11.2. 11.6 Obligations of the Guarantors Unconditional. Nothing contained in this Section 11 or elsewhere in this Agreement or in the Guarantees is intended to or shall impair as between the Guarantors and the Lenders the obligations of the Guarantors, which are absolute and unconditional, to pay to the Lenders the Guarantee Obligations as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Lenders and creditors of the Guarantors other than the holders of the Guarantor Senior Debt, nor shall anything herein or therein prevent the Lenders from exercising all remedies otherwise permitted by applicable law upon default under this Agreement, subject to the rights, if any, under this Section 11 of the holders of such Guarantor Senior Debt in respect of cash, Property or securities of the Guarantors received upon the exercise of any such remedy. The failure to make a payment on account of Guarantee Obligations by reason of any provision of this Section 11 shall not prevent the occurrence of an Event of Default under Section 7. 11.7 Lenders Authorize Agent To Effectuate Subordination. Each Lender hereby authorizes and expressly directs the Agent on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Section 11 and appoints the Agent its attorney in fact for such purpose, including, without limitation, in the event of any dissolution, winding up, liquidation or reorganization of any Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or any other similar remedy or otherwise) tending towards liquidation of the business and assets of any Guarantor, the immediate filing of a claim for the unpaid balance of the Guarantee Obligations in the form required in said proceedings and causing said claim to be approved or the actions required to negotiate and/or effectuate a restructuring of the Guarantee Obligations. If the Agent does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of 98 the Guarantor Senior Debt are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Lenders. In the event of any such proceeding, until the Guarantor Senior Debt is paid in full in cash or Cash Equivalent Investments, without the consent of the holders of a majority in principal amount outstanding of Guarantor Senior Debt, no Lender shall waive, settle or compromise any such claim or claims relating to the Obligations that such Lender now or hereafter may have against the Guarantors. SECTION 12. MISCELLANEOUS 12.1 Participations in and Assignments of Loans and Notes. (a) Each Lender shall have the right at any time to sell, assign, transfer or negotiate all or any portion of its Notes or its Loan Commitment in an aggregate amount of not less than $5,000,000 to any Eligible Assignee, other than to an Eligible Assignee which has, or has a Subsidiary which has, a principal line of business similar to any principal line of business of the Company or any of its Subsidiaries. In the case of any sale, transfer or negotiation of all or part of the Notes or any Loan Commitment authorized under this Section 12.1(a), the assignee, transferee or recipient shall become a party to this Agreement as a Lender by execution of an assignment and assumption agreement; provided that (i) at such time Section 2.1(a) or 2.2(a), as the case may be, shall be deemed modified to reflect the Loan Commitment of such new Lender and of the existing Lenders, (ii) upon surrender of the Notes, new Notes will be issued, at the Company's expense, to such new Lender and to the assigning Lender, such new Notes to be in conformity with the requirements of Section 2.1(d) or 2.2(c) as the case may be (with appropriate modifications) to the extent needed to reflect the revised Loan Commitment, and (iii) the Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non- refundable assignment fee of $3,500; and provided, further, that such transfer or assignment will not be effective until recorded by the Agent on the Register pursuant to Section 12.20. To the extent of any assignment pursuant to this Section 12.1(a), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Loan Commitment, and the assignee, transferee or recipient shall have, to the extent of such sale, assignment, transfer or negotiation, the same rights, benefits and obligations as it would if it were a Lender with respect to such Notes or Loan Commitment, including, without limitation, the right to approve or disapprove actions which, in accordance with the 99 terms hereof, require the approval of a Lender. At the time of each assignment pursuant to this Section 12.1(a) to an Eligible Assignee which is not already a Lender hereunder and which is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for Federal income tax purposes, the respective Eligible Assignee shall provide to the Company and the Agent the appropriate Internal Revenue Service Forms described in Section 2.10(b). (b) Each Lender may grant participations in all or any part of its Notes or its Loan Commitment in an aggregate amount of not less than $1,000,000 to any Eligible Assignee, other than to an Eligible Assignee which has, or has a Subsidiary which has, a principal line of business similar to any principal line of business of the Company or any of its Subsidiaries; provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Agreement and such Lender shall retain the sole right to enforce the obligations of the Company relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers with respect to any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans, or the dates fixed for payments of fees or principal of or interest on the Loans or termination of the Loan Commitment). (c) The Company shall, at its own cost and expense, provide such certificates, acknowledgments and further assurances in respect of this Agreement and the Loans as any Lender may reasonably require in connection with any participation, transfer or assignment pursuant to this Section 12.1. (d) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loan and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank. 12.2 Expenses. Whether or not the transactions contemplated hereby shall be consummated, the Company agrees to pay promptly upon demand (a) all the actual and reasonable costs and expenses of preparation of the Loan Documents and all the costs of furnishing all opinions by counsel for the Company and the Guarantors (including without limitation any opinions requested by the 100 Lenders as to any legal matters arising hereunder), and of the Company's and the Guarantors' performance of and compliance with all agreements and conditions contained herein on its part to be performed or complied with; (b) the reasonable fees, expenses and disbursements of counsel to the Lenders (including allocated costs of internal counsel) in connection with the negotiation, preparation, execution and administration of the Loan Documents and the Loans hereunder, and any amendments, modifications and waivers hereto or thereto and consents to departures from the terms hereof and thereof; and (c) after the occurrence of an Event of Default, all costs and expenses (including reasonable attorneys' fees, including allocated costs of internal counsel, and costs of settlement) incurred by the Lenders or the Agent in enforcing any Obligations of or in collecting any payments due from the Company or any Guarantor hereunder or under the Notes by reason of such Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or of any insolvency or bankruptcy proceedings. 12.3 Indemnity. In addition to the payment of expenses pursuant to Section 12.2, whether or not the transactions contemplated hereby shall be consummated, the Company agrees to indemnify, pay and hold each of the Lenders, the Agent and any holder of any of the Notes, and each of their respective officers, directors, employees, agents, representatives and affiliates (collectively called the "Indemnitees"), harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Indemnitee shall be designated as a party thereto), which may be suffered by, imposed on, incurred by, or asserted against that Indemnitee, in any manner resulting from, connected with, in respect of, relating to or arising out of this Agreement, the other Loan Documents, the Lenders' agreements to make the Loans or the use or intended use of any of the proceeds of the Loans hereunder, the issuance of the Exchange Notes or the Permanent Securities (the "indemnified liabilities"); provided, however, that the Company shall have no obligation to an Indemnitee hereunder with respect to indemnified liabilities (a) to the extent such liabilities are finally judicially determined to have resulted solely from (i) the gross negligence or willful misconduct of such Indemnitee or an affiliate of such Indemnitee or (ii) the failure of such Indemnitee to perform its obligations 101 under any Loan Document or (iii) such Indemnitee's violation of law or (b) in connection with the obligations of any Indemnitee under any Loan Document or for any transfer fees. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Company shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all indemnified liabilities incurred by the Indemnitees or any of them. 12.4 Setoff. Subject to Section 8, in addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default or, after the Maturity Date, upon all of the unpaid principal amount of and accrued interest on the Loans becoming due and payable, each Lender, the Agent and each subsequent holder of any Note is hereby authorized by the Company and each Guarantor at any time or from time to time, without notice to the Company or such Guarantor, or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured but not including trust accounts or any other accounts held for the benefit of another Person) and any other Indebtedness at any time held or owing by such Person or any such subsequent holder to or for the credit or the account of the Company or such Guarantor against and on account of the obligations and liabilities of the Company or such Guarantor to such Person or such subsequent holder under this Agreement and the Notes, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement or the Notes, irrespective of whether or not (a) such Person or such subsequent holder shall have made any demand hereunder or (b) such Person or such subsequent holder shall have declared the principal of or the interest on its portion of the Loans and its Notes and other amounts due hereunder to be due and payable as permitted by Section 7 and although said obligations and liabilities, or any of them, may be contingent or unmatured. 12.5 Amendments and Waivers. No amendment, modification, termination or waiver of any term or provision of this Agreement, of the Notes or, prior to the execution and delivery thereof, of the form of the Senior Subordinated Indenture or consent to any departure by the Company or any Guarantor therefrom, 102 shall in any event be effective without the prior written concurrence of the Company or such Guarantor, as the case may be, and the Required Lenders, and, upon the request of any Lender, the receipt of a written opinion of counsel of the Company addressed to the Lenders to the effect that such amendment, modification, termination, waiver or consent does not violate or conflict with any of the terms and provisions of the Senior Secured Credit Agreement or any other indenture, lease or other agreement of the Company; provided, however, that, notwithstanding the third sentence of Section 12.14, without the prior written consent of each Lender affected, an amendment, modification, termination or waiver of this Agreement, any Notes, any Guarantee, or consent to departure from a term or provision hereof or thereof may not: (a) reduce the principal amount of Notes whose holders must consent to any such amendment, modification, termination, waiver or consent; (b) reduce the rate of or extend the time for payment of principal or interest on any Note; (c) reduce the principal amount of any Note; (d) make any Note payable in money other than that stated in the Note; (e) make any change in Section 12.5 or make any change in or waive performance by the Company of its obligations under Section 2.5(d) or in the definition of Change of Control; (f) reduce the rate or extend the time of payment of fees or other compensation payable to the Lenders hereunder; or (g) modify the provisions of Section 8 or Section 11 or any of the defined terms related thereto in any manner adverse to the Lenders; and provided, further, that without the consent of the Agent, no such amendment, modification, termination or waiver may amend, modify, terminate or waive any provision of Section 9 as the same applies to the Agent or any other provision of this Agreement as it relates to the rights or obligations of the Agent. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Company or any Guarantor in any case shall entitle the Company or such Guarantor to any further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 12.5 shall be binding upon each holder of the Notes at the time outstanding, each further holder of the Notes, and, if signed by the Company or a Guarantor, on the Company and such Guarantor. 12.6 Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitation of, another covenant shall not avoid the occurrence of a Default or Event of Default if such action is taken or condition exists. For the 103 purpose of determining compliance with any covenant contained herein, if an item meets the criteria of more than one type of exception described in such covenants or the definitions used therein, the Company or the Subsidiary in question shall have the right to determine in its sole discretion the category to which such item applies and shall not be required to include the amount and type of such item in more than one of such categories and may elect to apportion such item between or among two or more of such categories otherwise applicable. 12.7 Entirety. The Loan Documents and the Fee Letter embody the entire agreement of the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof and thereof. 12.8 Notices. Unless otherwise provided herein, any notice or other communications herein required or permitted to be given shall be in writing and may be personally served, telecopied, telexed or sent by mail and shall be deemed to have been given when delivered in person, upon receipt of telecopy or telex against receipt of answer back or four Business Days after depositing it in the mail, registered or certified, with postage prepaid and properly addressed; provided, however, that notices shall not be effective until received. For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 12.8) shall be set forth under each party's name on the signature pages hereto. 12.9 Survival of Warranties and Certain Agreements. (a) All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement, the making of the Loans hereunder and the execution and delivery of the Notes and, notwithstanding the making of the Loans, the execution and delivery of the Notes or any investigation made by or on behalf of any party, shall continue in full force and effect. The closing of the transactions herein contemplated shall not prejudice any right of one party against any other party in respect of anything done or omitted hereunder or in respect of any right to damages or other remedies. (b) Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of the Company set forth in Sections 12.2, 12.3, 12.13, 12.14, 12.16 and 12.19 shall survive the payment of the Loans and the Notes and the termination of this Agreement. 104 12.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender or any holder of any Note in the exercise of any power, right or privilege hereunder, under a Guarantee or under the Notes shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under this Agreement, under a Guarantee or the Notes are cumulative to and not exclusive of any rights or remedies otherwise available. 12.11 Severability. In case any provision in or obligation under this Agreement, under a Guarantee or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 12.12 Headings. Section and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or given any substantive effect. 12.13 Applicable Law. THIS AGREEMENT, INCLUDING EACH GUARANTEE, AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS MADE AND PERFORMED WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW). 12.14 Successors and Assigns; Subsequent Holders of Notes. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the permitted successors and assigns of the Lenders. The terms and provisions of this Agreement and each Guarantee shall inure to the benefit of any assignee or transferee of the Notes pursuant to Section 12.1(a), and in the event of such transfer or assignment, the rights and privileges herein conferred upon the Lenders shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. Except as provided in Section 12.5, in determining whether the 105 holders of a sufficient aggregate principal amount of the Loans shall have consented to any action under this Agreement, any amount of the Loans owned or held by the Company, any Guarantor or any of its their respective Affiliates shall be disregarded. The Company's and the Guarantors' rights or any interest therein hereunder may not be assigned without the prior express written consent of each of the Lenders. 12.15 Counterparts; Effectiveness. This Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto, and delivery thereof to the Agent or, in the case of the Lenders, written telex or facsimile notice or telephonic notification (confirmed in writing) of such execution and delivery. The Agent will give the Company and each Lender prompt notice of the effectiveness of this Agreement. 12.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial. (a) Any legal action or proceeding with respect to this Agreement, any Note or any Guarantee may be brought in any New York state court or any United States court sitting in New York City, and, by execution and delivery of this Agreement, each of the parties to this Agreement hereby irrevocably accepts for itself and in respect of its respective property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the parties to this Agreement hereby further irrevocably waives any claim that any such courts lack jurisdiction over itself, and agrees not to plead or claim, in any legal action or proceeding with respect to this Agreement or the Notes brought in any of the aforesaid courts, that any such court lacks jurisdiction over such party. Each of the parties to this Agreement irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party, at its respective address for notices pursuant to Section 12.8, such service to become effective 30 days after such mailing. To the extent permitted by law, each of the parties to this Agreement hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any Note that service of process was in any way invalid or ineffective. Nothing herein shall affect the right of any party to this Agreement to serve process in any other manner permitted by 106 law or to commence legal proceedings or otherwise proceed against any party in any other jurisdiction. (b) Each of the parties to this Agreement hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or the Notes brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 12.17 Payments Pro Rata. (a) The Agent agrees that promptly after its receipt of each payment of any interest or premium on or principal of the Notes from or on behalf of the Company or any Guarantor, it shall, except as otherwise provided in this Agreement, distribute such payment to the Lenders (other than any Lender that has consented in writing to waive its pro rata share of such payment) pro rata based upon their respective pro rata shares, if any, of such payment. (b) Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents, or otherwise) which is applicable to the payment of the principal of, or interest on, the Loans of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligations then owed and due to such Lender bears to the total of such Obligations then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the Company to such Lenders in such amount as shall result in a proportional participation by all of the Lenders in such amount; provided 107 that, if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 12.18 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Loans as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Agreement; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Agent, but will suffer and permit the execution of every such power as though no such law had been enacted. 12.19 Confidentiality. Each Lender shall hold all non-public information obtained pursuant to the requirements of or in connection with this Agreement which has been identified as confidential by the Company in accordance with such Lender's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, it being understood and agreed by the Company that (a) in any event a Lender may make disclosures reasonably required by any actual or prospective assignee, transferee or participant in connection with the contemplated assignment or transfer by such Lender of any Loans or any participation therein or as required or requested by any governmental agency or representative thereof or pursuant to legal process; provided that unless specifically prohibited by applicable law or court order, each Lender shall notify the Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information and (b) a Lender may share with any of its Affiliates (that are not competitors of the Company or any Subsidiary in any of their respective lines of business), and such Affiliates may share with any Lender (that is not a competitor of the Company or any Subsidiary in any of their respective lines of business), any information related to the Company or the Company's or their respective Affiliates (including information relating to creditworthiness); and provided, further, that in no event shall any Lender 108 be obligated or required to return any materials furnished by the Company or any of its Subsidiaries. 12.20 Register. The Company hereby designates the Agent to serve as the Company's agent, solely for purposes of this Section 12.20, to maintain a register (the "Register") on which it will record the Loans made by each of the Lenders and each repayment in respect of the principal amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation shall not affect the Company's obligations in respect of such Loans. With respect to any Lender, the transfer of the Loan Commitments of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Loan Commitments shall not be effective until such transfer is recorded on the Register maintained by the Agent with respect to ownership of such Loan Commitments and Loans and prior to such recordation all amounts owing to the transferor with respect to such Loan Commitments and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Loan Commitments and Loans shall be recorded by the Agent on the Register only upon the receipt by the Agent of a properly executed and delivered assignment and assumption agreement pursuant to Section 12.1(a). Coincident with the delivery of such an Assignment and Assumption Agreement to the Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note evidencing such Loan, and thereupon one or more new Notes of the same type and in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender. 109 WITNESS the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above. COMPANY: BIO-RAD LABORATORIES, INC. By: /s/ Ronald W. Hutton Name:Title:Ronald W. Hutton Treasurer Notice Address: 1000 Alfred Nobel Drive Hercules, California 94547 Attention: Chief Financial Officer (with a copy to the General Counsel) Telephone: (510) 741-7000Telecopy: (510) 741-5815 S-1 AGENT: UBS AG, STAMFORD BRANCH, as Agent By: /s/ Michael Y. Leder Name:Title: Michael Y. Leder Executive Director Leveraged Finance By: /s Michael J. Cerminaro Name:Title: Michael J. Cerminaro Executive Director Leveraged Finance Notice Address: 677 Washington Blvd., 6th Floor Tower Stamford, Connecticut 06901 Attention: Lynne Alfarone Telephone: (203) 719-4308Telecopy: (203) 719-3888 S-2 LENDERS: Commitment: $80,000,000 UBS AG, STAMFORD BRANCH By: /s/ Michael Y. Leder Name:Title: Michael Y. Leder Executive Director Leveraged Finance By: /s/ Michael J. Cerminaro Name:Title: Michael J. Cerminaro Executive Director Leveraged Finance Notice Address: 677 Washington Blvd., 6th Floor Tower Stamford, Connecticut 06901 Attention: Lynne Alfarone Telephone: (203) 719-4308 Telecopy: (203) 719-3888 S-3 Commitment: $20,000,000 ABN AMRO BANK N.V. By: /s/ Jeffrey A. French Name:Title: Jeffrey A. French Senior Vice President By: /s/ Amanda C. Cox Name:Title: Amanda C. Cox Vice President Notice Address: ABN AMRO Bank N.V. San Francisco Branch 101 California Street, Suite 4550 San Francisco, California 94111 Attention: Jeffrey French Telephone: (415) 984-3730Telecopy: (415) 362-3524 with a copy to: ABN AMRO Bank N.V. Credit Administration 208 S. LaSalle Street, Suite 1500 Chicago, Illinois 60604-1003 Attention: Joe Coriaci Telephone: (312) 992-5118 Telecopy: (312) 992-5111 EX-4.5 4 EXHIBIT 4.5 - INDENTURE EXHIBIT 4.5 Exhibit 4.5 BIO-RAD LABORATORIES, INC. (as Issuer) 11-5/8% Senior Subordinated Notes due 2007 _____________ INDENTURE Dated as of February 17, 2000 _____________ Norwest Bank Minnesota, N.A. (as Trustee) TABLE OF CONTENTS Page ARTICLE IDEFINITIONS AND INCORPORATION BY REFERENCE 1 Section 1.1 Definitions 1 Section 1.2 Other Definitions 21 Section 1.3Incorporation by Reference of Trust Indenture Act 22 Section 1.4 Rules of Construction 23 ARTICLE IITHE NOTES 23 Section 2.1 Form and Dating 23 Section 2.2 Execution and Authentication 24 Section 2.3 Registrar, Paying Agent and Depositary 24 Section 2.4 Paying Agent to Hold Money in Trust 25 Section 2.5 Holder Lists 25 Section 2.6 Transfer and Exchange 25 Section 2.7 Replacement Notes 37 Section 2.8 Outstanding Notes 37 Section 2.9 Treasury Notes 38 Section 2.10 Temporary Notes 38 Section 2.11 Cancellation 38 Section 2.12 Defaulted Interest 38 Section 2.13 CUSIP Numbers 39 ARTICLE IIIREDEMPTION 39 Section 3.1 Notices to Trustee 39 Section 3.2 Selection of Notes to be Redeemed 39 Section 3.3 Notice of Redemption 40 Section 3.4 Effect of Notice of Redemption 40 Section 3.5 Deposit of Redemption Price 40 Section 3.6 Notes Redeemed in Part 41 Section 3.7 Optional Redemption 41 ARTICLE IVCOVENANTS 42 Section 4.1 Payment of Notes 42 Section 4.2 Maintenance of Office or Agency 42 Section 4.3 SEC Reports and Reports to Holders 43 Section 4.4 Compliance Certificate 43 Section 4.5 Taxes 44 Section 4.6 Stay, Extension and Usury Laws 44 Section 4.7Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock 44 Section 4.8 Limitation on Liens 47 Section 4.9 Limitations on Restricted Payments 47 Section 4.10Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries 49 Section 4.11 Limitation on Transactions with Affiliates 50 Section 4.12Limitation on Sale of Assets and Subsidiary Stock 50 Section 4.13Repurchase of Notes at the Option of the Holder upon a Change of Control 53 Section 4.14 Limitation on Layering Indebtedness 55 Section 4.15 Consolidation of Genetic Systems 55 Section 4.16 Limitation on Status as Investment Company 55 Section 4.17 Corporate Existence 55 i ARTICLE VSUCCESSORS 56 Section 5.1 Merger, Consolidation or Sale of Assets. 56 Section 5.2 Successor Corporation Substituted 56 ARTICLE VIDEFAULTS AND REMEDIES 57 Section 6.1 Events of Default. 57 Section 6.2 Acceleration 58 Section 6.3 Other Remedies 59 Section 6.4 Waiver of Past Defaults 59 Section 6.5 Control by Majority 60 Section 6.6 Limitation on Suits 60 Section 6.7 Rights of Holders of Notes to Receive Payment 60 Section 6.8 Collection Suit by Trustee 60 Section 6.9 Trustee May File Proofs of Claim 61 Section 6.10 Priorities 61 Section 6.11 Undertaking for Costs. 62 ARTICLE VIITRUSTEE 62 Section 7.1 Duties of Trustee. 62 Section 7.2 Rights of Trustee. 63 Section 7.3 Individual Rights of Trustee. 64 Section 7.4 Trustee's Disclaimer. 64 Section 7.5 Notice of Defaults Agreement 64 Section 7.6 Reports by Trustee to Holders of the Notes 64 Section 7.7 Compensation and Indemnity 64 Section 7.8 Replacement of Trustee 65 Section 7.9 Successor Trustee by Merger, etc. 66 Section 7.10 Eligibility; Disqualification 66 Section 7.11Preferential Collection of Claims against Company 67 ARTICLE VIIILEGAL DEFEASANCE AND COVENANT DEFEASANCE 67 Section 8.1Option to Effect Legal Defeasance or Covenant Defeasance. 67 Section 8.2 Legal Defeasance and Discharge. 67 Section 8.3 Covenant Defeasance 67 Section 8.4 Conditions to Legal or Covenant Defeasance 68 Section 8.5Deposited Money and Government Securities to be Held in Trust;Other Miscellaneous Provisions. 69 Section 8.6 Repayment to Company 69 Section 8.7 Reinstatement 70 Section 8.8 Satisfaction and Discharge 70 ARTICLE IXAMENDMENT, SUPPLEMENT AND WAIVER 71 Section 9.1 Without Consent of Holders of Notes. 71 Section 9.2 With Consent of Holders of Notes 71 Section 9.3 Compliance with Trust Indenture Act 73 Section 9.4 Revocation and Effect of Consents 73 Section 9.5 Notation on or Exchange of Notes 73 Section 9.6 Trustee to Sign Amendments, etc. 73 ARTICLE XGUARANTEES 74 Section 10.1 Guarantees 74 ii Section 10.2 Execution and Delivery of Guarantees 75 Section 10.3Guarantors May Consolidate, etc., on Certain Terms 75 Section 10.4 Future Guarantors 76 Section 10.5 Release of Guarantors 76 Section 10.6Limitation of Guarantor's Liability; Certain Bankruptcy Events. 77 Section 10.7Application of Certain Terms and Provisions to the Guarantors 77 Section 10.8 Subordination of Guarantees 78 ARTICLE XISUBORDINATION 78 Section 11.1 Notes Subordinate to Senior Debt 78 Section 11.2 No Payment on Notes in Certain Circumstances 79 Section 11.3Notes Subordinate to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization 80 Section 11.4Holders to be Subrogated to Rights of Holders of Senior Debt 80 Section 11.5Obligations of the Company and the Guarantors Unconditional. 80 Section 11.6Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice 81 Section 11.7Application by Trustee of Assets Deposited with It 81 Section 11.8Subordination Rights Not Impaired by Acts or Omissions of the Company, the Guarantors or Holders of Senior Debt. 82 Section 11.9Holders Authorize Trustee To Effectuate Subordination of Notes 82 Section 11.10 Rights of Trustee to Hold Senior Debt 83 Section 11.11 Article XI Not to Prevent Events of Default 83 Section 11.12No Fiduciary Duty of Trustee to Holders of Senior Debt 83 Section 11.13 Notice by Company 83 ARTICLE XIIMISCELLANEOUS 83 Section 12.1 Trust Indenture Act Controls 83 Section 12.2 Notices 83 Section 12.3Communication by Holders of Notes with Other Holders of Notes. 85 Section 12.4Certificate and Opinion as to Conditions Precedent 85 Section 12.5 Statements Required in Certificate or Opinion 85 Section 12.6 Rules by Trustee and Agents. 85 Section 12.7No Personal Liability of Directors, Officers, Employees and Stockholders 85 Section 12.8 Governing Law. 86 Section 12.9 No Adverse Interpretation of Other Agreements. 86 Section 12.10 Successors. 86 Section 12.11 Severability. 86 Section 12.12 Counterpart Originals. 87 Section 12.13 Table of Contents, Headings, etc. 87 EXHIBIT A FORM OF NOTE A-1 EXHIBIT BFORM OF CERTIFICATE OF TRANSFER B-1 EXHIBIT CFORM OF CERTIFICATE OF EXCHANGE C-1 EXHIBIT DFORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR D-1 EXHIBIT EFORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSIDIARY GUARANTORS E-1 iii CROSS-REFERENCE TABLE* TIA Section Indenture Section 310(a)(1) 7.10 (a)(2) 7.10 (a)(3) N.A. (a)(4) N.A. (a)(5) 7.8; 7.10 (b) 7.8; 7.10; 12.2 (c) N.A. 311(a) 7.11 (b) 7.11 (c) N.A. 312(a) 2.5 (b) 12.3 (c) 12.3 313(a) 7.6 (b)(1) N.A. (b)(2) 7.6 (c) 7.6; 12.2 (d) 7.6 314(a) 4.3; 4.4; 12.2 (b) N.A. (c)(1) 12.4 (c)(2) 12.4 (c)(3) N.A. (d) N.A. (e) 12.5 (f) N.A. 315(a) 7.1(b) (b) 7.5; 12.2 (c) 7.1(a) (d) 7.1(c) (e) 6.11 316(a)(last sentence) 2.9 (a)(1)(A) 6.5 (a)(1)(B) 6.4 (a)(2) N.A. (b) 6.7 317(a)(1) 6.8 (a)(2) 6.9 (b) 2.4 318(a) 12.1 (c) 12.1 ______________________________ N.A. means not applicable *This Cross-Reference table shall not, for any purpose, be deemed to be part of this Indenture. INDENTURE, dated as of February 17, 2000, between Bio- Rad Laboratories, Inc., a Delaware corporation (the "Company"), and Norwest Bank Minnesota, N.A., as trustee (the "Trustee"). The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 11-5/8% Series A Senior Subordinated Notes due 2007 (the "Series A Notes") and the 11_% Series B Senior Subordinated Notes due 2007 (the "Series B Notes" and, together with the Series A Notes, the "Notes"): ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1 Definitions. "144A Global Note" means one or more Global Notes bearing the Private Placement Legend, that will be issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Accrued Bankruptcy Interest" means, with respect to any Indebtedness, all interest accruing thereon after the filing of a petition by or against the Company or any of its Subsidiaries under any Bankruptcy Law, in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in the documents evidencing or governing such Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such Bankruptcy Law. ''Acquired Indebtedness'' means Indebtedness (including Disqualified Capital Stock) of any Person existing at the time such Person becomes a Subsidiary of the Company, including by designation, or is merged or consolidated into or with the Company or one of its Subsidiaries. ''Acquisition'' means the purchase or other acquisition of any Person or all or substantially all the assets of any Person by any other Person, whether by purchase, merger, consolidation, or other transfer, and whether or not for consideration. ''Affiliate'' means any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. For purposes of this definition, the term ''control'' means the power to direct the management and policies of a Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise; provided, that with respect to ownership interests in the Company and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to constitute control. Notwithstanding the foregoing, Affiliate shall not include Wholly Owned Subsidiaries that are Guarantors. "Agent" means any Registrar, Paying Agent or co-registrar. ''Applicable Premium'' means, with respect to any Note on any Redemption Date, the greater of: (a) 1.0% of the principal amount of the Note; or (b) the excess of: (i) the present value at such Redemption Date of (A) the redemption price of the Note at February 15, 2004 (such redemption price being stated in the table appearing in Section 3.7 plus (B) all required interest payments due on the Note through February 15, 2004, computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 75 basis points; over (ii) the principal amount of the Note. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange at the relevant time. ''Average Life'' means, as of the date of determination, with respect to any security or instrument, the quotient obtained by dividing (a) the sum of the products (i) of the number of years from the date of determination to the date or dates of each successive scheduled principal (or redemption) payment of such security or instrument and (ii) the amount of each such respective principal (or redemption) payment by (b) the sum of all such principal (or redemption) payments. "Bankruptcy Code" means the United States Bankruptcy Code, codified at 11 U.S.C. 101-1330, as amended. ''Beneficial Owner'' or ''beneficial owner'' for purposes of the definition of Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or not applicable, except that a ''person'' shall be deemed to have ''beneficial ownership'' of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. ''Board of Directors'' means, with respect to any Person, the board of directors of such Person or any committee of the Board of Directors of such Person authorized, with respect to any particular matter, to exercise the power of the board of directors of such Person. "Broker-Dealer" means any broker-dealer that receives Exchange Notes for its own account in the Exchange Offer in exchange for Notes that were acquired by such broker-dealer as a result of market-making or other trading activities. ''Business Day'' means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. ''Capital Contribution'' means any contribution to the equity of the Company for which no consideration other than the issuance of common stock with no redemption rights and no special preferences, privileges or voting rights is given. ''Capitalized Lease Obligation'' means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. ''Capital Stock'' means, with respect to any corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness that is not itself otherwise capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. ''Cash Equivalent'' means: (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided, that the full faith and credit of the United States of America is pledged in support thereof) maturing within one year after the date of acquisition; (b) time deposits and certificates of deposit and commercial paper issued by the parent corporation of any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 and a Thompson Bank Watch rating of ''B'' or better maturing within one year after the date of acquisition; (c) commercial paper issued by others having the highest rating obtainable from Standard & Poor's Corporation or Moody's Investors Services, Inc.; (d) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above; (e) marketable obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing, or payable at the demand of the holder thereof, within one year from the date of acquisition thereof and, at the time of acquisition, having one of the three highest ratings obtainable from either Standard & Poor's Corporation or Moody's Investors Services, Inc.; and (f) investments in money market funds substantially all of whose assets comprise securities of the types described in clauses (a) through (e) above. "Cedel" means Cedel Bank, S.A., or its successors. ''Change of Control'' means: (a) any merger or consolidation of the Company with or into any Person or any sale, transfer or other conveyance, whether direct or indirect, of all or substantially all of the assets of the Company, on a consolidated basis, in one transaction or a series of related transactions, if, immediately after giving effect to such transaction(s), either (i) any ''person'' or ''group'' (other than the Excluded Persons) is or becomes the ''beneficial owner,'' directly or indirectly, of more than 40% of the Voting Equity Interests of the transferee(s) or surviving entity or entities, and the Excluded Persons shall cease to own beneficially at least a greater percentage of the Voting Equity Interests of the transferee(s) or surviving entity or entities or (ii) the Excluded Persons shall cease to own beneficially (A) 30% of the Voting Equity Interests of such transferee(s) or surviving entity or entities or (B) a greater percentage of the Voting Equity Interests of such transferee(s) or surviving entity or entities than any other person or group, which ever is less, (b) any ''person'' or ''group'' (other than the Excluded Persons) is or becomes the ''beneficial owner,'' directly or indirectly, of more than 40% of the Voting Equity Interests of the Company, and the Excluded Persons shall cease to own beneficially at least a greater percentage of the Voting Equity Interests of the Company, (c) the Continuing Directors cease for any reason to constitute a majority of the Board of Directors of the Company then in office, or (d) the Company adopts a plan of liquidation or dissolution. As used in this definition, ''person'' or ''group'' has the meaning given by Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable. ''Consolidated Coverage Ratio'' of any Person on any date of determination (the ''Transaction Date'') means the ratio, on a pro forma basis, of (a) the aggregate amount of Consolidated EBITDA of such Person (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of) for the Reference Period to (b) the aggregate Consolidated Fixed Charges of such Person (exclusive of amounts attributable to operations and businesses permanently discontinued or disposed of, but only to the extent that the obligations giving rise to such Consolidated Fixed Charges would no longer be obligations contributing to such Person's Consolidated Fixed Charges subsequent to the Transaction Date) during the Reference Period; provided, that for purposes of such calculation: (i) Acquisitions which occurred during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date shall be assumed to have occurred on the first day of the Reference Period, (ii) transactions giving rise to the need to calculate the Consolidated Coverage Ratio shall be assumed to have occurred on the first day of the Reference Period, (iii) the incurrence of any Indebtedness (including issuance of any Disqualified Capital Stock) during the Reference Period or subsequent to the Reference Period and on or prior to the Transaction Date (and the application of the proceeds therefrom to the extent used to refinance or retire other Indebtedness) shall be assumed to have occurred on the first day of the Reference Period, and (iv) the Consolidated Fixed Charges of such Person attributable to interest on any Indebtedness or dividends on any Disqualified Capital Stock bearing a floating interest (or dividend) rate shall be computed on a pro forma basis as if the average rate in effect from the beginning of the Reference Period to the Transaction Date had been the applicable rate for the entire period, unless such Person or any of its Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall remain in effect for the 12- month period immediately following the Transaction Date) that has the effect of fixing the interest rate on the date of computation, in which case such rate (whether higher or lower) shall be used. ''Consolidated EBITDA'' means, with respect to any Person, for any period, the Consolidated Net Income of such Person for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of (a) Consolidated income tax expense, (b) Consolidated depreciation and amortization expense, (c) Consolidated Fixed Charges, and (d) all other non-cash charges (excluding any such non- cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period), less the amount of all cash payments made by such Person or any of its Subsidiaries during such period to the extent such payments relate to non-cash charges that were added back in determining Consolidated EBITDA for such period or any prior period; provided, that consolidated income tax expense, depreciation and amortization and Consolidated Fixed Charges of a Subsidiary (i) that is a less than Wholly Owned Subsidiary shall only be added to the extent and in the same proportions that the net income of such Subsidiary was included in the calculation of Consolidated Net Income of such Person and (ii) shall only be added to the extent and in the same proportions that the Consolidated EBITDA of such Subsidiary is permitted to be paid or distributed as a dividend, advance, loan or other distribution to such Person. ''Consolidated Fixed Charges'' of any Person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of such Person and its Consolidated Subsidiaries during such period, including (i) original issue discount and non-cash interest payments or accruals on any Indebtedness, (ii) the interest portion of all deferred payment obligations, and (iii) all commissions, discounts and other fees and charges owed with respect to banker's acceptances and letters of credit financings and currency and Interest Swap and Hedging Obligations, in each case to the extent attributable to such period, and (b) the amount of dividends accrued or payable (or guaranteed) by such Person or any of its Consolidated Subsidiaries in respect of Preferred Stock (other than by Subsidiaries of such Person to such Person or such Person's Wholly Owned Subsidiaries). For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined in good faith by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and (y) interest expense attributable to any Indebtedness represented by the guaranty by such Person or a Subsidiary of such Person of an obligation of another Person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed. ''Consolidated Net Income'' means, with respect to any Person for any period, the net income (or loss) of such Person and its Consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP) for such period, adjusted to exclude (only to the extent included in computing such net income (or loss) and without duplication): (a) all gains or losses which are extraordinary (as determined in accordance with GAAP) (including any gain from the sale or other disposition of assets outside the ordinary course of business or from the issuance or sale of any capital stock), (b) the net income, if positive, of any Person, other than a Consolidated Subsidiary, in which such Person or any of its Consolidated Subsidiaries has an interest, except to the extent of the amount of any dividends or distributions actually paid in cash to such Person or a Consolidated Subsidiary of such Person during such period, but in any case not in excess of such Person's pro rata share of such Person's net income for such period, (c) the net income or loss of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition, (d) the net income, if positive, of any of such Person's Consolidated Subsidiaries to the extent that the declaration or payment of dividends or similar distributions is not at the time permitted by operation of the terms of its charter or bylaws or any other agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Consolidated Subsidiary, and (e) the net income of, and all dividends and distributions from, any Unrestricted Subsidiary. ''Consolidated Net Worth'' of any Person at any date means the aggregate consolidated stockholders' equity of such Person (plus amounts of equity attributable to preferred stock) as would be shown on the consolidated balance sheet of such Person prepared in accordance with GAAP, adjusted to exclude (to the extent included in calculating such equity), (a) the amount of any such stockholders' equity attributable to Disqualified Capital Stock or treasury stock of such Person and its Consolidated Subsidiaries, (b) all upward revaluations and other write-ups in the book value of any asset of such Person or a Consolidated Subsidiary of such Person subsequent to the Issue Date, and (c) all investments in subsidiaries that are not Consolidated Subsidiaries and in Persons that are not Subsidiaries. ''Consolidated Subsidiary'' means, for any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which are consolidated for financial statement reporting purposes with the financial statements of such Person in accordance with GAAP. "Consolidation" means the consolidation of the accounts of the Company with the accounts of its Subsidiaries, all in accordance with GAAP; provided, that ''consolidation'' will not include consolidation of the accounts of any Unrestricted Subsidiary with the accounts of the Company. The term ''consolidated'' has a correlative meaning to the foregoing. ''Continuing Director'' means during any period of 12 consecutive months after the Issue Date, individuals who at the beginning of any such 12-month period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, including new directors designated in or provided for in an agreement regarding the merger, consolidation or sale, transfer or other conveyance, of all or substantially all of the assets of the Company, if such agreement was approved by a vote of such majority of directors). "Corporate Trust Office" shall be at the address of the Trustee specified in Section 12.2 or such other address as to which the Trustee may give notice to the Company; provided, that for purposes of complying with Section 2.3 such address shall be _ Norwest Bank Minnesota, N.A., 333 South Grand Avenue, Suite 740, Los Angeles, California 90071, Attention: Jeanie Mar. All notices by the Company sent to the Trustee at its Corporate Trust Office in the Borough of Manhattan, The City of New York shall also be sent to the Trustee at the address set forth in Section 12.2. ''Credit Agreement'' means the Credit Agreement, dated as of September 30, 1999, by and among the Company, certain of its Subsidiaries, certain financial institutions and Bank One, NA, as agent and representative, providing for (a) an aggregate $100,000,000 term loan facility, and (b) an aggregate $100,000,000 revolving credit facility, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term ''Credit Agreement'' shall include agreements in respect of Interest Swap and Hedging Obligations with lenders party to the Credit Agreement or their affiliates and shall also include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Credit Agreement and all refundings, refinancings and replacements of any Credit Agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder; provided, that on the date such Indebtedness is incurred its incurrence would not be prohibited by this Indenture, or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms of this Indenture. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means one or more certificated Notes registered in the name of the Holder thereof and issued in accordance with Section 2.6, in the form of Exhibit A hereto except that such Note shall not include the information called for by footnotes 3, 4 and 5 thereof. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.3 as the Depositary with respect to the Notes, until a successor will have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" will mean or include such successor. ''Designated Senior Debt'' means Senior Debt from time to time outstanding under the Credit Agreement. ''Disqualified Capital Stock'' means, with respect to any Person, (a) Equity Interests of such Person that, by its terms or by the terms of any security into which it is convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time or both, would be, required to be redeemed or repurchased (including at the option of the holder thereof) by such Person or any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity of the Notes, and (b) any Equity Interests of any Subsidiary of such Person other than any common equity with no preferences, privileges, and no redemption or repayment provisions. "Distribution Compliance Period" means the 40-day restricted period as defined in Regulation S. "Equity Interests" means Capital Stock or partnership, participation or membership interests and all warrants, options or other rights to acquire Capital Stock or partnership, participation or membership interests (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock or partnership, participation or membership interests). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, or its successor, as operator of the Euroclear system. "Event of Loss" means, with respect to any property or asset, any (a) loss, destruction or damage of such property or asset or (b) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset. ''Exchange Act'' means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means Series B Notes issued pursuant to an Exchange Offer. "Exchange Offer" shall have the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Excluded Persons" means (a) David Schwartz, Alice Schwartz, Norman D. Schwartz, Steven Schwartz, (b) any spouse, immediate family member, relative or lineal descendant of any person described in clause (a), (c) any trust in which any one or more of the persons described in clause (a) or (b) holds all of the beneficial interests, and (d) any Affiliate of the persons described in clause (a) or (b). ''Exempted Affiliate Transaction'' means: (a) customary employee compensation and benefit arrangements approved by a majority of independent (as to such transactions) members of the Board of Directors of the Company, (b) Restricted Payments, other than Investments, permitted under Section 4.9, (c) transactions solely between the Company and any Guarantor, or solely among Guarantors, (d) payment of reasonable directors' fees to persons who are not otherwise Affiliates of the Company, (e) sales of Equity Interests (other than Disqualified Capital Stock) to Affiliates of the Company, (f) performance of all agreements in existence on the Issue Date and any modification thereto or any transaction contemplated thereby in any replacement agreement therefor so long as such modification or replacement is not more disadvantageous to the Company, any of its Subsidiaries or the Holders in any material respect than the original agreement as in effect on the Issue Date, (g) transactions with suppliers or vendors pursuant to purchase orders executed in the ordinary course of business consistent with past practice and (h) transactions solely between the Company and any Subsidiary or solely among Subsidiaries; provided, that in the case of clauses (g) and (h) only, such transactions are otherwise in compliance with Section 4.11 without giving effect to the application of clause (c) of Section 4.11. ''Existing Indebtedness'' means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the Issue Date immediately after giving effect to the Transactions, reduced to the extent such amounts are repaid, refinanced or retired. ''Foreign Subsidiary'' means any Subsidiary of the Company which (a) is not organized under the laws of the United States, any state thereof or the District of Columbia and (b) conducts substantially all of its business operations outside the United States of America. ''Foreign Subsidiary Credit Agreement'' means any credit agreement or similar instrument, including, without limitation, working capital or equipment purchase lines of credit, entered into by any Foreign Subsidiary governing the terms of a bona fide borrowing by such Foreign Subsidiary from (a) a third-party financial institution that is primarily engaged in the business of commercial banking or (b) a vendor or other provider of financial accommodations in connection with the purchase of equipment, in either case for valid business purposes, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso in clause (iii) of the next sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term ''Foreign Subsidiary Credit Agreement'' shall include agreements in respect of Interest Swap and Hedging Obligations with lenders party to a Foreign Subsidiary Credit Agreement and shall also include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any Foreign Subsidiary Credit Agreement and all refundings, refinancings and replacements of any Foreign Subsidiary Credit Agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Foreign Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder; provided, that on the date such Indebtedness is incurred its incurrence would not be prohibited by this Indenture, or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms of this Indenture. "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession in the United States as in effect from time to time. ''Genetic Systems'' means Genetic Systems Corporation, a Delaware corporation. "Global Notes" means one or more Notes in the form of Exhibit A hereto that includes the information referred to in footnotes 3, 4 and 6 to the form of Note, attached hereto as Exhibit A, issued under this Indenture, that is deposited with or on behalf of and registered in the name of the Depositary or its nominee. "Global Note Legend" means the legend set forth in Section 2.6(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Governmental Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or foreign government, any state, province or any city or other political subdivision or otherwise and whether now or hereafter in existence, or any officer or official thereof, and any maritime authority. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. When used with respect to the Notes, a "Guarantee" means a guarantee by the Guarantors of all or any part of the Notes, in accordance with Article X. "Guarantor" means each of the Subsidiaries of the Company that in the future executes a Guarantee pursuant to and in accordance with the requirements of this Indenture in which such Subsidiary unconditionally guarantees on a senior subordinated basis the obligations of the Company under the Notes and this Indenture; provided, that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of this Indenture. "Holder" means a Person in whose name a Note is registered on the Registrar's books. "Indebtedness"of any Person means, without duplication, (a) all liabilities and obligations, contingent or otherwise, of such Person, to the extent such liabilities and obligations would appear as a liability upon the consolidated balance sheet of such Person in accordance with GAAP (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, except (other than accounts payable or other obligations to trade creditors which have remained unpaid for greater than 90 days past their original due date) those incurred in the ordinary course of its business that would constitute ordinarily a trade payable to trade creditors, (iv) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, or (v) relating to any Capitalized Lease Obligation, (b) all liabilities and obligations, contingent or otherwise, of such Person evidenced by a letter of credit or a reimbursement obligation of such Person with respect to any letter of credit, (c) all net obligations of such Person under Interest Swap and Hedging Obligations, (d) all liabilities and obligations of others of the kind described in the preceding clause (a), (b) or (c) that such Person has guaranteed or provided credit support or that is otherwise its legal liability or which are secured by any assets or property of such Person, (e) any and all deferrals, renewals, extensions, refinancing and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c), (d), or this clause (e), whether or not between or among the same parties, (f) all Disqualified Capital Stock of such Person (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends), and (g) all obligations to purchase, redeem or acquire any third-party Equity Interests. For purposes hereof, the ''maximum fixed repurchase price'' of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value to be determined in good faith by the board of directors of the issuer (or managing general partner of the issuer) of such Disqualified Capital Stock. The amount of any Indebtedness outstanding as of any date shall be (x) the accreted value thereof, in the case of any Indebtedness issued with original issue discount, but the accretion of original issue discount in accordance with the original terms of Indebtedness issued with an original issue discount will not be deemed to be an incurrence and (y) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Indirect Participant" means an entity that, with respect to DTC, clears through or maintains a direct or indirect, custodial relationship with a Participant. "Initial Purchasers" mean the initial purchasers of the Series A Notes under the Purchase Agreement, dated February 14, 2000, among the Company and such purchasers relating to the initial purchase and sale of the Series A Notes. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB. "Interest Payment Date" means the stated due date of an installment of interest on the Notes. "Interest Swap and Hedging Obligation" means any obligation of any Person pursuant to any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate exchange agreement, currency exchange agreement or any other agreement or arrangement designed to protect against fluctuations in interest rates or currency values, including, without limitation, any arrangement whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount. "Investment" by any Person in any other Person means (without duplication): (a) the acquisition (whether by purchase, merger, consolidation or otherwise) by such Person (whether for cash, property, services, securities or otherwise) of Equity Interests, bonds, notes, debentures, partnership or other ownership interests or other securities of such other Person or any agreement to make any such acquisition; (b) the making by such Person of any deposit with, or advance, loan or other extension of credit to, such other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other Person) or any written commitment to make any such advance, loan or extension (but excluding accounts receivable, endorsements for collection or deposits arising in the ordinary course of business) within one year; (c) other than guarantees of Indebtedness of the Company or any Subsidiary to the extent permitted by Section 4.7, the entering into by such Person of any guarantee of, or other credit support or contingent obligation with respect to, Indebtedness or other liability of such other Person; (d) the making of any capital contribution (which shall be deemed to include payment of consideration in excess of fair market value of any assets received) by such Person to such other Person; and (e) the designation by the Board of Directors of the Company of any Person to be an Unrestricted Subsidiary. The Company shall be deemed to make an Investment in an amount equal to the fair market value of the net assets of any subsidiary (or, if neither the Company nor any of its Subsidiaries has theretofore made an Investment in such subsidiary, in an amount equal to the Investments being made), at the time that such subsidiary is designated an Unrestricted Subsidiary, and any property transferred to an Unrestricted Subsidiary from the Company or a Subsidiary of the Company shall be deemed an Investment valued at its fair market value at the time of such transfer. The fair market value of each Investment shall be measured at the time made or returned, as applicable. "Issue Date" means the date of first issuance of the Notes under this Indenture. ''Junior Security'' means any Qualified Capital Stock and any Indebtedness of the Company or a Subsidiary, as applicable, that is contractually subordinated in right of payment to Senior Debt at least to the same extent as the Notes, and has no scheduled installment of principal due, by redemption, sinking fund payment or otherwise, on or prior to the Stated Maturity of the Notes; provided, that in the case of subordination in respect of Designated Senior Debt, ''Junior Security'' shall mean any Qualified Capital Stock and any Indebtedness of the Company or the Subsidiary that (a) has a final maturity date occurring after the final maturity date of all Designated Senior Debt on the date of issuance of such Qualified Capital Stock or Indebtedness, (b) is unsecured, (c) has an Average Life longer than the security for which such Qualified Capital Stock or Indebtedness is being exchanged, and (d) by their terms or by law are subordinated to Designated Senior Debt on the date of issuance of such Qualified Capital Stock or Indebtedness at least to the same extent as the Notes. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, or the city in which the Corporate Trust Office of the Trustee is located, or at a place of payment, are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Lien" means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. "Liquidated Damages" means all liquidated damages then owing pursuant to the Registration Rights Agreement. ''Material Domestic Subsidiary'' means any Subsidiary (other than a Foreign Subsidiary) that is a Significant Subsidiary or any group of Subsidiaries (other than Foreign Subsidiaries) that on a combined basis would constitute a Significant Subsidiary. "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents received by the Company in the case of a sale of Qualified Capital Stock or a Capital Contribution and by the Company and its Subsidiaries in respect of an Asset Sale plus, in the case of an issuance of Qualified Capital Stock upon any exercise, exchange or conversion of securities of the Company (including options, warrants, rights and convertible or exchangeable debt) that were issued for cash on or after the Issue Date, the amount of cash originally received by the Company upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt) less, in each case, the sum of all payments, fees, commissions and (in the case of Asset Sales, reasonable and customary), expenses (including, without limitation, the fees and expenses of legal counsel and investment banking fees and expenses) incurred in connection with such Asset Sale, sale of Qualified Capital Stock or Capital Contribution, and, in the case of an Asset Sale only, less the amount (estimated reasonably and in good faith by the Company) of income, franchise, sales and other applicable taxes required to be paid by the Company or any of its Subsidiaries in connection with such Asset Sale in the taxable year that such sale is consummated or in the immediately succeeding taxable year, the computation of which shall take into account the reduction in tax liability resulting from any available operating losses and net operating loss carryovers, tax credits and tax credit carryforwards, and similar tax attributes. "Non-Recourse Indebtedness" means Indebtedness of a Person as to which neither the Company nor any Subsidiary provides any guarantee, collateral or other credit support of any kind whatsoever. "Notes Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Obligation" means any principal, premium or interest payment, or monetary penalty, or damages, due by the Company or any Guarantor under the terms of the Notes or this Indenture, including any Liquidated Damages due pursuant to the terms of the Registration Rights Agreement. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice President of such Person. "Officers' Certificate" means an officers' certificate to be delivered upon the occurrence of certain events as set forth in this Indenture. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Sections 12.4 and 12.5. The counsel may be an employee of or counsel to the Company or any Subsidiary of the Company. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). ''Permitted Investment'' means: (a) any Investment in the Company or any Subsidiary; provided, that Investments by the Company or any Guarantor in Subsidiaries of the Company (other than Guarantors) shall be limited to $15,000,000 in the aggregate, subject to clause (d) below; (b) any Investment in Cash Equivalents; (c) intercompany notes to the extent permitted under Section 4.7; (d) any Investment by the Company or any Subsidiary of the Company in a Person in a Related Business if as a result of such Investment such Person immediately becomes a Subsidiary of the Company or such Person is immediately merged with or into the Company or a Subsidiary of the Company; provided, that Investments by the Company or any Guarantor under this clause (d) shall be subject to and reduce dollar for dollar the amount of Investments in Subsidiaries that may be made under clause (a) above, unless, as a result of such Investment, such Person immediately becomes a Guarantor or is immediately merged with or into the Company or a Guarantor, in which case such Investment shall not reduce the amount available under clause (a); (e) other Investments in any Person or Persons; provided, that after giving pro forma effect to each such Investment, the aggregate amount of all such Investments made on and after the Issue Date pursuant to this clause (e) that are outstanding (after giving effect to any such Investments that are returned to the Company or any Subsidiary of the Company that made such prior Investment, without restriction, in cash on or prior to the date of any such calculation, but only up to the amount of the Investment made under this clause (e) in such Person) at any time does not in the aggregate exceed $10,000,000 (measured by the value attributed to the Investment at the time made); (f) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that complies with Section 4.12; (g) any acquisition of assets solely in exchange for the issuance of the Equity Interests of the Company (other than Disqualified Capital Stock); (h) any Investment in connection with Interest Swap and Hedging Obligations otherwise permitted under this Indenture; (i) any Investment received (i) in satisfaction of judgments or (ii) as payment on a claim made in connection with any bankruptcy, liquidation, receivership or other insolvency proceeding; and (j) Investments in a Person or Persons existing on the Issue Date, plus additional Investments in such Person or Persons made on or after the Issue Date in an aggregate amount not to exceed at any time outstanding $10,000,000. "Permitted Liens" means: (a) Liens existing on the Issue Date, immediately after giving effect to the Transactions; (b) Liens imposed by governmental authorities for taxes, assessments or other charges not yet subject to penalty or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books and records of the Company in accordance with GAAP; (c) statutory liens of carriers, warehousemen, mechanics, material men, landlords, repairmen or other like Liens arising by operation of law in the ordinary course of business; provided, that (i) the underlying obligations are not overdue for a period of more than 30 days, or (ii) such Liens are being contested in good faith and by appropriate proceedings and adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP; (d) Liens securing the Notes and the Exchange Notes; (e) Liens securing Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Company or is merged with or into the Company or one of its Subsidiaries or Liens securing Indebtedness incurred in connection with an Acquisition; provided, that such Liens were in existence prior to the date of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets; (f) Liens arising from Purchase Money Indebtedness permitted to be incurred pursuant to this Indenture; provided, that such Liens relate solely to the property which is subject to such Purchase Money Indebtedness; (g) Liens arising from precautionary Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company or any of its Subsidiaries in the ordinary course of business; (h) Liens securing Refinancing Indebtedness incurred to refinance any Indebtedness that was previously so secured in a manner no more adverse to the Holders than the terms of the Liens securing such refinanced Indebtedness; provided, that the Indebtedness secured is not increased and the Lien is not extended to any additional assets or property that would not have been security for the Indebtedness refinanced; (i) Liens securing Indebtedness under the Credit Agreement incurred in accordance with the terms of this Indenture; (j) Liens securing Indebtedness of any Foreign Subsidiary incurred in accordance with the terms of this Indenture; (k) Liens in favor of the Company or any Guarantor; (l) Liens securing reimbursement obligations with respect to commercial letters of credit which solely encumber documents and other property relating to such letters of credit and products and proceeds thereof; (m) Liens securing other Indebtedness not exceeding $10,000,000 at any time outstanding; and (n) Liens on the Equity Interests of Unrestricted Subsidiaries securing obligations of Unrestricted Subsidiaries to the extent permitted by the terms of this Indenture. ''Person'' or ''person'' means any corporation, individual, limited liability company, joint stock company, joint venture, partnership, limited liability partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity. "Preferred Stock" means any Equity Interest of any class or classes of a Person (however designated) which is preferred as to payments of dividends, or as to distributions upon any liquidation or dissolution, over Equity Interests of any other class of such Person. "Private Placement Legend" means the legend set forth in Section 2.6(g)(i) to be placed on all Notes issued under this Indenture except where specifically stated otherwise by the provisions of this Indenture. "Pro Forma" or "pro forma" shall have the meaning set forth in Regulation S-X of the Securities Act of 1933, as amended, unless otherwise specifically stated herein. "Purchase Money Indebtedness" of any Person means any Indebtedness of such Person to any seller or other Person incurred solely to finance the acquisition (including in the case of a Capitalized Lease Obligation, the lease), construction, installation or improvement of any after acquired real or personal tangible property which, is directly related to a Related Business of the Company and which is incurred concurrently with (or within 180 days following) such acquisition, construction, installation or improvement and is secured only by the assets so financed. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualified Capital Stock" means any of the Capital Stock of the Company that is not Disqualified Capital Stock. "Qualified Exchange" means: (a) any legal defeasance, redemption, retirement, repurchase or other acquisition of Capital Stock of the Company or Indebtedness of the Company issued on or after the Issue Date with the Net Cash Proceeds received by the Company from the substantially concurrent sale of Qualified Capital Stock of the Company or, to the extent used to retire the Indebtedness of the Company (other than Disqualified Capital Stock) issued on or after the Issue Date, Subordinated Indebtedness of the Company; (b) any issuance of Qualified Capital Stock of the Company in exchange for any of the Capital Stock of the Company or Indebtedness issued on or after the Issue Date; or (c) any exchange of Subordinated Indebtedness of the Company for Subordinated Indebtedness of the Company issued on or after the Issue Date. "Record Date" means a Record Date specified in the Notes, whether or not such date is a Business Day. "Reference Period" with regard to any Person means the four full fiscal quarters (or such lesser period during which such Person has been in existence) ended immediately preceding any date upon which any determination is to be made pursuant to the terms of the Notes or this Indenture. "Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock (a) issued in exchange for, or the proceeds from the issuance and sale of which are used substantially concurrently to repay, redeem, defease, refund, refinance, discharge or otherwise retire for value, in whole or in part, or (b) constituting an amendment, modification or supplement to, or a deferral or renewal of (clauses (a) and (b) above are, collectively, a ''Refinancing''), any Indebtedness (including Disqualified Capital Stock) in a principal amount or, in the case of Disqualified Capital Stock, liquidation preference, not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing plus the amount of any premium paid in connection with such Refinancing in accordance with the terms of the documents governing the Indebtedness refinanced without giving effect to any modification thereof made in connection with or in contemplation of such refinancing) the lesser of (a) the principal amount or, in the case of Disqualified Capital Stock, liquidation preference, of the Indebtedness (including Disqualified Capital Stock) so Refinanced and (b) if such Indebtedness being Refinanced was issued with an original issue discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such Refinancing; provided, that: (i) such Refinancing Indebtedness shall only be used to refinance outstanding Indebtedness (including Disqualified Capital Stock) of such Person issuing such Refinancing Indebtedness, (ii) such Refinancing Indebtedness shall (A) not have an Average Life shorter than the Indebtedness (including Disqualified Capital Stock) to be so refinanced at the time of such Refinancing and (B) in all respects, be no less contractually subordinated or junior, if applicable, to the rights of Holders than was the Indebtedness (including Disqualified Capital Stock) to be refinanced, (iii) such Refinancing Indebtedness shall have a final stated maturity or redemption date, as applicable, no earlier than the final stated maturity or redemption date, as applicable, of the Indebtedness (including Disqualified Capital Stock) to be so refinanced or, if sooner, 91 days after the Stated Maturity of the Notes, and (iv) such Refinancing Indebtedness shall be secured (if secured) in a manner no more adverse to the Holders than the terms of the Liens (if any) securing such refinanced Indebtedness, including, without limitation, the amount of Indebtedness secured shall not be increased. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Issue Date, by and among the Company and the Initial Purchasers, as such agreement may be amended, modified or supplemented from time to time. "Reg S Permanent Global Note" means one or more permanent Global Notes bearing the Private Placement Legend, that will be issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Reg S Temporary Global Note upon expiration of the Distribution Compliance Period. "Reg S Temporary Global Note" means one or more temporary Global Notes bearing the Private Placement Legend and the Reg S Temporary Global Note Legend, issued in an aggregate amount of denominations equal in total to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Reg S Temporary Global Note Legend" means the legend set forth in Section 2.6(g)(iii), which is required to be placed on all Reg S Temporary Global Notes issued under this Indenture. "Regulation S" means Regulation S promulgated under the Securities Act, as it may be amended from time to time, and any successor provision thereto. "Regulation S Global Note" means a Reg S Temporary Global Note or a Reg S Permanent Global Note, as the case may be. "Related Business" means the business conducted (or proposed to be conducted) by the Company and its Subsidiaries as of the Issue Date and any and all businesses that in the good faith judgment of the Board of Directors of the Company are materially related businesses. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Debt. "Restricted Definitive Note" means one or more Definitive Notes bearing the Private Placement Legend, issued under this Indenture. "Restricted Global Note" means one or more Global Notes bearing the Private Placement Legend, issued under this Indenture; provided, that in no case shall an Exchange Note issued in accordance with this Indenture and the terms of the Registration Rights Agreement be a Restricted Global Note. "Restricted Investment" means in one or a series of related transactions, any Investment other than Permitted Investments. "Restricted Payment" means, with respect to any Person: (a) the declaration or payment of any dividend or other distribution in respect of Equity Interests of such Person or any parent or Subsidiary of such Person; (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Equity Interests of such Person or any Subsidiary or parent of such Person; (c) other than with the proceeds from the substantially concurrent sale of, or in exchange for, Refinancing Indebtedness any purchase, redemption, or other acquisition or retirement for value of, any payment in respect of any amendment of the terms of or any defeasance of, any Subordinated Indebtedness (other than the Notes), directly or indirectly, by such Person or a parent or Subsidiary of such Person prior to the scheduled maturity, any scheduled repayment of principal, or scheduled sinking fund payment, as the case may be, of such Indebtedness; and (d) any Restricted Investment by such Person; provided, however, that the term ''Restricted Payment'' does not include: (i) any dividend, distribution or other payment on or with respect to Equity Interests of an issuer to the extent payable solely in shares of Qualified Capital Stock of such issuer, or (ii) any dividend, distribution or other payment to the Company, or to any Subsidiary of the Company, by the Company or any of its Subsidiaries. "Rule 144A" means Rule 144A promulgated under the Securities Act, as it may be amended from time to time, and any successor provision thereto. "SEC" means the United States Securities and Exchange Commission, or any successor agency. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Securities Intermediary" means U.S. Trust Company, National Association, as securities intermediary under the Security Agreement. "Senior Debt" with respect to the Company or any Guarantor, means Indebtedness of the Company (including any monetary obligation in respect of the Credit Agreement, and any Accrued Bankruptcy Interest incurred pursuant to the Credit Agreement in any proceeding under any Bankruptcy Law) arising under the Credit Agreement or any Guarantee thereof or that is permitted to be incurred under the terms of this Indenture unless the terms of the instrument creating or evidencing such Indebtedness expressly provide that it is on a parity with or subordinated in right of payment to the Notes; provided, that in no event shall Senior Debt include: (a) Indebtedness of the Company to any Subsidiary of the Company or any officer, director or employee of the Company or any of its Subsidiaries or any other Affiliate, (b) Indebtedness incurred in violation of the terms of this Indenture, (c) Indebtedness to trade creditors, (d) Disqualified Capital Stock, (e) Capitalized Lease Obligations, and (f) any liability for taxes owed or owing by the Company or any Guarantor. "Shelf Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" shall have the meaning provided under Regulation S-X of the Securities Act, as in effect on the Issue Date, except that all references to "10%" in such Regulation shall be deemed to be references to "5%" for purposes of this definition. "Special Record Date" means, for payment of any Defaulted Interest, a date fixed by the Paying Agent pursuant to Section 2.12. "Stated Maturity" or "stated maturity" means, (a) with respect to any debt security, the date specified in such debt security as the fixed date on which the final installment of principal of such debt security is due and payable (which shall mean February 15, 2007 with respect to the Notes) and (b) with respect to any scheduled installment of principal of or interest on any debt security, the date specified in such debt security as the fixed date on which such installment is due and payable. "Subordinated Indebtedness" means Indebtedness of the Company that is subordinated in right of payment by its terms or the terms of any document or instrument relating thereto to the Notes. "Subsidiary," with respect to any Person, means: (a) a corporation a majority of whose Equity Interests with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person, (b) any other Person (other than a corporation) in which such Person, one or more Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof has at least majority ownership interest, or (c) a partnership in which such Person or a Subsidiary of such Person is, at the time, a general partner and in which such Person, directly or indirectly, at the date of determination thereof has at least a majority ownership interest. Notwithstanding the foregoing, an Unrestricted Subsidiary shall not be a ''Subsidiary'' of the Company or a ''Subsidiary'' of any of the Subsidiaries of the Company. Unless the context requires otherwise, Subsidiary means each direct and indirect Subsidiary of the Company. "Transactions" means the Acquisition, entering into the senior subordinated credit facility with Banc One Capital Markets, Inc. and entering into the Credit Agreement. "Transfer Restricted Notes" means Global Notes and Definitive Notes that bear or are required to bear the Private Placement Legend, issued under this Indenture. ''Treasury Rate'' means, as of any Redemption Date, the yield to maturity as of that Redemption Date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days before the Redemption Date (or, if that Statistical Release is no longer published, any publicly available source of similar market date)) most nearly equal to the period from the Redemption Date to February 15, 2004; provided, however, that if the period from the Redemption Date to February 15, 2004 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means such successor serving hereunder. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend, issued under this Indenture. "Unrestricted Global Note" means one or more permanent Global Notes representing a series of Notes that does not bear and is not required to bear the Private Placement Legend, issued under this Indenture. "Unrestricted Subsidiary" means any subsidiary of the Company that does not own any Capital Stock of, or own or hold any Lien on any property of, the Company or any of its Subsidiaries and that, at the time of determination, shall be an Unrestricted Subsidiary (as designated by the Board of Directors of the Company); provided, that such subsidiary at the time of such designation (a) has no Indebtedness other than Non-Recourse Indebtedness, (b) is not party to any agreement, contract, arrangement or understanding with the Company or any of its Subsidiaries unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company, (c) is a Person with respect to which neither the Company nor any of its Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results, and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Subsidiaries, other than Guarantees of the Notes. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Subsidiary; provided, that (x) no Default or Event of Default is existing or will occur as a consequence thereof and (y) immediately after giving effect to such designation, on a pro forma basis, the Company could incur at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio set forth in Section 4.7. Each such designation shall be evidenced by filing with the Trustee a certified copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "U.S. Government Obligations" means direct non-callable obligations of, or noncallable obligations guaranteed by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Equity Interests" means Equity Interests which at the time are entitled to vote in the election of, as applicable, directors, members or partners generally. "Wholly Owned Subsidiary" means a Subsidiary all the Equity Interests of which (other than directors' qualifying Shares) are owned by the Company and/or one or more of its Wholly Owned Subsidiaries. Section 1.2 Other Definitions. Term Defined in Section "Affiliate Transaction" 4.11 "Asset Sale" 4.12 "Asset Sale Offer" 4.12 "Asset Sale Offer Amount" 4.12 "Asset Sale Offer Period" 4.12 "Asset Sale Offer Price" 4.12 "Authentication Order" 2.2 "Bankruptcy Law" 6.1 "Benefitted Party" 10.1 "Change of Control Offer" 4.13 "Change of Control Offer 4.13 Period" "Change of Control Purchase 4.13 Date" "Change of Control Purchase 4.13 Price" "Covenant Defeasance" 8.3 "Custodian" 6.1 "Debt Incurrence Ratio" 4.7 "Defaulted Interest" 2.12 "Designation Date" 4.9 "DTC" 2.3 "Excess Proceeds" 4.12 "Guarantee Obligations" 10.1 "incur" or "incurrence" 4.7 "Incurrence Date" 4.7 "Investment Company Act" 4.16 "Legal Defeasance" 8.2 "Non-payment Default" 11.2 "Paying Agent" 2.3 "Payment Blockage Period" 11.2 "Payment Default" 11.2 "Payment Notice" 11.2 "Registrar" 2.3 "Redemption Date" 3.7 Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC; "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; "obligor" on the Notes means the Company, each Guarantor and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.4 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; (6) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (7) references to sections of or rules under the Securities Act and the Exchange Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time; and (8) unless otherwise required by the context, references to "Section" or "Article" are references to a Section or Article of this Indenture. ARTICLE II THE NOTES Section 1.5 Form and Dating. (1) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, any Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (2) Global Notes. Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Notes Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.6 hereof. (3) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank in effect at the relevant time shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Cedel Bank. Section 1.6 Execution and Authentication. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by an Officer (an "Authentication Order"), authenticate Notes for issuance up to the aggregate principal amount stated in such Authentication Order; provided, that Notes authenticated for issuance on the Issue Date shall not exceed $150,000,000 in aggregate principal amount. The aggregate principal amount of Notes outstanding at any time may not exceed $150,000,000, except in accordance with Section 2.8. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 1.7 Registrar, Paying Agent and Depositary. The Company shall maintain an office or agency in the Borough of Manhattan, The City of New York, where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Notes Custodian with respect to the Global Notes. Section 1.8 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent and in such event any such Paying Agent shall have the obligation to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for such money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. Section 1.9 Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA 312(a). If the Trustee is not the Registrar, the Company shall furnish, or shall cause the Registrar (if other than the Company) to furnish, to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA 312(a). Section 1.10 Transfer and Exchange. (1) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that (A) the Depositary is unwilling or unable to continue to act as Depositary for the Global Notes and the Company thereupon fails to appoint a successor Depositary within 90 days or (B) the Depositary is no longer a clearing agency registered under the Exchange Act, (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee or (iii) upon request of the Trustee or Holders of a majority of the aggregate principal amount of outstanding Notes if there shall have occurred and be continuing a Default or Event of Default with respect to the Notes; provided, that in no event shall the Reg S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (A) the expiration of the Distribution Compliance Period and (B) the receipt by the Registrar of any certificate identified by the Company and its counsel to be required pursuant to Rule 903 or Rule 904 under the Securities Act. Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.6(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.6(b), (c) or (f) hereof. (2) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Distribution Compliance Period, transfers of beneficial interests in the Reg S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.6(b)(i). (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.6(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) an order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) an order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(1) above; provided, that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Reg S Temporary Global Note prior to (x) the expiration of the Distribution Compliance Period and (y) the receipt by the Registrar of any certificates identified by the Company or its counsel to be required pursuant to Rule 903 and Rule 904 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.6(f) hereof, the requirements of this Section 2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.6(h) hereof. (3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.6(b)(ii) above and the Registrar receives the following: (1) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (2) if the transferee will take delivery in the form of a beneficial interest in the Reg S Temporary Global Note or the Reg S Permanent Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.6(b)(ii) above and: (1) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and Section 2.6(f) hereof, and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (2) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (3) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (4) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to xchange such beneficial interest for a beneficial interest in an unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), an Opinion of Counsel in form, and from legal counsel, reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (1) If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (3) Transfer or Exchange of Beneficial Interests for Definitive Notes. (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (2) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (3) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (4) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (5) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (6) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (7) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Note to be reduced accordingly pursuant to Section 2.6(h) hereof, and the Company shall execute and, upon receipt of an Authentication Order pursuant to Section 2.2, the Trustee shall authenticate and deliver to the Person designated in the instructions a Restricted Definitive Note in the appropriate principal amount. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.6(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (1) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and Section 2.6(f) hereof, and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker- Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (2) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (3) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (4) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of uch beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), an Opinion of Counsel in form, and from legal counsel, reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.6(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.6(h) hereof, and the Company shall execute and, upon receipt of an Authentication Order pursuant to Section 2.2, the Trustee shall authenticate and deliver to the Person designated in the instructions an Unrestricted Definitive Note in the appropriate principal amount. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Unrestricted Definitive Notes to the Persons in whose names such Notes are so registered. Any Unrestricted Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.6(c)(iii) shall not bear the Private Placement Legend. (4) Transfer or Exchange of Reg S Temporary Global Notes. Notwithstanding the other provisions of this Section 2.6, a beneficial interest in the Reg S Temporary Global Note may not be (A) exchanged for a Definitive Note prior to (1) the expiration of the Distribution Compliance Period (unless such exchange is effected by the Company, does not require an investment decision on the part of the holder thereof and does not violate the provisions of Regulation S) and (2) the receipt by the Registrar of any certificates identified by the Company or its counsel to be required pursuant to Rule 903(b)(3)(B) under the Securities Act or (B) transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to the events set forth in clause (A) above or unless the transfer is pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (4) Transfer and Exchange of Definitive Notes for Beneficial Interests. (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (1) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (2) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; or (3) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof, the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note. (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (1) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and Section 2.6(f) hereof, and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (2) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (3) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (4) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), an Opinion of Counsel, and from legal counsel, in form reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.6(d)(ii), the Trustee shall cancel the Restricted Definitive Notes so transferred or exchanged and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) of this Section 2.6(d) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (5) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.6(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.6(e). (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (1) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (2) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (3) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (1) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and Section 2.6(f) hereof, and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (2) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (3) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (4) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), an Opinion of Counsel in form, and from legal counsel, reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (6) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2, and an Opinion of Counsel for the Company as to certain matters discussed in this Section 2.6(f) the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the sum of (A) the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (1) they are not Broker-Dealers, (2) they are not participating in a distribution of the Exchange Notes and (3) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (B) the principal amount of Definitive Notes exchanged or transferred for beneficial interests in Unrestricted Global Notes in connection with the Exchange Offer pursuant to Section 2.6(d)(ii) and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer (other than Definitive Notes described in clause (i)(B) immediately above). Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and, upon receipt of an Authentication Order pursuant to Section 2.2, the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. The Opinion of Counsel for the Company referenced above shall state that: (1) the issuance and sale of the Exchange Notes by the Company have been duly authorized and, when executed and authenticated in accordance with the provisions of this Indenture and delivered in exchange for Series A Notes in accordance with this Indenture and the Exchange Offer, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms except as the enforceability thereof may be limited by (A) bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and (B) equitable principles of general applicability (regardless of whether enforceability is considered at equity or in law); and (1) (2) if applicable, when the Exchange Notes are executed and authenticated in accordance with the provisions of this Indenture and delivered in exchange for Series A Notes in accordance with this Indenture and the Exchange Offer, the Guarantees by the Guarantors endorsed thereon will be valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms except as the enforceability thereof may be limited by (A) bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and (B) equitable principles of general applicability (regardless of whether enforceability is considered at equity or in law). (7) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (1) Private Placement Legend. (1) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT RESALES OF THE NOTES BY WARBURG DILLON READ LLC AND ABN AMRO INCORPORATED (THE "INITIAL PURCHASERS"), (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT, IN CONNECTION WITH RESALES AND TRANSFERS OF THE NOTES OTHER THAN EXEMPT RESALES OF THE NOTES BY THE INITIAL PURCHASERS, IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S. PERSON" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING." (2) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (2) Global Note Legend. To the extent required by the Depositary, each Global Note shall bear legends in substantially the following forms: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." (3) Reg S Temporary Global Note Legend. To the extent required by the Depositary, each Reg S Temporary Global Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS NOTE." (8) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (9) General Provisions Relating to Transfers and Exchanges. (1) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order. (2) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.6, 4.12, 4.13 and 9.5 hereof). (3) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same Indebtedness, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (5) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.2 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date. (6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (7) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2 hereof. (8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile. Notwithstanding anything herein to the contrary, as to any certifications and certificates delivered to the Registrar pursuant to this Section 2.6, the Registrar's duties shall be limited to confirming that any such certifications and certificates delivered to it are in the form of Exhibits A, B, C and D attached hereto. The Registrar shall not be responsible for confirming the truth or accuracy of representations made in any such certifications or certificates. Section 1.11 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in both the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 1.12 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee (including any Note represented by a Global Note) except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.7 hereof, such Note, together with the Guarantee of that particular Note endorsed thereon, ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or the maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 1.13 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Section 1.14 Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 1.15 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee, and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. Subject to Section 2.7 hereof, the Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 1.16 Defaulted Interest. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date plus, to the extent lawful, any interest payable on the defaulted interest at the rate and in the manner provided in Section 4.1 hereof and in the Note (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant Record Date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee and the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Paying Agent an amount of cash equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements reasonably satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment, such cash when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (a). Thereupon the Paying Agent shall fix a "Special Record Date" for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Paying Agent of the notice of the proposed payment. The Paying Agent shall promptly notify the Company and the Trustee of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at its address as it appears in the Note register maintained by the Registrar not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the persons in whose names the Notes (or their respective predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee and the Paying Agent of the proposed payment pursuant to this clause, such manner shall be deemed practicable by the Trustee and the Paying Agent. Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 1.17 CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE III REDEMPTION Section 1.18 Notices to Trustee. If the Company elects to redeem Notes pursuant to the redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at least 30 days (unless a shorter period is acceptable to the Trustee) but not more than 60 days (unless a longer period is acceptable to the Trustee) before a redemption date, an Officers' Certificate setting forth (a) the clause of this Indenture pursuant to which the redemption shall occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed and (d) the redemption price. Section 1.19 Selection of Notes to be Redeemed. (1) If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes or portions thereof to be redeemed among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers appropriate and fair. Any such determination shall be conclusive. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 days nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. (2) The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. The Notes may be redeemed in part in multiples of $1,000 only. Notes and portions of Notes in denominations of larger than $1,000 selected shall be in amounts of $1,000 or integral multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not an integral multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 1.20 Notice of Redemption. (1) Subject to the provisions of Section 3.7 hereof, at least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. (2) The notice shall identify the Notes to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) if any Note is being redeemed in part, the portion of the principal amount equal to the unredeemed portion thereof and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (4) the name and address of the Paying Agent; (5) that Notes or portions thereof called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that, unless the Company defaults in making such redemption payment, interest on Notes or portions thereof called for redemption ceases to accrue on and after the redemption date; (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes or portions thereof called for redemption are being redeemed; and (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. (3) At the written request of the Company, the Trustee shall give the notice of redemption in the Company's name and at its expense. Section 1.21 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.3 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Section 1.22 Deposit of Redemption Price. On or prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent immediately available funds sufficient to pay the redemption price of and accrued and unpaid interest (and Liquidated Damages, if any) on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest (and Liquidated Damages, if any) on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest (and Liquidated Damages, if any) shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.1 hereof. Section 1.23 Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon receipt of an Authentication Order, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 1.24 Optional Redemption. Except as set forth below in this Section 3.7, the Notes shall not be redeemable by the Company. (1) The Notes shall be redeemable for cash at the option of the Company, in whole or in part, at any time prior to February 15, 2004, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages, if any, thereon to, the date of redemption of the Notes ("Redemption Date"). (2) The Notes shall be redeemable for cash at the option of the Company, in whole or in part, at any time on or after February 15, 2004, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the 12-month period commencing February 15 of the years indicated below, in each case (subject to the right of Holders of record on a Record Date to receive the corresponding interest due (and the corresponding Liquidated Damages, if any) on the corresponding Interest Payment Date that is on or prior to such redemption date) together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date: Year Percentage 2004 105.813% 2005 102.906% 2006 100.000% 2007 and thereafter 100.000% (3) Notwithstanding the provisions of clause (a) of this Section 3.7, at any time or from time to time prior to February 15, 2003, upon any sale of the common stock of the Company, up to 35% of the aggregate principal amount of the Notes originally issued under this Indenture may be redeemed at the option of the Company within 90 days of such sale, on not less than 30 days, but not more than 60 days, prior notice to each Holder of the Notes to be redeemed, with cash from the Net Cash Proceeds of such sale, at a redemption price equal to 111.625% of the principal amount thereof (subject to the right of Holders of record on a Record Date to receive the corresponding interest (and the corresponding Liquidated Damages, if any) due on the Interest Payment Date that is on or prior to such redemption date) together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date; provided, that immediately following such redemption not less than 65% of the aggregate principal amount of the Notes originally issued pursuant to this Indenture remain outstanding. (4) Any redemption pursuant to this Section 3.7 shall be made pursuant to the provisions of Sections 3.1 through 3.6 hereof. ARTICLE IV COVENANTS Section 1.25 Payment of Notes. (1) The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 12:00 noon Eastern time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement and herein. (2) The Company shall pay interest (including Accrued Bankruptcy Interest in any proceeding under any Bankruptcy Law) on overdue principal at the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including Accrued Bankruptcy Interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace period) at the same rate to the extent lawful. Section 1.26 Maintenance of Office or Agency. (1) The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office. (2) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such additional designations; provided, that no such designation or recission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. (3) The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.3 hereof. Section 1.27 SEC Reports and Reports to Holders. (1) Whether or not the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will deliver to the Trustee and to each Holder and to prospective purchasers of Notes identified to the Company by an Initial Purchaser, at the time the Company is or would have been (if the Company were subject to such reporting obligations) required to file such with the Commission, such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act, if the Company were subject to the requirements of Section 13 or 15(d) of the Exchange Act, including, with respect to annual information only, a report thereon by the certified independent public accountants of the Company as such would be required in such reports to the Commission, and, in each case, together with a management's discussion and analysis of financial condition and results of operations which would be so required and, unless the Commission will not accept such reports, file with the Commission the annual, quarterly and other reports which it is or would have been required to file with the Commission. (2) For so long as any Transfer Restricted Notes remain outstanding, the Company shall make available (which shall include filings by EDGAR) to all Holders and prospective purchasers, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 1.28 Compliance Certificate. (1) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company and its Subsidiaries have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company and its Subsidiaries are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. The Company shall provide the Trustee with timely written notice of any change in its fiscal year end, which is currently December 31. (2) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. (1) Section 1.29 Taxes. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment would not have a material adverse effect on the ability of the Company and any Guarantors to satisfy their obligations under the Notes, any Guarantees and this Indenture. Section 1.30 Stay, Extension and Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 1.31 Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock. (1) Except as set forth in this Section 4.7, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become directly or indirectly liable with respect to, or otherwise become responsible for, contingently or otherwise (individually and collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness (including Disqualified Capital Stock and Acquired Indebtedness). Notwithstanding the foregoing if (i) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect on a pro forma basis to, such incurrence of Indebtedness and (ii) on the date of such incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of the Company for the Reference Period immediately preceding the Incurrence Date, after giving effect on a pro forma basis to such incurrence of such Indebtedness and, to the extent set forth in the definition of Consolidated Coverage Ratio, the use of proceeds thereof, would be at least 2.25 to 1.00 (the "Debt Incurrence Ratio"), then the Company and its Guarantors may incur such Indebtedness (including Disqualified Capital Stock). (2) The foregoing limitations will not apply to: (1) the incurrence by the Company or any Subsidiary of Purchase Money Indebtedness; provided, that (1) the aggregate amount of such Indebtedness incurred and outstanding at any time pursuant to this paragraph (i) (plus any Refinancing Indebtedness issued to retire, defease, refinance, replace or refund such Indebtedness) shall not exceed $15,000,000 (or the equivalent thereof, at the time of incurrence, in the applicable foreign currency), and (2) in each case, such Indebtedness shall not constitute more than 100% of the cost to the Company or to such Subsidiary (determined in accordance with GAAP), as applicable, of the property so purchased, constructed, improved or leased; (2) the incurrence by the Company or any Guarantor of Indebtedness in an aggregate amount incurred and outstanding at any time pursuant to this paragraph (ii) (plus any Refinancing Indebtedness incurred to retire, defease, refinance, replace or refund such Indebtedness) of up to $20,000,000 (or the equivalent thereof, at the time of incurrence, in the applicable foreign currencies); (3) the incurrence by the Company or any Guarantor of Indebtedness pursuant to the Credit Agreement in an aggregate amount incurred and outstanding at any time pursuant to this paragraph (iii) (plus any Refinancing Indebtedness incurred to retire, defease, refinance, replace or refund such Indebtedness) of up to $180,000,000, minus the amount of any such Indebtedness (A) retired with the Net Cash Proceeds from any Asset Sale applied to permanently reduce the outstanding amounts or the commitments with respect to such Indebtedness pursuant to clause (i)(B)(2) of paragraph (a) of Section 4.12 or (B) assumed by a transferee in an Asset Sale; (4) the incurrence by the Subsidiaries of the Company that are not Guarantors of Indebtedness so long as, immediately after giving effect thereto, the aggregate principal amount of any such Indebtedness incurred and outstanding pursuant to this clause (iv) (plus any Refinancing Indebtedness incurred to retire, defease, refinance, replace or refund such Indebtedness) does not exceed 10% of the consolidated total assets of the Company; (5) the incurrence by the Company and its Subsidiaries of Indebtedness evidenced by the Notes and the Exchange Notes issued pursuant to this Indenture up to the amounts being issued on the Issue Date; (6) the incurrence by the Company and any Guarantor of Refinancing Indebtedness with respect to any Indebtedness (including Disqualified Capital Stock), described in clause (v) above, or this clause (vi) or clause (xii) below (less the amount of any such Existing Indebtedness repaid on or after the Issue Date), or incurred pursuant to the Debt Incurrence Ratio or which was refinanced pursuant to this clause (vi); (7) the incurrence by the Company and any Guarantor of Indebtedness solely in respect of bankers' acceptances, letters of credit and performance bonds (to the extent that such incurrence does not result in the incurrence of any obligation to repay any obligation relating to borrowed money of others), all in the ordinary course of business in accordance with customary industry practices, in amounts and for the purposes customary in the industry of the Company; provided, that the aggregate principal amount outstanding of such Indebtedness (including any Refinancing Indebtedness and any other Indebtedness issued to retire, refinance, refund, defease or replace such Indebtedness) shall at no time exceed $10,000,000; (8) the incurrence by the Company and its Subsidiaries of Indebtedness represented by performance bonds and letters of credit for the account of the Company or any such Subsidiary, as the case may be, in order to provide security for Value Added Tax (VAT) or customs obligations under bonds posted to a governmental authority, security for workers' compensation claims and payment obligations in connection with self-insurance, in each case, that are incurred in the ordinary course of business in accordance with customary industry practice in amounts, and for the purposes, customary in the Company's industry; (9) the incurrence by the Company of Indebtedness owed to (borrowed from) any Subsidiary of the Company, and any Subsidiary of the Company may incur Indebtedness owed to (borrowed from) any other Subsidiary of the Company or the Company; provided, that in any case where the Company is the obligor, such obligations shall be unsecured and contractually subordinated in all respects to the obligations of the Company pursuant to the Notes, and any event that causes such Subsidiary no longer to be a Subsidiary (including by designation to be an Unrestricted Subsidiary) shall be deemed to be a new incurrence subject to this covenant; (10) the guaranty by any Subsidiary of the Company of Indebtedness of the Company or of another Subsidiary that was permitted to be incurred pursuant to this Indenture, substantially concurrently with such incurrence or at the time such Person becomes a Subsidiary; provided, that a Guarantor cannot guarantee debt of a Subsidiary that is not a Guarantor; (11) the incurrence by the Company and its Subsidiaries of Interest Swap and Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate or currency risk with respect to any fixed or floating rate Indebtedness that is permitted by this Indenture to be outstanding or any receivable or liability the payment of which is determined by reference to a foreign currency; provided, that the notional amount of any such Interest Swap and Hedging Obligation does not exceed the principal amount of Indebtedness to which such Interest Swap and Hedging Obligation relates; (12) the incurrence by the Company and its Subsidiaries of Existing Indebtedness; (13) the incurrence by the Company of Indebtedness arising from agreements of the Company or its Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the Company otherwise permitted by this Indenture; (14) the accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock; provided, that in each such case, that the amount thereof is included in Consolidated Fixed Charges of the Company as accrued; and (15) the incurrence by the Company and its Subsidiaries of Indebtedness to the extent the proceeds thereof are used to purchase Notes pursuant to a Change of Control offer. (3) Indebtedness (including Disqualified Capital Stock) of any Person which is outstanding at the time such Person becomes a Subsidiary of the Company (including upon designation of any subsidiary or other Person as a Subsidiary) or is merged with or into or consolidated with the Company or a Subsidiary of the Company shall be deemed to have been incurred at the time such Person becomes a Subsidiary of the Company or is merged with or into or consolidated with the Company or a Subsidiary of the Company, as applicable. (4) Notwithstanding any other provision of this Section 4.7, and to avoid duplication only, a guarantee of Indebtedness of the Company or a Subsidiary of the Company incurred in accordance with the terms of this Indenture issued at the time such Indebtedness was incurred or if later at the time the guarantor thereof became a Subsidiary of the Company will not constitute a separate incurrence, or amount outstanding, of Indebtedness. Upon each incurrence, the Company may designate the provision of this Section 4.7 pursuant to which such Indebtedness is being incurred and, at the time of each subsequent incurrence in accordance with this Section 4.7, may reclassify such item of Indebtedness (or any part thereof) in any manner that complies with the provisions of this Section 4.7. Section 1.32 Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness, other than Permitted Liens, upon any of their respective assets now owned or acquired on or after the Issue Date or upon any income or profits therefrom unless the Company provides, and causes its Subsidiaries to provide, concurrently therewith, that the Notes are equally and ratably so secured; provided, that if such Indebtedness is Subordinated Indebtedness, the Lien securing such Indebtedness shall be subordinate and junior to the Lien securing the Notes with the same relative priority as such Subordinated Indebtedness shall have with respect to the Notes. Section 1.33 Limitations on Restricted Payments. (1) The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make any Restricted Payment if, after giving effect to such Restricted Payment on a pro forma basis, (1) a Default or an Event of Default shall have occurred and be continuing, (2) the Company is not permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio in Section 4.7, or (3) the aggregate amount of all Restricted Payments made by the Company and its Subsidiaries, including after giving effect to such proposed Restricted Payment, on and after the Issue Date, would exceed, without duplication, the sum of (1) 50% of the aggregate Consolidated Net Income of the Company for the period (taken as one accounting period), commencing on the first day of the first full fiscal quarter commencing after the Issue Date, to and including the last day of the fiscal quarter ended immediately prior to the date of each such calculation for which the consolidated financial statements of the Company are available (or, in the event the Consolidated Net Income of the Company for such period is a deficit, then minus 100% of such deficit), plus (2) the aggregate Net Cash Proceeds received by the Company from a Capital Contribution or from the sale of Qualified Capital Stock of the Company (other than (1) to one of the Company's Subsidiaries and (2) to the extent applied in connection with a Qualified Exchange after the Issue Date), plus (3) except in each case, in order to avoid duplication, to the extent any such payment or proceeds have been included in the calculation of Consolidated Net Income, an amount equal to the net reduction in Investments (other than returns of or from Permitted Investments) in any Person resulting from distributions on or repayments of any Investments, including payments of interest on Indebtedness, dividends, repayments of loans or advances, or other distributions or other transfers of assets, in each case to the Company or any Subsidiary of the Company or from the Net Cash Proceeds from the sale of any such Investment (valued in each case as provided in the definition of ''Investments''), not to exceed, in each case, the amount of Investments previously made by the Company or any Subsidiary of the Company in such Person, plus (4) 50% of any cash dividends received by the Company or any of its Subsidiaries after the date of this Indenture from an Unrestricted Subsidiary, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the Company for such period, plus (5) to the extent that any Unrestricted Subsidiary is redesignated as a Subsidiary after the date of this Indenture, the lesser of (1) the fair market value of the Investment by the Company in such Unrestricted Subsidiary as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary (the ''Designation Date'') plus the fair market value of any additional Investments in such Unrestricted Subsidiary made by the Company after the Designation Date, if any, and (2) the fair market value of such Investments as measured on the Determination Date, in each case to the extent such amount was not otherwise included in Consolidated Net Income of the Company. (2) The foregoing clauses (ii) and (iii) of paragraph (a), however, will not prohibit: (1) any dividend, distribution or other payments by any Subsidiary of the Company on its Equity Interests that is paid pro rata to all holders of such Equity Interests; (2) a Qualified Exchange; (3) the payment of any dividend on Qualified Capital Stock within 60 days after the date of its declaration if such dividend could have been made on the date of such declaration in compliance with the foregoing provisions; (4) repurchases of the Capital Stock of the Company deemed to occur on the exercise of stock options; (5) payments in lieu of fractional shares not to exceed $2,000,000 in the aggregate; (6) repurchases of Capital Stock of the Company in accordance with a repurchase program that is approved and adopted by the Board of Directors of the Company and whose primary purpose is to provide Capital Stock to satisfy the obligations of the Company under stock option plans and employee stock purchase plans not to exceed $4,000,000 in the aggregate; (7) that portion of Investments the payment for which consists exclusively of the Equity Interests of the Company (other than Disqualified Stock); or (8) other Restricted Payments not to exceed $20,000,000 in the aggregate. (3) The full amount of any Restricted Payment made pursuant to the foregoing clauses (i), (iii), (v), (vi), and (viii) (but not pursuant to clause (ii), (iv) and (vii)) of paragraph (b) above, however, will be counted as Restricted Payments made for purposes of the calculation of the aggregate amount of Restricted Payments available to be made referred to in clause (iii) of paragraph (a) above. (4) For purposes of this Section 4.9, the amount of any Restricted Payment made or returned, if other than in cash, shall be the fair market value thereof, as determined in the good faith reasonable judgment of the Board of Directors of the Company, unless stated otherwise, at the time made or returned, as applicable. Additionally, not later than the date of making each Restricted Payment, the Company shall deliver an Officers' Certificate to the Trustee describing in reasonable detail the nature of such Restricted Payment, stating the amount of such Restricted Payment, stating in reasonable detail the provisions hereof pursuant to which such Restricted Payment was made and certifying that such Restricted Payment was made in compliance with the terms hereof. Section 1.34 Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. (1) The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, assume or suffer to exist any consensual restriction on the ability of any of its Subsidiaries to pay dividends or make other distributions to or on behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer assets or property to or on behalf of, or make or pay loans or advances to or on behalf of, the Company or any of its Subsidiaries, except (1) restrictions imposed by the Notes or this Indenture or by the other Indebtedness of the Company ranking senior or pari passu with the Notes; provided, that, except as set forth in clause (v) below, such restrictions are no more restrictive taken as a whole than those imposed by this Indenture and the Notes, (2) restrictions imposed by applicable law, (3) existing restrictions under Existing Indebtedness, (4) restrictions under any Acquired Indebtedness not incurred in violation of this Indenture or any agreement (including any Equity Interest) relating to any property, asset, or business acquired by the Company or any of its Subsidiaries, which restrictions in each case existed at the time of acquisition, were not put in place in connection with or in anticipation of such acquisition and are not applicable to any Person, other than the Person acquired, or to any property, asset or business, other than the property, assets and business so acquired, (5) any restriction imposed by Indebtedness incurred under the Credit Agreement; provided, that such restriction or requirement is no more restrictive taken as a whole than that imposed by the Credit Agreement as of the Issue Date, (6) restrictions with respect solely to a Subsidiary of the Company imposed pursuant to a binding agreement which has been entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Subsidiary; provided, that such restrictions apply solely to the Equity Interests or assets of such Subsidiary which are being sold, (7) restrictions on transfer contained in Purchase Money Indebtedness; provided, that such restrictions relate only to the transfer of the property acquired with the proceeds of such Purchase Money Indebtedness, (8) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business, (9) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, and (10) in connection with and pursuant to permitted Refinancings, replacements of restrictions imposed pursuant to clauses (i), (iii), (iv), (v) or (vii) above or this clause (x) that are not more restrictive taken as a whole than those being replaced and do not apply to any other Person or assets than those that would have been covered by the restrictions in the Indebtedness so refinanced. (2) Notwithstanding the foregoing, (i) customary provisions restricting subletting or assignment of any lease entered into in the ordinary course of business, consistent with industry practice and (ii) any asset subject to a Lien which is not prohibited to exist with respect to such asset pursuant to the terms of this Indenture may be subject to customary restrictions on the transfer or disposition thereof pursuant to such Lien. Section 1.35 Limitation on Transactions with Affiliates. The Company shall not, and shall not permit any of its Subsidiaries on or after the Issue Date to, enter into or suffer to exist any contract, agreement, arrangement or transaction with any Affiliate (an ''Affiliate Transaction''), or any series of related Affiliate Transactions (other than Exempted Affiliate Transactions) (1) unless it is determined that the terms of such Affiliate Transaction are fair and reasonable to the Company, and no less favorable to the Company than could have been obtained in an arm's length transaction with a non-Affiliate, (2) if involving consideration to either party in excess of $5,000,000 such Affiliate Transaction(s) is evidenced by an Officers' Certificate addressed and delivered to the Trustee certifying that such Affiliate Transaction (or Transactions) has been approved by a majority of the members of the Board of Directors of the Company that are disinterested in such transaction, and (3) if involving consideration to either party in excess of $7,000,000, obtain a written favorable opinion as to the fairness of such transaction to the Company from a financial point of view from an independent investment banking firm of national reputation in the United States or, if pertaining to a matter for which such investment banking firms do not customarily render such opinions, an appraisal or valuation firm of national reputation in the United States. Section 1.36 Limitation on Sale of Assets and Subsidiary Stock. (1) The Company shall not, and shall not permit any of its Subsidiaries to, in one or a series of related transactions, convey, sell, transfer, assign or otherwise dispose of, directly or indirectly, any of their property, business or assets, including by merger or consolidation (in the case of a Subsidiary of the Company), and including any sale or other transfer or issuance of any Equity Interests of any Subsidiary of the Company, whether by the Company or any Subsidiary of the Company or through the issuance, sale or transfer of Equity Interests by a Subsidiary of the Company and including any sale and leaseback transaction (any of the foregoing, an ''Asset Sale''), unless (1) either: (1) an amount equal to the Net Cash Proceeds therefrom (the ''Asset Sale Offer Amount'') are applied within 365 days after the date of such Asset Sale to the repurchase of the Notes and such other Indebtedness on a parity with the Notes and with similar provisions requiring the Company to make an offer to purchase such Indebtedness with the proceeds from such Asset Sale pursuant to a cash offer (subject only to conditions required by applicable law, if any) (pro rata in proportion to the respective principal amounts (or accreted values in the case of Indebtedness issued with an original issue discount) of the Notes and such other Indebtedness then outstanding) (the ''Asset Sale Offer'') at a purchase price of 100% of the principal amount (or accreted value in the case of Indebtedness issued with an original issue discount) (the ''Asset Sale Offer Price'') together with accrued and unpaid interest and Liquidated Damages, if any, to the date of payment, or (2) within 365 days following such Asset Sale, the Asset Sale Offer Amount is (1) invested in property or assets (other than notes, bonds, obligations and securities) which will immediately constitute or be a part of a Related Business of the Company or such Subsidiary (if it continues to be a Subsidiary) immediately following such transaction, or (2) used to retire Purchase Money Indebtedness secured by the asset which was the subject of the Asset Sale, Indebtedness outstanding under the Credit Agreement or a Foreign Subsidiary Credit Agreement, or other Senior Debt, on a pro rata basis, and to permanently reduce (in the case of Senior Debt that is not such Purchase Money Indebtedness) the amount of such Indebtedness outstanding on the Issue Date or permitted pursuant to clause (b)(iii) of Section 4.7 (and, in the case of a revolver or similar arrangement that makes credit available on a committed basis, to permanently reduce the applicable commitment(s) by such amount or by the amount required by such agreement, whichever is less), except that, in the