TERM NOTE B-2
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Debtor's Name: Specialty Laboratories, Inc.
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Debtor's Address: Office: #210 Loan Number
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
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Maturity Date: Amount
February 1, 2004 $6,186,491.56
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Santa Monica, California $6,186,491.56 Date: February 17, 1999
FOR VALUE RECEIVED, on February 1, 2004 (the "Maturity Date"), the undersigned
("Debtor") promises to pay to the order of UNION BANK OF CALIFORNIA, N.A.
("Bank"), as indicated below, the principal sum of Six Million One Hundred
Eighty-Six Thousand Four Hundred Ninety-One and 56/100 Dollars ($6,186,491.56),
or so much thereof as is disbursed, together with interest on the balance of
such principal from time to time outstanding, at the per annum rate or rates and
at the times set forth below. This Term Note B-2 (this "Note") is the Term Note
B-2 described in the Amended and Restated Loan Agreement (as such term is
defined hereinbelow) and is governed by the terms and conditions thereof.
1. PAYMENTS.
PRINCIPAL PAYMENTS. Debtor shall pay principal in forty-eight (48)
equal consecutive monthly installments, each in an amount equal to one-sixtieth
(1/60th) of the outstanding principal amount hereof on February 1, 2000,
beginning February 1, 2000, and continuing on the first day of each month
thereafter. On the Maturity Date, all outstanding principal and accrued but
unpaid interest shall be due and payable. The availability under this Note shall
be reduced on the same day and in the same amount as each scheduled principal
payment.
INTEREST PAYMENTS. Debtor shall pay interest on the first day of each
month; commencing March 1, 1999. Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this Note shall be made on the basis of a year of
360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding
hereunder in increments of at least One Hundred Thousand Dollars
($100,000) shall bear interest at a rate, based on an index selected by
Debtor, equal to Bank's LIBOR Rate for the Interest Period selected by
Debtor plus the LIBOR Rate Margin.
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Any Base Interest Rate may not be changed, altered or otherwise
modified until the expiration of the Interest Period selected by
Xxxxxx. The exercise of interest rate options by Debtor shall be as
recorded in Bank's records, which records shall be prima facie evidence
of the amount borrowed as a Base Interest Rate Loan and the interest
rate; provided, however, that failure of Bank to make any such notation
in its records shall not discharge Debtor from its obligation to repay
in full with interest all amounts borrowed. In no event shall any
Interest Period extend beyond the Maturity Date.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which the Base Interest Rate is not accruing,
and on the expiration of any Interest Period with respect to principal
outstanding on which the Base Interest Rate has been accruing, select
an index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 10:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected index,
the Interest Period and the Origination Date selected (which
Origination Date shall follow the date of such selection by no more
than two (2) Business Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index is
unavailable for any reason, the selection shall be void. Bank reserves
the right to fund the principal from any source of funds.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum equal to the Reference Rate, which rate shall vary as
and when the Reference Rate changes.
Debtor shall pay all amounts due under this Note in lawful money of the
United States at Bank's Los Angeles Headquarters Commercial Banking
Office, or such other office as may be designated by Bank, from time to
time.
2. LATE PAYMENTS. If any payment required by the terms of this Note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this Note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above,
calculated from the date of default until all amounts payable under this Note
are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this Note bearing interest at a rate based
on the Reference Rate may be prepaid in whole or in part at any time,
without penalty or premium. Amounts outstanding under this Note bearing
interest at the Base Interest
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Rate may only be prepaid, in whole or in part, provided that Bank has
received not less than five (5) Business Days' prior written notice of
an intention to make such prepayment and Debtor pays a prepayment fee
to Bank in an amount equal to the present value of the product of: (i)
the difference (but not less than zero) between (a) the Base Interest
Rate applicable to the principal amount which Debtor intends to prepay
and (b) the return which Bank could obtain if it used the amount of
such prepayment of principal to purchase at bid price regularly quoted
securities issued by the United States having a maturity date most
closely coinciding with the relevant Base Rate Maturity Date and such
securities were held by Bank until the relevant Base Rate Maturity Date
("Yield Rate"); (ii) a fraction, the numerator of which is the number
of days in the period between the date of prepayment and the relevant
Base Rate Maturity Date and the denominator of which is 360; and (iii)
the amount of the principal so prepaid (except in the event that
principal payments are required and have been made as scheduled under
the terms of the Base interest Rate Loan being prepaid, then an amount
equal to the lesser of (A) the amount prepaid or (B) fifty percent
(50%) of the sum of (1) the amount prepaid and (2) the amount of
principal scheduled under the terms of the Base Interest Rate Loan
being prepaid to be outstanding at the relevant Base Rate Maturity
Date). Present value under this Note is determined by discounting the
above product to present value using the Yield Rate as the annual
discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim
against Bank, should the return which Bank could obtain under the above
prepayment formula exceed the interest that Bank would have received if
no prepayment had occurred. All prepayments shall include payment of
accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal. A
determination by Bank as to the prepayment fee amount, if any, shall be
conclusive.
