Current Report on Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 1998
INAMED CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA 1-9741 59-0920629
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3800 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89109
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Address of principal executive offices
Registrant's telephone number, including area code: 702/791-3388
N/A
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(Former name or former address, if changed since last report.)
Item 5. OTHER EVENTS.
On October 2, 1998, INAMED Corporation (the "Company")
announced three developments relating to the Company's progress
towards the completion of the mandatory class settlement (the
"Settlement") of the breast implant litigation (the "Breast
Implant Litigation"). A copy of the press release is attached
hereto as Exhibit 99.1 and incorporated herein by reference. The
three developments are:
(i) the deposit into a court-supervised escrow
account of all of the $31.5 million of consideration
required under the terms of the previously announced
settlement agreement, dated April 2, 1998, between the
Company and the settlement class, which deposit
consists of $3 million in cash, a $25.5 million
promissory note and 426,323 shares common stock of the
Company, $.01 par value per share (the "Common Stock"),
(ii) the establishment of a schedule for moving
forward with the Settlement, including the mailing of a
Notice of Class Action and Proposed Settlement to
settlement class members, a copy of which is attached
hereto as Exhibit 99.2 and incorporated herein by
reference, and
(iii) the completion of an approximately $8
million financing (the "New Financing") with Appaloosa
Management, L.P. ("Appaloosa"), as Collateral Agent, a
portion of which is being used to fund the $3 million
cash deposit as required by the court-supervised escrow
account, and the balance of which shall be applied to
working capital purposes as well as certain capital
projects.
The New Financing consists of (i) the sale of
approximately $8 million of the Company's 10% Senior Secured
Notes due March 31, 1999 or, at the option of the Company as
provided therein, September 1, 2000 (the "New Notes"), a copy of
which is attached hereto as Exhibit 99.3 and incorporated herein
by reference, pursuant to the Note Purchase Agreement, dated as
of September 30, 1998, between the Company, the parties listed on
Exhibit A thereto and Appaloosa (the "Note Purchase Agreement"),
a copy of which is attached hereto as Exhibit 99.4 and
incorporated herein by reference, and (ii) the issuance of
590,000 warrants to purchase Common Stock at an exercise price of
$6.50 per share, expiring on September 1, 2002 (the "Loan
Warrants"), a copy of which is attached hereto as Exhibit 99.5
and incorporated herein by reference. The Note Purchase Agreement
contains customary representations and warranties and customary
events of default, as well as covenants of the Company which
include limitations on indebtedness, encumbrances, dividends and
stock issuances as well as certain requirements of operating
profit and tangible assets.
Under the terms of the New Financing, Appaloosa, as
collateral agent under the New Notes, was granted a first
priority interest and lien on all of the assets of the Company
and its subsidiaries. In that regard, the Company has entered
into various security agreements with Appaloosa, including (i) a
Security Agreement (the "Security Agreement"), dated as of
September 30, 1998, a copy of which is attached hereto as Exhibit
99.6 and incorporated herein by reference, by which the Company
pledged as collateral its assets on a first priority senior
secured basis and (ii) a Guarantee and Security Agreement (the
"Guarantee and Security Agreement"), dated as of September 30,
1998, a copy of which is attached hereto as Exhibit 99.7 and
incorporated herein by reference, made by certain subsidiaries of
the Company who, subject to certain limitations set forth
therein, guarantee the obligations of the Company under the New
Notes and the Note Purchase Agreement and pledged as collateral
their assets on a first priority senior secured basis. In
addition, certain foreign subsidiaries of the Company entered
into a Guarantee Agreement (the "Guarantee Agreement) dated as of
September 30, 1998, in favor of the holders of the New Notes, a
copy of which is attached hereto as Exhibit 99.8 and incorporated
herein by reference, guaranteeing the New Notes, subject to
certain limitations set forth therein.
In order to facilitate the transactions contemplated by
the Note Purchase Agreement, the Company received the consent of
the requisite holders of the Company's 11% Convertible Secured
Notes Due January 1999 (the "Old Notes") to amend certain
provisions of the Indenture between the Company and Santa Barbara
Bank & Trust, as trustee (the "Trustee"), dated January 2, 1996,
(as amended, the "Old Indenture"), including among other things,
to increase the amount of Senior Indebtedness (as defined in the
Old Indenture) allowed under the Old Indenture from $5 million to
$8 million. In addition to the above, the Trustee and Appaloosa
entered into an Intercreditor Agreement, dated as of September
30, 1998 (the "Intercreditor Agreement"), a copy of which is
attached hereto as Exhibit 99.9 and incorporated herein by
reference, pursuant to which the Trustee agreed to (i) the
subordination of the Old Notes to the New Notes as to the right
of payment and (ii) the subordination of the liens and security
interests of the Trustee under the Old Indenture to the first
priority liens and security interests of Appaloosa held pursuant
to the New Notes.
The Company also granted certain registration rights to
holders of the New Notes under a Registration Rights Agreement,
dated as of September 30, 1998, (the "Registration Rights
Agreement"), a copy of which is attached hereto as Exhibit 9.10
and incorporated herein by reference, such that, among other
things, the holders of at least 25% or more of the aggregate
principal amount of the New Notes have the right, subject to
certain limitations set forth therein, to require the Company to
register the sale of the New Notes under the Securities Act of
1933, as amended. The Registration Rights Agreement also grants
certain "piggyback" rights to participate in other registered
offerings by the Company to holders of the New Notes.
On October 7, 1998 the Company commenced an Exchange
Offer (the "Exchange Offer") whereby the Company offered to
exchange the outstanding Old Notes for a package of securities
which consists of (i) the Company's Senior Subordinated Secured
Notes due March 31, 1999, or, at the option of the Company as
provided therein, September 1, 2000, in the aggregate principal
amount of $19,605,715 (the "Exchange Notes"), to be issued in
accordance with an Indenture between the Company and the Trustee
(the "Subordinated Indenture"), (ii) warrants to acquire an
aggregate of 3,671,616 shares of Common Stock of the Company with
an exercise price of $5.50 per share, expiring October 1, 2002
(the "Exchange Warrants"), and (iii) warrants to purchase an
aggregate of 500,000 shares of Common Stock of the Company with
an exercise price of $7.50 per share, expiring on October 1, 2002
(the "Additional Warrants"). The Additional Warrants are being
issued to all holders of the Old Notes regardless of whether or
not they participate in the Exchange Offer, as part of the
restructuring of the Company's senior debt and as an anti-
dilution adjustment. The Exchange Offer is being accomplished
pursuant to a Securities Exchange Agreement to be entered into
between the Company and holders of the Old Notes (the "Securities
Exchange Agreement"), and is expected to conclude in early
November, 1998 (the failure to do so constituting an event of
default under the Note Purchase Agreement).
Under the terms of the Subordinated Indenture and the
Securities Exchange Agreement, the Trustee, as representative of
the holders of the Exchange Notes, will be granted a subordinated
security interest and lien on all of the assets of the Company
and its subsidiaries. In that regard, the Company will enter into
various security agreements with the Trustee, including (i) a
Subordinated Security Agreement by which the Company will pledge
as collateral its assets on a secured basis and (ii) a
Subordinated Guarantee and Security Agreement (the "Subordinated
Guarantee and Security Agreement") to be made by certain
subsidiaries of the Company who, subject to certain limitations
set forth therein, will guarantee the obligations of the Company
under the Exchange Notes and pledge as collateral their assets on
a secured basis. In addition, certain foreign subsidiaries of the
Company will enter into a Subordinated Guarantee Agreement (the
"Subordinated Guarantee Agreement"), in favor of the holders of
the Exchange Notes guaranteeing the Exchange Notes, subject to
certain limitations set forth therein.
As a result of the New Financing and assuming full
participation in the Exchange Offer, the Company's capital
structure includes $27.6 million of debt, at a blended interest
rate of 10.7%, approximately 11 million shares of common stock
outstanding and approximately 8.6 million warrants and options to
purchase shares of Common Stock, for a total of approximately
19.6 million fully diluted shares. Upon the entrance of a final,
non-appealable order from the court with respect to the
Settlement of the Breast Implant Litigation, the Company would be
in a position to raise approximately $34.7 million through the
exercise of outstanding warrants.
Finally, the Company has amended the Rights Agreement
between the Company and U.S. Stock Transfer Company, dated as of
June 2, 1997 (as amended, the "Rights Agreement"), to exempt
Appaloosa and its affiliates from the application of certain
provisions of the Rights Agreement to the acquisition of
beneficial ownership of additional shares of Common Stock
pursuant to the transactions described herein. A copy of
Amendment No. 3 to the Rights Agreement is attached hereto as
Exhibit 99.11 and incorporated herein by reference.
For additional information, reference is made to the news
release and loan documents, which are attached hereto as
exhibits.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) EXHIBITS
99.1 News Release of INAMED Corporation dated October
2, 1998.
99.2 Notice to Class Members
99.3 New Note
99.4 Note Purchase Agreement
99.5 Form of Loan Warrant
99.6 Security Agreement
99.7 Guarantee and Security Agreement
99.8 Guarantee Agreement
99.9 Intercreditor Agreement
99.10 Registration Rights Agreement
99.11 Amendment No. 3 to Rights Agreement
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
INAMED CORPORATION
Dated: October 14, 1998 By: /s/ Richard G. Babbitt
Name: Richard G. Babbitt
Title: Chairman and Chief
Executive Officer
EXHIBIT INDEX
99.1 News Release of INAMED Corporation dated October
2, 1998.
99.2 Notice to Class Members
99.3 Form of New Note
99.4 Note Purchase Agreement
99.5 Form of Loan Warrant
99.6 Security Agreement
99.7 Guarantee and Security Agreement
99.8 Guarantee Agreement
99.9 Intercreditor Agreement
99.10 Registration Rights Agreement
99.11 Amendment No. 3 to Rights Agreement
Exhibit 99.1
INAMED "Innovation and Medicine" INAMED CORPORATION
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
(702) 791-3388
Fax: (702) 791-1922
Company Contact: Richard G. Babbitt
(702) 791-3388
Ilan K. Reich
(212) 626-6800
INAMED CORPORATION ANNOUNCES NEW DEVELOPMENTS
IN SETTLEMENT OF BREAST IMPLANT LITIGATION
October 2, 1998 - Las Vegas, Nevada - INAMED Corporation (OTC
Bulletin Board: IMDC) announced today three important
developments relating to the progress of its efforts to complete
the mandatory class settlement of the breast implant litigation.
First, the Company has deposited into a court-supervised escrow
account all of the $31.5 million of consideration required under
the terms of the settlement agreement which was announced earlier
this year. That consideration consists of $3 million of cash, a
$25.5 million promissory note and 426,323 shares of common stock.
Second, a schedule has been established for moving forward with
the settlement. Based on a recent status conference with Judge
Sam C. Pointer, Jr., the Company expects the following dates to
be set by the court: Within the next two weeks, notice of the
fairness hearing would be mailed to class members; December 11,
1998 as the date for class members to file written objections;
and January 11, 1999 as the date of the fairness hearing to
consider final approval. In addition, the parties have agreed to
extend until year-end the Company's time to satisfy certain
obligations toward 3M Corporation under a previously-announced
provisional agreement.
Finally, the Company has completed an $8 million financing with
Appaloosa Management L.P., a portion of which is being used to
fund the $3 million cash deposit into the court-supervised escrow
account. The balance of the new monies will be available for
working capital purposes and certain capital projects. The
Company and Appaloosa Management L.P. have also agreed to
restructure the Company's existing debt, as more fully described
below.
Mr. Richard G. Babbitt, Chairman and Chief Executive Officer of
the Company, stated: "Taken together, these activities reflect
the steady progress which is being made toward completing the
complex litigation settlement. We hope to achieve a final
resolution of this matter early in the first quarter of 1999.
The new financing and restructuring with Appaloosa Management
L.P. is another positive development, because it enables us to
obtain all of the monies needed to pay for the litigation
settlement while also extending the maturity of all of our debt."
The restructuring with Appaloosa Management L.P. extends the
maturity of the existing $19.6 million of senior debt under
certain circumstances until September 1, 2000. The $5.50 per
share conversion feature of that debt was replaced with an
equivalent number of new, four-year warrants to purchase common
stock at $5.50 per share. In the event the settlement agreement
becomes final and non-appealable, under certain circumstances
those warrants would become immediately exercisable and the
proceeds could be applied to redeem the $19.6 million of debt
without penalty or to pay for the litigation settlement. The
interest rate on that $19.6 million of debt remains at 11%,
except that if the price of the common stock reaches $11 per
share, the interest rate could decrease by up to 200 basis
points.
The $8 million of new financing matures on March 31, 1999, but is
extendable under certain circumstances until September 1, 2000.
The interest rate is 10%. In connection with this new financing
the Company issued 590,000 four-year warrants to purchase common
stock at $6.50 per share. Finally, in connection with the
restructuring of the existing senior debt and as part of an anti-
dilution adjustment, the Company issued to Appaloosa Management
L.P. and the other debtholders new, four-year warrants to
purchase 500,000 shares of common stock at $7.50 per share.
As a result of the new financing the Company's capital structure
now includes $27.6 million of debt, at a blended interest rate of
10.7%; approximately 11 million shares of common stock currently
outstanding; and approximately 8.6 million warrants and options
to purchase shares. Accordingly, the Company now has a total of
approximately 19.6 million fully diluted shares (an increase of
approximately 1.1 million fully diluted shares as a result of the
new financing arrangements).
Once the litigation settlement becomes final and non-appealable,
approximately $34.7 million could be raised through the exercise
of 5.6 million warrants at a blended price of $6.20 per share,
with the proceeds to be available to finance the litigation
settlement and retire debt.
INAMED Corporation is a global surgical and medical device
company engaged in the development, manufacturing and marketing
of medical devices for the plastic and reconstructive, bariatric
and general surgery markets.
Exhibit 99.2
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
Southern Division
In re: )
)
SILICONE GEL BREAST IMPLANTS ) Master File No. CV 92-P-10000-S
PRODUCTS LIABILITY LITIGATION )
(MDL-926) )
)
SANDY ALTRICHTER,, et al., )
Plaintiffs; )
)
-vs.- ) Case No. CV 97-P-11441-S
)
)
INAMED CORP., et al., )
Defendants; )
BREAST IMPLANT LITIGATION NOTICE
Please read this Notice carefully.
It affects your legal rights.
NOTICE OF CLASS ACTION AND PROPOSED SETTLEMENT WITH
INAMED CORPORATION AND RELATED PARTIES
(INCLUDING McGHAN MEDICAL CORPORATION AND CUI CORPORATION)
TO:All persons who have had breast implants1 manufactured or
sold by McGhan Medical Corporation, CUI Corporation (a/k/a
Cox-Uphoff), INAMED Corporation or Minnesota Mining and
Manufacturing Company (3M), and the spouses, parents,
children, relatives, "significant others", representatives,
estates, assignees and subrogees of such persons:
The purpose of this notice is to inform you that the court
has provisionally certified a mandatory, limited fund settlement
class and preliminarily approved a proposed settlement with
INAMED Corporation and its affiliates (including McGhan Medical
Corporation and CUI Corporation) (collectively "INAMED"), to
inform you of the settlement approval procedure, and to inform
you of your rights in connection with the proposed settlement.
In accordance with Rules 23(d) and 23(e) of the Federal Rules
of Civil Procedure, you are notified of the following:
. The court has provisionally certified a mandatory, limited
fund settlement class, with no right of exclusion ("opt-
out"), of which you may be a member;
. The court has preliminarily approved a $31,500,000 proposed
class action settlement of all breast implant-related claims
that class members have or may in the future have against
INAMED and certain related parties (the "Released Parties");2
. The court has scheduled the fairness hearing to commence on
January 11, 1999, at 9:00 a.m. in Courtroom 8, United States
Courthouse, 1729 Fifth Avenue North, Birmingham, Alabama;
. The court has set December 11, 1998, as the deadline for
class members to give notice of intent to appear and be heard
at the fairness hearing, and to submit written comments on or
objections to the class certification or the settlement;
. The court has temporarily enjoined the institution,
prosecution or settlement of any claims against INAMED or the
Released Parties that are covered by the proposed class
settlement, pending a fairness hearing at which class members
will have the opportunity to be heard on whether the class
should be finally certified and the settlement finally
approved. If the proposed settlement is approved and INAMED
fulfills all its obligations under the settlement, this
injunction will be made permanent.
I. THE LITIGATION AND THE SETTLEMENT CLASS.
1. Thousands of lawsuits claiming injuries resulting from
breast implants are pending in many federal and state courts. On
June 25, 1992, the Judicial Panel on Multidistrict Litigation
transferred to the United States District Court for the Northern
District of Alabama a series of federal cases seeking damages or
injunctive relief for injuries allegedly resulting from breast
implants. These cases, together with hundreds of cases later
transferred by the Panel or filed in the Northern District of
Alabama, are pending before the Honorable Sam C. Pointer, Jr.,
Chief Judge, as part of a coordinated proceeding captioned In re
Silicone Gel Breast Implants Products Liability Litigation, MDL
No. 926, Master File No. CV 92-P-10000-S. INAMED and the
Released Parties have been named in many, but not all, of these
cases as defendants.
2. On June 2, 1998, the court provisionally certified one of
these cases, Sandy Altrichter, et al., vs. INAMED Corp., et al.,
Case No. CV 97-P-11441-S, as a class action for settlement
purposes on behalf of all persons, wherever located, who have or
may in the future have claims against INAMED or the Released
Parties based on breast implants implanted before June 1, 1993.
. The class includes all persons who before June 1, 1993,
underwent breast implant surgery in which they received
silicone gel or saline breast implants manufactured or sold
by INAMED Corporation or its affiliates, including McGhan
Medical and CUI (formerly Cox-Uphoff).
. The class also includes persons who before June 1, 1993,
underwent breast implant surgery in which they received
silicone gel or saline breast implants manufactured or sold
by 3M or its affiliates, including McGhan Medical/3M, insofar
as such persons have asserted or may assert successor
liability claims against INAMED or the Released Parties on
account of such implants.
. The class includes not only direct claimants (such as implant
recipients), but also derivative claimants (such as spouses
claiming loss of consortium), assigned claimants (such as
health insurers asserting subrogation claims), and any other
claimants who, by reason of personal, legal, economic or
contractual relationships with breast implant recipients,
have asserted or may assert claims against INAMED or the
Released Parties.
. The class includes persons who have or may have claims with
respect to injuries not yet manifested.
. The settlement, if approved, will release breast implant-
related claims of any kind against INAMED or the Released
Parties, whether under federal or state law, including claims
for personal injury or death, emotional harm, medical
monitoring, economic loss, loss of support, society services
or consortium, or punitive damages.
. The settlement is limited to claims against INAMED and the
Released Parties, and does not cover claims against other
breast implant manufacturers, distributors, suppliers,
doctors, hospitals or others against whom class members may
have claims. Class members having unresolved claims against
such entities or persons remain free to pursue them.
The size of the class cannot be fixed with any precision at this
time. However, it is known that almost 44,000 implant recipients
who registered with the Claims Office have notified the Claims
Office that their only identifiable implants are INAMED implants
and another 27,500 registered implant recipients notified the
Claims Office that they had at least one INAMED implant in
addition to implants from other manufacturers. In addition,
there would be an unknown number of other persons, many of whom
opted out of the original global settlement and have instituted
suits in federal or state court against INAMED, who never
registered with or provided information to the Claims Office.
3. The court has designated Sandy Altrichter, Janell Crumley
Black, Darlene Davis, Lois Hamilton, Rose Marie Hodges, and
Gloria Jones as Representative Plaintiffs for the class. The
court has appointed the following attorneys experienced in breast
implant and class action litigation as Settlement Class Counsel:
Ralph I. Knowles, Jr.
Leslie J. Bryan
DOFFERMYRE, SHIELDS, CANFIELD, KNOWLES & DEVINE
Suite 1600
1355 Peachtree Street
Atlanta, GA 30309
Elizabeth J. Cabraser
Heather A. Woodard
LIEFF, CABRASER, HEIMANN & BERNSTEIN, LLP
30th Floor, Embarcadero Center West
275 Battery Street
San Francisco, CA 94111
Dianna Pendleton
BLIZZARD & McCARTHY
Lyric Center
440 Louisiana, Suite 1710
Houston, TX 77002-1689
Ernest H. Hornsby
FARMER PRICE HORNSBY & WEATHERFORD, LLP
P. O. Drawer 2228
Dothan, AL 36302
The court has reserved the power to appoint additional class
representatives or class counsel, or to designate appropriate
subclasses, should it later deem such appointments or
designations appropriate.
4. The court has provisionally certified the class as a
mandatory, "limited fund" settlement class under Federal Rule of
Civil Procedure 23(b)(1)(B), based on evidence that the costs and
risks of litigating breast implant cases would quickly exhaust
INAMED's limited resources, and that the $31,500,000 settlement
fund, most of which will be provided as new capital by outside
investors and which far exceeds INAMED's present ability to pay
claims, would be unavailable to class members absent mandatory
class certification.
5. There is no right to opt out of a mandatory class action
certified under Rule 23(b)(1)(B). The class serves as a vehicle
for equitable distribution of all class members' claims in light
of the limited available funds. Therefore, if you fall within
the class definition described above, you are a member of the
class and you cannot exclude yourself ("opt out"). This is so
whether or not you have brought your own lawsuit in federal or
state court, and whether or not you suffer from a medical
condition associated with a breast implant inserted on or before
June 1, 1993. If, after the fairness hearing described below,
the court confirms the class certification and enters a judgment
approving the proposed class settlement, you will be bound by
that judgment.
6. You have the right to comment on or object to the
certification of the class and/or the terms of the proposed class
settlement, provided you comply with the procedures and deadlines
set forth in this notice.
7. In order to preserve INAMED's assets and enhance its
ability to fulfill the terms of the class settlement should it be
approved, the court has entered an order temporarily enjoining
class members from instituting, prosecuting or individually
settling any claims against INAMED or the Released Parties that
are covered by the proposed class settlement. This injunction
does not preclude class members from pursuing or settling claims
they may have against parties other than INAMED or the Released
Parties. Further, should the class settlement with INAMED not be
approved, class members will regain the right to pursue
individual claims against INAMED or the Released Parties in
existing or new cases. Any motions for relief from, and any
direct or collateral challenges to, this injunction shall be made
to this court.
8. In provisionally certifying a mandatory class for
settlement purposes and preliminarily approving the proposed
settlement, the court has made no ruling on the propriety of
class certification outside the settlement context. The court
also has made no ruling as to the merits of the plaintiffs'
underlying claims or INAMED's denials and defenses. Plaintiffs
and their counsel have vigorously pursued the plaintiffs' claims,
and INAMED has denied any wrongdoing or liability. This notice
is not an expression by the court of any opinion on the
likelihood of recovery by the plaintiffs or on the merits of any
defense asserted by INAMED.
II. SUMMARY OF THE INAMED SETTLEMENT TERMS.
The terms and conditions of the proposed settlement are
contained in the Settlement Agreement between INAMED Corporation
and Representative Plaintiffs, filed with the court on May 21,
1998. The Settlement Agreement is lengthy and complex. This
notice is intended as a summary only. You may obtain a copy of
the Settlement Agreement by following the procedures in
"Examination of Papers" below.
Settlement Fund. INAMED has agreed to pay $31,500,000, plus
interest as specified in the Settlement Agreement, into a court-
supervised settlement fund. On October 2, 1998, INAMED deposited
the full principal amount of this obligation with the court-
appointed fund agent as follows:
1. $3 million in cash;
2. $3 million in common stock; and
3. $25.5 million in an interest bearing note (the
"Note").
Under the terms of the Settlement Agreement and the Note, both
the common stock and the Note will be redeemable for cash at
their combined face value ($28,500,000) on the later of April 30,
1999, or ninety-one days after a judgment approving the proposed
class settlement becomes final and appeals, if any, have been
exhausted. This fund will be increased by the amount of unused
funds, of approximately $500,000, previously contributed by
INAMED to an earlier proposed settlement fund, this enhanced fund
being called the "increased class settlement fund."
If the class settlement is not approved, the parties are to be
restored to their pre-agreement positions. The funds needed to
pay INAMED's obligations under the Settlement Agreement are being
provided through outside capital conditioned upon approval of the
settlement and will not become assets of INAMED if the settlement
is not approved.
Breast Implant Studies. INAMED is required to provide Settlement
Class Counsel access to reports of ongoing research concerning
breast implants and breast implant materials.
3M Contractual Indemnity Claims. The proposed settlement is
conditioned on release by 3M of certain contractual indemnity
claims that 3M asserts against INAMED's McGhan Medical subsidiary
under an agreement by which McGhan Medical purchased 3M's breast
implant business in 1984. McGhan Medical and 3M have entered
into a separate agreement providing such a release in exchange
for McGhan Medical's agreement to (1) pay 3M $3 million on the
later of April 30, 1999, or ninety-one days after a judgment
approving the proposed class settlement becomes final and
appeals, if any, have been exhausted, (2) use that $3 million to
obtain provisional releases of 3M from an agreed minimum number
of claims asserted against 3M by persons with implants
manufactured by McGhan Medical after its purchase of 3M's implant
business (the "3M Condition"), and (3) assume limited continuing
indemnification obligations going forward. If the 3M Condition
is not satisfied or waived, the proposed class settlement will
terminate. As of the date of this notice, INAMED has made
substantial progress in obtaining the conditional releases needed
to satisfy this condition and expects to have completed, or
virtually completed, this task by year-end. Based on INAMED's
showing in this regard and the desire of all parties not to delay
the implementation of the settlement, the court has authorized
the issuance of this notice scheduling the fairness hearing on
the class settlement for January 11, 1999.
Other Contribution and Indemnity Claims. The proposed settlement
is also conditioned on the court's inclusion, in its final
approval order, of a finding that the settlement was made in good
faith and a provision barring, under applicable state law, all
statutory or common law claims for contribution or
indemnification against INAMED or the Released Parties. The
Settlement Agreement further provides that in jurisdictions whose
laws may not provide for such a bar order, class members shall
reduce any judgments they may obtain against third parties to the
extent necessary to ensure that INAMED and the Released Parties
do not have to pay anything to such third parties by way of
contribution or indemnity.
Release. If the proposed settlement is approved, class members
will forever release INAMED and the Released Parties (identified
in Exhibit 2 of this notice) from any and all liability for any
and all of the claims covered by the settlement (as described in
Part I above). This release extends to all rights, claims, and
causes of action, known or unknown, filed or unfiled, pleaded or
not pleaded, suspected or unsuspected, concealed or unconcealed,
for damages, medical monitoring, and injunctive or other relief
(including punitive damages) relating to the covered claims. The
release does not, however, extend to any claims you may have
against any parties other than INAMED or the Released Parties.
The Settlement Agreement fully reserves your rights to pursue any
unresolved claims you may have against such other parties, except
to the limited extent that the contribution and indemnification
provisions described in the preceding paragraph may require you
to reduce a judgment against a third party by the amount, if any,
needed to ensure that INAMED and the Released Parties will not
have to pay the third party anything by way of contribution or
indemnification.
Exclusive Remedy. The proposed settlement, if approved, will be
class members' exclusive remedy against INAMED and the Released
Parties for claims covered by the settlement. INAMED and the
Released Parties will have no liabilities relating to such claims
other than their obligations under the Settlement Agreement. The
judgment approving the settlement will legally bar class members
from initiating, asserting, or prosecuting any settled claims
against INAMED and the Released Parties.
III. RECOMMENDATION OF COUNSEL
1. Settlement Class Counsel have thoroughly investigated the
merits of the claims against INAMED. Assisted by expert
financial advisors, Ernst & Young LLP, they have also thoroughly
investigated INAMED's financial condition, its ability to respond
to the pending breast implant litigation, and its ability to
raise funds to support a class settlement. Settlement Class
Counsel have concluded that: (1) the continued prosecution of
individual suits against INAMED through trial and appeals would
require considerable expense and time, with a high degree of risk
and uncertain prospects for recovery; (2) INAMED does not have
sufficient financial resources or insurance to defend against
and/or satisfy the thousands of claims pending against it; and
(3) the continued prosecution of separate actions by individual
class members would result in only a very small number of class
members being able to obtain compensation from INAMED and in tens
of thousands of class members being deprived of any opportunity
to obtain any compensation from INAMED. After considering all
available alternatives, including allowing INAMED to go bankrupt,
Settlement Class Counsel have reluctantly concluded that the
proposed settlement is superior to such other alternatives and
that in light of such alternatives, it is fair, adequate,
reasonable, and in the best interests of class members.
2. Although agreeing to the proposed settlement, INAMED has
denied, and continues to deny, the claims and contentions in the
Altrichter action and any wrongdoing or any legal liability of
any kind. The proposed settlement and this notice are not to be
construed as an admission of liability of any kind whatsoever by
INAMED or the Released Parties. Notwithstanding this, INAMED
recognizes that the costs and risks of litigating the thousands
of breast implant claims pending against it far exceed its
limited resources, and that settlement is therefore both
necessary and appropriate from the company's standpoint.
IV. FUTURE ALLOCATION OF SETTLEMENT FUND.
1. The Settlement Agreement does not specify any particular
allocation of settlement proceeds. Instead, it leaves to later
proceedings, after the entry of final judgment approving the
settlement, the development of procedures for equitable
allocation and distribution of the settlement fund to members of
the class. The parties contemplate that, in order to minimize
the cost of claim administration and maximize distributable
benefits, the distribution procedures will be designed, to the
extent feasible, to utilize the existing MDL 926 claims database
and claims processing facilities, while at the same time
permitting claims by class members who may not have previously
provided appropriate information to the Claims Office. The
Settlement Agreement expressly provides that the court shall
retain jurisdiction to make such other orders as it deems
appropriate to ensure that relevant interests are afforded
adequate representation and the opportunity to be heard in such
proceedings. Class members will be given notice and an
opportunity to be heard before any final allocation or
distribution decisions are made.
2. The cost of this notice, all subsequent notice expenses,
and all costs of claims administration will be paid from the
increased class settlement fund, except that any cost of this
providing this notice in excess of $400,000 will be borne by
INAMED without any right to recoupment from the settlement fund.
3. As of the date of approval of this notice, a group
representing approximately two-thirds of the nation's health
insurers had under review a proposal by INAMED and Settlement
Class counsel to release all their potential subrogation claims
against INAMED, the settlement fund, or individual class members
for $750,000. If consummated, this agreement will result in a
charge of $250,000 against the increased class settlement fund,
with the balance to be separately paid by INAMED. Any
subrogation claims by workers' compensation insurers and health
care insurers or providers not so resolved shall be mailed to
INAMED Settlement Proceedings (P. O. Box 2786, Birmingham, AL
35202-2785), postmarked no later than January 11, 1999. All such
claims shall be clearly marked "Subrogation Claim" and shall
specifically identify the individual Claimants by name and social
security numbers and shall include with specificity the
particulars of the subrogation claims for that class member.
Each subrogation claim shall be filed in a separate document.
After the expiration of the deadline for filing subrogation
claims, the court will consider the payment of timely subrogation
claims, after notice and opportunity to be heard by interested
parties, from the amounts allocated from the settlement fund to
the respective individual class members against whom subrogation
has been asserted. The failure to timely assert claims as set
forth above shall constitute a waiver of such claims.
4. As of the date of approval of this notice, the United
States had under review a proposal that, in exchange for a
separate payment of $25,000 by INAMED, it would agreed not to
assert any direct or subrogation claim against INAMED and not to
directly make against the settlement fund prior to distribution
any lien claim upon amounts payable to class members. Acceptance
by the United States of this proposal would facilitate
distribution of payments from the settlement fund and, as a
practical matter, would likely result in most situations in the
United States not pursuing subrogation or similar claims against
individual class members or their representatives, though, as a
legal matter, it would not bar the United States from
independently asserting and pursuing statutorily-authorized
claims or relieve such persons from statutory obligations such as
those imposed on Medicare recipients with respect to third-party
recoveries.
V. HOW YOUR RIGHTS ARE AFFECTED.
As stated above, the INAMED settlement class is a mandatory
class. If you fall within the definition of the class as
described above, you are automatically a member of the class,
and, although you may comment on or object to the class
certification or the proposed settlement, you may not exclude
yourself from the class and will be bound by the court's orders
and judgments in the Altrichter action if the class is certified
and the settlement is approved. For purposes of this settlement,
class members are automatically represented by the Settlement
Class Counsel previously appointed by the court and identified
above. You may hire an individual attorney, at your own expense,
to intervene or appear on your behalf for the purpose of
commenting on the matters contained in this notice, but you are
not required to hire an attorney in order to appear, comment, or
be heard at the fairness hearing, or to participate in the
settlement if it is approved.
VI. ATTORNEYS' FEES AND EXPENSES.
1. Settlement Class Counsel will not apply to the court for
any award of attorney fees from the settlement fund for their
services in negotiating the settlement or in representing the
INAMED Settlement Class. Although Settlement Class Counsel may
apply for reimbursement of their out-of-pocket expenses incurred
in connection with the settlement, such expenses will not be paid
unless first approved by the court as fair and reasonable. In
view of the limited amount of available funds that can be
provided by INAMED in relation to the number and potential amount
of claims of class members, the Common Benefit Fund previously
established to compensate plaintiffs' counsel for fees and
expenses incurred for the "common benefit" has agreed to forego
and waive its entitlement to an assessment and charge under Order
No. 13 and subsequent orders against the settlement amount
provided to INAMED class members.
2. If you are separately represented by your own attorney,
any claims by that attorney to a portion of any funds ultimately
distributable to you from the settlement fund, for fees and
expenses, will depend upon the terms of your agreement with that
attorney, subject to court approval, and will not be paid
separately out of the settlement fund. The court reserves the
right to impose limitations upon the amount of fees that may be
claimed by privately-retained attorneys with respect to amounts
distributable under this settlement.
VII. SETTLEMENT HEARING.
1. A fairness hearing will be held in Courtroom 8, Hugo L.
Black Courthouse, 1729 Fifth Avenue North, Birmingham, Alabama,
on January 11, 1999, at 9:00 a.m. to determine whether the
Settlement Agreement is fair, reasonable, and adequate and should
be approved by the court.
2. At the hearing, any class member may appear in person or
through counsel and may be heard in support of or in opposition
to the certification of the mandatory settlement class and/or the
fairness, reasonableness, and adequacy of the proposed
settlement. If you wish to be heard at the fairness hearing, you
must mail copies of your intention to appear and your written
comments or objections, postmarked no later than December 11,
1998, to:
INAMED Settlement Proceedings
P.O. Box 2785
Birmingham, AL 35202-2785
3. You do not need to appear at the fairness hearing in order
for your written comments or objections to be considered. The
court will consider all comments or objections mailed to the
above address and postmarked no later than the December 11, 1998,
deadline. The court will not consider any comments or objections
postmarked after that date.
4. Any class member who does not timely mail an intention to
appear or written comments or objections to the indicated post
office box shall be deemed to have waived any objections and
shall be foreclosed from later objecting (by appeal or otherwise)
either to the certification of the class or to the proposed
settlement. ANY CLASS MEMBER WHO DOES NOT OBJECT TO THE PROPOSED
CLASS CERTIFICATION AND SETTLEMENT NEED NOT APPEAR AT THE HEARING
OR SUBMIT ANY COMMENTS.
VIII. EXAMINATION OF PAPERS.
This Notice provides only a summary of the proposed class
settlement, which is documented in a lengthy Settlement Agreement
on file with the court. For a more detailed statement of the
matters involved in the Altrichter action, including the claims
asserted, the terms of the Settlement Agreement, and the basis
for Settlement Class Counsel's recommendation of the settlement,
you are referred to the papers on file under the caption
Altrichter, et al. vs. INAMED Corp., et al., Civil Action No. CV
97-P-11411-S, which may be inspected during regular business
hours at the office of the clerk of the United States District
Court in Birmingham, Alabama. The terms of the Settlement
Agreement are also available for download on the internet at
www.fjc.gov/BREIMLIT/mdl926.htm. You may also write for copies
to Plaintiffs' Liaison Office, The Singer Building, 2008 2nd
Avenue North, Birmingham, AL 35203. PLEASE DO NOT CONTACT THE
COURT OR THE CLAIMS OFFICE. The Judge's office, the Clerk's
office, and the Claims Office are not permitted to give legal
advice.
Dated: October 12, 1998.
/s/ Perry D. Mathis
Perry D. Mathis
Clerk
EXHIBIT 1
IMPLANT BRANDS OF INAMED AND AFFILIATED COMPANIES:
Biocell RHP (Round High Profile)
Biodimensional RLD (Round Low Profile DRIE)
Biospan RLP (Round Low Profile)
Cox Uphoff RTV/RTT (Smooth/Textured)
CZV/CRS (Croissant Ruiz-Cohen
Versafil RZV/SRV (Rectangular Versafil Tissue
Low Profile) Expander)
DRI SCC (Cylindrical Tissue Expander)
DRIE SCS (Crescent Tissue Expander)
EHP (Enhanced High SEE (Mini-crescent Tissue Expander)
Profile) SFS (Saline Fill Skin and Tissue
FZV/SFV (Round Versafil LP Expander)
Tissue Expander) SGO (Saline Gel Oval)
Gibney SGR (Saline Gel Round)
Intrashiel (manufactured SLP (Single Lumen Adjustable)
After 8/2/84) SLS (Longitudinally Curved Tissue
Intravent Expander)
IOC (Cylindrical SOE (Small Oval Tissue Expander)
Intraoperative Tissue SOS (Ear Shaped Tissue Expander)
Expander) SPS (Pear Shaped Tissue Expander)
IOM (Intravent SRS (Rectangular Tissue Expander)
Intraoperative Expander) SSS (Spherical Tissue Expander)
IOS (Spherical SWS (Wedge Shaped Tissue Expander)
Intraoperative SZR (Round Low Profile Sizer)
Tissue Expander) TLL (Triple Lumen Round)
Magna-Site Tri-Lumen
Maxwell TRL (Tri-Lumen Implants)
McGhan (manufactured after TSO (Triple Lumen Low Profile Oval)
8/2/84) TSR (Triple Lumen Round Low Profile)
MFE (Man Facelift UHP
Expander) Ultra High Performance
Microcell Versafil
OHP (Oval High Profile)
OLP (Oval Low Profile)
RCP (Round Conical
Profile)
RCR (Ruiz-Cohen Expanders)
RDD (Reserve Double Lumen
DRIE)
RDL (Reverse Double Lumen)
RDL-XPAND
RDX (Round Double Lumen)
Reverse Double Lumen
RHD (Round High Profile)
IMPLANT BRANDS OF 3M and MMC/3M (HERE DEFINED AS INAMED IMPLANTS
FOR THE LIMITED PURPOSE OF RELEASING CLAIMS AGAINST INAMED AND
THE RELEASED PARTIES BASED ON SUCH IMPLANTS):
3M
McGhan (manufactured before 8/3/84)
Intrashiel (manufactured before 8/3/84)
Natrashiel
EXHIBIT 2
RELEASED PARTIES
Biodermis Corporation
Biodermis Ltd.
BioEnterics Corporation
BioEnterics Latin America
BioEnterics, Ltd.
Bioplexus Corporation
Bioplexus Ltd.
Lawrence Birnbaum
Chamfield Ltd.
CUI Corporation
(f/k/a Cox-Uphoff International Corporation)
(a/k/a Cox-Uphoff Corporation)
Jack Fisher
Flowmatrix Corporation
INAMED B.V.
INAMED B.V.B.A.
INAMED B.V.(R.O.R.)
INAMED Corporation
INAMED do Brasil LTDA
INAMED Development Company
INAMED GmbH
INAMED Japan
INAMED Ltd.
INAMED Medical Group
INAMED S.A.
INAMED S.A.R.L.
INAMED S.R.L.
Innovative Surgical Products, Inc.
Ron E. Iverson
G. Patrick Maxwell
Donald K. McGhan
McGhan Limited
McGhan Medical Asia/Pacific
McGhan Medical Corporation, a California corporation
McGhan Medical Mexico, S.A. de C.V.
Medisyn Technologies Corporation
Medisyn Technologies Ltd.
Silicone Engineering, Inc.
Scott L. Spear
Specialty Silicone Fabricators, Inc.
John B. Tebbetts
John L. Williams
Corporate "Released Parties" listed above include their
respective parents, subsidiaries and affiliates, each of their
predecessors, successors and assigns (provided that 3M and
MMC/3M, insofar as they may be considered predecessors of MMC,
are expressly excluded from the definition of "Released Parties"
herein), and each of their current and former officers,
directors, employees, agents and attorneys, acting in their
capacities as such and/or in connection with INAMED or INAMED
Breast Implants.
Exhibit 99.3
INAMED CORPORATION
FORM OF 10.00% SENIOR SECURED NOTE DUE MARCH 31, 1999
THE INTEREST RATE SET FORTH BELOW IS SUBJECT TO INCREASE IN
ACCORDANCE WITH THE LETTER AGREEMENT, DATED AS OF SEPTEMBER 30,
1998, BETWEEN INAMED CORPORATION AND APPALOOSA MANAGEMENT, L.P.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY AND PURSUANT TO A
NOTE PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1998, A COPY OF
WHICH IS ON FILE AT THE OFFICES OF THE COMPANY. THIS NOTE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS. THIS INSTRUMENT WAS
ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR INFORMATION REGARDING
THE ISSUE PRICE, ISSUE DATE, YIELD TO MATURITY AND AMOUNT OF
ORIGINAL ISSUE DISCOUNT, CONTACT THE EXECUTIVE VICE PRESIDENT OF
INAMED CORPORATION AT (702) 791-3388
No. R-___
[DATE]__________________
FOR VALUE RECEIVED, the undersigned, INAMED CORPORATION
(herein called the "Company"), a corporation organized and
existing under the laws of the state of Florida, hereby promises
to pay to __________________________, or registered assigns, the
principal sum of $_____________ DOLLARS on March 31, 1999 subject
to extension as provided below (the "Maturity Date"), with
interest (computed on the basis of a 360-day year of twelve 30-
day months) (a) on the unpaid balance thereof at the rate of
10.00% per annum from the date hereof, payable quarterly, on
December 31, March 31, June 30 and September 30 in each year,
commencing with December 31, 1998, until the principal hereof
shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal or during any period in which an Event
of Default has occurred and is continuing, any overdue payment of
any amount due hereunder or during any period in which an Event
of Default has occurred and is continuing, payable quarterly as
aforesaid, at a rate per annum from time to time equal to 350
basis points per annum above the rate of interest stated in
clause (a) hereof. Notwithstanding the foregoing, so long as no
Event of Default (as defined in the Note Purchase Agreement (as
defined below)) shall have occurred and be continuing, the
Company may, at its option, extend the Maturity Date to September
1, 2000 by delivering to the holder of this Note a written notice
of such extension (in the manner provided in Section 11.6 of the
Note Purchase Agreement) prior to January 1, 1999.
Payments of principal of, interest on and any Premium
(as defined below) with respect to this Note are to be made in
lawful money of the United States of America in Las Vegas, Nevada
at the principal office of INAMED Corporation in such
jurisdiction or at such other place as the Company shall have
designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.
"Premium" shall mean any amount (other than principal or
interest) due in respect of the Notes pursuant to the Note
Purchase Agreement (as defined below).
This Note is one of the Senior Secured Notes (the
"Notes") issued pursuant to the Note Purchase Agreement, dated as
of September 30, 1998 (as from time to time amended, supplemented
or otherwise modified, the "Note Purchase Agreement"), among the
Company, the purchasers listed on Exhibit A thereto and Appaloosa
Management, L.P., as Collateral Agent. Each holder of this Note
will be deemed, by its acceptance hereof, to have made the
representations set forth in Sections 3.1, 3.2 and 3.3 of the
Note Purchase Agreement and to have agreed to be bound by the
restrictions on transfer set forth in Section 11.11 of the Note
Purchase Agreement.
This Note is a registered note and, as provided in the
Note Purchase Agreement, upon surrender of this Note for
registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued
to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary or held liable for allocations of income, losses,
gains, deductions or credits, which are made in good faith to
such registered holder.
The Company will make required payment of principal, at
the Maturity Date, on March 31, 1999 or September 1, 2000, as
specified herein and in the Note Purchase Agreement. This Note
is also subject to optional and mandatory prepayments, in whole
or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise.
The Company's obligations under this Note and the Note
Purchase Agreement are secured by a security interest in certain
assets of the Company pursuant to the Security Agreement and by a
security interest in certain assets of certain of the Company's
Subsidiaries pursuant to the Guarantee and Security Agreement
(each, as defined in the Note Purchase Agreement).
The Company's obligations under this Note and the Note
Purchase Agreement are guaranteed by certain of the Company's
Subsidiaries (as defined in the Note Purchase Agreement) under a
Guarantee and Security Agreement and a Guarantee Agreement (each,
as defined in the Note Purchase Agreement).
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, at the price (including any applicable Premium) and with
the effect provided in the Note Purchase Agreement.
The Company hereby waives any right it may have to a
trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection
with, this Note, the Note Purchase Agreement, the Security
Agreement, the Guarantee and Security Agreement, the Guarantee
Agreement or the Registration Rights Agreement (as defined in the
Note Purchase Agreement).
This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of
the law of such State that would require the application of the
laws of a jurisdiction other than such State.
If any action, proceeding or litigation shall be
brought by the holder of this Note in order to enforce any right
or remedy under this Note, the Company hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern
District of New York. The Company hereby irrevocably waives any
objection, including, but not limited to, any objection to the
laying of venue or based on the grounds of forum non conveniens,
which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
INAMED CORPORATION
By:/s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
Exhibit 99.4
NOTE PURCHASE AGREEMENT
AMONG
INAMED CORPORATION,
THE PURCHASERS LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
Dated as of September 30, 1998
THIS NOTE PURCHASE AGREEMENT, dated as of September
30, 1998 (this "Agreement"), among INAMED CORPORATION, a Florida
corporation (the "Company"), the parties listed on Exhibit A
hereto (each such party, a "Purchaser" and collectively, the
"Purchasers") and APPALOOSA MANAGEMENT, L.P., as Collateral Agent
(the "Collateral Agent").
