AGREEMENT
This Agreement ("Agreement"), dated as of November ___, 1996
is by and among OAKTREE CAPITAL MANAGEMENT, LLC, a California
limited liability company, as general partner or investment
manager (in such capacity, "Oaktree") on behalf of the funds
listed on Annex I under the heading "Oaktree Funds"
(collectively, the "Oaktree Funds"), DDJ OVERSEAS CORP., a Cayman
Islands company ("Overseas"), THE COPERNICUS FUND, L.P., a
Delaware limited partnership ("Copernicus" and, collectively with
Overseas, the "DDJ Funds"), BELMONT FUND, L.P., a Bermuda limited
partnership ("Belmont I"), BELMONT CAPITAL PARTNERS, II, L.P., a
Delaware limited partnership ("Belmont II" and, collectively with
Belmont I, the "Fidelity Funds" and, collectively with the
Oaktree Funds and the DDJ Funds, the "Funds"), and CERBERUS
PARTNERS, L.P. ("Cerberus") (Oaktree, the DDJ Funds, the Fidelity
Funds, and Cerberus hereinafter collectively referred to as the
"Senior Lenders"), and NU-TECH BIO-MED, INC., a Delaware
corporation ("Nu-Tech" and, collectively with the Senior
Lenders, the "Parties").
R E C I T A L S
1. The Senior Lenders currently hold all (a) senior
secured notes (the "Bank Debt") of Physician's Clinical
Laboratory, Inc. (the "Company"), issued pursuant to the Credit
Agreement dated as of April 1, 1994, as amended, among the
Company, as borrower, OCM Administrative Services, L.L.C. (as
assignee of Xxxxx Fargo Bank, N.A.), as agent, and the financial
institutions party thereto and (b) certain subordinated
indebtedness of the Company.
2. The Senior Lenders and Nu-Tech contemplate a
restructuring of the Company pursuant to which, among other
things, (a) the Senior Lenders will assign to Nu-Tech and Nu-Tech
will purchase from the Senior Lenders participation in certain of
the Bank Debt, on a pro rata basis, subject to the terms and
conditions of this Agreement, and (b) Senior Lenders will make
certain loans to the Company.
NOW THEREFORE, for good and valuable consideration, the
sufficiency and delivery of which are hereby acknowledged, the
Parties hereby agree as follows:
Section 1. Board Approval of Term Sheet. Each of the
Parties shall use its best efforts with respect to obtaining the
approval and execution by the Board of Directors of the Company
of the "Summary of Terms of Restructuring of Physician's Clinical
Laboratory, Inc." attached hereto as Exhibit A or a term sheet
containing substantially similar terms and conditions, acceptable
to all of the Parties (the "Term Sheet").
Section 2. Participation in Bank Debt. Upon approval and
execution by the Board of Directors of the Company of the Term
Sheet described in Section 1, Nu-Tech shall purchase an undivided
participation in the Bank Debt from the Senior Lenders, pro rata
to the percentage holdings of such Bank Debt by each of the
Senior Lenders, for $10,000,000, pursuant to the terms and
conditions of the Participation Agreement attached hereto as
Exhibit B. Nu-Tech hereby acknowledges and agrees that the
foregoing obligation shall be binding, irrespective of the
failure of any other conditions contained herein or in the Term
Sheet to be satisfied, including, without limitation, the failure
of the Company to file a bankruptcy petition, appoint Xxxxxx
Xxxxxxxxxx as its chief executive or crisis manager, consummate a
debtor in possession financing arrangement (as described in the
Term Sheet and paragraph 3, below, the "DIP Financing"),
consummate the plan of reorganization (such plan as described in
the Term Sheet the "Plan") or provide for the "Plan Treatment",
all described in the Term Sheet. In the event the DIP Financing
is not approved or the Plan are not consummated, Nu-Tech's sole
interest in the Company arising under this Agreement shall be as
a participant in the Bank Debt purchased from the Senior Lenders
pursuant to this Section 2.
Section 3. DIP Financing. As more particularly set forth
in the Term Sheet and subject to Section 5 below, the Senior
Lenders will provide to the Company a debtor in possession
secured credit facility in an amount up to $10,000,000, the
proceeds of which shall be used (a) for administrative costs
incurred by the Company in connection with the bankruptcy
(including legal, accounting and investment banking fees), (b)
for working capital needs of the Company during the bankruptcy
and (c) to fund the Plan. The Parties shall use their best
efforts to obtain court approval of the DIP Financing as soon as
practicable after the Company files its chapter 11 bankruptcy
petition.
Section 4. Break-Up/Overbid Protections. The Parties agree
to support the Break-up/Overbid Protections (more fully described
in the Term Sheet) and agree to cooperate to obtain Bankruptcy
Court approval for the Break-Up/Overbid Protections, as
contemplated by the Term Sheet.
