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): November 5, 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.
In connection with the Company's previously announced
Exchange Offer (the "Exchange Offer"), on November 5, 1998 the Company
exchanged $19,548,572 of its outstanding 11% Secured Convertible Notes Due
January 1999 (the "Old Notes") for a package of securities which consisted
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 $19,548,572 (the "Exchange Notes") (a
form of which is attached hereto as Exhibit 99.1 and incorporated herein by
reference) issued in accordance with the Indenture between the Company and
the Santa Barbara Bank & Trust, as trustee (the "Trustee"), dated as of
November 5, 1998, (the "Subordinated Indenture") (a copy of which is
attached hereto as Exhibit 99.2 and incorporated herein by reference), (ii)
warrants to acquire an aggregate of 3,660,915 shares of common stock of the
Company ("Common Stock") with an exercise price of $5.50 per share,
expiring October 1, 2002 (the "Exchange Warrants") (a form of which is
attached hereto as Exhibit 99.3 and incorporated herein by reference), 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") (a form of which is attached
hereto as Exhibit 99.4 and incorporated herein by reference). The
Additional Warrants were issued to all holders of the Old Notes regardless
of whether or not they participated in the Exchange Offer, as part of the
restructuring of the Company's senior debt and as an anti-dilution
adjustment. The Exchange Offer was accomplished pursuant to a Securities
Exchange Agreement between the Company and holders of the Old Notes dated
as of October 7, 1998 (the "Securities Exchange Agreement") (a copy of
which is attached hereto as Exhibit 99.5 and incorporated herein by
reference). The Subordinated Indenture contains customary events of
default, as well as standard financial and operating covenants that limit,
among other things, the incurrence of additional indebtedness by the
Company, encumbrances, the payment of dividends or making of other
restricted payments, the sale of the Company's assets and the ability of
the Company to enter into other lines of business or enter into certain
mergers and consolidations.
Under the terms of the Subordinated Indenture, the Trustee,
on behalf of the holders of the Exchange Notes, was granted a second
priority security interest and lien on all of the assets of the Company and
its subsidiaries. In that regard, the Company entered into various security
agreements with the Trustee, including (i) a Subordinated Security
Agreement (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 secured basis and (ii) a Subordinated Guarantee
and Security Agreement (a copy of which is attached hereto as Exhibit 99.7
and incorporated herein by reference) made by certain subsidiaries of the
Company who guaranteed the obligations of the Company under the Exchange
Notes and pledged as collateral their assets on a secured basis. In
addition, certain foreign subsidiaries of the Company entered into a
Subordinated Guarantee Agreement (a copy of which is attached hereto as
Exhibit 99.8 and incorporated herein by reference), in favor of the holders
of the Exchange Notes, guaranteeing the Exchange Notes.
In connection with the Exchange Offer, the Company entered
into a Registration Rights Agreement, dated as of November 5, 1998, by and
between the Company and the Trustee (the "Exchange Offer Registration
Rights Agreement") (a copy of which is attached as Exhibit 99.9 hereto and
incorporated herein by reference) with respect to the Exchange Notes, which
provides, among other things, that holders of at least 25% or more of the
aggregate principal amount of the Exchange Notes have the right, to require
the Company to register the sale of the Exchange Notes under the Securities
Act of 1933, as amended (the "Securities Act") and that the holders of the
Exchange Notes have certain "piggyback rights" to participate in other
registered offerings by the Company.
The Exchange Warrants contain customary provisions,
including anti-dilution protection. The Exchange Warrants may be exercised
by payment of the exercise price either in cash or by cashless exercise
through the tendering 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") or Exchange Notes (in the amounts prescribed in the
Exchange Warrants). Under certain circumstances, the Company may require
partial or full exercise of the Exchange Warrants. In addition, the
Exchange Warrants provide that the Company will (i) use its best efforts to
register the shares issuable upon exercise of the Exchange Warrants (the
"Exchange Warrant Stock") under the Securities Act and (ii) keep such
registration effective for such period of time as the Exchange Warrants or
Exchange Warrant Stock are held by the Holder (as defined therein).
The Additional Warrants contain customary provisions,
including anti-dilution protection. The Additional Warrants may be
exercised by payment of the exercise price either in cash or by cashless
exercise through the tendering of New Notes, Exchange Notes or Additional
Warrants (in the amounts prescribed in the Additional Warrants). The
Additional Warrants provide that the Company will (i) use its best efforts
to register the shares issuable upon exercise of the Additional Warrants
(the "Additional Warrant Stock") under the Securities Act and (ii) keep
such registration effective for such period of time as the Additional
Warrants or Additional Warrant Stock are held by the Holder (as defined
therein).
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) N/A
(b) N/A
(c) EXHIBITS
Exhibit 99.1: Form of Exchange Note
Exhibit 99.2: Subordinated Indenture
Exhibit 99.3: Form of Exchange Warrant
Exhibit 99.4: Form of Additional Warrant
Exhibit 99.5: Securities Exchange Agreement
Exhibit 99.6: Subordinated Security Agreement
Exhibit 99.7: Subordinated Guarantee and Security
Agreement
Exhibit 99.8: Subordinated Guarantee Agreement
Exhibit 99.9: Exchange Offer Registration 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: November 17, 1998 By: /s/ Richard G. Babbitt
Name: Richard G. Babbitt
Title: Chairman and Chief
Executive Officer
EXHIBIT INDEX
Exhibit 99.1: Form of Exchange Note
Exhibit 99.2: Subordinated Indenture
Exhibit 99.3: Form of Exchange Warrant
Exhibit 99.4: Form of Additional Warrant
Exhibit 99.5: Securities Exchange Agreement
Exhibit 99.6: Subordinated Security Agreement
Exhibit 99.7: Subordinated Guarantee and Security
Agreement
Exhibit 99.8: Subordinated Guarantee Agreement
Exhibit 99.9: Exchange Offer Registration Rights Agreement
Exhibit 99.1
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SECURITY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. THE INDENTURE UNDER WHICH
THIS SECURITY IS ISSUED HAS NOT BEEN QUALIFIED UNDER THE
TRUST INDENTURE ACT OF 1939, AS AMENDED.
No. $
INAMED CORPORATION
promises to pay to
or registered assigns, the principal sum of Dollars on March 31,
1999, or at the option of the Company as provided in the Subordinated
Indenture, September 1, 2000.
11.00% SENIOR SUBORDINATED SECURED NOTE DUE MARCH 31, 1999, OR AT
THE OPTION OF THE COMPANY AS PROVIDED IN THE SUBORDINATED INDENTURE,
SEPTEMBER 1, 2000.
Interest Payment Dates: March 31, June 30, September 30 and
December 31
Record Dates: March 15, June 15, September 15 and December 31
Dated: November 5, 1998
INAMED CORPORATION
By:
Authenticated:
SANTA BARBARA BANK & TRUST OR [Authenticating Agent's name]
By: By:
Authorized Signature Authorized Signature
INAMED CORPORATION
11.00% Senior Subordinated Secured Note due March 31, 1999 or at
the option of INAMED Corporation, September 1, 2000.