WHEREAS, the Company has entered into (i) a
Settlement Agreement, dated April 2, 1998 (the "Class Action
Settlement Agreement"), which provides, among other things, for
the settlement of certain claims against the Company arising out
of the litigation in the United States District Court for the
Northern District of Alabama, Southern Division stylized as
"Silicone Gel Breast Implant Products Liability Litigation
(MDL926)," (the "Breast Implant Litigation") and (ii) an
agreement with 3M, dated as of April 16, 1998 (the "3M
Agreement"), which provides, among other things, for the
resolution of certain indemnification claims of 3M against the
Company relating to the Breast Implant Litigation and for the
Company to obtain certain releases (the "Releases");
WHEREAS, on June 2, 1998, the United States
District Court for the Northern District of Alabama issued a
court order preliminarily approving the Class Action Settlement
Agreement and the 3M Agreement (the "June 2, 1998 Court Order");
WHEREAS, in order to finance certain of its
obligations under the Class Action Settlement Agreement and the
3M Agreement and to finance certain of its working capital
requirements, the Company has requested the Purchasers to loan
the Company $8,000,000 (the "Loan") by purchasing the 10.00%
Senior Secured Notes due March 31, 1999 or, at the option of the
Company exercised as provided therein, September 1, 2000 (the
"Notes"), and Warrants to acquire up to 590,000 shares of Common
Stock with an exercise price of $6.50 per share (the "Loan
Warrants");
WHEREAS, upon the terms and subject to the
conditions contained in this Agreement and in the other
Transaction Documents (as hereinafter defined), the Purchasers
are willing to make the Loan to the Company by purchasing the
principal amount of Notes set forth opposite such Purchaser's
name in Exhibit A and the number of Loan Warrants set forth
opposite such Purchaser's name in Exhibit A;
WHEREAS, in connection with the purchase and sale
of the Notes, after the date hereof the Company will consummate
an Exchange Offer (the "Exchange Offer") for its issued and
outstanding 11% secured convertible notes due January, 1999 (the
"Old Notes") by exchanging therefor (i) the Company's 11.00%
Senior Subordinated Secured Notes due March 31, 1999 or, at the
option of the Company as provided therein, September 1, 2000, in
the form of Exhibit B (the "Exchange Notes"), (ii) Warrants in
the form of Exhibit C to acquire up to 3,671,616 shares of Common
Stock with an exercise price of $5.50 per share (the "Exchange
Warrants") and (iii) Warrants in the form of Exhibit D to acquire
up to 500,000 shares of Common Stock with an exercise price of
$7.50 per share (the "Additional Warrants"); and
WHEREAS, the Purchasers and the Company desire to
provide for the purchase and sale of the Notes and the Loan
Warrants and to establish various rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and
the mutual representations, warranties and agreements herein set
forth, the parties hereto agree as follows:
1. Issuance and Sale of Notes.
1.1. Authorization of Notes; Definitions.
The Company has authorized the issuance and sale of
the Notes and the Loan Warrants. The Notes shall be in the form
of Exhibit 1.1A hereto and the Loan Warrants shall be in the form
of Exhibit 1.1B hereto. Certain capitalized terms used in the
Agreement are defined in Section 9 hereof; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
1.2. Issuance, Purchase and Sale of Notes.
Upon the terms and subject to the conditions set
forth herein, the Company is selling to the Purchasers and the
Purchasers are purchasing from the Company (i) Notes in the
aggregate principal amount of Eight Million Dollars ($8,000,000)
and (ii) the Loan Warrants, for an aggregate purchase price of
$8,000,000 in cash (the "Purchase Price"). The Company and the
Purchasers agree that for U.S. federal, state and local income
Tax purposes, the portion of the Purchase Price allocable to the
Loan Warrants is $300,000.00 and the portion allocable to the
Notes is $7,700,000.00, and the Company and the Purchasers shall
take no position inconsistent with such allocation. The closing
of the transactions contemplated hereby (the "Closing") is taking
place simultaneously herewith at the offices of Fried, Frank,
Harris, Shriver & Jacobson, New York, New York.
1.3. Deliveries by the Company.
At the Closing, the Company is delivering to each
Purchaser (and to such other parties as otherwise set forth
below) the following:
(i) duly executed Notes in the principal
amounts set forth opposite such Purchaser's name on
Exhibit A hereto;
(ii) duly executed Loan Warrants to
purchase shares of Common Stock in the amounts set
forth opposite such Purchaser's name on Exhibit A
hereto;
(iii) an opinion of the Company's counsel,
dated as of the date hereof, addressed to such
Purchaser in the form of Exhibit 1.3(iii) hereto;
(iv) an Officers' Certificate, dated as of
the date hereof, certifying that the representations
and warranties contained in Article 2 hereof are true
and correct;
(v) good standing certificates for the
Company and each of its Material Subsidiaries, dated
no earlier than ten days prior to the date hereof,
from the jurisdiction in which each is incorporated;
(vi) a copy of the resolutions of the board
of directors of the Company and each of its Material
Subsidiaries (as applicable) authorizing the
execution of each of the Transaction Documents and
the performance of the transactions contemplated in
the Transaction Documents which shall be certified as
true, correct and effective as of the date hereof by
the Secretary or Assistant Secretary of the Company
or such Material Subsidiary;
(vii) duly executed copies of the Guarantee
and Security Agreement, the Guarantee Agreement, the
Security Agreement, and the Registration Rights
Agreement in the forms attached hereto as Exhibits
1.3(vii) A, B, C, and D, and copies of any other
Collateral Documentation including Financing
Statements required to perfect the Holders' first
priority security interest in the Collateral;
(viii) evidence, satisfactory to each
Purchaser, of the commencement of the Exchange Offer;
(ix) a copy of the Rights Plan as in effect
on the date hereof and, which is attached hereto as
Exhibit 1.3(ix);
(x) a duly executed copy of the
Intercreditor Agreement, in the form attached hereto
as Exhibit 1.3(x);
(xi) the placement fee of $100,000 to Libra
Investments in immediately available funds by wire
transfer to one or more accounts designated by Libra
Investments on or prior to the date hereof and the
placement fee of $200,000 to Appaloosa to be deducted
from the portion of the Purchase Price to be paid by
Appaloosa at the Closing; and
(xii) such other instruments and documents
as reasonably requested by each Purchaser.
1.4. Deliveries by the Purchasers.
At the Closing, each Purchaser is delivering to the
Company (or to such other parties as otherwise set forth below)
the following:
(i) the amount set forth opposite such
Purchaser's name in Exhibit 1.4(i), such amount being equal to
the pro-rata portion of the Purchase Price allocable to such
Purchaser for the principal amount of Notes and the Loan Warrants
being purchased by such Purchaser as set forth opposite such
Purchaser's name in Exhibit A hereto, and less, in the case of
Appaloosa, (i) the placement fee of $200,000, (ii) $3,000,000 to
be wire transferred in immediately available funds at the Closing
to Edgar C. Gentle, III (the "Escrow Agent") pursuant to the
Escrow Agreement, dated as of October 1, 1998, by and between the
INAMED Settlement Fund by and through the Settlement Class
Counsel, the Company and the Escrow Agent (the "Escrow
Agreement") and (iii) its costs and expenses (including the
reasonable fees and expenses of its counsel, Fried, Frank,
Harris, Shriver & Jacobson and accountants, which amounts shall
be wire transferred by Appaloosa in immediately available funds
to one or more accounts designated by such parties on or prior to
the date hereof); and
(ii) a duly executed copy of the Registration
Rights Agreement.
2. Representations and Warranties of the Company.
The Company represents and warrants to each Holder as
follows:
2.1. Organization and Qualification.
Each Credit Party is a corporation duly organized
and existing in good standing under the laws of the jurisdiction
in which it is incorporated and has the power to own its
respective property and to carry on its respective business as
now being conducted. Except as set forth on Schedule 2.1, each
Credit Party is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which
the nature of the respective business conducted or property owned
by it makes such qualification necessary and where the failure to
so qualify would individually or in the aggregate have a Material
Adverse Effect.
2.2. Due Authorization.
Each Credit Party has all right, power and authority
to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery of each
Transaction Document by each Credit Party party thereto and the
performance by such Credit Party of the transactions contemplated
thereby (including, without limitation, the issuance and sale of
the Notes, the Loan Warrants, the Exchange Notes, the Exchange
Warrants and the Additional Warrants by the Company) and
compliance by each such Credit Party with all the provisions of
each Transaction Document (as applicable) have been duly
authorized by all requisite corporate proceedings on the part of
each Credit Party. Each of the Transaction Documents (other than
the Exchange Offer Documents) has been duly executed and
delivered on behalf of each Credit Party party thereto, and each
such Transaction Document constitutes the legal, valid and
binding obligation of such Credit Party, enforceable against such
Credit Party in accordance with their respective terms, except to
the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by general
principles of equity relating to creditors' rights generally.
The Company has furnished to each Purchaser true and correct
copies of the Company's Certificate of Incorporation and By-Laws
as in effect on the date of this Agreement, copies of which are
attached hereto as Exhibits 2.2(i) and 2.2(ii). In addition, the
Company has furnished to each Purchaser a true and correct copy
of the Proxy Statement, relating to the solicitation of votes to
approve the Reincorporation Merger, filed by the Company with the
SEC on September 18, 1998, a copy of which is attached hereto as
Exhibit 2.2(iii) (the "Proxy Statement").
2.3. Subsidiaries.
(a) Schedule 2.3(a) contains (except as noted
therein) complete and correct lists (i) of the Company's Material
Subsidiaries, showing, as to each Material Subsidiary, the
correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Company and
each other of the Company's Subsidiaries, and (ii) of the
Company's directors and senior officers.
(b) Except as set forth in Schedule 2.3(a), all of the
outstanding shares of capital stock or similar equity interests
of each Material Subsidiary shown in Schedule 2.3(a) as being
owned by the Company and its Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by the
Company or another of its Subsidiaries free and clear of any
Lien.
(c) There are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to
which the Company or any of its Subsidiaries may be required to
issue, sell, repurchase or redeem any of its capital stock or
other equity interests in any of the Company's Subsidiaries.
(d) The Company has furnished to each Purchaser true
and correct copies of the charter, by-laws and/or other
organizational documents of each of the Company's Material
Subsidiaries, as in effect on the date of this Agreement, copies
of which are attached hereto as Exhibit 2.3(d).
(e) Schedule 2.3(e) contains (except as noted therein)
a complete and correct list of all of the Company's Non-
Significant Subsidiaries.
2.4. SEC Reports Correspondence.
Except as set forth in Schedule 2.4, the Company has
filed all proxy statements, reports and other documents required
to be filed by it under the Exchange Act from and after January
1, 1995; and the Company has furnished each Purchaser true and
complete copies of all annual reports, quarterly reports, proxy
statements and other reports under the Exchange Act filed by the
Company from and after such date, each as filed with the SEC
(collectively, the "SEC Reports"). Except as set forth on
Schedule 2.4, each SEC Report was in compliance in all material
respects with the requirements of its respective report form and
did not on the date of filing contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and as of the date hereof there is no fact or facts
not disclosed in the SEC Reports which relate specifically to the
Company and/or any of its Subsidiaries and which individually or
in the aggregate may have a Material Adverse Effect. The Company
has made available for inspection by each Purchaser copies of all
correspondence between the Company and the SEC from and after
January 1, 1996.
2.5. Financial Statements.
Except as set forth in Schedule 2.5, the financial
statements (including any related schedules and/or notes)
included in the SEC Reports have been prepared in accordance with
GAAP consistently followed (except as indicated in the notes
thereto) throughout the periods involved and fairly present the
consolidated financial condition, results of operations, cash
flows and changes in stockholders' equity of the Company and its
Subsidiaries as of the respective dates thereof and for the
respective periods then ended (in each case subject, as to
interim statements, to changes resulting from year-end
adjustments, none of which were material in amount or effect).
Except as set forth in Schedule 2.5 or the SEC Reports, the
Company has no liabilities or obligations, contingent or
otherwise, except (i) liabilities and obligations in the
respective amounts reflected or reserved against in the Company's
balance sheet as of December 31, 1997 included in the SEC Reports
or (ii) liabilities and obligations incurred in the ordinary
course of business since December 31, 1997 which individually or
in the aggregate do not have a Material Adverse Effect. Since
December 31, 1997, the Company and its Subsidiaries have operated
their respective businesses only in the ordinary course and there
has not been individually or in the aggregate any Material
Adverse Effect, other than changes disclosed in the SEC Reports
or otherwise set forth in Schedule 2.5 hereto.
2.6. Litigation.
(a) Except as set forth in Schedule 2.6 hereto or as
disclosed in the SEC Reports, there is no action, suit,
investigation or proceeding pending or, to the Knowledge of the
Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets by
or before any court, arbitrator or other Governmental Entity.
(b) Except as set forth in Schedule 2.6 or as
disclosed in the SEC Reports, neither the Company nor any of its
Subsidiaries is in default under or in breach of any order of any
court, arbitrator or governmental entity, and neither the Company
nor any of its Subsidiaries is subject to or a party to any order
of any court or governmental entity arising out of any action,
suit or proceeding under any Law.
2.7. Title to Properties; Insurance.
(a) Except as set forth in Schedule 2.7(a),
the Company and each of its Subsidiaries have good and valid
title to, or, in the case of property leased by any of them as
lessee, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all Liens and
encumbrances, except as sold or otherwise disposed of in the
ordinary course of business and except for such Liens and
encumbrances which would not cause a Material Adverse Effect.
(b) Schedule 2.7(b) sets forth a complete and
correct list of all insurance coverage carried by the Company or
its Subsidiaries, the carrier and the terms and amount of
coverage. All of the material assets of the Company and the
Company's Subsidiaries and all aspects of the Company's and its
Subsidiaries' businesses that are of insurable character are
covered by insurance with insurers against risks of liability,
casualty and fire and other losses and liabilities customarily
obtained to cover comparable businesses and assets in amounts,
scope and coverage which are consistent with prudent industry
practice. Neither the Company nor any of its Subsidiaries is in
default with respect to its obligations under any such insurance
policy maintained by it. All such policies and other instruments
are in full force and effect and no premiums with respect thereto
are past due and owed. Except as set forth in Schedule 2.7(b),
neither the Company nor any of its Subsidiaries has failed to
give any notice or present any material claim under any such
insurance policy in due and timely fashion or as required by any
of such insurance policies, neither the Company nor any of its
Subsidiaries has otherwise, through any act, omission or non-
disclosure, jeopardized or impaired full recovery of any claim
under such policies, and there are no claims by the Company or
any of its Subsidiaries under any of such policies to which any
insurance company is denying liability or defending under a
reservation of rights or similar clause. Neither the Company nor
any of its Subsidiaries has received notice of any pending or
threatened termination of any of such policies or any premium
increases for the current policy period with respect to any of
such policies and the consummation of the transactions
contemplated by the Transaction Documents will not result in any
such termination or premium increase. The Company does not
maintain directors' and officers' insurance.
2.8. Governmental Consents, etc.
No Credit Party is required to obtain any consent,
approval or authorization of, or to make any registration,
declaration or filing with, any Governmental Entity or third
party as a condition to or in connection with the valid execution
and delivery of any of the Transaction Documents or the valid
offer, issue, sale or delivery of the Notes or the Loan Warrants,
or the performance by any such Credit Party of its obligations in
respect of any thereof, except for filings required pursuant to
state and federal securities laws to effect any registration of
securities pursuant to the Registration Rights Agreement, the
Financing Statements, and filings to be made with the U.S. Patent
and Trademark Office or the U.S. Copyright Office to perfect the
Holders' first priority security interest in the Intellectual
Property constituting Collateral under the Collateral
Documentation, and except for the filing on Form 8K under the
Exchange Act to report the consummation of the transactions
contemplated hereby.
2.9. Holding Company Act and Investment Company Act.
No Credit Party is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary
company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a "public utility," as
defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an
"affiliated person" of any such "affiliated person," as such
terms are defined in the Investment Company Act of 1940, as
amended.
2.10. Taxes
. Except as set forth in Schedule 2.10:
(a) The Company and its Subsidiaries are each
members of the affiliated group (as defined in Code Section 1504)
filing a consolidated federal income Tax Return of which the
Company is the common parent. The Company and its Subsidiaries
(i) have timely filed all Tax Returns (including, but not limited
to, those filed on a consolidated, combined or unitary basis)
required to have been filed by the Company or its Subsidiaries,
all of which Tax Returns are true, correct and complete in all
material respects; (ii) have within the time and manner
prescribed by Law paid all Taxes, required to be paid in respect
of the periods covered by such Tax Returns or otherwise due to
any Governmental Authority; (iii) have established and maintained
on their respective books and records, accruals and reserves that
are adequate for the payment of all Taxes not yet due and payable
and attributable to any period preceding the date hereof; and
(iv) have not received notice of any deficiencies for any Tax
from any Governmental Authority against the Company or any of its
Subsidiaries, which deficiency has not been satisfied. Neither
the Company nor any of its Subsidiaries is the subject of any
currently ongoing audit or judicial or administrative proceeding
relating to Taxes, nor is any such audit pending or, to the
Company's Knowledge, threatened. With respect to any taxable
period ended prior to December 31, 1992, all Tax Returns
including the Company or any of its Subsidiaries have been
audited by the Internal Revenue Service or are closed by the
applicable statute of limitations. The accruals and reserves for
Taxes on the December 31, 1997 Balance Sheet are complete and
adequate in all material respects to cover the liability of the
Company and its Subsidiaries for Taxes through such date. There
are no Liens with respect to Taxes upon any of the properties or
assets, real or personal, tangible or intangible, of the Company
or any of its Subsidiaries (other than Liens for Taxes not yet
due). No claim has been made or threatened in writing, and no
claim has, to the Company's Knowledge, otherwise been made or
threatened, by a Governmental Authority in a jurisdiction where
the Company and its Subsidiaries do not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction. Neither the Company nor any of
its Subsidiaries has filed an election under Section 341(f) of
the Code to be treated as a consenting corporation. Neither the
Company nor any of its Subsidiaries is or has been a party to any
Tax Sharing Agreement.
(b) The Company and its Subsidiaries have duly
withheld or collected all Taxes required by law to have been
withheld or collected (including Taxes required by law to be
withheld or collected in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or
other third party) and any such amounts required to be remitted
to a Governmental Authority have been timely remitted.
2.11. Compliance with ERISA
. The Company has provided or made available to each
Purchaser, or has caused to be provided to each Purchaser
(i) current, accurate and complete copies of all documents
embodying or relating to each employee benefit plan (within the
meaning of Section 3(3) of ERISA) and each Employee Agreement,
including all amendments thereto, and trust or funding agreements
with respect thereto (excluding any grantor trusts established to
hold assets subject to the claims of Seller's creditors)
maintained or contributed to by and Credit Party or any ERISA
Affiliate; and (ii) all summary plan descriptions and
communications of any material modifications to any employee or
employees relating to any employee benefit plan (within the
meaning of Section 3(3) of ERISA) or Employee Agreement
maintained by any Credit Party or any ERISA Affiliate. Schedule
2.11 sets forth a complete and correct list of all employee
benefit plans and Employee Agreements described in clause (i)
above. Each employee benefit plan (within the meaning of Section
3(3) of ERISA) maintained or contributed to by any Credit Party
or any ERISA Affiliate has been established and operated in
accordance with terms thereof and all other applicable laws,
including, but not limited to the Code and ERISA. Neither any
Credit Party nor any ERISA Affiliate presently sponsors,
maintains, contributes to, or is required to contribute to, nor
has any Credit Party nor any ERISA Affiliate ever sponsored,
maintained, contributed to, or been required to contribute to, an
"employee pension benefit plan" (within the meaning of Section
3(2) of ERISA) which is subject to Title IV of ERISA or Section
412 of the Code. Neither any Credit Party nor any ERISA
Affiliate has ever maintained or contributed to or been required
to maintain or contribute to any employee welfare benefits plan
(within the meaning of Section 3(1) of ERISA) which provides for
post-retirement medical or other welfare-type benefits and has no
liability for any such benefits to any present or former
employee.
2.12. Intellectual Property Rights
. Except as disclosed on Schedule 2.12 hereto, to the
Company's Knowledge, (i) the Company or one of its Subsidiaries
owns or has the right to use pursuant to license, sub-license,
agreement or permission all of its Intellectual Property; and
(ii) neither the Company nor any of its Subsidiaries has
interfered with, infringed upon or misappropriated any
Intellectual Property rights of third parties, except for
interferences, infringements and misappropriations which would
not individually or in the aggregate have a Material Adverse
Effect, and the Company has no Knowledge of any claim, demand or
notice alleging any such interference, infringement or
misappropriation (including any claim that it must license or
refrain from using any Intellectual Property rights of any third
party). To the Company's Knowledge, no third party has
interfered with, infringed upon or misappropriated any
Intellectual Property rights of the Company or any of the
Company's Subsidiaries.
2.13. Possession of Franchises, Licenses, Etc.
Each Credit Party possesses all franchises,
certificates, licenses, permits and other authorizations from
Governmental Entities and other rights, free from burdensome
restrictions, that are necessary for the ownership, maintenance
and operation of their respective properties and assets, except
for those the absence of which would not individually or in the
aggregate have a Material Adverse Effect, and no Credit Party is
in violation of any thereof, except for violations which would
not cause a Material Adverse Effect.
2.14. Compliance with Laws
. Each Credit Party is in compliance with all
applicable Laws including, without limitation, those relating to
protection of the environment, employment opportunity and
employee safety, except where the failure to comply would not
individually or in the aggregate have a Material Adverse Effect.
No injunction, order or other decree has been issued nor any Law
enacted which prevents, nor does any Law prohibit the
consummation of the transactions contemplated by any of the
Transaction Documents.
2.15. Conflicting Agreements and Charter Provisions
. Other than the Class Action Settlement Agreement, no
Credit Party is a party to any Contract or is subject to any
charter or By-Law provision or any judgment or decree which
individually or in the aggregate has or is reasonably likely to
have a Material Adverse Effect. Neither the execution and
delivery of any of the Transaction Documents, nor the issuance of
the Notes or the Loan Warrants, nor the fulfillment of or
compliance with the terms and provisions hereof or thereof, will
conflict with or result in a breach of the terms, conditions, or
provisions of, or give rise to a right of termination under, or
constitute a default under, or result in the creation of any
Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of any
Credit Party or any Contract of any Credit Party except where
such conflict, breach, right of termination, default, Lien or
violation would not cause a Material Adverse Effect. No Credit
Party is in default under any outstanding indenture or other debt
instrument or with respect to the payment of the principal of or
interest on any outstanding obligations for borrowed money, or is
in default under any of its Contracts except, in the case of
Contracts, where such default would not cause a Material Adverse
Effect.
2.16. Capitalization
. The authorized capital stock of the Company consists
of 20,000,000 shares of Common Stock, of which, as of the date
hereof, 10,990,290 shares were issued and outstanding. All of
the outstanding shares of Common Stock have been validly issued
and are fully paid and nonassessable. No class of Capital Stock
of the Company is entitled to preemptive rights. Except for the
Old Notes and the warrants and options listed on Schedule 2.16
hereto, there are no outstanding options, warrants, subscription
rights, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, shares of any class
of Capital Stock of the Company, or Contracts, by which the
Company or any of its Subsidiaries is or may become bound to
issue additional shares of its Capital Stock or options, warrants
or other rights to purchase or acquire any shares of its Capital
Stock. Immediately following the consummation of the
transactions contemplated hereby, the Company's capitalization
will be as set forth in Schedule 2.16. The Company has not
declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January
1, 1995.
2.17. Disclosure
. Neither any Transaction Document nor any Schedule
thereto, nor any certificate furnished to any Purchaser by or on
behalf of the Company or any of its Subsidiaries in connection
with the transactions contemplated thereby, taken as a whole,
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein and therein not misleading.
2.18. Offering of Notes
. Neither the Company nor any Person acting on its
behalf has offered the Notes or the Loan Warrants or any similar
securities of the Company for sale to, solicited any offers to
buy the Notes or the Loan Warrants or any similar securities of
the Company from or otherwise approached or negotiated with
respect to the Company with any Person other than the Purchasers
and other "accredited investors" (as defined in Rule 501(a) under
the Securities Act). Neither the Company nor any Person acting
on its behalf has taken or, except as contemplated hereby will
take any action (including, without limitation, any offering of
any securities of the Company under circumstances which would
require the integration of such offering with the offering of the
Notes or the Loan Warrants under the Securities Act) which could
reasonably be expected to subject the offering, issuance or sale
of the Notes or the Loan Warrants to the registration
requirements of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
2.19. Existing Indebtedness; Future Liens
. (a) Schedule 2.19 sets forth a complete and
correct list of all outstanding Indebtedness of the Company and
its Subsidiaries as of the date hereof. Neither the Company nor
any of its Subsidiaries is in default and no waiver of default is
currently in effect, in the payment of any principal or interest
on any such Indebtedness and no event or condition exists with
respect to any such Indebtedness that would permit (or that with
notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled
dates of payment. None of the Company's 4% convertible
debentures, due January 30, 2000, are outstanding.
(b) No Credit Party has agreed or consented to cause
or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to any Lien.
2.20. Environmental Matters
. No Credit Party has Knowledge of any claim or has
received any notice of any claim, and no proceeding has been
instituted raising any claim against any Credit Party or any of
its real properties now or formerly owned, leased or operated by
any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws. Except as
otherwise set forth in Schedule 2.20, (i) no Credit Party has
Knowledge of any facts which would give rise to any claim, public
or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or affecting real
properties now or formerly owned, leased or operated by any of
them or to other assets or their use; (ii) except as set forth on
Schedule 2.20, no Credit Party has stored any Hazardous Materials
on real properties now or formerly owned, leased or operated by
any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws; and (iii) all
buildings on all real properties now owned, leased or operated by
any Credit Party are in compliance with applicable Environmental
Laws; except in each case for such occurrences which would not
cause a Material Adverse Effect.
2.21. Solvency
. No Credit Party is, and after giving effect to the
purchase of the Notes and the application of the proceeds
therefrom will be, insolvent within the meaning of Title 11 of
the United States Code or any comparable state law provision.
2.22. Labor Relations
. Except as set forth in Schedule 2.22, no unfair
labor practice complaint or any complaint alleging sexual
harassment or sex, age, race or other employment discrimination
has been brought during the last three years against any Credit
Party before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other Governmental
Authority, nor is there any charge, investigation (formal or
informal) or complaint pending, or to the Knowledge of each
Credit Party, threatened, against any Credit Party regarding any
labor or employment matter. There have been no governmental
audits of the equal employment opportunity practices of any
Credit Party and, to the Knowledge of each Credit Party, no
reasonable basis for any such audit exists. Each Credit Party
(i) is in compliance with all applicable federal, state and local
laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of
employment, collective bargaining and wages and hours, except for
such laws, rules and regulations which would not cause a Material
Adverse Effect and (ii) has withheld all amounts required by law
or by agreement to be withheld from the wages, salaries and other
payments to its employees.
2.23. Security Documents
. Upon proper filing of the Financing Statements (or
assignments thereof) in the offices of the Secretary of State of
Nevada with respect to the Company and upon proper filing of the
Financing Statements (or assignments thereof) in the locations
identified in the Guarantee and Security Agreement, with respect
to the domestic Material Subsidiaries, the Liens granted under
the Transaction Documents (other than the Exchange Offer
Documents) shall constitute fully perfected first priority
security interests in all right, title and interest of the
Company or such domestic Material Subsidiary, as the case may be,
in and to the personal property therein prior to any other
security interests against such property or interests therein.
2.24. Litigation Settlement
. (a) Attached hereto as Exhibits 2.24A, 2.24B and
2.24C are true and complete copies of the Class Action Settlement
Agreement, the 3M Agreement, and the June 2, 1998 Court Order
approving the Class Action Settlement Agreement and the 3M
Agreement (including the 30-day extension letter thereto).
(b) The plaintiffs in the Breast Implant Litigation
have been preliminarily certified as a Mandatory (non "opt-out"
Limited Fund) Class under Rule 23(b)(1)(B) of the Federal Rules
of Civil Procedure.
(c) Except as disclosed in the Company's filing in its
1997 Form 10K, the implementation of the Class Action Settlement
Agreement will preclude further litigation by all persons who are
within the scope of the class and whose claims arise during the
class period.
(d) Each Credit Party is in full compliance with all
of the terms of the Class Action Settlement Agreement, the 3M
Agreement and the June 2, 1998 Court Order. No Credit Party is
in default under or in violation of the Class Action Settlement
Agreement, the 3M Agreement, or the June 2, 1998 Court Order and
all of the foregoing are in full force and effect with respect to
each Credit Party. To the Knowledge of each Credit Party, each
Person (other than a Credit Party) who is a party to the Class
Action Settlement Agreement or the 3M Agreement or who is subject
to the June 2, 1998 Court Order is in full compliance with the
terms of such agreements and such order, are not in default or in
violation of such agreements or such order, and each of the
foregoing is in full force and effect with respect to such
parties.
(e) The Company has delivered to each Purchaser true
and correct copies of the Escrow Agreement and the Interim
Agreement for Custodian Services for the INAMED Settlement Fund,
dated as of September 30, 1998, by and between The INAMED
Settlement Fund and Compass Bank (the "Custody Agreement").
2.25. Brokers or Finders
. Other than the $100,000 fee to Libra Investments and
the $200,000 fee to Appaloosa, no agent, broker, investment
banker or other Person is or will be entitled to any broker's fee
or any other commission or similar fee from any Credit Party in
connection with any of the transactions contemplated by this
Agreement.
2.26. No Material Adverse Change
. Except as set forth in Schedule 2.26, since January
1, 1997, no event has occurred or failed to occur which has had a
Material Adverse Effect.
2.27. Related Party Transactions
. (a) Except as set forth in Schedule 2.27 or as
disclosed in the SEC Reports, no Credit Party has entered into or
been a party to any transaction with any Related Party thereof
except in the ordinary course of, and pursuant to the reasonable
requirements of, such party's business and upon fair and
reasonable terms that are at least equivalent to an arms length
transaction with a Person not a Related Party of such party.
(b) Except as set forth in Schedule 2.27 or as
disclosed in the SEC Reports, no Credit Party has entered into
any lending or borrowing transaction with any director, officer
or employee of the Company or any of its Subsidiaries in excess
of $10,000 in the aggregate.
2.28. McGhan Documents
. (a) Attached hereto as Exhibits 2.28(i) and
2.28(ii), respectively, are true and complete copies of (i) the
Standstill Agreement and (ii) all documents and agreements
relating to the full discharge of all Indebtedness to
International Integrated Industries LLC.
(b) The Company has discharged in full, in a manner
satisfactory to each Purchaser, all indebtedness to International
Integrated Industries LLC.
(c) Each Credit Party is in full compliance with all
of the terms of the documents listed in Section 2.28(a) and is
not in default or in violation of any of the foregoing. All of
the documents listed in Section 2.28(a) are in full force and
effect with respect to each Credit Party.
(d) To the Knowledge of each Credit Party, each Person
(other than a Credit Party) who is a party to any of the
documents listed in Section 2.28(a) is in full compliance with
the terms of such documents, is not in default or in violation of
the foregoing, and each such document is in full force and effect
with respect to such parties.
2.29. Year 2000
. The Company reasonably believes that the Company and
its Subsidiaries will on a timely basis successfully resolve the
risk that computer applications used by the Company and its
Subsidiaries may be unable to recognize and perform properly date-
sensitive functions involving certain dates, commonly referred to
as the "Year 2000 Problem", if the Company and its Subsidiaries
implement the plans for such resolution currently in place. The
Company reasonably believes that the cost to the Company and its
Subsidiaries of correcting their Year 2000 Problem will not be
Material. The Company and its Subsidiaries, on the basis of
inquiries made, believe that each material supplier and customer
of the Company and each of its Subsidiaries will also
successfully resolve on a timely basis the Year 2000 Problem for
all of its computer applications.
2.30. Statements; Omissions
. With respect to the Exchange Offer, the Company has
provided (or will have provided prior to the consummation of the
Exchange Offer) to the holders of the Old Notes all material
facts relevant to the Company and the Exchange Offer, and the
Company has not made any untrue statements of a material fact or
omitted to state a material fact necessary in order to make any
statements made by the Company, in the light of the circumstances
under which they were made, not misleading.
2.31. No Registration Required; Trust Indenture Act
. Subject to compliance by the holders of the Old
Notes with the representations and warranties set forth in
Article III of the Securities Exchange Agreement, it is not
necessary in connection with the Exchange Offer and the granting
of the Exchange Warrants and Additional Warrants to the Holders
and by the Holders to each subsequent holder in the manner
contemplated by the Securities Exchange Agreement to register the
Exchange Notes, the Exchange Warrants and Additional Warrants
under the Act. The Exchange Offer Documents and the transactions
contemplated thereby are in full compliance with the Trust
Indenture Act of 1939, as amended.
3. Representations and Warranties of the Purchasers
. Each Purchaser, severally and not jointly,
represents and warrants to the Company with respect to such
Purchaser as follows:
3.1. Organization and Qualification
. Such Purchaser is duly organized and existing in
good standing under the laws of the state of its formation and
has the power to own its respective property and to carry on its
respective business as now being conducted.
3.2. Due Authorization
. Such Purchaser has all right, power and authority to
enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions
contemplated thereby. Such Purchaser's execution and delivery of
each Transaction Document to which it is a party and the
performance by such Purchaser of the transactions contemplated
thereby and compliance by such Purchaser with all the provisions
of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite
proceedings on the part of such Purchaser. Each of the
Transaction Documents (other than the Exchange Offer Documents)
to which it is a party has been duly executed and delivered on
behalf of such Purchaser, and each such Transaction Document
constitutes the legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with
its respective terms, except as may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other
similar laws or by general principles of equity relating to
creditors' rights generally.
3.3. Acquisition for Investment
. Such Purchaser is acquiring the Notes being
purchased by it for its own account for the purpose of investment
and not with a view to or for sale in connection with any
distribution thereof except in compliance with all applicable
securities Laws.
3.4. Offering of Notes
. Such Purchaser has not offered the Notes for sale by
any means of general solicitation or general advertising
including, but not limited to, any advertisements, articles,
notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees were invited by any
general solicitation or general advertising.
3.5. Accredited Investor
. Such Purchaser is an "accredited investor" within
the meaning of Rule 501 promulgated under the Securities Act.
Such Purchaser represents that it has been afforded the
opportunity to ask questions and receive answers concerning the
terms and conditions of the Transaction Documents and the
transactions contemplated thereby.
3.6. Brokers or Finders
. No agent, broker, investment banker or other Person
is or will be entitled to any broker's fee or any other
commission or similar fee from such Purchaser in connection with
any of the transactions contemplated by this Agreement.
4. Registration, Exchange and Transfer of Notes.
4.1. The Note Register; Persons Deemed Owners
. The Company shall maintain, at its office designated
for notices in accordance with Section 11.6, a register for the
Notes (the "Note Register"), in which the Company shall record
the name and address of the person in whose name each Note has
been issued and the name and address of each transferee and prior
owner of each Note. The Company may deem and treat the person in
whose name a Note is so registered as the Holder and owner
thereof for all purposes and shall not be affected by any notice
to the contrary, until due presentment of such Note for
registration of transfer as provided in this Article 4.
4.2. Issuance of New Notes Upon Exchange or Transfer
. Upon surrender for exchange or registration of
transfer of any Note at the office of the Company designated for
notices in accordance with Section 11.6, the Company shall
execute and deliver, at its expense, one or more new Notes as
requested by the Holder of the surrendered Note, each dated the
date to which interest has been paid on the Note so surrendered
(or, if no interest has been paid, the date of such surrendered
Note), but in the same aggregate unpaid principal amount as such
surrendered Note, and registered in the name of such person or
persons as shall be designated in writing by such Holder. Every
Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer
duly executed, by the Holder of such Note or by his attorney duly
authorized in writing. The Company may also condition the
issuance of any new Note or Notes to a Person other than the
Holder thereof on the payment of a sum sufficient to cover any
stamp tax or other governmental charge imposed in respect of such
transfer.
5. Payment of Notes.
5.1. Home Office Payment
. The Company will pay to each Purchaser or any
transferee thereof all sums becoming due on the Notes held by
such Purchaser or transferee (including all sums which become due
on the Notes at the maturity thereof) (a) prior to the date of
execution of an indenture (the "Indenture Date") at the
account/address to be specified by such Purchaser or transferee
for such purpose by notice to the Company, by wire transfer of
immediately available funds, or at such other address or by such
other method as such Purchaser or transferee shall have
designated by notice to the Company and (b) at any time after the
Indenture Date, by wire transfer to the Trustee, as specified in
the indenture. Before selling or otherwise transferring any
Note, such Purchaser or transferee will make a notation thereon
of the aggregate amount of all payments of principal, if any,
theretofore made, and of the date to which interest has been
paid.
5.2. Limitation on Interest
. No provision of this Agreement or of the Notes shall
require the payment or permit the collection of interest in
excess of the maximum rate which is permitted by Law. If any
such excess interest is provided for herein or in the Notes, or
shall be adjudicated to be so provided for, then the Company
shall not be obligated to pay such interest in excess of the
maximum rate permitted by Law, and the right to demand payment of
any such excess interest is hereby waived, any other provisions
in this Agreement or in the Notes to the contrary
notwithstanding.
5.3. Interest
. Interest on the principal amount of the Notes shall
be due and payable as provided in the Notes.
5.4. Principal
. Unless otherwise provided herein, payment of the
principal amount of the Notes shall be due and payable as
provided in the Notes.
6. Covenants of the Company
. The Company covenants that for so long as any of the
Notes are outstanding:
6.1. Maintenance of Office or Agency
. The Company shall maintain in Las Vegas, Nevada an
office or agency where Notes may be presented or surrendered for
payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the
Company in respect of the Notes may be served. The Company shall
give prompt written notice to the Holders of the location, and
any change in the location, of such office or agency. The
Company may also from time to time designate one or more other
offices or agencies (in or outside Nevada) where the Notes may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations, provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in Las Vegas, Nevada for such purposes. The Company shall
give prompt written notice to the Holders of any such designation
or rescission and of any change in the location of any such other
office or agency.
6.2. Money for Security Payments to be Held in Trust
. On or before each due date of the principal of or
interest on any of the Notes, the Company shall segregate and
hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided.
6.3. Existence
. The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence, Material rights (charter and statutory) and Material
franchises and the existence, Material rights and Material
franchises of all of its Subsidiaries. Neither the Company nor
any of its Subsidiaries shall enter into any transaction of
acquisition of, or merger or consolidation or amalgamation with,
any other Person (including any Subsidiary or Affiliate of the
Company or any of its Subsidiaries), or transfer all or
substantially all of its assets to any foreign Subsidiary, or
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), or make any Material change in the present
method of conducting business or engage in any type of business
other than of the same general type now conducted by it. The
Company shall not, and shall not permit any of its Subsidiaries
to, amend or otherwise modify (i) the Company's articles of
incorporation or certificate of incorporation (as the case may
be), (ii) the Company's by-laws or (iii) the charter, by-laws or
other organizational documents of any of the Company's
Subsidiaries. Notwithstanding the foregoing, the Company shall
be permitted to (A) consummate the Reincorporation Merger to
change the Company's state of incorporation from Florida to
Delaware (substantially on the terms described in the Proxy
Statement, the Delaware Charter and the Delaware By-Laws, but in
no event on terms more adverse to the Holders than those
contained in the Proxy Statement, Delaware Charter and Delaware
By-Laws and in no event increasing the number of authorized
shares contained therein), provided, however, that the Company
shall not, without the prior written consent of the Required
Holders, amend or otherwise modify the Delaware Charter or the
Delaware By-Laws and (B) effect any transaction otherwise
prohibited under this Section 6.3 solely with respect to its Non-
Significant Subsidiaries except for the provisions of the first
two sentences of this Section 6.3.
6.4. Maintenance of Properties
. The Company shall cause all properties used or
useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and
shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such if such
discontinuance is, in the reasonable, good faith judgment of the
Company, desirable in the conduct of its business or the business
of any Subsidiary and not disadvantageous in any Material respect
to the Holders.
6.5. Payment of Taxes and Other Claims
. The Company shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent,
(i) all Taxes levied or imposed upon any Credit Party or upon the
income, profits or property of any Credit Party, and (ii) all
lawful claims for labor, materials and supplies which, if unpaid,
might by Law become a Lien upon the property of any Credit Party;
provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such Tax whose
amount, applicability or validity is being contested in good
faith by appropriate proceedings.
6.6. Limitation on Indebtedness
. The Company shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or
indirectly liable for the payment of any Indebtedness (excluding
Permitted Indebtedness and Indebtedness which is a Guaranty of an
Indebtedness of a Credit Party that is otherwise Permitted
Indebtedness).
6.7. Limitation on Encumbrances
. The Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur,
assume or otherwise suffer to exist or cause or otherwise suffer
to become effective any Lien in or on any right, title or
interest to any property (real or personal) that constitutes all
or any portion of the Collateral (a "Restricted Encumbrance,"
which term excludes the Lien created in favor of the Holders)
unless such Restricted Encumbrance is a Permitted Lien.
6.8. Limitation on Related Party Transactions
. (a) The Company shall not, and shall not permit
any of its Subsidiaries to, enter into or be a party to any
transaction with any Related Parties (other than an Appaloosa or
its Affiliates) except in the ordinary course of, and pursuant to
the reasonable requirements of, such party's business and upon
fair and reasonable terms that are at least equivalent to an arms
length transaction with a Person that is not a Related Party. In
addition, if any such transaction or series of related
transactions involves payments in excess of $25,000 in the
aggregate, the terms of those transactions must be disclosed in
advance to each Holder. All such transactions existing as of the
date hereof are set forth in Schedule 6.8.
(b) The Company shall not, and shall not permit any of
its Subsidiaries to, enter into any lending or borrowing
transaction with any director, officer or employee of any Credit
Party.
(c) The Company shall not, and shall not permit any of
its Subsidiaries to, (i) enter into or adopt or amend any
existing agreement or arrangement relating to severance, (ii)
enter into or adopt or amend any existing severance plan, (iii)
enter into or adopt or amend any employee benefit plan (within
the meaning of Section 3(3) of ERISA) or Employee Agreement or
(iv) grant any bonus, salary increase, severance or termination
pay to, any employee, officer, director or consultant other than
in the ordinary course of business consistent with past practice.
6.9. Limitation on Dividends; Stock Issuances
. The Company shall not offer or issue any shares of
preferred stock of the Company for any purpose whatsoever
including, without limitation, any shares of "blank check"
preferred stock authorized under Article FOURTH of the Delaware
Charter following the effectiveness of the Reincorporation
Merger. The Company shall not offer or issue any shares of
Common Stock of the Company that, if consummated, would cause the
aggregate number of shares of Common Stock outstanding to be
greater than 20,000,000 (adjusted for reverse stock splits and
similar transactions). The Company shall not declare any
dividends on any shares of its Capital Stock, or make any payment
on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement or other
acquisition of any shares of its Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash,
Securities, property or in obligations of any Credit Party.
6.10. Subsidiary Guarantees
. The Company shall cause its existing and future
wholly-owned direct and indirect Material Subsidiaries organized
under the laws of any state of the United States (or the District
of Columbia) to jointly and severally guarantee the obligations
of the Company under the Notes and this Agreement pursuant to the
Guarantee and Security Agreement. The Company shall cause such
guarantees to be executed and delivered by all of the domestic
Material Subsidiaries in existence on the date hereof
concurrently with the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, to the extent
that the Company establishes or acquires a direct or indirect
Subsidiary that constitutes a Material Subsidiary, or if an
existing Non-Significant Subsidiary shall become a Material
Subsidiary, and such Subsidiary is organized under the laws of a
state of the United States and doing business in the United
States after the date hereof, the Company shall cause such
Subsidiary to jointly and severally guarantee the obligations of
the Company under the Notes and this Agreement pursuant to the
Guarantee and Security Agreement. The Company shall cause its
existing and future direct and indirect Material Subsidiaries
organized under the laws of any jurisdiction other than any state
of the United States or the District of Columbia to jointly and
severally guarantee the obligations of the Company under the
Notes and this Agreement pursuant to the Guarantee Agreement.
The Company shall cause such guarantees to be executed, delivered
and approved by all of such foreign Material Subsidiaries in
existence on the date hereof concurrently with the execution and
delivery of this Agreement. Without limiting the generality of
the foregoing, to the extent that the Company establishes or
acquires a direct or indirect Subsidiary that constitutes a
Material Subsidiary, or if an existing Non-Significant Subsidiary
shall become a Material Subsidiary, and such Subsidiary is
organized under the laws of any jurisdiction other than any state
of the United States or the District of Columbia, the Company
shall cause such Subsidiary to jointly and severally guarantee
the obligations of the Company under the Notes and this Agreement
pursuant to the Guarantee Agreement.
6.11. Pledges of Intercompany Notes
. The Company shall, and shall cause each of its
Material Subsidiaries to, promptly pledge all Intercompany Notes
(and all security agreements and documents relating thereto),
whether in existence or created after the date hereof, to the
Collateral Agent as Collateral under the Collateral
Documentation. To the extent that, on or after the date hereof,
the Company makes any cash investment in any of its Subsidiaries
(in accordance with Section 6.13) which are organized under the
laws of and doing business in the United States, such investment
shall be required to be made in the form of a loan, which shall
be evidenced by an Intercompany Note and all such Intercompany
Notes shall be pledged by the Company to the Collateral Agent as
Collateral under the Collateral Documentation.