case of each of the provisions of clauses (A) and (B), only proceeds from an Asset Sale of assets or capital stock of a Foreign Subsidiary may be invested in or used to retire Indebtedness of a Foreign Subsidiary, (2) at least 75% of the total consideration for such Asset Sale or series of related Asset Sales consists of cash or Cash Equivalents, (3) no Default or Event of Default shall have occurred and be continuing at the time of, or would occur after giving effect, on a pro forma basis, to such Asset Sale, and (4) the Board of Directors of the Company determines in good faith that the Company received or such Subsidiary received, as applicable, fair market value for such Asset Sale. (1) (2) An acquisition of Notes pursuant to an Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds from Asset Sales not applied as set forth in (i)(A) or (i)(B) above (the ''Excess Proceeds'') exceeds $10,000,000, and each Asset Sale Offer shall remain open for 20 Business Days following its commencement (the ''Asset Sale Offer Period''). (3) Upon expiration of the Asset Sale Offer Period, the Company shall apply the Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and Liquidated Damages, if any, to the purchase of all Indebtedness properly tendered in accordance with the provisions hereof (on a pro rata basis if the Asset Sale Offer Amount is insufficient to purchase all Indebtedness so tendered) at the Asset Sale Offer Price (together with accrued interest and Liquidated Damages, if any). To the extent that the aggregate amount of Notes and such other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount, the Company may use any remaining Net Cash Proceeds for general corporate purposes as otherwise permitted by this Indenture and following the consummation of each Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For purposes of (a)(ii) above, total consideration received means the total consideration received for such Asset Sales minus the amount of, (i) Purchase Money Indebtedness secured solely by the assets sold and assumed by a transferee; provided, that the Company is and its Subsidiaries are fully released from obligations in connection therewith and (ii) property that within 30 days of such Asset Sale is converted into cash or Cash Equivalents; provided, that such cash and Cash Equivalents shall be treated as Net Cash Proceeds attributable to the original Asset Sale for which such property was received). (4) Notwithstanding, and without complying with, the provisions of this Section 4.12, (1) the Company and its Subsidiaries may, in the ordinary course of business, (1) convey, sell, transfer, assign or otherwise dispose of inventory and other assets acquired and held for resale in the ordinary course of business, (2) liquidate Cash Equivalents and (3) liquidate securities that consist of shares of capital stock that are traded on a nationally recognized stock exchange, (2) the Company and its Subsidiaries may convey, sell, transfer, assign or otherwise dispose of assets pursuant to and in accordance with Article V hereof, (3) the Company and its Subsidiaries may sell or dispose of damaged, worn out or other obsolete property in the ordinary course of business so long as such property is no longer necessary for the proper conduct of the business of the Company or such Subsidiary, and the Company may convey, sell, transfer, assign or otherwise dispose of assets to any Subsidiary of the Company provided such transaction is otherwise in compliance with Section 4.11, except that the Company is not required to comply with the provisions of clause (c) of such Section, (4) Subsidiaries of the Company may convey, sell, transfer, assign or otherwise dispose of assets to the Company or any other Subsidiary of the Company, (5) the Company and its Subsidiaries may, in the ordinary course of business, convey, sell, transfer, assign, or otherwise dispose of assets (or related assets in related transactions) with a fair market value of less than $2,000,000, (6) the Company and its Subsidiaries may exchange assets held by the Company or such Subsidiaries for assets held by any Person or entity; provided, that (A) the assets received by the Company or such Subsidiaries in any such exchange will immediately constitute, be a part of, or be used in, a Related Business of the Company or such Subsidiaries, (B) the Board of Directors of the Company has determined that the terms of any exchange are fair and reasonable, (C) any such exchange shall be deemed to be an Asset Sale to the extent that the Company or any of its Subsidiaries receives cash or Cash Equivalents in such exchange, and (D) that, in the case of a transaction exceeding $10,000,000 of consideration to any party thereto, the Company shall have obtained a favorable written opinion by an independent financial advisor of national reputation in the United States as to the fairness from a financial point of view to the Company or such Subsidiaries of the proposed transaction, (7) the Subsidiaries of the Company may issue their Equity Interests to the Company or to another Subsidiary of the Company, (8) Permitted Liens may be granted, and (9) the Company and its Subsidiaries may make or liquidate any Restricted Payment or Permitted Investment that is permitted by Section 4.9 hereof. (5) All Net Cash Proceeds from an Event of Loss in excess of $10,000,000 (other than the proceeds of any business interruption insurance) shall be reinvested or used as otherwise provided above in clauses (i)(A) or (i)(B) of paragraph (a) of this Section 4.12. (6) Any Asset Sale Offer shall be made in compliance with all applicable laws, rules, and regulations, including, if applicable, Regulation 14E of the Exchange Act and the rules and regulations thereunder and all other applicable Federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.12, compliance by the Company or any of its Subsidiaries with such laws and regulations shall not in and of itself cause a breach of the Company's obligations under this Section 4.12. (7) If the payment date in connection with an Asset Sale Offer hereunder is on or after an interest payment Record Date and on or before the associated Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages, if any) due on such Interest Payment Date will be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and such interest (or Liquidated Damages, if applicable) will not be payable to Holders who tender Notes pursuant to such Asset Sale Offer. Section 1.37 Repurchase of Notes at the Option of the Holder upon a Change of Control. (1) In the event that a Change of Control has occurred, each Holder of Notes will have the right, at such Holder's option, pursuant to an offer (subject only to conditions required by applicable law, if any) by the Company (the ''Change of Control Offer''), to require the Company to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date (the ''Change of Control Purchase Date'') that is no later than 45 Business Days after the occurrence of such Change of Control, at a cash price equal to 101% of the principal amount thereof (the ''Change of Control Purchase Price''), together with accrued and unpaid interest and Liquidated Damages, if any, to the Change of Control Purchase Date. (2) The Change of Control Offer shall be made within 10 Business Days following a Change of Control (but may be commenced prior to the Change of Control so long as it is contingent on the Change of Control) and shall remain open for 20 Business Days following its commencement (the ''Change of Control Offer Period''). Upon expiration of the Change of Control Offer Period, the Company shall promptly purchase all Notes properly tendered in response to the Change of Control Offer. (3) Notwithstanding the foregoing, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company. (4) Prior to the commencement of a Change of Control Offer, but in any event within 45 days following any Change of Control, the Company shall: (1) (1) repay in full and terminate all commitments of Indebtedness under the Credit Agreement and all other Senior Debt the terms of which require repayment upon a Change of Control or (2) offer to repay in full and terminate all commitments of Indebtedness under the Credit Agreement and all such other Senior Debt and repay the Indebtedness owed to each lender which has accepted such offer in full, or (2) obtain the requisite consents under the Credit Agreement and all such other Senior Debt to permit the repurchase of the Notes as provided herein. (5) The failure of the Company to comply with the preceding sentence shall constitute an Event of Default described in clause (a)(iii) of Section 6.1, but without giving effect to the stated exceptions in that clause. (6) On or before the Change of Control Purchase Date, the Company shall (1) accept for payment Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent cash sufficient to pay the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any) of all Notes or portion thereof so tendered, and (3) deliver to the Trustee the Notes so accepted together with an Officers' Certificate listing the Notes or portions thereof being purchased by the Company. (7) The Paying Agent promptly will pay the Holders of Notes so accepted an amount equal to the Change of Control Purchase Price (together with accrued and unpaid interest and Liquidated Damages, if any) and the Trustee promptly will authenticate and deliver to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted will be delivered promptly by the Company to the Holder thereof. The Company will announce publicly the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. (8) Any Change of Control Offer shall be made in compliance with all applicable laws, rules and regulations, including, if applicable, Regulation 14E under the Exchange Act and the rules thereunder and all other applicable Federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.13, compliance by the Company or any of the Guarantors with such laws and regulations shall not in and of itself cause a breach of their obligations hereunder. (9) If the Change of Control Purchase Date hereunder is on or after an interest payment Record Date and on or before the associated Interest Payment Date, then any accrued and unpaid interest (and Liquidated Damages, if any) due on such Interest Payment Date will be paid to the Person in whose name a Note is registered at the close of business on such Record Date, and such interest (and Liquidated Damages, if applicable) will not be payable to Holders who tender the Notes pursuant to the Change of Control Offer. Section 1.38 Limitation on Layering Indebtedness. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur, or suffer to exist any Indebtedness that is contractually subordinate in right of payment to any other Indebtedness unless, by its terms, such Indebtedness is Indebtedness of the Company and is contractually subordinate in right of payment to, or ranks pari passu with, the Notes. Section 1.39 Consolidation of Genetic Systems. Within 180 days following the Issue Date, the Company shall either (a) consolidate with or merge with (such that the Company is the surviving entity), or cause to be transferred to the Company all of the assets of, Genetic Systems or (b) cause Genetic Systems to irrevocably and unconditionally guarantee the Notes on a senior subordinated basis. Section 1.40 Limitation on Status as Investment Company. The Company and its Subsidiaries shall not become required to register as an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act")), or otherwise become subject to regulation under the Investment Company Act. Section 1.41 Corporate Existence. Subject to Article V hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (a) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (b) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole. ARTICLE V SUCCESSORS Section 1.42 Merger, Consolidation or Sale of Assets. (1) The Company shall not consolidate with or merge with or into another Person or, directly or indirectly, sell, lease, convey or transfer all or substantially all of the assets of the Company (computed on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person or group of affiliated Persons unless (1) either (A) the Company is the continuing entity or (B) the resulting, surviving or transferee entity (the "Surviving Person") is a corporation organized under the laws of the United States, any state thereof or the District of Columbia and expressly assumes by supplemental indenture all of the obligations of the Company in connection with the Notes, this Indenture and the Registration Rights Agreement, (2) no Default or Event of Default shall exist or shall occur immediately after giving effect on a pro forma basis to such transaction, (3) unless such transaction is solely the merger of the Company with or into any person solely for the purpose of effecting a change in the state of incorporation of the Company and one of the Company's previously existing Wholly Owned Subsidiaries and which transaction is not for the purpose of evading this provision immediately after giving effect to such transaction on a pro forma basis, (A) the Surviving Person would immediately thereafter be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in Section 4.7 hereof, and (B) the Consolidated Net Worth of the Surviving Person is at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction, and (4) each Guarantor, if any, unless such Guarantor is the Person with which the Company has entered into a transaction under this covenant shall have by amendment to its Guarantee confirmed that its Guarantee shall apply to the obligations of the Company or the obligations of the surviving entity, as applicable, in accordance with the Notes and this Indenture. (2) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of all or substantially all of the properties and assets of one or more Subsidiaries, the interest of the Company in which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. Section 1.43 Successor Corporation Substituted. Upon any consolidation or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.1 hereof, the successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made shall (except in the case of a lease) succeed to and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named therein as the Company, and (except in the case of a lease) the Company shall be released from the obligations under the Notes and this Indenture except with respect to any obligations that arise from, or are related to, such transaction. ARTICLE VI DEFAULTS AND REMEDIES Section 1.44 Events of Default. (1) "Event of Default," wherever used herein, means any one of the following events: (1) the failure by the Company to pay any installment of interest (or Liquidated Damages, if any) on the Notes as and when the same becomes due and payable and the continuance of any such failure for 30 days, (2) the failure by the Company to pay all or any part of the principal, or premium, if any, on the Notes when and as the same becomes due and payable at maturity, redemption, by acceleration or otherwise, including, without limitation, payment of the Change of Control Purchase Price (except as provided in Section 4.13 hereof) or the Asset Sale Offer Price, on Notes validly tendered and not properly withdrawn pursuant to a Change of Control Offer or Asset Sale Offer, as applicable (as set forth in Sections 4.13 and 4.12 hereof), (3) the failure by the Company or any of its Subsidiaries to observe or perform any other covenant or agreement contained in the Notes or this Indenture and, except for Sections 4.12, 4.13, 4.15 and 5.1 hereof, the continuance of such failure for a period of 45 days after written notice is given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes outstanding, (4) a default in the Indebtedness of the Company or any of its Subsidiaries with an aggregate amount outstanding in excess of $10,000,000 (A) resulting from the failure to pay principal at maturity or (B) as a result of which the maturity of such Indebtedness has been accelerated prior to its stated maturity, (5) final unsatisfied judgments not covered by insurance aggregating in excess of $10,000,000, at any one time rendered against the Company or any of its Subsidiaries and not stayed, bonded or discharged within 60 days, (6) any Guarantee of a Guarantor that is a Significant Subsidiary (or group of Guarantors that on a combined basis would constitute a Significant Subsidiary) ceases to be in full force and effect or becomes unenforceable or invalid or is declared null and void (other than in accordance with the terms of the Guarantee) or any Guarantor that is a Significant Subsidiary (or group of Guarantors that on a combined basis would constitute a Significant Subsidiary) denies or disaffirms its Obligations under its Guarantee, (7) a court having jurisdiction in the premises enters a decree or order for (A) relief in respect of the Company or any Significant Subsidiary in an involuntary case under any applicable Bankruptcy Law now or hereafter in effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (C) the winding up or liquidation of the affairs of the Company or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (8) the Company or any Significant Subsidiary (A) commences a voluntary case under any applicable Bankruptcy Law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (C) effects any general assignment for the benefit of creditors. (2) The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Section 1.45 Acceleration. (1) If an Event of Default (other than an Event of Default specified in clause (a)(vii) or (a)(viii) of Section 6.1 that occurs with respect to the Company) occurs and is continuing under this Indenture, then in every such case, unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes, then outstanding, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued interest (and Liquidated Damages, if any) on the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued interest (and Liquidated Damages, if any) shall be immediately due and payable; provided, however, that if any Designated Senior Debt is outstanding, upon a declaration of such acceleration, such principal and interest shall be due and payable upon the earlier of (i) the fifth Business Day after the sending to the Company and to the Representative under the Credit Agreement, of such written notice, unless such Event of Default is cured or waived prior to such date and (ii) the date of acceleration of any Designated Senior Debt. In the event a declaration of acceleration resulting solely from an Event of Default described in clause (a)(iv) above has occurred and is continuing, such declaration of acceleration shall be automatically annulled if such default is cured or waived or the holders of the Indebtedness which is the subject of such default have rescinded their declaration of acceleration in respect of such Indebtedness within five days thereof and the Trustee has received written notice of such cure, waiver or rescission and no other Event of Default described in clause (a)(iv) above has occurred that has not been cured or waived within five days of the declaration of such acceleration in respect of such Indebtedness. If an Event of Default specified in clauses (a)(vii) or (a)(viii) above, relating to the Company, occurs, all principal and accrued interest (and Liquidated Damages, if any) thereon will be immediately due and payable on all outstanding Notes without any declaration or other act on the part of the Trustee or the Holders. (2) At any time after such a declaration of acceleration being made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article VI, the Holders of not less than a majority in aggregate principal amount of then outstanding Notes, by written notice to the Company and the Trustee, may rescind, on behalf of all Holders, any such declaration of acceleration if: (1) the Company has paid or deposited with the Trustee cash sufficient to pay: (A) all overdue interest and Liquidated Damages, if any, on all Notes; (B) the principal of (and premium, if any, applicable to) any Notes which would become due other than by reason of such declaration of acceleration, and interest thereon at the rate borne by the Notes; (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes; (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, and all other amounts due the Trustee under Section 7.7; and (2) all Events of Default, other than the non-payment of the principal of, premium, if any, and interest (and Liquidated Damages, if any) on the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 6.4. (3) Notwithstanding the previous sentence of this Section 6.2, no waiver shall be effective against any Holder for any Event of Default or event which with notice or lapse of time or both would be an Event of Default with respect to (i) any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected thereby, unless all such affected Holders agree, in writing, to waive such Event of Default or other event and (ii) any provision or covenant requiring supermajority approval to amend, unless such default has been waived by such a supermajority. No such waiver shall cure or waive any subsequent default or impair any right consequent thereon. (4) If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify each Representative of Senior Debt of the acceleration. Section 1.46 Other Remedies. (1) If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. (2) The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 1.47 Waiver of Past Defaults. Subject to Section 6.7, the Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Company and to the Trustee, may, on behalf of all Holders, waive any existing or past Default or Event of Default hereunder and its consequences under this Indenture, except a default: (1) in the payment of principal of, premium, if any, or interest on any Note not yet cured as specified in clauses (a)(i) and (a)(ii) of Section 6.1 hereof; (2) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of the Holder of each outstanding Note affected, unless all such affected Holders agree, in writing, to waive such default; (3) any provision or covenant requiring supermajority approval to amend, unless such default has been waived by such a supermajority; or (4) the rescission of which would conflict with any judgment or decree of a court of competent jurisdiction. (5) Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right arising therefrom. Section 1.48 Control by Majority. Holders of at least a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines in good faith may be unduly prejudicial to the rights of other Holders of Notes not joining in the giving of such direction or that may involve the Trustee in personal liability and the Trustee may take any other action it deems proper that is not inconsistent with any such direction received from Holders of the Notes. Section 1.49 Limitation on Suits. (1) A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. (2) A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 1.50 Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, except as permitted by Section 9.2 and subject to the provisions of Article XI, the right of any Holder of a Note to receive payment of the principal of, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase) or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 1.51 Collection Suit by Trustee. If an Event of Default specified in Section 6.1 occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 1.52 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise; provided, that nothing stated herein shall modify the rights as between the Holders of the Notes and the holders of Senior Debt or Senior Debt of the Guarantors, as applicable, as set forth in Article XI. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and may be a member of the creditor's committee. Section 1.53 Priorities. (1) If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: (1) to the Trustee, its agents and attorneys for amounts due under Section 7.7 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; (2) subject to the provisions of Article XI, to Holders of Notes for amounts due and unpaid on the Notes for principal and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any, and interest, respectively; and (3) to the Company or to such party as a court of competent jurisdiction shall direct. (2) The Trustee may fix a Record Date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. (1) Section 1.54 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE VII TRUSTEE Section 1.55 Duties of Trustee. (1) If an Event of Default of which the Trustee has knowledge has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of its own affairs. (2) Except during the continuance of an Event of Default of which the Trustee has knowledge: (1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (3) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph (c) does not limit the effect of paragraph (b) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by an Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5 hereof. (4) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.1 and 7.2. (5) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (6) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 1.56 Rights of Trustee. (1) In connection with the Trustee's rights and duties under this Indenture, the Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting under this Indenture, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (3) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (5) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (6) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (7) Except with respect to Section 4.1 hereof, the Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article IV hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Sections 6.1(a)(i), 6.1(a)(ii) and 4.1 or (ii) any Default or Event of Default of which the Trustee shall have received written notification in the manner set for in this Indenture, or an officer in the corporate trust administration of the Trustee shall have obtained actual knowledge. (8) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee may, in its discretion, make such further inquiry or investigation into such facts or matters as it may see fit. (1) Section 1.57 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as defined in the TIA) it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 1.58 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 1.59 Notice of Defaults Agreement. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice in the manner and to the extent provided by Section 313(c) of the TIA of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 1.60 Reports by Trustee to Holders of the Notes. (1) Within 60 days after each March 15 beginning with the March 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA 313(a) (but if no event described in TIA 313(a) has occurred within the 12 months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA 313(c). (2) A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 1.61 Compensation and Indemnity. (1) The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (2) The Company shall indemnify the Trustee against any and all losses, liabilities or expenses (including reasonable attorneys' fees) incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.7) and defending itself against any claim (whether asserted by the Company or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, bad faith or willful misconduct. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. (3) The obligations of the Company under this Section 7.7 shall survive the satisfaction and discharge of this Indenture. (4) To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes; provided, that nothing stated herein shall modify the rights as between the Holders of the Notes and the holders of the Senior Debt or Senior Debt of the Guarantors, as applicable, as set forth in Article XI hereof. Such Lien shall survive the satisfaction and discharge of this Indenture. (5) When the Trustee incurs expenses or renders services after an Event of Default specified in Sections 6.1(a)(vii) or 6.1(a)(viii) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. (6) The Trustee shall comply with the provisions of TIA 313(b)(2) to the extent applicable. Section 1.62 Replacement of Trustee. (1) A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.8. (2) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10 hereof; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. (3) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. (4) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. (5) If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (6) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided, that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the Company's obligations under Section 7.7 hereof shall continue for the benefit of the retiring Trustee. Section 1.63 Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 1.64 Eligibility; Disqualification. (1) There shall at all times be a Trustee hereunder that is a corporation or trust company (or a member of a bank holding company) organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has (or the bank holding company of which it is a member has) a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. (2) This Indenture shall always have a Trustee who satisfies the requirements of TIA 310(a)(1), (2) and (5). The Trustee is subject to TIA 310(b). Section 1.65 Preferential Collection of Claims against Company. The Trustee is subject to TIA 311(a), excluding any creditor relationship listed in TIA 311(b). A Trustee who has resigned or been removed shall be subject to TIA 311(a) to the extent indicated therein. ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 1.66 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII. Section 1.67 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.2, each of the Company and the Guarantors, as applicable, shall, subject to the satisfaction of the applicable conditions set forth in Section 8.4 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes and Guarantees, as applicable, on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Guarantees, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.5 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes, such Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.4 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest and Liquidated Damages, if any, on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Article II and Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith and (d) this Article VIII. Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3 hereof. Section 1.68 Covenant Defeasance. Upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3, subject to the satisfaction of the applicable conditions set forth in Section 8.4 hereof, the Company and the Guarantors shall be released from their respective obligations under Sections 4.3, 4.4, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and clause (iii) of Section 5.1 hereof and the Guarantors shall be released from their obligations under Section 10.3(b) hereof, in each case on and after the date the conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes and the Guarantees shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.1 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the satisfaction of the applicable conditions set forth in Section 8.4 hereof, (a) Sections 6.1(a)(iii) through 6.1(a)(vi) hereof shall not constitute Events of Default and (b) Sections 6.1(a)(vii) and 6.1(a)(viii) shall not constitute Events of Default as of the 91st day following the occurrence of the Company's exercise of Covenant Defeasance; provided, however, that for all other purposes as set forth herein, such Covenant Defeasance provisions shall be effective. Section 1.69 Conditions to Legal or Covenant Defeasance. (1) The following shall be the conditions to the application of either Section 8.2 or 8.3 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (1) the Company must irrevocably deposit or cause to be deposited with the Trustee, in trust, for the benefit of the Holders of the Notes, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, Liquidated Damages, if any, and interest on such Notes on the stated date for payment thereof or on the redemption date of such principal or installment of principal of, premium, if any, Liquidated Damages, if any, or interest on such Notes, and the Holders of Notes must have a valid, perfected, exclusive security interest in such trust; (2) in the case of an election under Section 8.2 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by the Internal Revenue Service, a ruling or (B) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of such Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of an election under Section 8.3 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to such Trustee confirming that the Holders of such Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit; (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under this Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (6) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of such Notes over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; and (7) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that the conditions precedent provided for in, in the case of the Officers' Certificate, clauses (i) through (vi) and, in the case of the Opinion of Counsel, clauses (i) (with respect to the validity and perfection of the security interest), (ii), (iii) and (v) of this paragraph (a) have been complied with. (2) If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of, premium, if any, and interest on the Notes when due, then the obligations of the Company and the Guarantors under this Indenture will be revived and no such defeasance shall be deemed to have occurred. Section 1.70 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. (1) Subject to Section 8.6 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest (and Liquidated Damages, if any), but such money need not be segregated from other funds except to the extent required by law. (2) The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.4 hereof or the principal and interest received in respect thereof, other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. (3) Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 1.71 Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, Liquidated Damages, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, Liquidated Damages, if any, or interest has become due and payable shall be paid to the Company on its written request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 1.72 Reinstatement. If the Trustee or Paying Agent is unable to apply any United States legal tender or U.S. Government Obligations in accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. Section 1.73 Satisfaction and Discharge. In addition to the Company's rights under Sections 8.2 and 8.3, the Company and the Guarantors may terminate all of their obligations under this Indenture (subject to Section 8.7) when: (1) either (i) all such outstanding Notes theretofore authenticated and delivered (other than Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.7) have been delivered to the Trustee for cancellation, or (ii) all such Notes not theretofore delivered to the Trustee for cancellation have become due and payable or, within one year will become due and payable or subject to redemption under Section 3.7 hereof, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest to the Stated Maturity of the Notes; (2) the Company has paid all sums payable hereunder; (3) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be; (4) the Holders have a valid, perfected, exclusive security interest in such trust; and (5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with, and that such satisfaction and discharge will not result in a breach or violation of, or constitute a Default under, this Indenture or any other material instrument to which the Company, any Guarantors or any of their Subsidiaries is a party or by which it or their property is bound. (1) ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER Section 1.74 Without Consent of Holders of Notes. (1) Notwithstanding Section 9.2 of this Indenture, the Company, any Guarantor and the Trustee may amend or supplement this Indenture, the Notes or any Guarantee, without the consent of any Holder of a Note: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company's obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Article V hereof; (4) to provide for additional Guarantors as set forth in Section 10.4 or for the release or assumption of a Guarantee in compliance with this Indenture; (5) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the rights hereunder of any Holder; (6) to comply with the provisions of the Depositary, Euroclear or Cedel or the Trustee with respect to the provisions of this Indenture or the Notes relating to transfers and exchanges of Notes or beneficial interests therein; or (7) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. (2) Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Company in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise. Section 1.75 With Consent of Holders of Notes. (1) Except as expressly stated otherwise in this Section 9.2, and subject to Sections 6.4 and 6.7 hereof, the Company, any Guarantor and the Trustee may amend or supplement this Indenture, the Notes and the Guarantees, with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes); provided, that no such modification may, without the consent of Holders of at least 66_% in aggregate principal amount of Notes at the time outstanding, modify the provisions (including the defined terms used therein) of Section 4.13 in a manner adverse to the Holders; and provided, further, that no such modification may, without the consent of each Holder affected thereby (1) change the Stated Maturity on any Note, or reduce the principal amount thereof or the rate (or extend the time for payment) of interest thereon or any premium payable upon the redemption thereof at the Company's option, or change the place of payment where, or the coin or currency in which, any Note or any premium or the interest thereon (and Liquidated Damages, if any) is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or in the case of redemption at the Company's option, on or after the Redemption Date), or, after the applicable Change of Control or Asset Sale occurs, reduce the corresponding Change of Control Purchase Price or the Asset Sale Offer Price or alter the provisions (including the defined terms used herein) of Article III of this Indenture in a manner adverse to the Holders; or (2) reduce the percentage in principal amount of the outstanding Notes, the consent of whose Holders is required for any such amendment, supplemental indenture or waiver provided for in this Indenture; or (3) modify any of the waiver provisions, except to increase any required percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected thereby. (2) In connection with any amendment, supplement or waiver under this Article IX, the Company may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, consideration for such Holder's consent to such amendment, supplement or waiver. (3) Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.6 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental indenture unless such amended or supplemental indenture adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture. (4) It shall not be necessary for the consent of the Holders of Notes under this Section 9.2 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. (5) After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. (1) Section 1.76 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental Indenture that complies with the TIA as then in effect. Section 1.77 Revocation and Effect of Consents. (1) Until an amendment, supplement or waiver becomes effective (as determined by the Company and which may be prior to any such amendment, supplement or waiver becoming operative), a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same Indebtedness as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective (as determined by the Company). (2) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which record date shall be the date so fixed by the Company notwithstanding the provisions of the TIA. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date, and only those Persons (or their duly designated proxies), shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. (3) After an amendment, supplement or waiver becomes effective, it shall bind every Holder unless it makes a change described in any of clauses (a)(i) through (a)(iii) of Section 9.2 hereof, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note; provided, that any such waiver shall not impair or affect the right of any Holder to receive payment of principal and premium of and interest (and Liquidated Damages, if any) on a Note, on or after the respective dates set for such amounts to become due and payable expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates. Section 1.78 Notation on or Exchange of Notes. (1) The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. (2) Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 1.79 Trustee to Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. In executing any amendment, supplement or waiver, the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive and (subject to Section 7.