1. Interest and Maturity.
INAMED CORPORATION, a Florida corporation (the "Company"),
which term includes any successor issuer under the Indenture referred to
herein), hereby promises to pay interest on the principal amount of this
11.00% Senior Subordinated Secured Note due March 31, 1999, or at the
option of the Company as provided in the Subordinated Indenture (as defined
herein), September 1, 2000 (this "Security") at a rate per annum (the
"Applicable Rate") for any Interest Period until March 31, 1999, or at the
option of the Company as provided in the Subordinated Indenture, September
1, 2000 (the "Maturity Date") equal to 11.00% or such other rate as set
forth in Section 2.2 of the Subordinated Indenture.
Upon the occurrence of any Event of Default (as defined in
the Subordinated Indenture) except for a failure to file a registration
statement as described in the next sentence, the Applicable Rate shall be
immediately increased by 350 basis points, until such Event of Default is
no longer continuing, in which case the Applicable Rate shall return to the
interest rate that would otherwise then be applicable to the Securities.
"Interest Period" means the period from and including the
first day of each January, April and July and October through the next
applicable Interest Payment Date (as defined below); provided that the
first "Interest Period" shall commence on and include the date following
the most recent interest payment date of the Indenture dated January 2,
1996 between the Company and Santa Barbara Bank & Trust, as Trustee prior
to the date on which this Security is issued and the last "Interest Period"
shall terminate on the Maturity Date or such earlier date as this Security
is redeemed.
The Company will pay interest quarterly in arrears on March
31, June 30, September 30 and December 31 of each year until the Maturity
Date, commencing on the first such date after issuance, or if any such date
is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on this Security will accrue from the
most recent date to which interest has been paid or, if no interest has
been paid, from the date of issuance of this Security through the date on
which interest is paid. The Company shall pay interest on overdue principal
and, to the extent lawful, on overdue installments of interest (without
regard to any applicable grace periods) at the Default Rate. Interest will
be computed on the basis of a 360-day year composed of 12 30-day months.
2. Method of Payment. The Company will pay interest on
the Securities (except Defaulted Interest) to the person in whose name each
Security is registered at the close of business on the March 31, June 30,
September 30 and December 31 immediately preceding the relevant Interest
Payment Date (each a "Regular Record Date"). The Holder must surrender the
Security to a Paying Agent to collect principal payments. The Company will
pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The
Company shall pay principal and interest by wire transfer or other
transfers of immediately available funds to the bank account of each holder
thereto.
3. Paying Agent and Registrar. The Company will
initially act as Paying Agent and Registrar. The Company may change the
Paying Agent, Registrar or co-registrar without prior notice. Subject to
certain limitations in the Subordinated Indenture, the Company or any of
its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Securities under
a Subordinated Indenture dated as of November 5, 1998 (the "Subordinated
Indenture") between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb as in effect on the date of the Indenture (the "Trust
Indenture Act"). The Securities are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and holders are referred to
the Indenture and the Trust Indenture Act for a statement of such terms.
The Securities are secured obligations of the Company
limited to $19,605,715 aggregate principal amount (subject to Section 2.9
of the Indenture). The Indenture imposes certain limitations on the Company
and the Guarantors, including, subject to certain exceptions, the
incurrence of Indebtedness, the payment of dividends on, and redemption of,
the Capital Stock of the Company, the sale by the Company and certain of
its Subsidiaries of assets, transactions with certain related persons,
Liens on the Collateral securing the Securities and consolidations and
mergers and transfer of all or substantially all the Company's and certain
of its Subsidiaries' assets.
As provided in the Subordinated Indenture, the Securities
are secured by the Lien of the Subordinated Indenture and the other
Collateral Documentation in respect of the Collateral. Each Holder, by
accepting a Security, shall be bound by and entitled to the benefits of the
Collateral Documentation, as the same may be amended from time to time
pursuant to the provisions thereof and of the Indenture. The Securities and
each Holder's rights thereunder and with respect to the Collateral are
subject to the terms of the subordination in favor of all Senior
Indebtedness, including any subordination or intercreditor agreements as
may be requested by such holders of Senior Indebtedness.
5. Redemption. This Security will be subject to
optional redemption, at any time, upon no less than 30 days notice and no
more than 30 days notice, at par plus accrued. In such event, this Security
will be redeemed based upon its pro rata share (based upon all originally
issued Securities) of certain escrowed amounts established in connection
with the offering of the Securities as provided in the Subordinated
Indenture.
6. Denominations, Transfer, Exchange. The Securities
are in registered form without coupons in denominations of $100,000 and
integral multiples of $25,000 in excess thereof. The transfer of Securities
may be registered, and the Securities may be exchanged, as provided in the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
7. Persons Deemed Owners. The registered holder of a
Security shall be treated as its owner for all purposes.
8. Amendments and Waivers. Subject to certain
exceptions, the Indenture, the Securities and the other documents executed
and delivered in connection therewith may be amended with the consent of
the Holders of at least a majority in principal amount of the then
outstanding Securities, and any existing Default or Event of Default may be
waived with the consent of the Holders of a majority in principal amount of
then outstanding Securities. Without the consent of any Holder, the
Indenture, the Securities or the other documents delivered in connection
herewith may be amended, among other things, to cure any ambiguity, defect
or inconsistency or to make any change that does not adversely affect the
rights of any Holder.
9. Defaults and Remedies. An Event of Default is
defined in Section 4.1 of the Subordinated Indenture. If certain Events of
Default occur and are continuing, the Holders of at least a majority in
principal amount of the then outstanding Securities may declare all the
Securities to be due and payable immediately, except that, in the case of
an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable immediately
without further action or notice. Holders may not enforce the Indenture,
the Securities or the Collateral Documentation except as provided in the
Subordinated Indenture. The Trustee does not have a right independent of
the instruction of a majority in principal amount of Securities then
outstanding to enforce the Indenture, the Securities or the Collateral
Documentation. The Trustee may require indemnity satisfactory to it before
it enforces the Indenture or the Securities. Subject to certain
limitations, the Holders of a majority in principal amount of the then
outstanding Securities may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any
trust or power conferred on it. The Trustee may withhold from Holders
notice of any continuing Default (except a Default in payment of principal
or interest) if it determines that withholding notice is in their best
interests. The Company must furnish an annual compliance certificate to the
Trustee.
10. Trustee Dealings with the Company. Santa Barbara
Bank & Trust, the Trustee under the Subordinated Indenture, in its
individual or any other capacity, may make loans to, accept deposits from
and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
11. No Recourse Against Others. No director, officer,
employee or stockholder, as such, of the Company or any of its Subsidiaries
(other than Company or any other Subsidiary), shall have any liability for
any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the
issue of the Securities.
12. Discharge and Defeasance. Subject to certain
conditions, the Company at any time may terminate some of or all its
obligations under the Securities and the Subordinated Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for
the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Authentication. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
14. Abbreviations. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
with right of survivorship and not as tenants in common), CUST (=
Custodian), and UIGIMIA (= Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
INAMED CORPORATION
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Ilan K. Reich
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(Insert Assignee's Social Security or Tax I.D. No.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint(s)
agent to transfer this Note on the books of Inamed. The agent may
substitute another to act for the agent.