6.12. No Speculative Transactions
. The Company shall not, and shall not permit any of
its Subsidiaries to, engage in any transaction involving
commodity options, futures contracts or similar transactions,
except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and except for interest
swaps, currency hedges, caps or collars.
6.13. Restricted Investments
. The Company shall not, directly or indirectly, make
or cause or permit, or permit any of its Subsidiaries to, make or
cause or permit, (i) any direct or indirect advance to, (ii) any
loan or other extension of credit to, (iii) any guarantee of any
Indebtedness of, (iv) any capital contribution to, (v) any
purchase or other acquisition of any Equity Interests in,
(vi) any purchase or other acquisition of assets (other than in
the ordinary course of business) from or (vii) any merger with,
any Person, including, without limitation, any of the Company's
Subsidiaries, in each case other than Permitted Investments.
6.14. Operating Profit
. The Company's Operating Profit (as defined below)
shall be greater than the amounts listed in the following chart
for the applicable period. "Operating Profit" shall mean, for
any given period, Net Income for such period (exclusive of (A)
all amounts in respect of any extraordinary gains or losses, (B)
gains and losses arising from the sale or other disposition of
material assets not in the ordinary course of business, (C)
earnings and losses from discontinued operations and (D) fees and
expenses incurred by the Company (including reasonable attorneys'
and accountants' fees and expenses) in connection with the offer
and sale of the Notes and the Exchange Offer) plus, to the extent
reflected as a charge in the statement of Consolidated Net Income
for such period, the sum of: (i) all taxes measured by income
(whether paid or deferred), (ii) interest expense (net
of interest income), (iii) non-cash charges related to the Class
Action Settlement Agreement, and (iv) restructuring charges
disclosed in the 1997 Annual Report on Form 10-K and the June 30,
1998 Quarterly Report on Form 10-Q.
Minimum Operating Minimum Operating
Profit for three- Profit for twelve-
Date month period ending month period ending
on date indicated on date indicated
June 30, 1998 $2,500,000 n/a
September 30, 1998 $2,500,000 n/a
December 31, 1998 $2,500,000 n/a
March 30, 1999 $2,500,000 $10,000,000
June 30, 1999 $2,500,000 $10,000,000
September 30, 1999 $3,750,000 $11,250,000
December 31, 1999 $3,750,000 $12,500,000
March 31, 2000 $3,750,000 $13,750,000
June 30, 2000 and $3,750,000 $15,000,000
the last day of
each calendar
quarter thereafter
6.15. Tangible Assets
. The Company's Consolidated Tangible Assets shall
exceed $50 million on September 30, 1998 and each quarter
thereafter.
6.16. Line of Business
. The Company shall not, and shall not permit any of
its Subsidiaries to, engage in any business if, as a result, the
general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the businesses
in which the Company and its Subsidiaries, taken as a whole, are
engaged on the date of this Agreement.
6.17. Sale of Assets
. The Company shall not, and shall not permit any of
its Subsidiaries to, sell, transfer or otherwise dispose of
("Transfer") any property or assets, unless the property or asset
that is the subject of such Transfer constitutes (i) inventory
held for sale, (ii) marketable securities available for sale, or
(iii) real estate, equipment, fixtures, supplies or materials no
longer required in the operation of the business of the Company
or such Subsidiary or that is obsolete, and, in the case of any
Transfer described in clause (i) or (iii), such Transfer is in
the ordinary course of business.
6.18. Indenture Relating to the Notes
. Upon the written request of the Required Holders,
the Company, at its expense, shall cause to be prepared, executed
and delivered within 30 days after such request an indenture
(including a new form of note, any necessary related
documentation and, from time to time thereafter, any necessary
supplements thereto) with respect to the Notes, which indenture
(and form of note) shall contain terms and provisions
substantially the same as those set forth in Articles 6, 8 and 9
hereof and such other terms and provisions as are required under
the Trust Indenture Act of 1939 and such other items and
provisions as are customary in indentures relating to publicly
traded senior secured debt securities having a rating comparable
to the rating that the Notes would receive if rated by a
nationally recognized rating agency. In such event, the Company
shall also appoint as trustee under such indenture a national
banking association reasonably acceptable to the Required Holders
having its principal offices in New York, New York, and having
capital, surplus, and undivided profits of at least $50,000,000.
In connection with the execution of any such indenture, the
Holders shall exchange all outstanding Notes for new notes in the
form contemplated by such indenture, and upon such exchange such
new notes shall be deemed to be "Notes" for purposes hereof.
6.19. Financial Statements and Information
. The Company shall furnish to each Holder: (a) as
soon as practicable and in any event within 45 days after the end
of each of the four quarters of each fiscal year and within 90
days of the end of each fiscal year (i) copies of the quarterly
and annual reports and of the other information, documents, and
other reports which the Company files or is required to file with
the SEC pursuant to the Exchange Act and of any other reports or
information which the Company delivers or makes available to any
of its security holders, at the time of filing such reports with
the SEC or of delivery to the Company's security holders, as the
case may be (but in no event later than the time such filing or
delivery is required pursuant to the Exchange Act) or (ii) as
soon as practicable and in any event within 45 days after the end
of each of the four quarters of each fiscal year and within 90
days of the end of each fiscal year, quarterly reports for the
four quarters of each fiscal year of the Company and annual
reports which the Company would have been required to file under
any provision of the Exchange Act if it had a class of securities
listed on a national securities exchange or was otherwise
required to file such reports under the Exchange Act, within
fifteen Business Days of when such report would have been filed
under Section 13 of the Exchange Act, together with copies of a
consolidating balance sheet of the Company and its Subsidiaries
as of the end of each such accounting period and of the related
consolidating statements of income and cash flow for the portion
of the fiscal year then ended, all in reasonable detail and all
certified by the principal financial officer of the Company to
present fairly the information contained therein in accordance
with GAAP (and in the case of annual reports, including financial
statements, audited and certified by the Company's independent
public accountants as required under the Exchange Act);
(b) within ninety days after the end of each fiscal year, a
written statement by the Company's independent certified public
accountants stating as to the Company whether in connection with
their audit examination, any Default or Event of Default has come
to their attention; (c)(i) within forty-five days after the end
of the four quarters of the Company's fiscal year and within
ninety days after the end of the Company's fiscal year, an
Officers' Certificate setting forth computations in reasonable
detail showing, as at the end of such quarter or fiscal year, as
the case may be, the Company's compliance with Sections 6.6, 6.7,
6.13, 6.14 and 6.15, and (ii) within 45 days after the end of
each fiscal quarter, an Officers' Certificate in the form of
Exhibit 6.19 stating that as of the date of such certificate,
based upon such examination or investigation and review of this
Agreement, as in the opinion of such signer is necessary to
enable the signer to express an informed opinion with respect
thereto, to the best Knowledge of such signer, the Company has
kept, observed, performed and fulfilled each and every covenant
contained in this Agreement, and is not in default in the
performance or observance of any of the terms, provisions and
conditions hereof, and to the best of such signer's Knowledge, no
Default or Event of Default exists or has existed during such
period or, if a Default or Event of Default shall exist or have
existed, specifying all such defaults, and the nature and period
of existence thereof, and what action the Company has taken, is
taking or proposes to take with respect thereto; (d) promptly
after becoming aware of (i) the existence of a Default or Event
of Default or any default in any of the Collateral Documentation,
or (ii) any default or event of default under any Indebtedness of
the Company or any of its Subsidiaries, an Officers' Certificate
specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect
thereto, or (iii) any litigation or proceeding affecting any
Credit Party in which the amount claimed is in excess of $100,000
and not covered by insurance or in which injunctive relief is
sought which if obtained would have a Material Adverse Effect, or
(iv) any change that has or is reasonably likely to have a
Material Adverse Effect; and (e) such other information,
including financial statements and computations, relating to the
performance of the provisions of this Agreement and the affairs
of the Company and any of its Subsidiaries as each Holder may
from time to time reasonably request. In addition, the Company
shall make available to securities analysts and broker-dealers,
upon their reasonable request, copies of all annual, quarterly
and interim reports filed by the Company with the SEC pursuant to
the Exchange Act (including, without limitation, copies of (i)
each financial statement, report, notice or proxy statement sent
by any Credit Party to public securities holders generally, and
(ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by any
Credit Party with the SEC and of all press releases and other
statements made available generally by any Credit Party to the
public concerning developments that are Material). The Company
shall keep at its principal executive office a true copy of this
Agreement (as at the time in effect), and cause the same to be
available for inspection at said office, during normal business
hours and after reasonable notice to the Company by any Holder.
6.20. Inspection
. (a) Any Holder or Holders holding in excess of 25%
of the aggregate principal amount of Notes issued and outstanding
shall have the right to visit and inspect any of the properties
of any Credit Party, to examine the books of account and records
of any Credit Party, to be provided with copies and extracts
therefrom, to discuss the affairs, finances and accounts of any
Credit Party with, and to be advised as to the same by, its and
their executive officers, and its and their independent public
accountants (and the Company authorizes such independent public
accountants to discuss the Company's or any Subsidiaries'
financial matters with such Holder and its representatives,
regardless of whether any representative of the Company is
present, but provided that an officer of the Company will be
afforded a reasonable opportunity to be present at any such
discussion), all at such reasonable times and intervals during
normal business hours, and upon reasonable prior notice to the
Company as such Holder and the Company shall agree and at the
expense of the Company (including the costs incurred by such
Holder in hiring accountants to conduct an audit). The Company
will likewise afford each Holder the opportunity to obtain any
information necessary to verify the accuracy of any of the
representations and warranties made by the Company hereunder or
in any Transaction Document or compliance by the Company and its
Subsidiaries with any covenant made hereunder or in any
Transaction Document.
(b) By receipt of information under this Section 6.20,
such Holder agrees that all information (other than such
information that is publicly available or any other information
that is in such Holder's possession prior to any disclosure under
this Section 6.20) provided to it pursuant to this Section 6.20
shall be used by such Holder solely in connection with its
investment in the Company and for no other purpose, and such
Holder shall treat such information as confidential in accordance
with such reasonable internal procedures as it applies generally
to information of this kind and shall not disclose such
information to any Person, except (i) to any governmental entity
having jurisdiction over such Holder in the ordinary course of
business to the extent so required by law, (ii) to any other
Person pursuant to subpoena or other process, whether legal,
administrative or other (and such Holder hereby agrees to provide
the Company with prompt notice of any such subpoena or other
process and provide the Company with an opportunity to contest
such disclosure), (iii) to such Holder's officers, directors,
trustees, employees, partners, legal counsel, financial advisors
or auditors or accountants who need access to such information in
connection with their duties, (iv) to any transferee or
prospective purchaser of a Note or interest therein who agrees to
be bound by this paragraph, or (v) to the extent necessary in the
enforcement of such Holder's rights hereunder and under the Notes
during the continuance of a Default or Event of Default.
6.21. Change-in-Control Purchase Offer
. (a) The Company shall make an offer, in accordance
with the procedures set forth in Section 6.21(b) to acquire the
Notes for cash at 101% of the principal amount thereof (plus
accrued and unpaid interest to the date of repurchase) in the
event of (i) a Change of Control, a merger, consolidation or
other combination involving the Company, or (ii) a Change of
Control of a Subsidiary of the Company or a group of Subsidiaries
of the Company occurs and such Subsidiary or group of
Subsidiaries, individually or in the aggregate, together with
their consolidated Subsidiaries and all other Subsidiaries
previously subject to a Change of Control, if any, represent more
than 50% of the revenues or net assets of the Company and its
Subsidiaries on a consolidated basis as of the last date of the
immediately preceding fiscal quarter of the Company or for the
twelve month period then ended.
(b) Notice of any redemption of Notes pursuant to this
Section 6.21 shall be mailed at least 30 but not more than 60
days prior to the date fixed for redemption to each Holder. In
order to facilitate the redemption of Notes, the board of
directors of the Company may fix a record date for the
determination of Notes to be redeemed which shall be a date at
least 20 days following the date of the notice. Promptly
following a Change in Control (but in no event more than five
Business Days thereafter), the Company shall mail to each Holder,
notice of such Change in Control, which notice shall set forth
such Holder's right to require the Company to redeem any or all
Notes held by it. The Company shall thereafter, during a period
of 90 days from the date of such notice redeem any Notes, in
whole or in part, at the option of the such Holder, upon at least
five days' written notice to the Company by such Holder
specifying (i) the principal amount of Notes to be redeemed and
(ii) the redemption date. On the date of any redemption being
made pursuant to this Section 6.21 which is specified in a notice
given pursuant to this Section 6.21, the Company shall wire
transfer to such Holder the amount determined in accordance with
Section 6.21(a) for the principal amount of Notes so redeemed,
together with an amount equal to all accrued and unpaid interest
thereon to the date of redemption.
6.22. Sale and Leaseback Transactions
. The Company shall not, and shall not permit any
Subsidiary to, enter into any Sale-and-Leaseback Transaction.
6.23. Compliance with Laws.
The Company shall, and shall cause each of its
Subsidiaries to, comply with all Laws, ordinances or governmental
rules or regulations to which each of them is subject, and shall
obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such Laws,
ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company shall timely file
all proxy statements, reports and other documents required to be
filed by it under the Exchange Act and such statements, reports
and other documents shall be in compliance in all material
respects with the requirements of its respective report form and
shall not on the date of filing contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
6.24. Supplemental Disclosure
. From time to time as may be requested by the
Required Holders, the Company shall supplement each Schedule
hereto, or any representation herein or in any other Transaction
Document, with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Schedule or as
an exception to such representation or which is necessary to
correct any information in such Schedule or representation which
has been rendered inaccurate thereby (and, in the case of any
supplements to any Schedule, such Schedule shall be appropriately
marked to show changes made therein); provided that no such
supplement to any such Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from
the matters disclosed therein.
6.25. Proceeds
. The proceeds of the sale of the Notes shall be used
for the purposes set forth in Schedule 6.25. No part of the
proceeds from the sale of the Notes hereunder shall be used,
directly or indirectly, for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System, or for any purpose which
violates or would be inconsistent with the provisions of
Regulations T, U or X of said Board.
6.26. Insurance; Damage to or Destruction of
Collateral
. The Company shall, and shall cause each of its
Subsidiaries to, at its sole cost and expense, maintain the
policies of insurance described on Schedule 2.7(b) in form and
with insurers reasonably acceptable to the Required Holders. If
the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto,
the Collateral Agent may (at the direction of the Required
Holders) at any time or times after ten days written notice to
the Company obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto
which the Required Holders deem advisable. Neither the
Collateral Agent nor the Required Holders shall have any
obligation to obtain insurance for the Company or any of its
Subsidiaries or pay any premiums therefor. By doing so, the
Collateral Agent and the Holders shall not be deemed to have
waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including reasonable attorneys'
fees, court costs and other charges related thereto, shall be
payable on demand by the Company to the Collateral Agent and
shall be secured by the Collateral. Following the Closing, the
Company shall use its reasonable best efforts to obtain
directors' and officers' insurance in amounts, scope and coverage
customarily obtained by comparable businesses.
6.27. Amendment of Litigation Documents and McGhan
Documents
. Without the prior written consent of the Required
Holders, the Company shall not, and shall not permit any other
Credit Party to, amend or otherwise modify, or waive or
relinquish any rights under, or fail to enforce any rights under,
(i) the Standstill Agreement, (ii) any document or agreement
relating to the full discharge of all Indebtedness to
International Integrated Industries, (iii) the Rights Plan
(except that the Company may amend the Rights Plan in accordance
with Section 27 thereof (as amended by Amendment No. 2 thereto,
dated as of July 2, 1997)), (iv) the Class Action Settlement
Agreement, (v) the 3M Agreement, (vi) the June 2, 1998 Court
Order, (vii) the Escrow Agreement, (viii) the Custody Agreement
or (vii) any instrument, agreement or other document executed or
delivered in connection therewith.
6.28. Exchange Offer
. The Company shall consummate the Exchange Offer
pursuant to the Exchange Offer Documents.
6.29. State Takeover Statutes
. Prior to the consummation of the Reincorporation
Merger, the Board of Directors of the Company shall, and shall
cause the board of directors of the Delaware Subsidiary into
which the Company will merge, to take all action required to (i)
determine that Appaloosa and its affiliates are not (individually
or in groups) an "interested shareholder" within the meaning of
Section 607.0901 of the Florida 1989 Business Corporation Act,
and (ii) approve the Reincorporation Merger (pursuant to which
the Company would merge with and into a wholly-owned Delaware
Subsidiary of the Company for the purpose of changing the
Company's state of incorporation from Florida to Delaware). In
addition, the Company shall, and shall cause each of its
Subsidiaries to, take any other board action necessary to render
inapplicable to Appaloosa and its affiliates the restriction on
certain business combinations (at the time of the Reincorporation
Merger or thereafter) pursuant to the provisions of Section
203(a) of the Delaware General Corporation Law.
7. Events of Default and Remedies.
7.1. Events of Default and Remedies.
"Event of Default," wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest upon any
Note when it becomes due and payable, and continuance of such
default for a period of 5 days; or
(b) default in the payment of any principal of any
Note when it becomes due and payable; or
(c) default in the performance of any agreement or
covenant in, or provision of, this Agreement, the Notes, or the
other documents executed and delivered in connection with this
Agreement (including any Transaction Document) and to which the
Company or any of its Subsidiaries is a party (other than a
covenant or a default in whose performance is elsewhere in this
Section specifically dealt with), which default continues for 5
days following the Company's receipt of notice (or, if the
Company fails to provide notice pursuant to Section 6.19(d), such
default shall be immediate), or any representation or warranty
made in any document executed and delivered in connection with
this Agreement (including any Transaction Document) was false in
any material respect on the date as of which made or deemed made;
or
(d) a default under any mortgage, indenture,
instrument or agreement other than under clause (c) above under
which there may be issued or by which there may be secured or
evidenced any Indebtedness of any Credit Party, whether such
Indebtedness now exists or shall be created hereafter, if the
holder or holders of at least $500,000 in principal amount of
such Indebtedness cause such $500,000 (or more) of principal
amount of Indebtedness to become due and payable prior to its
stated maturity; or
(e) other than the Class Action Settlement Agreement,
a final judgment or judgments for the payment of money are
entered by a court or courts of competent jurisdiction against
any Credit Party and such remains undischarged for a period
(during which execution shall not effectively be stayed) of
90 days, provided that the aggregate of all such judgments that
are not covered by insurance under which the Company is a
beneficiary exceeds $1,000,000, or the Required Holders shall
determine that any regulatory body having jurisdiction over any
Credit Party including, without limitation, the SEC, shall have
taken or proposed to take any action that the Required Holders
believe would have a Material Adverse Effect or that adversely
affects the Holders' first priority security interest in the
Collateral; or
(f) any Credit Party (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation
or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or
(vi) takes corporate action for the purpose of any of the
foregoing; or
(g) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by any
Credit Party, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or
any other petition in bankruptcy or for liquidation or to take
advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or
liquidation of any Credit Party, or any such petition shall be
filed against any Credit Party and such petition shall not be
dismissed within 60 days; or
(h) a court of competent jurisdiction enters a final
judgment holding any of the documents delivered in connection
with this Agreement (including any Transaction Document) to be
invalid or unenforceable and such judgment remains unstayed and
in effect for a period of 20 consecutive days; or any Credit
Party shall assert, in any pleading filed in such a court, that
any of the documents delivered in connection with this Agreement
are invalid or unenforceable; or
(i) any provision of any Transaction Document shall
for any reason cease to be valid, binding and enforceable in
accordance with its terms (or any Credit Party (or the Trustee in
the case of the Intercreditor Agreement) shall challenge the
enforceability of any Transaction Document or shall assert in
writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Transaction Documents
has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms (other than because such
document has not yet been entered into)), or any security
interest created under any Transaction Document (other than the
Exchange Offer Documents) shall cease to be a valid and perfected
first priority security interest or Lien in any of the Collateral
purported to be covered thereby;
(j) (A) any Credit Party shall fail to comply with the
terms of, or violate or fail to enforce its rights under (i) the
Class Action Settlement Agreement, (ii) the 3M Agreement, (iii)
the June 2, 1998 Court Order, (iv) the Standstill Agreement, (v)
the agreements relating to the full discharge of all Indebtedness
to International Integrated Industries or (vi) the Class Action
Settlement Agreement is not approved by the United States
District Court for the Northern District of Alabama prior to
February 1, 1998 (or any such approval is reversed) or (B) either
of the Class Action Settlement Agreement or the 3M Agreement
shall terminate in accordance with its terms or any other party
thereto shall assert in writing that any such agreement has
terminated;
(k) any Credit Party shall default in the payment of
any amounts in excess of $25,000 due pursuant to the terms of any
document executed and delivered by the Company or such Subsidiary
in connection with this Agreement (other than payments elsewhere
in this Section specifically dealt with); or
(l) the Company shall fail to consummate the Exchange
Offer by November 16, 1998 pursuant to the Exchange Offer
Documents.
7.2. Acceleration of Maturity
. If any Event of Default shall have occurred and be continuing,
the Required Holders may, by notice to the Company, declare the
entire unpaid principal amount of the Notes, plus (x) all accrued
and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full
extent permitted by applicable law) to be immediately due and
payable, and upon such declaration all of such amount shall be
immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby waived, anything in the Notes or in this Agreement to the
contrary notwithstanding; provided that if an Event of Default
under clause (f), (g), (h), (i) or (j) of Section 7.1 shall have
occurred, the entire unpaid principal amount of the Notes, plus
(x) all accrued and unpaid interest thereon and (y) the Make-
Whole Amount determined in respect of such principal amount (to
the full extent permitted by applicable law), shall immediately
become due and payable, without any declaration and without
presentment, demand, protest or further notice, all of which are
hereby waived, anything in the Notes or this Agreement to the
contrary notwithstanding; and provided, further, that the Company
acknowledges, and the parties hereto agree, that each Holder of a
Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole
Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended
to provide compensation for the deprivation of such right under
such circumstances.
7.3. Other Remedies
. If any Event of Default shall have occurred and be
continuing, from and including the date of such Event of Default
to but not including the date such Event of Default is cured or
waived, each Holder may enforce its rights by suit in equity, by
action at law, or by any other appropriate proceedings, whether
for the specific performance (to the extent permitted by Law) of
any covenant or agreement contained in this Agreement or the
Notes or in aid of the exercise of any power granted in this
Agreement or the Notes, and each Holder may enforce the payment
of any Note held by such Holder and any of its other legal or
equitable rights.
7.4. Conduct No Waiver; Collection Expenses
. No course of dealing on the part of any Holder, nor
any delay or failure on the part of any Holder to exercise any of
its rights, shall operate as a waiver of such right or otherwise
prejudice any Holder's rights, powers and remedies. If the
Company fails to pay, when due, the principal or the premium, if
any, or the interest on any Note, the Company will pay to such
Holder, to the extent permitted by Law, on demand, all costs and
expenses incurred by such Holder in the collection of any amount
due in respect of any Note hereunder, including reasonable legal
fees incurred by such Holder in enforcing its rights hereunder.
7.5. Annulment of Acceleration
. If a declaration is made in accordance with
Section 7.2, then and in every such case, the Required Holders
may, by an instrument delivered to the Company, annul such
declaration and the consequences thereof.
7.6. Remedies Cumulative
. No right or remedy conferred upon or reserved to
each Purchaser or the Collateral Agent or the Holders under this
Agreement is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now
and hereafter existing under applicable law. Every right and
remedy given by this Agreement or by applicable Law to each
Purchaser or the Collateral Agent or the Holders may be exercised
from time to time and as often as may be deemed expedient by such
Purchaser or the Collateral Agent or the Holders.
8. Prepayment of the Notes.
8.1. Optional Prepayments with Make-Whole Amount
. The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any
part of, the Notes, in an amount not less than $2,000,000 in the
case of a partial prepayment, at 100% of the principal amount so
prepaid, together with interest on such principal amount accrued
to the date of such prepayment, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal
amount. The Company will give each Holder written notice of each
optional prepayment under this Section 8.1 not less than 30 days
and not more than 90 days prior to the date fixed for such
prepayment (the "Prepayment Date"). Each such notice shall
specify the Prepayment Date, the aggregate principal amount of
the Notes to be prepaid on the Prepayment Date, the amount of
each Note held by such Holder to be prepaid (determined in
accordance with Section 8.2), and the interest to be paid on the
Prepayment Date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of an
executive officer of the Company as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if
the date of such notice were the date of the prepayment), setting
forth the details of such computation. Two Business Days prior
to such prepayment, the Company shall deliver to each holder a
certificate of an executive officer of the Company specifying the
calculation of such Make-Whole Amount as of the specified
Prepayment Date. Notwithstanding the foregoing, at any time
prior to the date of any such prepayment, any Holders shall be
entitled to object to such computation of the Make-Whole Amount
by delivering a notice of objection to the Company setting forth
such holders' computation of the Make-Whole Amount. If any
Holders shall deliver such a notice of objection to the Company,
the Make-Whole Amount specified in such notice shall be binding,
absent manifest error, on the holders and the Company.
8.2. Allocation of Partial Prepayments
. In the case of each partial prepayment of the Notes
pursuant to Section 8.1, the principal amount of the Notes to be
prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore
called for prepayment.
8.3. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to
this Article 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to
pay such principal amount when so due and payable, together with
the interest and Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any
Note paid or prepaid in full shall be surrendered to the Company
and canceled and shall not be reissued, and no Note shall be
issued in lieu of any prepaid principal amount of any Note.
8.4. Purchase of Notes
. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except upon
the payment or prepayment of the Notes in accordance with the
terms of this Agreement and the Notes. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any
provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.
8.5. Make-Whole Amount
. The term "Make-Whole Amount" means, with respect to
any Note, an amount equal to the excess, if any, of the
Discounted Value of all remaining payments of interest and
principal with respect to the Called Principal of such Note over
the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the
following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
Section 8.1 or has become or is declared to be immediately due
and payable pursuant to Section 7.2, as the context requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
remaining payments of interest and principal with respect to such
Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time) on the
third Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as "Page USD" on
the Bloomberg Financial Markets Service Screen (or such other
display as may replace Page USD on the Bloomberg Financial
Markets Service Screen) for actively traded U.S. Treasury
securities issued on the Settlement Date and maturing on
September 30, 2000, or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported as of the third Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities. Such
implied yield will be determined, if necessary, by (A) converting
U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (B) interpolating
linearly between (1) the actively traded U.S. Treasury security
with the duration closest to and greater than the period between
the Settlement Date and September 30, 2000 and (2) the actively
traded U.S. Treasury security with the duration closest to and
less than the period between the Settlement Date and
September 30, 2000.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to Section 8.1 or has become or is
declared to be immediately due and payable pursuant to
Section 7.2, as the context requires.
9. The Collateral Agent.
9.1 Appointment.
Each Purchaser for itself and for future Holders
hereby irrevocably designates and appoints Appaloosa Management,
L.P. as the Collateral Agent under this Agreement, and
irrevocably authorizes the Collateral Agent to take such action
on such Purchaser's behalf and any future Holder's behalf and to
exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of the Transaction
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Collateral Agent shall
not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any
Purchaser or future Holder, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any of the Transaction Documents or
otherwise exist against the Collateral Agent.
9.2 Delegation of Duties.
The Collateral Agent may execute any of its duties
under the Transaction Documents by or through agents or attorneys-
in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall
not be responsible for the negligence or misconduct of any agents
or attorneys-in-fact selected by it with reasonable care, except
as otherwise provided in Section 9.3.
9.3 Exculpatory Provisions.
Neither the Collateral Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact, Affiliates or
Subsidiaries shall be (i) liable for any action taken or omitted
to be taken by any of them under or in connection with this
Agreement or any of the Transaction Documents, or (ii)
responsible in any manner to any of the Purchasers or future
Holders for any recitals, statements, representations or
warranties made by any Credit Party or any officer thereof
contained in the Transaction Documents or in any certificate,
report, statement or other document referred to or provided for
in, or received by the Collateral Agent under or in connection
with, the Transaction Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the
Transaction Documents or for any failure of any Credit Party to
perform its obligation thereunder. The Collateral Agent shall
not be under any obligation to any Purchaser or future Holder to
ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, any
Transaction Document, or to inspect the properties, books or
records of any Credit Party.
9.4 Reliance by the Collateral Agent.
The Collateral 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, 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), independent accountants and other experts selected by
the Collateral Agent. The Collateral Agent may deem and treat
the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing
to take any action under any Transaction Document unless it shall
first receive such advice or concurrence of the Required Holders
(or, where unanimous consent of the Holders is expressly required
hereunder or thereunder, such Holders) as it deems appropriate or
it shall first be indemnified to its satisfaction by the Holders
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 Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under any Transaction
Document in accordance with a request of the Required Holders,
and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Purchasers and all future
Holders of the Notes.
9.5 Notice of Default.
The Collateral Agent shall not be deemed to have
knowledge or notice of the occurrence of any default or Event of
Default hereunder unless the Collateral Agent has received
written notice from a Holder 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 Collateral Agent receives such a notice, the Collateral
Agent shall promptly give notice thereof to all Holders. The
Collateral Agent shall take such action with respect to such
default or Event of Default as shall be directed by the Required
Holders; provided that (i) the Collateral Agent shall not be
required to take any action that exposes the Collateral Agent to
liability or that is contrary to this Agreement or applicable law
and (ii) unless and until the Collateral Agent shall have
received such directions, the Collateral Agent may (but shall not
be obligated to) take such action, or refrain from taking such
action, with respect to such default or Event or Default as it
shall deem advisable in the best interests of the Holders.
9.6 Non-Reliance on Collateral Agent and Other
Purchasers.
Each Purchaser for itself and all future Holders of
the Notes acquired by such Purchaser expressly acknowledges that
neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or Affiliates
has made any representation or warranties to it and that no act
by the Collateral Agent hereafter taken, including any review of
the affairs of the Credit Parties, shall be deemed to constitute
any representation or warranty by the Collateral Agent to any
such Purchaser or Holder. Each Purchaser for itself and all
future Holders of the Notes acquired by such Purchaser represents
to the Collateral Agent that it has, independently and without
reliance upon the Collateral Agent or any other Holder, and based
on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
operation, property, financial and other condition and
creditworthiness of the Credit Parties and made its own decision
to make its loan hereunder and to enter into this Agreement.
Each Purchaser also represents for itself and all future Holders
of the Notes acquired by such Purchaser that it will,
independently and without reliance upon the Collateral Agent or
any other Holder, 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 the Transaction Documents, and to make such
investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Credit Parties. Except for notices,
reports and other documents expressly required to be furnished to
the Holders by the Collateral Agent hereunder, the Collateral
Agent shall not have any duty or responsibility to provide any
Holder with any credit or other information concerning the
business, financial condition, assets, liabilities, net assets,
properties, results of operations, value, prospects and other
condition or creditworthiness of the Credit Parties which may
come into the possession of the Collateral Agent or any of its
officers, directors, employees, agents, attorneys-in-fact,
Affiliates or any of its Subsidiaries.
9.7 Indemnification.
The Purchasers and the future Holders jointly and
severally agree to indemnify the Collateral Agent in its capacity
as such (to the extent not reimbursed by the Credit Parties and
without limiting the obligation of the Credit Parties to do so),
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Collateral Agent
in any way relating to or arising out of the Transaction
Documents or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or
omitted by the Collateral Agent under or in connection with any
of the foregoing; provided that no Purchaser or future Holder
shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting
solely from the Collateral Agent's gross negligence or willful
misconduct. The agreements contained in this Section 9.7 shall
survive the payment of the Notes and all other amounts payable
hereunder.
9.8 Collateral Agent in its Individual Capacity.
The Collateral Agent and its Affiliates and
Subsidiaries may make loans to, accept deposits from and
generally engage in any kind of business with the Credit Parties
as though the Collateral Agent were not the Collateral Agent
hereunder. With respect to its loans made or renewed by it or
any Note issued to it, the Collateral Agent shall have the same
rights and powers, duties and liabilities under the Transaction
Documents as any Holder and may exercise the same as though it
were not the Collateral Agent and the terms "Purchaser",
"Purchasers", "Holder" and "Holders" shall include the Collateral
Agent in its individual capacities.
9.9 Successor Collateral Agent.
The Collateral Agent may resign as Collateral Agent
upon 30 days' notice to the Company (and the Company shall
promptly notify the Holders). If the Collateral Agent shall
resign as Collateral Agent under the Transaction Documents, then
the Required Holders shall appoint a successor agent for the
Holders which successor agent shall be approved by the Company
(which approval shall not be unreasonably withheld) whereupon
such successor agent shall succeed to the rights, powers and
duties of the Collateral Agent and the term "Collateral Agent"
shall mean such successor agent effective upon its appointment,
and the former Collateral Agent's rights, powers and duties as
Collateral Agent shall be terminated, without any other or
further act or deed on the part of such former Collateral Agent
or any of the parties to this Agreement or any Holders of the
Notes. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Article 9
shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under the
Transaction Documents.
10. Interpretation.
10.1 Definitions.
"Additional Warrants" shall have the meaning ascribed
thereto in the Recitals.
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act. "Affiliate" shall
also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of
any Purchaser or Holder or any limited partners of a limited
partner of any Purchaser or Holder.
"Appaloosa" shall mean Appaloosa Investment Limited
Partnership I.
"Beneficially Own" with respect to any securities shall
mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Breast Implant Litigation" shall have the meaning
ascribed thereto in the Recitals.
"Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
"Called Principal" shall have the meaning ascribed to
such term in Section 8.5.
"Capital Stock" means, in the case of the Company, any
and all shares (however designated) of the capital stock of the
Company now or hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any
Person, any lease or any other agreement for the use of property
which, in accordance with generally accepted accounting
principles, should be capitalized on the lessee's or user's
balance sheet.
"Capitalized Lease Obligation" of any Person shall mean
and include, as of any date as of which the amount thereof is to
be determined, the amount of the liability capitalized or
disclosed (or which should be disclosed) in a balance sheet of
such Person in respect of a Capitalized Lease of such Person.
"Change in Control" shall mean:
(a) the acquisition by any individual,
entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than Appaloosa or its Affiliates, of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35%
or more of the combined voting power of the then
outstanding Voting Securities of the Company, but
excluding, for this purpose, any such acquisition
by (i) the Company or any of its Subsidiaries,
(ii) any employee benefit plan (or related trust)
of the Company or any of its Subsidiaries, or
(iii) any corporation with respect to which,
following such acquisition, 50% or more of the
combined voting power of the then outstanding
Voting Securities of such corporation is then
beneficially owned, directly or indirectly, by
individuals and entities who were the beneficial
owners of Voting Securities of the Company
immediately prior to such acquisition in
substantially the same proportion as their
ownership, immediately prior to such acquisition,
of the combined voting power of the then
outstanding Voting Securities of the Company; or
(b) a reorganization, merger or
consolidation, in each case, with respect to which
all or substantially all the Persons who were the
respective Beneficial Owners of the Voting
Securities of the Company immediately prior to
such reorganization, merger or consolidation do
not, following such reorganization, merger or
consolidation Beneficially Own, directly or
indirectly, more than 35% of the combined voting
power of the then outstanding Voting Securities of
the corporation resulting from such
reorganization, merger or consolidation; or
(c) the Incumbent Board shall cease for
any reason to constitute at least 50% of the
members of the Board; or
(d) the sale, lease or other
disposition of all or a substantial part of the
Company's assets in one transaction or a series of
related transactions.
"Class Action Settlement Agreement" shall have the
meaning ascribed thereto in the Recitals.
"Closing" shall have the meaning ascribed thereto in
Section 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" means all real and personal property and
interests in real and personal property including, without
limitation, Intellectual Property, rights under leases and
royalty rights and agreements, now owned or hereafter acquired by
the Company or its Material Subsidiaries in or upon which a Lien
is granted or made under the Collateral Documentation.
"Collateral Agent" shall mean Appaloosa Management,
L.P.
"Collateral Documentation" means the Guarantee and
Security Agreements, the Guarantee Agreements, the Security
Agreement, the Financing Statements, the Intercompany Notes and
the endorsements thereof to the Collateral Agent (for the benefit
of the Holders) or to the Holders, and all other deeds of trust,
assignments, endorsements, pledged stock, collateral assignments
and other instruments, documents, agreements or conveyances at
any time creating or evidencing Liens or assigning Liens to the
Collateral Agent (for the benefit of the Holders) or to the
Holders, to secure the obligations of the Company or any of its
Subsidiaries hereunder and under the Notes and the Registration
Rights Agreement.
"Common Stock" shall mean the Common Stock of the
Company, par value $0.01 per share.
"Consolidated" or "consolidated", when used with
reference to any financial term in this Agreement (but not when
used with respect to any tax return or tax liability), shall mean
the aggregate for two or more Persons of the amounts signified by
such term for all such Persons, with inter-company items
eliminated and, with respect to earnings, after eliminating the
portion of earnings properly attributable to minority interests,
if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any
other such Person.
"Consolidated Tangible Assets" shall mean, as at any
date for any Person, the sum for such Person and its Subsidiaries
(determined on a consolidated basis without duplication in
accordance with GAAP), of the following:
(a) the book value of all assets of the Company as
reflected on its most recent balance sheet, minus
(b) the sum of the following: the book value of all
assets which should be classified as intangibles, including
goodwill, minority interests, research and development costs,
trademarks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, all reserves and any write-
up in the book value of assets resulting from a revaluation of
such assets subsequent to December 31, 1997.
"Contracts" shall mean all agreements, contracts,
leases, purchase orders, arrangements, commitments and licenses
to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound.
"Copyrights" shall mean, collectively, (a) all
copyrights, copyright registrations and applications for
copyright registrations, (b) all renewals and extensions of all
copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties,
damages and other payments (including in respect of all past,
present or future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for
all past, present and future infringements with respect to any of
the foregoing and (iii) otherwise accruing under or pertaining to
any of the foregoing throughout the world.
"Credit Party" shall mean each of the Company and each
of its Subsidiaries.
"Delaware By-Laws" shall mean the by-laws, to be used
by the Company after the Reincorporation Merger, in the form
included in the Proxy Statement.
"Delaware Charter" shall mean the certificate of
incorporation, to be used by the Company after the
Reincorporation Merger, in the form included in the Proxy
Statement.
"Discounted Value" shall have the meaning ascribed to
such term in Section 8.5.
"Employee Agreement" shall mean each management,
employment, severance, consulting, non-compete, confidentiality,
or similar agreement or contract between any Credit Party or any
ERISA Affiliate and any employee pursuant to which any Credit
Party or any ERISA Affiliate has or may have any liability
contingent or otherwise.
"Environmental Laws" means any and all federal, state,
local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"Equity Interests" means any Capital Stock, partnership
interest, joint venture interest or other equity interest or
warrants, options or other rights to acquire any Capital Stock,
partnership interest, joint venture interest or other equity
interest.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" means each business or entity which
is a member of a "controlled group of corporations," under
"common control" or an "affiliated service group" with the
Company within the meaning of Sections 414(b), (c) or (m) of the
Code, or required to be aggregated with the Company under Section
414(o) of the Code, or is under "common control" with the
Company, within the meaning of Section 4001(a)(14) of ERISA.
"Escrow Agent" shall have the meaning ascribed thereto
in Section 1.4.
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such
successor federal statute.
"Exchange Notes" shall have the meaning ascribed
thereto in the Recitals.
"Exchange Offer" shall have the meaning ascribed
thereto in the Recitals.
"Exchange Offer Documents" shall mean the Exchange
Notes, the Exchange Warrants, the Additional Warrants, the
Subordinated Indenture, the Securities Exchange Agreement, the
Exchange Offer Registration Rights Agreement, the Subordinated
Guarantee and Security Agreement, the Subordinated Security
Agreement, the Subordinated Guarantee and the Exchange Offer
Intercreditor Agreement.
"Exchange Offer Intercreditor Agreement" shall mean the
agreement, dated as of the date hereof, between the Collateral
Agent and the Trustee for the Exchange Notes under the
Subordinated Indenture, in the form of Exhibit 10.1A.
"Exchange Offer Registration Rights Agreement" shall
mean the agreement to be entered into between the Trustee and the
holders of the Exchange Notes in the form of Exhibit 10.1B.
"Exchange Warrants" shall have the meaning ascribed
thereto in the Recitals.
"Financing Statements" means Form UCC-1 financing
statements to be filed in all jurisdictions necessary or
desirable in order to perfect the Holders' security interest in
the Collateral and shall include any Form UCC-1 financing
statements assigned to the Holders and filings to be made in the
U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting
principles.
"Governmental Entity" shall mean any supernational,
national, foreign, federal, state or local judicial, legislative,
executive, administrative or regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) of
any Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any
property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such
Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such
Indebtedness or obligation, or (iv) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against
loss in respect thereof. For the purposes of any computations
made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the outstanding amount of the Indebtedness
for borrowed money which has been guaranteed, and a Guarantee in
respect of any other obligation or liability or any dividend
shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Guarantee Agreement" shall mean the agreement, dated
as of the date hereof, made by the Company's foreign Material
Subsidiaries in favor of the Holders providing for Guarantees
from such Material Subsidiaries.
"Guarantee and Security Agreement" shall mean the
agreement, dated as of the date hereof, between the Collateral
Agent and the Company's domestic Material Subsidiaries, providing
for a first priority security interest in the domestic Material
Subsidiaries' Collateral and Guarantees from such Material
Subsidiaries.
"Hazardous Material" means any and all pollutants,
toxic or hazardous wastes or any other substances that might pose
a hazard to health or safety, the removal of which may be
required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including, without limitation,
asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"Holder" shall mean, at any time of reference, a Person
in whose name a Note is registered in the Note Register at such
time.
"Incumbent Board" shall mean the individuals who,
immediately after the Closing, constitute the board of directors
of the Company; provided, however, that any individual becoming a
director subsequent to the Closing whose election, or nomination
for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be deemed to be a member of the Incumbent
Board.
"Indebtedness" shall mean, with respect to any Person,
(i) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers
and similar accrued liabilities incurred in the ordinary course
of business and paid in a manner consistent with industry
practice), (v) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or
not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all
Guarantees of such Person, (viii) all obligations (including but
not limited to reimbursement obligations) relating to the
issuance of letters of credit for the account of such Person,
(ix) all obligations arising out of foreign exchange contracts,
and (x) all obligations arising out of interest rate and currency
swap agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Indemnified Person" shall have the meaning ascribed
thereto in Section 11.1.
"Indenture Date" shall have the meaning ascribed
thereto in Section 5.1.
"Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all Patents, patent
applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all Copyrights
and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments of the foregoing (in whatever form or
medium) and (i) all licenses or agreements in connection with the
foregoing.
"Intercompany Notes" means the notes from the
Subsidiaries or Affiliates of the Company in favor of the Company
in the form of Exhibit 10.1C, as the same may be amended,
modified or supplemented from time to time in accordance with
their terms, and all other promissory notes or other instruments
evidencing Indebtedness of Affiliates or Subsidiaries of the
Company to the Company between the Company and its Affiliates.
"Intercreditor Agreement" shall mean the agreement,
dated as of the date hereof, between the Collateral Agent and the
Trustee for the Old Notes under the Indenture, dated as of
January 2, 1996, between the Trustee and the Company (as
amended).
"June 2, 1998 Court Order" shall mean the June 2, 1998
preliminary court order approving the Class Action Settlement
Agreement and the 3M Agreement issued by the United States
District Court for the Northern District of Alabama.
"Knowledge", with respect to the Company, shall mean
the actual knowledge of each member of the board of directors of
the Company and each officer of the Company, and the knowledge
that any of the foregoing persons would have after due and
reasonable inquiry and investigation.
"Law" shall include any foreign, federal, state, or
local law, statute, ordinance, rule, regulation, order, judgment
or decree.
"Lien" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with
respect to any property or asset of such Person (including in the
case of stock, stockholder agreements, voting trust agreements
and all similar arrangements).
"Loan" shall have the meaning ascribed thereto in the
Recitals.
"Loan Warrants" shall have the meaning ascribed thereto
in the Recitals.
"Make-Whole Amount" shall have the meaning ascribed
thereto in Section 8.5.
"Material" shall mean material in relation to the
properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the property, business, prospects (including,
without limitation, the prospects for the settlement of the
Breast Implant Litigation), operations, earnings, assets,
liabilities or the condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, whether or not in
the ordinary course of business, (b) the ability of any Credit
Party to perform its obligations under any of the Transaction
Documents to which it is a party, (c) the validity or
enforceability of any of the Transaction Documents, (d) the
rights, remedies, powers and privileges of the Holders under any
of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
"Material Subsidiaries" at any time, shall mean any
Subsidiary of the Company, other than any Non-Significant
Subsidiary of the Company.
"Net Income" shall mean, with respect to any period,
the net income or net loss of the Company and its Subsidiaries in
accordance with GAAP on a consolidated basis as reflected in the
financial statements furnished to the Holders in accordance with
Section 6.19.
"Non-Significant Subsidiary" at any time, shall mean
any Subsidiary of the Company which at such time has total assets
(including the total assets of any Subsidiaries) that have a fair
market value of, or for which the Company or any of its
Subsidiaries shall have paid (including the assumption of
Indebtedness) in connection with the acquisition of capital stock
(or other equity interests) or the total assets of such
Subsidiary, less than $100,000, provided that the total assets of
all Non-Significant Subsidiaries at any time does not exceed 5%
of the total assets of the Company and its Subsidiaries on a
consolidated basis.
