Exhibit 10.33
EXECUTION COPY
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of November 7, 1996, is by and
between Unilab Corporation (the "Seller") and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (together with its successors and assigns, "DLJ").
RECITALS
WHEREAS:
A. All capitalized terms used in this Participation Agreement without
definition shall have the respective meanings ascribed to such terms in the
Stock Purchase Agreement (as defined below).
B. Seller entered into a Stock Purchase Agreement with Unilabs Group
Limited ("UGL") and UniHolding Corp. ("UniHolding"), dated as of June 30, 1995,
a copy of which is attached hereto as Exhibit "A" (the "Stock Purchase
Agreement"). Pursuant to the Stock Purchase Agreement, Seller sold to UGL, and
UGL purchased from Seller, 400 shares of capital stock of UGL, par value $1.00
per share (the "UGL Shares").
C. Upon closing the Stock Purchase Agreement, UGL, in payment for the
UGL Shares, (i) paid Unilab the Cash Consideration and (ii) delivered to Unilab
a promissory note, dated June 30, 1995, in the principal amount of $15,000,000
(the "Note"), a copy of which is attached hereto as Exhibit "B".
D. As collateral security for the payment of the Note, 200 of the UGL
Shares were placed in Escrow pursuant to the terms of an Escrow Agreement, dated
June 30, 1995, among Seller, UGL, UniHolding and Bankers Trust Company, as
escrow agent. A copy of the Escrow Agreement is attached hereto as Exhibit "C".
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises herein contained and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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SECTION 1. Purchase and Sale
.Seller and DLJ, as the case may be, each covenant and agree as follows:
(a) Subject to the terms and conditions of this Agreement, Seller
wishes to sell to DLJ and DLJ wishes to purchase from Seller, an undivided 100%
participation interest (the "Participation") in all of Seller's right, title and
interest in and to the Note (including the registration rights granted therein),
the Escrow Agreement, and, to the extent the rights conferred thereunder relate
to the enforcement and collection of the Note or Escrow Agreement, the Stock
Purchase Agreement (collectively, the "Agreements") and all rights associated
therewith, including, without limitation:
(i) any right or claim (collectively, the "Related Claims")
relating to the Agreements which Seller now has or hereafter acquires
against any party to any Agreement (a "Party") retained by any Party
in connection with the Agreements or any transaction contemplated
therein; and
(ii) all cash, securities, interest, dividends or other
property which may be distributed or exchanged for or collected in
respect of the foregoing (including in connection with any
restructuring of UGL or UniHolding), and the proceeds thereof,
including, without limitation, distributions in respect of principal,
interest, fees, costs and expenses relating thereto (collectively, the
"Proceeds");
(all such right, title and interest of Seller in and to the Agreements, the
Related Claims and the Proceeds being referred to herein as the "Participation
Interest").
(b) Nature of Participation. Upon the occurrence of the Closing
pursuant to Section 2 below, Seller hereby sells and transfers to DLJ the
Participation. The Participation conveyed hereunder is a true sale of an
undivided 100% beneficial interest in the Note and the Agreements and, in
accordance with the terms hereof, there shall exist an agency relationship
between Seller, as agent, and DLJ, as beneficiary.
(c) No Assumption of Obligations or Liabilities. Seller and DLJ intend
and agree that DLJ is not assuming any of Seller's obligations or liabilities
arising under or relating to the Agreements.
(d) Security Interest. Effective upon Seller's receipt of the Purchase
Price (as defined below), Seller hereby grants and conveys to DLJ a security
interest in the Note as security for Seller's obligations hereunder. To perfect
such security interest, concurrently with the execution and delivery of this
Participation Agreement, Seller is delivering to DLJ the Note as collateral
security.
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SECTION 2. Closing
.The sale of the Participation is expressly conditioned upon and shall not
be deemed to have occurred unless and until:
(i) Each of Seller and DLJ shall have executed and delivered
to the other a copy of this Participation Agreement and shall have
received the same;
(ii) Seller shall have delivered to DLJ the Note as
collateral security in accordance with Section 1(d) above; and
(iii) DLJ shall have wired the Purchase Price (the "Purchase
Price" as defined in that certain letter agreement, dated as of the
date hereof, between Seller and DLJ (the "Pricing Letter")), in
immediately available funds to:
Unilab Corporation
Bank Name: Citibank
ABA #: 000000000
Account #: 4060-3893
Reference: Sale of UGL Note
and Seller shall have received the Purchase Price (the date on which Seller
receives the Purchase Price being referred to herein as the "Closing Date").