Date: Your Signature:
(Sign exactly as your name appears on the other side of this
Note)
[Signature Guarantee]
Exhibit 99.2
INAMED CORPORATION
Issuer
$19,605,715
Senior Subordinated Secured Notes due 1999
SUBORDINATED INDENTURE
Dated as of November 5, 1998
SANTA BARBARA BANK & TRUST
Trustee
TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN PROVISIONS OF TRUST
INDENTURE ACT OF 1939
Trust Indenture Act Section Indenture Section
ss. 310 (a)(1) 5.10
(a)(2) 5.10
(a)(3) 5.1(e)
(a)(4) N/A
(b) 5.8, 5.10, 11.6
(c) N/A
ss.311 (a) 5.11
(b) 5.11
(c) N/A
ss.312 (a) 2.8
(b) 11.7
(c) 11.7
ss.313 (a) 5.6
(b) (1) 5.6
(b) (2) 5.6
(c) 5.6, 11.6
(d) 5.6
ss.314 (a) 7.18, 11.5
(b) N/A
(c) 11.2
(d) 6.3
(e) 11.2
ss.315 (a) 5.1(a)
(b) 5.5, 11.6
(c) 5.1(b)
(d) 5.1(c)
(e) 4.11
ss.316 (a)(last sentence) 2.11
(a) (1) (A) 4.5
(a) (1) (B) 4.4
(a) (2) N/A
(b) 4.7
(c) 6.4
ss.317 (a) (1) 4.8
(a) (2) 4.9
(b) 2.7
ss.318 (a) 11.1
N/A means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be a part of this Indenture.
INDENTURE, dated as of November 5, 1998 between Inamed
Corporation, a corporation duly organized and existing under the laws of
the State of Florida (the "Company"), having its principal office at 3800
Howard Hughes Parkway, Suite 900, Las Vegas, Nevada and Santa Barbara Bank
& Trust, a bank duly organized and existing under the laws of the State of
California, as Trustee (the "Trustee").
The Company's 11% Senior Subordinated Secured Notes due
March 31, 1999 (the "Notes") are being issued in exchange (the "Exchange")
for the Company's 11% Secured Convertible Notes due 1999 (the "Old Notes")
which were issued pursuant to the Indenture dated as of January 2, 1996
between the Company and the Trustee (the "Old Indenture").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are
defined in the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted at the date of this
instrument; and
(4) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article 9, are defined in that
Article.
"Act" when used with respect to any Holder, has the meaning
specified in Section 11.4.
"Additional Warrants" means Warrants to acquire up to
500,000 shares of Common Stock with an exercise price of $7.50 per share.
"Affiliate" shall have meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations of the Exchange Act.
"Affiliate" shall also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of any Holder
or any limited partners of a limited partner of any Purchaser.
"Agent" means any Registrar, Paying Agent, Conversion
Agent, Authenticating Agent or co-registrar.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate the Notes.
"Bankruptcy Law" means Title 11, United States Code, or
any similar federal or state law for the relief of debtors.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"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.
"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 Obligations" 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.
"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.
"Class Action Settlement Agreement" means the Settlement
Agreement dated April 2, 1998 which provides, among other thing, 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").
"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" means Appaloosa Management L.P.
"Collateral Documentation" means the Subordinated Guarantee
and Security Agreements, the Subordinated Guarantee Agreements, the
Subordinated Security Agreement, the Financing Statements, the Intercompany
Notes, the Intercreditor Agreement and the endorsements thereof to the
Trustee, 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 Trustee, to secure the obligations of the Company or any of its
Subsidiaries hereunder and under the Notes and the Exchange Offer
Registration Rights Agreement.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to
redemption by the Company.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by its Chairman of the
Board, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"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.
"Corporate Trust Office" means the principal office of the
Trustee in Santa Barbara, California at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Party" shall mean each of the Company and each of
its Subsidiaries.
"Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"Default" means an event that with notice or lapse of time
or both would become an Event of Default.
"Defaulted Interest" has the meaning specified in Section
2.12.
"Delaware Charter" the Certificate of Incorporation which
will be in effect upon the effectiveness of the merger to effectuate the
Company's Reincorporation Merger.
"Documents" means the Securities Exchange Agreement, the
Indenture, the Notes, the Collateral Documentation, the Subordinated
Guarantee Agreement and all other security agreements, the Intercreditor
Agreement, the Registration Rights Agreement, mortgages, deeds of trust,
financing statements, lease assignments, guaranties and other agreements
and instruments, together with any assignments, endorsements of, exhibits,
schedules or other attachments to all of the foregoing, delivered in
connection with the transactions contemplated hereby or thereby, all as
amended, supplemented or otherwise modified from time to time.
"Domestic Guarantors" means the Subsidiaries of the Company
that shall have issued to the Trustee for the benefit of the Holders
Guarantee and Security Agreements relating to the Company's obligations
under this Indenture and the Notes.
"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.
"Event of Default" has the meaning specified in Section
4.1.
"Exchange Warrants" means the warrants to be issued by the
Company to the holders of the Notes in connection with the Exchange.
"Financing Statements" means Form UCC-1 financing
statements to be filed in all jurisdictions necessary or desirable in order
to perfect the Trustee's security interest in the Collateral and shall
include any Form UCC-1 financing statements assigned to the Trustee and
filings to be made in the U.S. Patent and Trademark Office and the U.S.
Copyright Office.
"Foreign Guarantors" means the Subsidiaries or Affiliates
of the Company who execute and deliver Subordinated Guarantee Agreements.
"GAAP" shall mean U.S. generally accepted accounting
principles.
"Guarantors" means Domestic Guarantors and Foreign
Guarantors.
"Holder" means a Person in whose name a Note is registered
in the Note Register.
"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.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Intercompany Notes" means the notes from Subsidiaries or
Affiliates of the Company in favor of the Company in the form of Exhibit E,
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 Trustee and the Collateral Agent.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"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.
"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).
"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 or (d) the rights, remedies, powers and
privileges of the Holders under any of the Transaction Documents.
"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.
"Maturity" used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration or otherwise.
"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 7.18.
"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" or "Notes" means the 11.00% Senior Subordinated
Secured Notes due March 31, 1999 or, at the option of the Company exercised
as provided herein, September 1, 2000.
"New Warrants" means the warrants to purchase 590,000
shares of Common Stock to be issued by the Company to the parties listed on
Exhibit A of the Note Purchase Agreement.
"Note Purchase Agreement" means the note purchase
agreement, dated as of September 30, 1998, between the Company, the parties
listed on Exhibit A thereto and the Collateral Agent.
"Note Register" and "Registrar" have the respective
meanings specified in Section 2.6.
"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.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable to the
Trustee.
"Outstanding," shall mean when used with reference to the
Notes at a particular time, all Notes theretofore issued as provided in
this Indenture, 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 Indenture,
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.