"Note Register" shall have the meaning ascribed thereto
in Section 4.1.
"Notes" shall have the meaning ascribed thereto in the
Recitals.
"Officers' Certificate" means a certificate signed by
any two officers of the Company, one of whom must be the Chairman
of the Board, the President, the Chief Executive Officer, the
Treasurer or a Vice President of the Company.
"Old Notes" shall have the meaning ascribed thereto in
the Recitals.
"Operating Profit" shall have the meaning ascribed to
it in Section 6.14.
"Outstanding" or "outstanding" shall mean when used
with reference to the Notes at a particular time, all Notes
theretofore issued as provided in this Agreement, except
(i) Notes theretofore reported as lost, stolen, damaged or
destroyed, or surrendered for transfer, exchange or replacement,
in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes therefore
canceled by the Company, except that, for the purpose of
determining whether Holders of the requisite principal amount of
Notes have made or concurred in any waiver, consent, approval,
notice or other communication under this Agreement, Notes
registered in the name of, or owned beneficially by, the Company
or any of its Subsidiaries of any thereof, shall not be deemed to
be outstanding.
"Patents" shall mean, collectively, (a) all patents and
patent applications, (b) all reissues, divisions, continuations,
renewals, extensions and continuations-in-part of all patents or
patent applications and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages, and
other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or
with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, including all inventions
and improvements described or discussed in all such patents and
patent applications.
"Permitted Indebtedness" means, without duplication,
any of the following Indebtedness of the Company or any of its
Subsidiaries, as the case may be: (i) $25.5 million aggregate
principal amount of 6.00% subordinated notes to be issued
pursuant to the Class Action Settlement Agreement (having the
terms set forth therein); (ii) Indebtedness and obligations under
the Notes and the Exchange Notes; (iii) any other Indebtedness
and obligations outstanding on the date hereof and set forth on
Schedule 2.19 hereof; (iv) Indebtedness of a domestic Subsidiary
of the Company to the Company as long as such Subsidiary has
executed the Guarantee and Security Agreement and such
Indebtedness is evidenced by Intercompany Notes and the
Intercompany Notes are pledged to the Collateral Agent as
Collateral as provided in Section 6.11 or (v) Indebtedness which
refinances any of the Indebtedness specified herein, provided
that the terms of such refinancing Indebtedness shall not have a
Material Adverse Effect (in comparison to the terms of the
Indebtedness being refinanced), such refinancing Indebtedness
shall be unsecured and subordinate in right of payment to the
Notes, shall mature at least one year after all of the Notes have
matured and shall have such other terms as are reasonably
acceptable to the Required Holders.
"Permitted Investments" shall mean (a) direct
obligations of the United States of America, or of any of its
agencies, or obligations guaranteed as to principal and interest
by the United States of America, or of any of its agencies, in
either case maturing not more than 90 days from the date of
acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers
acceptances of any bank or trust company organized under the laws
of the United States of America or any state or licensed to
conduct a banking or trust business in the United States of
America or any state and having capital, surplus and undivided
profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or
better or P-1 by Standard & Poor's Corporation or Moody's
Investors Services, Inc., respectively, maturing not more than
90 days from the date of acquisition; (d) money market funds
sponsored by commercial or investment banks unaffiliated with the
Company or any of its Subsidiaries; and (e) loans or advances of
money by the Company or any Material Subsidiary to the Company's
domestic Subsidiaries that have executed the Guarantee and
Security Agreement as long as such loans or advances are
evidenced by Intercompany Notes and the Intercompany Notes are
pledged to the Collateral Agent as Collateral as provided in
Section 6.11 hereof.
"Permitted Liens" means (i) Liens existing on the date
hereof and set forth in Schedule 2.19, all of which are
subordinate to the Lien of the Collateral Documentation;
(ii) Liens (other than any Lien imposed under ERISA or any
Environmental Laws) for taxes, assessments or charges of any
governmental authority for claims not yet due or which are being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which
adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP and
enforcement thereof is stayed; (iii) Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other Liens
(other than any Lien imposed under ERISA) not voluntarily granted
for amounts not yet due or which are being contested in good
faith by appropriate proceedings promptly instituted and
diligently conducted, and with respect to which adequate reserves
or other appropriate provisions are being maintained in
accordance with the provisions of GAAP, and enforcement thereof
is stayed; (iv) Liens (other than any Lien imposed under ERISA),
incurred or deposited made in the ordinary course of business,
including without limitation, surety bonds and appeal bonds, in
connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for
the repayment of indebtedness), statutory obligations and other
similar obligations or arising as a result of progress payments
under government contracts; (v) easements (including without
limitation reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and other similar restrictions, charges
or encumbrances (whether or not recorded) and other Liens
incurred in the ordinary course of business, which do not secure
indebtedness or the deferred purchase price of any asset and
which do not interfere materially with the ordinary conduct of
the business of the Company and which do not materially detract
from the value of the property to which they attach or materially
impair the use thereof to the Company; (vi) building
restrictions, zoning laws and other statutes, laws, rules,
regulations, ordinances and restrictions, and any amendments
thereto, now or at any time hereafter adopted by any governmental
authority having jurisdiction; and (vii) purchase money liens to
the extent such liens secure Permitted Indebtedness.
"Person" shall mean any individual, firm, corporation,
limited liability company, partnership, company or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
"Prepayment Date" shall have the meaning ascribed
thereto in Section 8.1.
"Proxy Statement" shall have the meaning ascribed
thereto in Section 2.2.
"Purchase Price" shall have the meaning ascribed
thereto in Section 1.2.
"Registration Rights Agreement" shall mean the
Registration Rights Agreement dated the date hereof between the
Purchasers and the Company with respect to the Notes.
"Reincorporation Merger" shall mean the merger, if
consummated, the primary purpose of which is to effect the
reincorporation of the Company in the state of Delaware as
described in the Proxy Statement.
"Reinvestment Yield" shall have the meaning ascribed to
such term in Section 8.5.
"Related Parties" shall mean Affiliates of the Company
or any of its Subsidiaries and directors or officers of the
Company or any of its Subsidiaries (including any family members
of directors and officers).
"Releases" shall have the meaning ascribed thereto in
the Recitals.
"Required Holders" means, at any time, the holders of
at least 51% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any
of its Affiliates).
"Restricted Encumbrance" shall have the meaning
ascribed thereto in Section 6.7.
"Rights Plan" shall mean the plan (as amended) adopted
by the Company's board of directors on June 10, 1997.
"Sale-and-Leaseback Transaction" shall mean a
transaction or series of transactions pursuant to which the
Company or any of its Subsidiaries shall sell or transfer to any
Person (other than the Company or a Subsidiary of the Company)
any property, whether now owned or hereafter acquired, and, as
part of the same transaction or series of transactions, the
Company or any of its Subsidiaries shall rent or lease as lessee
(other than pursuant to a Capitalized Lease), or similarly
acquire the right to possession or use of, such property or one
or more properties which it intends to use for the same purpose
or purposes as such property.
"SEC" shall mean the United States Securities and
Exchange Commission.
"SEC Reports" shall have the meaning ascribed thereto
in Section 2.4.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the SEC thereunder, all as the same shall be in
effect at the time. Reference to a particular section of the
Securities Act shall include reference to the comparable section,
if any, of such successor federal statute.
"Security" or "Securities" shall mean any equity or
debt security of the Company (including, without limitation,
subscriptions, options, warrants, rights, stock-based or stock-
related awards or convertible or exchangeable securities to which
the Company is a party or by which the Company may be bound of
any character relating to, or obligating the Company to issue,
grant, award, transfer or sell any issued or unissued shares of
the Company's Capital Stock or other securities of the Company).
"Secured Obligations" shall mean any and all
obligations of any Credit Party at any time and from time to time
for the performance of its agreements, covenants and undertakings
under or in respect of the Transaction Documents to which it is a
party.
"Securities Exchange Agreement" shall mean the
agreement to be entered into by the Company and the
securityholders parties thereto in the form of Exhibit 10.1D.
"Security Agreement" shall mean the agreement, dated as
of the date hereof, between the Collateral Agent and the Company,
providing for a first priority security interest in the
Collateral.
"Standstill Agreement" shall mean the agreement, dated
July 8, 1998, between the Company and Mr. Donald K. McGhan
restricting Mr. McGhan's ability to vote his Common Stock.
"Stated Maturity" when used with respect to any
security or any installment of interest thereon, means the date
specified in such security as the fixed date on which the
principal of such security or such installment of interest is due
and payable.
"Subordinated Guarantee Agreement" shall mean the
guarantee to be made by the Company's foreign Material
Subsidiaries in favor of the holders of the Exchange Notes in the
form of Exhibit 10.1E.
"Subordinated Guarantee and Security Agreement" shall
mean the agreement to be entered into by the Company's domestic
Material Subsidiaries and the Trustee in the form of Exhibit
10.1F.
"Subordinated Indenture" shall mean the agreement to be
entered into between the Company and the Trustee in the form of
Exhibit 10.1G.
"Subordinated Security Agreement" shall mean the
agreement to be entered into by the Company and the Trustee in
the form of Exhibit 10.1H
"Subsidiary" means, with respect to any Person, (i) a
corporation a majority of whose capital stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof, (ii) any other Person (other than a
corporation), including without limitation a joint venture, in
which such Person, one or more Subsidiaries thereof or such
Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of
directors, managers or trustees thereof (or other Persons
performing similar functions) or (iii) any other Person required
to be consolidated with such Person in accordance with generally
accepted accounting principles. For purposes of this definition
(and for the determination of whether or not a Subsidiary is a
wholly-owned Subsidiary of a Person), any directors' qualifying
shares or investment by foreign nationals mandated by applicable
law shall be disregarded in determining the ownership of a
Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local
or foreign income, gross receipts, property, sales, use, value
added, license, excise, franchise, capital, net worth, estimated,
withholding, employment, payroll, premium, withholding,
alternative or added minimum, ad valorem, inventory, asset,
gains, transfer or excise tax, or any other tax, levy, custom,
duty, impost, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalty or
additions to tax, imposed by any Governmental Authority and,
including, without limitation, any Taxes of another person owing
under a contract, as transferee or successor, under Treas. Reg.
1.1502-6 or analogous state, local or foreign law, or
otherwise.
"Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including
any attached schedules), including, without limitation, any
information return, claim for refund, amended return or
declaration of estimated Tax.
"3M" shall mean the Minnesota Mining & Manufacturing
Company.
"3M Agreement" shall have the meaning ascribed thereto
in the Recitals.
"Trademarks" shall mean, collectively, (a) all trade
names, trademarks and service marks, logos, trademark and service
mark registrations and applications for trademark and service
mark registrations, (b) all renewals and extensions of any of the
foregoing and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, together, in each case,
with the product lines and goodwill of the business connected
with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Transaction Documents" shall mean this Agreement, the
Notes, the Registration Rights Agreement, the Security Agreement,
the Guarantee and Security Agreement, the Guarantee Agreement,
the Loan Warrants, the Intercreditor Agreement, the Assignment,
dated as of the date hereof, from the Company to the Collateral
Agent, the Letter Agreement, dated as of the date hereof, between
the Company and the Collateral Agent and the Exchange Offer
Documents.
"Transfer" shall have the meaning ascribed thereto in
Section 6.17.
"Voting Securities" shall mean at any time shares of
any class of capital stock of the Company (or other corporation)
which are then entitled to vote generally in the election of
directors of the Company (or such other corporation).
"Year 2000 Problem" shall have the meaning ascribed
thereto in Section 2.29.
10.2. Accounting Principles
. The character or amount of any asset, liability,
capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any
consolidation or other accounting computation required to be made
pursuant to this Agreement, and the construction of any
definition in this Agreement containing a financial term, shall
be determined or made, as the case may be, in accordance with
generally accepted accounting principles, to the extent
applicable, unless such principles are inconsistent with the
express requirements of this Agreement.
11. Miscellaneous.
11.1. Payments; Indemnity
. (a) The Company agrees that, so long any Notes shall
remain outstanding, it will make all interest, principal and
other payments hereunder and under the Notes in immediately
available funds by wire transfer on the date due in such manner
as each Holder may reasonably request in writing. Anything in
this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or interest on any Note that is due on a
date other than a Business Day shall be made on the next
succeeding Business Day. If the date for payment is extended to
the next succeeding Business Day by reason of the preceding
sentence, the period of such extension will be included in the
computation of the interest payable on such next succeeding
Business Day.
(b) Each Credit Party shall jointly and severally
indemnify and hold harmless each Purchaser, each Holder and each
of their respective Affiliates, and each such Person's respective
officers, directors, partners, members, employees, attorneys,
agents and representatives (each, an "Indemnified Person") from
and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and out-of-pocket expenses
(including reasonable attorneys' fees and disbursements and other
costs of investigation or defense, including those incurred upon
any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this
Agreement and the other Transaction Documents and the
administration of such credit, and in connection with or arising
out of the transactions contemplated hereunder and thereunder and
any actions or failures to act in connection therewith.
(c) The Company shall bear all sales, documentary,
transfer, stamp or other similar Taxes and all filing fees and
expenses incurred in connection with the transactions
contemplated by this Agreement and shall indemnify and hold
harmless each Indemnified Person from and against any such Taxes.
11.2. Severability
. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of
this Agreement and such exhibits shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or
unenforceable.
11.3. Specific Enforcement
. The Purchasers, on the one hand, and the Company, on
the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the
Holders shall be entitled to an injunction to prevent breaches of
the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or
any state thereof having jurisdiction, this being in addition to
any other remedy to which they may be entitled at Law or equity.
11.4. Entire Agreement
. The Transaction Documents (including the Schedules
and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated
hereby and thereby.
11.5. Counterparts
. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each party and delivered to the
other parties, it being understood that all parties need not sign
the same counterpart.
11.6. Notices and other Communications
. All notices, consents, requests, instructions,
approvals, financial statements, proxy statements, reports and
other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by
registered mail, postage prepaid, if to:
The Company, to:
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
Attention: Ilan K. Reich, Executive Vice President
With a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attention: Adam W. Finerman, Esq.
The Purchasers, to each Purchaser's address as set
forth in the Note Register
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
The Collateral Agent, to:
Appaloosa Management, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. Jim Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
or to such other address as any party may, from time to time,
designate in a written notice given in a like manner.
11.7. Amendments
. This Agreement may be amended as to the Purchasers,
any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform
any act required to be performed by it, if the Company shall
obtain the written consent of the Required Holders. This
Agreement may not be waived, changed, modified, or discharged
orally, but only by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right
to consent to such waiver, change, modification or discharge on
behalf of such party.
11.8. Successors and Assigns
. All covenants and agreements contained herein shall
bind and inure to the benefit of the parties hereto and their
respective successors and assigns (including, without limitation,
any subsequent holder of a Note).
11.9. Expenses
. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to
any future amendment or supplement to any of the Transaction
Documents or any of the Notes (or any proposal by the Company for
such amendment or supplement) whether or not consummated or any
waiver or consent with respect thereto (or any proposal for such
waiver or consent) whether or not consummated, and all costs and
expenses of such Holder relating to the enforcement of any of the
Transaction Documents.
11.10.Survival
. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered
pursuant hereto in connection with the transactions contemplated
hereby shall survive the Closing and the delivery of the
Transaction Documents, regardless of any investigation made by or
on behalf of any party.
11.11.Transfer of Notes
. Each Purchaser understands and agrees that the
Notes have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or
otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws, or
transactions as to which an exemption from the registration
requirements of the Securities Act and, where applicable, such
laws are available. Each Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, such Purchaser has
no right to require the Company to register the Notes. Each
Purchaser understands and agrees that each Note or certificate
representing the Notes shall bear the following legends:
"THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] [THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A
NOTE PURCHASE AGREEMENT DATED AS OF SEPTEMBER _, 1998, A
COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY."
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS
NOTE HAS] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS. THIS
INSTRUMENT WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE ISSUE PRICE, ISSUE DATE, YIELD TO
MATURITY AND AMOUNT OF ORIGINAL ISSUE DISCOUNT, CONTACT
EXECUTIVE VICE PRESIDENT, AT INAMED CORPORATION."
11.12.GOVERNING LAW
. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-
OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
11.13.Submission to Jurisdiction
. If any action, proceeding or litigation shall be
brought by any Holder in order to enforce any right or remedy
under this Agreement or any of the Notes, the Company hereby
consents and will submit, and will cause each of its Subsidiaries
to submit, to the jurisdiction of any state or federal court of
competent jurisdiction sitting within the area comprising the
Southern District of New York on the date of this Agreement. The
Company hereby irrevocably waives any objection, including, but
not limited to, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or
litigation in such jurisdiction.
11.14.Service of Process
. Nothing herein shall affect the right of any Holder
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.
11.15.WAIVER OF JURY TRIAL
. THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OF THE NOTES.
11.16.Public Announcements
. Neither the Company nor any Purchaser shall make any
public statements, including, without limitation, any press
releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the
other party (which consent shall not be unreasonably withheld)
except as may be required by law. If a public statement is
required to be made by law, the parties shall consult with each
other in advance as to the contents and timing thereof.
11.17.Further Assurances
. The Company and each of its Subsidiaries agrees that
it shall and shall cause each other to, at the Company's expense
and upon the reasonable request of Collateral Agent, duly execute
and deliver, or cause to be duly executed and delivered, to the
Collateral Agent such further instruments, agreements and
documents (including, without limitation, financing statements
under the Code, security agreements in respect of Intellectual
Property, stock powers executed in blank and other items
necessary or desirable in connection with the perfection of Liens
in the Collateral) and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of the
Collateral Agent to carry out more effectually the provisions and
purposes of the Transaction Documents.
11.18.Representations of Purchasers.
Each Purchaser (other than Appaloosa and its
affiliates), severally and not jointly, represents and warrants
to Appaloosa with respect to such Purchaser as follows: (i) such
Purchaser acknowledges that Fried, Frank, Harris, Shriver &
Jacobson is acting solely on behalf of Appaloosa, (ii) such
Purchaser has, or such Purchaser together with its advisers, if
any, have, such knowledge and experience in financial and
business matters that such Purchaser is, or such Purchaser
together with its advisers, if any, are, and will be capable of
evaluating the merits and risks relating to such Purchaser's
purchase of the Notes and Loan Warrants under this Agreement,
(iii) such Purchaser has been given the opportunity to obtain
information and documents relating to the Company and to ask
questions of and receive answers from representatives of the
Company concerning the Company and such Purchaser's investment in
the Notes and the Loan Warrants and such Purchaser's decision to
invest in the Company has been based upon independent
investigations made by such Purchaser and its advisers, if any.
11.19.Signatures
. This Agreement shall be effective upon delivery of
original signature pages or facsimile copies thereof executed by
each of the parties hereto.
IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and
delivered by their respective officers or partners thereunto duly
authorized.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its
General Partner
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P.,
its General Partner
By: Appaloosa Partners Inc., its
General Partner
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
PALOMINO FUND LTD.
By: Appaloosa Management L.P.,
Its General Partner
By: Appaloosa Partners Inc., its
General Partner
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
Exhibit 99.5
FORM OF WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
No. of Shares of Common Stock: __________
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS
No. of Shares of Common Stock: _______________
FORM OF WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
THIS IS TO CERTIFY THAT
_______________________________, or registered assigns, is
entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from INAMED CORPORATION, a
Florida corporation (the "Company"), ____________ (subject to
adjustment as provided herein) shares of Common Stock (as
hereinafter defined), in whole or in part, at a purchase price of
$6.50 per share (subject to adjustment as provided herein), all
on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company after the Closing
Date, other than Warrant Stock.
"Business Day" shall mean any day that is not a
Saturday or Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
"Capital Stock" means, in the case of the Company, any
and all shares (however designated) of the capital stock of the
Company now or hereafter outstanding.
"Closing Date" shall mean September 30, 1998.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the
Securities Act and other federal securities laws.
"Common Stock" shall mean (except where the context
otherwise indicates) the Common Stock, $0.01 par value, of the
Company as constituted on the Closing Date, and any capital stock
into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares
of Common Stock upon any reclassification thereof and (ii) shares
of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders
of Common Stock of the Company in the circumstances contemplated
by Section 4.8.
"Convertible Securities" shall mean evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable or exercisable, with or without
payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any
share of Common Stock on any date herein specified, the average
of the daily volume weighted average sale price per share of
Common Stock for the twenty Business Days ending five days prior
to such date. The closing price for each day shall be the last
quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.,
Automated Quotation System or such other system then in use, or,
if on any such date the Common Stock or such other securities are
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of
Directors of the Company. If the Common Stock is listed or
admitted to trading on a national securities exchange, the
closing price shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading.
"Current Warrant Price" shall mean, in respect of a
share of Common Stock at any date herein specified, the price at
which a share of Common Stock may be purchased pursuant to this
Warrant on such date.
"Exchange Notes" shall mean the Company's 11.00% Senior
Subordinated Secured Notes due March 31, 1999 or, at the option
of the Company as provided therein, September 1, 2000.
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this
Warrant is registered on the books of the Company maintained for
such purpose. "Holders" shall mean, collectively, each Holder of
a Warrant, in the event of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of
shares of Warrant Stock then purchasable upon exercise of all
Warrants.
"Notes" shall mean the Company's 10.00% Senior Secured
Notes issued pursuant to the Note Purchase Agreement, dated as of
the date hereof, among the purchasers listed on Exhibit A
thereto, the Company and Appaloosa Management, L.P., as
Collateral Agent.
"Other Property" shall have the meaning set forth in
Section 4.8.
"Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares
thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the
Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock. For
the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in
respect of options or warrants to purchase, or securities
convertible into, shares of Common Stock, the exercise or
conversion price of which is less than the Current Market Price
as of any date on which the number of shares of Common Stock
Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of
Common Stock upon exercise of the warrants and options listed on
Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by
merger or otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common
Stock which are, or which upon their issuance on the exercise of
this Warrant would be, evidenced by a certificate bearing the
restrictive legend set forth in Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted
by the Company's board of directors on June 10, 1997.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Security" or "Securities" shall mean any equity or
debt security of the Company (including, without limitation,
subscriptions, options, warrants, rights, stock-based or stock-
related awards or convertible or exchangeable securities to which
the Company is a party or by which the Company may be bound of
any character relating to, or obligating the Company to issue,
grant, award, transfer or sell any issued or unissued shares of
the Company's Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would
constitute a sale thereof within the meaning of the Securities
Act.
"Transfer Notice" shall have the meaning set forth in
Section 9.2.
"Warrants" shall mean this Warrant and all warrants
issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be
identical as to terms and conditions and date, except as to the
number of shares of Common Stock for which they may be exercised.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise
thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise.
At any time or from time to time from and after the
Closing Date and until 5:00 P.M., New York time, on the
Expiration Date, Holder may exercise this Warrant, on any
Business Day, for all or any part of the number of shares of
Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at
3800 Howard Hughes Parkway, Suite 900, Las Vegas, NV 89109 (i) a
written notice of Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock
to be purchased, (ii) payment of the aggregate Current Warrant
Price for such shares and (iii) this Warrant. Such notice shall
be substantially in the form appearing at the end of this Warrant
as Exhibit A, duly executed by Holder. Upon receipt of the items
specified in the second preceding sentence, the Company shall
execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing
the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a
share, as hereinafter provided. The stock certificate or
certificates so delivered shall be in such denomination or
denominations as Holder shall request in the notice and shall be
registered in the name of Holder or, subject to Section 9, such
other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or
any other Person so designated shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the notice, together with the Current Warrant Price and this
Warrant, are received by the Company as described above. If this
Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to Holder a new Warrant
evidencing the right of Holder to purchase the unpurchased shares
of Common Stock called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant, or,
at the request of Holder, appropriate notation may be made on
this Warrant and the same returned to Holder.
Payment of the Warrant Price shall be made at the
option of Holder (i) by certified or official bank check, (ii) by
tendering Notes or Exchange Notes having a principal face amount
such that the amount of such Notes or Exchange Notes, together
with accrued and unpaid interest thereon shall be equal to the
Warrant Price (the Company hereby agreeing to reissue any Notes
or Exchange Notes of a Holder into one or more Notes or Exchange
Notes (as applicable) in denominations requested by such Holder)
or (iii) by the surrender of this Warrant to the Company, with a
duly executed exercise notice marked to reflect "Net Issue
Exercise," and, in either case, specifying the number of shares
of Common Stock to be purchased, during normal business hours on
any Business Day. Upon a Net Issue Exercise, Holder shall be
entitled to receive shares of Common Stock equal to the value of
this Warrant (or the portion thereof being exercised by Net Issue
Exercise) by surrender of this Warrant to the Company together
with notice of such election, in which event the Company shall
issue to Holder a number of shares of the Company's Common Stock
computed as of the date of surrender of this Warrant to the
Company using the following formula:
X = Y x (A-B)
A
Where X = the number of shares of Common Stock to be issued
to the Holder
Y= the number of shares of Warrant Stock being exercised
under this Warrant;
A = the Current Market Price of one share of the Company's
Common Stock (at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of
such calculation).
2.2. Payment of Taxes.
All shares of Common Stock issuable upon the exercise
of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be
imposed with respect to, the issue or delivery thereof.
2.3. Fractional Shares.
The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant.
As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such fraction in an amount equal to
the same fraction of the Current Market Price per share of Common
Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer.
Subject to compliance with Section 9, transfer of
this Warrant and all rights hereunder, in whole or in part, shall
be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the principal
office of the Company referred to in Section 2.1, together with a
written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder and funds sufficient to
pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly
be canceled. A Warrant, if properly assigned in compliance with
Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination.
Subject to Section 9, this Warrant may be divided
into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by
Holder. Subject to compliance with Section 3.1 and with Section
9, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant
or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
3.3. Expenses.
The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or
Warrants under this Section 3.
3.4. Maintenance of Books.
The Company agrees to maintain, at its aforesaid
office, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this
Warrant is exercisable and/or the price at which such shares may
be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The
Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at
the time of such event.
4.1. Stock Dividends, Subdivisions and Combinations.
If at any time the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Shares of
Common Stock,
(b) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of shares
of Common Stock for which this Warrant is exercisable immediately
prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current
Warrant Price per share shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such
adjustment.
4.2. Certain Other Distributions.
If at any time the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of
stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this
Warrant is exercisable shall be adjusted to equal the product of
the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such adjustment and a fraction
(A) the numerator of which shall be the Current Market Price per
share of Common Stock at the date of taking such record and (B)
the denominator of which shall be such Current Market Price per
share of Common Stock minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the fair
value (as determined in good faith by the Board of Directors of
the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or
other subscription or purchase rights so distributable, and
(ii) the Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such
adjustment. A reclassification of the Common Stock (other than a
change in par value, or from par value to no par value or from no
par value to par value) into shares of Common Stock and shares of
any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such
other class of stock within the meaning of this Section 4.2 and,
if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision
or combination, as the case may be, of the outstanding shares of
Common Stock within the meaning of Section 4.1.
4.3. Issuance of Additional Shares of Common Stock.
(a) If at any time the Company shall (except as
hereinafter provided) issue or sell any Additional Shares of
Common Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional Share of Common Stock
less than the Current Warrant Price at the time the Additional
Shares of Common Stock are issued, then (i) the Current Warrant
Price as to the number of shares for which this Warrant is
exercisable prior to such adjustment shall be reduced to a price
determined by dividing (A) an amount equal to the sum of (x) the
number of shares of Common Stock Outstanding immediately prior to
such issue or sale multiplied by the then existing Current
Warrant Price, plus (y) the consideration, if any, received by
the Company upon such issue or sale, by (B) the total number of
shares of Common Stock Outstanding immediately after such issue
or sale; and (ii) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the Current Warrant Price in
effect immediately prior to such issue or sale by the number of
shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product
thereof by the Current Warrant Price resulting from the
adjustment made pursuant to clause (i) above.
(b) If at any time the Company shall (except as
hereinafter provided) issue or sell any Additional Shares of
Common Stock, other than Permitted Issuances, for consideration
in an amount per Additional Share of Common Stock less than the
Current Market Price, then (i) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to
equal the product obtained by multiplying the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such issue or sale by a fraction (A) the numerator of
which shall be the number of shares of Common Stock Outstanding
immediately after such issue or sale, and (B) the denominator of
which shall be the number of shares of Common Stock Outstanding
immediately prior to such issue or sale plus the number of shares
which the aggregate offering price of the total number of such
Additional Shares of Common Stock would purchase at the then
Current Market Price; and (ii) the Current Warrant Price as to
the number of shares for which this Warrant is exercisable prior
to such adjustment shall be adjusted by multiplying such Current
Warrant Price by a fraction (X) the numerator of which shall be
the number of shares for which this Warrant is exercisable
immediately prior to such issue or sale; and (Y) the denominator
of which shall be the number of shares of Common Stock
purchasable immediately after such issue or sale.
(c) If at any time the Company (except as hereinafter
provided) shall issue or sell any Additional Shares of Common
Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional Shares of Common Stock
which is less than the Current Warrant Price and the Current
Market Price at the time the Additional Shares of Common Stock
are issued, the adjustment required under Section 4.3 shall be
made in accordance with the formula in paragraph (a) or (b) above
which results in the lower Current Warrant Price following such
adjustment. The provisions of paragraphs (a) and (b) of Section
4.3 shall not apply to any issuance of Additional Shares of
Common Stock for which an adjustment is provided under Section
4.1 or 4.2. No adjustment of the number of shares of Common
Stock for which this Warrant shall be exercisable shall be made
under paragraph (a) or (b) of Section 4.3 upon the issuance of
any Additional Shares of Common Stock which are issued pursuant
to the exercise of any warrants or other subscription or purchase
rights or pursuant to the exercise of any conversion or exchange
rights in any Convertible Securities, if any such adjustment
shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.4 or Section 4.5 herein.
4.4. Issuance of Warrants or Other Rights.
If at any time the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other
rights to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Securities (other than Permitted
Issuances), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant
Price or the Current Market Price in effect immediately prior to
the time of such issue or sale, then the number of shares for
which this Warrant is exercisable and the Current Warrant Price
shall be adjusted as provided in Section 4.3 on the basis that
the maximum number of Additional Shares of Common Stock issuable
pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration
payable therefor, if any, as of the date of the actual issuance
of the number such warrants or other rights. No further
adjustments of the Current Warrant Price shall be made upon the
actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities. Notwithstanding the
foregoing, no adjustment shall be required under this Section 4.4
solely by reason of the issuance or distribution of stock
purchase rights pursuant to the Rights Plan or any other rights
plan of the Company, provided that the adjustments required by
this Section 4.4 shall be made if any "flip-in" or "flip-over"
event shall occur under such stockholder rights plan.
4.5. Issuance of Convertible Securities.
If at any time the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities,
whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange shall be less
than the Current Warrant Price or Current Market Price in effect
immediately prior to the time of such issue or sale, then the
number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be adjusted as provided in Section
4.3 on the basis that the maximum number of Additional shares of
Common Stock necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of
the consideration payable therefor, if any, as of the date of
actual issuance of such Convertible Securities. No adjustment of
the number of shares for which this Warrant is exercisable and
the Current Warrant Price shall be made under this Section 4.5
upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously
have been made upon the issuance of such warrants or other rights
pursuant to Section 4.4. No further adjustments of the number of
shares for which this Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made
upon exercise of any warrant or other right to subscribe for or
to purchase any such Convertible Securities for which adjustments
of the number of shares for which this Warrant is exercisable and
the Current Warrant Price have been or are to be made pursuant to
other provisions of this Section 4, no further adjustments of the
number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be made by reason of such issue or
sale.
4.6. Superseding Adjustment.
If, at any time after any adjustment of the number of
shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or
Section 4.5 as the result of any issuance of warrants, rights or
Convertible Securities, such warrants or rights, or the right of
conversion or exchange in such other Convertible Securities,
shall expire, and all of such warrants or rights, or the right of
conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have
been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding
Warrant such previous adjustment shall be rescinded and annulled
and the Additional Shares of Common Stock which were deemed to
have been issued by virtue of the computation made in connection
with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation.
4.7. Other Provisions Applicable to Adjustments under this
Section.
The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Current Warrant Price
provided for in this Section 4:
(a) Computation of Consideration. To the extent that
any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible
Securities shall be issued for cash consideration, the
consideration received by the Company therefor shall be the
amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are
offered by the Company for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Convertible
Securities are sold to underwriters or dealers for public
offering without a subscription offering, the public offering
price (in any such case subtracting any amounts paid or
receivable for accrued interest or accrued dividends). To the
extent that such issuance shall be for a consideration other than
cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined
in good faith by the Board of Directors of the Company. In case
any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or
purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which
the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in
good faith by the Board of Directors of the Company, of such
portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants or other rights, as the case may
be. The consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe
for or purchase the same shall be the consideration received by
the Company for issuing such warrants or other rights plus the
additional consideration payable to the Company upon exercise of
such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms
of any Convertible Securities shall be the consideration received
by the Company for issuing warrants or other rights to subscribe
for or purchase such Convertible Securities, plus the
consideration paid or payable to the Company in respect of the
subscription for or purchase of such Convertible Securities, plus
the additional consideration, if any, payable to the Company upon
the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of
any Additional Shares of Common Stock or Convertible Securities
in payment or satisfaction of any dividends upon any class of
stock other than Common Stock, the Company shall be deemed to
have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of
such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments
required by this Section 4 shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except
that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in
Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not
previously made results in an increase or decrease of less than
1% of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum
amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made,
would result in a minimum adjustment or on the date of exercise.
For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of
its occurrence.
(c) Fractional Interests. In computing adjustments
under this Section 4, fractional interests in Common Stock shall
be taken into account to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company
shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or distribution
or subscription or purchase rights and shall, thereafter and
before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment
shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be
rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property
becomes distributable pursuant to this Section 4 by reason of the
taking of any record of the holders of Common Stock, but prior to
the occurrence of the event for which such record is taken,
Holder exercises this Warrant, any Additional Shares of Common
Stock issuable upon exercise by reason of such adjustment shall
be deemed the last shares of Common Stock for which this Warrant
is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow
for Holder by the Company to be issued to Holder when and to the
extent that the event actually takes place, upon payment of the
then Current Warrant Price. Notwithstanding any other provision
to the contrary herein, if the event for which such record was
taken fails to occur or is rescinded, then such escrowed shares
shall be canceled by the Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever
the Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any item under
this Section 4, such determination may be challenged in good
faith by the Majority Holders, and any dispute shall be resolved
by an investment banking firm of recognized national standing
selected by the Company and acceptable to the Majority Holders.
4.8. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets.
In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving
corporation or where there is a change in or distribution with
respect to the Common Stock of the Company), or sell, transfer or
otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by
or distributed to the holders of Common Stock of the Company,
then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant
Price, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets,
the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to
provide for adjustments of shares of the Common Stock for which
this Warrant is exercisable which shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 4.
For purposes of this Section 4.8, "common stock of the successor
or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights
to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.8 shall similarly apply to
successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. Other Action Affecting Common Stock.
In case at any time or from time to time the Company
shall take any action in respect of its Common Stock, other than
any action described in this Section 4, then, unless such action
will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for
which this Warrant is exercisable and/or the purchase price
thereof shall be adjusted in such manner as may be equitable in
the circumstances.
4.10. Certain Limitations.
Notwithstanding anything herein to the contrary, the
Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant
Price to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments.
Whenever the number of shares of Common Stock for
which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of
the Warrants, shall be adjusted pursuant to Section 4, the
Company shall forthwith prepare a certificate to be executed by
the chief financial officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the
Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in
Section 4.2 or 4.7(a)), specifying the number of shares of Common
Stock for which this Warrant is exercisable and (if such
adjustment was made pursuant to Section 4.8 or 4.9) describing
the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in
the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed
copy of such certificate to be delivered to each Holder in
accordance with Section 13.2. The Company shall keep at its
principal office copies of all such certificates and cause the
same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
5.2. Notice of Corporate Action.
If at any time
(a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to
receive a dividend (other than a cash dividend payable out
of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of
incorporation of the Company) or other distribution, or any
right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger
of the Company (other than the reincorporation merger
described in the Proxy Statement filed with the Securities
and Exchange Commission by the Company on September 18,
1998) with, or any sale, transfer or other disposition of
all or substantially all the property, assets or business of
the Company to, another corporation, or
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to
Holder (i) at least 20 days' prior written notice of the date on
which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at
least 20 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is
to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in
accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 No Impairment.
The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-
laws or comparable governing instruments or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to
protect the rights of Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a)
not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as
may be necessary to enable the Company to perform its obligations
under this Warrant.
Upon the request of Holder, the Company will at any
time during the period this Warrant is outstanding acknowledge in
writing, in form reasonably satisfactory to Holder, the
continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at
all times reserve and keep available for issue upon the exercise
of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full
of all outstanding Warrants. All shares of Common Stock which
shall be so issuable, when issued upon exercise of any Warrant
and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and
nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by
the Company to the holders of its Common Stock with respect to
which any provision of Section 4 refers to the taking of a record
of such holders, the Company will in each such case take such a
record and will take such record as of the close of business on a
Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its
stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be
transferred, hypothecated or assigned before satisfaction of the
conditions specified in this Section 9, which conditions are
intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any
Warrant Stock. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 9.
9.1. Restrictive Legend.
Except as otherwise provided in this Section 9, each
Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Warrant, and each certificate for Warrant
Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"[THIS WARRANT AND THE SECURITIES
REPRESENTED HEREBY] [THE SECURITIES
REPRESENTED BY THIS CERTIFICATE] HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. Notice of Proposed Transfers; Requests for
Registration.
Prior to any Transfer or attempted Transfer of any
Warrants or any shares of Restricted Common Stock, the holder of
such Warrants or Restricted Common Stock shall give ten days'
prior written notice (a "Transfer Notice") to the Company of such
holder's intention to effect such Transfer, describing the manner
and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to
the Company, an opinion that the proposed Transfer of such
Warrants or such Restricted Common Stock may be effected without
registration under the Securities Act. After receipt of the
Transfer Notice and opinion, the Company shall, within five days
thereof, notify the holder of such Warrants or such Restricted
Common Stock as to whether such opinion is reasonably
satisfactory and, if so, such holder shall thereupon be entitled
to Transfer such Warrants or such Restricted Common Stock, in
accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Restricted Common
Stock issued upon such Transfer and each Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section
9.1, unless in the opinion of such counsel such legend is not
required in order to ensure compliance with the Securities Act.
The holder of the Warrants or the Restricted Common Stock, as the
case may be, giving the Transfer Notice shall not be entitled to
Transfer such Warrants or such Restricted Common Stock until
receipt of notice from the Company under this Section 9.2 that
such opinion is reasonably satisfactory.
9.3. Registration Rights.
(a) The Company has agreed to (i) use its best efforts to
register with the Commission on an appropriate form under the
Securities Act, as soon as practicable after issuance of the
Warrants (or cause an appropriate post-effective amendment to be
made to any existing registered registration statement on or
prior to such date), and to use its best efforts to cause to
become effective as soon as practicable thereafter and in any
event within six months of the Closing Date, such registration
statement with respect to the Warrant Stock and (ii) keep such
registration statement effective for such period of time as the
Warrants or the Warrant Stock is held by the Holder. The Company
will pay all expenses, including legal and accounting fees and
expenses, in connection with registrations pursuant to this
Section 9.3(a).
(b) To the extent that a registration statement is not
effective pursuant to Section 9.3(a), if, at any time, the
Company proposes or is required to register any of its equity
securities or securities convertible into or exchangeable for
equity securities under the Securities Act (an "Incidental
Registration"), the Company will give prompt written notice to
all holders of record of the Warrants and the Warrant Stock of
its intention to so register its securities and of such holders'
rights under this Section 9.3(b). Upon the written request of
any holder of the Warrants or the Warrant Stock made within
20 days following the receipt of any such written notice (which
request shall specify the maximum number of Warrants Stock
intended to be disposed of by such holder and the intended method
of distribution thereof), the Company will use its best efforts
to effect the registration under the Securities Act of all
Warrant Stock which the Company has been so requested to register
by the holders thereof together with any other securities the
Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No
registration effected under this Section 9.3(b) shall relieve the
Company of its obligation to effect any registration under
Section 9.3(a). Each holder of Warrants or Warrant Stock shall
have the right to withdraw its request for inclusion of its
Warrant Stock in any registration statement pursuant to this
Section 9.3(b) at any time by giving written notice to the
Company of its request to withdraw. There is no limitation on
the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 9.3(b). The Company
will pay all expenses in connection with any registration of
Warrant Stock requested pursuant to this Section 9.3(b).
(c) In connection with registration of the Warrant
Stock under the Securities Act pursuant to this Section 9.3, the
Company shall indemnify and hold harmless each Person who
participated in the offering of such Warrant Stock and each other
Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or
participating Person or controlling Person may become subject
under the Securities Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i)
any alleged untrue statement of any material fact contained in
any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) any alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse
such holder or such director, officer or participating Person or
controlling Person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or
participating Person or controlling Person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any
alleged untrue statement or alleged omission made in such
registration statement, preliminary prospectus, prospectus or
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such holder
specifically for use therein and provided further that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises from or is based
upon the failure by any holder of Warrants or Warrant Stock to
deliver a required prospectus or prospectus supplement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such
director, officer or participating Person or controlling Person,
and shall survive the transfer of such securities by such holder.
(d) Each holder of Warrants or Warrant Stock
registered under the Securities Act in accordance with the
provisions of this Section 9.3, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors and
officers and each other Person, if any, who controls the Company
within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to which the
Company or any such director or officer or any such Person may
become subject under the Securities Act or any other statue or at
common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon information in writing provided to the Company by such
holder of Warrants or Warrant Stock specifically for use in any
registration statement under which securities were registered
under the Securities Act for resale by such holder, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto or the failure of such holder
to deliver any required prospectus or prospectus supplement;
provided, however, that the indemnification obligations of such
holder shall be limited to the gross proceeds from the offering
of the Warrant Stock received by such holder.
(e) If the indemnification provided for in this
Section 9.3 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
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 expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or related to
information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall
be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding provided, however, that the
contribution obligation of any holder shall be limited to the
gross proceeds from the offering of the Warrant Stock received by
such holder.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 9.3(e)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitle to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
9.4. Preemptive Rights.
(a) The Company shall not issue, sell or exchange, or
agree to issue, sell or exchange (collectively, "Issue," and any
issuance, sale or exchange resulting therefrom, an "Issuance")
any Securities unless the Company shall have first given written
notice (the "Section 9.4 Notice") to each holder of Warrants or
Warrant Stock (for purposes of this Section, each a "Section 9.4
Offeree") that shall (i) state the Company's intention to Issue
Securities, the amount to be issued, sold or exchanged, the terms
of such Securities, the purchase price therefor and a summary of
the other material terms of the proposed issuance, sale or
exchange and (ii) offer (a "Section 9.4 Offer") to Issue to each
Section 9.4 Offeree and their affiliates such Section 9.4
Offeree's Proportionate Percentage (as defined below) of such
Securities (with respect to each Section 9.4 Offeree, the
"Offered Securities") upon the terms and subject to the
conditions set forth in the Section 9.4 Notice, which Section 9.4
Offer by its terms shall remain open and irrevocable for a period
of 15-days from the date it is delivered by the Company to such
holder, as the case may be (and, to the extent the Section 9.4
Offer is accepted during such 15-day period, until the closing of
the Issuance contemplated by the Section 9.4 Offer).
"Proportionate Percentage" for the purposes of this Section shall
mean the quotient obtained by dividing: (A) the Warrant Stock
held by such Section 9.4 Offeree (assuming for purposes of this
Section 9.4 that all issued and outstanding Warrants have been
exercised) on the date of the Section 9.4 Offer, by (B) the
Warrant Stock issued and outstanding on the date of the Section
9.4 Offer.
(b) Notice of a Section 9.4 Offeree's intention to
accept a Section 9.4 Offer, in whole or in part, shall be
evidenced by a writing signed by such party and delivered to the
Company prior to the end of the 15-day period of such Section 9.4
Offer (each, a "Notice of Acceptance"), setting forth the portion
of the Offered Securities that the Section 9.4 Offeree elects to
purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not
given by a Section 9.4 Offeree in respect of all the Offered
Securities, the Company shall have 60 days following the 15-day
period referred to in clause (b) above to Issue all or any part
of such remaining Offered Securities not covered by the Notice of
Acceptance to any other Person(s), but only at a price not less
than the price, and on terms no more favorable to the person than
the terms, stated in the Section 9.4 Offer Notice. If the
Company does not consummate the Issuance of all or part of the
remaining Offered Securities to such other Person(s) within such
period, the right provided hereunder shall be deemed to be
revived and such securities shall not be offered unless first re-
offered to each Section 9.4 Offeree in accordance with this
Section 9.4. Upon the closing of the Issuance to such other
Person(s) (the "Other Buyers") of all or part of the remaining
Offered Securities, each Section 9.4 Offeree shall purchase from
the Company, and the Company shall Issue to each such Section 9.4
Offeree, the Offered Securities covered by the Notice of
Acceptance delivered to the Company by the Section 9.4 Offeree,
on the terms specified in the Section 9.4 Offer. The purchase by
a Section 9.4 Offeree of any Offered Securities is subject in all
cases to the execution and delivery by the Company and the
Section 9.4 Offeree of a purchase agreement relating to such
Offered Securities in form and substance similar in all material
respects to the extent applicable to that executed and delivered
between the Company and the Other Buyers.
