UC ACQUISITION SUB, INC.
July 30, 1999
Unilab Corporation
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the Agreement and Plan of Merger dated as of May 24,
1999 between Unilab Corporation (the "Company") and UC Acquisition Sub, Inc.
("Merger Sub"), as amended on July 8, 1999 (the "Merger Agreement"). This letter
confirms the parties' agreement that the Merger Agreement is hereby amended and
supplemented, effective as of the date of this letter, as follows:
(a) The words "or affiliates thereof" shall be inserted after "Merger Sub"
in the last sentence of Section 2.5.
(b) The following proviso shall be added to the end and as part of the
second sentence of Section 5.11(a) (after the phrase "....the proceeds
of the Bridge Financing"): "; provided further that Merger Sub shall
have no obligation to draw on or obtain for it or the Company the
proceeds of the Bridge Financing if an Escrow Closing (as defined in
Section 5.11(c)) has theretofore occurred."
(c) Section 5.11(c) shall be added to the Merger Agreement consisting of
the following:
"(c) At any time prior to consummation of the Merger, the proceeds of
the subordinated debt financing in connection with the Merger may be
closed into escrow such that such proceeds are held by a newly formed
corporation (the "EscrowCo") formed at the direction of ▇▇▇▇▇ (such
closing, an "Escrow Closing"). At or immediately prior to such Escrow
Closing, the Company shall pay to EscrowCo an amount in dollars (the
"Breakage Amount") sufficient to cover (i) accrued interest on the
EscrowCo Debt (as defined below) from the Escrow Closing to and
including the Termination Date (as defined in Section 7.1(d)), net of
income earned by EscrowCo from investing the proceeds of the
subordinated debt financing in Permitted Investments (as defined
below) to be determined by the Company and Merger Sub prior to the
deposit of the Breakage Amount with EscrowCo and (ii) any repayment
premium applicable thereto in the event that this Agreement is
terminated by the parties in accordance with its terms or the Merger
is not consummated by the date specified by the terms of the EscrowCo
Debt. At or immediately prior to the Effective Time and subject to
consummation of the Merger, (i) the Surviving Corporation shall assume
the indebtedness of EscrowCo plus any accrued and unpaid interest
thereon (the "EscrowCo Debt") and receive the proceeds held by
EscrowCo and (ii) EscrowCo
shall be released from all obligations with respect thereto. In the
event that this Agreement is terminated by the parties in accordance
with its terms or the Merger is not consummated by the date specified
by the terms of the EscrowCo Debt, the EscrowCo Debt (plus any
applicable repayment premium) shall be repaid in full by EscrowCo.
With respect to any such repayment of the EscrowCo Debt (plus any
applicable repayment premium), Merger Sub shall promptly reimburse the
Company for one-half of the excess of the Breakage Amount over any
portion of such amount returned to the Company by EscrowCo. The
parties hereto agree that (i) any applicable repayment premium shall
in no event exceed 1% of the principal amount of the EscrowCo Debt,
(ii) placement agent fees or discounts or commitments shall be payable
with respect to the EscrowCo Debt only at the Effective Time and (iii)
EscrowCo shall invest the proceeds of its borrowings in Permitted
Investments. In the event that the proceeds of the subordinated debt
financing are invested in Permitted Investments such that the Breakage
Amount is less than the amount, which when added to such proceeds, is
not enough to repay in full the EscrowCo Debt (plus any applicable
repayment premium), the Company and Merger Sub shall each pay one-half
of such shortfall to EscrowCo to enable it to pay such amount to the
applicable debtholders. As used herein, "Permitted Investments" shall
mean United States treasury securities (without regard to maturity)
and investments in time deposits, certificates of deposit or money
market deposits maturing within 90 days of the date of acquisition
thereof and entitled to U.S. Federal deposit insurance for the full
amount thereof or issued by a bank or trust company which is organized
under the laws of the United States or any state thereof having
capital in excess of $500 million."
(d) The word "provisos" shall replace the word "proviso" as the second to
last word of Section 6.3(c) (without giving effect to the remainder of
this sentence) and the following shall be added to the end of Section
6.3(c): "; and provided further that if an Escrow Closing has occurred
with respect to an amount as great as that set forth in the Bridge
Financing Letter (or such lesser amount as necessary to provide, when
taken together with the Debt Financing under the Commitment Letters,
$310,000,000) and if the Surviving Corporation shall have assumed the
EscrowCo Debt and received the proceeds held by EscrowCo and EscrowCo
shall
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have been released therefrom in accordance with the terms thereof, the
condition set forth in clause (ii) shall be deemed satisfied."
Very truly yours,
UC Acquisition Sub, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Title: Vice President
Agreed to as of the date written above:
Unilab Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