Section 5. Plan of Reorganization. The Parties shall use
their best efforts to obtain confirmation of the Plan as soon as
reasonably practicable. Additionally, the Parties agree to vote
all of their claims against the Company (including, without
limitation, claims relating to the Bank Debt and the Subordinated
Indebtedness held at such time) in favor of the Plan. As more
particularly set forth in the Term Sheet and subject to Section
5, the Plan shall provide for the following to occur on the
effective date of the Plan (the "Effective Date"):
a. The capitalization of the reorganized Company (the
"Reorganized Company") shall be as follows:
i. Nu-Tech shall hold 51% of the fully diluted
common shares of Reorganized Company (the
"Shares") by (a) exchanging its holding of
Existing Senior Debt in the principle amount
of $13.333 million for 34% of the Shares and
(b) purchasing 17% of the Shares for the sum
of Five Million Dollars ($5,000,000) as of
the Effective Date;
ii. The Senior Lenders shall receive 49% of the
Shares, unless the Voting Condition (as
defined in the Term Sheet) is satisfied, in
which event the Senior Lenders shall receive
37% of the Shares;
iii. If, but only if the Voting Condition is
satisfied, the holders of the Subordinated
Indebtedness shall receive 9% of the Shares;
iv. If, but only if the Voting Condition is
satisfied, the holders of existing equity
interests in PCL shall receive 3% of the
Shares and the Warrants (as defined in the
DIP Term Sheet);
v. The Senior Lenders shall receive the
$55,000,000 of "New Senior Debt" issued by
the Reorganized Company, which shall contain
the terms and conditions set forth in the
Term Sheet and other terms and conditions
agreeable to all of the Parties;
vi. All amounts owed under the DIP Facility shall
be forgiven and any unfunded portion of the
DIP Facility shall be contributed by the
Senior Lenders to the Reorganized Company as
a capital contribution;
vii. The Reorganized Company shall have no other
indebtedness, equity interest or claims
against its equity interest, other than the
working capital facility referenced in the
DIP Term Sheet and outstanding trade debt
incurred in the ordinary course of business.
b. The Plan or separate agreement of the Parties
shall provide for the following:
i. Reorganized Company's Board of Directors will
consist of five (5) directors, three of whom
shall be appointed by Nu-Tech (including the
Chairman of the Board) and the remaining two
(the "Lender Director(s)") of whom shall be
appointed by the Senior Lenders. The Senior
Lenders shall be entitled to appoint two
directors to the Reorganized Company's Board
of Directors for the initial one-year term,
and with respect to subsequent terms,
Oaktree and Nu-Tech shall enter into a
mutually agreeable shareholders agreement
pursuant to which Nu-Tech shall be entitled
to appoint three directors and Oaktree, or
its designee, shall be entitled to appoint
two directors on account of the Shares held
by the Senior Lenders unless and until the
Senior Lenders, in the aggregate, own less
than twenty percent (20%) of the Shares of
the Reorganized Company, in which event,
Oaktree, or its designee, shall only be
entitled to appoint such directors, if any,
which they would be entitled to appoint under
the cumulative voting provisions of the
Delaware law on account of the Shares held by
Senior Lenders.
ii. The organizational documents of the
Reorganized Company shall provide that the
Reorganized Company's Board of Directors will
not undertake the following activities
without approval of at least one Lender
Director: (a) merger & acquisition; (b)
assuming non-ordinary course obligations in
excess of $1 million; (c) making capital
expenditures in excess of $1 million; and (d)
modifying, extending or renewing the
employment agreement referenced in
subparagraph iii, below. The foregoing
limitation on the actions of the Reorganized
Company's board of directors shall cease to
be effective in the event the Senior Lenders
in the aggregate own less than 20% of the
Shares of Reorganized Company; and
iii. J. Xxxxxx Xxxxxxxxxx shall be appointed as
the President and Chief Executive Officer of
Reorganized Company for a term of three (3)
years and shall be paid an initial salary of
$104,000 per annum, and stock options at the
market value of PCL as of the Petition Date
and in an amount to be negotiated with the
Board of Directors.
Section 6. Confidentiality. Each of the Parties agrees to
respect the confidential information disclosed in the negotiation
and performance of this Agreement and the Term Sheet, including
any information labeled or otherwise indicated as being
confidential or proprietary by the disclosing party, except
disclosures (a) which may be compelled by legal process, by an
order, judgment or decree of a court or other governmental
authority of competent jurisdiction, (b) to its own employees,
attorneys, accountants or representatives or (c) which may be
required by any applicable federal, state or other regulatory
requirement including disclosures required by Bankruptcy Code
1125 and disclosures required to be made by any party in
accordance with federal or state securities laws.
Section 7. Termination. The obligation of the Parties
under Section 5 shall be binding on each of the Parties until the
earliest of the Effective Date or the first anniversary of the
Petition Date.