9.5. Termination of Restrictions.
Notwithstanding the foregoing provisions of this
Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the
Restricted Common Stock and the legend requirements of Section
9.1 shall terminate as to any particular Warrant or share of
Warrant Stock or Restricted Common Stock (i) when and so long as
such security shall have been effectively registered under the
Securities Act and disposed of pursuant thereto or (ii) when the
Company shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be transferred without
registration thereof under the Securities Act.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a
Warrant and each holder of Restricted Common Stock in supplying
such information as may be reasonably necessary for such holder
to complete and file any reports or forms presently or hereafter
required by the Commission as a condition to the availability of
an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and indemnity
reasonably satisfactory to it (it being understood that, in the
case of the initial holder, the written agreement of Appaloosa
Management, L.P. shall be sufficient indemnity), and in case of
mutilation upon surrender and cancellation hereof, the Company
will execute and deliver in lieu hereof a new Warrant of like
tenor to such Holder; provided, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form
is surrendered to the Company for cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative
action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof,
shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors
of the Company.
13. MISCELLANEOUS
13.1. Nonwaiver and Expenses.
No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights,
powers or remedies. If the Company fails to make, when due, any
payments provided for hereunder, or fails to comply with any
other provision of this Warrant, the Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by
Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies
hereunder.
13.2. Notice Generally.
Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently
given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail,
return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at
its last known address appearing on the books of the Company
maintained for such purpose.
(b) If to the Company at
INAMED Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Executive Vice President
Telecopy Number: (702) 791-3205
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder shall be
deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after
the same shall have been deposited in the United States mail.
Failure or delay in delivering copies of any notice, demand,
request, approval, declaration, delivery or other communication
to the person designated above to receive a copy shall in no way
adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
13.3. Remedies.
Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under of this Warrant. The Company
agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would
be adequate.
13.4. Successors and Assigns.
Subject to the provisions of Sections 3.1 and 9, this
Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and
the successors and assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from
time to time of this Warrant and, with respect to Section 9
hereof, holders of Warrant Stock, and shall be enforceable by any
such Holder or holder of Warrant Stock.
13.5. Amendment.
This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written
consent of the Company and the Majority Holders, provided that no
such Warrant may be modified or amended to reduce the number of
shares of Common Stock for which such Warrant is exercisable or
to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment
as provided therein) without the prior written consent of the
Holder thereof, provided however, that the foregoing shall not
limit the operation of Section 4.6.
13.6. Severability.
Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Warrant.
13.7. Headings.
The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
13.8. Governing Law.
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY
("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY
LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER
AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT
BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN
THIS WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF
THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA,
IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY
FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING
OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be duly executed and its corporate seal to be impressed hereon
and attested by its Secretary or an Assistant Secretary.
Dated: _________________, 1998
INAMED CORPORATION
By: ___________________________
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise _____No ______Yes
The undersigned registered owner of this Warrant
irrevocably exercises this Warrant for the purchase of _____
Shares of Common Stock of INAMED Corporation and herewith makes
payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _____________ whose
address is ________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.
(Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of
this Warrant hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under
this Warrant, with respect to the number of shares of Common
Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint
________________ attorney-in-fact to register such transfer on
the books of INAMED CORPORATION maintained for the purpose, with
full power of substitution in the premises.
Dated:_______________ Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with
the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
Exhibit 99.6
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") dated as of
September 30, 1998, is made by INAMED Corporation, a Florida
corporation (the "Obligor"), and APPALOOSA MANAGEMENT, L.P., as
collateral agent (the "Collateral Agent") for the benefit of the
holders of the Obligor's 10.00% Senior Secured Notes due March
31, 1999 or, at the option of the Obligor exercised as provided
therein, September 1, 2000 (the "Notes").
RECITALS
A. Pursuant to the Note Purchase Agreement, dated as of the
date hereof (as amended, supplemented, restated or otherwise
modified from time to time, the "Note Purchase Agreement"), among
the purchasers listed on Exhibit A thereto (the "Purchasers"),
the Collateral Agent and the Obligor, the Purchasers are
purchasing Notes from the Obligor in the aggregate principal
amount of $8,000,000 and Warrants to acquire up to 590,000 shares
of Common Stock with an exercise price of $6.50 per share (the
"Loan Warrants");
B. As a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes and the Loan Warrants, the
Purchasers required that the Obligor deliver this Agreement to
the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligor agrees with the Collateral Agent as
follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms.
Unless otherwise defined, all capitalized terms used in this
Agreement that are defined in the Note Purchase Agreement
(including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note
Purchase Agreement. In addition, the following terms shall have
the following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in
Section 2.01(b).
"Breast Implant Litigation" shall mean the litigation in the
United States District Court for the Northern District of
Alabama, Southern Division stylized as "Silicone Gel Breast
Implant Products Liability Litigation (MDL926)."
"Capitalized Lease" shall mean, with respect to any Person,
any lease or any other agreement for the use of property which,
in accordance with generally accepted accounting principles,
should be capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be
determined, the amount of the liability capitalized or disclosed
(or which should be disclosed) in a balance sheet of such Person
in respect of a Capitalized Lease of such Person.
"Casualty Event" shall mean, with respect to any property of
any Person, any loss of or damage to, or any condemnation or
other taking of, such property for which such Person or any of
its Subsidiaries receives insurance proceeds, or proceeds of a
condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in
Section 2.01.
"Collateral Account" shall have the meaning assigned to that
term in Section 3.01.
"Copyright Collateral" shall mean all Copyrights, whether
now owned or hereafter acquired by the Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright
registrations, (b) all renewals and extensions of all copyrights,
copyright registrations and applications for copyright
registration and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in
Section 2.01(f).
"Equipment" shall have the meaning assigned to that term in
Section 2.01(e).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments,
preemptive rights or agreements of any kind (including any
stockholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such
Person.
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 7.1 of the Note Purchase
Agreement.
"Holder" shall mean, at any time of reference, a Person in
whose name a Note is registered in the Note Register at such
time.
"Indebtedness" shall mean, with respect to any Person,
(i) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers
and similar accrued liabilities incurred in the ordinary course
of business and paid in a manner consistent with industry
practice), (v) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or
not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all
guarantees of such Person, (viii) all obligations (including but
not limited to reimbursement obligations) relating to the
issuance of letters of credit for the account of such Person,
(ix) all obligations arising out of foreign exchange contracts,
and (x) all obligations arising out of interest rate and currency
swap agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Instruments" shall have the meaning assigned to that term
in Section 2.01(c).
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all Patents, patent
applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all Copyrights
and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments of the foregoing (in whatever form or
medium) and (i) all licenses or agreements in connection with the
foregoing.
"Inventory" shall have the meaning assigned to that term in
Section 2.01(d).
"Issuers" shall mean, collectively, each Subsidiary,
directly or indirectly, of the Obligor that is the issuer (as
defined in the Uniform Commercial Code) of any shares of capital
stock now owned or hereafter acquired by the Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the
Notes, this Agreement, the Guarantee and Security Agreement,
dated as of the date hereof, between certain Subsidiaries of the
Obligor and the Collateral Agent, the Guarantee Agreement, dated
as of the date hereof, made by certain Subsidiaries of the
Obligor in favor of the Holders, the Registration Rights
Agreement, dated as of the date hereof, by and between the
Obligor and the Purchasers and the Intercreditor Agreement, dated
as of the date hereof, by and between the Collateral Agent and
the Trustee.
"Loan Warrants" shall have the meaning assigned to that term
in the Recitals.
"Make-Whole Amount" shall have the meaning assigned to that
term in the Note Purchase Agreement.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the property, business, prospects (including,
without limitation, the prospects for the settlement of the
Breast Implant Litigation), operations, earnings, assets,
liabilities or the condition (financial or otherwise) of the
Obligor and its Subsidiaries taken as a whole, whether or not in
the ordinary course of business, (b) the ability of the Obligor
to perform its obligations under any of the Loan Documents to
which it is a party, (c) the validity or enforceability of any of
the Loan Documents, (d) the rights, remedies, powers and
privileges of the Holders under any of the Loan Documents or (e)
the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors,
trailers and other like property, whether or not the title to any
such property is governed by a certificate of title or ownership.
"Note Register" shall have the meaning ascribed thereto in
the Note Purchase Agreement.
"Obligations" shall mean the principal and interest due
under the Notes and all other obligations and liabilities of the
Obligor to the Holders of every nature whatsoever now existing or
hereafter arising, including, without limitation, all prepayment
premiums, indemnities, reimbursement obligations, fees, costs and
expenses, arising under or in connection the Loan Documents
(including, without limitation, any interest accruing subsequent
to (or that would accrue but for) the commencement of any
proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Obligor), and any
and all expenses which may be incurred by the Holders in
collecting any or all of the obligations of the Obligor under
this Agreement and/or enforcing any rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now
owned or hereafter acquired by the Obligor.
"Patents" shall mean, collectively, (a) all patents and
patent applications, (b) all reissues, divisions, continuations,
renewals, extensions and continuations-in-part of all patents or
patent applications and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages, and
other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or
with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, including all inventions
and improvements described or discussed in all such patents and
patent applications.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any of its agencies, or
obligations guaranteed as to principal and interest by the United
States of America, or of any of its agencies, in either case
maturing not more than 90 days from the date of acquisition of
such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank
or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust
business in the United States of America or any state and having
capital, surplus and undivided profits of at least $35,000,000,
maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A-1 or better or P-1 by Standard & Poor's
Corporation or Moody's Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition; and
(d) money market funds sponsored by commercial or investment
banks unaffiliated with the Obligor.
"Person" shall mean any individual, firm, corporation,
limited liability company, partnership, company or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
"Pledged Debt" shall have the meaning assigned to that term
in Section 2.01(a).
"Pledged Stock" shall have the meaning assigned to that term
in Section 2.01(a).
"SEC" shall mean the United States Securities and Exchange
Commission.
"Secured Obligations" shall mean any and all obligations of
the Obligor at any time and from time to time for the performance
of its agreements, covenants and undertakings under or in respect
of the Loan Documents.
"Securities Collateral" means the Stock Collateral and the
Pledged Debt.
"Signing Date" shall mean the date on which the Obligor
shall sign and deliver this Agreement.
"Stock Collateral" shall have the meaning assigned to that
term in Section 2.01(a).
"Trademark Collateral" shall mean all Trademarks, whether
now owned or hereafter acquired by the Obligor. Notwithstanding
the foregoing, the Trademark Collateral shall not include any
Trademark which would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the
Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark
registrations and applications for trademark and service mark
registrations, (b) all renewals and extensions of any of the
foregoing and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, together, in each case,
with the product lines and goodwill of the business connected
with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of New York from time to time or,
by reason of mandatory application, any other applicable
jurisdiction.
1.02 Interpretation.
In this Agreement, unless otherwise indicated, the singular
includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; references to "writing"
include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to
articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other
modifications by the terms of any Loan Document); and references
to Persons include their respective permitted successors and
assigns and, in the case of governmental Persons, Persons
succeeding to their respective functions and capacities.
Article II. Collateral.
2.01 Grant.
As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise)
and performance of the Secured Obligations, the Obligor hereby
pledges and grants to the Collateral Agent, for the ratable
benefit of the Holders a security interest in all of the
Obligor's right, title and interest in and to the following
property, whether now owned or hereafter acquired by the Obligor
and whether now existing or hereafter coming into existence
including, without limitation, all real and personal property and
interests in real and personal property (collectively, the
"Collateral"):
(a)(i) all of the shares of capital stock of the
Issuers now owned or hereafter acquired by the Obligor as set
forth in Schedule 2.01 together with in each case the
certificates representing the same (collectively, the "Pledged
Stock"); (ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of
capital in respect of, any of the Pledged Stock, resulting from a
split-up, revision, reclassification or other like change of any
of the Pledged Stock or otherwise received in exchange for any of
the Pledged Stock and all Equity Rights issued to the holders of,
or otherwise in respect of, any of the Pledged Stock; and (iii)
without affecting the obligations of the Obligor under any
provision prohibiting such action under any Loan Document, in the
event of any consolidation or merger in which any Issuer is not
the surviving corporation, all shares of each class of the
capital stock of the successor corporation (unless such successor
corporation is the Obligor itself) formed by or resulting from
such consolidation or merger (collectively, and together with the
property described in clauses (i) and (ii) above, the "Stock
Collateral"); (iv) the Indebtedness described in Annex I and
issued by the obligors named therein (the "Pledged Debt"); (v)
all additional Indebtedness for money borrowed or for the
deferred purchase price of property from time to time owed to the
Obligor by any obligor of the Pledged Debt, and all additional
Indebtedness in excess of $25,000 for money borrowed or for the
deferred purchase price of property from time to time owed to the
Obligor by any other Person who, after the date of this
Agreement, becomes, as a result of any occurrence, a Subsidiary
of the Obligor or an Affiliate of the Obligor (any such
Indebtedness being "Additional Debt"); (vi) all notes or other
instruments evidencing the Indebtedness referred to in clauses
(iv) and (v) above;
(b) all accounts and general intangibles (each as
defined in the Uniform Commercial Code) of the Obligor
constituting a right to the payment of money, whether or not
earned by performance, including all moneys due and to become due
to the Obligor in repayment of any loans or advances (including
loans and advances to Subsidiaries of the Obligor), in payment
for goods (including Inventory and Equipment) sold or leased or
for services rendered, in payment of tax refunds and in payment
of any guarantee of any of the foregoing (collectively, the
"Accounts");
(c) all instruments, chattel paper or letters of
credit (each as defined in the Uniform Commercial Code) of the
Obligor evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts (collectively, the
"Instruments");
(d) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles)
of the Obligor that are held by the Obligor for sale, lease or
furnishing under a contract of service (including to its
Subsidiaries or Affiliates), that are so leased or furnished or
that constitute raw materials, work in process or material used
or consumed in its business, including all spare parts and
related supplies, all goods obtained by the Obligor in exchange
for any such goods, all products made or processed from any such
goods and all substances, if any, commingled with or added to any
such goods (collectively, the "Inventory");
(e) all equipment (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles)
of the Obligor that are used or bought for use primarily in its
business, including all spare parts and related supplies, all
goods obtained by the Obligor in exchange for any such goods, all
substances, if any, commingled with or added to such goods and
all upgrades and other improvements to such goods, in each case
to the extent not constituting Inventory (collectively, the
"Equipment");
(f) all documents of title (as defined in the
Uniform Commercial Code) or other receipts of the Obligor
covering, evidencing or representing Inventory or Equipment
(collectively, the "Documents");
(g) all contracts and other agreements of the
Obligor relating to the sale or other disposition of all or any
part of the Inventory, Equipment or Documents and all rights,
warranties, claims and benefits of the Obligor against any Person
arising out of, relating to or in connection with all or any part
of the Inventory, Equipment or Documents of the Obligor,
including any such rights, warranties, claims or benefits against
any Person storing or transporting any such Inventory or
Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of
the Obligor not constituting Accounts, including, to the extent
related to all or any part of the other Collateral, all books,
correspondence, credit files, records, invoices, tapes, cards,
computer runs and other papers and documents in the possession or
under the control of the Obligor or any computer bureau or
service company from time to time acting for the Obligor;
(i) the balance from time to time in the
Collateral Account;
(j) all other tangible and intangible property of
the Obligor, including all Intellectual Property; and
(k) all proceeds and products in whatever form of
all or any part of the other Collateral, including all proceeds
of insurance and all condemnation awards and all other
compensation for any Casualty Event with respect to all or any
part of the other Collateral (together with all rights to recover
and proceed with respect to the same), and all accessories to,
substitutions for and replacements of all or any part of the
other Collateral.
2.02 Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise
its rights, remedies, powers and privileges under Article VI at
such time or times as the Collateral Agent shall be lawfully
entitled to exercise such rights, remedies, powers and
privileges, and for no other purpose, the Obligor hereby grants
to the Collateral Agent, to the extent assignable, an
irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to the Obligor) to use, assign,
license or sublicense any of the Intellectual Property of the
Obligor, together with reasonable access to all media in which
any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout of such
items.
2.03 Perfection.
Concurrently with the execution and delivery of this
Agreement, the Obligor shall (i) file such financing statements
and other documents in such offices as shall be necessary or as
the Collateral Agent may request to perfect and establish the
first priority (subject only to Liens permitted under Section 6.7
of the Note Purchase Agreement) of the Liens granted by this
Agreement (including promptly filing the Assignment for Security-
- -Trademarks and Patents, in the form executed on the date hereof
by the Obligor, in the United States Patent and Trademark
Office), (ii) deliver and pledge to the Collateral Agent any and
all Instruments, endorsed or accompanied by such instruments of
assignment and transfer in such form and substance as the
Collateral Agent may request, (iii) cause the Collateral Agent
(to the extent requested by the Collateral Agent) to be listed as
the lienholder on all certificates of title or ownership relating
to Motor Vehicles owned by the Obligor and deliver to the
Collateral Agent originals of all such certificates of title or
ownership for the Motor Vehicles together with the odometer
statements for each respective Motor Vehicle, (iv) deliver and
pledge to the Collateral Agent all certificates for the Pledged
Stock and notes, instruments or other documents evidencing the
Pledged Debt, accompanied by undated stock or bond powers, as the
case may be, duly executed in blank and (v) take all such other
actions as shall be necessary or as the Collateral Agent may
request to perfect and establish the first priority (subject only
to such Permitted Liens) of the Liens granted by this Agreement.
The Collateral Agent shall have the right, at any time in its
discretion and with notice to the Obligor, to transfer to or to
register in its name or in the name of any of its nominees any or
all of the Pledged Stock or Pledged Debt.
2.04 Preservation and Protection of Security Interests.
The Obligor shall:
(a) upon the acquisition after the Signing Date
by the Obligor of any Securities Collateral, promptly either (x)
transfer and deliver to the Collateral Agent all such Securities
Collateral (together with the certificates or instruments
representing such Securities Collateral securities duly endorsed
in blank or accompanied by undated powers duly executed in blank)
or (y) take such other action as the Collateral Agent shall deem
necessary or appropriate to perfect, and establish the priority
of, the Liens granted by this Agreement in such Securities
Collateral;
(b) upon the acquisition after the Signing Date
by the Obligor of any Instrument, promptly deliver and pledge to
the Collateral Agent all such Instruments, endorsed or
accompanied by such instruments of assignment and transfer in
such form and substance as the Collateral Agent may request;
(c) upon the acquisition after the Signing Date
by the Obligor of any Equipment or Motor Vehicle covered by a
certificate of title or ownership, promptly cause the Collateral
Agent to be listed as the lienholder on such certificate of title
and within 45 days of the acquisition of such property deliver
evidence of the same to the Collateral Agent;
(d) upon the Obligor's acquiring, or otherwise
becoming entitled to the benefits of, any Copyright (or
copyrightable material), Patent (or patentable invention),
Trademark (or associated goodwill) or other Intellectual Property
or upon or prior to the Obligor's filing, either directly or
through any agent, licensee or other designee, of any application
with any governmental Person for any Copyright, Patent,
Trademark, or other Intellectual Property, in each case after the
Signing Date, execute and deliver such contracts, agreements and
other instruments as the Collateral Agent may request to
evidence, validate, perfect and establish the first priority
(subject only to Liens permitted under Section 6.7 of the Note
Purchase Agreement) of the Liens granted by this Agreement in
such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any
and all financing statements, notices, contracts, agreements or
other instruments, obtain any and all governmental approvals and
take any and all steps that may be necessary or as the Collateral
Agent may request to create, perfect, establish the first
priority (subject only to Liens permitted under Section 6.7 of
the Note Purchase Agreement) of, or to preserve the validity,
perfection or first priority (subject only to such Permitted
Liens) of, the Liens granted by this Agreement or to enable the
Collateral Agent to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such
Liens, including causing any or all of the Securities Collateral
to be transferred of record into the name of the Collateral Agent
or its nominee (and the Collateral Agent agrees that if any
Securities Collateral is transferred into its name or the name of
its nominee, the Collateral Agent will thereafter promptly give
to the Obligor copies of any notices and communications received
by it with respect to the Stock Collateral pledged by the
Obligor), provided that notices to account debtors in respect of
any Accounts or Instruments shall be subject to the provisions of
Section 3.02(b).
2.05 Attorney-in-Fact.
(a) Subject to the rights of the Obligor under Sections
2.06, 2.07, 2.08 and 2.09, the Collateral Agent is hereby
appointed the attorney-in-fact of the Obligor for the purpose of
carrying out the provisions of this Agreement and taking any
action and executing any instruments which the Collateral Agent
may deem necessary or advisable to accomplish the purposes of
this Agreement, to preserve the validity, perfection and first
priority (subject only to Liens permitted under Section 6.7 of
the Note Purchase Agreement) of the Liens granted by this
Agreement and, following any Default, to exercise its rights,
remedies, powers and privileges under this Agreement. This
appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall be entitled under this Agreement upon
the occurrence and continuation of any Event of Default (or, in
respect of Section 3.02(b), any Default) (i) to ask, demand,
collect, sue for, recover, receive and give receipt and discharge
for amounts due and to become due under and in respect of all or
any part of the Collateral; (ii) to receive, endorse and collect
any Instruments or other drafts, instruments, documents and
chattel paper in connection with clause (i) above (including any
draft or check representing the proceeds of insurance or the
return of unearned premiums); (iii) to file any claims or take
any action or proceeding that the Collateral Agent may deem
necessary or advisable for the collection of all or any part of
the Collateral, including the collection of any compensation due
and to become due under any contract or agreement with respect to
all or any part of the Collateral; and (iv) to execute, in
connection with any sale or disposition of the Collateral under
Article VI, any endorsements, assignments, bills of sale or other
instruments of conveyance or transfer with respect to all or any
part of the Collateral. In any suit, proceeding or action
brought by the Collateral Agent relating to any Account, contract
or Instrument for any sum owing thereunder, or to enforce any
provision of any Account, contract or Instrument, the Obligor
will save, indemnify and keep the Collateral Agent harmless from
and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the obligor thereunder, arising out of a
breach by the Obligor of any obligation thereunder or arising out
of any other agreement, Indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from the
Obligor, and all such obligations of the Obligor shall be and
remain enforceable against and only against the Obligor and shall
not be enforceable against the Collateral Agent.
(b) Without limiting the rights and powers of the
Collateral Agent under Section 2.05(a), the Obligor hereby
appoints the Collateral Agent as its attorney-in-fact, effective
the Signing Date and terminating upon the termination of this
Agreement, for the purpose of (i) executing on behalf of the
Obligor title or ownership applications for filing with
appropriate state agencies to enable Motor Vehicles now owned or
hereafter acquired by the Obligor to be retitled and the
Collateral Agent to be listed as lienholder as to such Motor
Vehicles, (ii) filing such applications with such state agencies
and (iii) executing such other documents and instruments on
behalf of, and taking such other action in the name of, the
Obligor as the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement (including the
purpose of creating in favor of the Collateral Agent a first
priority perfected lien on the Motor Vehicles and exercising the
rights and remedies of the Collateral Agent under Article VI).
This appointment as attorney-in-fact is irrevocable and coupled
with an interest.
(c) Without limiting the rights and powers of the
Collateral Agent under Section 2.05(a), the Obligor hereby
appoints the Collateral Agent as its attorney-in-fact, effective
the Signing Date and terminating upon the termination of this
Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by
Section 2.04(d). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
2.06 Special Provisions Relating to Securities Collateral.
(a) So long as no Event of Default shall have occurred and
be continuing, the Obligor shall have the right to exercise all
voting, consensual and other powers of ownership pertaining to
the Securities Collateral for all purposes not inconsistent with
the terms of any Loan Document, provided that the Obligor agrees
that it will not vote the Securities Collateral in any manner
that is inconsistent with the terms of any Loan Document; and the
Collateral Agent shall, at the Obligor' expense, execute and
deliver to the Obligor or cause to be executed and delivered to
the Obligor all such proxies, powers of attorney, dividends and
other orders and other instruments, without recourse, as the
Obligor may reasonably request for the purpose of enabling the
Obligor to exercise the rights and powers which it is entitled to
exercise pursuant to this Section 2.06(a).
(b) So long as no Event of Default shall have
occurred and be continuing, the Obligor shall be entitled to
receive and retain any dividends or distributions on the
Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred
and be continuing, and whether or not the Holders or the
Collateral Agent exercise any available right to declare any
Secured Obligation due and payable or seek or pursue any other
right, remedy, power or privilege available to them under
applicable law, this Agreement or any other Loan Document, all
dividends and other distributions on the Securities Collateral
shall be paid directly to the Collateral Agent and retained by it
in the Collateral Account as part of the Securities Collateral,
subject to the terms of this Agreement, and, if the Collateral
Agent shall so request, the Obligor agrees to execute and deliver
to the Collateral Agent appropriate additional dividend,
distribution and other orders and instruments to that end,
provided that if such Event of Default is cured, any such
dividend or distribution paid to the Collateral Agent prior to
such cure shall, upon request of the Obligor (except to the
extent applied to the Secured Obligations), be returned by the
Collateral Agent to the Obligor.
2.07 Use of Intellectual Property.
Subject to such action not otherwise constituting a Default
and so long as no Event of Default shall have occurred and be
continuing, the Obligor will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take
other actions with respect to the Intellectual Property in the
ordinary course of the business of the Obligor. In furtherance
of the foregoing, so long as no Event of Default shall have
occurred and be continuing, the Collateral Agent shall from time
to time, upon the request of the Obligor, execute and deliver any
instruments, certificates or other documents, in the form so
requested, which the Obligor shall have certified are appropriate
(in its reasonable judgment) to allow it to take any action
permitted above (including relinquishment of the license provided
pursuant to Section 2.02 as to any specific Intellectual
Property). The exercise of rights, remedies, powers and
privileges under Article VI by the Collateral Agent shall not
terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Obligor in accordance with
the first sentence of this Section 2.07.
2.08 Instruments.
So long as no Default or Event of Default shall have
occurred and be continuing, the Obligor may retain for collection
in the ordinary course of business any Instruments obtained by it
in the ordinary course of business, and the Collateral Agent
shall, promptly upon the request, and at the expense of the
Obligor, make appropriate arrangements for making any Instruments
pledged by the Obligor available to the Obligor for purposes of
presentation, collection or renewal. Any such arrangement shall
be effected, to the extent deemed appropriate by the Collateral
Agent, against trust receipt or like document.
2.09 Use of Collateral.
So long as no Event of Default shall have occurred and be
continuing, the Obligor shall, in addition to its rights under
Sections 2.06, 2.07 and 2.08 hereof and Section 6.17 of the Note
Purchase Agreement, in respect of the Collateral contemplated in
those sections, be entitled to use and possess the other
Collateral and to exercise its rights, title and interest in all
contracts, agreements, licenses and governmental approvals,
subject to the rights, remedies, powers and privileges of the
Collateral Agent under Articles III and VI and to such use,
possession or exercise not otherwise constituting a Default.
2.10 Rights and Obligations.
(a) The Obligor shall remain liable to perform its duties
and obligations under the contracts and agreements included in
the Collateral in accordance with their respective terms to the
same extent as if this Agreement had not been executed and
delivered. The exercise by the Collateral Agent of any right,
remedy, power or privilege in respect of this Agreement shall not
release the Obligor from any of its duties and obligations under
such contracts and agreements and the Obligor shall save,
indemnify and keep the Collateral Agent harmless from and against
all expense, loss or damage suffered by reason of such exercise.
The Collateral Agent shall have no duty, obligation or liability
under such contracts and agreements or with respect to any
governmental approval included in the Collateral by reason of
this Agreement or any other Loan Document, nor shall the
Collateral Agent be obligated to perform any of the duties or
obligations of the Obligor under any such contract or agreement
or any such governmental approval or to take any action to
collect or enforce any claim (for payment) under any such
contract or agreement or governmental approval.
(b) No Lien granted by this Agreement in the
Obligor's right, title and interest in any contract, agreement or
governmental approval shall be deemed to be a consent by the
Collateral Agent to any such contract, agreement or governmental
approval.
(c) No reference in this Agreement to proceeds or
to the sale or other disposition of Collateral shall authorize
the Obligor to sell or otherwise dispose of any Collateral except
to the extent otherwise expressly permitted by the terms of any
Loan Document.
(d) The Collateral Agent shall not be required to
take steps necessary to preserve any rights against prior parties
to any part of the Collateral.
2.11 Release of Motor Vehicles.
So long as no Default shall have occurred and be continuing,
upon the request of, and at the expense of, the Obligor, the
Collateral Agent shall execute and deliver to the Obligor such
instruments as the Obligor shall reasonably request to remove the
notation of the Collateral Agent as lienholder on any certificate
of title for any Motor Vehicle; provided that any such
instruments shall be delivered, and the release shall be
effective, only upon receipt by the Collateral Agent of a
certificate from the Obligor stating that the Motor Vehicle the
Lien on which is to be released is to be sold or has suffered a
casualty loss (with title passing to the appropriate casualty
insurance company in settlement of the claim for such loss).
2.12 Termination.
When all Secured Obligations shall have been indefeasibly
paid in full, this Agreement shall terminate, and the Collateral
Agent shall, at the expense of the Obligor, forthwith cause to be
assigned, transferred and delivered, against receipt but without
any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect of the
Collateral, to or on the order of the Obligor and to be released,
canceled and granted back all licenses and rights referred to in
Section 2.02. The Collateral Agent shall also, at the expense of
the Obligor, execute and deliver to the Obligor upon such
termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and
such other documentation as shall be reasonably requested by the
Obligor to effect the termination and release of the Liens
granted by this Agreement on the Collateral.
Article III. Cash Proceeds of Collateral.
3.01 Collateral Account.
There is hereby established with the Collateral Agent a cash
collateral account (the "Collateral Account") in the name and
under the exclusive domain and control of the Collateral Agent
into which there shall be deposited from time to time the cash
proceeds of any of the Collateral (including proceeds resulting
from insurance or condemnation) required to be delivered to the
Collateral Agent pursuant to this Agreement and into which the
Obligor may from time to time deposit any additional amounts
which it wishes to pledge to the Collateral Agent as additional
collateral security under this Agreement. The balance from time
to time in the Collateral Account shall constitute part of the
Collateral and shall not constitute payment of the Secured
Obligations until applied as provided in this Agreement. If any
Event of Default shall have occurred and be continuing, the
Collateral Agent may in its discretion apply (subject to
collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Secured
Obligations in the manner specified in Article VI. The balance
from time to time in the Collateral Account shall be subject to
withdrawal only as provided in this Agreement.
3.02 Certain Proceeds.
(a) If any Default or Event of Default shall have occurred
and be continuing, the Obligor shall, upon request of the
Collateral Agent, promptly notify (and the Obligor hereby
authorizes the Collateral Agent so to notify) each account debtor
in respect of any Accounts or Instruments that such Collateral
has been assigned to the Collateral Agent under this Agreement
and that any payments due or to become due in respect of such
Collateral are to be made directly to the Collateral Agent. All
such payments made to the Collateral Agent shall be immediately
deposited in the Collateral Account.
(b) The Obligor agrees that if the proceeds of
any Collateral (including payments made in respect of Accounts
and Instruments) shall be received by it following the occurrence
and during the continuation of a Default, the Obligor shall as
promptly as possible deposit such proceeds into the Collateral
Account. Until so deposited, all such proceeds shall be held in
trust by the Obligor for and as the property of the Collateral
Agent and shall not be commingled with any other funds or
property of the Obligor.
3.03 Investment of Balance in Collateral Account.
Amounts on deposit in the Collateral Account shall be
invested from time to time in such Permitted Investments as the
Obligor (or, if any Default or Event of Default shall have
occurred and be continuing, the Collateral Agent) shall
determine. All such investments shall be held in the name and be
under the control of the Collateral Agent. At any time after the
occurrence and during the continuance of an Event of Default, the
Collateral Agent may in its discretion at any time and from time
to time elect to liquidate any such investments and to apply or
cause to be applied the proceeds of such action to the payment of
the Secured Obligations in the manner specified in Article VI.
Article IV. Representations and Warranties.
The Obligor hereby represents and warrants to the Collateral
Agent for the benefit of the Holders as follows:
4.01 Title.
The Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement,
and, except as set forth in Schedule 4.01, such Collateral is
free and clear of all Liens. The first priority Liens granted by
this Agreement in favor of the Collateral Agent for the benefit
of the Collateral Agent and the Holders have attached and, upon
filing of the respective financing statements in the
jurisdictions listed on Annex II, this Agreement is effective to
create a perfected first priority security interest in all of
such Collateral prior to all other Liens. With respect to the
Pledged Stock, the Pledged Debt and the cash in the Collateral
Account, the pledge of such Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in
such Collateral in favor of the Collateral Agent for the benefit
of the Holders.
4.02 Securities Collateral.
(a) The Pledged Stock presently owned by the Obligor is duly
authorized, validly existing, fully paid and nonassessable, and
none of such Pledged Stock is subject to any contractual
restriction, or any restriction under the charter or by-laws of
the respective Issuer of such Pledged Stock, upon the transfer of
such Pledged Stock (except for any such restriction contained in
any Loan Document). The Pledged Debt pledged by the Obligor has
been duly authorized, authenticated or issued and delivered, and
is the legal, valid and binding obligation of the issuers
thereof, and is not in default. The Pledged Debt constitutes all
of the outstanding Indebtedness for money borrowed or for the
deferred purchase price of property owed to the Obligor by any of
its Subsidiaries or Affiliates.
(b) The Pledged Stock pledged by the Obligor
constitutes all of the issued and outstanding shares of capital
stock of any class of the Issuers beneficially owned by the
Obligor on the Signing Date (whether or not registered in the
name of the Obligor).
4.03 Intellectual Property.
(a) Except pursuant to licenses and other user agreements
entered into by the Obligor in the ordinary course of business,
the Obligor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any
Copyright, Patent or Trademark constituting Intellectual
Property.
(b) The Obligor owns any Trademarks registered in
the United States of America to which the last sentence of the
definition of Trademark Collateral applies.
4.04 Goods.
Any goods now or hereafter manufactured or otherwise
produced by the Obligor or any of its Subsidiaries included in
the Collateral have been and will be produced in compliance with
the requirements of the Fair Labor Standards Act.
Article V. Covenants.
5.01 Books and Records.
The Obligor shall: (a) keep full and accurate books and
records relating to the Collateral and stamp or otherwise mark
such books and records in such manner as the Collateral Agent may
reasonably require in order to reflect the Liens granted by this
Agreement; (b) furnish to the Collateral Agent from time to time
(but, unless a Default shall have occurred and be continuing, no
more frequently than quarterly) statements and schedules further
identifying and describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such other reports in
connection with the Copyright Collateral, the Patent Collateral
and the Trademark Collateral, as the Collateral Agent may
reasonably request, all in reasonable detail; (c) prior to
filing, either directly or through an agent, licensee or other
designee, any application for any Copyright, Patent or Trademark,
furnish to the Collateral Agent prompt notice of such proposed
filing; and (d) permit representatives of the Collateral Agent,
upon reasonable notice, at any time during normal business hours
to inspect and make abstracts from its books and records
pertaining to the Collateral, permit representatives of the
Collateral Agent to be present at the Obligor's place of business
to receive copies of all communications and remittances relating
to the Collateral and forward copies of any notices or
communications received by the Obligor with respect to the
Collateral, all in such manner as the Collateral Agent may
reasonably request.
5.02 Removals, Etc.
Without at least 30 days' prior written notice to the
Collateral Agent, the Obligor shall (i) not maintain any of its
books and records with respect to the Collateral at any office or
maintain its principal place of business at any place, or permit
any Inventory or Equipment to be located anywhere, other than (a)
at the address initially indicated for notices to it under
Article VII, (b) at one of the other business locations presently
owned or operated by the Obligor or any of its Affiliates and
identified in Annex II or III or (c) in transit from one of such
locations to another, or (ii) change its corporate name, or the
name under which it does business, from the name shown on the
signature pages to this Agreement, provided that the Company
shall be permitted to consummate the reincorporation merger
whereby the Company would merge with a Delaware Subsidiary of the
Company to change the Company's state of incorporation from
Florida to Delaware (as described in the Notice of Special
Meeting of Stockholders and Proxy Statement filed by the Company
with the SEC on September 18, 1998).
5.03 Stock Collateral.
The Obligor will cause the Stock Collateral to constitute at
all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligor shall
cause all such shares to be duly authorized, validly issued,
fully paid and nonassessable and to be free of any contractual
restriction or any restriction under the charter or bylaws of the
respective Issuer of such Stock Collateral, upon the transfer of
such Stock Collateral (except for any such restriction contained
in any Loan Document). The Obligor agrees that it will (i) cause
each issuer of the Pledged Stock not to issue any shares of stock
or other securities in addition to or in substitution for the
Pledged Stock, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all
additional shares of capital stock issued to the Obligor (the
"Additional Stock") and any and all Additional Debt, and (iii)
promptly (and in any event within three business days) deliver to
the Collateral Agent an amendment to this Agreement, duly
executed by the Obligor, in respect of the Additional Shares or
Additional Debt, together with all certificates, notes or other
instruments representing or evidencing the same. The Obligor
agrees that all Additional Shares and Additional Debt listed on
any such amendment delivered to the Collateral Agent shall for
all purposes hereunder constitute Pledged Stock and Pledged Debt,
respectively, and (iii) is deemed to have made, upon such
delivery, the representations and warranties contained in Article
IV hereof with respect to such Collateral.
5.04 Intellectual Property.
(a) The Obligor (either itself or through licensees) will,
for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such
Trademark on each and every trademark class of goods applicable
to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in
full force and effect free from any claim of abandonment for
nonuse, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration and (iv)
not (and not permit any licensee or sublicensee to) do any act or
knowingly omit to do any act whereby any Trademark material to
the conduct of its business may become invalidated.
(b) The Obligor (either itself or through
licensees) will not do any act or knowingly omit to do any act
whereby any Patent material to the conduct of its business may
become abandoned or dedicated.
(c) The Obligor shall notify the Collateral Agent
immediately if it knows or has reason to know that any
Intellectual Property material to the conduct of its business may
become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such
determination or development in, any proceeding before any
governmental Person) regarding the Obligor's ownership of any
Intellectual Property material to its business, its right to
copyright, patent or register the same (as the case may be), or
its right to keep, use and maintain the same.
(d) The Obligor will take all necessary steps
that are consistent with good business practices in any
proceeding before any appropriate governmental Person to maintain
and pursue each application relating to any Intellectual Property
(and to obtain the relevant registrations) and to maintain each
registration material to the conduct of its business, including
payment of maintenance fees, filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In the event that any Intellectual Property
material to the conduct of its business is infringed,
misappropriated or diluted by a third party, the Obligor shall
notify the Collateral Agent within ten days after it learns of
such event and shall, if consistent with good business practice,
promptly sue for infringement, misappropriation or dilution, seek
temporary restraints and preliminary injunctive relief to the
extent practicable, seek to recover any and all damages for such
infringement, misappropriation or dilution and take such other
actions as are appropriate under the circumstances to protect
such Collateral.
(f) The Obligor shall prosecute diligently any
application for any Intellectual Property pending as of the date
of this Agreement or thereafter made until the termination of
this Agreement, make application on uncopyrighted but
copyrightable material, unpatented but patentable inventions and
unregistered but registrable Trademarks and preserve and maintain
all rights in applications for any Intellectual Property;
provided, however, that the Obligor shall have no obligation to
make any such application if making such application would be
unnecessary or imprudent in the good faith business judgment of
the Obligor. Any expenses incurred in connection with such an
application shall be borne by the Obligor.
(g) The Collateral Agent shall have the right but
shall in no way be obligated to bring suit in its own name to
enforce the Copyrights, Patents and Trademarks and any license
under such Intellectual Property, in which event the Obligor
shall, at the request of the Collateral Agent, do any and all
lawful acts and execute and deliver any and all proper documents
required by the Collateral Agent in aid of such enforcement
action.
Article VI. Remedies.
6.01 Events of Default, Etc.
If any Event of Default shall have occurred and be
continuing:
(a) the Collateral Agent in its discretion may
require the Obligor to, and the Obligor shall, assemble the
Collateral owned by it at such place or places, reasonably
convenient to both the Collateral Agent and the Obligor,
designated in the Collateral Agent's request;
(b) the Collateral Agent in its discretion may
make any reasonable compromise or settlement it deems desirable
with respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify
the terms of, all or any part of the Collateral;
(c) the Collateral Agent in its discretion may,
in its name or in the name of the Obligor or otherwise, demand,
sue for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for all or any
part of the Collateral, but shall be under no obligation to do
so;
(d) the Collateral Agent in its discretion may,
upon five business days' prior written notice to the Obligor of
the time and place, with respect to all or any part of the
Collateral which shall then be or shall thereafter come into the
possession, custody or control of the Collateral Agent, or its
agents, sell, lease or otherwise dispose of all or any part of
such Collateral, at such place or places as the Collateral Agent
deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale,
without demand of performance or notice of intention to effect
any such disposition or of time or place of any such sale (except
such notice as is required above or by applicable statute and
cannot be waived), and the Collateral Agent or any other Person
may be the purchaser, lessee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent
permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind,
including any right or equity of redemption (statutory or
otherwise), of the Obligor, any such demand, notice and right or
equity being hereby expressly waived and released. In the event
of any sale, license or other disposition of any of the Trademark
Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be
included, and the Obligor shall supply to the Collateral Agent or
its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its
discretion may exercise, all of the rights, remedies, powers and
privileges with respect to the Collateral of a secured party
under the Uniform Commercial Code (whether or not the Uniform
Commercial Code is in effect in the jurisdiction where such
rights, remedies, powers and privileges are asserted) and such
additional rights, remedies, powers and privileges to which a
secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in
respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to
exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Collateral Agent were the
sole and absolute owner of the Collateral (and the Obligor agrees
to take all such action as may be appropriate to give effect to
such right).
The proceeds of, and other realization upon, the
Collateral by virtue of the exercise of remedies under this
Section 6.01 and of the exercise of the license granted to the
Collateral Agent in Section 2.02 shall be applied in accordance
with Section 6.04.
6.02 Deficiency.
If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section
6.01 and of the exercise of the license granted to the Collateral
Agent in Section 2.02 are insufficient to cover the costs and
expenses (including attorneys fees) of such exercise and the
payment in full of the other Secured Obligations, the Obligor
shall remain liable for any deficiency.
6.03 Private Sale.
(a) The Collateral Agent shall incur no liability as a
result of the sale, lease or other disposition of all or any part
of the Collateral at any private sale pursuant to Section 6.01
conducted in a commercially reasonable manner. The Obligor
hereby waives any claims against the Collateral Agent arising by
reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than
the aggregate amount of the Secured Obligations, even if the
Collateral Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of
certain prohibitions contained in the Securities Act and
applicable state securities laws, the Collateral Agent may be
compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account,
for investment and not with a view to distribution or resale.
The Obligor acknowledges that any such private sales may be at
prices and on terms less favorable to the Collateral Agent than
those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to
permit the respective Issuer of such Collateral to register it
for public sale.
6.04 Application of Proceeds.
Except as otherwise expressly provided in this Agreement and
except as provided below in this Section 6.04, the proceeds of,
or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under Section 6.01 or of the
exercise of the license granted in Section 2.02, and any other
cash at the time held by the Collateral Agent under Article III
or this Article VI, shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of such
exercise of remedies, including reasonable out-of-pocket costs
and expenses of the Collateral Agent, the fees and expenses of
its agents and counsel and all other expenses incurred and
advances made by the Collateral Agent in that connection;
Second, to the Collateral Agent for amounts due and unpaid
on the Notes for principal and interest and all other amounts due
and unpaid under the Loan Documents including the Make-Whole
Amount; and
Third, to the Obligor or any other obligor on the Notes, as
their interests may appear, or as a court of competent
jurisdiction may direct.
As used in this Article VI, "proceeds" of Collateral shall
mean cash, securities and other property realized in respect of,
and distributions in kind of, Collateral, including any property
received under any bankruptcy, reorganization or other similar
proceeding as to the Obligor or any issuer of, or account debtor
or other obligor on, any of the Collateral.
Article VII. Miscellaneous.
7.01 Waiver.
No failure on the part of the Collateral Agent or any Holder
to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this
Agreement shall operate as a waiver of such right, remedy, power
or privilege, nor shall any single or partial exercise of any
right, remedy, power or privilege under this Agreement preclude
any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided
in this Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
7.02 Notices.
All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered
personally, by telecopy or sent by registered mail, postage
prepaid to:
if to the Obligor: INAMED Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
7.03 Expenses, Etc.
The Obligor agrees to pay or to reimburse the Collateral
Agent for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Collateral Agent
in any effort to enforce any of the provisions of Article VI, or
any of the obligations of the Obligor in respect of the
Collateral or in connection with (a) the preservation of the Lien
of, or the rights of the Collateral Agent under this Agreement or
(b) any actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in
respect of, or care of, the Collateral, including all such costs
and expenses (and reasonable attorney's fees and expenses)
incurred in any bankruptcy, reorganization, workout or other
similar proceeding.
7.04 Amendments.
This Agreement may be amended as to the Collateral Agent and
its respective successors and assigns, and the Obligor may take
any action herein prohibited, or omit to perform any act required
to be performed by it, if the Obligor shall obtain the written
consent of the Collateral Agent. This Agreement may not be
waived, changed, modified, or discharged orally, but only by an
agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
7.05 Successors and Assigns.
All covenants and agreements contained herein shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
7.06 Survival.
All covenants, agreements, representations and warranties
contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby
shall survive the Closing and the delivery of the Loan Documents,
regardless of any investigation made by or on behalf of any
party.
7.07 Agreements Superseded.
Except with respect to express references to other Loan
Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
7.08 Severability.
If any term, provision, covenant or restriction of this
Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement and such exhibits shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which
may be hereafter declared invalid, void or unenforceable.
7.09 Captions.
The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of
any provision of this Agreement.
7.10 Counterparts.
This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have
been signed by each party and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart.