SECTION 3. Administration
. Seller and DLJ, as the case may be, each covenant and agree as follows:
(a) Expenses. Seller has paid, or will pay, any costs or expenses, if
any, arising under or in connection with the Agreements that arise prior to, or
are attributable to the period prior to, the Closing Date. DLJ shall reimburse
Seller for costs and expenses under the Escrow Agreement that are attributable
to the period from and after the Closing Date. Each party hereto shall be
responsible for its own costs and expenses (including, without limitation, fees
and disbursements of its counsel) in connection with entering into this
Participation Agreement and consummating the transactions contemplated
hereunder.
(b) Distributions. Whenever Seller receives any Proceeds in respect
of the Participation Interest, Seller shall promptly pay (in no event later than
two business days after receipt) the same over to DLJ in accordance with the
wire instructions set forth on the signature page hereto. Until any such
Proceeds are paid to DLJ, Seller shall segregate and hold the same as agent for
the sole economic benefit of DLJ. Unless otherwise instructed in writing by DLJ
and as otherwise provided in this Participation Agreement, Seller shall use
commercially
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reasonable efforts to cause any Proceeds issued in the form of securities to be
registered in the name of DLJ or in such name or names as DLJ may direct, at
DLJ's sole cost and expense.
(c) Documents. Seller shall promptly upon the receipt thereof deliver
to DLJ, at DLJ's sole cost and expense, any documents and notices that relate to
the Agreements.
(d) Acts and Decisions. Seller shall act as DLJ's agent and at DLJ's
direction in DLJ's sole discretion and at DLJ's sole cost and expense, for all
purposes under the Agreements, including, without limitation, for purposes of
voting (to the extent permitted under the Agreements), distribution, and
exercise of any rights under the Agreements including, without limitation,
Seller's rights with respect to demand and other registration rights in respect
of the resale by Seller on behalf of DLJ or directly by DLJ any securities to be
issued in exchange for, or in payment of, the Note as directed by DLJ in
writing. Without limiting the foregoing, DLJ, at its sole cost and expense,
shall be entitled (i) to designate all attorneys to be retained by Seller (who
shall be reasonably satisfactory to Seller) in connection with all matters
relating to the Agreements including, without limitation, Seller's rights of
enforcement thereunder and (ii) to direct all actions to be taken by such
counsel, within the scope of its representation of Seller. DLJ shall have the
exclusive right to direct the settlement of any litigation or restructuring
affecting the Participation Interest. Notwithstanding the foregoing, DLJ, at its
sole option, and at DLJ's sole cost and expense, may as Seller's agent or
attorney-in-fact in Seller's name, as necessary or appropriate, take all actions
it deems necessary to collect or enforce rights in respect of the Participation
Interest and the Agreements and Seller shall execute any documents necessary so
to authorize DLJ.
(e) Seller to Act at DLJ's Request. Upon DLJ's request, and at DLJ's
sole cost and expense, Seller shall take any actions reasonably requested by DLJ
and not inconsistent with the terms of the Agreements with respect to the
Agreements and the Participation Interest including, without limitation, the
sale, in accordance with DLJ's instructions, of any securities issued by UGL or
UniHolding in exchange for, or in payment of, the Note and the prompt payment to
DLJ of the Proceeds thereof.
(f) Transfer by Seller. Seller covenants and agrees that it shall not
sell, grant, convey or transfer participation or subparticipation interests in,
or otherwise transfer or encumber, in whole or in part, any of its right, title
and interest in the Participation Interest or the Agreements other than as
contemplated herein.
(g) Acknowledgment of Relationship. DLJ and Seller each acknowledge
that Seller has sold DLJ all equitable and beneficial interests of Seller in the
Participation Interest and Seller shall retain legal title thereto in trust for
DLJ.