"Paying Agent" means any Person authorized by the Company
to pay the principal of or interest on any Notes on behalf of the Company.
"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 terms reasonably acceptable to the Holders of at least a
majority in principal amount of Outstanding Notes; (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 1 hereof; (iv) Indebtedness of a domestic Subsidiary of the
Company to the Company as long as such Subsidiary has executed the
Subordinated Guarantee and Security Agreement and such Indebtedness is
evidenced by Intercompany Notes and the Intercompany Notes are pledged to
the Collateral Agent as Collateral; and (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 Holders of at least a majority in principal amount of Outstanding
Notes.
"Permitted Liens" means (i) Liens existing on the date
hereof and set forth in Schedule 2 hereof; (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; (vii) purchase money liens to
the extent such liens secure Permitted Indebtedness and (viii) Liens
granted in connection with the Note Purchase Agreement.
"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- l or better or
P- l 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 to its domestic Subsidiaries that have
executed the Subordinated Guarantee and Security Agreement as long as such
loans or advances are evidenced by Intercompany Notes and the Intercompany
Notes are pledged to the Trustee as Collateral.
"Person" or "person" means any individual, corporation,
company, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Note" of any particular Note means every
previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note.
"Proxy Statement" shall have the meaning specified in
Section 7.4.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not and would not be, by its terms, or by the terms of any
security into which it is convertible or exchangeable, or upon the
happening of an event, required to be repurchased, including at the option
of the holder, in whole or in part, and that does not and will not have,
upon the happening of an event, a redemption or similar payment due, on or
prior to the Stated Maturity of the Notes.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the March 15, June 15, September 15 or December
15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"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.
"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).
"Responsible Officer" when used with respect to the
Trustee, means the chairman or any vice-chairman of the board of directors,
the chairman or any vice-chairman of the executive committee of the board
of directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or
any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"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).
"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 Stated Securities and Exchange
Commission.
"Senior Indebtedness" means (i) the Company's 10.00% Senior
Secured Notes issued pursuant to the Note Purchase Agreement and (ii)
refinancings, deferrals, refundings, replacements, extensions and renewals
of or amendments, modifications or supplements to the Senior Indebtedness,
not to exceed $8,000,000 in principal amount (excluding capitalized
interest) in aggregate.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as
the fixed date on which the principal of such Note or such installment of
interest is due and payable.
"Subordinated Guarantee Agreements" means the Subordinated
Guarantee Agreements of even date herewith in the form of Exhibit D
executed by certain Subsidiaries of the Company issuing guarantees of the
Company's obligation under the Documents, as the same may be amended
modified or supplemented from time to time in accordance with their terms,
including with respect to Subsidiaries that become Guarantors thereunder in
accordance with the terms of the Exchange Agreement.
"Subordinated Guarantee and Security Agreements" means the
Subordinated Security Agreement of even date herewith in the form of
Exhibit B executed by the Company and the Subordinated Guarantee and
Security Agreements of even date herewith in the form of Exhibit C executed
by the Guarantors issuing guarantees and/or granting Liens on certain of
the Collateral as partial security for their respective obligations under
the Documents, as the same may be amended, modified or supplemented from
time to time in accordance with their terms, including with respect to
Subsidiaries that become Guarantors thereunder in accordance with the terms
of the Exchange Agreement.
"Securities Exchange Agreement" shall mean the agreement to
be entered into by the Company and the securityholders parties thereto.
"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.
"Transaction Documents" shall mean the Exchange Notes, the
Exchange Warrants, the Additional Warrants, the Indenture, the Securities
Exchange Agreement, the Exchange Offer Registration Rights Agreement to be
entered into between the Trustee and the holders of the Exchange Notes, the
Subordinated Guarantee and Security Agreement, the Subordinated Security
Agreement to be entered into between the Trustee and the Company, providing
for a security interest in the Collateral, the Subordinated Guarantee
Agreement and the Intercreditor Agreement.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S. Code <section><section> 77aaa-77bbbb), as amended, as in effect on
the date of this Indenture, unless and until such time as this Indenture is
qualified under the Trust Indenture Act, and thereafter as in effect on the
date on which this Indenture is qualified under the Trust Indenture Act,
except as otherwise provided in Section 6.3.
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the timely payment
of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt; provided that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Legal Tender" means such coin or currency of the
United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
"Vice President" when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
ARTICLE 2
THE NOTES
SECTION 2.1 Form and Dating.
The Notes shall be substantially in the form of Exhibit A,
which is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture, and to
the extent applicable, the Company, the Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such
terms and provisions and to be bound thereby.
SECTION 2.2 Title and Terms.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $19,605,715,
except for Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Notes pursuant to Sections
2.5, 2.9, 2.10 or 6.5.
The Notes shall be known and designated as the "11% Senior
Subordinated Secured Notes due 1999" of the Company. Their Stated Maturity
shall be March 31, 1999, except as provided in Section 2.16 and, except as
otherwise provided below, they shall bear interest at the rate of 11% per
annum, from the most recent interest payment date of the Old Indenture
prior to the date of the Indenture or the most recent Interest Payment Date
to which interest has been paid or duly provided for, as the case may be,
payable quarterly on March 31, June 30, September 30 and December 31,
commencing December 31, 1998, until the principal thereof is paid or made
available for payment.
Notwithstanding the foregoing
(i) if during any period in which the Notes
bear interest at the rate of 11% per annum (an "Eleven Percent Period"),
the daily volume weighted average sale price as of the close of trading, on
the display on the applicable Bloomberg Financial Markets Service Screen
(or if such price is not reported on the Bloomberg Financial Markets
Service Screen, then such price shall be determined as reported by such
other reputable reporting service reasonably satisfactory to the Company
and the Purchaser) of the Common Stock (the "Daily Market Price") is
greater than $11.00 per share for each of 90 consecutive days (such 90 day
period not having commenced until after all registration statements have
gone effective with respect to the shares issued or issuable on exercise of
the Exchange Warrants, the New Warrants and the Additional Warrants), then
the interest rate at which the Notes shall bear interest for the 90 day
period beginning on the first day of the next fiscal quarter of the Company
after such 90 day period, shall be 10.00% (any such period in which the
interest rate is 10.00%, a "Ten Percent Period").
(ii) if during a Ten Percent Period:
(A) the Daily Market Price falls below $11.00 on
any given day, then commencing on the first
day after such Ten Percent Period, the
interest rate at which the Notes shall
bear interest shall be 11.00%.
(B) the Daily Market Price does not fall
below $11.00 on any given day, then the
interest rate at which the Notes shall
bear interest for the 90 day period
beginning on the day after such Ten
Percent Period shall be 9.00% (any such
period in which the interest rate is 9.00%,
a "Nine Percent Period").
(iii) if during a Nine Percent Period:
(A) the Daily Market Price falls below $11.00,
then commencing on the first day after
such Nine Percent Period, the interest
rate at which the Notes shall bear
interest shall be 10.00%.