7.11 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF
THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
7.12 Submission to Jurisdiction
. If any action, proceeding or litigation shall be brought
by the Collateral Agent in order to enforce any right or remedy
under this Agreement, the Obligor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern
District of New York on the date of this Agreement. The Obligor
hereby irrevocably waives any objection, including, but not
limited to, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
7.13. Service of Process
. Nothing herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the
Obligor in any other jurisdiction.
7.14. WAIVER OF JURY TRIAL
. THE OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered as of the day and year first
above written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
APPALOOSA MANAGEMENT, L.P.
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
Exhibit 99.7
GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT (this "Agreement")
dated as of September 30, 1998, is made by the certain
Subsidiaries of INAMED Corporation, a Florida corporation (the
"Company") that are signatories hereto and who execute a Joinder
hereto in the form of Exhibit A hereto (collectively, the
"Obligors") and APPALOOSA MANAGEMENT, L.P., as collateral agent
(the "Collateral Agent") for the benefit of the holders of the
Company's 10.00% Senior Secured Notes due March 31, 1999 or, at
the option of the Company exercised as provided therein,
September 1, 2000 (the "Notes").
RECITALS
A. Pursuant to the Note Purchase Agreement, dated as of the
date hereof (as amended, supplemented, restated or otherwise
modified from time to time, the "Note Purchase Agreement"), among
the purchasers listed on Exhibit A thereto (the "Purchasers"),
the Collateral Agent and the Company, the Purchasers are
purchasing Notes from the Company in the aggregate principal
amount of $8,000,000 and Warrants to acquire up to 590,000 shares
of Common Stock with an exercise price of $6.50 per share (the
"Loan Warrants");
B. The Obligors are direct or indirect Subsidiaries of the
Company;
C. As a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes and the Loan Warrants, the
Purchasers required that the Obligors deliver this Agreement to
the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligors agree with the Collateral Agent as
follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms.
Unless otherwise defined, all capitalized terms used in this
Agreement that are defined in the Note Purchase Agreement
(including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note
Purchase Agreement. In addition, the following terms shall have
the following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in
Section 3.01(b).
"Breast Implant Litigation" shall mean the litigation in the
United States District Court for the Northern District of
Alabama, Southern Division stylized as "Silicone Gel Breast
Implant Products Liability Litigation (MDL926)."
"Capitalized Lease" shall mean, with respect to any Person,
any lease or any other agreement for the use of property which,
in accordance with generally accepted accounting principles,
should be capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be
determined, the amount of the liability capitalized or disclosed
(or which should be disclosed) in a balance sheet of such Person
in respect of a Capitalized Lease of such Person.
"Casualty Event" shall mean, with respect to any property of
any Person, any loss of or damage to, or any condemnation or
other taking of, such property for which such Person or any of
its Subsidiaries receives insurance proceeds, or proceeds of a
condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in
Section 3.01.
"Collateral Account" shall have the meaning assigned to that
term in Section 4.01.
"Copyright Collateral" shall mean all Copyrights, whether
now owned or hereafter acquired by any Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright
registrations, (b) all renewals and extensions of all copyrights,
copyright registrations and applications for copyright
registration and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in
Section 3.01(f).
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 7.1 of the Note Purchase
Agreement.
"Equipment" shall have the meaning assigned to that term in
Section 3.01(e).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments,
preemptive rights or agreements of any kind (including any
stockholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such
Person.
"Guaranteed Obligations" means any and all Obligations and
any and all obligations of the Company for the performance by it
of its agreements, covenants and undertakings under or in respect
of the Loan Documents.
"Holder" shall mean, at any time of reference, a Person in
whose name a Note is registered in the Note Register at such
time.
"Indebtedness" shall mean, with respect to any Person,
(i) all obligations of such Person for borrowed money, or with
respect to deposits or advances of any kind, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to
property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers
and similar accrued liabilities incurred in the ordinary course
of business and paid in a manner consistent with industry
practice), (v) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or
not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all
guarantees of such Person, (viii) all obligations (including but
not limited to reimbursement obligations) relating to the
issuance of letters of credit for the account of such Person,
(ix) all obligations arising out of foreign exchange contracts,
and (x) all obligations arising out of interest rate and currency
swap agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Instruments" shall have the meaning assigned to that term
in Section 3.01(c).
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all Patents, patent
applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all Copyrights
and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments of the foregoing (in whatever form or
medium) and (i) all licenses or agreements in connection with the
foregoing.
"Inventory" shall have the meaning assigned to that term in
Section 3.01(d).
"Issuers" shall mean, collectively, each Subsidiary,
directly or indirectly, of the Company that is the issuer (as
defined in the Uniform Commercial Code) of any shares of capital
stock now owned or hereafter acquired by any Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the
Notes, this Agreement, the Security Agreement, dated as of the
date hereof, by and between the Company and the Collateral Agent
(the "Security Agreement"), the Guarantee Agreement, dated as of
the date hereof, made by certain Subsidiaries of the Obligor in
favor of the Holders, and the Registration Rights Agreement,
dated as of the date hereof, by and between the Company and the
Purchasers and the Intercreditor Agreement, dated as of the date
hereof, by and between the Collateral Agent and the Trustee.
"Loan Warrants" shall have the meaning assigned to that term
in the Recitals.
"Make-Whole Amount" shall have the meaning assigned to that
term in the Note Purchase Agreement.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the property, business, prospects (including,
without limitation, the prospects for the settlement of the
Breast Implant Litigation), operations, earnings, assets,
liabilities or the condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, whether or not in
the ordinary course of business, (b) the ability of any Obligor
to perform its obligations under any of the Loan Documents to
which it is a party, (c) the validity or enforceability of any of
the Loan Documents, (d) the rights, remedies, powers and
privileges of the Holders under any of the Loan Documents or (e)
the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors,
trailers and other like property, whether or not the title to any
such property is governed by a certificate of title or ownership.
"Note Register" shall have the meaning ascribed thereto in
the Note Purchase Agreement.
"Obligations" shall mean the principal and interest due
under the Notes and all other obligations and liabilities of the
Company to the Holders of every nature whatsoever now existing or
hereafter arising, including, without limitation, all prepayment
premiums, indemnities, reimbursement obligations, fees, costs and
expenses, arising under or in connection the Loan Documents
(including, without limitation, any interest accruing subsequent
to (or that would accrue but for) the commencement of any
proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Company), and any
and all expenses which may be incurred by the Holders in
collecting any or all of the obligations of such Obligor under
this Agreement and/or enforcing any rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now
owned or hereafter acquired by any Obligor.
"Patents" shall mean, collectively, (a) all patents and
patent applications, (b) all reissues, divisions, continuations,
renewals, extensions and continuations-in-part of all patents or
patent applications and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages, and
other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or
with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, including all inventions
and improvements described or discussed in all such patents and
patent applications.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any of its agencies, or
obligations guaranteed as to principal and interest by the United
States of America, or of any of its agencies, in either case
maturing not more than 90 days from the date of acquisition of
such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank
or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust
business in the United States of America or any state and having
capital, surplus and undivided profits of at least $35,000,000,
maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A-1 or better or P-1 by Standard & Poor's
Corporation or Moody's Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition; and
(d) money market funds sponsored by commercial or investment
banks unaffiliated with the Company.
"Person" shall mean any individual, firm, corporation,
limited liability company, partnership, company or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
"Pledged Debt" shall have the meaning assigned to that term
in Section 3.01(a).
"Pledged Stock" shall have the meaning assigned to that term
in Section 3.01(a).
"SEC" shall mean the United States Securities and Exchange
Commission.
"Secured Obligations" shall mean (a) any and all Guaranteed
Obligations and (b) any and all obligations of the Obligors at
any time and from time to time for the performance of their
agreements, covenants and undertakings under or in respect of the
Loan Documents.
"Securities Collateral" means the Stock Collateral and the
Pledged Debt.
"Signing Date" shall mean the date on which a respective
Obligor shall sign and deliver this Agreement, whether directly
or through execution and delivery of a Joinder hereto.
"Stock Collateral" shall have the meaning assigned to that
term in Section 3.01(a).
"Trademark Collateral" shall mean all Trademarks, whether
now owned or hereafter acquired by any Obligor. Notwithstanding
the foregoing, the Trademark Collateral shall not include any
Trademark which would be rendered invalid, abandoned, void or
unenforceable by reason of its being included as part of the
Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark
registrations and applications for trademark and service mark
registrations, (b) all renewals and extensions of any of the
foregoing and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, together, in each case,
with the product lines and goodwill of the business connected
with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of New York from time to time or,
by reason of mandatory application, any other applicable
jurisdiction.
1.02 Interpretation.
In this Agreement, unless otherwise indicated, the singular
includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; references to "writing"
include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to
articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other
modifications by the terms of any Loan Document); and references
to Persons include their respective permitted successors and
assigns and, in the case of governmental Persons, Persons
succeeding to their respective functions and capacities.
Article II. Guarantee.
2.01 Guarantee.
(a) Subject to the limitation set forth in Section
2.08, each of the Obligors, as a primary obligor and not merely
as a surety, hereby jointly and severally guarantees to the
Holders the prompt and complete payment when due (whether at
stated maturity, by acceleration or otherwise) and performance of
the Guaranteed Obligations in each case strictly in accordance
with their terms. The Obligors hereby further jointly and
severally agree that if the Company shall fail to pay in full
when due (whether at stated maturity, by acceleration or
otherwise) all or any part of the Guaranteed Obligations, the
Obligors will immediately pay the same, without any demand or
notice whatsoever, and that in the case of any extension of time
of payment or renewal of all or any part of the Guaranteed
Obligations, the same will be timely paid in full when due
(whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal. The
obligations of the Obligors under this Article II are irrevocable
and unconditional in nature and are made with respect to any
Guaranteed Obligations now existing or in the future arising.
The Obligors' liability under this Agreement shall continue until
full satisfaction of all Guaranteed Obligations. The obligations
of the Obligors constitute a guarantee of due and punctual
payment and performance and not merely a guarantee of collection,
and each of the Obligors specifically agrees that it shall not be
necessary or required that the Holders exercise any right, assert
any claim or demand or enforce any remedy whatsoever against the
Company (or any other Person) before or as a condition to the
obligations of such Obligor hereunder.
(b) No payment or payments made by the Company or any
other Person or received or collected by the Holders from the
Company or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or
from time to time in reduction of or in payment of the Guaranteed
Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Obligors hereunder which
shall, notwithstanding any such payment or payments, remain
liable for the Guaranteed Obligations until the date upon which
the Guaranteed Obligations are fully performed and paid in full.
2.02 Acknowledgments, Waivers and Consents.
Each Obligor acknowledges that the obligations undertaken by
it under this Agreement involve the guarantee of obligations of
Persons other than such Obligor and that such obligations of such
Obligor are absolute, irrevocable and unconditional under any and
all circumstances. In full recognition and in furtherance of the
foregoing, each Obligor agrees that:
(a) Without affecting the enforceability or
effectiveness of this Agreement in accordance with its terms and
without affecting, limiting, reducing, discharging or terminating
the liability of such Obligor, or the rights, remedies, powers
and privileges of the Holders under this Agreement, the
Collateral Agent may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever: (i)
amend, supplement, modify, extend, renew, waive, accelerate or
otherwise change the time for payment or performance of, or the
terms of, all or any part of the Guaranteed Obligations
(including any increase or decrease in the rate or rates of
interest on all or any part of the Guaranteed Obligations); (ii)
amend, supplement, modify, extend, renew, waive or otherwise
change, or enter into or give, any Loan Document or any
agreement, security document, guarantee, approval, consent or
other instrument with respect to all or any part of the
Guaranteed Obligations, any Loan Document or any such other
instrument or any term or provision of the foregoing; (iii)
accept or enter into new or additional agreements, security
documents, guarantees or other instruments in addition to, in
exchange for or relative to any Loan Document, all or any part of
the Guaranteed Obligations or any collateral now or in the future
serving as security for the Guaranteed Obligations; (iv) accept
or receive (including from any other Obligor) partial payments or
performance on the Guaranteed Obligations (whether as a result of
the exercise of any right, remedy, power or privilege or
otherwise); (v) accept, receive and hold any additional
collateral for all or any part of the Guaranteed Obligations
(including from any other Obligor); (vi) release, reconvey,
terminate, waive, abandon, allow to lapse or expire, fail to
perfect, subordinate, exchange, substitute, transfer, foreclose
upon or enforce any collateral, security documents or guarantees
(including the obligations of any other Obligor) for or relative
to all or any part of the Guaranteed Obligations; (vii) apply any
collateral or the proceeds of any collateral or guarantee
(including the obligations of any other Obligor) to all or any
part of the Guaranteed Obligations in such manner and extent as
the Collateral Agent may in its discretion determine; (viii)
release any Person (including any other Obligor) from any
personal liability with respect to all or any part of the
Guaranteed Obligations; (ix) settle, compromise, release,
liquidate or enforce upon such terms and in such manner as the
Collateral Agent may determine or as applicable law may dictate
all or any part of the Guaranteed Obligations or any collateral
on or guarantee of all or any part of the Guaranteed Obligations
(including with any other Obligor); (x) consent to the merger or
consolidation of, the sale of substantial assets by, or other
restructuring or termination of the corporate existence of the
Company or any other Person (including any other Obligor); (xi)
proceed against the Company, such or any other Obligor or any
other guarantor of all or any part of the Guaranteed Obligations
or any collateral provided by any Person and exercise the rights,
remedies, powers and privileges of the Holders under the Loan
Documents or otherwise in such order and such manner as the
Collateral Agent may, in its discretion, determine, without any
necessity to proceed upon or against or exhaust any collateral,
right, remedy, power or privilege before proceeding to call upon
or otherwise enforce this Agreement as to any Obligor; (xii)
foreclose upon any deed of trust, mortgage or other instrument
creating or granting liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure,
bid any amount or make no bid in any foreclosure sale or make any
other election of remedies with respect to such liens or exercise
any right of set-off; (xiii) obtain the appointment of a receiver
with respect to any collateral for all or any part of the
Guaranteed Obligations and apply the proceeds of such
receivership as the Collateral Agent may in its discretion
determine (it being agreed that nothing in this clause (xiii)
shall be deemed to make the Collateral Agent a party in
possession in contemplation of law, except at its option); (xiv)
enter into such other transactions or business dealings with any
other Obligor, the Company, any Subsidiary or Affiliate of the
Company or any other guarantor of all or any part of the
Guaranteed Obligations as the Collateral Agent may desire; and
(xv) do all or any combination of the actions set forth in this
Section 2.02(a).
(b) The enforceability and effectiveness of this
Agreement and the liability of the Obligors, and the rights,
remedies, powers and privileges of the Holders and the Collateral
Agent, under this Agreement shall not be affected, limited,
reduced, discharged or terminated, and each Obligor hereby
expressly waives to the fullest extent permitted by law any
defense now or in the future arising, by reason of: (i) the
illegality, invalidity or unenforceability of all or any part of
the Guaranteed Obligations, any Loan Document or any agreement,
security document, guarantee or other instrument relative to all
or any part of the Guaranteed Obligations; (ii) any disability or
other defense with respect to all or any part of the Guaranteed
Obligations of the Company, any other Obligor or any other
guarantor of all or any part of the Guaranteed Obligations,
including the effect of any statute of limitations that may bar
the enforcement of all or any part of the Guaranteed Obligations
or the obligations of any such other guarantor; (iii) the
illegality, invalidity or unenforceability of any security or
guarantee for all or any part of the Guaranteed Obligations or
the lack of perfection or continuing perfection or failure of the
priority of any lien on any collateral for all or any part of the
Guaranteed Obligations; (iv) the cessation, for any cause
whatsoever, of the liability of the Company, any other Obligor or
any other guarantor of all or any part of the Guaranteed
Obligations (other than, subject to Section 2.05, by reason of
the full payment and performance of all Guaranteed Obligations);
(v) any failure of the Holders or the Collateral Agent to marshal
assets in favor of the Company or any other Person (including any
other Obligor), to exhaust any collateral for all or any part of
the Guaranteed Obligations, to pursue or exhaust any right,
remedy, power or privilege it may have against any other Obligor,
the Company, any other guarantor of all or any part of the
Guaranteed Obligations or any other Person or to take any action
whatsoever to mitigate or reduce such or any other Obligor's
liability under this Agreement, the Holders and the Collateral
Agent being under no obligation to take any such action
notwithstanding the fact that all or any part of the Guaranteed
Obligations may be due and payable and that the Company may be in
default of its obligations under any Loan Document; (vi) any
failure of the Holders or the Collateral Agent to give notice of
sale or other disposition of any Collateral (including any notice
of any judicial or nonjudicial foreclosure or sale of any
interest in real property serving as collateral for all or any
part of the Guaranteed Obligations) for all or any part of the
Guaranteed Obligations to the Company, any Obligor or any other
Person or any defect in, or any failure by any Obligor or any
other Person to receive, any notice that may be given in
connection with any sale or disposition of any Collateral; (vii)
any failure of the Holders or the Collateral Agent to comply with
applicable laws in connection with the sale or other disposition
of any Collateral for all or any part of the Guaranteed
Obligations; (viii) any judicial or nonjudicial foreclosure or
sale of, or other election of remedies with respect to, any
interest in real property or other Collateral serving as security
for all or any part of the Guaranteed Obligations, even though
such foreclosure, sale or election of remedies may impair the
subrogation rights of any Obligor or may preclude any Obligor
from obtaining reimbursement, contribution, indemnification or
other recovery from any other Obligor, the Company, any other
guarantor or any other Person and even though the Company may
not, as a result of such foreclosure, sale or election of
remedies, be liable for any deficiency; (ix) any benefits the
Company, any Obligor or any other guarantor may otherwise derive
from the laws of any jurisdiction of the nature of a "one-form-of-
action," "anti-deficiency" or "security-first" rule; (x) any act
or omission of the Holders, the Collateral Agent or any other
Person that directly or indirectly results in or aids the
discharge or release of the Company or any other Obligor of all
or any part of the Guaranteed Obligations or any security or
guarantee for all or any part of the Guaranteed Obligations by
operation of law or otherwise; (xi) any law which provides that
the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation; (xii) the possibility
that the obligations of the Company to the Holders or the
Collateral Agent may at any time and from time to time exceed the
aggregate liability of the Obligors under this Agreement; (xiii)
any counterclaim, set-off or other claim which the Company or any
other Obligor has or alleges to have with respect to all or any
part of the Guaranteed Obligations; (xiv) any failure of the
Holders or the Collateral Agent to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person; (xv)
the election by the Holders or the Collateral Agent, in any
bankruptcy proceeding of any Person, of the application or
nonapplication of Section 1111(b)(2) of the Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code; (xvii) any use of cash
collateral under Section 363 of the Bankruptcy Code; (xviii) any
agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any Lien in favor of the Holders or the
Collateral Agent for any reason; (xx) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person,
including any discharge of, or bar or stay against collecting,
all or any part of the Guaranteed Obligations (or any interest on
all or any part of the Guaranteed Obligations) in or as a result
of any such proceeding; (xxi) any action taken by the Collateral
Agent that is authorized by this Section 2.02 or otherwise in
this Agreement or by any other provision of any Loan Document or
any omission to take any such action; or (xxii) any other
circumstance whatsoever that might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor.
(c) Each Obligor expressly waives, for the benefit of
the Collateral Agent and the Holders, all set-offs and
counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor and all other notices or
demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this
Agreement or of the existence, creation, incurring or assumption
of new or additional Guaranteed Obligations. Each Obligor
further expressly waives the benefit of any and all statutes of
limitation and any and all laws providing for the exemption of
property from execution or for valuation and appraisal upon
foreclosure, to the maximum extent permitted by applicable law.
(d) Each Obligor represents and warrants to the
Holders that it has established adequate means of obtaining
financial and other information pertaining to the business,
operations and condition (financial and otherwise) of the Company
and its properties on a continuing basis and that such Obligor is
now and will in the future remain fully familiar with the
business, operations and condition (financial and otherwise) of
the Company and its properties. Each Obligor further represents
and warrants that it has reviewed and approved each of the Loan
Documents and is fully familiar with the transactions
contemplated by the Loan Documents and that it will in the future
remain fully familiar with such transactions and with any new
Loan Documents and the transactions contemplated by such Loan
Documents. Each Obligor hereby expressly waives and relinquishes
any duty on the part of the Holders (should any such duty exist)
to disclose to such or any other Obligor any matter of fact or
other information related to the business, operations or
condition (financial or otherwise) of the Company or its
properties or to any Loan Document or the transactions undertaken
pursuant to, or contemplated by, any such Loan Document, whether
now or in the future known by the Holders.
(e) Each Obligor intends that its rights and
obligations shall be those expressly set forth in this Agreement
and that its obligations shall not be affected, limited, reduced,
discharged or terminated by reason of any principles or
provisions of law which conflict with the terms of this
Agreement.
2.03 Understanding With Respect to Waivers and
Consents.
Each Obligor warrants and agrees that each of the waivers and
consents set forth in this Agreement are made voluntarily and
unconditionally after consultation with outside legal counsel and
with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right
waived may diminish, destroy or otherwise adversely affect rights
which such or any other Obligor otherwise may have against the
Company, the Holders, the Collateral Agent or any other Person or
against any Collateral. If, notwithstanding the intent of the
parties that the terms of this Agreement shall control in any and
all circumstances, any such waivers or consents are determined to
be unenforceable under applicable law, such waivers and consents
shall be effective to the maximum extent permitted by law.
2.04 Subrogation.
Notwithstanding any payment or payments made by the Obligors
hereunder, or any set-off or application of funds of the Obligors
by the Collateral Agent, no Obligors shall exercise any of the
rights of the Collateral Agent or any Holder which any Obligor
may acquire by way of subrogation, by any payment made hereunder,
by reason of such set-off or application of funds or otherwise,
against the Company or against any collateral security or
guarantee or right of set-off held by the Collateral Agent or any
Holder for the payment of the Guaranteed Obligations, and no
Obligor shall seek or be entitled to seek any contribution or
reimbursement from the Company in respect of payments made by the
Obligors hereunder, until all amounts owing to the Collateral
Agent and the Holders by the Company on account of the Guaranteed
Obligations are paid in full. If any amount shall be paid to any
Obligor on account of such subrogation rights at any time when
all of the Guaranteed Obligations shall not have been paid in
full, such amount shall be held by such Obligor in trust for the
Collateral Agent and the Holders, segregated from other funds of
such Obligor, and shall, forthwith upon receipt by such Obligor,
be turned over to the Collateral Agent in the exact form received
by such Obligor (duly indorsed by such Obligor to the Collateral
Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as
required by the applicable Loan Documents.
2.05 Reinstatement.
The obligations of each Obligor under this Article II shall
be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Company, any other
Obligor or any other Person or any other application of funds
(including the proceeds of any collateral for all or any part of
the Guaranteed Obligations) in respect of all or any part of the
Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of such Guaranteed Obligations, whether as a result
of any proceedings in bankruptcy, reorganization or otherwise and
the Obligors jointly and severally agree that it will indemnify
the Holders and the Collateral Agent on demand for all reasonable
costs and expenses (including fees and expenses of counsel)
incurred by the Holders in connection with such rescission or
restoration.
2.06 Remedies.
The Obligors hereby jointly and severally agree that,
between each of them and the Collateral Agent (for the benefit of
the Holders) the obligations of the Company under the Loan
Documents may be declared to be forthwith (or may become
automatically) due and payable as provided in Section 7.2 of the
Note Purchase Agreement for purposes of Section 2.01
notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations becoming due and
payable as against the Company) and that, in the event of such
declaration (or such obligation being deemed due and payable),
such obligations (whether or not due and payable by the Company)
shall forthwith become due and payable for purposes of Section
2.01.
2.07 Subordination of Indebtedness of the Company;
Security Interest.
(a) Each Obligor agrees that any indebtedness of the
Company now or in the future owed to such Obligor is hereby
subordinated to the Guaranteed Obligations. If the Collateral
Agent so requests, any such indebtedness shall be collected,
enforced and received by such Obligor as trustee for the
Collateral Agent and shall be paid over to the Collateral Agent
(for the benefit of the Holders) in kind on account of the
Guaranteed Obligations. If, after the Collateral Agent's
request, such Obligor fails to collect or enforce any such
indebtedness or to pay the proceeds of such indebtedness to the
Collateral Agent, the Collateral Agent as such Obligor's attorney-
in-fact may do such acts and sign such documents in such
Obligor's name and on such Obligor's behalf as the Collateral
Agent considers necessary or desirable to effect such collection,
enforcement or payment, the Collateral Agent being hereby
appointed such Obligor's attorney-in-fact for such purpose.
(b) Each Obligor hereby grants to the Collateral Agent
(for the benefit of the Holders) a security interest in any
indebtedness referred to in Section 2.07(a) and in any personal
property of the Company in which such Obligor now has or in the
future acquires any right, title or interest. Each Obligor
agrees that such security interest shall be additional security
for the Guaranteed Obligations and shall be superior to any right
of such Obligor in such property until the Guaranteed Obligations
have been fully satisfied and performed.
2.08 Limitation on Guarantee.
In any proceeding involving any state corporate law or any
state or federal bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the
obligations of the Obligors under Section 2.01 would otherwise be
held or determined to be void, invalid or unenforceable or if the
claims of the Holders in respect of such obligations would be
subordinated to the claims of any other creditors on account of
the Obligors' liability under Section 2.01, then, notwithstanding
any other provision of this Agreement to the contrary, the amount
of such liability shall, without any further action by the
Obligors, the Holders or any other Person, be automatically
limited and reduced to the highest amount which is valid and
enforceable and not subordinated to the claims of other creditors
as determined in such action or proceeding.
Article III. Collateral.
3.01 Grant.
As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise)
and performance of the Secured Obligations, each Obligor hereby
pledges and grants to the Collateral Agent, for the ratable
benefit of the Holders a security interest in all of such
Obligor's right, title and interest in and to the following
property, whether now owned or hereafter acquired by such Obligor
and whether now existing or hereafter coming into existence,
including, without limitation, all real and personal property and
interests in real and personal property (collectively, the
"Collateral"):
(a)(i) all of the shares of capital stock of the
Issuers now owned or hereafter acquired by such Obligor as set
forth in Schedule 3.01 together with in each case the
certificates representing the same (collectively, the "Pledged
Stock"); (ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of
capital in respect of, any of the Pledged Stock, resulting from a
split-up, revision, reclassification or other like change of any
of the Pledged Stock or otherwise received in exchange for any of
the Pledged Stock and all Equity Rights issued to the holders of,
or otherwise in respect of, any of the Pledged Stock; and (iii)
without affecting the obligations of any Obligor under any
provision prohibiting such action under any Loan Document, in the
event of any consolidation or merger in which any Issuer is not
the surviving corporation, all shares of each class of the
capital stock of the successor corporation (unless such successor
corporation is the Company itself) formed by or resulting from
such consolidation or merger (collectively, and together with the
property described in clauses (i) and (ii) above, the "Stock
Collateral"); (iv) the Indebtedness described in Annex I issued
by the obligors named therein (the "Pledged Debt"); (v) all
additional Indebtedness for money borrowed or for the deferred
purchase price of property from time to time owed to such Obligor
by any obligor of the Pledged Debt, and all additional
Indebtedness in excess of $25,000 for money borrowed or for the
deferred purchase price of property from time to time owed to
such Obligor by any other Person who, after the date of this
Agreement, becomes, as a result of any occurrence, a Subsidiary
of such Obligor or an Affiliate of such Obligor (any such
Indebtedness being "Additional Debt"); (vi) all notes or other
instruments evidencing the Indebtedness referred to in clauses
(iv) and (v) above;
(b) all accounts and general intangibles (each as
defined in the Uniform Commercial Code) of such Obligor
constituting a right to the payment of money, whether or not
earned by performance, including all moneys due and to become due
to such Obligor in repayment of any loans or advances, in payment
for goods (including Inventory and Equipment) sold or leased or
for services rendered, in payment of tax refunds and in payment
of any guarantee of any of the foregoing (collectively, the
"Accounts");
(c) all instruments, chattel paper or letters of
credit (each as defined in the Uniform Commercial Code) of such
Obligor evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts (collectively, the
"Instruments");
(d) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles)
of such Obligor that are held by such Obligor for sale, lease or
furnishing under a contract of service (including to its
Subsidiaries or Affiliates), that are so leased or furnished or
that constitute raw materials, work in process or material used
or consumed in its business, including all spare parts and
related supplies, all goods obtained by such Obligor in exchange
for any such goods, all products made or processed from any such
goods and all substances, if any, commingled with or added to any
such goods (collectively, the "Inventory");
(e) all equipment (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles)
of such Obligor that are used or bought for use primarily in its
business, including all spare parts and related supplies, all
goods obtained by such Obligor in exchange for any such goods,
all substances, if any, commingled with or added to such goods
and all upgrades and other improvements to such goods, in each
case to the extent not constituting Inventory (collectively, the
"Equipment");
(f) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of such Obligor covering,
evidencing or representing Inventory or Equipment (collectively,
the "Documents");
(g) all contracts and other agreements of such Obligor
relating to the sale or other disposition of all or any part of
the Inventory, Equipment or Documents and all rights, warranties,
claims and benefits of such Obligor against any Person arising
out of, relating to or in connection with all or any part of the
Inventory, Equipment or Documents of such Obligor, including any
such rights, warranties, claims or benefits against any Person
storing or transporting any such Inventory or Equipment or
issuing any such Documents;
(h) all other accounts or general intangibles of such
Obligor not constituting Accounts, including, to the extent
related to all or any part of the other Collateral, all books,
correspondence, credit files, records, invoices, tapes, cards,
computer runs and other papers and documents in the possession or
under the control of such Obligor or any computer bureau or
service company from time to time acting for such Obligor;
(i) the balance from time to time in the Collateral
Account;
(j) all other tangible and intangible property of such
Obligor, including all Intellectual Property; and
(k) all proceeds and products in whatever form of all
or any part of the other Collateral, including all proceeds of
insurance and all condemnation awards and all other compensation
for any Casualty Event with respect to all or any part of the
other Collateral (together with all rights to recover and proceed
with respect to the same), and all accessories to, substitutions
for and replacements of all or any part of the other Collateral.
3.02 Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise
its rights, remedies, powers and privileges under Article VII at
such time or times as the Collateral Agent shall be lawfully
entitled to exercise such rights, remedies, powers and
privileges, and for no other purpose, each Obligor hereby grants
to the Collateral Agent, to the extent assignable, an
irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Obligor) to use, assign,
license or sublicense any of the Intellectual Property of such
Obligor, together with reasonable access to all media in which
any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout of such
items.
3.03 Perfection.
Concurrently with the execution and delivery of this
Agreement, each Obligor shall (i) file such financing statements
and other documents in such offices as shall be necessary or as
the Collateral Agent may request to perfect and establish the
first priority (subject only to Liens permitted under Section 6.7
of the Note Purchase Agreement) of the Liens granted by this
Agreement (including promptly filing the Assignment for Security-
- -Trademarks and Patents, in the form executed on the date hereof
by the Obligors, in the United States Patent and Trademark
Office), (ii) deliver and pledge to the Collateral Agent any and
all Instruments, endorsed or accompanied by such instruments of
assignment and transfer in such form and substance as the
Collateral Agent may request, (iii) cause the Collateral Agent
(to the extent requested by the Collateral Agent) to be listed as
the lienholder on all certificates of title or ownership relating
to Motor Vehicles owned by such Obligor and deliver to the
Collateral Agent originals of all such certificates of title or
ownership for the Motor Vehicles together with the odometer
statements for each respective Motor Vehicle, (iv) deliver and
pledge to the Collateral Agent all certificates for the Pledged
Stock and notes, instruments or other documents evidencing the
Pledged Debt, accompanied by undated stock or bond powers, as the
case may be, duly executed in blank and (v) take all such other
actions as shall be necessary or as the Collateral Agent may
request to perfect and establish the first priority (subject only
to such Permitted Liens) of the Liens granted by this Agreement.
The Collateral Agent shall have the right, at any time in its
discretion and with notice to the Company, to transfer to or to
register in its name or in the name of any of its nominees any or
all of the Pledged Stock or Pledged Debt.
3.04 Preservation and Protection of Security Interests.
Each Obligor shall:
(a) upon the acquisition after the Signing Date by
such Obligor of any Securities Collateral, promptly either (x)
transfer and deliver to the Collateral Agent all such Securities
Collateral (together with the certificates or instruments
representing such Securities Collateral securities duly endorsed
in blank or accompanied by undated powers duly executed in blank)
or (y) take such other action as the Collateral Agent shall deem
necessary or appropriate to perfect, and establish the priority
of, the Liens granted by this Agreement in such Securities
Collateral;
(b) upon the acquisition after the Signing Date by
such Obligor of any Instrument, promptly deliver and pledge to
the Collateral Agent all such Instruments, endorsed or
accompanied by such instruments of assignment and transfer in
such form and substance as the Collateral Agent may request;
(c) upon the acquisition after the Signing Date by
such Obligor of any Equipment or Motor Vehicle covered by a
certificate of title or ownership, promptly cause the Collateral
Agent to be listed as the lienholder on such certificate of title
and within 45 days of the acquisition of such property deliver
evidence of the same to the Collateral Agent;
(d) upon such Obligor's acquiring, or otherwise
becoming entitled to the benefits of, any Copyright (or
copyrightable material), Patent (or patentable invention),
Trademark (or associated goodwill) or other Intellectual Property
or upon or prior to such Obligor's filing, either directly or
through any agent, licensee or other designee, of any application
with any governmental Person for any Copyright, Patent,
Trademark, or other Intellectual Property, in each case after the
Signing Date, execute and deliver such contracts, agreements and
other instruments as the Collateral Agent may request to
evidence, validate, perfect and establish the first priority
(subject only to Liens permitted under Section 6.7 of the Note
Purchase Agreement) of the Liens granted by this Agreement in
such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other
instruments, obtain any and all governmental approvals and take
any and all steps that may be necessary or as the Collateral
Agent may request to create, perfect, establish the first
priority (subject only to Liens permitted under Section 6.7 of
the Note Purchase Agreement) of, or to preserve the validity,
perfection or first priority (subject only to such Permitted
Liens) of, the Liens granted by this Agreement or to enable the
Collateral Agent to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such
Liens, including causing any or all of the Securities Collateral
to be transferred of record into the name of the Collateral Agent
or its nominee (and the Collateral Agent agrees that if any
Securities Collateral is transferred into its name or the name of
its nominee, the Collateral Agent will thereafter promptly give
to such Obligor copies of any notices and communications received
by it with respect to the Stock Collateral pledged by such
Obligor), provided that notices to account debtors in respect of
any Accounts or Instruments shall be subject to the provisions of
Section 4.02(b).
3.05 Attorney-in-Fact.
(a) Subject to the rights of such Obligor under
Sections 3.06, 3.07, 3.08 and 3.09, the Collateral Agent is
hereby appointed the attorney-in-fact of each Obligor for the
purpose of carrying out the provisions of this Agreement and
taking any action and executing any instruments which the
Collateral Agent may deem necessary or advisable to accomplish
the purposes of this Agreement, to preserve the validity,
perfection and first priority (subject only to Liens permitted
under Section 6.7 of the Note Purchase Agreement) of the Liens
granted by this Agreement and, following any Default, to exercise
its rights, remedies, powers and privileges under this Agreement.
This appointment as attorney-in-fact is irrevocable and coupled
with an interest. Without limiting the generality of the
foregoing, the Collateral Agent shall be entitled under this
Agreement upon the occurrence and continuation of any Event of
Default (or, in respect of Section 4.02(b), any Default) (i) to
ask, demand, collect, sue for, recover, receive and give receipt
and discharge for amounts due and to become due under and in
respect of all or any part of the Collateral; (ii) to receive,
endorse and collect any Instruments or other drafts, instruments,
documents and chattel paper in connection with clause (i) above
(including any draft or check representing the proceeds of
insurance or the return of unearned premiums); (iii) to file any
claims or take any action or proceeding that the Collateral Agent
may deem necessary or advisable for the collection of all or any
part of the Collateral, including the collection of any
compensation due and to become due under any contract or
agreement with respect to all or any part of the Collateral; and
(iv) to execute, in connection with any sale or disposition of
the Collateral under Article VII, any endorsements, assignments,
bills of sale or other instruments of conveyance or transfer with
respect to all or any part of the Collateral. In any suit,
proceeding or action brought by the Collateral Agent relating to
any Account, contract or Instrument for any sum owing thereunder,
or to enforce any provision of any Account, contract or
Instrument, the Obligors, jointly and severally, will save,
indemnify and keep the Collateral Agent harmless from and against
all expense, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability
whatsoever of the obligor thereunder, arising out of a breach by
any Obligor of any obligation thereunder or arising out of any
other agreement, Indebtedness or liability at any time owing to,
or in favor of, such obligor or its successors from the Obligors,
and all such obligations of the Obligors shall be and remain
enforceable against and only against the Obligors and shall not
be enforceable against the Collateral Agent.
(b) Without limiting the rights and powers of the
Collateral Agent under Section 3.05(a), each Obligor hereby
appoints the Collateral Agent as its attorney-in-fact, effective
the Signing Date and terminating upon the termination of this
Agreement, for the purpose of (i) executing on behalf of such
Obligor title or ownership applications for filing with
appropriate state agencies to enable Motor Vehicles now owned or
hereafter acquired by such Obligor to be retitled and the
Collateral Agent to be listed as lienholder as to such Motor
Vehicles, (ii) filing such applications with such state agencies
and (iii) executing such other documents and instruments on
behalf of, and taking such other action in the name of, such
Obligor as the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement (including the
purpose of creating in favor of the Collateral Agent a first
priority perfected lien on the Motor Vehicles and exercising the
rights and remedies of the Collateral Agent under Article VII).
This appointment as attorney-in-fact is irrevocable and coupled
with an interest.
(c) Without limiting the rights and powers of the
Collateral Agent under Section 3.05(a), each Obligor hereby
appoints the Collateral Agent as its attorney-in-fact, effective
the Signing Date and terminating upon the termination of this
Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by
Section 3.04(d). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
3.06 Special Provisions Relating to Securities
Collateral.
(a) So long as no Event of Default shall have occurred
and be continuing, the Obligors shall have the right to exercise
all voting, consensual and other powers of ownership pertaining
to the Securities Collateral for all purposes not inconsistent
with the terms of any Loan Document, provided that the Obligors
jointly and severally agree that they will not vote the
Securities Collateral in any manner that is inconsistent with the
terms of any Loan Document; and the Collateral Agent shall, at
the Obligors' expense, execute and deliver to the Obligors or
cause to be executed and delivered to the Obligors all such
proxies, powers of attorney, dividends and other orders and other
instruments, without recourse, as the Obligors may reasonably
request for the purpose of enabling the Obligors to exercise the
rights and powers which they are entitled to exercise pursuant to
this Section 3.06(a).
(b) So long as no Event of Default shall have occurred
and be continuing, the Obligors shall be entitled to receive and
retain any dividends or distributions on the Securities
Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Collateral
Agent exercise any available right to declare any Secured
Obligation due and payable or seek or pursue any other right,
remedy, power or privilege available to them under applicable
law, this Agreement or any other Loan Document, all dividends and
other distributions on the Securities Collateral shall be paid
directly to the Collateral Agent and retained by it in the
Collateral Account as part of the Securities Collateral, subject
to the terms of this Agreement, and, if the Collateral Agent
shall so request, the Obligors jointly and severally agree to
execute and deliver to the Collateral Agent appropriate
additional dividend, distribution and other orders and
instruments to that end, provided that if such Event of Default
is cured, any such dividend or distribution paid to the
Collateral Agent prior to such cure shall, upon request of the
Obligors (except to the extent applied to the Secured
Obligations), be returned by the Collateral Agent to the
Obligors.
3.07 Use of Intellectual Property.
Subject to such action not otherwise constituting a Default
and so long as no Event of Default shall have occurred and be
continuing, the Obligors will be permitted to exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in
the ordinary course of the business of the Obligors. In
furtherance of the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Collateral Agent shall
from time to time, upon the request of the Obligors through the
Company, execute and deliver any instruments, certificates or
other documents, in the form so requested, which such Obligors
through the Company shall have certified are appropriate (in
their reasonable judgment) to allow them to take any action
permitted above (including relinquishment of the license provided
pursuant to Section 3.02 as to any specific Intellectual
Property). The exercise of rights, remedies, powers and
privileges under Article VII by the Collateral Agent shall not
terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Obligors in accordance
with the first sentence of this Section 3.07.
3.08 Instruments.
So long as no Default or Event of Default shall have
occurred and be continuing, each Obligor may retain for
collection in the ordinary course of business any Instruments
obtained by it in the ordinary course of business, and the
Collateral Agent shall, promptly upon the request, and at the
expense of, such Obligor through the Company, make appropriate
arrangements for making any Instruments pledged by the Obligors
available to the respective Obligor for purposes of presentation,
collection or renewal. Any such arrangement shall be effected,
to the extent deemed appropriate by the Collateral Agent, against
trust receipt or like document.
3.09 Use of Collateral.
So long as no Event of Default shall have occurred and be
continuing, each Obligor shall, in addition to its rights under
Sections 3.06, 3.07 and 3.08 hereof and Section 6.17 of the Note
Purchase Agreement, in respect of the Collateral contemplated in
those sections, be entitled to use and possess the other
Collateral and to exercise its rights, title and interest in all
contracts, agreements, licenses and governmental approvals,
subject to the rights, remedies, powers and privileges of the
Collateral Agent under Articles IV and VII and to such use,
possession or exercise not otherwise constituting a Default.
3.10 Rights and Obligations.
(a) Each Obligor shall remain liable to perform its
duties and obligations under the contracts and agreements
included in the Collateral in accordance with their respective
terms to the same extent as if this Agreement had not been
executed and delivered. The exercise by the Collateral Agent of
any right, remedy, power or privilege in respect of this
Agreement shall not release any Obligor from any of its duties
and obligations under such contracts and agreements and the
Obligors shall save, indemnify and keep the Collateral Agent
harmless from and against all expense, loss or damage suffered by
reason of such exercise. The Collateral Agent shall have no
duty, obligation or liability under such contracts and agreements
or with respect to any governmental approval included in the
Collateral by reason of this Agreement or any other Loan
Document, nor shall the Collateral Agent be obligated to perform
any of the duties or obligations of any Obligor under any such
contract or agreement or any such governmental approval or to
take any action to collect or enforce any claim (for payment)
under any such contract or agreement or governmental approval.
(b) No Lien granted by this Agreement in the Obligors'
right, title and interest in any contract, agreement or
governmental approval shall be deemed to be a consent by the
Collateral Agent to any such contract, agreement or governmental
approval.
(c) No reference in this Agreement to proceeds or to
the sale or other disposition of Collateral shall authorize any
Obligor to sell or otherwise dispose of any Collateral except to
the extent otherwise expressly permitted by the terms of any Loan
Document.
(d) The Collateral Agent shall not be required to take
steps necessary to preserve any rights against prior parties to
any part of the Collateral.
3.11 Release of Motor Vehicles.
So long as no Default shall have occurred and be continuing,
upon the request of, and at the expense of, any Obligor, the
Collateral Agent shall execute and deliver to such Obligor such
instruments as such Obligor shall reasonably request to remove
the notation of the Collateral Agent as lienholder on any
certificate of title for any Motor Vehicle; provided that any
such instruments shall be delivered, and the release shall be
effective, only upon receipt by the Collateral Agent of a
certificate from such Obligor stating that the Motor Vehicle the
Lien on which is to be released is to be sold or has suffered a
casualty loss (with title passing to the appropriate casualty
insurance company in settlement of the claim for such loss).
3.12 Termination.
When all Secured Obligations shall have been indefeasibly
paid in full, this Agreement shall (subject, however, to Section
2.05) terminate, and the Collateral Agent shall, at the expense
of the respective Obligor, forthwith cause to be assigned,
transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect of the Collateral, to or
on the order of the respective Obligors and to be released,
canceled and granted back all licenses and rights referred to in
Section 3.02. The Collateral Agent shall also, at the expense of
the respective Obligor, execute and deliver to the respective
Obligors upon such termination such Uniform Commercial Code
termination statements, certificates for terminating the Liens on
the Motor Vehicles and such other documentation as shall be
reasonably requested by the respective Obligors to effect the
termination and release of the Liens granted by this Agreement on
the Collateral.
Article IV. Cash Proceeds of Collateral.
4.01 Collateral Account.
There is hereby established with the Collateral Agent a cash
collateral account (the "Collateral Account") in the name and
under the exclusive domain and control of the Collateral Agent
into which there shall be deposited from time to time the cash
proceeds of any of the Collateral (including proceeds resulting
from insurance or condemnation) required to be delivered to the
Collateral Agent pursuant to this Agreement and into which any
Obligor may from time to time deposit any additional amounts
which it wishes to pledge to the Collateral Agent as additional
collateral security under this Agreement. The balance from time
to time in the Collateral Account shall constitute part of the
Collateral and shall not constitute payment of the Secured
Obligations until applied as provided in this Agreement. If any
Event of Default shall have occurred and be continuing, the
Collateral Agent may in its discretion apply (subject to
collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Secured
Obligations in the manner specified in Article VII. The balance
from time to time in the Collateral Account shall be subject to
withdrawal only as provided in this Agreement.
4.02 Certain Proceeds.
(a) If any Default or Event of Default shall have
occurred and be continuing, each Obligor shall, upon request of
the Collateral Agent, promptly notify (and such Obligor hereby
authorizes the Collateral Agent so to notify) each account debtor
in respect of any Accounts or Instruments that such Collateral
has been assigned to the Collateral Agent under this Agreement
and that any payments due or to become due in respect of such
Collateral are to be made directly to the Collateral Agent. All
such payments made to the Collateral Agent shall be immediately
deposited in the Collateral Account.