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amendment, supplement or waiver is authorized or permitted by this Indenture. ARTICLE X GUARANTEES Section 1.80 Guarantees. (1) Subject to the provisions of this Article X, and in consideration of good and valuable consideration, the receipt of and sufficiency of which are hereby acknowledged, each Guarantor that from time to time shall be required to execute a supplemental indenture in accordance with Section 10.4 hereof, jointly and severally, if any, to the fullest extent permitted under applicable law, irrevocably and unconditionally guarantees, as to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, that: (i) the principal of, and premium and interest and Liquidated Damages, if any, on the Notes shall be duly and punctually paid in full when due, whether at maturity, by acceleration, call for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or otherwise, and interest on overdue principal, and premium, if any, and (to the extent permitted by law) interest on any interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee hereunder or under the Notes (including fees, expenses or other) shall be promptly paid in full or performed, all in accordance with the terms hereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, call for redemption, upon a Change of Control, upon an Asset Sale Offer or otherwise (collectively, the "Guarantee Obligations"). Failing payment when due of any Guarantee Obligation or failing performance of any other obligation of the Company to the Holders, for whatever reason, each Guarantor shall be obligated to pay, or to perform or to cause the performance of, the same immediately and before the failure to so pay becomes an Event of Default. An Event of Default under this Indenture or the Notes shall constitute an event of default under the Guarantee, and shall entitle the Trustee or the Holders of Notes to accelerate the Guarantee Obligations of each Guarantor hereunder in the same manner and to the same extent as the Obligations of the Company. (2) Each Guarantor hereby agrees that, to the fullest extent permitted under applicable law, its Guarantee Obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any thereof, the entry of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby, to the fullest extent permitted under applicable law, waives and relinquishes, (i) any right to require the Trustee, the Holders or the Company (each, a "Benefitted Party") to proceed against the Company, the Subsidiaries or any other Person or to proceed against or exhaust any security held by a Benefitted Party at any time or to pursue any other remedy in any secured party's power before proceeding against the Guarantors; (ii) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of a Benefitted Party to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons; (iii) demand, protest and notice of any kind (except as expressly required by this Indenture), including but not limited to notice of the existence, creation or incurring of any new or additional Indebtedness or obligation or of any action or non-action on the part of the Guarantors, the Company, the Subsidiaries, any Benefitted Party, any creditor of the Guarantors, the Company or the Subsidiaries or on the part of any other Person whomsoever in connection with any obligations the performance of which are hereby guaranteed; (vi) any defense based upon an election of remedies by a Benefitted Party, including but not limited to an election to proceed against the Guarantors for reimbursement; (v) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (vi) any defense arising because of a Benefitted Party's election, in any proceeding instituted under the Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy Code; and (vii) any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. The Guarantors hereby covenant that, except as otherwise provided therein, the Guarantees shall not be discharged except by payment in full of all Guarantee Obligations, including the principal, premium, if any, and interest on the Notes and all other costs provided for under this Indenture or as provided in Section 8.1. (3) If any Holder or the Trustee is required by any court or otherwise to return to either the Company or the Guarantors, or any trustee or similar official acting in relation to either the Company or the Guarantors, any amount paid by the Company or the Guarantors to the Trustee or such Holder, the Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. Each of the Guarantors agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guarantee Obligations hereby until payment in full of all such obligations guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes hereof, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantee Obligations, and (ii) in the event of any acceleration of such obligations as provided in Article VI hereof, such Guarantee Obligations (whether or not due and payable), shall forthwith become due and payable by such Guarantor for the purpose of the Guarantee. Section 1.81 Execution and Delivery of Guarantees. (1) To evidence the Guarantees set forth in Section 10.1 hereof, each of the Guarantors agrees that a supplemental indenture substantially in the form of Exhibit E hereto shall be executed on behalf of each of the Guarantors by an Officer of each of the Guarantors. (2) Each of the Guarantors agree that the Guarantees set forth in this Article X shall remain in full force and effect and apply to all the Notes notwithstanding any failure to endorse on each Note a notation of the Guarantees. (3) If an Officer whose facsimile signature is on a Note or a notation of Guarantee no longer holds that office at the time the Trustee authenticates the Note on which the Guarantees are endorsed, the Guarantees shall be valid nevertheless. (4) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantees set forth in this Indenture on behalf of the Guarantors. Section 1.82 Guarantors May Consolidate, etc., on Certain Terms. (1) Nothing contained in this Indenture or in the Notes shall prevent any consolidation or merger of any Guarantor with or into each other or with or into the Company. Upon any such consolidation or merger, the Subsidiary Guarantee of the Subsidiary Guarantor that does not survive the consolidation or merger shall no longer be of any force or effect. (2) Except for a merger or consolidation in which a Guarantor is sold and its Guarantee is released in compliance with the provisions of Section 10.5, no Guarantor shall consolidate or merge with or into (whether or not such Guarantor is the surviving Person) another Person unless, subject to the provisions of the following paragraph and certain other provisions of this Indenture, (i) the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee, pursuant to which such person shall unconditionally guarantee, on a senior subordinated basis, all of such Guarantor's obligations under such Guarantor's Guarantee and this Indenture on the terms set forth in this Indenture; and (ii) immediately before and immediately after giving effect to such transaction on a pro forma basis, no Default or Event of Default shall have occurred or be continuing. In case of any such consolidation or merger and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form to the Trustee, of the Guarantees endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by such Guarantor, such successor corporation shall succeed to and be substituted for such Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Guarantees had been issued at the date of the execution hereof. (3) The Trustee, subject to the provisions of Section 12.4 hereof, shall be entitled to receive an Officers' Certificate as conclusive evidence that any such consolidation or merger, and any such assumption of Guarantee Obligations, comply with the provisions of this Section 10.3. Such Officers' Certificate shall comply with the provisions of Section 12.5. Section 1.83 Future Guarantors. The Company shall not permit any Subsidiary individually or together with all other Subsidiaries that are not Guarantors to become Material Domestic Subsidiaries unless such Subsidiary and all such other Subsidiaries, if applicable, simultaneously executes a supplemental indenture to this Indenture providing for the Guarantee of the payment of the Notes by such Subsidiary or Subsidiaries, which Guarantee(s) shall be irrevocable and unconditional in respect of all principal, premium, if any, Liquidated Damages, if any, and interest on the Notes on a senior subordinated basis and shall execute a supplemental indenture substantially in the form of Exhibit E hereto. Section 1.84 Release of Guarantors. (1) Notwithstanding Section 10.3(b), upon the sale or disposition (whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or all or substantially all of its assets) to an entity which is not a Subsidiary, or the designation of a Subsidiary to become an Unrestricted Subsidiary, which transaction is otherwise in compliance with this Indenture (including, without limitation, the provisions of Section 4.12), such Guarantor shall be deemed released from its obligations under its Guarantee of the Notes. (2) Upon delivery by the Company to the Trustee of an Officer's Certificate, to the effect that such sale or other disposition or that such designation was made by the Company in accordance with the provisions of this Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any such Guarantor from its Guarantee Obligations under its Guarantee. Except as provided in Section 10.3(a), any Guarantor not released from its Guarantee Obligations under its Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article X. (3) Notwithstanding the foregoing provisions of this Article X, (i) any Guarantor whose Guarantee would otherwise be released pursuant to the provisions of this Section 10.5 may elect, at its sole discretion, by written notice to the Trustee, to maintain such Guarantee in effect notwithstanding the event or events that otherwise would cause the release of such Guarantee (which election to maintain such Guarantee in effect may be conditional or for a limited period of time), and (ii) any Subsidiary of the Company which is not a Guarantor may elect, at its sole discretion, by written notice to the Trustee, to become a Guarantor (which election may be conditional or for a limited period of time). Section 1.85 Limitation of Guarantor's Liability; Certain Bankruptcy Events. (1) Each Guarantor, and by its acceptance hereof each Holder, hereby confirms that it is the intention of all such parties that the Guarantee Obligation of such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law. To effectuate the foregoing intention, the Holders and such Guarantor hereby irrevocably agree that the Guarantee Obligations of such Guarantor under this Article X shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the Guarantee Obligations of such other Guarantor under this Article X, result in the Guarantee Obligations of such Guarantor under the Guarantee of such Guarantor not constituting a fraudulent transfer or conveyance. (2) Each Guarantor hereby covenants and agrees, to the fullest extent that it may do so under applicable law, that in the event of the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, such Guarantor shall not file (or join in any filing of), or otherwise seek to participate in the filing of, any motion or request seeking to stay or to prohibit (even temporarily) execution on the Guarantee Obligations and hereby waives and agrees not to take the benefit of any such stay of execution, whether under Section 362 or 105 of the Bankruptcy Law or otherwise. Section 1.86 Application of Certain Terms and Provisions to the Guarantors. (1) For purposes of any provision of this Indenture which provides for the delivery by any Guarantor of an Officers' Certificate and/or an Opinion of Counsel, the definitions of such terms in Section 1.1 shall apply to such Guarantor as if references therein to the Company were references to such Guarantor. (2) Any request, direction, order or demand which by any provision of this Indenture is to be made by any Guarantor, shall be sufficient if evidenced as described in Section 12.2 as if references therein to the Company were references to such Guarantor. (3) Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Notes to or on any Guarantor may be given or served as described in Section 12.2 as if references therein to the Company were references to such Guarantor. (1) (4) Upon any demand, request or application by any Guarantor to the Trustee to take any action under this Indenture, such Guarantor shall furnish to the Trustee such certificates and opinions as are required in Section 12.4 hereof as if all references therein to the Company were references to such Guarantor. Section 1.87 Subordination of Guarantees. (1) The obligations of each Guarantor under its Guarantee pursuant to this Article X is subordinated in right of payment to the prior payment in full in cash of all Senior Debt of such Guarantor on the same basis as the Notes are subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of Notes pursuant to this Indenture, including Article XI hereof. In the event that the Trustee receives any Guarantor payment at a time when an officer of the corporate trust administration of the Trustee has actual knowledge that such payment is prohibited by the foregoing sentence, such Guarantor payment shall be paid over and delivered to the holders of the Senior Debt of such Guarantor remaining unpaid, to the extent necessary to pay in full all such Senior Debt. In the event that a Holder receives any Guarantor payment at a time when such payment is prohibited by the foregoing sentence, such Guarantor payment shall be paid over and delivered to the holders of the Senior Debt of such Guarantor remaining unpaid, to the extent necessary to pay in full all such Senior Debt. (2) Each Holder of a Note by its acceptance thereof (i) acknowledge that as of the Issue Date there are no Guarantors, (ii) agrees to and shall be bound by the provisions of this Section 10.8, (iii) authorizes and directs the Trustee on the Holder's behalf to take such action as may be necessary and appropriate to effectuate the subordination so provided, and (vi) appoints the Trustee as the Holder's attorney-in-fact for any and all such purposes. ARTICLE X SUBORDINATION Section 1.88 Notes Subordinate to Senior Debt. (1) The Company, the Guarantors and each Holder, by its acceptance of the Notes, agree that (i) the payment of the principal of and interest on the Notes and (ii) any other payment in respect of the Notes, including on account of the acquisition or redemption of the Notes by the Company and the Guarantors (including, without limitation, pursuant to Sections 4.12 and 4.13 and Article X), as applicable, is subordinated, to the extent and in the manner provided in this Article XI, to the prior payment in full in cash of all Senior Debt and that these subordination provisions are for the benefit of the holders of Senior Debt. (2) This Article XI shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt and such holders are made obligees hereunder and any one or more of them may enforce such provisions. Section 1.89 No Payment on Notes in Certain Circumstances. (1) No payment (by set-off or otherwise) shall be made by or on behalf of the Company or the Guarantors, as applicable, on account of the principal of, premium, if any, or interest (or Liquidated Damages, if any) on the Notes, or on account of any other obligation for the payment of money due in respect of the Notes, or on account of the redemption provisions of the Notes (including any repurchases of Notes), for cash or property (other than payments made with Junior Securities or from the trust described in Sections 8.2 and 8.3 hereof), in the event of a default in the payment of any principal of, premium, if any, or interest on, Designated Senior Debt of the Company or such Guarantor when it becomes due and payable, whether at maturity, or at a date fixed for prepayment or by declaration of acceleration or otherwise (a "Payment Default"), unless and until such Payment Default has been cured or waived or otherwise has ceased to exist. (2) Upon (i) the happening of an event of default other than a Payment Default that permits the holders of Designated Senior Debt or any representative thereof to declare such Designated Senior Debt to be due and payable (a "Non-payment Default") and (ii) written notice of such event of default specifically referring to this Section 11.2 given to the Company and the Trustee by the Representative under the Credit Agreement (a "Payment Notice"), then, unless and until such event of default has been cured or waived or otherwise has ceased to exist, no payment (by set-off or otherwise) may be made by or on behalf of the Company or any Guarantor, as applicable, including the principal of, premium, if any, or interest on the Notes (or Liquidated Damages, if any), or on account of the redemption provisions of the Notes (including any repurchases of any of the Notes), in any such case, other than payments made with Junior Securities or from the trust described in Sections 8.2 and 8.3 hereof. Notwithstanding the foregoing, unless the Designated Senior Debt in respect of which such event of default exists has been declared due and payable in its entirety within 179 days after the Payment Notice is delivered as set forth above (the "Payment Blockage Period") (and such declaration has not been rescinded or waived), at the end of the Payment Blockage Period, the Company and the Guarantors shall be required to pay all sums not paid to the Holders of the Notes during the Payment Blockage Period due to the foregoing prohibitions and to resume all other payments as and when due on the Notes. Any number of Payment Notices may be given; provided, that (i) not more than one Payment Notice shall be given within a period of any 360 consecutive days, and (ii) no Non-payment Default that existed upon the date of such Payment Notice or the commencement of such Payment Blockage Period (whether or not such event of default is on the same issue of Senior Debt) shall be made the basis for the commencement of any other Payment Blockage Period (unless such default shall have been cured or waived for a period of not less than 120 days). (3) In furtherance of the provisions of Section 11.1, in the event that, notwithstanding the foregoing provisions of this Section 11.2 and the provisions of Section 11.3, any payment or distribution of assets of the Company or any Guarantor (other than Junior Securities or from the trust described in Sections 8.2 and 8.3 hereof) shall be received by the Trustee or the Holders at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment or distribution is prohibited by the foregoing provisions of this Section 11.2 or the provisions of Section 11.3, such payment or distribution shall be held in trust for the benefit of the holders of such Senior Debt, and shall be paid or delivered by the Trustee or such Holders, as the case may be, to the holders of such Senior Debt remaining unpaid or unprovided for or to their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Debt may have been issued, ratably according to the aggregate principal amounts remaining unpaid on account of such Senior Debt held or represented by each, for application to the payment of all such Senior Debt remaining unpaid, to the extent necessary to pay or to provide for the payment of all such Senior Debt in full in cash or Cash Equivalents or otherwise to the extent holders accept satisfaction of amounts due by settlement in other than cash or Cash Equivalents after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. Section 1.90 Notes Subordinate to Prior Payment of All Senior Debt on Dissolution, Liquidation or Reorganization. Upon any distribution of the assets of the Company upon any dissolution, winding up, total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar proceeding or upon assignment for the benefit of creditors or any marshalling of assets or liabilities: (1) the holders of all Senior Debt shall first be entitled to receive payment in full in cash or Cash Equivalents (or have such payment duly provided for in accordance with the terms thereof) or otherwise to the extent holders accept satisfaction of amounts due by settlement in other than cash or Cash Equivalents before the Holders are entitled to receive any payment on account of any Obligation in respect of the Notes, including the principal of, premium, if any, and interest on the Notes or Liquidated Damages, if any, pursuant to the Registration Rights Agreement (other than Junior Securities); and (2) any payment or distribution of assets of the Company or any Guarantor of any kind or character from any source, whether in cash, property or securities (other than Junior Securities) to which the Holders or the Trustee on behalf of the Holders would be entitled (by set-off or otherwise), except for the subordination provisions contained in this Indenture, shall be paid by the liquidating trustee or agent or other person making such a payment or distribution directly to the holders of such Senior Debt or their representative to the extent necessary to make payment in full (or have such payment duly provided for to the satisfaction of the Holders of the Senior Debt) on all such Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Debt. Section 1.91 Holders to be Subrogated to Rights of Holders of Senior Debt. Subject to the payment in full of all Senior Debt as provided herein, the Holders of Notes shall be subrogated to the rights of the holders of such Senior Debt to receive payments or distributions of assets of the Company and any Guarantor applicable to the Senior Debt until all amounts owing on the Notes shall be paid in full, and for the purpose of such subrogation no such payments or distributions to the holders of such Senior Debt by or on behalf of the Company or any Guarantor, or by or on behalf of the Holders by virtue of this Article XI, which otherwise would have been made to the Holders shall, as between the Company or any Guarantor and the Holders, be deemed to be payment by the Company or any Guarantor or on account of such Senior Debt, it being understood that the provisions of this Article XI are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of such Senior Debt, on the other hand. Section 1.92 Obligations of the Company and the Guarantors Unconditional. Nothing contained in this Article XI or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Company and any Guarantor and the Holders, the obligation of each such Person, which is absolute and unconditional, to pay to the Holders the principal of, premium, if any, and interest on (or, if applicable, Liquidated Damages, if any) the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company and the Guarantors other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon any default under this Indenture, subject to the rights, if any, under this Article XI, of the holders of Senior Debt, including, without limitation, their right to receive any cash, property or Notes of the Company and any Guarantor received upon the exercise of any such remedy. Notwithstanding anything to the contrary in this Article XI or elsewhere in this Indenture or in the Notes, upon any distribution of assets of the Company and the Guarantors referred to in this Article XI, the Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI so long as such court has been apprised of the provisions of, or the order, decree or certificate makes reference to, the provisions of this Article XI. Nothing in this Article XI shall apply to the claims of, or payments to, the Trustee under or pursuant to Section 7.7. Section 1.93 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee unless and until a corporate trust officer of the Trustee or any Paying Agent shall have received at the addresses for notices set forth in Section 12.2, no later than two Business Days prior to such payment written notice thereof specifically referring to this Article XI from the Company or from one or more holders of Senior Debt or from any representative therefor and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Sections 7.1 and 7.2, shall be entitled in all respects conclusively to assume that no such fact exists. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Debt (or a representative on behalf of such holder) to establish that such notice has been given by a holder of Senior Debt or a representative on behalf of such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person who is a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XI, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment or until such time as the Trustee shall be otherwise satisfied as to the right of such Person to receive such payment. Section 1.94 Application by Trustee of Assets Deposited with It. Amounts deposited in trust with the Trustee pursuant to and in accordance with Article VIII shall be for the sole benefit of Holders and, to the extent (i) the making of such deposit by the Company shall not be in contravention of any term or provisions the Credit Agreement or other Senior Debt and (ii) allocated for the payment of Notes, shall not be subject to the subordination provisions of this Article XI. Otherwise, any deposit of assets with the Trustee or the Paying Agent (whether or not in trust) for the payment of principal of or interest on any Notes shall be subject to the provisions of Sections 11.1, 11.2, 11.3 and 11.4; provided, that, if prior to one Business Day preceding the date on which by the terms of this Indenture any such assets may become distributable for any purpose (including without limitation, the payment of either principal of or interest on any Security) the Trustee or such Paying Agent shall not have received with respect to such assets the written notice provided for in Section 11.6, then the Trustee or such Paying Agent shall have full power and authority to receive such assets and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date. Section 1.95 Subordination Rights Not Impaired by Acts or Omissions of the Company, the Guarantors or Holders of Senior Debt. No right of any present or future holders of any Senior Debt to enforce subordination provisions contained in this Article XI shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company or any Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Debt may extend, renew, modify or amend the terms of the Senior Debt or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company and the Guarantors, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders. The subordination provisions contained in this Indenture are for the benefit of the holders from time to time of Senior Debt and may not be rescinded, cancelled, amended or modified in any way other than any amendment or modification that would not adversely affect the rights of any holder of Senior Debt or any amendment or modification that is consented to by each holder of Senior Debt that would be adversely affected thereby. The subordination provisions hereof shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of the Senior Debt upon the insolvency, bankruptcy, or reorganization of the Company or any Guarantor, or otherwise, all as though such payment has not been made. Section 1.96 Holders Authorize Trustee To Effectuate Subordination of Notes. Each Holder of the Notes by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provisions contained in this Article XI and to protect the rights of the Holders pursuant to this Indenture, and appoints the Trustee his attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company or any Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company or any Guarantor), the immediate filing of a claim for the unpaid balance of his Notes in the form required in said proceedings and cause said claim to be approved. In the event of any liquidation or reorganization of the Company or any Guarantor in bankruptcy, insolvency, receivership or similar proceeding, if the Holders of the Notes (or the Trustee on their behalf) have not filed any claim, proof of claim, or other instrument of similar character necessary to enforce the obligations of the Company or any Guarantor in respect of the Notes at least thirty (30) days before the expiration of the time to file the same, then in such event, but only in such event, the Representatives under the Credit Agreement or the holders of an aggregate of at least $5,000,000 principal amount outstanding of any other Senior Debt or a representative on their behalf may, as an attorney-in-fact for such Holders, file any claim, proof of claim, or other instrument of similar character on behalf of such Holders. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their representative to vote in respect of the claim of any Holder in any such proceeding. As a condition to taking any action by the Trustee pursuant to this Section 11.9, the Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred thereby. Section 1.97 Rights of Trustee to Hold Senior Debt. The Trustee shall be entitled to all of the rights set forth in this Article XI in respect of any Senior Debt at any time held by it to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 1.98 Article XI Not to Prevent Events of Default. The failure to make a payment on account of principal of, premium, if any, or interest (or Liquidated Damages, if any) on the Notes by reason of any provision of this Article XI shall not be construed as preventing the occurrence of a Default or an Event of Default under Section 6.1 or in any way limit the rights of the Trustee or any Holder to pursue any other rights or remedies with respect to the Notes. Section 1.99 No Fiduciary Duty of Trustee to Holders of Senior Debt. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders (other than for its willful misconduct or negligence) if it shall in good faith mistakenly pay over or distribute to the Holders of Notes or the Company, any Guarantor or any other Person, cash, property or Notes to which any holders of Senior Debt shall be entitled by virtue of this Article XI or otherwise. Nothing in this Section 11.12 shall affect the obligation of any other such Person to hold such payment for the benefit of, and to pay such payment over to, the holders of Senior Debt or their representative. In the event of any conflict between the fiduciary duty of the Trustee to the Holders of Notes and any duty to the holders of Senior Debt, the Trustee is expressly authorized to resolve such conflict in favor of the Holders. Section 1.100 Notice by Company. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article XI, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt as provided in this Article XI. ARTICLE XI MISCELLANEOUS Section 1.101 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by the TIA, the imposed duties shall control. Section 1.102 Notices. (1) Any notice or communication by the Company or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company: Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Telephone No.: (510) 741-7000 Telecopier No.: (510) 741-5815 Attention: Chief Financial Officer With a copy (which shall not constitute notice) to: Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, California 94111 Telephone No.: (415) 391-0600 Telecopier No.: (415) 395-8095 Attention: Tracy K. Edmonson, Esq. If to the Trustee: Norwest Bank Minnesota, N.A. 333 South Grand Avenue, Suite 740 Los Angeles, California 90071 Telephone No.: (213) 253-6320 Telecopier No.: (213) 680-1827 Attention: Jeanie Mar (2) The Company or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications; provided, that until such time, all notices under this Indenture to the Trustee shall be sent to both of the Trustee's addresses set forth above. (3) All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. (4) Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. (5) If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. (6) If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. Section 1.103 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, any Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA 312(c). Section 1.104 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee, if required by the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.5 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.5 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants, if any, have been satisfied. Section 1.105 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA 314(a)(4)) shall comply with the provisions of TIA 314(e) and shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied; provided, however, that with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate or certificate of public officials. Section 1.106 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 1.107 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder (direct or indirect) of the Company or the Guarantors (or any such successor entity), as such, shall have any liability for any Obligations of the Company or the Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of, such Obligations or their creation, except in their capacity as an obligor or Guarantor of the Notes in accordance with this Indenture. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 1.108 Governing Law. (1) THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (2) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION. Section 1.109 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 1.110 Successors. All agreements of the Company and the Guarantors in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 1.111 Severability. In case any one or more of the provisions of this Indenture or in the Notes or in the Guarantees shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. Section 1.112 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 1.113 Table of Contents, Headings, etc. The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] SIGNATURES IN WITNESS WHEREOF, the parties hereto have executed this Indenture as of the date first written above. THE COMPANY: BIO-RAD LABORATORIES, INC. By: /s/ Thomas C. Chesterman Name: Thomas C. Chesterman Title:Vice President & Chief Financial Officer By: /s/ Ronald W. Hutton Name: Ronald W. Hutton Title:Treasuer THE TRUSTEE: NORWEST BANK MINNESOTA, N.A. By: /s/Jeanie Mar Name: Jeanie Mar Title:Vice President EXHIBIT A [FORM OF NOTE] BIO-RAD LABORATORIES, INC. 11-5/8% [SERIES A] [SERIES B]1 SENIOR SUBORDINATED NOTE DUE 2007 No. CUSIP: __________ $________________ Bio-Rad Laboratories, Inc., a Delaware corporation (hereinafter called the "Company" which term includes any successors under this Indenture hereinafter referred to), for value received, hereby promises to pay to _________________________, or registered assigns, the principal sum of _________________________ Dollars, on February 15, 2007. Interest Payment Dates: February 15 and August 15; commencing August 15, 2000. Record Dates: February 1 and August 1. Reference is made to the further provisions of this Note on the reverse side, which will, for all purposes, have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. BIO-RAD LABORATORIES, INC., a Delaware corporation By: Name: Title: By: Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION: This is one of the Notes described in the within-mentioned Indenture. NORWEST BANK MINNESOTA, N.A., as Trustee By: Authorized Signatory Dated: (Back of Note) 11-5/8% [Series A] [Series B]2 Senior Subordinated Notes due 2007 [THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]3 [UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]4 [THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS NOTE.]5 THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT, IN CONNECTION WITH EXEMPT RESALES OF THE NOTES BY WARBURG DILLON READ LLC AND ABN AMRO INCORPORATED (THE "INITIAL PURCHASERS"), (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT, IN CONNECTION WITH RESALES AND TRANSFERS OF THE NOTES OTHER THAN EXEMPT RESALES OF THE NOTES BY THE INITIAL PURCHASERS, IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S. PERSON" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]6 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. Interest. Bio-Rad Laboratories, Inc., a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 11_% per annum until maturity and shall pay the Liquidated Damages, if any, payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages, if any, semi-annually on February 15 and August 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on this Note will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a Record Date (defined below) referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be August 15, 2000. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if any, (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on this Note (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the February 1 or August 1 next preceding the Interest Payment Date (each a "Record Date"), even if such Notes are cancelled after such Record Date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture (as defined below) with respect to defaulted interest. This Note will be payable as to principal, premium, interest and Liquidated Damages, if any, at the office or agency of the Company maintained within the City and State of New York for such purpose, or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds to an account within the United States will be required with respect to principal of and interest, premium and Liquidated Damages, if any, on all Global Notes. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. Paying Agent and Registrar. Initially, Norwest Bank Minnesota, N.A., the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. Indenture. The Company issued this Note under an Indenture dated as of February 17, 2000 ("Indenture") between the Company and the Trustee. The terms of this Note include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code 77aaa-77bbbb). This Note is subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Notes will be limited in aggregate principal amount to $150,000,000. 5. Optional Redemption. Except as set forth below, the Notes shall not be redeemable by the Company. (1) The Notes shall be redeemable for cash at the option of the Company, in whole or in part, at any time prior to February 15, 2004, upon not less than 30 days nor more than 60 days prior notice mailed by first class mail to each Holder at its last registered address, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest and Liquidated Damages, if any, thereon to, the Redemption Date. (2) The Notes shall be redeemable for cash at the option of the Company, in whole or in part, at any time on or after February 15, 2004, upon not less than 30 days nor more than 60 days prior notice mailed by first class mail to each Holder at its last registered address, at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the 12-month period commencing February 15 of the years indicated below, in each case (subject to the right of Holders of record on a Record Date to receive the corresponding interest due (and the corresponding Liquidated Damages, if any) on the corresponding Interest Payment Date that is on or prior to such redemption date) together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date: Year Percentage 2004 105.813% 2005 102.906% 2006 100.000% 2007 and thereafter 100.000% (3) Notwithstanding the provisions of paragraph (a), at any time or from time to time prior to February 15, 2003, upon any sale of the common stock of the Company, up to 35% of the aggregate principal amount of the Notes originally issued under this Indenture may be redeemed at the option of the Company within 90 days of such sale, on not less than 30 days, but not more than 60 days, prior notice to each Holder of the Notes to be redeemed, with cash from the Net Cash Proceeds of such sale, at a redemption price equal to 111.625% of the principal amount thereof (subject to the right of Holders of record on a Record Date to receive the corresponding interest (and the corresponding Liquidated Damages, if any) due on the Interest Payment Date that is on or prior to such redemption date) together with accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date; provided, that immediately following such redemption not less than 65% of the aggregate principal amount of the Notes originally issued pursuant to this Indenture remain outstanding. (4) Notice of redemption will be mailed by first class mail at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in integral multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption unless the Company defaults in such payments due on the redemption date. 6. Repurchase of Notes at the Option of the Holder upon a Change of Control. In the event that a Change of Control has occurred, each Holder of Notes will have the right, at such Holder's option, pursuant to an offer (subject only to conditions required by applicable law, if any) by the Company, to require the Company to repurchase all or any part of such Holder's Notes (provided, that the principal amount of such Notes must be $1,000 or an integral multiple thereof) on a date (the ''Change of Control Purchase Date'') that is no later than 45 Business Days after the occurrence of such Change of Control, at a cash price equal to 101% of the principal amount thereof, together with accrued and unpaid interest and Liquidated Damages, if any, to the Change of Control Purchase Date. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a Record Date and the corresponding Interest Payment Date. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 9. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture, the Notes or the Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing Default or compliance with any provision of the Indenture, the Notes or the Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes; provided, that no such modification may, without the consent of Holders of at least 66_% in aggregate principal amount of Notes at the time outstanding, modify the provisions (including the defined terms used therein) of Section 4.13 of the Indenture in a manner adverse to the Holders. Without the consent of any Holder of a Note, the Indenture, the Notes or the Guarantees may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders of the Notes in case of a merger or consolidation, to provide for additional Guarantors as set forth in the Indenture or for the release or assumption of Guarantees in compliance with the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes (including the addition of any Guarantor) or that does not adversely affect the rights under the Indenture of any such Holder, to comply with the provisions of the Depositary, Euroclear or Cedel or the Trustee with respect to the provisions of the Indenture or the Notes relating to transfers and exchanges of Notes or beneficial interests therein, or to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA. 10. Defaults and Remedies. The Indenture provides that each of the following constitutes an Event of Default: (a) the failure by the Company to pay any installment of interest (or Liquidated Damages, if any) on the Notes as and when the same becomes due and payable and the continuance of any such failure for 30 days; (b) the failure by the Company to pay all or any part of the principal, or premium, if any, on the Notes when and as the same becomes due and payable at maturity, redemption, by acceleration or otherwise, including, without limitation, payment of the Change of Control Purchase Price (except as provided in Section 4.13 of the Indenture), or the Asset Sale Offer Price, on Notes validly tendered and not properly withdrawn pursuant to a Change of Control Offer, or Asset Sale Offer, as applicable (as set forth in Sections 4.13 and 4.12 of the Indenture); (c) the failure by the Company or any of its Subsidiaries to observe or perform any other covenant or agreement contained in the Notes or the Indenture and, except for the provisions under Sections 4.12, 4.13, 4.15 and 5.1 of the Indenture, the continuance of such failure for a period of 30 days after written notice is given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes outstanding; (d) a default in the Indebtedness of the Company or any of its Subsidiaries with an aggregate amount outstanding in excess of $10,000,000 (i) resulting from the failure to pay principal at maturity or (ii) as a result of which the maturity of such Indebtedness has been accelerated prior to its stated maturity; (e) final unsatisfied judgments not covered by insurance aggregating in excess of $10,000,000, at any one time rendered against the Company or any of its Subsidiaries and not stayed, bonded or discharged within 60 days; (f) any Guarantee of a Guarantor that is a Significant Subsidiary (or group of Guarantors that on a combined basis would constitute a Significant Subsidiary) ceases to be in full force and effect or becomes unenforceable or invalid or is declared null and void (other than in accordance with the terms of the Guarantee) or any Guarantor that is a Significant Subsidiary (or group of Guarantors that on a combined basis would constitute a Significant Subsidiary) denies or disaffirms its Obligations under its Guarantee; (g) a court having jurisdiction in the premises enters a decree or order for (i) relief in respect of the Company or any Significant Subsidiary in an involuntary case under any applicable Bankruptcy Law now or hereafter in effect, (ii) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (iii) the winding up or liquidation of the affairs of the Company or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (h) the Company or any Significant Subsidiary (i) commences a voluntary case under any applicable Bankruptcy Law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (ii) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (iii) effects any general assignment for benefit of creditors. 11. Subordination. The Notes and the Guarantees are subordinated in right of payment, to the extent and in the manner provided in Article XI and Section 10.8 of the Indenture, to the prior payment in full of all Senior Debt. The Company agrees, and each Holder by accepting a Note consents and agrees, to the subordination provided in the Indenture and authorizes the Trustee to give it effect. 12. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 13. No Recourse Against Others. No past, present or future director, officer, employee, incorporator or stockholder (direct or indirect) of the Company or the Guarantors (or any such successor entity), as such, shall have any liability for any Obligations of the Company or the Guarantors under the Notes, the Guarantees or this Indenture or for any claim based on, in respect of, or by reason of, such Obligations or their creation, except in their capacity as an obligor or Guarantor of the Notes in accordance with this Indenture. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 14. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 15. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 16. Additional Rights of Holders of Transfer Restricted Notes.7 In addition to the rights provided to Holders of Notes under the Indenture, Holders of Transferred Restricted Notes shall have all the rights set forth in the Registration Rights Agreement dated as of the date of the Indenture, between the Company and the Initial Purchasers (the "Registration Rights Agreement"). 17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon, and any such redemption shall not be affected by any defect in or omission of such numbers. 18. Notation of Guarantee. As more fully set forth in the Indenture, the Company's obligations under the Notes shall be guaranteed, to the extent permitted by law, on a senior subordinated basis by each of the Guarantors that from time to time shall be required to execute a supplemental indenture in accordance with the provisions of Section 10.4 of the Indenture. 