(B) the Daily Market price does not fall below
$11.00, then the interest rate at which
the Notes shall bear interest for the 90
day period beginning on the day after
such Nine Percent Period shall remain at
9.00%.
The principal of and interest on the Notes shall be payable
at the office or agency of the Company in Las Vegas, Nevada maintained for
such purpose and at any other office or agency maintained by the Company
for such purpose; provided, however, that payment of interest shall be made
by wire transfer or other transfers of immediately available funds to the
bank account of the Person entitled thereto as such address shall appear in
the Note Register.
The Notes shall be redeemable prior to their maturity as
provided in Article 8.
The Notes shall be subordinated in right of payment to
Senior Indebtedness as provided in Article 9.
SECTION 2.3 Denominations.
The Notes shall be issuable only in registered form without
coupons and only in denominations of $100,000 and any integral multiple of
$25,000 in excess thereof, except when such other multiple is required in
connection with the Exchange.
SECTION 2.4 Execution, Authentication and Delivery.
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of
its Vice Presidents, under its corporate seal reproduced thereon attested
by its Secretary or one of its Assistant Secretaries. The signature of any
of these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Notes or did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Notes; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Notes as in this Indenture provided and not otherwise.
No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Note a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.5 Temporary Notes.
Pending the preparation of definitive Notes, the Company
may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Notes which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable
for definitive Notes upon surrender of the temporary Notes at any office or
agency of the Company designated pursuant to Section 8.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Notes the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized definitions. Until so exchanged the temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.6 Registrar and Paying Agent.
The Company shall maintain or cause to be maintained in
such locations as it shall determine, which may be the Corporate Trust
Office, an office or agency: (i) where Notes may be presented for
registration of transfer or for exchange ("Registrar"); (ii) where Notes
may be presented for payment ("Paying Agent"); and (iii) where notices and
demands to or upon the Company in respect of Notes and this Indenture may
be served by the Holders of the Notes. The Registrar shall keep a register
of the Notes and of their transfer and exchange (the "Note Register"). The
Company may appoint one or more co-registrars or one or more additional
paying agents. The term "Paying Agent" includes any additional paying
agent. The Company may change any Paying Agent, Registrar or co-registrar
without prior notice. The Company shall notify the Trustee of the name and
address of any Agent not a party to this Indenture and shall enter into an
appropriate agency agreement with any Registrar, Paying Agent or
co-registrar not a party to this Indenture. The agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company or
any of its subsidiaries may act as Paying Agent, Registrar or co-registrar.
If the Company fails to appoint or maintain another entity as Registrar,
Paying Agent or fails to notify the Trustee of such person, the Trustee
shall act as such, and the Trustee shall be entitled to appropriate
compensation in accordance with Section 5.7.
The Company initially appoints the Company as Registrar,
Paying Agent and agent for service of notices and demands in connection
with the Notes.
SECTION 2.7 Paying Agent to Hold Money in Trust.
Not later than each due date of the principal of and
interest on any Notes, the Company shall deposit with the Paying Agent
money sufficient to pay such principal and interest so becoming due.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal or interest on the Notes (whether such money
has been paid to it by the Company, the Guarantors or any other obligor on
the Notes or any other Person), and will notify the Trustee of any default
by the Company (or the Guarantors or any other obligor on the Notes or any
other Person) in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by
it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
SECTION 2.8 Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names
and addresses of Holders and, in the event and so long as this Indenture is
qualified under the Trust Indenture Act, shall otherwise comply with
Section 312(a) of the Trust Indenture Act. If the Trustee is not the
Registrar, the Company, the Guarantors, the Foreign Guarantors and any
other obligor shall furnish to the Trustee on or before each Interest
Payment Date and at such other times as the Trustee may request in writing,
but in any event at least quarterly, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders and, in the event and so long as this Indenture is qualified under
the Trust Indenture Act, the Company shall otherwise comply with Section
312(a) of the Trust Indenture Act.
SECTION 2.9 Transfer and Exchange.
(a) When Notes are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for
an equal principal amount of securities of other denominations, the
Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met (including, if required by the
Company, an opinion of counsel to the Holder requesting transfer that an
exemption from registration under the Securities Act of 1933, as amended,
is available for such transfer). To permit registrations of transfer and
exchanges, the Company shall issue and the Trustee shall authenticate Notes
at the Registrar's request. No service charge shall be made to the Holder
for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or similar
governmental charge payable upon exchanges pursuant to Section 2.5 or 6.5)
(b) The Company shall not be required to issue,
register the transfer of or exchange Notes following the redemption date,
except the unredeemed portion of any Note being redeemed in part.
SECTION 2.10 Replacement Notes.
If the Holder of a Note claims that the Note has been
mutilated, destroyed, lost or stolen, then, in the absence of notice to the
Company or Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. In case any Note
which has matured or is about to mature, or has been called for redemption
pursuant to Section 8 shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such
payment shall furnish to the Company, to the Trustee and, if applicable, to
the Authenticating Agent such security or indemnity as may be required by
them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in case of destruction,
loss or theft, evidence satisfactory to the Company, the Trustee and, if
applicable, any Paying Agent of the destruction, loss or theft of such Note
and of the ownership thereof. If required by the Trustee or the Company,
an indemnity bond must be provided which is sufficient in the judgment of
both to protect the Company, the Trustee, any Agent or any Authenticating
Agent from any loss which any of them may suffer if a Note is replaced.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every replacement Note is an additional obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.
SECTION 2.11 Treasury Notes.
In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company, the Guarantors or any other obligor or
an Affiliate of the Company, shall be considered as though they are not
Outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes which the Trustee knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Company or any other obligor upon the Notes or
any Affiliate of the Company or of such other obligor.
SECTION 2.12 Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of
any Defaulted Interest to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this Clause provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the Note
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clause (2).
(2) The Company shall make payment of any
Defaulted Interest by wire transfer or other transfer of immediately
available funds.
Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13 Persons Deemed Owners.
Prior to the presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Note is registered as the
owner of such Note for the purpose of receiving payment of principal of and
(subject to Section 2.12) interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary.
SECTION 2.14 Cancellation.
All Notes surrendered for payment, redemption, registration
of transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of as directed by a Company
Order. Subject to Section 8.6, the Trustee shall cancel and the Company
shall not reissue any Notes that have been surrendered for payment,
redemption or conversion.
SECTION 2.15 Computation of Interest.
Interest on the Notes shall be computed on the basis of a
year of twelve 30-day months.
SECTION 2.16 Extension of Maturity. At the Company's option, at any
time at least thirty days prior to March 31, 1999, the Stated Maturity may
be extended until September 1, 2000 by the Company by delivery of a notice
to the Holders pursuant to the provisions of Section 11.6, which notice
shall state that the Stated Maturity of the Notes is being extended until
September 1, 2000, so long as no Event of Default shall have occurred and
be continuing at the time of delivery of such notice.