(b) Each Obligor agrees that if the proceeds of any
Collateral (including payments made in respect of Accounts and
Instruments) shall be received by it following the occurrence and
during the continuation of a Default, such Obligor shall as
promptly as possible deposit such proceeds into the Collateral
Account. Until so deposited, all such proceeds shall be held in
trust by each Obligor for and as the property of the Collateral
Agent and shall not be commingled with any other funds or
property of such Obligor.
4.03 Investment of Balance in Collateral Account.
Amounts on deposit in the Collateral Account shall be
invested from time to time in such Permitted Investments as the
Obligors through the Company (or, if any Default or Event of
Default shall have occurred and be continuing, the Collateral
Agent) shall determine. All such investments shall be held in
the name and be under the control of the Collateral Agent. At
any time after the occurrence and during the continuance of an
Event of Default, the Collateral Agent may in its discretion at
any time and from time to time elect to liquidate any such
investments and to apply or cause to be applied the proceeds of
such action to the payment of the Secured Obligations in the
manner specified in Article VII.
Article V. Representations and Warranties.
Each Obligor hereby represents and warrants to the
Collateral Agent for the benefit of the Holders as follows:
5.01 Title.
Such Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement,
and, except as set forth in Schedule 5.01, such Collateral is
free and clear of all Liens. The first priority Liens granted by
this Agreement in favor of the Collateral Agent for the benefit
of the Collateral Agent and the Holders have attached and, upon
filing of the respective financing statements in the
jurisdictions listed on Annex II, this Agreement is effective to
create a perfected first priority security interest in all of
such Collateral prior to all other Liens. With respect to the
Pledged Stock, the Pledged Debt and the cash in the Collateral
Account, the pledge of such Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in
such Collateral in favor of the Collateral Agent for the benefit
of the Holders.
5.02 Securities Collateral.
(a) The Pledged Stock presently owned by such Obligor
is duly authorized, validly existing, fully paid and
nonassessable, and none of such Pledged Stock is subject to any
contractual restriction, or any restriction under the charter or
by-laws of the respective Issuer of such Pledged Stock, upon the
transfer of such Pledged Stock (except for any such restriction
contained in any Loan Document). The Pledged Debt pledged by
such Obligor has been duly authorized, authenticated or issued
and delivered, and is the legal, valid and binding obligation of
the issuers thereof, and is not in default. The Pledged Debt
constitutes all of the outstanding Indebtedness for money
borrowed or for the deferred purchase price of property owed to
such Obligor by any of its Subsidiaries or Affiliates.
(b) The Pledged Stock pledged by such Obligor
constitutes all of the issued and outstanding shares of capital
stock of any class of the Issuers beneficially owned by such
Obligor on the Signing Date (whether or not registered in the
name of such Obligor).
5.03 Intellectual Property.
(a) Except pursuant to licenses and other user
agreements entered into by such Obligor in the ordinary course of
business, such Obligor owns and possesses the right to use, and
has done nothing to authorize or enable any other Person to use,
any Copyright, Patent or Trademark constituting Intellectual
Property.
(b) No Obligor owns any Trademarks registered in the
United States of America to which the last sentence of the
definition of Trademark Collateral applies.
5.04 Goods.
Any goods now or hereafter manufactured or otherwise
produced by any Obligor or any of its Subsidiaries included in
the Collateral have been and will be produced in compliance with
the requirements of the Fair Labor Standards Act.
Article VI. Covenants.
6.01 Books and Records.
Each Obligor shall: (a) keep full and accurate books and
records relating to the Collateral and stamp or otherwise mark
such books and records in such manner as the Collateral Agent may
reasonably require in order to reflect the Liens granted by this
Agreement; (b) furnish to the Collateral Agent from time to time
(but, unless a Default shall have occurred and be continuing, no
more frequently than quarterly) statements and schedules further
identifying and describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such other reports in
connection with the Copyright Collateral, the Patent Collateral
and the Trademark Collateral, as the Collateral Agent may
reasonably request, all in reasonable detail; (c) prior to
filing, either directly or through an agent, licensee or other
designee, any application for any Copyright, Patent or Trademark,
furnish to the Collateral Agent prompt notice of such proposed
filing; and (d) permit representatives of the Collateral Agent,
upon reasonable notice, at any time during normal business hours
to inspect and make abstracts from its books and records
pertaining to the Collateral, permit representatives of the
Collateral Agent to be present at such Obligor's place of
business to receive copies of all communications and remittances
relating to the Collateral and forward copies of any notices or
communications received by such Obligor with respect to the
Collateral, all in such manner as the Collateral Agent may
reasonably request.
6.02 Removals, Etc.
Without at least 30 days' prior written notice to the
Collateral Agent, each Obligor shall (i) not maintain any of its
books and records with respect to the Collateral at any office or
maintain its principal place of business at any place, or permit
any Inventory or Equipment to be located anywhere, other than (a)
at the address initially indicated for notices to it under
Article VIII, (b) at one of the other business locations
presently owned or operated by such Obligor or any of its
Affiliates and identified in Annex II or III or (c) in transit
from one of such locations to another, or (ii) change its
corporate name, or the name under which it does business, from
the name shown on the signature pages to this Agreement, provided
that the Company shall be permitted to consummate the
reincorporation merger whereby the Company would merge with a
Delaware Subsidiary of the Company to change the Company's state
of incorporation from Florida to Delaware (as described in the
Notice of Special Meeting of Stockholders and Proxy Statement
filed by the Company with the SEC on September 18, 1998).
6.03 Stock Collateral.
The Obligors will cause the Stock Collateral to constitute
at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligors
shall cause all such shares to be duly authorized, validly
issued, fully paid and nonassessable and to be free of any
contractual restriction or any restriction under the charter or
bylaws of the respective Issuer of such Stock Collateral, upon
the transfer of such Stock Collateral (except for any such
restriction contained in any Loan Document). Such Obligor agrees
that it will (i) cause each issuer of the Pledged Stock not to
issue any shares of stock or other securities in addition to or
in substitution for the Pledged Stock, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of capital stock issued to
such Obligor (the "Additional Stock") and any and all Additional
Debt, and (iii) promptly (and in any event within three business
days) deliver to the Collateral Agent an amendment to this
Agreement, duly executed by such Obligor, in respect of the
Additional Shares or Additional Debt, together with all
certificates, notes or other instruments representing or
evidencing the same. Such Obligor agrees that all Additional
Shares and Additional Debt listed on any such amendment delivered
to the Collateral Agent shall for all purposes hereunder
constitute Pledged Stock and Pledged Debt, respectively, and
(iii) is deemed to have made, upon such delivery, the
representations and warranties contained in Article IV hereof
with respect to such Collateral.
6.04 Intellectual Property.
(a) Each Obligor (either itself or through licensees)
will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such
Trademark on each and every trademark class of goods applicable
to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in
full force and effect free from any claim of abandonment for
nonuse, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration and (iv)
not (and not permit any licensee or sublicensee to) do any act or
knowingly omit to do any act whereby any Trademark material to
the conduct of its business may become invalidated.
(b) Each Obligor (either itself or through licensees)
will not do any act or knowingly omit to do any act whereby any
Patent material to the conduct of its business may become
abandoned or dedicated.
(c) Each Obligor shall notify the Collateral Agent
immediately if it knows or has reason to know that any
Intellectual Property material to the conduct of its business may
become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such
determination or development in, any proceeding before any
governmental Person) regarding each Obligor's ownership of any
Intellectual Property material to its business, its right to
copyright, patent or register the same (as the case may be), or
its right to keep, use and maintain the same.
(d) Each Obligor will take all necessary steps that
are consistent with good business practices in any proceeding
before any appropriate governmental Person to maintain and pursue
each application relating to any Intellectual Property (and to
obtain the relevant registrations) and to maintain each
registration material to the conduct of its business, including
payment of maintenance fees, filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In the event that any Intellectual Property
material to the conduct of its business is infringed,
misappropriated or diluted by a third party, each Obligor shall
notify the Collateral Agent within ten days after it learns of
such event and shall, if consistent with good business practice,
promptly sue for infringement, misappropriation or dilution, seek
temporary restraints and preliminary injunctive relief to the
extent practicable, seek to recover any and all damages for such
infringement, misappropriation or dilution and take such other
actions as are appropriate under the circumstances to protect
such Collateral.
(f) Each Obligor shall prosecute diligently any
application for any Intellectual Property pending as of the date
of this Agreement or thereafter made until the termination of
this Agreement, make application on uncopyrighted but
copyrightable material, unpatented but patentable inventions and
unregistered but registrable Trademarks and preserve and maintain
all rights in applications for any Intellectual Property;
provided, however, that the Obligors shall have no obligation to
make any such application if making such application would be
unnecessary or imprudent in the good faith business judgment of
the respective Obligor. Any expenses incurred in connection with
such an application shall be borne by the Obligors.
(g) The Collateral Agent shall have the right but
shall in no way be obligated to bring suit in its own name to
enforce the Copyrights, Patents and Trademarks and any license
under such Intellectual Property, in which event each Obligor
shall, at the request of the Collateral Agent, do any and all
lawful acts and execute and deliver any and all proper documents
required by the Collateral Agent in aid of such enforcement
action.
Article VII. Remedies.
7.01 Events of Default, Etc.
Without limitation on the rights, remedies, powers and
privileges of the Collateral Agent under Article II, if any Event
of Default shall have occurred and be continuing:
(a) the Collateral Agent in its discretion may require
each Obligor to, and each Obligor shall, assemble the Collateral
owned by it at such place or places, reasonably convenient to
both the Collateral Agent and such Obligor, designated in the
Collateral Agent's request;
(b) the Collateral Agent in its discretion may make
any reasonable compromise or settlement it deems desirable with
respect to any of the Collateral and may extend the time of
payment, arrange for payment in installments, or otherwise modify
the terms of, all or any part of the Collateral;
(c) the Collateral Agent in its discretion may, in its
name or in the names of the Obligors or otherwise, demand, sue
for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for all or any part of
the Collateral, but shall be under no obligation to do so;
(d) the Collateral Agent in its discretion may, upon
five business days' prior written notice to the Obligors of the
time and place, with respect to all or any part of the Collateral
which shall then be or shall thereafter come into the possession,
custody or control of the Collateral Agent, or its agents, sell,
lease or otherwise dispose of all or any part of such Collateral,
at such place or places as the Collateral Agent deems best, for
cash, for credit or for future delivery (without thereby assuming
any credit risk) and at public or private sale, without demand of
performance or notice of intention to effect any such disposition
or of time or place of any such sale (except such notice as is
required above or by applicable statute and cannot be waived),
and the Collateral Agent or any other Person may be the
purchaser, lessee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind,
including any right or equity of redemption (statutory or
otherwise), of the Obligors, any such demand, notice and right or
equity being hereby expressly waived and released. In the event
of any sale, license or other disposition of any of the Trademark
Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be
included, and the Obligors shall supply to the Collateral Agent
or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time
or place to which the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its
discretion may exercise, all of the rights, remedies, powers and
privileges with respect to the Collateral of a secured party
under the Uniform Commercial Code (whether or not the Uniform
Commercial Code is in effect in the jurisdiction where such
rights, remedies, powers and privileges are asserted) and such
additional rights, remedies, powers and privileges to which a
secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in
respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to
exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Collateral Agent were the
sole and absolute owner of the Collateral (and each Obligor
agrees to take all such action as may be appropriate to give
effect to such right).
The proceeds of, and other realization upon, the Collateral
by virtue of the exercise of remedies under this Section 7.01 and
of the exercise of the license granted to the Collateral Agent in
Section 3.02 shall be applied in accordance with Section 7.04.
7.02 Deficiency.
If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section
7.01 and of the exercise of the license granted to the Collateral
Agent in Section 3.02 are insufficient to cover the costs and
expenses (including attorneys fees) of such exercise and the
payment in full of the other Secured Obligations, the Obligors
shall remain liable for any deficiency.
7.03 Private Sale.
(a) The Collateral Agent shall incur no liability as a
result of the sale, lease or other disposition of all or any part
of the Collateral at any private sale pursuant to Section 7.01
conducted in a commercially reasonable manner. Each Obligor
hereby waives any claims against the Collateral Agent arising by
reason of the fact that the price at which the Collateral may
have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than
the aggregate amount of the Secured Obligations, even if the
Collateral Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
(b) The Obligors recognize that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Collateral, to
limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and
not with a view to distribution or resale. The Obligors
acknowledge that any such private sales may be at prices and on
terms less favorable to the Collateral Agent than those
obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private
sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to
permit the respective Issuer of such Collateral to register it
for public sale.
7.04 Application of Proceeds.
Except as otherwise expressly provided in this Agreement and
except as provided below in this Section 7.04, the proceeds of,
or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under Section 7.01 or of the
exercise of the license granted in Section 3.02, and any other
cash at the time held by the Collateral Agent under Article IV or
this Article VII, shall be applied by the Collateral Agent:
First, to the payment of the costs and expenses of such
exercise of remedies, including reasonable out-of-pocket costs
and expenses of the Collateral Agent, the fees and expenses of
its agents and counsel and all other expenses incurred and
advances made by the Collateral Agent in that connection;
Second, to the Collateral Agent for amounts due and unpaid
on the Notes for principal and interest and all other amounts due
and unpaid under the Loan Documents including the Make-Whole
Amount; and
Third, to the Company, the Obligors or any other obligors on
the Notes, as their interests may appear, or as a court of
competent jurisdiction may direct.
As used in this Article VII, "proceeds" of Collateral shall
mean cash, securities and other property realized in respect of,
and distributions in kind of, Collateral, including any property
received under any bankruptcy, reorganization or other similar
proceeding as to any Obligor or any issuer of, or account debtor
or other obligor on, any of the Collateral.
Article VIII. Miscellaneous.
8.01 Waiver.
No failure on the part of the Collateral Agent or any Holder
to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this
Agreement shall operate as a waiver of such right, remedy, power
or privilege, nor shall any single or partial exercise of any
right, remedy, power or privilege under this Agreement preclude
any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided
in this Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
8.02 Notices.
All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered
personally, by telecopy or sent by registered mail, postage
prepaid to:
if to the Obligors: INAMED Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
8.03 Expenses, Etc.
The Obligors jointly and severally agree to pay or to
reimburse the Collateral Agent for all costs and expenses
(including reasonable attorney's fees and expenses) that may be
incurred by the Collateral Agent in any effort to enforce any of
the provisions of Article II or Article VII, or any of the
obligations of the Obligors in respect of the Collateral or in
connection with (a) the preservation of the Lien of, or the
rights of the Collateral Agent under this Agreement or (b) any
actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in
respect of, or care of, the Collateral, including all such costs
and expenses (and reasonable attorney's fees and expenses)
incurred in any bankruptcy, reorganization, workout or other
similar proceeding.
8.04 Amendments.
This Agreement may be amended as to the Collateral Agent and
its respective successors and assigns, and the Obligors may take
any action herein prohibited, or omit to perform any act required
to be performed by it, if the Obligors shall obtain the written
consent of the Collateral Agent. This Agreement may not be
waived, changed, modified, or discharged orally, but only by an
agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
8.05 Successors and Assigns.
All covenants and agreements contained herein shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
8.06 Survival.
All covenants, agreements, representations and warranties
contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby
shall survive the Closing and the delivery of the Loan Documents,
regardless of any investigation made by or on behalf of any
party.
8.07 Agreements Superseded.
Except with respect to express references to other Loan
Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
8.08 Severability.
If any term, provision, covenant or restriction of this
Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement and such exhibits shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which
may be hereafter declared invalid, void or unenforceable.
8.09 Captions.
The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of
any provision of this Agreement.
8.10 Counterparts.
This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have
been signed by each party and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart.
8.11 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF
THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
8.12 Submission to Jurisdiction
If any action, proceeding or litigation shall be brought by
the Collateral Agent in order to enforce any right or remedy
under this Agreement, each Obligor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern
District of New York on the date of this Agreement. Each Obligor
hereby irrevocably waives any objection, including, but not
limited to, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
8.13. Service of Process
Nothing herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any
Obligor in any other jurisdiction.
8.14. Waiver Of Jury Trial
EACH OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered as of the day and year first
above written.
APPALOOSA MANAGEMENT, L.P.
By: /s/ Jim Bolin
Name: Jim Bolin
Title: Vice President
BIOENTERICS CORPORATION,
a California corporation
By: /s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
CUI CORPORATION,
a California corporation
By: /s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
FLOWMATRIX CORPORATION,
a California corporation
By: /s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
INAMED DEVELOPMENT COMPANY,
a California corporation
By: /s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL CORPORATION,
a California corporation
By: /s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
Exhibit 99.8
GUARANTEE AGREEMENT
This GUARANTEE (this "Agreement") dated as of September 30,
1998, is made by certain Subsidiaries of INAMED Corporation, a
Florida corporation (the "Company") that are signatories hereto
and who execute a Joinder hereto in the form of Exhibit A hereto
(collectively, the "Guarantors") in favor of the holders of the
Company's 10.00% Senior Secured Notes due March 31, 1999 or, at
the option of the Company exercised as provided therein,
September 1, 2000 (the "Notes") issued pursuant to the Note
Purchase Agreement, dated as of the date hereof, among the
purchasers listed on Exhibit A thereto (the "Purchasers"),
Appaloosa Management, L.P., as Collateral Agent and the Company
(the "Note Purchase Agreement").
RECITALS
A. Pursuant to the Note Purchase Agreement, the Purchasers are
purchasing Notes from the Company in the aggregate principal
amount of $8,000,000 and Warrants to acquire up to 590,000 shares
of Common Stock with an exercise price of $6.50 per share (the
"Loan Warrants");
B. The Guarantors are direct or indirect Subsidiaries of the
Company;
C. As a condition, and material inducement, to the Purchasers'
agreement to purchase the notes and the Loan Warrants, the
Purchasers required that the Guarantors execute this Agreement.
NOW, THEREFORE, in consideration of the premises and to
induce the Purchasers and the Collateral Agent to enter into the
Note Purchase Agreement, each Guarantor hereby agrees as follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms.
Unless otherwise defined, all capitalized terms used in this
Agreement that are defined in the Note Purchase Agreement
(including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note
Purchase Agreement. In addition, the following terms shall have
the following meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in
the Note Purchase Agreement.
"Guaranteed Obligations" means any and all Obligations and
any and all obligations of the Company for the performance by it
of its agreements, covenants and undertakings under or in respect
of the Loan Documents.
"Loan Documents" shall mean the Note Purchase Agreement, the
Notes, this Agreement, the Security Agreement, dated as of the
date hereof, between the Company and the Collateral Agent (the
"Security Agreement"), the Guarantee and Security Agreement,
dated as of the date hereof, by and between certain Subsidiaries
of the Company and the Collateral Agent (the "Guarantee and
Security Agreement"), the Registration Rights Agreement, dated as
of the date hereof, by and between the Company and the Purchasers
and the Intercreditor Agreement, dated as of the date hereof, by
and between the Collateral Agent and the Trustee.
"Loan Warrants" shall have the meaning assigned to that term
in the Recitals.
"Obligations" shall mean the principal and interest due
under the Notes and all other obligations and liabilities of the
Company to the Holders of every nature whatsoever now existing or
hereafter arising, including, without limitation, all prepayment
premiums, indemnities, reimbursement obligations, fees, costs and
expenses, arising under or in connection the Loan Documents
(including, without limitation, any interest accruing subsequent
to (or that would accrue but for) the commencement of any
proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Company), and any
and all expenses which may be incurred by the Holders in
collecting any or all of the obligations of such Guarantor under
this Agreement and/or enforcing any rights under this Agreement.
1.02 Interpretation.
In this Agreement, unless otherwise indicated, the singular
includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; references to "writing"
include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to
articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other
modifications by the terms of any Loan Document); and references
to Persons include their respective permitted successors and
assigns and, in the case of governmental Persons, Persons
succeeding to their respective functions and capacities.
Article II. Guarantee.
2.01 Guarantee.
(a) Subject to the limitation set forth in Section 2.08, each of
the Guarantors, as a primary guarantor and not merely as a
surety, hereby jointly and severally guarantees to the Holders
the prompt and complete payment when due (whether at stated
maturity, by acceleration or otherwise) and performance of the
Guaranteed Obligations in each case strictly in accordance with
their terms. The Guarantors hereby further jointly and severally
agree that if the Company shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) all or
any part of the Guaranteed Obligations, the Guarantors will
immediately pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of
payment or renewal of all or any part of the Guaranteed
Obligations, the same will be timely paid in full when due
(whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal. The
obligations of the Guarantors under this Article II are
irrevocable and unconditional in nature and are made with respect
to any Guaranteed Obligations now existing or in the future
arising. The Guarantors' liability under this Agreement shall
continue until full satisfaction of all Guaranteed Obligations.
The obligations of the Guarantors constitute a guarantee of due
and punctual payment and performance and not merely a guarantee
of collection, and each of the Guarantors specifically agrees
that it shall not be necessary or required that the Holders
exercise any right, assert any claim or demand or enforce any
remedy whatsoever against the Company (or any other Person)
before or as a condition to the obligations of such Guarantor
hereunder.
(b) No payment or payments made by the Company or any
other Person or received or collected by the Holders from the
Company or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or
from time to time in reduction of or in payment of the Guaranteed
Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantors hereunder which
shall, notwithstanding any such payment or payments, remain
liable for the Guaranteed Obligations until the date upon which
the Guaranteed Obligations are fully performed and paid in full.
2.02 Acknowledgments, Waivers and Consents.
Each Guarantor acknowledges that the obligations undertaken
by it under this Agreement involve the guarantee of obligations
of Persons other than such Guarantor and that such obligations of
such Guarantor are absolute, irrevocable and unconditional under
any and all circumstances. In full recognition and in
furtherance of the foregoing, each Guarantor agrees that:
(a) Without affecting the enforceability or
effectiveness of this Agreement in accordance with its terms and
without affecting, limiting, reducing, discharging or terminating
the liability of such Guarantor, or the rights, remedies, powers
and privileges of the Holders under this Agreement, the
Collateral Agent may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever: (i)
amend, supplement, modify, extend, renew, waive, accelerate or
otherwise change the time for payment or performance of, or the
terms of, all or any part of the Guaranteed Obligations
(including any increase or decrease in the rate or rates of
interest on all or any part of the Guaranteed Obligations); (ii)
amend, supplement, modify, extend, renew, waive or otherwise
change, or enter into or give, any Loan Document or any
agreement, security document, guarantee, approval, consent or
other instrument with respect to all or any part of the
Guaranteed Obligations, any Loan Document or any such other
instrument or any term or provision of the foregoing; (iii)
accept or enter into new or additional agreements, security
documents, guarantees or other instruments in addition to, in
exchange for or relative to any Loan Document, all or any part of
the Guaranteed Obligations or any collateral now or in the future
serving as security for the Guaranteed Obligations; (iv) accept
or receive (including from any other Guarantor) partial payments
or performance on the Guaranteed Obligations (whether as a result
of the exercise of any right, remedy, power or privilege or
otherwise); (v) accept, receive and hold any additional
collateral for all or any part of the Guaranteed Obligations
(including from any other Guarantor); (vi) release, reconvey,
terminate, waive, abandon, allow to lapse or expire, fail to
perfect, subordinate, exchange, substitute, transfer, foreclose
upon or enforce any collateral, security documents or guarantees
(including the obligations of any other Guarantor) for or
relative to all or any part of the Guaranteed Obligations; (vii)
apply any collateral or the proceeds of any collateral or
guarantee (including the obligations of any other Guarantor) to
all or any part of the Guaranteed Obligations in such manner and
extent as the Collateral Agent may in its discretion determine;
(viii) release any Person (including any other Guarantor) from
any personal liability with respect to all or any part of the
Guaranteed Obligations; (ix) settle, compromise, release,
liquidate or enforce upon such terms and in such manner as the
Collateral Agent may determine or as applicable law may dictate
all or any part of the Guaranteed Obligations or any collateral
on or guarantee of all or any part of the Guaranteed Obligations
(including with any other Guarantor); (x) consent to the merger
or consolidation of, the sale of substantial assets by, or other
restructuring or termination of the corporate existence of the
Company or any other Person (including any other Guarantor); (xi)
proceed against the Company, such or any other Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations
or any collateral provided by any Person and exercise the rights,
remedies, powers and privileges of the Holders under the Loan
Documents or otherwise in such order and such manner as the
Collateral Agent may, in its discretion, determine, without any
necessity to proceed upon or against or exhaust any collateral,
right, remedy, power or privilege before proceeding to call upon
or otherwise enforce this Agreement as to any Guarantor; (xii)
foreclose upon any deed of trust, mortgage or other instrument
creating or granting liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure,
bid any amount or make no bid in any foreclosure sale or make any
other election of remedies with respect to such liens or exercise
any right of set-off; (xiii) obtain the appointment of a receiver
with respect to any collateral for all or any part of the
Guaranteed Obligations and apply the proceeds of such
receivership as the Collateral Agent may in its discretion
determine (it being agreed that nothing in this clause (xiii)
shall be deemed to make the Collateral Agent a party in
possession in contemplation of law, except at its option); (xiv)
enter into such other transactions or business dealings with any
other Guarantor, the Company, any Subsidiary or Affiliate of the
Company or any other guarantor of all or any part of the
Guaranteed Obligations as the Collateral Agent may desire; and
(xv) do all or any combination of the actions set forth in this
Section 2.02(a).
(b) The enforceability and effectiveness of this
Agreement and the liability of the Guarantors, and the rights,
remedies, powers and privileges of the Holders and the Collateral
Agent, under this Agreement shall not be affected, limited,
reduced, discharged or terminated, and each Guarantor hereby
expressly waives to the fullest extent permitted by law any
defense now or in the future arising, by reason of: (i) the
illegality, invalidity or unenforceability of all or any part of
the Guaranteed Obligations, any Loan Document or any agreement,
security document, guarantee or other instrument relative to all
or any part of the Guaranteed Obligations; (ii) any disability or
other defense with respect to all or any part of the Guaranteed
Obligations of the Company, any other Guarantor or any other
guarantor of all or any part of the Guaranteed Obligations,
including the effect of any statute of limitations that may bar
the enforcement of all or any part of the Guaranteed Obligations
or the obligations of any such other guarantor; (iii) the
illegality, invalidity or unenforceability of any security or
guarantee for all or any part of the Guaranteed Obligations or
the lack of perfection or continuing perfection or failure of the
priority of any lien on any collateral for all or any part of the
Guaranteed Obligations; (iv) the cessation, for any cause
whatsoever, of the liability of the Company, any other Guarantor
or any other guarantor of all or any part of the Guaranteed
Obligations (other than, subject to Section 2.05, by reason of
the full payment and performance of all Guaranteed Obligations);
(v) any failure of the Holders or the Collateral Agent to marshal
assets in favor of the Company or any other Person (including any
other Guarantor), to exhaust any collateral for all or any part
of the Guaranteed Obligations, to pursue or exhaust any right,
remedy, power or privilege it may have against any other
Guarantor, the Company, any other guarantor of all or any part of
the Guaranteed Obligations or any other Person or to take any
action whatsoever to mitigate or reduce such or any other
Guarantor's liability under this Agreement, the Holders and the
Collateral Agent being under no obligation to take any such
action notwithstanding the fact that all or any part of the
Guaranteed Obligations may be due and payable and that the
Company may be in default of its obligations under any Loan
Document; (vi) any failure of the Holders or the Collateral Agent
to give notice of sale or other disposition of any Collateral
(including any notice of any judicial or nonjudicial foreclosure
or sale of any interest in real property serving as collateral
for all or any part of the Guaranteed Obligations) for all or any
part of the Guaranteed Obligations to the Company, any Guarantor
or any other Person or any defect in, or any failure by any
Guarantor or any other Person to receive, any notice that may be
given in connection with any sale or disposition of any
Collateral; (vii) any failure of the Holders or the Collateral
Agent to comply with applicable laws in connection with the sale
or other disposition of any Collateral for all or any part of the
Guaranteed Obligations; (viii) any judicial or nonjudicial
foreclosure or sale of, or other election of remedies with
respect to, any interest in real property or other Collateral
serving as security for all or any part of the Guaranteed
Obligations, even though such foreclosure, sale or election of
remedies may impair the subrogation rights of any Guarantor or
may preclude any Guarantor from obtaining reimbursement,
contribution, indemnification or other recovery from any other
Guarantor, the Company, any other guarantor or any other Person
and even though the Company may not, as a result of such
foreclosure, sale or election of remedies, be liable for any
deficiency; (ix) any benefits the Company, any Guarantor or any
other guarantor may otherwise derive from the laws of any
jurisdiction of the nature of a "one-form-of-action," "anti-
deficiency" or "security-first" rule; (x) any act or omission of
the Holders, the Collateral Agent or any other Person that
directly or indirectly results in or aids the discharge or
release of the Company or any other Guarantor of all or any part
of the Guaranteed Obligations or any security or guarantee for
all or any part of the Guaranteed Obligations by operation of law
or otherwise; (xi) any law which provides that the obligation of
a surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or
which reduces a surety's or guarantor's obligation in proportion
to the principal obligation; (xii) the possibility that the
obligations of the Company to the Holders or the Collateral Agent
may at any time and from time to time exceed the aggregate
liability of the Guarantors under this Agreement; (xiii) any
counterclaim, set-off or other claim which the Company or any
other Guarantor has or alleges to have with respect to all or any
part of the Guaranteed Obligations; (xiv) any failure of the
Holders or the Collateral Agent to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person; (xv)
the election by the Holders or the Collateral Agent, in any
bankruptcy proceeding of any Person, of the application or
nonapplication of Section 1111(b)(2) of the Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code; (xvii) any use of cash
collateral under Section 363 of the Bankruptcy Code; (xviii) any
agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any Lien in favor of the Holders or the
Collateral Agent for any reason; (xx) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person,
including any discharge of, or bar or stay against collecting,
all or any part of the Guaranteed Obligations (or any interest on
all or any part of the Guaranteed Obligations) in or as a result
of any such proceeding; (xxi) any action taken by the Collateral
Agent that is authorized by this Section 2.02 or otherwise in
this Agreement or by any other provision of any Loan Document or
any omission to take any such action; or (xxii) any other
circumstance whatsoever that might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor.
(c) Each Guarantor expressly waives, for the benefit
of the Collateral Agent and the Holders, all set-offs and
counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor and all other notices or
demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this
Agreement or of the existence, creation, incurring or assumption
of new or additional Guaranteed Obligations. Each Guarantor
further expressly waives the benefit of any and all statutes of
limitation and any and all laws providing for the exemption of
property from execution or for valuation and appraisal upon
foreclosure, to the maximum extent permitted by applicable law.
(d) Each Guarantor represents and warrants to the
Holders that it has established adequate means of obtaining
financial and other information pertaining to the business,
operations and condition (financial and otherwise) of the Company
and its properties on a continuing basis and that such Guarantor
is now and will in the future remain fully familiar with the
business, operations and condition (financial and otherwise) of
the Company and its properties. Each Guarantor further
represents and warrants that it has reviewed and approved each of
the Loan Documents and is fully familiar with the transactions
contemplated by the Loan Documents and that it will in the future
remain fully familiar with such transactions and with any new
Loan Documents and the transactions contemplated by such Loan
Documents. Each Guarantor hereby expressly waives and
relinquishes any duty on the part of the Holders (should any such
duty exist) to disclose to such or any other Guarantor any matter
of fact or other information related to the business, operations
or condition (financial or otherwise) of the Company or its
properties or to any Loan Document or the transactions undertaken
pursuant to, or contemplated by, any such Loan Document, whether
now or in the future known by the Holders.
(e) Each Guarantor intends that its rights and
obligations shall be those expressly set forth in this Agreement
and that its obligations shall not be affected, limited, reduced,
discharged or terminated by reason of any principles or
provisions of law which conflict with the terms of this
Agreement.
2.03 Understanding With Respect to Waivers and
Consents.
Each Guarantor warrants and agrees that each of the waivers
and consents set forth in this Agreement are made voluntarily and
unconditionally after consultation with outside legal counsel and
with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right
waived may diminish, destroy or otherwise adversely affect rights
which such or any other Guarantor otherwise may have against the
Company, the Holders, the Collateral Agent or any other Person or
against any Collateral. If, notwithstanding the intent of the
parties that the terms of this Agreement shall control in any and
all circumstances, any such waivers or consents are determined to
be unenforceable under applicable law, such waivers and consents
shall be effective to the maximum extent permitted by law.
2.04 Subrogation.
Notwithstanding any payment or payments made by the
Guarantors hereunder, or any set-off or application of funds of
the Guarantors by the Collateral Agent, no Guarantors shall
exercise any of the rights of the Collateral Agent or any Holder
which any Guarantor may acquire by way of subrogation, by any
payment made hereunder, by reason of such set-off or application
of funds or otherwise, against the Company or against any
collateral security or guarantee or right of set-off held by the
Collateral Agent or any Holder for the payment of the Guaranteed
Obligations, and no Guarantor shall seek or be entitled to seek
any contribution or reimbursement from the Company in respect of
payments made by the Guarantors hereunder, until all amounts
owing to the Collateral Agent and the Holders by the Company on
account of the Guaranteed Obligations are paid in full. If any
amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Guaranteed
Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Collateral Agent and
the Holders, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over
to the Collateral Agent in the exact form received by such
Guarantor (duly indorsed by such Guarantor to the Collateral
Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as
required by the applicable Loan Documents.
2.05 Reinstatement.
The obligations of each Guarantor under this Article II
shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Company, any other
Guarantor or any other Person or any other application of funds
(including the proceeds of any collateral for all or any part of
the Guaranteed Obligations) in respect of all or any part of the
Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of such Guaranteed Obligations, whether as a result
of any proceedings in bankruptcy, reorganization or otherwise and
the Guarantors jointly and severally agree that it will indemnify
the Holders and the Collateral Agent on demand for all reasonable
costs and expenses (including fees and expenses of counsel)
incurred by the Holders in connection with such rescission or
restoration.
2.06 Remedies.
The Guarantors hereby jointly and severally agree that,
between each of them and the Collateral Agent (for the benefit of
the Holders) the obligations of the Company under the Loan
Documents may be declared to be forthwith (or may become
automatically) due and payable as provided in Section 7.2 of the
Note Purchase Agreement for purposes of Section 2.01
notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations becoming due and
payable as against the Company) and that, in the event of such
declaration (or such obligation being deemed due and payable),
such obligations (whether or not due and payable by the Company)
shall forthwith become due and payable for purposes of Section
2.01.
2.07 Subordination of Indebtedness of the Company;
Security Interest.
(a) Each Guarantor agrees that any indebtedness of the
Company now or in the future owed to such Guarantor is hereby
subordinated to the Guaranteed Obligations. If the Collateral
Agent so requests, any such indebtedness shall be collected,
enforced and received by such Guarantor as trustee for the
Collateral Agent and shall be paid over to the Collateral Agent
(for the benefit of the Holders) in kind on account of the
Guaranteed Obligations. If, after the Collateral Agent's
request, such Guarantor fails to collect or enforce any such
indebtedness or to pay the proceeds of such indebtedness to the
Collateral Agent, the Collateral Agent as such Guarantor's
attorney-in-fact may do such acts and sign such documents in such
Guarantor's name and on such Guarantor's behalf as the Collateral
Agent considers necessary or desirable to effect such collection,
enforcement or payment, the Collateral Agent being hereby
appointed such Guarantor's attorney-in-fact for such purpose.
(b) Each Guarantor hereby grants to the Collateral
Agent (for the benefit of the Holders) a security interest in any
indebtedness referred to in Section 2.07(a) and in any personal
property of the Company in which such Guarantor now has or in the
future acquires any right, title or interest. Each Guarantor
agrees that such security interest shall be additional security
for the Guaranteed Obligations and shall be superior to any right
of such Guarantor in such property until the Guaranteed
Obligations have been fully satisfied and performed.
2.08 Limitation on Guarantee.
In any proceeding involving any state corporate law or any
state or federal bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the
obligations of the Guarantors under Section 2.01 would otherwise
be held or determined to be void, invalid or unenforceable or if
the claims of the Holders in respect of such obligations would be
subordinated to the claims of any other creditors on account of
the Guarantors' liability under Section 2.01, then,
notwithstanding any other provision of this Agreement to the
contrary, the amount of such liability shall, without any further
action by the Guarantors, the Holders or any other Person, be
automatically limited and reduced to the highest amount which is
valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
Article III. Covenants.
3.01 Books and Records.
Each Guarantor shall: (a) keep full and accurate books and
records relating to its business; and (b) permit representatives
of the Collateral Agent, upon reasonable notice, at any time
during normal business hours to inspect and make abstracts from
its books and records pertaining to financial matters, in such
manner as the Collateral Agent may request.
Article IV. Miscellaneous.
4.01 Waiver.
No failure on the part of the Collateral Agent or any Holder
to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this
Agreement shall operate as a waiver of such right, remedy, power
or privilege, nor shall any single or partial exercise of any
right, remedy, power or privilege under this Agreement preclude
any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided
in this Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
4.02 Notices.
All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered
personally, by telecopy or sent by registered mail, postage
prepaid to:
if to the Guarantors: INAMED Corporation
3800 Howard Hughes Parkway,
#900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
4.03 Expenses, Etc.
The Guarantors jointly and severally agree to pay or to
reimburse the Collateral Agent for all costs and expenses
(including reasonable attorney's fees and expenses) that may be
incurred by the Collateral Agent in any effort to enforce any of
the provisions of Article II, or any of the obligations of the
Guarantors in respect of the Collateral or in connection with (a)
the preservation of the Lien of, or the rights of the Collateral
Agent under this Agreement or (b) any actual or attempted sale,
lease, disposition, exchange, collection, compromise, settlement
or other realization in respect of, or care of, the Collateral,
including all such costs and expenses (and reasonable attorney's
fees and expenses) incurred in any bankruptcy, reorganization,
workout or other similar proceeding.
4.04 Amendments.
This Agreement may be amended as to the Collateral Agent and
its respective successors and assigns, and the Guarantors may
take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Guarantors shall obtain
the written consent of the Collateral Agent. This Agreement may
not be waived, changed, modified, or discharged orally, but only
by an agreement in writing signed by the party or parties against
whom enforcement of any waiver, change, modification or discharge
is sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
4.05 Successors and Assigns.
All covenants and agreements contained herein shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns.
4.06 Survival.
All covenants, agreements, representations and warranties
contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby
shall survive the Closing and the delivery of the Loan Documents,
regardless of any investigation made by or on behalf of any
party.
4.07 Agreements Superseded.
Except with respect to express references to other Loan
Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect
to the subject matter of this Agreement.
4.08 Severability.
If any term, provision, covenant or restriction of this
Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement and such exhibits shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which
may be hereafter declared invalid, void or unenforceable.
4.09 Captions.
The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of
any provision of this Agreement.
4.10 Counterparts.
This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have
been signed by each party and delivered to the other parties, it
being understood that all parties need not sign the same
counterpart.
4.11 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF
THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
4.12 Submission to Jurisdiction
If any action, proceeding or litigation shall be brought by
the Collateral Agent in order to enforce any right or remedy
under this Agreement, each Guarantor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern
District of New York on the date of this Agreement. Each
Guarantor hereby irrevocably waives any objection, including, but
not limited to, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or
litigation in such jurisdiction.
4.13. Service of Process
Nothing herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any
Guarantor in any other jurisdiction.
4.14. WAIVER OF JURY TRIAL
EACH GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered as of the day and year first
above written.
BIOENTERICS LATIN AMERICA
S.A. DE C.V.,
a Mexico corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
CHAMFIELD LTD.,
a Ireland corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
INAMED DO BRASIL LTDA,
a Brazil corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN LTD.,
a Ireland corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL ASIA/PACIFIC LTD.,
a Hong Kong corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL B.V.,
a Netherlands corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL BENELUX B.V.,
a Netherlands corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL BENELUX B.V.B.A,
a Belgium corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL GMBH,
a Germany corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL LTD.,
a United Kingdom corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL MEXICO, S.A.
DE C.V.,
a Mexico corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL S.A.,
a Spain corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL S.A.R.L.,
a France corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
MCGHAN MEDICAL S.R.L.,
a Italy corporation
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
Exhibit 99.9
INTERCREDITOR AGREEMENT
dated as of September 30, 1998
Between
APPALOOSA INVESTMENT PARTNERSHIP I, L.P.,
as Collateral Agent
and
SANTA BARBARA BANK & TRUST
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement"), dated
as of September 30, 1998, between APPALOOSA INVESTMENT
PARTNERSHIP I, L.P., as Collateral Agent ("Appaloosa") and SANTA
BARBARA BANK & TRUST (the "Trustee").
WHEREAS:
A. Pursuant to the Note Purchase Agreement, dated as
of the date hereof (the "Note Purchase Agreement"), between
the purchasers listed on Exhibit A thereto (the
"Purchasers"), Appaloosa and INAMED Corporation, a Florida
corporation (the "Company"), the Purchasers are purchasing
10.00% Senior Secured Notes (the "Notes") from the Company
in the aggregate principal amount of $8,000,000 and Warrants
to acquire up to 590,000 shares of Common Stock with an
exercise price of $6.50 per share;
B. In connection with the purchase and sale of the
Notes, simultaneously herewith the Company is commencing an
exchange offer for all of its issued and outstanding 11.00%
secured convertible notes due January, 1999 (the "Old
Notes") pursuant to which the Company will issue 11.00%
Senior Subordinated Secured Notes due March 31, 1999 or, at
the option of the Company as provided therein, September 1,
2000 (the "Exchange Notes"), (ii) Warrants to acquire up to
3,671,616 shares of Common Stock with an exercise price of
$5.50 per share and (iii) Warrants to acquire up to 500,000
shares of Common Stock with an exercise price of $7.50 per
share; and
C. The Company and the Trustee have previously
entered into an Indenture, dated as of January 2, 1996 (as
amended, the "Indenture") with respect to the Old Notes; and
D. Pursuant to the Note Purchase Agreement, Appaloosa
has been appointed Collateral Agent to act on behalf of the
Holders in connection with administering the Collateral (as
hereinafter defined); and
E. Pursuant to the Indenture, the Trustee obtained
liens and security interests in the Collateral;
F. The Collateral Agent and the Trustee have agreed
that the Old Notes are subordinate in right of payment to
the Notes and the liens and security interests of the
Trustee are subject to the liens and security interests of
Appaloosa; and
G. The parties hereto have agreed to allocate
priorities and share the proceeds of the Collateral on the
terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereby agree as follows:
1. Definitions.
(a) As used herein, the following terms have the
following meanings:
"Accounts" shall have the meaning ascribed thereto in
the definition of Collateral.
"Affiliate" shall have the meanings ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. "Affiliate" shall
also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of
Appaloosa or any limited partners of a limited partner of
Appaloosa.
"Casualty Event" shall mean, with respect to any
property of any Person, any loss of or damage to, or any
condemnation or other taking of, such property for which such
Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation.
"Code" shall mean the Internal Revenue Code of 1986, as
amended and any regulations promulgated or proposed thereunder.
"Collateral" shall mean all of each Obligor's real and
personal property and interests in real and personal property
including, without limitation, (i) all of the shares of capital
stock of the Issuers now owned as set forth in Schedule 2(a) or
hereafter acquired by such Obligor together with in each case the
certificates representing the same (collectively, the "Pledged
Stock"); (ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of
capital in respect of, any of the Pledged Stock, resulting from a
split-up, revision, reclassification or other like change of any
of the Pledged Stock or otherwise received in exchange for any of
the Pledged Stock and all Equity Rights issued to the holders of,
or otherwise in respect of, any of the Pledged Stock; (iii)
without affecting the obligations of any Obligor under any
provision prohibiting such action under the Note Purchase
Agreement, in the event of any consolidation or merger in which
any Issuer is not the surviving corporation, all shares of each
class of the capital stock of the successor corporation (unless
such successor corporation is the Company itself) formed by or
resulting from such consolidation or merger (collectively, and
together with the property described in clauses (i) and (ii)
above, the "Stock Collateral"); (iv) the Indebtedness described
in Annex I with respect to such Obligor and issued by the
obligors named therein (the "Pledged Debt"); (v) all additional
Indebtedness for money borrowed or for the deferred purchase
price of property from time to time owed to such Obligor by any
obligor of the Pledged Debt, and all additional Indebtedness in
excess of $25,000 for money borrowed or for the deferred purchase
price of property from time to time owed to such Obligor by any
other Person who, after the date hereof, becomes, as a result of
any occurrence, a Subsidiary of such Obligor or an Affiliate of
such Obligor (any such Indebtedness being "Additional Debt");
(vi) all notes or other instruments evidencing the Indebtedness
referred to in clauses (iv) and (v) above; (vii) all accounts and
general intangibles (each as defined in the Uniform Commercial
Code) of such Obligor constituting a right to the payment of
money, whether or not earned by performance, including all moneys
due and to become due to such Obligor in repayment of any loans
or advances, in payment for goods (including Inventory and
Equipment) sold or leased or for services rendered, in payment of
tax refunds and in payment of any guarantee of any of the
foregoing (collectively, the "Accounts"); (viii) all instruments,
chattel paper or letters of credit (each as defined in the
Uniform Commercial Code) of such Obligor evidencing,
representing, arising from or existing in respect of, relating
to, securing or otherwise supporting the payment of, any of the
Accounts; (ix) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles)
of such Obligor that are held by such Obligor for sale, lease or
furnishing under a contract of service (including to its
Subsidiaries or Affiliates), that are so leased or furnished or
that constitute raw materials, work in process or material used
or consumed in its business, including all spare parts and
related supplies, all goods obtained by such Obligor in exchange
for any such goods, all products made or processed from any such
goods and all substances, if any, commingled with or added to any
such goods (collectively, the "Inventory"); (x) all equipment (as
defined in the Uniform Commercial Code) and all other goods
(including Motor Vehicles) of such Obligor that are used or
bought for use primarily in its business, including all spare
parts and related supplies, all goods obtained by such Obligor in
exchange for any such goods, all substances, if any, commingled
with or added to such goods and all upgrades and other
improvements to such goods, in each case to the extent not
constituting Inventory (collectively, the "Equipment"); (xi) all
documents of title (as defined in the Uniform Commercial Code) or
other receipts of such Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the
"Documents"); (xii) all contracts and other agreements of such
Obligor relating to the sale or other disposition of all or any
part of the Inventory, Equipment or Documents and all rights,
warranties, claims and benefits of such Obligor against any
Person arising out of, relating to or in connection with all or
any part of the Inventory, Equipment or Documents of such
Obligor, including any such rights, warranties, claims or
benefits against any Person storing or transporting any such
Inventory or Equipment or issuing any such Documents; (xiii) all
other accounts or general intangibles of such Obligor not
constituting Accounts, including, to the extent related to all or
any part of the other Collateral, all books, correspondence,
credit files, records, invoices, tapes, cards, computer runs and
other papers and documents in the possession or under the control
of such Obligor or any computer bureau or service company from
time to time acting for such Obligor; (xiv) the balances from
time to time in the Collateral Accounts; (xv) all other tangible
and intangible property of such Obligor, including all
Intellectual Property; and (xvi) all proceeds and products in
whatever form of all or any part of the other Collateral,
including all proceeds of insurance and all condemnation awards
and all other compensation for any Casualty Event with respect to
all or any part of the other Collateral (together with all rights
to recover and proceed with respect to the same), and all
accessories to, substitutions for and replacements of all or any
part of the other Collateral.