c. Such prepayment fee, if any, shall also be payable if prepayment
occurs as the result of the acceleration of the principal of this Note
by Bank because of any default hereunder. If, following such
acceleration, all or any portion of a Base Interest Rate Loan is
satisfied, whether through sale of property encumbered by any security
agreement or other agreement securing this Note, at a foreclosure sale
held thereunder or through the tender of payment at any time following
such acceleration, but prior to such a foreclosure sale, then such
satisfaction shall be deemed an evasion of the prepayment conditions
set forth above, and Bank shall, automatically and without notice or
demand, be entitled to receive, concurrently with such satisfaction the
prepayment fee set forth above, and the amount of such prepayment fee
shall be added to the principal. DEBTOR HEREBY ACKNOWLEDGES AND AGREES
THAT BANK WOULD NOT EXTEND THE CREDIT TO DEBTOR EVIDENCED BY THIS NOTE
WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE, TO PAY BANK A
PREPAYMENT FEE UPON THE SATISFACTION OF ALL OR ANY PORTION OF THE
PRINCIPAL BEARING INTEREST AT THE BASE INTEREST RATE FOLLOWING THE
ACCELERATION OF THE MATURITY DATE HEREOF BY REASON OF A DEFAULT. DEBTOR
HAS CAUSED THOSE PERSONS SIGNING THIS NOTE ON ITS BEHALF TO SEPARATELY
INITIAL THE AGREEMENT CONTAINED IN THIS PARAGRAPH BY PLACING THEIR
INITIALS BELOW:
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INITIALS: [ILLEGIBLE] [ILLEGIBLE]
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5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include,
but not be limited to, any of the following: (a) the failure of Debtor
to make any payment required under this Note when due and, in the case
of any interest payment only, such failure shall continue for five (5)
days; (b) any breach, misrepresentation or other default by Debtor, any
guarantor, co-maker, endorser, or any person or entity other than
Debtor providing security for this Note (hereinafter individually and
collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor,
and such breach, misrepresentation or other default, if in respect of a
financial covenant which is capable of being cured, is not cured within
thirty (30) days after its occurrence; (c) the insolvency of any
Obligor or the failure of any Obligor generally to pay such Obligor's
debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or
debtor relief and in the case of any involuntary proceeding, the same
shall not be dismissed or discharged within sixty (60) days after
commencement; (e) the assignment by any Obligor for the benefit of such
Obligor's creditors of any substantial part of such Obligor's property;
(f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for
all or substantially all of any Obligor's property; (g) the
commencement of any proceeding for the dissolution or liquidation of
any Obligor; (h) the termination of existence or death of any Obligor;
(i) the revocation of any guaranty or subordination agreement given in
connection with this Note; (j) the failure of any Obligor to comply
with any order, judgment, injunction, decree, writ or demand of any
court or other public authority; (k) the filing or recording against
any Obligor, or the property of any Obligor, of any notice of levy,
notice to withhold, or other legal process for taxes other than
property taxes; (l) the default by any Obligor personally liable for
amounts owed hereunder on any obligation concerning the borrowing of
money; (m) the issuance against any Obligor, or the property of any
Obligor, of any writ of attachment, execution, or other judicial lien;
or (n) the deterioration of the financial condition of any Obligor
which results in Bank deeming itself, in good faith, insecure. Upon the
occurrence of any such default, Bank, in its discretion, may cease to
advance funds hereunder and may declare all obligations under this Note
immediately due and payable; however, upon the occurrence of an event
of default under subsection (d), (e), (f) or (g) hereof, all principal
and interest shall automatically become immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this
Note are not paid when due, Debtor promises to pay all costs and
expenses, including reasonable attorneys' fees, incurred by Bank in the
collection or enforcement of this Note. Debtor and any endorsers of
this Note, for the maximum period of time and the full extent
permitted by law, (a) waive diligence, presentment, demand, notice of
nonpayment, protest, notice of protest, and notice of every kind; (b)
waive the right to assert the defense of any statute of limitations to
any debt or obligation hereunder; and (c) consent to renewals and
extensions of time for the payment of any amounts due under this Note.
The receipt of any check or other item of payment by Bank, at its
option, shall not be considered a payment on account until such check
or other item of payment is honored when presented for payment at the
drawee bank. Bank may delay the credit of such payment based upon
Bank's schedule of funds availability, and interest under this Note
shall accrue until the funds are deemed collected. In any action
brought under or arising out of this Note,
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Debtor and any Obligor, including their successors and assigns, hereby
consent to the jurisdiction of any competent court within the State of
California, as provided in any alternative dispute resolution agreement
executed between Debtor and Bank, and consent to service of process by
any means authorized by said state's law. The term "Bank" includes,
without limitation, any holder of this Note. This Note shall be
construed in accordance with and governed by the laws of the State of
California. This Note hereby incorporates any alternative dispute
resolution agreement previously, concurrently or hereafter executed
between Debtor and Bank.