ARTICLE 3
SATISFACTION, DISCHARGE AND DEFEASANCE
SECTION 3.1 Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of the
Notes herein expressly provided for and except as provided in Section 3.3),
and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when:
(1) either
(A) all Notes theretofore authenticated and
delivered (other than (i) Notes which have
been mutilated, destroyed, lost or stolen
and which have been replaced or paid as
provided in Section 2.10 and (ii) Notes for
whose payment money has theretofore been
deposited in trust or segregated and held in
trust by the Company and thereafter repaid to
the Company or discharged from such trust,
pursuant to the terms of this Indenture) have
been delivered to the Trustee for cancellation;
or
(B) all such Notes not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii)will become due and payable at their
Stated Maturity within one year,
and the Company, in the case of (i) or (ii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and interest to the date of such deposit (in
the case of Notes which have become due and payable) or to the Stated
Maturity;
(2) the Company has paid or caused to be paid
all other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.7, the
obligations of the Trustee to any Authenticating Agent under Section 5.12
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 3.2 and the last paragraph of Section 7.3 shall survive.
SECTION 3.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section
7.3, all money deposited with the Trustee pursuant to Section 3.1 shall be
held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal
and interest for whose payment such money has been deposited with the
Trustee.
SECTION 3.3 Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any
money in accordance with Section 3.2 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application and (ii) the Holders of at least a majority in
principal amount of Outstanding Notes so request by written notice to the
Trustee, the Company's and the Guarantors' obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 3.1 until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 3.2.
ARTICLE 4
REMEDIES
SECTION 4.1 Events of Default.
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 Indenture, the Notes, or the other documents executed
and delivered in connection with this Indenture (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 7.18(d), such default shall be
immediate), or any representation or warranty made in any document executed
and delivered in connection with this Indenture (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 such Required Holders believe would have a Material Adverse
Effect on the Company or the Holders' security interest in the Collateral,
and such Required Holders have notified the Trustee of such determination
by delivery of a certificate as to such determination; or
(f) any Credit Party (i) is 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 Indenture
(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
Indenture 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 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), or any security interest created
under any Transaction Document shall cease to be a valid and perfected
security interest or Lien in any of the Collateral purported to be covered
thereby; or
(j) any Credit Party defaults 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
Indenture (other than payments elsewhere in this Section specifically dealt
with).
SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.
If any Event of Default shall have occurred and be
continuing, the Holders of at least a majority in principal amount of then
Outstanding Notes may, by notice to the Company, declare the entire unpaid
principal amount of the Notes, plus all accrued and unpaid interest thereon
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 Indenture to the contrary
notwithstanding; provided that if an Event of Default under clause (f),
(g), (h) or (i) of Section 4.1 shall have occurred, the entire unpaid
principal amount of the Notes, plus all accrued and unpaid interest thereon
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 Indenture to the contrary
notwithstanding.
SECTION 4.3 Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal
or interest on the Notes or to enforce the performance of any provision of
the Notes, the Guarantee and Security Agreements, this Indenture or the
other Documents, or to realize upon any Collateral.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding.
SECTION 4.4 Waiver of Past Defaults.
The Holders of a majority in principal amount of
Outstanding Notes by notice to the Trustee may waive an existing Default or
Event of Default and its consequences except a continuing Default or Event
of Default in the payment of the principal of or interest on any Note or in
respect of a covenant or provision of this Indenture that cannot be
modified or amended without the consent of all Holders. Upon such waiver,
such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 4.5 Control by Majority.
The Holders of a majority in principal amount of
Outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that is unduly
prejudicial to the rights of other Holders, or would involve the Trustee in
personal liability.
SECTION 4.6 Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture
or the Notes only if:
(1) the Holder gives to the Trustee notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal
amount of the then outstanding Notes make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the
request within 30 days after receipt of the request and the offer of
indemnity; and
(5) during such 30-day period the Holders of a
majority in principal amount of the then Outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 4.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal and interest
on the Note, on or after the respective due dates expressed in the Note, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 4.8 Collection Suit by Trustee.
If an Event of Default specified in Section 4.1(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company, the Guarantors or
any other obligor on the Notes for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the
costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 4.9 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims
of the Trustee and the Holders allowed in any judicial proceedings relative
to the Company, the Guarantors or any other obligor or their respective
creditors or property. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 4.10 Priorities.
If the Trustee collects any money pursuant to this Article
or by exercise of its remedies under the Documents, it shall pay out the
money in the following order and, in case of the distribution of such money
on account of principal or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
First: to the Trustee for amounts due under
Section 5.7;
Second: to the Holders of Senior Indebtedness to the extent
required by Article 9; and
Third: to Holders for amounts due and unpaid on
the Notes for principal and interest ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal and interest, respectively; and
Fourth: to the Company, the Guarantors or any other
obligors on the Notes, as their interests may appear, or as a court of
competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any
payment to Holders.
SECTION 4.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action
taken or omitted by it as a Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the
costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to any
suit instituted by the Company or by the Trustee, a suit by a Holder for
the enforcement of the payment of the principal of or interest on any Note
on or after the respective Stated Maturities expressed in such Note, or a
suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
SECTION 4.12 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes in the
last paragraph of Section 2.10, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity
otherwise. The assertion or employment of any right or remedy hereunder or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 4.13 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee
or by the Holders, as the case may be.
SECTION 4.14 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as though no
such law has been enacted.
ARTICLE 5
THE TRUSTEE
SECTION 5.1 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event
of Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by Indenture, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conducting its own affairs.
(c) No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that
(1) this Subsection shall not be construed to
limit the effect of Subsection (a) of this
Section;
(2) the Trustee shall not be liable for any
error of judgment made in good faith by a
Responsible Officer, unless it shall be
proved that the Trustee was negligent
in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with
respect to any action taken or omitted
to be taken by it in good faith in
accordance with the direction of the
Holders of a majority in principal
amount of the Outstanding Notes relating
to the time, method and place of
conducting any proceeding for any
remedy available to the Trustee, or
exercising any trust or power conferred
upon the Trustee, under this Indenture;
(4) no provision of this Indenture shall
require the Trustee to expend or
risk its own funds or otherwise incur
any financial liability in the
performance of any of its duties
hereunder;
(5) the Trustee may refuse to perform any duty
or exercise any right or power unless it
receives indemnity satisfactory to it
against any loss, liability or expense; and
(6) the Trustee shall not be liable for
interest on any money received by it
except as the Trustee may agree in
writing with the Company and the
Guarantors. Money held in trust by the
Trustee need not be segregated from other
funds except to the extent required by law.
(d) Whether or not therein expressly so
provided, every provision of this Indenture
relating to the conduct or affecting the
liability of or affording protection to the
Trustee shall be subject to the provisions of
this Section.