19. Governing Law. (a) THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Attention: Chief Financial Officer Telephone No.: (510) 741-7000 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to (Insert assignee's soc. sec. or tax I.D. no.) (Print or type assignee's name, address and zip code) and irrevocably appoint to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Your Signature: (Sign exactly as your name appears on the face of this Note) Signature Guarantee* *NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (INSP.); (iii) The Stock Exchange Medallion Program (SEEP); or (iv) in such other guarantee program acceptable to the Trustee. Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Company pursuant to Section 4.12 or 4.13 of the Indenture, check the box below: Section 4.12 Section 4.13 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.12 or Section 4.13 of the Indenture, state the amount you elect to have purchased (in denominations of $1,000 only, except if you have elected to have all of your Notes purchased): $___________ Date: Your Signature: (Sign exactly as your name appears on the face of this Note) Tax Identification No.:______________ Signature Guarantee* *NOTICE: The Signature must be guaranteed by an Institution which is a member of one of the following recognized signature Guarantee Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (INSP.); (iii) The Stock Exchange Medallion Program (SEEP); or (iv) in such other guarantee program acceptable to the Trustee. SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Notes or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made: Principal Amount of Amount of Amount of this Signature decrease Increase Global Note of authorized in Principal in Principal following officer of Date of s Amount of this Amount of this such decrease Trustee or Note Exchange Global Note Global Note (or increase) Custodian EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Attention: Chief Financial Officer Norwest Bank Minnesota, N.A. 333 South Grand Avenue, Suite 740 Los Angeles, California 90071 Attention: Jeanie Mar Re: 11-5/8% Senior Subordinated Notes due 2007 Dear Sirs: Reference is hereby made to the Indenture, dated as of February 17, 2000 (the "Indenture"), between Bio-Rad Laboratories, Inc., as issuer (the "Company"), and Norwest Bank, Minnesota, N.A., as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any State of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser) and the interest transferred will be held immediately thereafter through Euroclear or Cedel. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. Check and complete if Transferee will take delivery of a beneficial interest in a Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any State of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) Such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) Such Transfer is being effected to the Company or a subsidiary thereof; or (c) Such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in a form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification and provided to the Company, which has confirmed its acceptability), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Definitive Notes and in the Indenture and the Securities Act. 4. Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note. (a) Check if Transfer is Pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture and the Securities Act. (b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture and the Securities Act. (c) Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. Dated: [Insert Name of Transferor] By: Name: Title: ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) a beneficial interest in the: (i) 144A Global Note (CUSIP _______), or (ii) Regulation S Global Note (CUSIP ), or (b) a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) a beneficial interest in the: (i) 144A Global Note (CUSIP ), or (ii) Regulation S Global Note (CUSIP ), or (iii) Unrestricted Global Note (CUSIP ); or (b) a Restricted Definitive Note; or (c) an Unrestricted Definitive Note, in accordance with the terms of the Indenture. EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Attention: Chief Financial Officer Norwest Bank Minnesota, N.A. 333 South Grand Avenue, Suite 740 Los Angeles, California 90071 Attention: Jeanie Mar Re: 11-5/8% Senior Subordinated Notes due 2007 Dear Sirs: Reference is hereby made to the Indenture, dated as of February 17, 2000 (the "Indenture"), between Bio-Rad Laboratories, Inc., as issuer (the "Company") and party thereto and Norwest Bank Minnesota, N.A., as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ________________________________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________________________________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note. (a) Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any State of the United States. (b) Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any State of the United States. (c) Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any State of the United States. (d) Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any State of the United States. 2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes (a) Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the: [CHECK ONE] 144A Global Note or Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any State of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. [Insert Name of Owner] By: Name: Title: Dated: EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Attention: Chief Financial Officer Norwest Bank Minnesota, N.A. 33 South Grand Avenue, Suite 740 Los Angeles, California 90071 Attention: Jeanie Mar Re: 11-5/8% Senior Subordinated Notes due 2007 Dear Sirs: Reference is hereby made to the Indenture, dated as of February 17, 2000 (the "Indenture"), between Bio-Rad Laboratories, Inc., as issuer (the "Company") and party thereto and Norwest Bank Minnesota, N.A., as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) a beneficial interest in a Global Note, or (b) a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any Guarantor or any of their respective subsidiaries, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if the proposed transfer is in respect of an aggregate principal amount of Notes of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act, (F) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel acceptable to the Company) or (G) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note from us in a transaction meeting the requirements of clauses (A) through (F) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or beneficial interest therein acquired by us must be effected through one of the Initial Purchasers. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Dated: [Insert Name of Accredited Investor] By: Name: Title: EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSIDIARY GUA RANTORS Supplemental Indenture (this "Supplemental Indenture"), dated as of ________ __, ____, among ___________________________________, (the "Guaranteeing Subsidiary"), a subsidiary of Bio-Rad Laboratories, Inc. (or its permitted successor), a Delaware corporation (the "Company"), the Company, the Guarantors (as defined in the Indenture referred to herein) party thereto and Norwest Bank Minnesota, N.A., as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of February 17, 2000, providing for the issuance of 11_% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances Subsidiaries of the Company are required to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary shall unconditionally guarantee all of the Company's obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Subsidiary Guarantee"); and WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. Agreement to Guarantee. The Guaranteeing Subsidiary irrevocably and unconditionally guarantees the Guarantee Obligations, which include (i) the due and punctual payment of the principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes, whether at maturity, by acceleration, call for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or otherwise, the due and punctual payment of interest on the overdue principal and premium, if any, and (to the extent permitted by law) interest on any interest on the Notes, and payment of expenses, and the due and punctual performance of all other obligations of the Company, to the Holders or the Trustee all in accordance with the terms set forth in Article X of the Indenture, (ii) in case of any extension of time of payment or renewal of any Notes or any such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, call for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or otherwise, and (iii) the payment of any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee in enforcing any rights under this Guarantee. The obligations of Guaranteeing Subsidiary to the Holders and to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth in Article X of the Indenture and reference is hereby made to such Indenture for the precise terms of this Subsidiary Guarantee. No past, present or future director, officer, employee, incorporator or stockholder (direct or indirect) of the Guarantors (or any such successor entity), as such, shall have any liability for any Obligations of the Guarantors under this Subsidiary Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such Obligations or their creation, except in their capacity as an obligor or Guarantor of the Notes in accordance with the Indenture. This is a continuing Guarantee and shall remain in full force and effect and shall be binding upon the Guaranteeing Subsidiary and its successors and assigns until full and final payment of all of the Company's obligations under the Notes and Indenture or until released in accordance with the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders, and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a Guarantee of payment and not of collectibility. The Obligations of the Guaranteeing Subsidiary under its Subsidiary Guarantee shall be limited to the extent necessary to insure that it does not constitute a fraudulent conveyance under applicable law. THE TERMS OF ARTICLE X OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE. 3. NEW YORK LAW TO GOVERN. (a) THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. (b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER JURISDICTION. 4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 5. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. THE COMPANY: BIO-RAD LABORATORIES, INC. By: Name: Title: By: Name: Title: THE GUARANTOR[S]: [ ] By: Name: Title: [ ] By: Name: Title: TRUSTEE: NORWEST BANK MINNESOTA, N.A. By: Name: Title: EX-4.6 5 EXHIBIT 4.6 - REGISTRATION RIGHTS AGREEMENT Exhibit 4.6 REGISTRATION RIGHTS AGREEMENT Dated as of February 17, 2000 by and among BIO-RAD LABORATORIES, INC. and WARBURG DILLON READ LLC ABN AMRO INCORPORATED This Registration Rights Agreement (this "Agreement") is made and entered into as of February 17, 2000, by and among (i) Bio-Rad Laboratories, Inc., a Delaware corporation (the "Company"), and (ii) Warburg Dillon Read LLC and ABN AMRO Incorporated (each an "Initial Purchaser" and collectively, the "Initial Purchasers"), each of whom has agreed to purchase the Company's 11-5/8% Series A Senior Subordinated Notes due 2007 (the "Series A Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated February 14, 2000 (the "Purchase Agreement"), by and among the Company and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Series A Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Sections 2 and 3 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated February 17, 2000, between the Company and Norwest Bank Minnesota, N.A., as Trustee, relating to the Series A Notes and the Series B Notes (the "Indenture"). The parties hereby agree as follows: Section 1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Affiliate: As defined in Rule 144 of the Act. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Certificated Securities: Definitive Notes, as defined in the Indenture. Closing Date: The date hereof. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange Offer Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of Series B Notes in the same aggregate principal amount as the aggregate principal amount of Series A Notes tendered by Holders thereof pursuant to the Exchange Offer. Consummation Deadline: As defined in Section 3(b) hereof. Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Offer: The exchange and issuance by the Company of a principal amount of Series B Notes (which shall be registered pursuant to the Exchange Offer Registration Statement) equal to the outstanding principal amount of Series A Notes that are tendered by such Holders in connection with such exchange and issuance. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Series A Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act and pursuant to Regulation S under the Act. Filing Deadline: As defined in Sections 3(a) and 4(a) hereof. Holders: As defined in Section 2 hereof. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post- effective amendments, and all material incorporated by reference into such Prospectus. Recommencement Date: As defined in Section 6(d) hereof. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Company relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) that is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Regulation S: Regulation S promulgated under the Act. Rule 144: Rule 144 promulgated under the Act. Series B Notes: The Company's 11% Series B Senior Subordinated Notes due 2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof. Shelf Registration Statement: As defined in Section 4 hereof. Suspension Notice: As defined in Section 6(d) hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Series A Note, until the earliest to occur of (a) the date on which such Series A Note is exchanged in the Exchange Offer for a Series B Note which is entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Act, (b) the date on which such Series A Note has been disposed of in accordance with a Shelf Registration Statement (and the purchasers thereof have been issued Series B Notes), or (c) the date on which such Series A Note is distributed to the public pursuant to Rule 144 under the Act or may be sold under Rule 144(k) under the Act (and purchasers thereof have been issued Series B Notes) and each Series B Note until the date on which such Series B Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including the delivery of the Prospectus contained therein). Section 2. Holders. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. Section 3. Registered Exchange Offer. (1) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company shall (i) cause the Exchange Offer Registration Statement to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date (such 90th day being the "Filing Deadline"), (ii) use its best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 180 days after the Closing Date (such 180th day being the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause it to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Series B Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting (i) registration of the Series B Notes to be offered in exchange for the Series A Notes that are Transfer Restricted Securities and (ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates) as contemplated by Section 3(c) below. (2) The Company shall use its best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Series B Notes (and guarantees thereof, if any) shall be included in the Exchange Offer Registration Statement. The Company shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days thereafter (such 30th Business Day being the "Consummation Deadline"). (3) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities (other than Series A Notes acquired directly from the Company or any Affiliate of the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of Distribution" section shall also contain all other information with respect to such sales by such Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy, rules or regulations after the date of this Agreement. See the Shearman & Sterling no action letter (available July 2, 1993). Because such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of any Series B Notes received by such Broker-Dealer in the Exchange Offer, the Company shall permit the use of the Prospectus contained in the Exchange Offer Registration Statement by such Broker-Dealer to satisfy such prospectus delivery requirement. To the extent necessary to ensure that the Prospectus contained in the Exchange Offer Registration Statement is available for sales of Series B Notes by Broker-Dealers, the Company agrees to use its best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 6(a) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of one year from the Consummation Deadline or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold pursuant thereto. The Company shall provide sufficient copies of the latest version of such Prospectus to such Broker-Dealers, promptly upon request, and in no event later than one day after such request, at any time during such period. Section 4. Shelf Registration. (1) Shelf Registration. If (i) the Exchange Offer is not permitted by applicable law (after the Company has complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation Deadline that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired directly from the Company or any of its Affiliates, then the Company shall: (x) cause to be filed, on or prior to 30 days after the earlier of (i) the date on which the Company determines that the Exchange Offer Registration Statement cannot be filed as a result of clause (a)(i) above and (ii) the date on which the Company receives the notice specified in clause (a)(ii) above, (such earlier date, the "Filing Deadline"), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement (the "Shelf Registration Statement")), relating to all Transfer Restricted Securities, and (y) shall use their respective best efforts to cause such Shelf Registration Statement to become effective on or prior to 60 days after the Filing Deadline for the Shelf Registration Statement (such 60th day the "Effectiveness Deadline"). If, after the Company has filed an Exchange Offer Registration Statement that satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer is not permitted under applicable federal law (i.e., clause (a)(i) above), then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above; provided that, in such event, the Company shall remain obligated to meet the Effectiveness Deadline set forth in clause (y). To the extent necessary to ensure that the Shelf Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a) and the other securities required to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall use its best efforts to keep any Shelf Registration Statement required by this Section 4(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Sections 6(b) and (c) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant thereto, or otherwise cease to be Transfer Restricted Securities. (2) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein or Prospectus supplement thereto. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. Section 5. Liquidated Damages. (1) If: (1) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline, (2) any such Registration Statement has not been declared effective by the Commission on or prior to the applicable Effectiveness Deadline, (3) the Exchange Offer has not been Consummated on or prior to the Consummation Deadline or (4) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately after filing such post-effective amendment to such Registration Statement (each such event referred to in clauses (i) through (iv), a "Registration Default"), then the Company hereby agrees to pay to each Holder of Transfer Restricted Securities affected thereby liquidated damages in an amount equal to $.05 per week per $1,000 in principal amount of Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues for the first 90-day period immediately following the occurrence of such Registration Default. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.30 per week per $1,000 in principal amount of Transfer Restricted Securities; provided, that the Company shall in no event be required to pay liquidated damages for more than one Registration Default at any given time. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. (2) All accrued liquidated damages shall be paid to the Holders entitled thereto, in the manner provided for the payment of interest in the Indenture, on each Interest Payment Date, as more fully set forth in the Indenture and the Series A Notes. Notwithstanding the fact that any securities for which liquidated damages are due cease to be Transfer Restricted Securities, all obligations of the Company to pay liquidated damages with respect to securities shall survive until such time as such obligations with respect to such securities shall have been satisfied in full. Section 6. Registration Procedures. (1) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company shall (x) comply with all applicable provisions of Section 6(c) below, (y) use its best efforts to effect such exchange and to permit the resale of Series B Notes by Broker-Dealers that tendered in the Exchange Offer Series A Notes that such Broker-Dealer acquired for its own account as a result of its market making activities or other trading activities (other than Series A Notes acquired directly from the Company or any of its Affiliates) being sold in accordance with the intended method or methods of distribution thereof, and (z) comply with all of the following provisions: (1) If, following the date hereof there has been announced a change in Commission policy with respect to exchange offers such as the Exchange Offer, that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company to Consummate an Exchange Offer for such Transfer Restricted Securities. The Company hereby agrees to pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company hereby agrees to take all such other actions as may be requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission staff, (B) delivering to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff. (2) As a condition to its participation in the Exchange Offer, each Holder of Transfer Restricted Securities (including, without limitation, any Holder who is a Broker-Dealer) shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an Affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Series B Notes to be issued in the Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary course of business. As a condition to its participation in the Exchange Offer each Holder using the Exchange Offer to participate in a distribution of the Series B Notes shall acknowledge and agree that, if the resales are of Series B Notes obtained by such Holder in exchange for Series A Notes acquired directly from the Company or an Affiliate thereof, it (1) could not, under Commission policy as in effect on the date of this Agreement, rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K. (3) Prior to effectiveness of the Exchange Offer Registration Statement, the Company shall provide a supplemental letter to the Commission (A) stating that the Company is registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that the Company has not entered into any arrangement or understanding with any Person to distribute the Series B Notes to be received in the Exchange Offer and that, to the best of the Company's information and belief, each Holder participating in the Exchange Offer is acquiring the Series B Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Series B Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above, if applicable. (2) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company shall: (1) comply with all the provisions of Section 6(c) below and use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof; and (2) issue, upon the request of any Holder or purchaser of Series A Notes covered by any Shelf Registration Statement contemplated by this Agreement, Series B Notes having an aggregate principal amount equal to the aggregate principal amount of Series A Notes sold pursuant to the Shelf Registration Statement and surrendered to the Company for cancellation; the Company shall register Series B Notes on the Shelf Registration Statement for this purpose and issue the Series B Notes to the purchaser(s) of securities subject to the Shelf Registration Statement in the names as such purchaser(s) shall designate. (3) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement, the Company shall: (1) use its best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 hereof, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable; (2) prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (3) advise each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (4) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (5) furnish to each Holder in connection with such exchange or sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holder in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Holder shall reasonably object within five Business Days after the receipt thereof. A Holder shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails to comply with the applicable requirements of the Act; (6) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Holder in connection with such exchange or sale, if any, make the Company's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Holder may reasonably request; (7) make available, at reasonable times, for inspection by each Holder and any attorney or accountant retained by such Holder, all financial and other pertinent corporate documents and records of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holder, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (8) if requested by any Holder in connection with such exchange or sale, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such Holder may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (9) furnish to each Holder in connection with such exchange or sale, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including, if requested, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (10) deliver to each Holder without charge, as many copies of the Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto as such Holder reasonably may request; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each selling Holder in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (11) upon the request of any Holder, enter into such agreements (including underwriting agreements) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder in connection with any sale or resale pursuant to any applicable Registration Statement. In such connection, the Company shall: (1) upon request of any Holder, furnish (or in the case of paragraphs (A) and (B), use its best efforts to cause to be furnished) to each Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the Shelf Registration Statement, as the case may be: (1) a certificate, dated such date, in the same form as the certificate delivered upon closing of the transactions contemplated by the Purchase Agreement and signed on behalf of the Company by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company, confirming, as of the date thereof, the matters set forth in Sections 6(w), 9(a) and 9(b) of the Purchase Agreement and such other similar matters as such Holder may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration statement, as the case may be, of counsel for the Company covering matters similar to those set forth in paragraph (e) of Section 9 of the Purchase Agreement and such other matters as such Holder may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company, including representatives of the independent public accountants for the Company, in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to the extent such counsel deems appropriate upon the statements of officers and other representatives of the Company without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective and, in the case of the Exchange Offer Registration Statement, as of the date of Consummation of the Exchange Offer,contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date and, in the case of the opinion dated the date of Consummation of the Exchange Offer, as of the date of Consummation, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included or incorporated by reference in any Registration Statement contemplated by this Agreement or the related Prospectus; and (3) a customary comfort letter, dated the date of Consummation of the Exchange Offer, or as of the date of effectiveness of the Shelf Registration Statement, as the case may be, from the Company's independent accountants, in customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 9(g) of the Purchase Agreement; and (2) deliver such other documents and certificates as may be reasonably requested by the selling Holders to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in any agreement entered into by the Company pursuant to this clause (xi); (12) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (13) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two Business Days prior to such sale of Transfer Restricted Securities; (14) use its best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (15) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; (16) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (17) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; (18) provide promptly to each Holder, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act; and (19) use its best efforts to take all other steps necessary to effect the registration of the Transfer Restricted Securities covered by a Registration Statement contemplated hereby. (4) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Suspension Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the date of delivery of the Recommencement Date. Section 7. Registration Expenses. (1) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (1) (1) all registration and filing fees and expenses; (2) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws (including, without limitation, reasonable fees and disbursements of one firm of lawyers in connection with Blue Sky qualifications of the Transfer Restricted Securities or Series B Notes); (3) all expenses of printing (including printing certificates for the Series B Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (4) all fees and disbursements of counsel for the Company and one counsel for the Holders of Transfer Restricted Securities; (5) all application and filing fees in connection with listing the Series B Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (6) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (2) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Series A Notes in the Exchange Offer and/or selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Skadden, Arps, Slate, Meagher & Flom LLP, unless another firm shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. Section 8. Indemnification. (1) The Company agrees to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, and judgments, (including without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary Prospectus or Prospectus (or any amendment or supplement thereto) provided by the Company to any Holder or any prospective purchaser of Series B Notes or registered Series A Notes, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to any of the Holders furnished in writing to the Company by any of the Holders. (2) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company to the same extent as the foregoing indemnity from the Company set forth in section (a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder ex pressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (3) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing (provided, that the failure to give such notice shall not relieve the indemnifying party of its obligations pursuant to this Agreement, except to the extent that such failure materially prejudices the position of such indemnifying party as determined by a final non- appealable order of a court of competent jurisdiction) and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (4) To the extent that the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, from their initial sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The Company and, by its acquisition of Transfer Restricted Securities, each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total amount received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint. Section 9. Rule 144A and Rule 144. The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. Section 10. Miscellaneous. (1) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Sections 3 and 4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 3 and 4 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (2) No Inconsistent Agreements. The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Company has not previously entered into any agreement granting any registration rights with respect to its securities to any Person that would require such securities to be included in any Registration Statement required by this Agreement. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (3) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 10(c)(i), the Company has obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Transfer Restricted Securities are being tendered pursuant to the Exchange Offer, and that does not affect directly or indirectly the rights of other Holders whose Transfer Restricted Securities are not being tendered pursuant to such Exchange Offer, may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (4) Third-Party Beneficiary. The Holders shall be third-party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. (5) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (2) if to the Company: Bio-Rad Laboratories, Inc. 1000 Alfred Nobel Drive Hercules, California 94547 Telecopier No.: (510) 741-5815 Attention: Chief Financial Officer With a copy (which shall not constitute notice) to: Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, California 94111 Telecopier No.: (415) 395-8095 Attention: Tracy K. Edmonson, Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. Upon the date of filing of the Exchange Offer Registration Statement or a Shelf Registration Statement, as the case may be, notice shall be delivered to Warburg Dillon Read LLC, on behalf of the Initial Purchasers (in the form attached hereto as Exhibit A) and shall be addressed to: 667 Washington Blvd., Stamford, CT 06912, Attention: High Yield Capital Markets, with a copy (which shall not constitute notice) to Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Los Angeles, California 90071, Telecopier No.: (213) 687-5600, Attention: Rodrigo A. Guerra, Jr., Esq. (6) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. (7) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (8) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (9) Governing Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of New York, without regard to principles of conflicts of law except Section 5-1401 of the New York General Obligations Law. The Company hereby irrevocably submits to the jurisdiction of any New York state court sitting in the Borough of Manhattan in the City of New York or any federal court sitting in the Borough of Manhattan in the City of New York in respect of any suit, action or proceeding arising out of or relating to this Agreement, and irrevocably accepts for itself and in respect of its property, generally and unconditionally, jurisdiction of the aforesaid courts. The Company irrevocably waives, to the fullest extent it may effectively do so under applicable law, trial by jury and any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The Company irrevocably consents, to the fullest extent it may effectively do so under applicable law, to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Company at its address set forth herein, such service to become effective 30 days after such mailing. Nothing herein shall affect the rights of the Initial Purchasers and the Holders to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (10) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (11) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. BIO-RAD LABORATORIES, INC. By: /s/ Thomas C. Chesterman Name: Thomas C. Chesterman Title:Vice President & Chief Financial Officer WARBURG DILLON READ LLC By: /s/ Kaj Ahlburg Name: Kaj Ahlburg Title: Managing Director Leveraged Finance By: /s/ Matthew R. Stopnik Name: Matthew R. Stopnik Title: Associate Director ABN AMRO INCORPORATED By: /s/ June Yuson Name: June Yuson Title: Managing Director EXHIBIT A NOTICE OF FILING OF [A/B EXCHANGE OFFER/SHELF] REGISTRATION STATEMENT To: Warburg Dillon Read LLC ABN AMRO Incorporated Warburg Dillon Read LLC 299 Park Avenue New York, New York 10171 From: Bio-Rad Laboratories, Inc. 11-5/8% Senior Subordinated Notes Due 2007 Date: [________] [__], 2000 For your information only (NO ACTION REQUIRED): Today, [________] [__], 2000, we filed [an A/B Exchange Offer Registration Statement/a Shelf Registration Statement] with the Securities and Exchange Commission. We currently expect this registration statement to be declared effective within [____] business days of the date hereof. EX-10.12 6 EXHIBIT 10.12 - SPLIT DOLLAR LIFE INSURANCE AGREEMENT EXHIBIT 10.12 SPLIT-DOLLAR LIFE INSURANCE AGREEMENT THIRD PARTY OWED COLLATERALLY ASSIGNED RESTRICTIVE AGREEMENT FOR MAJORITY SHAREHOLDER This Agreement made this 17th day of September, 1999 by and between Schwartz Irrevocable Descendants Trust, hereinafter referred to as the ("Trust"), and Bio-Rad Laboratories, Inc., hereinafter referred to as the ("Corporation"). WITNESSETH: WHEREAS, David Schwartz, hereinafter referred to as the Employee, is and has been employed by the Corporation for over forty (40) years, and his wife, Alice N. Schwartz, was formerly an employee of the Corporation and has been a director for approximately 35 years and they both have performed unique and valuable services for the establishment, growth and development of the Corporation; and WHEREAS, the Corporation has determined that in the event of the demise of Employee and his wife, their heirs might be required to sell a significant amount of their holdings in the Corporation in order to satisfy estate taxes, which the Corporation believes might result in a major disruption in the trading of the Corporation's stock. WHEREAS, the Corporation is willing to assist said Employee and his wife in providing insurance protection for their family which would provide proceeds to the heirs for the payment of a portion of the aforementioned estate taxes; and WHEREAS, the Employee and his wife (collectively, the "Insureds") have established the Trust as a trust for the purpose of receiving such insurance proceeds. NOW, THEREFORE, in consideration of past services and future services to be rendered, the parties agree that: 1 1. A $20,586,468 life insurance policy (the "Policy") on the life of the Insureds will be purchased from Pacific Life Insurance Company (the "Insurance Company"). The Trust will be the owner of the Policy, subject to a split-dollar assignment to the Corporation. Except to the extent that the Policy is needed to secure the Corporation's interest in the Policy as hereinafter provided, the Trust will retain all incidents of ownership (including the right to dividends, if any, the right to surrender or cancel the Policy and the right to borrow or withdraw against the Policy). 2. All premiums due on the Policy shall be paid by the Corporation to the Trust for payment to the Insurance Company. 3. The Corporation's interest in the cash surrender value of the Policy shall be an amount equal to the lesser of the entire cash surrender value or the Corporation's cumulative net premium payments. 4. If the Insureds should die while this Agreement and the Policy are in effect, the Corporation will be entitled to receive an amount equal to its cumulative net premium payments. The remainder of the death benefit, if any, shall belong to the Trust. 5. The Trust agrees not to sell, assign, surrender or otherwise terminate the Policy while this Agreement is in effect without the consent of the Corporation. 6. This Agreement may be terminated as follows: (a) For the period commencing on the date hereof and continuing until September 16, 2009, by mutual consent of the parties hereto. (b) For the period commencing on September 16, 2009 and continuing until the termination of the Agreement or the Policy: (i) Either party may terminate this Agreement while no premium under said Policy is overdue by written notice to the other part sent by hand or registered mail to such party's last known address. The effective date of such termination shall be the date of mailing; or (ii) By mutual consent of the parties hereto. 7. In the event of the termination of this Agreement under Paragraph 6 hereof, the Trust shall pay to the Corporation an amount equal to the Corporation's interest in the cash surrender value of the Policy as stated in Paragraph 3, and upon such payment the Corporation will release the collateral assignment made to it. Should the Trust fail to pay the Corporation's total interest in the cash surrender value within 60 days of termination, the Corporation shall have the right to enforce any rights it may have under the collateral assignment. 2 The Insurance Company and all persons having any interest in the Policy may in any instance conclusively rely upon the Corporation's certification that all conditions precedent to its right to receive its interest have occurred and shall be released from any and all claims, demands and responsibility in acting upon this certification and making payment to the Corporation of its entire interest upon the Corporation's sole signatures. The Corporation shall pay over to the Trust any amount collected by it which is in excess of the amount due to it. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day first above written. BIO-RAD LABORATORIES, INC. /s/ David Lehman BY: /s/ Thomas C. Chesterman (Witness) Thomas C. Chesterman Vice President and Chief Financial Officer SCHWARTZ IRREVOCABLE DESCENDANTS TRUST /s/ Deborah L. Tannenbaum BY: /s/ Howard Foster (Witness) Howard Foster Trustee 3 EX-13 7 EXHIBIT 13.1 - EXCERPT FROM 1999 ANNUAL REPORT EXHIBIT 13.1 Bio-Rad Laboratories, Inc. SUMMARY OF OPERATIONS (In thousands, except per share data)
________________________________________________________________________________________________________________________ 1999 1998 1997 1996 1995 1994 Net sales $549,489 $441,942 $426,914 $418,789 $396,618 $355,299 Cost of goods sold (1) 255,223 202,438 189,331 182,046 171,942 155,805 Gross profit 294,266 239,504 237,583 236,743 224,676 199,494 Selling, general and administrative expense 194,457 166,978 164,792 155,516 150,272 132,591 Product research and development expense 51,210 41,381 46,138 39,580 34,714 30,172 Purchased in-process research and development expense 15,500 - - - - - Restructuring costs - - - 2,700 1,500 - Income from operations 33,099 31,145 26,653 38,947 38,190 36,731 Other income (expense): Interest expense (12,741) (3,731) (1,216) (3,027) (4,465) (6,138) Other, net (3,942) 6,814 (2,709) 553 (183) (6,596) Income before taxes and extraordinary charge 16,416 34,228 22,728 36,473 33,542 23,997 Provision for income taxes 4,695 9,926 6,364 9,118 8,386 8,399 Income before extraordinary charge 11,721 24,302 16,364 27,355 25,156 15,598 Extraordinary charge (2) - - - (1,176) - - Net income $ 11,721 $ 24,302 $ 16,364 $ 26,179 $ 25,156 $ 15,598 Basic earnings per share before extraordinary charge (3) $0.97 $1.98 $1.33 $2.23 $2.06 $1.29 Extraordinary charge (2)(3) - - - (.10) - - Basic earnings per share (3) $0.97 $1.98 $1.33 $2.13 $2.06 $1.29 Weighted average common shares (3) 12,110 12,264 12,260 12,273 12,206 12,113 Cash dividends paid per common share - - - - - - Total assets $668,862 $367,299 $351,876 $284,925 $285,098 $263,650 Long-term debt, net of current maturities $239,211 $ 42,339 $ 38,952 $ 6,721 $ 20,922 $ 26,287 _______________________________________________________________________________________________________________________ (1) In 1996, cost of goods sold includes a charge of $2.1 million for a write-down of inventory associated with the restructuring costs. (2) Extraordinary charge for redemption of subordinated debt: 1996 - $1,176, net of tax effect of $817. (3) Restated to give effect to a stock split in the form of a 50% stock dividend in 1996.