SECTION 4. Seller's Representations and Warranties
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.Seller hereby represents and warrants as follows:
(a) Good Standing. Seller is a Delaware corporation duly organized,
validly existing and with requisite power and authority to execute and deliver
this Participation Agreement and the Pricing Letter and consummate the
transactions contemplated hereby.
(b) Authority. The execution, delivery and performance of this
Participation Agreement, the Pricing Letter and all other instruments and
documents executed and delivered by Seller in connection herewith (i) have been
duly authorized by all necessary action and do not and will not require any
consent or approval of Seller's shareholders; (ii) have been duly authorized by
Seller; and (iii) do not violate any law, rule, regulation, order, writ,
judgment, injunction, decree, or determination presently in effect having
applicability to Seller or any provision of Seller's charter or by-laws.
(c) Validity. This Participation Agreement is binding upon and is
enforceable against Seller in accordance with its terms.
(d) Power to Grant. Seller has the full power and legal right to grant
the security interest to DLJ pursuant to this Participation Agreement free and
clear of any and all liens, claims and encumbrances.
(e) Title. Seller is the sole owner of the Participation Interest,
free and clear of any liens, claims, encumbrances or other charges whatsoever.
Neither the Note nor the Participation is subject to any prior assignment,
conveyance, transfer or participation or agreement to assign, convey, transfer
or participate, in whole or in part.
(f) Sophisticated Seller. Seller is a sophisticated seller with
respect to the participation, has adequate information concerning the business
and financial condition of UGL and UniHolding to make informed decisions
regarding the sale of the Participation and has independently and without
reliance upon DLJ and based upon such information as Seller has deemed
appropriate, made its own independent decision to enter into this Participation
Agreement. Seller acknowledges that DLJ may be in possession of material
non-public information not known to Seller, and Seller covenants not to xxx DLJ
due to its lack of such information; provided, however, that such information,
if any, does not contradict any of the representations made by DLJ herein.
(g) Not an Insider. Seller is not an "insider" (as that term is
defined in Section 101(31) of the Bankruptcy Code) with respect to UGL or
UniHolding.
(h) Actions by Seller. Seller has not engaged in any action, omission
or conduct that could result in the Note being subject to any defense, right of
setoff, recoupment,
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avoidance, disallowance, or subordination, in whole or in part, whether on
contractual, legal or equitable grounds.
(i) Offsets. Neither UGL or UniHolding nor any of their affiliated
entities maintains any deposit accounts with Seller.
(j) Judgments; Principal Amount. No judgment has been entered upon the
Note, no part of the original principal amount of the Note has been paid, and no
challenge to the validity or enforceability of the Note has been asserted, or,
to the best of Seller's knowledge, threatened, as of the date hereof.
(k) No Defenses. Payment by UGL and UniHolding under the Note is not
subject to any defense, right of setoff, recoupment, avoidance, disallowance, or
subordination, in whole or in part.
(l) Proceedings. No proceedings are pending or, to the best of
Seller's knowledge, threatened against or affecting Seller, which, in the
aggregate, could adversely affect the Participation or the Participation
Interest.
(m) Documents. There are no documents or agreements to which Seller is
a party that would materially adversely affect the Agreements. Seller has
delivered to DLJ true and complete copies of the Agreements, copies of which are
annexed hereto as Exhibits A, B and C. None of the Agreements has been amended
or modified.
(n) Unfunded Obligations. Seller has no obligation to extend credit or
any other financial accommodation to UGL or UniHolding.
(o) Prior Representations True and Correct. Seller has complied with
all of its agreements and covenants in the Agreements.
(p) Release is Valid. Annexed hereto as Exhibit "D" is a true and
correct copy of the Termination and Release Agreement and such agreement has not
been amended or modified.
SECTION 5. DLJ's Representations
.DLJ hereby represents and warrants as follows:
(a) Good Standing. DLJ is validly existing and in good standing under
the laws of its jurisdiction, and has all requisite power and authority to
execute and deliver this Participation Agreement and the Pricing Letter and
consummate the transactions contemplated hereby, and has obtained all consents
and approvals, and made all registrations, required to be made or obtained by it
in connection herewith.