(e) The Company and the Trustee acknowledge and
agree and the Holders by acquisition of
the Notes acknowledge and agree that (1) in
order to enforce some of the rights and
duties of the Trustee under this Indenture,
it may be necessary for the Trustee to act
or cause others to take actions in
jurisdictions in which Trustee currently is
not or in the future may not be authorized to
transact business as a fiduciary or
otherwise, (2) the parties do not expect the
Trustee to become so qualified to transact
business in such jurisdictions, and (3)
consequently it is recognized that in the
event of litigation under this Indenture, and
in particular in the event of enforcement of
the rights of the Trustee following an Event
of Default, or in the case the Trustee deems
that by reason of any present or future law
of any jurisdiction it may not exercise any
of the powers, rights or remedies herein
granted to the Trustee or act as Trustee
hereunder in any jurisdiction, or take any
action that may be desirable or necessary in
connection therewith, it may be necessary
that the Trustee (and the Trustee is hereby
authorized to) appoint an additional
individual or institution as a separate Trustee
or co-Trustee.
If the Trustee appoints any such individual or
institution as a separate co-Trustee, then each and every remedy, power,
right, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be
exercisable by and vest in such separate or co-Trustee but only to the
extent necessary to enable such separate or co-Trustee to exercise such
powers, rights and remedies, and every covenant and obligation necessary to
the exercise thereof by such separate or co-Trustee shall run to and be
enforceable by either of them.
Upon request of the Trustee, the Company shall
make, execute, acknowledge and deliver such documents as may be necessary
or appropriate to perfect or clarify the authority of such separate or
co-Trustee and confirm to it such rights, powers, duties and obligations as
the Trustee determines to be appropriate and as are consistent with the
rights, powers, duties and obligations of the Trustee under this Indenture.
SECTION 5.2 Rights of Trustee.
(a) Except as otherwise provided herein, the
Trustee may rely on any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel,
or both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or Opinion
of Counsel.
(c) The Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) Subject to Section 5.1, the Trustee shall
not be liable for any action it takes or omits to take in good faith which
it believes to be authorized or within its rights or powers.
SECTION 5.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the
Company, the Guarantors or an Affiliate of any of them with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 5.10 and 5.11.
SECTION 5.4 Trustee's Disclaimer.
The Trustee makes no representation or warranty concerning, and
shall have no liability with regard to (a) the accuracy or reliability or
completeness of any statement, representation or warranty, or of any
disclosures (whether oral or written) made by the Company or the Guarantors
in connection with the sale of the Notes, including in any offering
memorandum or circular distributed in connection with the sale of the
Notes, (b) the Company's compliance with applicable securities rules
governing the sale of the Notes, (c) the validity, adequacy or
enforceability of this Indenture, the Notes, the Subordinated Guarantee and
Security Agreements, (d) the Company's use of the proceeds from the sale of
the Notes, (e) the perfection or priority of any lien created or intended
to be created by the Subordinated Guarantee and Security Agreements, or (f)
any recitation of facts or alleged facts in this Indenture.
SECTION 5.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall, as soon as
practicable thereafter and in any event within 10 days after it occurs,
mail to Holders a notice of the Default or Event of Default. For purposes
of this Indenture, the Trustee shall not be deemed to "know" or "have
knowledge" or "be aware" or otherwise be charged with knowing any fact or
circumstance unless either (i) a person who is an executive officer of the
Trustee (as determined by the Trustee's Board of Directors for the period
for which such determination is being made) has actual knowledge of such
fact or circumstance or (ii) written notice of such fact or circumstance is
sent to the Trustee in accordance with Section 11.5(1), below.
SECTION 5.6 Reports by Trustee to Holders.
In the event and so long as this Indenture is qualified
under the Trust Indenture Act, within 60 days after each January 1
beginning on the January 1 following the date of this Indenture, the
Trustee shall mail to Holders a brief report dated as of such reporting
date that complies with Trust Indenture Act <section> 313(a). Whether or
not this Indenture is qualified under the Trust Indenture Act, within 60
days after each January 1 beginning on the January 1 following the date of
this Indenture, the Trustee shall mail to Holders a brief report dated as
of such reporting date that complies with Trust Indenture Act <section>
313(a)(3), (7) and (8). In the event and so long as this Indenture is
qualified under the Trust Indenture Act, the Trustee also shall comply with
Trust Indenture Act <section> 313(b)(1) and Trust Indenture Act <section>
313(b)(2) and the Trustee shall transmit by mail all reports as required by
Trust Indenture Act <section> 313(c).
Commencing at the time and so long as this Indenture is
qualified under the Trust Indenture Act, a copy of each report at the time
of its mailing to Holders shall be filed with the Commission and each stock
exchange on which the Notes are listed. The Company shall notify the
Trustee when the Notes are listed on any securities exchange.
SECTION 5.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee upon request
for all reasonable out-of-pocket expenses incurred by it. Such expenses
shall include the reasonable compensation and out-of-pocket expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The
Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel, and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence or
bad faith.
To secure the Company's payment obligations in this
Section, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 4.1(6) or (7) occurs, the expenses
and the compensation for the services are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 5.8 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section
5.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee
under any Bankruptcy Law;
(3) a Custodian or public officer takes charge
of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company and any other obligor
shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal
amount of Outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee (at
the expense of the Company), the Company or the Holders of at least 10% in
principal amount of Outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 5.10, any
Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 5.7. Notwithstanding replacement of the
Trustee pursuant to this Section 5.8, the Company's obligations under
Section 5.7 hereof shall continue for the benefit of the retiring Trustee
with respect to expenses and liabilities incurred by it prior to such
replacement.
SECTION 5.9 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act
shall be the successor Trustee.
SECTION 5.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies
the requirements of Trust Indenture Act <section> 310(a)(1). The Trustee
shall always have a combined capital and surplus of not less than
$35,000,000. In the event and so long as this Indenture is qualified under
the Trust Indenture Act, the Trustee shall be subject to Trust Indenture
Act <section> 310(b), including the optional provision permitted by the
second sentence of Trust Indenture Act <section> 310(b)(9).
SECTION 5.11 Preferential Collection of Claims Against Company.
The Trustee shall be subject to Trust Indenture Act
<section> 311(a), excluding any creditor relationship listed in Trust
Indenture Act <section> 311(b). A Trustee who has resigned or been removed
shall be subject to Trust Indenture Act <section> 311(a) to the extent
indicated therein.
SECTION 5.12 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate
Notes issued upon original issue and upon exchange, registration of
transfer or pursuant to Section 2.10, and Notes so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication
and delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus required of a
Trustee hereunder and subject to supervision or examination by Federal or
State authority. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation succeeding
to the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the Note
Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section,
and the Trustee shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 5.7.
ARTICLE 6
AMENDMENTS
SECTION 6.1 Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend this
Indenture, the Notes or the other Documents without the consent of any
Holder:
(1) to cure any ambiguity, defect or
inconsistency;
(2) to provide for uncertificated Notes in
addition to certificated Notes;
(3) to make any change that would provide
additional rights to or benefits to the Holders or that does not adversely
affect the legal rights hereunder of any Holder; and
(4) to comply with any requirements of the
Commission in connection with the qualification or requalification of this
Indenture under the Trust Indenture Act.
SECTION 6.2 With Consent of Holders.
Subject to Section 4.7, the Company and the Trustee may
amend this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of Outstanding Notes. Subject
to Sections 4.4 and 4.7, the Holders of a majority in principal amount of
the Notes then outstanding may also waive compliance in a particular
instance by the Company or the Guarantors with any provision of this
Indenture or the Notes.