1 Bio-Rad Laboratories, Inc. Consolidated Balance Sheets (In thousands)
________________________________________________________________________________________ December 31, Assets 1999 1998 Current Assets: Cash and cash equivalents $ 17,087 $ 10,081 Accounts receivable, less allowance of $9,582 in 1999 and $3,629 in 1998 193,898 106,010 Inventories: Raw materials 32,398 26,038 Work in process 31,936 21,614 Finished goods 61,943 44,759 Total inventories 126,277 92,411 Deferred tax assets 20,584 18,340 Prepaid expenses and other current assets 20,871 8,547 Total current assets 378,717 235,389 Property, Plant and Equipment: Land and improvements 8,937 8,057 Buildings and leasehold improvements 73,230 56,280 Equipment 168,401 133,838 Total property, plant and equipment 250,568 198,175 Accumulated depreciation (124,626) (116,045) Net property, plant and equipment 125,942 82,130 Marketable Securities 1,169 6,174 Goodwill 105,350 18,616 Other Assets 57,684 24,990 Total Assets $668,862 $367,299 ________________________________________________________________________________________
The accompanying notes are an integral part of these statements. 2 Bio-Rad Laboratories, Inc. Consolidated Balance Sheets (In thousands, except share data)
__________________________________________________________________________________________ December 31, Liabilities and Stockholders' Equity 1999 1998 Current Liabilities: Notes payable $ 11,547 $ 8,721 Current maturities of long-term debt 10,413 672 Accounts payable 64,737 26,706 Accrued payroll and employee benefits 59,919 27,351 Sales, income and other taxes payable 14,086 6,396 Other current liabilities 41,819 27,398 Total current liabilities 202,521 97,244 Long-Term Debt, net of current maturities 239,211 42,339 Deferred Tax Liabilities 7,016 13,382 Total liabilities 448,748 152,965 Commitments and Contingent Liabilities Stockholders' Equity: Preferred stock, $1.00 par value, 2,300,000 shares authorized; none outstanding - - Class A common stock, $1.00 par value, 15,000,000 shares authorized; outstanding 1999 - 9,977,862; 1998 - 9,973,679 9,978 9,974 Class B common stock, $1.00 par value, 6,000,000 shares authorized; outstanding 1999 - 2,484,716; 1998 - 2,452,899 2,485 2,453 Additional paid-in capital 18,830 18,523 Class A treasury stock, 335,450 shares in 1999 and (7,392) (7,047) 306,368 shares in 1998 at cost Retained earnings 200,993 189,838 Accumulated other comprehensive income: Currency translation (4,741) 92 Net unrealized holding gain (loss) on marketable securities (39) 501 Total stockholders' equity 220,114 214,334 Total Liabilities and Stockholders' Equity $668,862 $367,299 __________________________________________________________________________________________
The accompanying notes are an integral part of these statements. 3 Bio-Rad Laboratories, Inc. Consolidated Statements of Income (In thousands, except per share data)
______________________________________________________________________________________________________________________ Year Ended December 31, 1999 1998 1997 Net sales $549,489 $441,942 $426,914 Cost of goods sold 255,223 202,438 189,331 Gross profit 294,266 239,504 237,583 Selling, general and administrative expense 194,457 166,978 164,792 Product research and development expense 51,210 41,381 46,138 Purchased in-process research and development expense 15,500 - - Income from operations 33,099 31,145 26,653 Other income (expense): Interest expense (12,741) (3,731) (1,216) Investment income, net 873 8,790 1,601 Other, net (4,815) (1,976) (4,310) Income before taxes 16,416 34,228 22,728 Provision for income taxes 4,695 9,926 6,364 Net income $ 11,721 $ 24,302 $ 16,364 Basic earnings per share: Net income $0.97 $1.98 $1.33 Weighted average common shares 12,110 12,264 12,260 Diluted earnings per share: Net income $0.96 $1.97 $1.32 Weighted average common shares 12,165 12,358 12,394 __________________________________________________________________________________________________________________
The accompanying notes are an integral part of these statements. 4 Bio-Rad Laboratories, Inc. Consolidated Statements of Cash Flows (In thousands)
________________________________________________________________________________________________________ Year Ended December 31, 1999 1998 1997 Cash flows from operating activities: Cash received from customers $527,132 $436,029 $414,694 Cash paid to suppliers and employees (453,266) (395,265) (381,489) Interest paid (9,307) (3,833) (1,155) Income tax payments (17,237) (9,370) (10,950) Miscellaneous receipts (payments) (2,341) (226) 9 Net cash provided by operating activities 44,981 27,335 21,109 Cash flows from investing activities: Capital expenditures, net (27,275) (21,176) (23,571) Payments for acquisitions (202,828) - (31,238) Purchases of marketable securities and investments (2,216) (19,086) (8,352) Sales of marketable securities and investments 6,600 16,367 3,419 Foreign currency hedges, net 2,401 (1,360) 3,817 Net cash used in investing activities (223,318) (25,255) (55,925) Cash flows from financing activities: Net borrowings under line-of-credit arrangements (13,493) (1,365) 4,665 Long-term borrowings 353,108 133,710 87,275 Payments on long-term debt (151,788) (130,666) (55,329) Arrangement and other fees for long-term acquisition financing (5,008) -- -- Proceeds from issuance of common stock 343 103 1,459 Purchase of treasury stock (2,233) (4,665) (5,302) Reissuance of treasury stock 1,322 1,978 750 Net cash provided by (used in) financing activities 182,251 (905) 33,518 Effect of exchange rate changes on cash 3,092 (1,937) 2,751 Net increase (decrease) in cash and cash equivalents 7,006 (762) 1,453 Cash and cash equivalents at beginning of year 10,081 10,843 9,390 Cash and cash equivalents at end of year $ 17,087 $ 10,081 $ 10,843 ________________________________________________________________________________________________________
The accompanying notes are an integral part of these statements. 5 Bio-Rad Laboratories, Inc. Consolidated Statements of Changes in Stockholders' Equity (In thousands)
______________________________________________________________________ Year Ended December 31, 1999 1998 1997 Common Stock, $1.00 par value: Balance at beginning of year $12,427 $ 12,421 $ 12,321 Issuance of common stock 36 6 100 Balance at end of year 12,463 12,427 12,421 Additional Paid-In Capital: Balance at beginning of year 18,523 18,426 17,067 Issuance of common stock 307 97 1,359 Balance at end of year 18,830 18,523 18,426 Treasury Stock: Balance at beginning of year (7,047) (6,006) (1,639) Purchase of treasury stock (2,233) (4,665) (5,302) Reissuance of treasury stock 1,888 3,624 935 Balance at end of year (7,392) (7,047) (6,006) Retained Earnings: Balance at beginning of year 189,838 167,182 151,003 Net income 11,721 24,302 16,364 Reissuance of treasury stock at less than cost (566) (1,646) (185) Balance at end of year 200,993 189,838 167,182 Accumulated Other Comprehensive Income: Balance at beginning of year 593 4,654 4,756 Currency translation adjustments (4,833) 1,241 (4,719) Net unrealized holding gains 66 819 5,746 Reclassification adjustment for gains included in net income (606) (6,121) (1,129) Balance at end of year (4,780) 593 4,654 ________ ________ ________ Total Stockholders' Equity $220,114 $214,334 $196,677 Comprehensive Income: Net income $ 11,721 $ 24,302 $ 16,364 Currency translation adjustments (4,833) 1,241 (4,719) Net unrealized holding gains 66 819 5,746 Reclassification adjustments for gains included in net income (606) (6,121) (1,129) Total Comprehensive Income $ 6,348 $ 20,241 $ 16,262 _________________________________________________________________________
The accompanying notes are an integral part of these statements. 6 Bio-Rad Laboratories, Inc. Notes to Consolidated Financial Statements (In thousands of dollars, except share and per share data) _________________________________________________________________ 1. Significant Accounting Policies Basis of Presentation The consolidated financial statements include the accounts of Bio-Rad Laboratories, Inc. and all subsidiaries ("Bio-Rad" or the "Company") after elimination of intercompany balances and transactions. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in such estimates may affect amounts reported in the future. Certain amounts in the financial statements of prior years have been reclassified to be consistent with the 1999 presentation. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid in- vestments with original maturities of three months or less which are readily convertible into cash. Cash equivalents are stated at cost, which approximates market value. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable. The Company performs credit evaluation procedures and with the exception of certain developing countries, generally does not require collateral. As a result of increased risk in these countries, some Bio-Rad sales are subject to collateral letters of credit. Credit risk is limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of trade receivables are with national healthcare systems in countries within the European Economic Community. The Company does not currently anticipate a credit risk associated with these receiv- ables. Inventory Valuation Inventories are valued at the lower of average cost or market and include material, labor and overhead costs. Property, Plant and Equipment Property, plant and equipment are carried at historical cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets ranging from two to thirty years. Leasehold improvements are amortized over the lives of the respective leases or the lives of the improvements, whichever is shorter. 7 Marketable Securities The Company's marketable securities are classified as available-for- sale and are recorded at current market value. Unrealized holding gains and losses are included as a separate component of stockholders' equity. Realized gains and losses are included in investment income. For the purpose of determining realized gains and losses, the cost of securities sold is based upon specific identification. Goodwill Goodwill, representing the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses, is stated at cost and is amortized on a straight-line basis over the estimated future periods to be benefited, typically ten to fifteen years. Goodwill, other intangibles and other long-lived assets are periodically reviewed for impairment to ensure they are properly valued. Revenue Recognition and Warranty Bio-Rad recognizes revenues when products are shipped or services are rendered and all significant obligations of the Company have been met. Where appropriate, the Company also establishes a concurrent reserve for returns and allowances. The Company warrants certain equipment against defects in design, materials and workmanship, generally for one year. Upon shipment of equipment sold at a price which includes a warranty, the Company establishes, as part of cost of goods sold, a provision for the expected costs of such warranty. Foreign Currency Translation Balance sheet accounts of international subsidiaries are translated at the current exchange rate as of the end of the accounting period. Income statement items are translated at average exchange rates. The resulting translation adjustment is recorded as a separate component of stockholders' equity. Forward Exchange Contracts The Company does not use derivative financial instruments for speculative or trading purposes. As part of distributing its products, the Company regularly enters into intercompany transactions. The Company enters into forward foreign exchange contracts to hedge against future movements in foreign exchange rates that affect foreign currency denominated intercompany receivables and payables. These contracts generally have maturity dates of 60 days or less, relate primarily to currencies of industrial countries and are marked to market at each balance sheet date. The resulting gains or losses are included in other income and expense and offset exchange losses or gains on the related receivables and payables. Unrealized gains and losses are not deferred. Exchange gains and losses on these contracts are net of premiums and discounts which result from interest rate 8 differentials between the U.S. and the countries of the currencies being traded. The cash flows related to these contracts are classified as cash flows from investing activities in the Statement of Cash Flows. Stock Compensation Plans Stock-based compensation is recognized using the intrinsic value method. For disclosure purposes, pro forma net income and earnings per share are provided as if the fair value method had been applied. Earnings Per Share Basic earnings per share are calculated on the basis of the weighted average number of common shares outstanding for each period. Diluted earnings per share are calculated assuming the exercise of certain stock options. Treasury stock is not considered outstanding for purposes of calculating weighted average shares. Fair Value of Financial Instruments For certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, notes payable, accounts payable, long-term debt and forward exchange contracts, the carrying amounts approximate fair value. The fair values of other instruments are disclosed in relevant notes to the financial statements. 2. Acquisitions In October 1999, the Company acquired Pasteur Sanofi Diagnostics S.A., a French corporation (PSD), from its shareholders, Sanofi-Synthelabo S.A. and Institut Pasteur. The Company paid $202,828 for all of the capital stock of PSD (and certain ancillary assets and assumed liabilities related to PSD). PSD was founded by the Institut Pasteur and operates in the HIV and infectious disease diagnostic product market. The purchase of PSD was financed with the proceeds from a $200,000 Senior Credit Agreement and a $100,000 Senior Subordinated Credit Agreement (see Note 5). The acquisition was accounted for using the purchase method of accounting. The operating results of PSD have been included in the Consolidated Statement of Income from the date of acquisition. As a result of the acquisition, the Company recorded $88,630 of goodwill. Goodwill reflects the excess of the purchase price, purchase liabilities and liabilities assumed over the fair value of net identifiable assets and in-process research and development projects acquired. Acquired in-process research and development of $15,500 was charged to expense in the fourth quarter in accordance with generally accepted accounting principles. Purchase liabilities recorded included approximately $14,000 for severance and other 9 employee costs and $4,000 for the consolidation and closure of certain leased facilities. The Company expects to complete its workforce reduction by September 30, 2000. The closure of facilities identified by the Company will be completed in fiscal 2000, with lease payments, net of sublease revenues, continuing until all contractual obligations are met. For the year 1999 no material amounts were charged to the purchase liability for severance and facility closures. The Company does not believe that the final purchase price allocation will differ significantly from the preliminary purchase price allocation recorded in the current fiscal year. As the Company's 1999 financial statements include only three months of operations of PSD, the following selected unaudited pro forma information is being provided to present a summary of the combined results of Bio-Rad and PSD as if the acquisition had occurred as of January 1, 1998, giving effect to purchase accounting adjustments and actual costs of financing. The pro forma data is for informational purposes only and may not necessarily reflect the results of operations of Bio-Rad had PSD operated as part of the Company for the years ended December 31, 1999 and 1998. Unaudited Pro Forma Year Ended December 31, 1999 1998 Sales $722,000 $669,800 Net income (loss) $6,300 $(5,000) Basic earnings (loss)per share $0.52 $(0.41) The pro forma amounts reflect the results of operations for Bio-Rad and PSD and the following purchase accounting adjustments for the periods presented: Amortization of intangible assets and goodwill based on the purchase price allocation for the period presented. Amortization of debt financing fees and expenses over the relative term of the following debt: Senior Credit Agreement, Senior Subordinated Credit Facility and Senior Subordinated Notes. The additional interest expense on debt incurred to finance the acquisition offset by a reduction of historical interest resulting from the elimination of PSD's debt. The estimated income tax effect on the pro forma adjustments, including a limitation on the deductibility of goodwill amortization. The pro forma statements do not include the $15,500 write- off of in-process research and development. This charge is included in the Consolidated Statements of Operations of the Company for 1999. 10 3. Marketable Securities The Company's portfolio is comprised principally of equity securities with an aggregate market value of $1,169 and $6,174 and cost of $1,224 and $5,469 at December 31, 1999 and 1998, respectively. At December 31, 1999, gross unrealized holding gains and losses were $104 and $159, respectively. At December 31, 1998, gross unrealized holding gains and losses were $1,044 and $339, respectively. Information regarding the proceeds and gross realized gains and losses from sales of securities is as follows:
Year Ended December 31, 1999 1998 1997 Proceeds $ 6,600 $ 16,367 $ 3,419 Gross realized gains $ 1,260 $ 9,168 $ 1,211 Gross realized losses (410) (548) (82) Net realized gains $ 850 $ 8,620 $ 1,129
4. Investment in Affiliates In December 1997, Bio-Rad began investing in Instrumentation Laboratory, S.p.A. (IL), an Italian based clinical diagnostics company. At December 31, 1999, Bio-Rad held approximately 27% of the outstanding stock of IL. A privately held company based in Spain controls over 50% of the outstanding stock of IL. The most recently published financial statements for IL are as of February 28, 1999. Given the limited availability of financial information and the low volume of shares traded, Bio-Rad management does not believe there is a sufficient liquid market for IL stock. Accordingly, the investment is reported as Other Assets. Additionally, since Bio-Rad does not have the ability to significantly influence the operating and financial policies of IL, the investment has been recorded at its cost of $18,830. An unrealized holding gain of $652 was included in comprehensive income in 1997. This amount was reversed in 1998 when the investment in IL was reclassified to Other Assets. 5. Notes Payable and Long-Term Debt Notes payable include local credit lines maintained by the Company's subsidiaries aggregating approximately $32,742, of which $21,195 was unused at December 31, 1999. The weighted average interest rate on these lines was 5.76% and 5.14% at December 31, 1999 and 1998, respectively. The parent company guarantees most of these credit lines. 11 The principal components of long-term debt are as follows: December 31, 1999 1998 Senior Subordinated Credit Agreement $100,000 $ - Term loan 100,000 - Revolving credit agreement 49,000 42,000 Capitalized leases 624 606 Other - 405 249,624 43,011 Less current maturities 10,413 672 Long-Term Debt $239,211 $42,339
On September 30, 1999, the Company entered into a $200,000 Senior Credit Agreement and a $100,000 Senior Subordinated Credit Agreement to finance the acquisition of PSD and certain related assets and to provide funds for working capital needs. The Senior Credit Agreement included a term loan and revolving facility, each in the amount of $100,000. Debt issue costs related to these financings were $8,600. The $100,000 Senior Subordinated Credit Agreement was replaced on January 31, 2000 (see Note 14). The term loan and revolving facility are secured by an interest in the Company's assets. Interest on both loans is based upon either the Eurodollar, the Federal Funds effective or corporate based (prime) rate. The term loan interest rate was 8.92% at December 31, 1999. The revolving credit agreement provides for borrowings on a secured basis through September 2004. The interest rate at December 31, 1999 was 9.13%. A commitment fee ranging from .30% to .50% annually is charged on the daily unborrowed portion of the revolving credit agreement. The Company entered into interest rate swap agreements to reduce the impact of changing interest rates on its revolving credit agreement. At December 31, 1999, the Company had two interest rate swap agreements with commercial banks, having an aggregate notional amount of $25,000. The agreements essentially fix the Company's interest rate exposure on $25,000 worth of floating rate loans under its revolving credit agreement at 8.50%. The agreements mature December 29, 2000 and June 30, 2002. The resulting applicable interest rate was 8.81% on the revolving facility versus an effective rate of 9.13%. In terms of the interest rate swap, the Company is exposed to credit loss in the event of nonperformance by a counterparty, however the Company has not experienced such nonperformance to date and considers such a possibility remote. The Senior Credit Agreement (including amendments) requires the Company, among other things, to comply with certain financial ratios. The Company was in compliance with all financial ratios as of December 31, 1999. This agreement also contains certain other restrictions, including limitations on payment of cash dividends, sales of assets, incurrence of indebtedness, the creation of liens, making certain investments and engaging in sale/leaseback transactions. 12 Maturities of long-term debt at December 31, 1999, are as follows: 2000 - $10,413; 2001 - $15,137; 2002 - $20,074; 2003 - $25,000; 2004 - $79,000; thereafter - $100,000. 6. Income Taxes The U.S. and international components of income before taxes are as follows: Year Ended December 31, 1999 1998 1997 U.S. $ 15,176 $ 24,173 $ 11,343 International 1,240 10,055 11,385 Income before taxes $ 16,416 $ 34,228 $ 22,728
The provision for income taxes consists of: Year Ended December 31, 1999 1998 1997 Current: U.S. Federal $ 4,583 $ 8,564 $ 3,277 International 8,323 4,974 3,226 U.S. State 853 374 552 13,759 13,912 7,055 Deferred (9,064) (3,986) (691) Provision for income taxes $ 4,695 $ 9,926 $ 6,364
The Company's income tax provision differs from the amount computed by applying the U.S. federal statutory rate to income before taxes as follows: Year Ended December 31, 1999 1998 1997 U.S. statutory tax rate 35% 35% 35% State taxes, net of federal income tax benefit 2 (1) 1 Foreign Sales Corporation tax benefit (10) (5) (6) Research and development tax credit (1) (1) (2) International taxes in excess of U.S. Foreign Tax Credit 12 - 1 Loss carryforwards utilized (5) (1) (6) Amortization of goodwill 4 - 2 Foreign losses in connection with the PSD acquisition not benefited 31 - - Favorable resolution of U.S. income tax disputes (40) - - Other 1 2 3 Provision for income taxes 29% 29% 28%
13 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows: December 31, 1999 1998 Deferred Tax Assets: Reserves for obsolete inventory, warranty and bad debts $ 12,622 $ 12,102 Eliminated intercompany profit 3,661 3,265 Tax benefit of foreign loss carryforwards 16,457 4,732 Other 11,975 3,583 44,715 23,682 Valuation allowance (24,131) (5,342) Deferred Tax Assets $ 20,584 $ 18,340 Deferred Tax Liabilities: Deferred gain on condemnation $ 3,522 $ 4,473 Depreciation 1,567 1,174 Development cost of Hercules facility 1,385 1,413 Other 542 6,322 Deferred Tax Liabilities $ 7,016 $ 13,382
The valuation allowance is needed to reduce the deferred tax assets to an amount that is more likely than not to be realized. The net change in the valuation allowance in 1999 was an increase of $18,789, primarily resulting from an increase in tax loss carryforwards. The net change in 1998 was an increase of $2,057, primarily resulting from an increase in tax loss carryforwards. At December 31, 1999, Bio-Rad's international subsidiaries had combined net operating loss carryforwards of $40,231. A portion of these loss carryforwards will expire in the following years: 2000 - $809; 2001 - $394; 2002 - $754; 2003 - $150; 2004 - $178; 2005 - $1,639 and 2008 - $393. The remainder of these loss carryforwards have no expiration date. The utilization of these carryforwards is limited to the separate taxable income of each individual subsidiary. Bio-Rad does not provide for taxes which would be payable if the cumulative undistributed earnings of its international subsidiaries, approximately $36,916 at December 31, 1999, were remitted to the U.S. parent company. Unless it becomes advantageous for tax or foreign exchange reasons to remit a subsidiary's earnings, such earnings are indefinitely reinvested in subsidiary operations. The withholding tax and U.S. federal income taxes on these earnings, if remitted, would in large part be offset by tax credits. 14 7. Stockholders' Equity Stock Classification The Company's outstanding stock consists of Class A Common Stock (Class A) and Class B Common Stock (Class B). Each share of Class A and Class B participates equally in the earnings of Bio-Rad, and is identical in most respects except that Class A has limited voting rights. Each share of Class A is entitled to one-tenth of a vote on most matters, and each share of Class B is entitled to one vote. Additionally, Class A stockholders are entitled to elect 25% of the Board of Directors and Class B stockholders are entitled to elect the balance of the directors. Cash dividends may be paid on Class A shares without paying a cash dividend on Class B shares but no cash dividend may be paid on Class B shares unless at least an equal cash dividend is paid on Class A shares. Class B shares are convertible at any time into Class A shares on a one-for-one basis at the option of the stockholder. Stock Option Plans Bio-Rad maintains incentive and non-qualified fixed stock option plans for officers and certain other key employees. Under the Amended 1994 Stock Option Plan, the Company may grant options to its employees for up to 1,175,000 shares of common stock provided that no option shall be granted after March 1, 2004. Under the plans, Class A and Class B options are granted at prices not less than fair market value on the date of grant, are exercisable on a cumulative basis at a rate not greater than 25% per annum commencing one year after the date of grant and expire five years after the date of grant. The Company has made no charge to income with respect to any stock options. At the time options are exercised, the par value of the shares is credited to common stock and the excess is credited to additional paid-in capital. The Company may receive income tax benefits from the exercise of non-qualified stock options and from certain dispositions of stock received by employees under qualified or incentive stock options. The fair value of each option granted since January 1, 1995, was estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions for grants in 1999, 1998 and 1997, respectively: no dividend yield for all periods; expected lives of 2.2 and 3.0 years in 1999, 2.0 and 2.9 years in 1998 and 1.8 and 2.8 years in 1997; expected volatility of 34%, 35% and 33%; and risk-free interest rates ranging from 4.72% to 4.82%, 5.39% to 5.48% and 5.63% to 6.15%. 15 Activity under the plans is summarized below (amounts reported in the Price columns represent the weighted average exercise price):
Year Ended December 31, 1999 1998 1997 Shares Price Shares Price Shares Price Outstanding at beginning of year 561,047 $23.73 517,018 $21.40 482,900 $16.34 Granted 166,080 19.89 150,653 23.54 147,050 32.54 Exercised (60,914) 8.47 (89,625) 10.09 (90,445) 11.88 Forfeited (19,712) 25.10 (14,677) 25.07 (19,909) 25.38 Expired (1,386) 7.37 (2,322) 9.46 (2,578) 12.04 Outstanding at end of year 645,115 $24.18 561,047 $23.73 517,018 $21.40 Options exercisable at year-end 280,825 222,539 172,689 Weighted average fair value of options granted during the year $6.46 $7.62 $10.76
The following summarizes information about fixed stock options outstanding at December 31, 1999:
Options Outstanding Options Exercisable Number Weighted Average Number Range of Outstanding Remaining Weighted Average Exercisable Weighted Average Exercise Prices at 12/31/99 Contractual Life Exercise Price at 12/31/99 Exercise Price $18.00 - $19.69 206,131 2.4 years $19.04 85,851 $18.13 $19.80 - $23.94 184,916 3.2 22.49 44,441 22.63 $25.92 - $29.33 124,813 1.3 26.50 85,909 26.51 $31.63 - $35.89 129,255 2.1 32.53 64,624 32.53 $18.00 - $35.89 645,115 2.4 24.18 280,825 24.72
16 Employee Stock Purchase Plan Under the Amended and Restated 1988 Employee Stock Purchase Plan (the Plan), the Company has authorized the sale of 745,000 shares of Class A to eligible employees. The purchase price of the shares under the Plan is the lesser of 85% of the fair market value on the first day of each calendar quarter, or 85% of the fair market value on the last day of each calendar quarter. Employees may designate up to 10% of their compensation for the purchase of stock. Under the Plan, the Company sold 58,762 shares for $1,098, 51,446 shares for $1,129 and 43,785 shares for $982 to employees in 1999, 1998 and 1997, respectively. At December 31, 1999, 105,364 shares remained authorized under the Plan. The fair value of the employees' purchase rights since 1995 was estimated using the Black-Scholes model with the following assumptions for 1999, 1998 and 1997, respectively: no dividend yield for all periods; an expected life of three months for all periods; expected volatility ranging from 22% to 35%, from 28% to 38% and from 19% to 30%; and risk-free interest rates ranging from 4.28% to 4.88%, from 4.27% to 5.23% and from 5.02% to 5.41%. The weighted average fair value of those purchase rights granted in 1999, 1998 and 1997 was $4.74, $5.55 and $5.50, respectively. Pro Forma Disclosures If compensation cost for the Company's stock-based compensation plans had been determined based upon the fair value at grant dates for awards under those plans consistent with the method of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock- Based Compensation", the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below: Year Ended December 31, 1999 1998 1997 Net income As reported $11,721 $24,302 $16,364 Pro forma $10,469 $23,026 $15,173 Diluted earnings per As reported $0.96 $1.97 $1.32 share Pro forma $0.86 $1.86 $1.22
Under the requirements of SFAS No. 123, the above disclosures relate only to options granted after December 15, 1994, and do not include the impact of outstanding options that were made prior to the period for which SFAS No. 123 is effective. Since employee stock options vest over several years, and additional grants are likely to be made in the future, during the phase-in period of SFAS No. 123 the disclosures are not likely to be representative of the effects on reported pro forma net income or earnings per share in future years. 17 8. Earnings Per Share Weighted average shares used for diluted earnings per share include the dilutive effect of outstanding stock options of 55,000, 94,000 and 134,000 shares, for the years ended December 31, 1999, 1998 and 1997, respectively. Options to purchase 261,000, 229,000 and 133,000 shares of common stock were outstanding during 1999, 1998 and 1997, respectively, but were excluded from the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares. The options were still outstanding at the end of 1999. 9. Other Income and Expense Other, net includes the following income and (expense) components: Year Ended December 31, 1999 1998 1997 Amortization of goodwill $(3,813) $(2,068) $(1,612) Exchange gains (losses) (886) 22 (711) Other non-operating litigation costs, net 73 117 (1,606) Miscellaneous other items (189) (47) (381) Other, net $(4,815) $(1,976) $(4,310)
Exchange gains (losses) include premiums and discounts on forward foreign exchange contracts. 10. Supplemental Cash Flow Information The reconciliation of net income to net cash provided by operating activities is as follows: Year Ended December 31, 1999 1998 1997 Net income $11,721 $24,302 $16,364 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,495 20,975 19,470 Foreign currency hedge transactions, net (2,401) 1,360 (4,001) Gains on dispositions of marketable securities (850) (8,620) (1,129) Increase in accounts receivable, net (16,082) (5,739) (6,176) (Increase) decrease in inventories 4,095 (166) (14,831) (Increase) decrease in other current assets 5,609 4,629 (6,369) Increase (decrease) in accounts payable and other current liabilities 26,153 (4,808) 18,775 Increase in income taxes payable 4,804 1,040 1,122 Decrease in deferred taxes (16,946) (5,292) (1,276) Other 1,383 (346) (840) Net cash provided by operating activities $44,981 $27,335 $21,109