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(b) Authority. The execution, delivery and performance of this
Participation Agreement, the Pricing Letter and all other instruments and
documents executed and delivered by DLJ in connection herewith (i) have been
duly authorized by all necessary action and do not and will not require any
consents or approvals; (ii) have been duly authorized by DLJ; and (iii) do not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, or
determination presently in effect having applicability to DLJ or any provision
of DLJ's charter or by-laws.
(c) No Investment Advice. DLJ acknowledges that Seller has not given
any investment advice, credit information or rendered any opinion as to whether
the purchase of the Participation is prudent. DLJ acknowledges that Seller may
be in possession of material non-public information not known to DLJ, and DLJ
covenants not to xxx Seller due to its lack of such information; provided,
however, that such information, if any, does not contradict any of the
representations made by Seller herein.
(d) Purchase for Investment. Without creating any implication that the
Participation is a security, DLJ represents that it (i) is an "accredited
investor" within the meaning of Section 2(15) of the Securities Act of 1933 (the
"Securities Act"), and the rules and regulations of the Securities and Exchange
Commission thereunder, and (ii) is not purchasing the Participation, or any part
thereof, with a view to the sale or distribution thereof in violation of the
Securities Act; provided, however, that DLJ may resell the Participation if such
resale is effected in accordance with the Securities Act and in compliance with
Section 7 hereof.
(e) ERISA. DLJ is not purchasing the Participation on behalf of one or
more employee benefit plans with proceeds which, directly or indirectly,
constitute plan assets, as defined in the Employee Retirement Income Security
Act of 1974, as amended.
(f) Sophisticated Purchaser. DLJ is a sophisticated purchaser with
respect to the Participation, has adequate information concerning the business
and financial condition of UGL and UniHolding to make informed decisions
regarding the purchase of the Participation and has independently and without
reliance upon Seller and based upon such information as DLJ has deemed
appropriate, made its own independent decision to enter into this Participation
Agreement.
SECTION 6. Indemnities
. (a) Seller's Indemnities. Seller hereby agrees to indemnify and hold
DLJ and its agents, affiliates, controlling persons, officers, directors, and
employees (collectively, the "DLJ Indemnitees") harmless from and against any
and all expenses (including, without limitation, reasonable attorneys' fees and
disbursements), losses (including lost profit), claims, damages or liabilities
(collectively, "Liabilities") which are incurred by DLJ Indemnitees or any of
them, caused by, or in any way resulting from or relating to, (i) Seller's
failure to carry out
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any or all of its obligations under the Agreements or (ii) Seller's breach of
any of its representations, warranties, covenants or agreements set forth
herein.
(b) DLJ's Indemnities. DLJ hereby agrees to indemnify and hold Seller,
its agents, affiliates, controlling persons, officers, directors and employees
(collectively, "Seller Indemnitees") harmless from and against any and all
Liabilities which are incurred by Seller Indemnitees or any of them, including,
but not limited to, reasonable attorneys' fees and expenses, caused by, or in
any way resulting from or relating to, (i) DLJ's breach of any of its
representations, warranties, covenants or agreements set forth herein, (ii) any
action taken by Seller in accordance with DLJ's direction pursuant to this
Participation Agreement; or (iii) any action taken by DLJ as agent or
attorney-in-fact of Seller.
SECTION 7. Transfer
. (a) Further Assignments, Participations. This Participation
Agreement including, without limitation, the representations, warranties,
covenants and agreements contained herein, shall inure to the benefit of and be
enforceable by the respective parties hereto and their respective successors,
assigns and transferees. DLJ may sell, assign, or transfer or participate the
Participation or any portion thereof or any interest therein without Seller's
consent; provided, however, that, absent Seller's consent, which consent shall
not be unreasonably withheld or delayed, any such sale, assignment or transfer,
the obligations of DLJ and Seller hereunder shall remain in full force and
effect until fully paid, performed and satisfied. Seller shall not assign, sell
or otherwise transfer its obligations under this Agreement without the consent
of DLJ.