Section 8. Limitations on Liability. Nu-Tech hereby
acknowledges and agrees that in no event shall any of the
partners, officers, directors, members, fiduciaries,
shareholders, employees, agents, affiliates or investment
managers (collectively "Representatives") of any of Oaktree, the
DDJ Funds or the Belmont Funds have any obligation or liability
to Nu-Tech for any action taken or omitted by or on behalf of any
of the Funds or in connection herewith (such obligation and
liability being the sole responsibility of such Funds). Nu-Tech
further acknowledges and agrees that (a) all obligations and
liabilities of each Fund under this Agreement or in connection
herewith are enforceable solely against such Fund and its assets
and not against the assets of Oaktree, the DDJ Funds' affiliates,
the Belmont Funds' affiliates, any other Fund or any
Representatives of Oaktree, the DDJ Funds or the Belmont Funds,
and (b) the obligations and liabilities of each Fund shall be
several in the proportions set forth on Annex I and not joint and
several.
Section 9. Representations and Warranties. Each Party
hereby represents and warrants as follows:
a. Such Party is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
organization with all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated herein.
b. The execution, delivery and performance of this
Agreement and all other instruments and documents executed and
delivered by such Party in connection herewith have been duly
authorized by all necessary proceedings.
c. No authorizations, consents or approvals from, or
notifications to, any court or any governmental agency having
jurisdiction over such Party or any other person or entity are or
will be necessary to the valid execution, delivery or performance
by such Party of this Agreement.
d. This Agreement constitutes the legal, valid and
binding obligation of such Party except as may be limited by
bankruptcy, reorganization, receivership, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
Section 10. Entire Agreement; Amendments. This Agreement,
together with the Annexes and Exhibits hereto, sets forth the
entire agreement between the Parties and supersedes all prior
communications and understandings of any nature and may not be
supplemented or altered orally. Any amendments hereto shall be
in writing and signed by each party.
Section 11. Notices. Each notice or other communication
hereunder shall be in writing, shall be sent by messenger, by
telecopy or facsimile transmission or by express mail, shall be
deemed given when sent to the designated address set forth in
Annex II (or such other address as the Parties may designate from
time to time to the other Parties).
Section 12. Further Assurances. Each Party shall execute
and deliver all further documents or instruments reasonably
requested by the other Parties in order to effect the intent of
this Agreement and obtain the full benefit of this Agreement.
Section 13. Successors and Assigns. This Agreement shall
be binding on, and inure to the benefit of, the Parties and their
successors and assigns.
Section 14. Submission to Jurisdiction. The Parties agree
that any legal action or proceeding arising out of or relating to
this Agreement may be brought in the courts of the State of
California, the courts of the United States of America located in
the City of Los Angeles, or in any other court having
jurisdiction with respect thereto, and the Parties irrevocably
consent to service of process in any said action or proceeding in
any of such courts by the mailing of copies thereof, postage
prepaid, to such Party at such Party's address set forth in Annex
II, such service to become effective 10 days after such mailing.
Section 15. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. EACH OF THE PARTIES HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ITS RIGHT TO A
TRIAL BY JURY WITH RESPECT TO ANY DISPUTE ARISING WITH RESPECT TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 16. Severability. If any provision of this
Agreement shall for any reason be held to be invalid or
unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Agreement shall be
construed as if such invalid or unenforceable provision had never
been contained herein.
Section 17. Authority. Oaktree represents and warrants to
Nu-Tech that it has full power and authority to execute and
deliver this Agreement for and on behalf of the Oaktree Funds.
Oaktree is authorized to act on behalf of its respective Funds in
connection with the matters contemplated hereby.
Section 18. Counterparts. This Agreement may be executed
in one or more counterparts each signed by one or more of the
parties to this Agreement, and such counterparts shall together
constitute one agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed by their respective duly authorized officers as of
the date first above written.
NU-TECH BIO-MED, INC.
By_________________________________
Its_____________________________
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
OAKTREE CAPITAL MANAGEMENT, LLC, as
general partner or investment
manager on behalf of the funds
listed on Annex I hereto under
"Oaktree Funds"
By_________________________________
Its_____________________________
By_________________________________
Its______________________________
DDJ OVERSEAS CORP.
By_________________________________
Xxxx X. Xxxxxxx
Its Vice President
THE COPERNICUS FUND, L.P.
By DDJ Copernicus, LLC, its General
Partner
By_________________________________
Its_____________________________
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
BELMONT FUND, L.P.
By [_______________], its General
Partner
By_________________________________
Its______________________________
BELMONT CAPITAL PARTNERS, II, L.P.,
By [_______________], its General
Partner
By_________________________________
Its______________________________
CERBERUS PARTNERS, L.P.
By_________________________________
By_________________________________
Its______________________________
Annex I
Oaktree Funds
Entity Percentage
OCM Opportunities Fund, L.P. 96%
Columbia/HCA Master Retirement Trust 4%
(Separate Account)
100%
DDJ
Funds
The Copernicus Fund, L.P.
DDJ Overseas Corp.
Belmont Funds
Belmont Fund, L.P.
Belmont Capital Partners II, L.P.
Annex II
Oaktree:
Oaktree Capital Management, LLC
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
DDJ Funds:
c/o DDJ Capital Management, LLC
000 Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Belmont Funds:
c/o Fidelity Management & Research Company
00 Xxxxxxxxxx Xxxxxx - X00X
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Cerberus Partners, L.P.:
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
Nu-Tech:
Nu-Tech Bio-Med, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