7. DEFINITIONS. As used herein, the following terms shall have the
meanings respectively set forth below: "AMENDED AND RESTATED LOAN
AGREEMENT" shall mean that certain Amended and Restated Loan Agreement
dated as of April 7, 1997, by and between Debtor and Bank, as amended
by that certain First Amendment dated as of January 23, 1998, as
amended by that certain Second Amendment and Waiver dated as of
February 17, 1999 and as at any time further amended, supplemented or
otherwise modified or further restated. "BASE INTEREST RATE" shall mean
a rate of interest based on the LIBOR Rate. "BASE INTEREST RATE LOAN"
shall mean amounts outstanding under this Note that bear interest at
the Base Interest Rate. "BASE RATE MATURITY DATE" shall mean the last
day of the Interest Period with respect to principal outstanding under
a Base Interest Rate Loan. "BUSINESS DAY" shall mean a day which is not
a Saturday or Sunday on which Bank is open for business in the state
identified in paragraph 6 above, and with the respect to the rate of
interest based on the LIBOR Rate, on which dealings in U.S. dollar
deposits outside of the United States may be carried on by Bank.
"INTEREST PERIOD" shall mean any calendar period of one (1), three (3),
six (6), nine (9) or, subject to availability, twelve (12) months. In
determining an Interest Period, a month means a period that starts on
one Business Day in a month and ends on and includes the day preceding
the numerically corresponding day in the next month. For any month in
which there is no such numerically corresponding day, then as to that
month, such day shall be deemed to be the last calendar day of such
month. Any Interest Period which would otherwise end on a non-Business
Day shall end on the next succeeding Business Day unless that is the
first day of a month, in which event such Interest Period shall end on
the next preceding Business Day. In no event shall any Interest Period
extend beyond the Maturity Date. "LIBOR RATE" shall mean a per annum
rate of interest (rounded upward, if necessary, to the nearest 1/100
of 1%) at which dollar deposits, in immediately available funds and in
lawful money of the United States would be offered to Bank, outside of
the United States, for a term coinciding with the Interest Period
selected by Debtor and for an amount equal to the amount of principal
covered by Xxxxxx's interest rate selection, plus Bank's costs,
including the cost, if any of reserve requirements. "LIBOR RATE MARGIN"
shall mean, (i) two and three-quarters percent (2-3/4%) per annum,
effective on the first day of the month following the month in which
Bank receives a Financial Statement (as such term is defined in the
Amended and Restated Loan Agreement) from Debtor demonstrating that the
ratio of Debtor's Funded Indebtedness to EBITDA for the fiscal period
covered thereby was greater than 2.25 to 1.00, (ii) two and forty-five
one hundredths percent (2.45%) per annum, effective on the first day of
the month following the month in which Bank receives a Financial
Statement from Debtor demonstrating that the ratio of Debtor's Funded
Indebtedness to EBITDA for the fiscal period covered thereby was less
than or equal to 2.25 to 1.00 but greater than 1.50 to 1.00 and (iii)
two percent (2%) per annum, effective on the first day of the month
following the month in which Bank receives a Financial Statement from
Debtor demonstrating that the ratio of Xxxxxx's Funded Indebtedness to
EBITDA for the fiscal
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period covered thereby was less than or equal to 1.50 to 1.00;
provided, however, that (x) if at any time there exists an Event of
Default under the Amended and Restated Loan Agreement, or any event
which, with notice or the lapse of time, or both, would become an Event
of Default under the Amended and Restated Loan Agreement or (y) if
Debtor fails to deliver any Financial Statement to Bank within the
required time period set forth in the Amended and Restated Loan
Agreement, then the ratio of Debtor's Funded Indebtedness to EBITDA
shall be deemed to be greater 2.25 to 1.00 until such Event of Default
or unmatured Event of Default is cured or otherwise waived by Bank or
such Financial Statement is delivered to Bank, as the case may be; and
provided further, however, that the LIBOR Rate Margin shall never be a
negative number. "ORIGINATION DATE" shall mean the Business Day on
which funds are made available to Debtor relating to Debtor's selection
of the Base Interest Rate. "REFERENCE RATE" shall mean the rate
announced by Bank from time to time at its corporate headquarters as
its Reference Rate. The Reference Rate is an index rate determined by
Bank from time to time as a means of pricing certain extensions of
credit and is neither directly tied to any external rate of interest or
index nor necessarily the lowest rate of interest charged by Bank at
any given time.
SPECIALTY LABORATORIES, INC.
By /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Title President
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By /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title Vice President Finance and Treasurer
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