(b) Conversion to Direct Assignment. At any time after the date
hereof, upon DLJ's request, Seller shall take all steps reasonably necessary to
convert the Participation Interest into a direct assignment of the Note (rather
than as a participation). At DLJ's sole cost and expense, Seller and DLJ shall
use commercially reasonable efforts to obtain any necessary consents to transfer
Seller's rights under the Agreements; provided, however, that, notwithstanding
any such conversion of the Participation Interest to a direct assignment, this
Participation Agreement shall not terminate upon such assignment. DLJ shall
promptly reimburse Seller for all reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees) incurred by Seller in connection
therewith.
SECTION 8. Miscellaneous
. (a) Notices. All notices between parties shall be in writing. Notices
delivered personally or by telecopier shall be deemed received on the same
business day if delivered personally or by telecopier before 3:00 p.m. on such
day, and otherwise on the next day. Notices deposited with an overnight courier
service prior to its deadline on any business day shall be deemed received on
the next business day. Notices deposited in the mail, postage prepaid, on
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any business day shall be deemed received on the seventh business bay following
such deposit. All notices to Seller shall be given to:
Unilab Corporation
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
All notices to DLJ shall be given to:
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) Final Integration. This Participation Agreement and the Pricing
Letter shall serve as a final integration and expression of all agreements
between Seller and DLJ with respect to the subject matter hereof, and any
previous agreement representation or warranty, whether oral or written, shall
have no force and effect.
(c) Choice of Law. This Participation Agreement shall be governed by
and interpreted in accordance with the internal laws of the State of New York
without reference to conflict of law principles.
(d) Survival, Successors and Assigns. This Participation Agreement
(except as expressly provided herein), including without limitation, the
representations, warranties, covenants and indemnities contained herein, all of
which shall survive the execution and delivery of this Participation Agreement
(i) shall inure to the benefit of and be enforceable by the respective parties
hereto and their successors, assigns, participants and transferees and (ii)
shall be binding upon and enforceable against the respective parties hereto, and
their respective successors, assigns and transferees.
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(e) Further Assurances. Each of the parties hereto agrees to execute
and deliver or cause to be delivered all such instruments and to take all such
action as the other party may reasonably request in order to effectuate the
intent and purposes of and to carry out the terms of this Participation
Agreement.
(f) Amendments. No amendment of any provision of this Participation
Agreement shall be effective unless it is in writing and signed by Seller and
DLJ, and no waiver of any provision of this Participation Agreement nor consent
to any departure by Seller or DLJ therefrom, shall be effective unless it is in
writing and signed by the other party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(g) Headings. The headings of the Sections and subsections of this
Participation Agreement are for informational purposes only, do not constitute a
part of this Participation Agreement and shall not affect the interpretation
hereof.
(h) Counterparts. This Participation Agreement may be executed in
counterparts each of which when so executed shall be original but all such
counterparts shall together constitute but one and the same instrument. Executed
counterparts may be delivered by telecopier, provided that original executed
counterparts are thereafter exchanged by mail or overnight delivery service.
(i) Acknowledgment. Seller and DLJ each hereby acknowledges and agrees
that in no event shall any of the officers, directors, shareholders, employees,
agents or investment managers of either party or any affiliate of either party
(each, a "Related Entity") have any personal obligation or liability to Seller
or DLJ, as the case may be, for any action taken or omitted by or on behalf of
any Related Entity hereunder or in connection herewith. Seller and DLJ each
further acknowledges and agrees that all obligations of the other party under
this Participation Agreement are enforceable solely against such party and such
party's assets and not against the assets of any Related Entity and no Related
Entity shall be held liable or responsible for any obligations of either party
arising out of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute this Participation Agreement on the date first
above written.
UNILAB CORPORATION
By:_________________________
Name:
Title:
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:
Name:
Title:
DLJ's Wire Instructions:
Citibank, N.A.
ABA #: 000000000
Acct. Name: DLJ Securities Corp.
Acct. No.: 911-125623
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EXHIBIT A
STOCK PURCHASE AGREEMENT
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EXHIBIT B
PROMISSORY NOTE
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EXHIBIT C
ESCROW AGREEMENT
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EXHIBIT D
TERMINATION AND RELEASE AGREEMENT
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