18 11. Commitments and Contingent Liabilities Rents and Leases Net rental expense under operating leases was $13,607 in 1999, $12,622 in 1998 and $11,339 in 1997. Leases are principally for facilities and automobiles. Annual future minimum lease payments at December 31, 1999, under operating leases are as follows: 2000 - $10,166; 2001 - $7,554; 2002 - $4,914; 2003 - $3,605; 2004 - $2,769; subsequent to 2004 - $7,084. Deferred Profit Sharing Retirement Plan The Company has a profit sharing plan covering substantially all U.S. employees. Contributions are made at the discretion of the Board of Directors. Bio-Rad has no liability other than for the current year's contribution. Contributions charged to income were $4,030, $3,566 and $3,285 in 1999, 1998 and 1997, respectively. Foreign Exchange Contracts The Company enters into forward foreign exchange contracts as a hedge against foreign currency denominated intercompany receivables and payables. At December 31, 1999, the Company had contracts maturing in January 2000 to sell foreign currency with a market value of $64,390 and to purchase foreign currency with a market value of $6,339. At December 31, 1998, the Company had contracts maturing in January 1999 to sell foreign currency with a market value of $48,053 and to purchase foreign currency with a market value of $1,811. 12. Legal Proceedings The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the outcome of these claims, legal actions and complaints would have no material adverse effect on the future results of operations or the financial position of the Company. 13. Segment Information The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" in 1998 which changed the way the Company reports information about its operating segments. Bio-Rad is a multinational manufacturer and worldwide distributor of life science research products, clinical diagnostics and analytical instruments. Bio-Rad has three reportable segments: Life Science, Clinical Diagnostics and Analytical Instruments. These reportable segments are strategic business lines that offer different products and services and require different marketing strategies. The Life Science segment develops, manufactures, sells and services liquid chromatography, electrophoresis, gene amplification and transformation, imaging and image analysis, DNA sequencing and sample preparation products. 19 These products are sold to university and medical school laboratories, pharmaceutical and biotechnology companies, and government and industrial research facilities. The Clinical Diagnostics segment develops, manufactures, sells and services automated test systems, informatics systems, test kits and specialized quality controls for the healthcare market. These products are sold to reference laboratories, hospital laboratories, state newborn screening facilities, physicians office laboratories, and insurance and forensic testing laboratories. The Analytical Instruments segment develops, manufactures, sells and services FT-IR spectroscopy systems, semiconductor test and manufacturing instruments, spectral reference publications and software. These products are sold to industrial companies, government institutions, academia and forensic analysis laboratories. The accounting policies of the segments are the same as those described in Significant Accounting Policies (see Note 1). Segment profit or loss used for corporate management purposes includes an allocation of corporate expense based upon sales and an allocation of interest expense based upon accounts receivable and inventories. In addition, certain items that are classified as non-operating expenses and reported as other income and expense on a consolidated basis are included in segment profit or loss. Segments are expected to manage only assets completely under their control. Accordingly, segment assets include primarily accounts receivable, inventories and gross machinery and equipment. Information regarding industry segments at December 31, 1999, 1998 and 1997 and for the years then ended is as follows: Life Clinical Analytical Science Diagnostics Instruments Segment net sales 1999 $234,696 $249,243 $ 67,974 1998 209,655 170,002 66,100 1997 205,704 150,095 75,800 Allocated interest expense 1999 $ 3,761 $ 7,775 $ 1,206 1998 1,501 1,464 571 1997 550 428 212 Depreciation and amortization 1999 $ 8,003 $ 15,466 $ 1,335 1998 7,328 11,242 1,652 1997 7,258 7,553 3,768 Segment profit (loss) 1999 $ 16,643 $ 16,661 $ 2,928 1998 12,649 18,160 (2,166) 1997 6,816 19,257 (1,003) Segment assets 1999 $131,689 $320,419 $ 35,387 1998 124,219 129,089 38,607 1997 116,289 111,453 44,964 20 Capital expenditures 1999 $ 10,673 $ 13,388 $ 1,378 1998 6,487 15,213 1,912 1997 7,461 14,432 1,991
Capital expenditures include capitalized leases of $100, $311 and $331 in 1999, 1998 and 1997, respectively. Inter-segment sales are primarily from Life Science to Clinical Diagnostics and are priced to give Life Science a market representative gross margin. This represents the difference between total segment net sales and consolidated net sales. The difference between total segment allocated interest expense, depreciation and amortization, and capital expenditures and the corresponding consolidated amounts is attributable to the Company's corporate headquarters. The following reconciles total segment profit to consolidated income before taxes: Year Ended December 31, 1999 1998 1997 Total segment profit $36,232 $28,643 $25,070 Gross profit on inter-segment sales (1,204) (1,925) (2,338) Net corporate operating, interest and other expense not allocated to segments (3,985) (1,280) (1,605) Purchased in-process research and development (15,500) -- -- Investment income, net 873 8,790 1,601 Consolidated income before taxes $16,416 $34,228 $22,728
The following reconciles total segment assets to consolidated total assets: December 31, 1999 1998 1997 Total segment assets $487,495 $291,915 $272,706 Cash and other current assets 58,542 36,968 39,025 Net property, plant and equipment excluding segment specific gross machinery and equipment (41,378) (11,364) (5,635) Other long-term assets 164,203 49,780 45,780 Total assets $668,862 $367,299 $351,876
21 The following presents sales to external customers by geographic area based primarily on the location of the use of the product or service: Year Ended December 31, 1999 1998 1997 Europe $188,969 $141,004 $132,551 Pacific Rim 110,729 88,917 98,070 United States 225,795 195,309 184,533 Other (primarily Canada and Latin America) 23,996 16,712 11,760 Total net sales $549,489 $441,942 $426,914
The following presents long-lived assets by geographic area based upon the location of the asset: December 31, 1999 1998 1997 Europe $ 34,129 $ 7,860 $ 7,004 Pacific Rim 6,954 4,933 3,885 United States 247,293 118,628 112,967 Other (primarily Canada and Latin America) 1,769 489 602 Total long-lived assets $290,145 $131,910 $124,458
14. Subsequent Event The Company entered into a $100,000 Senior Subordinated Credit Agreement dated January 31, 2000. This agreement had a one-year term and provided for an automatic rollover for an additional term maturing in September 2005. The proceeds of this transaction were used to replace the Senior Subordinated Credit Agreement dated September 30, 1999. Fees paid in January 2000 to replace and initiate the Senior Subordinated Credit Agreements were $4,000. The replacement loan was repaid in February 2000. The Company sold $150,000 aggregate principal amount of Senior Subordinated Notes due in 2007 under an indenture dated February 17, 2000. The notes were offered at 98.832% of par and pay a fixed rate of interest of 11.625% per year. The notes are redeemable at the Company's option prior to the due date under certain terms and conditions. The Company's obligations under the notes are not secured and rank junior to all of the Company's existing and future senior debt. The indenture requires the Company, among other things, to comply with certain financial ratios and covenants. The proceeds from this transaction were used (1) to repay the $100,000 Senior Subordinated Credit Agreement dated January 31, 2000, (2) to permanently retire $20,000 of the $100,000 term loan, and (3) to repay a portion of the outstanding borrowings under the revolving facility. 22 15. Quarterly Financial Data - (unaudited) Summarized quarterly financial data for 1999 and 1998 are as follows: First Second Third Fourth Quarter Quarter Quarter Quarter 1999 Net sales $125,738 $115,794 $113,527 $194,430 Gross profit 70,182 65,241 61,628 97,215 Net income (loss) 10,802 7,881 4,253 (11,215) Basic earnings (loss) per share $0.89 $0.65 $0.35 $(0.92) Diluted earnings (loss) per share $0.89 $0.65 $0.35 $(0.92) 1998 Net sales $116,174 $107,898 $ 98,982 $118,888 Gross profit 64,076 58,857 53,577 62,994 Net income 8,776 7,151 1,938 6,437 Basic earnings per share $0.72 $0.58 $0.16 $0.52 Diluted earnings per share $0.71 $0.58 $0.16 $0.52
16. Information Concerning Common Stock - (unaudited) The Company's Class A and Class B Common Stock are listed on the American Stock Exchange with the symbols BIO.A and BIO.B, respectively. The following sets forth, for the periods indicated, the high and low prices for the Company's Class A and Class B Common Stock. Class A Class B High Low High Low 1999 First Quarter 21-3/4 18-7/8 21-3/8 19-3/8 Second Quarter 29 20-3/8 27-1/2 23-3/8 Third Quarter 28 25-5/8 27 25-7/8 Fourth Quarter 27-1/2 22-1/2 27-1/8 23-1/8 1998 First Quarter 27 22-1/2 26-3/8 23-1/4 Second Quarter 34-1/8 24-1/8 33-3/4 27 Third Quarter 31-7/8 23-5/16 29-1/2 24-1/4 Fourth Quarter 24-3/4 19-1/2 22-3/8 19-3/4
On February 28, 2000, the Company had 570 holders of record of Class A Common Stock and 265 holders of record of Class B Common Stock. Bio-Rad has never paid a cash dividend and has no present plans to pay cash dividends. 23 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Bio-Rad Laboratories, Inc.: We have audited the accompanying consolidated balance sheets of Bio-Rad Laboratories, Inc. (a Delaware Corporation) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, cash flows and changes in stockholders' equity for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bio-Rad Laboratories, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP San Francisco, California, February 9, 2000, except for Note 14, as to which the date is February 17, 2000 24 Bio-Rad Laboratories, Inc. Management's Discussion and Analysis ________________________________________________________________ MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION This discussion should be read in conjunction with the information contained in the Company's Consolidated Financial Statements and the accompanying notes which are an integral part of the statements. References are to the Notes to Consolidated Financial Statements. The following shows operating income and expense items as a percentage of net sales: Year Ended December 31, 1999 1998 1997 Net sales 100.0 100.0 100.0 Cost of goods sold 46.5 45.8 44.3 Gross profit 53.5 54.2 55.7 Selling, general and administrative expense 35.4 37.8 38.7 Product research and development expense 9.3 9.4 10.8 Purchased in-process research and development 2.8 - - Income from operations 6.0 7.0 6.2 ===== ===== ===== Net income 2.1 5.5 3.8 ===== ===== =====
The year 1999 is highlighted by the October 1, 1999 acquisition of Pasteur Sanofi Diagnostics, S.A. (PSD). The details of the acquisition are discussed and disclosed throughout the remainder of the Management Discussion and Analysis of Operations of the 1999 Annual Report. The significance of this transaction is that the acquisition enhances Bio-Rad's clinical diagnostics market position in the following ways: the companies have complementary product lines with few actual overlapping products. The combined company has increased geographic reach. There is an opportunity to apply emerging Bio-Rad technologies to the combined product portfolio. Finally, the Company expects to achieve operational efficiencies. Profit performance in 2000 and 2001 could be impacted when compared to prior years or until fully assimilated and reorganized. 25 Corporate Results -- Sales, Margins and Expenses Bio-Rad's net sales (sales) in 1999 were $549.5 million, an increase of 24.3% over 1998 sales. Included in the 1999 fourth quarter sales was $60.2 million from the recently acquired PSD operations (see Note 2). Excluding this amount, Bio-Rad's sales grew by 10.7% over the year 1998. For the year 1999, the impact from currency translation on sales was less than $1.0 million. The strengthening of the Japanese Yen offset the negative impact from most European currencies. Excluding any impact from currency for 1999, the Life Science and Clinical Diagnostics segments (excluding the PSD acquisition) grew by 11.9% and 11.2%, respectively. The growth in the Life Science segment is attributable to laboratory products and scientific imaging equipment excellent performance. The Clinical Diagnostics segment growth was a result of the continuing demand for the Company's diabetes monitoring and quality control systems. The Analytical Instruments segment grew by 2.8% as the market for the Company's semiconductor test and manufacturing equipment grew significantly in the second half of 1999. Bio-Rad's sales in 1998 amounted to $441.9 million, an increase of 3.5% over sales in 1997. The effect of a strengthening U.S. dollar caused a reduction in sales growth of 2.5% or approximately $10.5 million. When 1998 sales are compared to 1997 at constant 1997 exchange rates, sales for the Company grew 6.0%. Eliminating the effect of a strengthened U.S. dollar, sales increased 16% and 4% in the Clinical Diagnostics and Life Science segments, respectively. The Analytical Instruments segment experienced lower sales as the markets it served contracted almost worldwide. The growth in the Clinical Diagnostics segment was attributed to the December 1997 purchase of the controls business from Chiron Diagnostics Corporation. The Life Science segment experienced strong growth in the U.S. especially in the imaging and microscopy product lines. Consolidated gross margins were 53.5% for 1999 compared to 54.2% in the prior year. After adjusting for the acquisition of PSD, gross margins for the businesses operated for twelve months were 55.3%, an improvement over the 54.2% recorded in 1998. The Life Science segment's gross margin improved by 1% as sales growth provided the opportunity to lower fixed factory overhead and new product pricing remained firm. The Clinical Diagnostics segment's gross margin declined slightly, (0.3%), as pricing pressure in the healthcare industry remained a considerable factor. Also, the cost of foreign sourced products rose as the Yen strengthened when compared to the dollar. The Analytical Instruments segment's gross margin improved as demand increased and pricing improved for the Company's semiconductor test and manufacturing equipment. Cost reductions begun in prior years have been fully implemented across this segment. 26 Consolidated gross margins were 54.2% for 1998 compared to 55.7% for 1997. Gross margins overall were adversely affected by lower prices on international sales caused by the strengthening U.S. dollar and a majority of manufacturing costs being U.S. dollar denominated. The Life Science segment margins declined from higher service and warranty costs, and were particularly impacted in Asia. The Clinical Diagnostics segment gross margins declined 3.1% of sales, in part from the Chiron acquisition, where several large supply agreements existed. Continued consolidation in the diagnostic laboratory and the role of government in diagnostic reimbursement maintained severe pressure on prices received for diagnostics products. Analytical Instruments segment margins were negatively impacted by an increasingly weak semiconductor market and the strengthening dollar. Consolidated selling, general and administrative expense (SG&A) decreased to 35.4% of sales in 1999 when compared to 37.8% for 1998. After adjusting for the PSD acquisition, SG&A expense for the Company was 36.2%, a decline of 1.6% of sales from the prior year. For the Company excluding PSD, total SG&A grew by less than 60% of sales growth. The Company continues to make the efficient use of SG&A expense a priority. The acquisition of PSD should allow the Company to further leverage this expense in a larger sales environment through the elimination of redundant facilities and positions. In absolute dollars, the largest increase in SG&A expense was in the Life Science segment as the Clinical Diagnostics segment grew only slightly and Analytical Instruments segment declined. SG&A decreased to 37.8% of sales in 1998 from 38.7% in 1997. Spending increased in absolute dollars only in the Clinical Diagnostics segment, yet at a growth rate of approximately half that in sales. The Life Science and Analytical Instruments segments each had declines in absolute spending both from the currency effect on foreign incurred SG&A and cost elimination programs begun in late 1997. Product research and development expense (R&D) increased by 23.7% in 1999 to $51.2 million including the operations of PSD compared to $41.4 million for the year 1998. Both Life Science and Clinical Diagnostics segments (excluding PSD) increased R&D spending at a rate higher than sales growth as the Company is focusing on programs to increase sales both through new product development and the acquisition of existing businesses. Future spending levels are expected to be at or near current levels as a percentage of sales. Included in income from operations is the write-off of $15.5 million "purchased in-process research and development expense" (IPR&D). IPR&D represents the value assigned in a purchase business combination to research and development projects of the acquired business that have been commenced but not completed at acquisition. In accordance with SFAS No. 2, "Accounting for Research and Development Costs" the 27 value of IPR&D must be charged to expense as part of the allocation of the purchase price. R&D decreased in 1998 by 10% to $41.4 million compared to $46.1 million for the year 1997. Spending declined in the Life Science and Analytical Instruments segments and increased 3% in the Clinical Diagnostics segment. Declines in the Life Science and Analytical Instruments segments were due to the completion or termination of projects. Corporate Results -- Non-Operating Items Interest expense increased substantially for the year 1999 as the purchase of PSD was financed almost entirely with borrowed funds. The Company borrowed approximately $225 million on October 1, 1999 to pay for the acquisition, including one time bank charges and fees for a $200 million Credit Facility and an interim $100 million Senior Subordinated Credit Facility. Costs associated with the Credit Facility were capitalized and will be amortized over the five year life of the revolver and term loan. Expenses for the Senior Subordinated Credit Facility amounted to $3.6 million to December 31, 1999. Going forward, the Company expects to experience significantly higher interest expense. At December 31, 1999 the debt to equity ratio was 119% compared to 24% at December 31, 1998. Average borrowings for the years 1999 and 1998 were $97.8 million and $52.3 million, respectively. Investment income in 1999, 1998 and 1997 includes gains on sales of marketable securities. During 1999, Bio-Rad realized $0.9 million of investment income as it liquidated its investment of marketable securities to raise cash just prior to the PSD acquisition. During 1998, Bio-Rad realized significant income, $8.6 million, as it sold some of its investment in marketable securities to increase its investment in Instrumentation Laboratory (see Note 4). Net other income and expense for 1999 is comprised principally of amortization of goodwill and exchange losses (see Note 9). Net other income and expense for 1998 was principally amortization of goodwill. Net other income and expense for 1997 was principally non-operating litigation costs and amortization of goodwill. Bio-Rad's hedging program is limited to nonspeculative forward foreign exchange contracts (with major financial institutions) which hedge the exposure of intercompany receivables and payables. The net exchange gain or loss results from the estimating inherent in projecting intercompany balances and from transaction charges. Bio-Rad's consolidated effective tax rate was 29%, 29% and 28% in 1999, 1998 and 1997, respectively. The tax rate for all years reflects the utilization of loss carryforwards, foreign sales corporation benefits and foreign tax credits. The effective tax 28 rate in future periods is expected to rise as the deductibility of goodwill amortization, interest expense as well as the utilization of loss carry-forwards are dependent on the source and amount of income generated by the Company. Financial Condition As a result of the substantial amount of debt and debt service obligations undertaken in relation to the acquisition of PSD, the Company now faces increased risk from inadequate levels of liquidity and capital resources. The Company became substantially leveraged as it entered into new credit facilities. The Company entered into a $200 million Credit Facility (consisting of a $100 million term loan and a $100 million revolving facility) on September 30, 1999, replacing the $100 million credit agreement previously in place. The new facility provides for borrowing on a secured basis through September 30, 2004. Interest is based upon the Eurodollar rate, the Federal Funds effective rate or corporate based (prime)rate. The Company also entered into an interim $100 million Senior Subordinated Credit Agreement on September 30, 1999. This agreement had a one year term and provided for an automatic rollover for an additional term expiring September 30, 2005. This credit facility was replaced on January 29, 2000 with a new interim $100 million Senior Subordinated Credit Agreement. The Company repaid amounts outstanding under this agreement with proceeds from the February 2000 issuance of $150.0 million aggregate principal amount of Senior Subordinated Notes due 2007. The lenders have placed restrictions on the Company's ability to: borrow further, service this and other debt, make expenditures for capital improvements, pay dividends, repurchase the Company's own stock and/or make strategic and tactical investments in support of operating the business. The Company is also required to comply with certain financial ratios. The amount of debt undertaken in connection with this acquisition could materially impact the financial condition of the Company should management's plan for operating the new entity not be successful. At December 31, 1999, the Company had available $17.1 million in cash and cash equivalents, $21.2 million under its international lines of credit, $51.0 million under its principal revolving credit agreement (see Note 5) and marketable securities with a market value of $1.2 million. We believe that this availability, together with cash flow from operations, will be adequate to meet our current objectives for operations, research and development and investment in our systems and equipment. Net cash provided by operations was $45.0 million, $27.3 million and $21.1 million in 1999, 1998 and 1997, respectively. 29 Consolidated net accounts receivable increased approximately $90 million in 1999 when compared to 1998. This increase is primarily attributable to receivables acquired from PSD of approximately $75 million and an increase in fourth quarter sales of $15 million for Bio-Rad's same period comparable operations. Bio-Rad's management regularly reviews the allowance for uncollectible receivables and believes net receivables are fully realizable. For the year ended December 1999, consolidated inventories rose $34.0 million to $126.3 million. The PSD acquisition added approximately $36.0 million to the Clinical Diagnostics segment inventories. Inventory changes for comparable segments were generally in line with sales activity, rising in the Life Science segment, and declining in the Analytical Instruments segment. Management regularly reviews the impact of obsolescence on current inventory caused by the introduction of new products. Management will continue its focus on inventory control in the coming year to moderate capital requirements. A valuation reserve is necessary for deferred tax assets (see Note 6) primarily because realization of tax attributable to foreign loss carryforwards is uncertain. Net capital expenditures in 1999 totaled $27.3 million compared to $21.2 million and $23.6 million in 1998 and 1997, respectively. Expenditures in all years include clinical diagnostic equipment placed with customers to be used with the Company's diagnostic reagents. Expenditures in 1998 include additions to the Clinical Diagnostics segment's southern California manufacturing facilities to accommodate the consolidation of operations and assets acquired in the fourth quarter of 1997. Management regularly approves capital spending in the normal course of business. The Board of Directors authorized the Company to repurchase up to $18 million of common stock over an indefinite period of time. Through January 2000, the Company has repurchased 567,786 shares of Class A Common Stock and 30,000 shares of Class B Common Stock for a total of $14.1 million. The indenture restricts the Company's ability to repurchase its own stock to an amount not to exceed $4.0 million in the aggregate. Share repurchases made during 1999 amounted to $2.2 million. The repurchase is designed to improve shareholder value and to satisfy the Company's obligations under the employee stock purchase and stock option plans. 30 Euro - A New European Currency On January 1, 1999, certain member countries of the European Union began to fix the conversion rates between their national currencies and a common currency, the "Euro". Over the period January 1, 1999 through January 1, 2002 participating countries will gradually transition from their national currencies to the Euro. This transition will have business implications including the need to adjust internal systems to accommodate the Euro and cross-border price transparency. A group of Corporate and European managers have been assigned the task of preparing and accommodating the changes required to continue to do business in the European Union. The Company does not presently expect that the efforts involved will have a material impact on operations, financial position or liquidity. There will be increased competitive pressures, and marketing strategies will need to be continuously evaluated until the transition is complete. As a result of competitive forces and emerging government regulations, the Company cannot guarantee that all problems will be foreseen and remediated, and that no material disruption will occur. Year 2000 The scope of the Year 2000 compliance effort included (i) IT, such as software and hardware; (ii) non-IT systems or embedded technology for manufacturing and laboratory equipment, environmental and safety systems, facilities and utilities (iii) date-sensitive Company products; and (iv) the readiness of key third party suppliers and customers. From inception of the Company's effort on the Year 2000 issues through December 31, 1999, the Company spent an estimated $8.0 million related to the Year 2000 readiness issue. The costs captured include external consultants, and purchased software and hardware. No internal costs were captured as they principally related to payroll costs for the information systems group working on the Year 2000 project. The Company expensed as incurred costs related to assessment and remediation. These costs were funded through operating cash flows. From December 31, 1999 to February 18, 2000, no material problems were reported in any of the Company's facilities or operations. As of the date of this filing, the Company had not experienced any material Year 2000 problems with its IT or non-IT systems or products, nor had the Company experienced any material problems with any of its key customers or suppliers. The Company has no indication of any problems related to any customers or vendors. Initial orders and shipments for the first six weeks of the new year indicate that there may have been some accelerated 31 purchasing during the fourth quarter of 1999. The Company, however, feels given the nature of its products that any anomaly to its established sales cycle will be short-lived. Financial Risk Management Bio-Rad uses derivative financial instruments to reduce the Company's exposure to fluctuations in foreign exchange rates and interest rates. No derivative financial instruments are entered into for the purpose of speculating or trading. Company policy limits all derivative positions exclusively to reducing risk by hedging an underlying economic exposure that can be effectively correlated to the Company's chosen hedging vehicle. Changes in the value of the derivative are generally offset by reciprocal changes in Bio-Rad's underlying asset. Bio-Rad operates and conducts business in many foreign countries and is exposed to movements in foreign currency exchange rates. Additionally, Bio-Rad's consolidated net equity is impacted by the conversion of the net assets of international subsidiaries for which the functional currency is not the U.S. dollar. Foreign currency exposures are managed on a centralized basis by the Company's Treasury Department. This allows for the netting of natural offsets and lowers transaction costs and exposures. Bio-Rad currently makes more than 50% of its sales outside the United States and weakening in one currency can often be offset by strengthening in another. Bio-Rad typically enters into forward exchange contracts to sell its foreign currency. Contracts are entered into typically for 30 to 60 days, primarily in British Sterling, Japanese Yen, Italian Lira and German Marks. The costs are recognized in income monthly and generally are the reciprocal of the change in underlying assets. Bio-Rad does not hold any derivative contracts that hedge its foreign currency denominated net asset exposures. Bio-Rad uses sensitivity analysis to assess the market risk associated with its foreign currency exchange risk. Market risk is the potential change in fair value of derivative positions from an adverse movement in currency exchange rates. The forward foreign exchange contracts at December 31, 1999 had a net fair value of $58.1 million. A 10% adverse loss on quoted foreign currency exchange rates would result in a $5.8 million loss. This impact, of a change in exchange rates, excludes from the analysis the offset derived from the change in the Company's underlying assets and liabilities, which could reduce the effect to zero. 32 New Financial Accounting Standards In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities" effective for fiscal years beginning after June 15, 1999, with early adoption permitted. The FASB has now delayed the SFAS No. 133 for all fiscal quarters of all fiscal years beginning after June 15, 2000. This statement establishes accounting and reporting standards requiring companies to record all derivatives on the balance sheet as either assets or liabilities and measure those instruments at fair value. The manner in which companies are to record gains or losses resulting from changes in the values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. The impact of SFAS No. 133 on the Company's financial statements will depend on a variety of factors, including future interpretive guidance from the FASB, the future level of forecasted and actual foreign currency transactions, the extent of the Company's hedging activities, the types of hedging instruments used and the effectiveness of such instruments. However, the Company does not expect the effect of adopting SFAS No. 133 to have a material effect on its financial statements. Forward Looking Statements Other than statements of historical fact, statements made in this Annual Report include forward looking statements, such as statements with respect to the Company's future financial performance, operating results, plans and objectives. We have based these forward looking statements on our current expectations and projections about future events. However, actual results may differ materially from those currently anticipated depending on a variety of risk factors including among other things: our ability to successfully integrate with PSD, which we recently renamed "Bio-Rad Pasteur"; our substantial leverage and ability to service our debt; our ability to successfully develop and market new products; our reliance on and access to necessary intellectual property; competition in and government regulation of the industries in which we operate; and the monetary policies of various countries. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. 33 EX-21 8 EXHIBIT 21.1 - LISTING OF SUBSIDIARIES EXHIBIT 21.1 - LISTING OF SUBSIDIARIES JURISDICTION OF SUBSIDIARY ORGANIZATION Bio-Rad Laboratories Pty. Limited Australia Sanofi Diagnostics Pasteur Pty. Australia Bio-Rad Laboratories Ges.m.b.H. Austria Sanofi Diagnostics Pasteur HgmbH Austria Bio-Rad International, Inc. (FSC) Barbados Bio-Rad Laboratories S.A.-N.V. Belgium RSL N.V. Belgium Bio-Metrics Properties, Limited California, USA Bio-Rad Laboratories (Israel) Inc. California, USA Bio-Rad Leasing Corporation California, USA Bio-Rad Pacific Limited California, USA Bio-Rad Laboratories (Canada) Limited Canada Sanofi Diagnositcs Pasteur Inc. Canada Beijing Bio-Rad Analytical Biochemistry Instrument Co., Ltd. China SoftShell International, Ltd. Colorado, USA Bio-Metrics, Limited Delaware, USA Bio-Rad Export, Inc. (DISC) Delaware, USA Bio-Metrics (U.K.) Limited England Bio-Rad Laboratories Europe Limited England Bio-Rad Laboratories Limited England Bio-Rad Lasersharp Limited England Bio-Rad Limited England Bio-Rad Micromeasurements Limited England Bio-Rad Microscience Limited England Micromeasurements Limited England Sadtler Research Laboratories Limited England Sanofi Diagnostics Pasteur Ltd. England Bio-Rad S.A. France Sanofi Diagnostics France Sanofi Diagnostics Pasteur France ADIL Instruments S.A. France Bio-Rad Laboratories G.m.b.H. Germany Sanofi Diagnostics GMB Germany Bio-Rad China Limited Hong Kong Bio-Rad Laboratories(India)Private Limited India Bio-Rad Laboratories Israel Limited Israel Bio-Rad Laboratories S.r.l. Italy Sanofi Diagnostics Pasteur S.r.l. Italy Nippon Bio-Rad Laboratories K.K. Japan Sanofi Fujirebio Japan Bio-Rad Korea Ltd. Korea Bio-Rad Micromeasurements, Inc. Massachusetts, USA Bio-Rad Laboratories Mexico, S.A. de C.V. Mexico Sanofi Diagnostics Pasteur Mexico Bio-Rad Laboratories B.V. The Netherlands Sanofi Diagnostics Pasteur BV The Netherlands Sandia Systems, Inc. New Mexico, USA Polaron Instruments, Inc. Pennsylvania, USA Sanofi Polska SP ZOO Poland Sanofi Diagnostics Pasteur LDA Portugal Bio-Rad Laboratories Ltd. Russia Bio-Rad Laboratories (Singapore) Pte.Limited Singapore Sanofi Africa Ltd. South Africa Bio-Rad Laboratories S.A. Spain Sanofi Diagnostics Pasteur ESP Spain Bio-Rad Laboratories AB Sweden Bio-Rad Laboratories AG Switzerland Sanofi Diagnostics Pasteur S.A. Switzerland Sanofi Pacific Diagnostics Ltd. Thailand Blood Virus Diagnostics Inc. Washington, USA Genetic Systems Corporation Washington, USA Sanofi Diagnostics Pasteur Inc. Washington, USA EX-23 9 EXHIBIT 23.1 - CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23.1 - CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included or incorporated by reference in this Form 10-K, into the Company's previously filed Registration Statements on Form S-8 (File Nos. 33-53335 and 33-53337). It should be noted that we have not audited any financial statements of the Company subsequent to December 31, 1999 or performed any audit procedures subsequent to the date of our report. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP San Francisco, California, March 28, 2000 EX-27 10 EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Bio-Rad Laboratories, Inc. Form 10-K for the year ended December 31, 1999 and is qualified in its entirety by reference to such financial statements. 1,000 YEAR DEC-31-1999 DEC-31-1999 17,087 0 203,480 9,582 126,277 378,717 250,568 124,626 668,862 202,521 239,211 0 0 12,463 207,651 668,862 549,489 549,489 255,223 255,223 0 0 12,741 16,416 4,695 11,721 0 0 0 11,721 0.97 0.96
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