"Collateral Accounts" shall refer to the collateral
accounts maintained by Appaloosa pursuant to the Security
Documents.
"Copyrights" shall mean, collectively, (a) all
copyrights, copyright registrations and applications for
copyright registrations, (b) all renewals and extensions of all
copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties,
damages and other payments (including in respect of all past,
present or future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for
all past, present and future infringements with respect to any of
the foregoing and (iii) otherwise accruing under or pertaining to
any of the foregoing throughout the world.
"Documents" shall have the meaning ascribed thereto in
the definition of Collateral.
"Equipment" shall have the meaning ascribed thereto in
the definition of Collateral.
"Equity Rights" shall mean, with respect to any Person,
any outstanding subscriptions, options, warrants, commitments,
preemptive rights or agreements of any kind (including any
stockholders' or voting trust agreements) for the issuance, sale,
registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such
Person.
"Exchange Notes" shall have the meaning ascribed
thereto in the Recitals.
"Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all Patents, patent
applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all Copyrights
and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments of the foregoing (in whatever form or
medium) and (i) all licenses or agreements in connection with the
foregoing.
"Inventory" shall have the meaning ascribed thereto the
definition of Collateral.
"Issuers" shall mean, collectively, each Subsidiary,
directly or indirectly, of the Company that is the issuer (as
defined in the Uniform Commercial Code) of any shares of capital
stock now owned or hereafter acquired by any Obligor.
"Notes" shall have the meaning ascribed thereto in the
Recitals.
"Obligor" or "Obligors" shall mean each of the Company
and each the Company's Subsidiaries that, at any time, execute
the Guaranty and Security Agreement.
"Patents" shall mean, collectively, (a) all patents and
patent applications, (b) all reissues, divisions, continuations,
renewals, extensions and continuations-in-part of all patents or
patent applications and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages, and
other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or
with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, including all inventions
and improvements described or discussed in all such patents and
patent applications.
"Person" shall mean any individual, firm, corporation,
limited liability company, partnership, company or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
"Pledged Debt" shall have the meaning ascribed thereto
in the definition of Collateral.
"Pledged Stock" shall have the meaning ascribed thereto
in the definition of Collateral.
"Security Documents" shall mean (i) the Guarantee and
Security Agreement, dated as of the date hereof, among Appaloosa
and certain of the Company's domestic Subsidiaries, providing for
a first priority security interest in such Subsidiaries'
Collateral and guarantees from such Subsidiaries, (ii) the
Guarantee Agreement, dated as of the date hereof, made by certain
of the Company's foreign Subsidiaries in favor of Appaloosa and
(iii) the Security Agreement, dated as of the date hereof,
between Appaloosa and the Company, providing for a first priority
security interest in the Collateral.
"Indenture" has the meaning ascribed thereto in the
Recitals.
"Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power or the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
"Trademarks" shall mean, collectively, (a) all trade
names, trademarks and service marks, logos, trademark and service
mark registrations and applications for trademark and service
mark registrations, (b) all renewals and extensions of any of the
foregoing and (c) all rights, now existing or hereafter coming
into existence, (i) to all income, royalties, damages and other
payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any
of the foregoing throughout the world, together, in each case,
with the product lines and goodwill of the business connected
with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
(b) Terms defined in Article 9 of the Uniform
Commercial Code currently in effect in the State of New York and
not otherwise defined herein are used herein as therein defined.
2. Priorities.
(a) Appaloosa and the Trustee hereby acknowledge and
agree that the liens and security interests of Appaloosa (for the
benefit of the holders of the Notes) in each Obligor's right,
title and interest in and to the Collateral, whether now owned or
hereafter acquired by such Obligor and whether now existing or
hereafter coming into existence shall constitute first priority
liens and security interests in such Collateral, prior in right
to the liens and security interests of the Trustee (for the
benefit of the holders of the Old Notes) in the Collateral.
Appaloosa and the Trustee further acknowledge and agree that the
payment of the principal of (and premium, if any) and interest on
the Old Notes are subordinated and subject in right of payment to
the prior payment in full of the principal of (and premium, if
any) and interest on the Notes. The Trustee is hereby delivering
to Appaloosa all Collateral in its possession.
(b) The priorities set forth in this Agreement are
applicable irrespective of the order of creation, attachment or
perfection of any of such liens or security interests or any
priority that might otherwise be available to any Person under
applicable law and notwithstanding any representation or warranty
of the Company to the contrary in the Note Purchase Agreement or
the Indenture.
(c) The Trustee agrees not to contest, or to bring (or
voluntarily join in) any action or proceeding for the purpose of
contesting, the validity, perfection or priority (as herein
provided) of, or seeking to avoid, Appaloosa's liens and security
interests in the Collateral, provided that nothing herein shall
be deemed or construed to prevent the Trustee from commencing an
action or proceeding against each other to assert any right or
claim it may have arising under or in connection with this
Agreement.
(d) The Trustee and Appaloosa agree that they shall,
at their own expense and upon the reasonable request of the other
party, duly execute and deliver, or cause to be duly executed and
delivered, to each other such further instruments, agreements and
documents (including, without limitation, financing statements
under the Code, security agreements in respect of Intellectual
Property, stock powers executed in blank and other items
necessary or desirable in connection with the perfection of liens
in the Collateral) and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of either
party to carry out more effectually the provisions and purposes
of this Agreement. The Trustee hereby agrees to amend all
financing statements presently filed by it in any location
(including, without limitation, the U.S. Patent and Trademark
Office and the U.S. Copyright Office) with respect to the
Collateral to reflect Appaloosa's first priority security
interest (for the benefit of the holders of the Notes) on the
Collateral.
3. Enforcement of Security.
(a) Appaloosa and the Trustee may from time to time in
their sole discretion and in accordance with the terms of their
respective loan documents take or authorize the taking of such
action with regard to the protection, exercise and enforcement of
their rights in and to the Collateral as they may determine to be
necessary or appropriate; provided, however, that the Trustee
will not (i) take any action to enforce, collect on or exercise
any of its rights in respect of its liens and security interests
in the Collateral or (ii) interfere with any exercise by or on
behalf of Appaloosa of its rights in respect of its liens and
security interests in the Collateral, in each case unless and
until Appaloosa has given written notice to the Trustee that the
Company has satisfied, in full, all amounts (whether representing
principal, interest, fees, expenses or otherwise) owing to the
holders of the Notes in respect of the Notes and otherwise
pursuant to the Note Purchase Agreement (and Appaloosa hereby
agrees to promptly give such notification following satisfaction
of all such amounts).
(b) Except as otherwise provided in Section 3(a) of
this Agreement, Appaloosa may from time to time, at its
discretion and in accordance with its applicable loan
documentation, enforce, collect on or exercise any of its
respective rights in respect of such liens and security
interests. Each right, power and remedy of any of Appaloosa or
the Trustee provided for in this Agreement, the Note Purchase
Agreement, the Indenture or any other loan document relating to
any of the foregoing, whether now existing or hereafter available
at law or in equity or by statute or otherwise, shall be
cumulative and concurrent (except to the extent otherwise
provided in any such document) and shall be in addition to every
other such right, power or remedy. Except to the extent
otherwise provided in this Agreement, the Note Purchase
Agreement, the Indenture or any other loan document relating to
any thereof, the exercise or beginning of the exercise by
Appaloosa or the Trustee of any one or more of such rights,
powers or remedies shall not preclude the simultaneous or later
exercise of all other such rights, powers or remedies, and no
course of dealing or failure or delay on the part of any party
hereto in exercising any such right, power or remedy shall
operate as a waiver thereof or otherwise prejudice its rights,
powers or remedies.
(c) Each of Appaloosa and the Trustee agrees to hold
any Collateral received by it, in or against which a security
interest or lien may be perfected by possession, on behalf of the
other as well as itself, and upon satisfaction, in full, of its
respective obligations, to turn over to the other all such
Collateral, provided that this subparagraph (c) is intended
solely to assure continuous perfection of the liens and security
interests granted under the Note Purchase Agreement and the
Indenture, respectively, and nothing in this paragraph (c) shall
be deemed or construed as altering the priorities or obligations
set forth elsewhere in this Agreement.
(d) Upon the written request of Appaloosa, the Trustee
agrees to release any Collateral specified in such request
provided that Appaloosa has previously released such Collateral.
4. Representations and Warranties.
Each of Appaloosa and the Trustee represents and
warrants to each other as follows:
(a) This Agreement has been duly executed and
delivered by its duly authorized officer and constitutes its
legal, valid and binding obligation enforceable against it
in accordance with the terms hereof.
(b) The execution, delivery and performance by it of
this Agreement have been duly authorized by all necessary
corporate action and do not and will not (i) violate any
provision of any law, rule or regulation having
applicability to it or of its charter or articles of
association or by-laws, (ii) result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease or
instrument to which it is a party, or (iii) require the
consent or approval of any governmental authority or
arbitrator.
5. Waiver of Marshalling and Similar Rights.
Each of the parties hereto, to the fullest extent
permitted by applicable law, waives any requirement regarding,
and agrees not to demand, request, plead or otherwise claim the
benefit of, any marshalling, appraisement, valuation or other
similar right that may otherwise be available under applicable
law.
6. Security Notices, etc.
Appaloosa and the Trustee each agree to give the other
written notice of their intention to exercise any remedies in
respect of any Event of Default (as defined in the Note Purchase
Agreement or the Indenture, as applicable) and copies of any
written notice of default sent to the Company and of the time and
place of any public sale or the time after which any private sale
or other intended disposition is to be made by either of them of
the Collateral, and agree to use reasonable efforts to make
available to the other (but shall have no liability to the other
for failure to do so) information received by them from the
Company which the recipient considers to be of common interest
with respect to the payment of the Notes or the Collateral,
provided that the Trustee's rights to exercise any remedy is
subject to Section 3(a) hereof. This Agreement is intended, in
part, to constitute a request for notice and a written notice of
a claim by each party hereto to the other of an interest in the
Collateral in accordance with the provisions of Sections 9-504
and 9-505 of the Uniform Commercial Code.
7. Reliance.
In acting in respect of this Agreement, each of
Appaloosa and the Trustee will be entitled (a) to rely on any
communication believed by it to be genuine and to have been made,
sent or signed by the person by whom it purports to have been
made, sent or signed, or (b) to rely on the advice or services or
opinions and statements of any professional advisor whose advice
or services to it seem necessary, expedient or desirable and are
given or made in connection with this Agreement, including,
without limitation, the opinion of counsel (including counsel for
the Company).
8. Termination.
Upon receipt by the Trustee of the notices referred to
in Section 3, this Agreement shall terminate; provided, however,
that if after termination any payment received by any party
hereto is rescinded or must otherwise be returned or paid over to
or for the account of any Obligor by such party for any reason,
this Agreement shall forthwith be reinstated until the giving of
a further notice by such party of the type referred to in Section
3.
9. No Trust Relationship, etc.
This Agreement is intended to create a relationship
among independent contractors, and nothing in this Agreement
shall be deemed to create a fiduciary, agency or trust
relationship between or among any of the parties hereto.
10. Benefit of Agreement.
This Agreement is solely for the benefit of Appaloosa
and the Trustee, and no other person or entity shall be entitled
to rely on, or is, intended to receive any benefit under, this
Agreement.
11. Amendment, Modification, Waiver of Documents.
No provision of the Agreement may be amended, modified
or waived except by a writing signed each of Appaloosa and the
Trustee, provided that nothing in this Agreement shall affect the
right of either Appaloosa or the Trustee to amend, modify or
waive any provision of any other loan document related to this
transaction in accordance with the terms thereof. Each of
Appaloosa and the Trustee agrees to give the other written notice
of any material amendment, modification or waiver to the other
loan documents related to this transaction.
12. Notices, etc.
All notices, consents, requests, instructions,
approvals, financial statements, proxy statements, reports and
other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by
registered mail, postage prepaid, if to:
Appaloosa, to:
Appaloosa Investment Partnership I, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. James Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
The Trustee, to:
Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administration
13. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
14. Submission to Jurisdiction.
If any action, proceeding or litigation shall be
brought by either party hereto in order to enforce any right or
remedy under this Agreement or any of the Notes, both parties
hereby consent and will submit to the jurisdiction of any state
or federal court of competent jurisdiction sitting within the
area comprising the Southern District of New York on the date of
this Agreement. Both parties hereby irrevocably waive any
objection, including, but not limited to, any objection to the
laying of venue or based on the grounds of forum non conveniens,
which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
15. Service of Process.
Nothing herein shall affect the right of any either
party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against each
other in any other jurisdiction.
16. WAIVER OF JURY TRIAL.
BOTH PARTIES HEREBY WAIVE ANY RIGHT EITHER MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT.
17. Miscellaneous.
This Agreement, until its termination, shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. The
headings in this Agreement are for the purpose of reference only
and shall not limit or define the meaning hereof. This Agreement
may be executed in several counterparts, each of which shall be
an original, but all of which shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.
APPALOOSA INVESTMENT
PARTNERSHIP I, L.P.
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
SANTA BARBARA BANK & TRUST,
By: /s/ Christine M. Sontag
Name: Christine M. Sontag
Title: Ass't V.P. & Associate
General Counsel
Acknowledged as of the
date first above written:
INAMED CORPORATION
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
Exhibit 99.10
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 30,
1998 (this "Registration Rights Agreement"), by and between
INAMED CORPORATION, a Florida corporation (the "Company"), and
the parties listed on Exhibit A hereto (each such party, a
"Purchaser" and collectively, the "Purchasers").
1. Background. The Company and the Purchasers have
entered into a Note Purchase Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated,
restructured or otherwise modified from time to time, the "Note
Purchase Agreement") whereby the Purchasers have purchased the
Company's $8,000,000 principal amount 10.00% Senior Secured Notes
due March 31, 1999, or, at the option of the Company as provided
therein, to September 1, 2000 (the "Notes"). In order to induce
the Purchasers to enter into and consummate the transactions
contemplated by the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Registration
Rights Agreement. The execution and delivery of this
Registration Rights Agreement is a condition to the execution and
delivery of, and Closing under, the Note Purchase Agreement.
2. Definitions. Capitalized terms used but not defined
herein shall have the respective meanings given to them in the
Purchase Agreement. As used herein, unless the context otherwise
requires, the following terms have the following respective
meanings:
"Incidental Registration" is defined in Section 3.2.
"Participating Holders" means the holders of Registrable
Securities participating in the particular registration.
"Registration Expenses" means all expenses incident to
the Company's performance of or compliance with Section 3,
including, without limitation, all registration, filing and
applicable fees of the Commission, stock exchange or NASD
registration and filing fees and all listing fees and fees with
respect to the inclusion of securities in NASDAQ (as defined in
Section 3.3(j)), all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of
counsel to the underwriters or the Participating Holders in
connection with "blue sky" qualification of the Registrable
Securities and determination of their eligibility for investment
under the laws of the various jurisdictions), all word
processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants including the
expenses of "cold comfort" letters required by or incident to
such registration, all fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, all
transfer taxes, and the fees and expenses of one counsel to the
Participating Holders (selected by the Requisite Percentage of
Participating Holders); provided, however, that Registration
Expenses shall exclude and the Participating Holders shall pay
underwriters' fees and underwriting discounts and commissions in
respect of the Registrable Securities being registered.
"Registrable Securities" means the Notes. As to any
particular Registrable Securities, such securities shall cease to
be Registrable Securities (a) when a registration statement with
respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement,
(b) when such securities shall have been otherwise transferred,
new certificates for them not bearing a legend restricting
further transfer under the Securities Act shall have been
delivered by the Company and subsequent public distribution of
them shall not require registration of them under the Securities
Act, (c) when such securities are sold pursuant to Rule 144 (or
similar rule adopted by the Commission) under the Securities Act,
or (d) when such securities cease to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Outstanding Holders" means the
holders of Registrable Securities who hold 25% or more of the
aggregate principal amount of the Notes that are then
outstanding.
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a
majority of the Notes that are then being held by all
Participating Holders.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the
limitations imposed by Sections 3.1(c), at any time and from time
to time, one or more holders of Registrable Securities
representing the Requisite Percentage of Outstanding Holders
shall have the right to require the Company to file a
registration statement under the Securities Act covering all or
any part of their respective Registrable Securities, by
delivering a written request therefor to the Company specifying
the number and amount of Registrable Securities and the intended
method of distribution thereof. Any such request pursuant to
this Section 3.1(a) is referred to herein as a "Requested
Registration." The Company shall give prompt written notice of
each Requested Registration to all other holders of record of
Registrable Securities, and thereupon the Company shall use its
best efforts to effect the registration under the Securities Act
so as to permit promptly the sale, in accordance with the
intended method of distribution, of the Registrable Securities
which the Company has been so requested to register in the
Requested Registration and all other Registrable Securities which
the Company has been requested to register by the holders thereof
by written request given to the Company within 30 days after the
giving of such written notice by the Company.
(b) Registration of Other Securities. Whenever
the Company shall effect a registration pursuant to this Section
3.1 in connection with an underwritten offering by one or more
Participating Holders of Registrable Securities, securities other
than Registrable Securities shall not be included among the
securities covered by such registration to the extent that the
managing underwriter of such underwritten offering shall inform
the Company by letter of its belief that the inclusion of such
other securities would materially adversely affect such offering
(including, without limitation, the pricing of the offering).
(c) Limitations on Requested Registrations;
Expenses. The rights of holders of Registrable Securities to
request Requested Registrations pursuant to Section 3.1(a) are
subject to the following limitations: (i) the Company shall not
be obligated to effect a Requested Registration having an
aggregate anticipated offering price of less than U.S. $1,000,000
unless such offering shall cover all remaining Registrable
Securities; (ii) the Company shall not be obligated to effect a
Requested Registration within six months after the effective date
of any other registration of securities (other than pursuant to a
registration on Form S-8 or any successor or similar form which
is then in effect); and (iii) the Company will pay all
Registration Expenses only in connection with the first three
Requested Registrations of Registrable Securities pursuant to
this Section 3.1 that have become effective under the Securities
Act.
(d) Registration Statement Form.
Registrations under this Section 3.1 shall be on Form S-1, Form S-
3 or any successor forms, if permitted, or such appropriate
registration form of the Commission as shall be selected by the
Company and as shall be reasonably acceptable to the Requisite
Percentage of Participating Holders. The Company agrees to
include in any such registration statement all information which,
in the opinion of counsel to the Participating Holders and
counsel to the Company, is required to be included.
(e) Effective Registration Statement. A
registration requested pursuant to this Section 3.1 shall not be
deemed to have been effected (including for purposes of paragraph
(c) of this Section 3.1) (i) unless a registration statement with
respect thereto has become effective and has been kept
continuously effective for a period of at least 90 days (or such
shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold
pursuant thereto), (ii) if, after it has become effective, such
registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other
Governmental Authority or court for any reason not attributable
to the Participating Holders and has not thereafter become
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by
reason of a failure on the part of the Participating Holders.
(f) Selection of Underwriters. The managing
underwriter or underwriters of each underwritten offering of the
Registrable Securities registered under this Section 3.1 shall be
selected by the Requisite Percentage of Participating Holders
(and shall be reasonably acceptable to the Company).
(g) Cutbacks in Requested Registration. If the
managing underwriter of any underwritten offering shall advise
the Company in writing (with a copy to each Participating Holder)
that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to the
Requisite Percentage of Participating Holders, the Company will
include in such registration, to the extent of the number which
the Company is so advised can be sold in such offering,
Registrable Securities requested to be included in such
registration, pro rata among the Participating Holders requesting
such registration in accordance with the principal amount of
Notes held by each such Participating Holder so requested to be
registered, and any securities of the Company included in such
registration pursuant to Section 3.1(b) shall be reduced
proportionately.
(h) Postponement. The Company shall be entitled
once in any six-month period to postpone for a reasonable period
of time (but not exceeding 90 days) the filing of any
registration statement required to be prepared and filed by it
pursuant to this Section 3.1 if the Company determines, in its
reasonable judgment, that such registration and offering would
interfere with any financing, corporate reorganization or other
material transaction or development involving the Company or any
subsidiary or would require premature disclosure thereof, and
promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to this Section 3.1 written notice
of such determination, containing a statement of the reasons for
such postponement and an approximation of the anticipated delay.
If the Company shall so postpone the filing of a registration
statement, the Participating Holders representing the Requisite
Percentage of Participating Holders shall have the right to
withdraw the request for registration by giving written notice to
the Company within 20 days after receipt of the notice of
postponement and, in the event of such withdrawal, such request
shall not be counted toward the number of Requested Registrations
(including for purposes of paragraph (c) of this Section 3.1).
(i) Holder's Right to Withdraw. The Requisite
Percentage of Participating Holders shall have the right to
withdraw the request of the Requisite Percentage of Outstanding
Holders for registration pursuant to Section 3.1 at any time by
giving written notice to the Company of its request to withdraw
and such request (if made before the filing of the registration
statement with the Securities and Exchange Commission) shall not
be counted toward the number of Requested Registrations
(including for purposes of paragraph (c) of this Section 3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time,
the Company proposes or is required to register any of its
securities under the Securities Act (other than pursuant to
registrations on such form or similar form(s) solely for
registration of securities in connection with an employee benefit
plan or dividend reinvestment plan) (an "Incidental
Registration"), the Company will give prompt written notice to
all holders of record of Registrable Securities of its intention
to so register its securities and of such holders' rights under
this Section 3.2. Upon the written request of any holder of
Registrable Securities made within 20 days following the receipt
of any such written notice (which request shall specify the
maximum number of Registrable Securities intended to be disposed
of by such holder and the intended method of distribution
thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by
the holders thereof together with any other securities the
Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No
registration effected under this Section 3.2 shall relieve the
Company of its obligation to effect any Requested Registration
under Section 3.1.
(b) Abandonment or Delay. If, at any time after
the Company has giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall determine not to register or to
delay registration of such securities, the Company may, at its
election, give written notice of such determination and its
reasons therefor to all holders of record of Registrable
Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration
Expenses in connection therewith), without prejudice, however, to
the rights of any holder or holders of Registrable Securities
entitled to do so to request that such registration be effected
as a registration under Section 3.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the
delay in registering such other securities.
(c) Holder's Right to Withdraw. Each holder of
Registrable Securities shall have the right to withdraw its
request for inclusion of its Registrable Securities in any
registration statement pursuant to this Section 3.2 at any time
by giving written notice to the Company of its request to
withdraw.
(d) Unlimited Number of Registrations; Expenses.
There is no limitation on the number of Incidental Registrations
which the Company is obligated to effect pursuant to this Section
3.2. The Company will pay all Registration Expenses in
connection with any registration of Registrable Securities
requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental
Registrations. If the managing underwriter of any underwritten
offering shall inform the Company by letter of its belief that
the number of Registrable Securities requested to be included in
such registration would materially adversely affect such
offering, then the Company will include in such registration,
first, the securities proposed by the Company to be sold for its
own account, second, if applicable, the securities proposed by
the Company to be sold for the account of a holder of securities
who has made a demand for registration pursuant to a section of a
registration rights agreement between such holder and the Company
analogous to Section 3.1 hereof, and third, the Registrable
Securities and all other securities of the Company to be included
in such registration to the extent of the number and type which
the Company is so advised can be sold in (or during the time of)
such offering, pro rata among the Participating Holders and such
other holders requesting such registration in accordance with the
principal amount of Notes held by each Participating Holder and
each such other holder so requested to be registered.
3.3 Registration Procedures. If and whenever the
Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities
Act as provided in Sections 3.1 or 3.2 hereof, the Company will
as expeditiously as possible:
(a) prepare and file with the Commission as soon
as practicable the requisite registration statement to effect
such registration (and shall include all financial statements
required by the Commission to be filed therewith) and thereafter
use its best efforts to cause such registration statement to
become effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment
or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall furnish
such documents to the Participating Holders, their counsel, and
each underwriter, if any, participating in the offering of the
Registrable Securities and its counsel; and provided, further,
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior
to the effective date of the registration statement relating
thereto;
(b) notify each Participating Holder of the
Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities
covered by such registration statement for such period as shall
be required for the disposition of all of such Registrable
Securities, provided, that such period need not exceed 90 days;
(c) furnish, without charge, to each Participating
Holder such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act,
in conformity with the requirements of the Securities Act, and
such other documents, as such Participating Holder may reasonably
request;
(d) use its best efforts (i) to register or
qualify all Registrable Securities and other securities covered
by such registration statement under such securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the Participating Holders shall
reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other action
which may be reasonably necessary or advisable to enable such
Participating Holders to consummate the disposition in such
jurisdictions of the securities to be sold by such Participating
Holders, except that the Company shall not for any such purpose
be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state or
foreign governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to the
Participating Holders to consummate the disposition of such
Registrable Securities;
(f) furnish to each Participating Holder and each
underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of
(i) an opinion of outside counsel (or inside
counsel if satisfactory to each underwriter) for
the Company, and
(ii) a "comfort" letter signed by the
independent public accountants who have certified
the Company's financial statements included or
incorporated by reference in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters, and, in
the case of the accountants' comfort letter, such other financial
matters, as the Requisite Percentage of Participating Holders, or
the underwriters, may reasonably request;
(g) promptly notify each Participating Holder and
each managing underwriter, if any, participating in the offering
of the securities covered by such registration statement (i) when
such registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or post-
effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; (v) at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and in the case of this
clause (v), at the request of any Participating Holder, promptly
prepare and furnish to it and each managing underwriter, if any,
participating in the offering of the Registrable Securities a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and (vi)
at any time when the representations and warranties of the
Company contemplated by Section 3.4(a) hereof cease to be true
and correct;
(h) otherwise comply with all applicable rules
and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning
with the first full calendar month after the effective date of
such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and promptly furnish to each
such Participating Holder a copy of any amendment or supplement
to such registration statement or prospectus;
(i) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for
all Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on
a national securities exchange or to secure designation of all
such Registrable Securities as a National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
"national market system security" within the meaning of
Rule 11Aa2-1 of the Commission;
(k) deliver promptly to counsel to the
Participating Holders and each underwriter, if any, participating
in the offering of the Registrable Securities, copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such
registration statement;
(l) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement;
(m) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the registration
statement; and
(n) make available its employees and personnel
and otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's businesses) in
their marketing of Registrable Securities.
The Company may require each Participating Holder as to the
Registrable Securities of whom any registration is being effected
to furnish the Company such information regarding such holder and
the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt of
any notice from the Company of the happening of any event of the
kind described in subsection (g) (iii) or (v) of this Section
3.3, the Participating Holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities
until, in the case of subsection (g)(iii) of this Section 3.3,
such stop order is removed or proceedings therefor terminated,
and, in the case of subsection (g)(v) of this Section 3.3, such
holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (g)(v) of this Section 3.3
and, if so directed by the Company, will 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
relating to such Registrable Securities current at the time of
receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering by
Participating Holders pursuant to a registration requested under
Section 3.1, the Company will use its best efforts to enter into
an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder and the
underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing
in agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in Section
3.6 hereof. The Participating Holders will cooperate with the
Company in the negotiation of the underwriting agreement and will
give consideration to the reasonable suggestions of the Company
regarding the form thereof. The Participating Holders shall be
parties to such underwriting agreement and may, at their option,
require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for
the benefit of the Participating Holders and that any or all of
the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of the Participating Holders. No Participating
Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters
other than representations, warranties or agreements regarding
such holder, such holder's ownership of and title to the
Registrable Securities, such holder's intended method of
distribution and any other representations required by law, and
any liability of the Participating Holder to any underwriter or
other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its
representations and warranties and shall be limited to an amount
equal to the net proceeds that the Participating Holder derives
from such registration.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the
Securities Act as contemplated by Section 3.2 hereof and such
securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Participating
Holder, use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by
such Participating Holder among the securities of the Company to
be distributed by such underwriters. The Participating Holders
shall be parties to the underwriting agreement between the
Company and such underwriters and may, at their option, require
that any or all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the
benefit of such Participating Holders and that any or all of the
conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of such Participating Holders. No Participating
Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters
other than representations, warranties or agreements regarding
such holder, such holder's ownership of and title to the
Registrable Securities, such holder's intended method of
distribution and any other representations required by law, and
any liability of the Participating Holder to any underwriter or
other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its
representations and warranties and shall be limited to an amount
equal to the net proceeds that the Participating Holder derives
from such registration.
3.5 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement,
the Company will give the Participating Holders, their
underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or
filed with the Commission, and, to the extent practicable, each
amendment thereof or supplement thereto, and give each of them
such access to its books and records and such opportunities to
discuss the business of the Company with its officers and
employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning
of the Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event
of any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and
hold harmless, to the fullest extent permitting by law, each
Participating Holder, its directors, officers, partners,
attorneys, agents and affiliates or general and limited partners
(and the directors, officers, employees, stockholders and
affiliates thereof), and each other Person who participates as an
underwriter in the offering or sale of such securities and each
other Person, if any, who controls such Participating Holder or
any such underwriter within the meaning of the Securities Act,
against any losses, claims, damages, or liabilities, joint or
several (or actions or proceedings, whether commenced or
threatened) to which such Participating Holder or any such
director, officer, partner, agent or affiliate or underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under
which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement
thereto, together with the documents incorporated by reference
therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances in which
they were made not misleading, and the Company will reimburse
such Participating Holder and each such director, officer,
partner, agent or affiliate, or general or limited partner,
underwriter and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability,
action or proceeding; provided, that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by
or on behalf of such Participating Holder or underwriter, as the
case may be, specifically stating that it is for use in the
preparation thereof; and provided, further, that the Company
shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or
any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus,
as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person
if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force regardless
of any investigation made by or on behalf of such Participating
Holder or any such director, officer, partner, attorney, agent or
affiliate or controlling Person and shall survive the transfer of
such securities by such Participating Holder.
(b) Indemnification by the Participating Holders.
As a condition to including any Registrable Securities in any
registration statement, the Company shall have received an
undertaking satisfactory to it from the Participating Holders to
indemnify and hold harmless (in the same manner and to the same
extent as set forth in subsection (a) of this Section 3.6) the
Company, each director and officer of the Company, and each other
Person, if any, who controls the Company within the meaning of
the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, but only if such statement or
alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by
such Participating Holder specifically stating that it is for use
in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such
indemnifying party under this Section 3.6(b) shall be limited to
the amount of net proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall
remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such
securities by the Participating Holder.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in the
preceding subsections of this Section 3.6, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action or proceeding; provided, however,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding subsections of this Section 3.6,
except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice, and shall not relieve
the indemnifying party from any liability which it may have to
the indemnified party otherwise than under this Section 3.6. In
case any such action or proceeding is brought against an
indemnified party, the indemnifying party shall be entitled to
participate therein and, unless in the opinion of outside counsel
to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such
action or proceeding include both the indemnified party and the
indemnifying party and if in the opinion of outside counsel to
the indemnified party there may be legal defenses available to
such indemnified party and/or other indemnified parties which are
different from or in addition to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties,
provided, further, that the indemnifying party shall be obligated
to pay for only one counsel for all indemnified parties. After
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by the
indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal expenses
subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation
(unless the first proviso in the preceding sentence shall be
applicable). No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If the indemnification
provided for in this Section 3.6 shall for any reason be held by
a court to be unavailable to an indemnified party under
subsection (a) or (b) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, then, in
lieu of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party under
subsection (a) or (b) hereof shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the
relative fault of the Company and the Participating Holders which
resulted in such loss, claim, damage or liability, or action in
respect thereof, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect not only the
relative fault but also the relative benefits received by the
Company and the Participating Holders from the offering of the
securities covered by such registration statement as well as any
other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if contributions
pursuant to this Section 3.6(d) were to be determined by pro rata
allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above.
No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Participating Holders'
obligations to contribute as provided in this subsection (d) are
several and not joint in proportion to the relative value of
their respective Registrable Securities covered by such
registration statement. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld.
Notwithstanding anything in this subsection (d) to the contrary,
no indemnifying party (other than the Company) shall be required
to contribute any amount in excess of the net proceeds received
by such party from the sale of the Registrable Securities in the
offering to which the losses, claims, damages or liabilities of
the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding
subsections of this Section 3.6 (with appropriate modifications)
shall be given by the Company and each Participating Holder with
respect to any required registration or other qualification of
securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 3.6 shall be
in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law
or contract and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the transfer of any of
the Registrable Securities by any of the Participating Holders.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 3.6
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3.7 Certain Rights of the Purchasers If Named in a
Registration Statement. If any statement contained in a
registration statement under the Securities Act or in any filing
under the state securities laws of any jurisdiction refers to any
Purchaser by name or otherwise as the holder of any securities of
the Company, then such Purchaser shall have the right to require
(i) the insertion therein of language, in form and substance
satisfactory to such Purchaser, to the effect that the holding by
such Purchaser of such securities does not necessarily make such
Purchaser a "controlling person" of the Company within the
meaning of the Securities Act and is not to be construed as a
recommendation by such Purchaser of the investment quality of the
Company's debt or equity securities covered thereby and that such
holding does not imply that such Purchaser will assist in meeting
any future financial requirements of the Company or (ii) in the
event that such reference to such Purchaser by name or otherwise
is not, in the reasonable judgment of such Purchaser as advised
by its counsel, required by the Securities Act or any of the
rules and regulations promulgated thereunder, or any state
securities laws of any jurisdiction, the deletion of the
reference to such Purchaser.
3.8 Unlegended Notes. In connection with the offering
of any Registrable Securities registered pursuant to this Article
3, the Company shall (i) facilitate the timely preparation and
delivery to Participating Holders and the underwriters, if any,
participating in such offering, of unlegended Notes representing
ownership of such Registrable Securities being sold in such
denominations and registered in such names as requested by such
Participating Holders or such underwriters and (ii) instruct any
transfer agent and registrar of such Registrable Securities to
release any stop transfer orders with respect to any such
Registrable Securities.
3.9 Limitation on Sale or Distribution of Other
Securities. The Company hereby agrees that, if it shall
previously have received a request for registration pursuant to
Section 3.1 or 3.2 hereof, and if such previous registration
shall not have been withdrawn or abandoned, (i) the Company shall
not effect any public or private offer, sale or other
distribution of its securities or effect any registration of any
of its equity securities under the Securities Act (subject to the
provisions of Section 3.2 hereof) (other than a registration on
Form S-8 or any successor or similar form which is then in
effect), whether or not for sale for its own account, until a
period of 90 days (or such shorter period as the Requisite
Majority of Participating Holders shall agree) shall have elapsed
after the effective date of such previous registration (and the
Company shall so provide in any registration rights agreements
hereafter entered into with respect to any of its securities);
and (ii) the Company shall use its best efforts to cause each
holder of its equity securities purchased from the Company at any
time after the date of this Agreement other than in a public
offering to agree not to effect any public sale or distribution
of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall
be deemed to create an independent obligation on the part of any
Participating Holder to sell any Registrable Securities pursuant
to any effective registration statement.
4. Rule 144. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule
144, or (b) any similar rule or regulation hereafter adopted by
the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be
filed by the Exchange Act. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such
requirements.
5. Amendments and Waivers. This Agreement may be amended
with the consent of (i) the Company and (ii) the holders of at
least 51% in aggregate principal amount of the outstanding Notes.
The Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, in each
case only if the Company shall have obtained the written consent
to such action or omission to act, of holders of at least 51% in
aggregate principal amount of the outstanding Notes. Each holder
of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this
Section 5, whether or not such Registrable Securities shall have
been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election
in writing delivered to the Company (accompanied by a written
acknowledgment of, and consent to, such election by such
nominee), be treated as the holder of such Registrable Securities
for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or
any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects to be
treated as the holder of such Registrable Securities, the Company
may require assurances reasonably satisfactory to it of such
owner's beneficial ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder
shall be personally delivered or sent by telecopier (and
confirmed by telephone) or by a reputable overnight courier, and
shall be addressed as follows:
(a) if to any Purchaser, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as
it shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities,
at the address that such holder shall have furnished to the
Company in writing, or, until any such other holder so furnishes
to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an
address to the Company; or
(c) if to the Company, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as
the Company shall have furnished to each holder of Registrable
Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns. This
Agreement may not be assigned by the Company. This Agreement
and/or the registration and other rights contained herein
(including these assignment rights) may be assigned by such
Purchaser to any one or more transferees or distributees of all
or part of such Purchaser's Registrable Securities. A holder of
Registrable Securities shall be permitted, in connection with a
transfer or disposition of Registrable Securities, to impose
conditions or constraints on the ability of the transferee, as a
holder of Registrable Securities, to request a registration
pursuant to Section 3.1 and shall provide the Company with copies
of such conditions or constraints and the identity of such
transferees.
9. Remedies. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding
brought to enforce any provision of this Agreement (including the
indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on
or after the date of this Agreement, enter into any agreement
with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof.
Except as set forth on Exhibit B hereto, the Company has not
previously entered into any agreement with respect to its
securities granting any registration rights to any Person other
than the registration rights granted pursuant to this Agreement.
Except as set forth on Exhibit C hereto, the rights granted to
the holders of Registrable Securities hereunder do not in any way
conflict with and are not inconsistent with any other agreements
to which the Company is a party or by which it is bound. The
Company further agrees that if any other registration rights
agreement entered into after the date of this Agreement with
respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto
than the terms and conditions contained in this Agreement are
(insofar as they are applicable) to the Purchasers, then the
terms and conditions of this Agreement shall immediately be
deemed to have been amended without further action by the Company
or any of the holders of Registrable Securities so that such
holders shall be entitled to the benefit of any such more
favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted
for reference only and shall not limit or otherwise affect the
meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York, without regard to the
conflicts of laws principles thereof. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and
the United States of America located in New York, New York for
any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees
not to commence any action or proceeding relating thereto except
in such courts). Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue
of any action or proceeding arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of
New York or the United States of America located in New York, New
York, and hereby further irrevocably and unconditionally 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. The Company hereby waives any right it
may have to a trial by jury in respect of any action, proceeding
or litigation directly or indirectly arising out of, under or in
connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Name: Ilan K. Reich
Title: Executive Vice President
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P.,
its General Partner
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
PALOMINO FUND LTD.
By: Appaloosa Management, L.P.,
its Investment Advisor
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ James Bolin
Name: James Bolin
Title: Vice President
EXHIBIT A
to the
Registration Rights Agreement
dated as of September 30, 1998
1. Appaloosa Investment Limited Partnership I
2. Palomino Fund Ltd.
Exhibit B
Other Registration Rights Agreements
Exhibit C
Conflicts
1. Registration Rights Agreement, dated as of ________________,
19__ between the Company and the holders of the Company's 4.00%
Convertible Debentures due January 16, 2000.
Exhibit 99.11
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
This third amendment, dated as of September 30, 1998, amends
the Rights Agreement dated as of June 2, 1997, as amended by
Amendment No. 1 dated as of June 13, 1997 and Amendment No. 2
dated as of July 2, 1997 (the "Rights Agreement") between INAMED
Corporation (the "Company") and U.S. Stock Transfer Corporation,
as Rights Agent (the "Rights Agent"). Terms defined in the
Rights Agreement and not otherwise defined herein are used herein
as so defined.
W I T N E S S E T H
WHEREAS, on May 23, 1997, the Board of Directors of the
Company authorized the issuance of Rights to purchase, on the
terms and subject to the provisions of the Rights Agreement, one
share of the Company's Common Stock; and
WHEREAS, the Board of Directors of the Company authorized
and declared a dividend distribution of one Right for every share
of Common Stock of the Company outstanding on June 13, 1997 and
authorized the issuance of one Right (subject to certain
adjustments) for each share of Common Stock of the Company issued
between the Record Date and the Distribution Date; and
WHEREAS, simultaneously herewith the Company is entering
into financing transactions with Appaloosa Management, L.P.,
pursuant to which the Company has agreed to amend certain
provisions of the Rights Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Board of Directors now unanimously desires to amend certain
provisions of the Rights Agreement in order to supplement certain
provisions therein.
NOW, THEREFORE, the Rights Agreement is hereby amended as
follows:
1. Section 1(a) is hereby amended by deleting Section 1(a)
in its entirety and substituting the following
therefor:
"(a) "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or which,
together with all Affiliates and Associates (as
such terms are hereinafter defined) of such
Person, after the date hereof, shall become the
Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Common Shares of
the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term
is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any
such plan.
Notwithstanding anything in this Agreement
that might otherwise be deemed to the contrary:
(i) no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares
by the Company which, by reducing the number of
shares outstanding, increases the proportionate
number of shares beneficially owned by such Person
to 15% or more of the Common Shares of the company
then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or
more of the Common Shares of the Company then
outstanding by reason of share purchases by the
Company and shall, after such share purchases by
the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring
Person"; (ii) if the Board of Directors of the
Company determines in good faith that a Person who
would otherwise be an "Acquiring Person" has
become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of
Common Shares so that such Person would no longer
be an "Acquiring Person," then such Person shall
not be deemed to be an "Acquiring Person" for any
purposes of this Agreement; (iii) no officer or
director of the Company who or which, together
with all Affiliates of such Person, is the
Beneficial Owner of 15% or more of the outstanding
shares of Common Stock of the Company as of the
Record Date shall be deemed an "Acquiring Person"
for any purpose of this Agreement, provided, that
such officer or director, together with his
Affiliates, does not become the Beneficial Owner
of 20% or more of the outstanding shares of Common
Stock of the Company, and provided further that
such officer or director need not continue in such
capacity after the Record Date, and (iv) Appaloosa
Management, L.P., together with its Affiliates and
Associates (collectively, "Appaloosa"), shall not
be deemed an "Acquiring Person" for any purpose of
this Agreement with respect to Beneficial
Ownership of 15% or more of the outstanding shares
of the Company's Common Stock so long as Appaloosa
does not become the Beneficial Owner of Common
Shares in an amount in excess of the Appaloosa
Threshold. For purposes of this Agreement, the
Appaloosa Threshold as at any date shall mean an
amount equal to the sum of (A) all common shares
beneficially owned by Appaloosa as of the date
hereof (the "Grandfather Date"), including any
Common Shares which may be deemed to be
Beneficially Owned by Appaloosa through Warrants
or other similar rights held by Appaloosa as of
the Grandfather Date, plus (B) all Common Shares
in which Appaloosa may acquire beneficial
ownership after the Grandfather Date (I) pursuant
to the Note Purchase Agreement (the "Note Purchase
Agreement"), dated as of September 30, 1998, among
the Company, the Purchasers listed on Exhibit A
thereto and Appaloosa, (II) pursuant to or in
connection with the Exchange Offer (as defined in
the Note Purchase Agreement) as amended or
modified from time to time after the date hereof
or (III) through the exercise of preemptive or
similar rights held by Appaloosa. The provisions
of clause (iv) above shall not apply to (x) any
third party transferees not affiliated with
Appaloosa who may acquire any securities from
Appaloosa, or (y) any Common Shares in which
Appaloosa may acquire beneficial ownership of
after the Grandfather Date other than as described
under (B) of clause (iv)."
2. This Amendment may be executed in any number of
counterparts, and each of such counterparts shall for
all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, this Amendment No. 3 has been signed to
be effective as of the close of business on this 30th day of
September, 1998, by authorized representatives of each of the
Company and the Rights Agent.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Ilan K. Reich
Executive Vice President
U.S. STOCK TRANSFER
CORPORATION
By: /s/ William Garza
William Garza
Assistant Vice President
1. As used in this notice, the term "breast implants" includes
any breast implant device containing or consisting of saline,
silicone, silicone gel, or an elastomer made of silicone, including
implants designed for temporary implantation in the breast (i.e.,
tissue expanders). Implant brands covered by this notice include
all brands listed in the attached Exhibit 1.
2. The Released Parties are listed in the attached Exhibit 2.