However, without the consent of each Holder affected, an
amendment or waiver under this Section may not:
(1) reduce the amount of Notes whose Holders
must consent to an amendment or waiver;
(2) reduce the rate of or change the time for
payment of interest on any Note;
(3) reduce the principal of or change the fixed
maturity of any Note or alter the redemption provisions with respect
thereto;
(4) make any Note payable in money other than
that stated in the Note;
(5) make any change in Section 4.4, 4.7 or 6.2
(this sentence); or
(6) waive a default in the payment of the
principal of, or interest on, any Note.
The Holders of at least 66-2/3% in principal amount of
Outstanding Notes may release any portion of the Collateral, whether
constituting less than or all or substantially all of the Collateral, from
the Liens granted under the Collateral Documentation, without compliance
with the requirements of the last paragraph of Section 10.2 of this
Indenture, unless this Indenture previously has been qualified under the
Trust Indenture Act and the Trust Indenture Act prohibits such a release.
It is the intent of the parties that any release of Collateral consented to
by the Holders of at least 66-2/3% in principal amount of Outstanding Notes
shall not be in contravention of the provisions of the Indenture within the
meaning of Section 314(d) of the Trust Indenture Act in the event it is
applicable to this Indenture.
To secure a consent of the Holders under this Section it
shall not be necessary for the Holders to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing
the amendment or waiver.
SECTION 6.3 Compliance with Trust Indenture Act.
This Indenture and every amendment, waiver or supplement
under this Indenture or the Notes shall comply with the Trust Indenture Act
as then in effect.
SECTION 6.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is
not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his Note or portion of a Note if the Trustee
receives notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented to the amendment or waiver (or
before such later date as may be required by law or securities exchange
rule).
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to consent
to any amendment or waiver. If a record date is fixed, then
notwithstanding the provisions of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent
to such amendment or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date.
No consent shall be valid or effective for more than 90 days after such
record date unless consents from Holders of the principal amount of Notes
required hereunder for such amendment or waiver to be effective shall have
also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall
bind every Holder, unless it is of the type described in any of clauses (1)
through (4) of Section 6.2. In such case, the amendment or waiver shall
bind each Holder of a Note who has consented to it and every subsequent
Holder of a Note that evidences the same debt as the consenting Holder's
Note.
SECTION 6.5 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new
Notes that reflect the amendment or waiver.
SECTION 6.6 Trustee Protected.
The Trustee shall sign all supplemental indentures, except
that the Trustee need not sign any supplemental indenture that adversely
affects its rights. The Trustee may request an Opinion of Counsel and an
Officers' Certificate stating that such supplemental indenture is permitted
hereunder and all conditions precedent have been complied with.
ARTICLE 7
COVENANTS
SECTION 7.1 Payment of Principal and Interest.
The Company shall pay the principal of and interest on
Notes on the dates and in the manner provided in the Notes and in
accordance with the terms hereof. An installment of principal of or
interest on the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or an Affiliate of the
Company) holds in trust on that date U.S. Legal Tender designated for and
sufficient to pay the installment; provided, however, that U.S. Legal
Tender held by the Trustee after receipt of notice provided for in Section
9.12 below and for the benefit of holders of Senior Indebtedness pursuant
to the provisions of Article 10 hereof shall not be considered to be
designated for the payment of any installment of principal of or interest
on the Notes within the meaning of this Section 7.1.
SECTION 7.2 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 Trustee 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 Trustee of any such
designation or rescission and of any change in the location of any such
other office or agency.
SECTION 7.3 Money for Note Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of or interest
on any of the Notes, 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 and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents,
it will, prior to each due date of the principal of or interest on any
Notes, deposit with a Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of
the principal of or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided.
(2) give the Trustee notice of any default by
the Company (or any other obligor upon the Notes) in the making of any
payment of principal or interest; and
(3) at any time during the continuance of any
such default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of
or interest on any Note and remaining unclaimed for two years after such
principal or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect
to such trust money, and all liability of the Company as trustee thereof,
shall thereupon cease, provided, however, that the Company shall attempt,
not less than twice prior to the termination of such two-year period, to
contact the Holder at its last known address in the Note Register or any
other address provided by such Holder to the Company or the Trustee for
such purpose and provided further that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed
and that after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 7.4 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, (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 (i)
consummate the Reincorporation Merger to change the Company's state of
incorporation from Florida to Delaware (substantially upon the terms
described in the Notice of Special Meeting of Stockholders and Proxy
Statement filed by the Company with the SEC on September 18, 1998 (the
"Proxy Statement")).
SECTION 7.5 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.
SECTION 7.6 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.
SECTION 7.7 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).
SECTION 7.8 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.
SECTION 7.9 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 the Collateral Agent 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.
(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.
SECTION 7.10 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 Indenture
pursuant to the Subordinated 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 Indenture. 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
Indenture pursuant to the Subordinated 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 Indenture pursuant to the Subordinated 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 Indenture.
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 Indenture pursuant to the Subordinated
Guarantee Agreement.
SECTION 7.11 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.
SECTION 7.12 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 (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 and (C) earnings and losses from discontinued operations) 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,
(iv) restructuring charges disclosed in the 1997 Annual Report on Form 10-K
and the June 30, 1998 Quarterly Report on Form 10-Q and (v) charges and
expenses (including legal and accounting fees) incurred in connection with
the transactions entered into pursuant to the Exchange and as contemplated
by the Note Purchase Agreement.
Date
Minimum Operating Profit for Minimum Operating Profit for
three-month period ending on twelve-month period ending on
date indicated 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 the last day of each calendar quarter thereafter
$3,750,000 $15,000,000
SECTION 7.13 Tangible Assets.
The Company's Consolidated Tangible Assets shall exceed $50 million
on September 30, 1998 and each quarter thereafter.
SECTION 7.14 Statement by Officers as to Default.
The Company will deliver to the Trustee, 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 7.7, 7.8, 7.11, 7.12 and 7.13, and (ii) within 45
days after the end of each fiscal quarter, an Officers' Certificate in the
form of Exhibit 7.18 stating that as of the date of such certificate, based
upon such examination or investigation and review of this Indenture, 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 Indenture, 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.
SECTION 7.15 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.
SECTION 7.16 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 Indenture.
SECTION 7.17 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.
SECTION 7.18 Financial Statements and Information.
The Company shall furnish to the Trustee: (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 7.6, 7.8, 7.11, 7.12 and 7.13, and
(ii) within 45 days after the end of each fiscal quarter, an Officers'
Certificate in the form of Exhibit 7.18 stating that as of the date of such
certificate, based upon such examination or investigation and review of
this Indenture, 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 Indenture, 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, (ii) any default or event of default under any Indebtedness
of the Company or any of its Subsidiaries, (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, 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; and (e) such other information, including financial
statements and computations, relating to the performance of the provisions
of this Indenture 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 Indenture (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.
SECTION 7.19 Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Subsidiary to,
enter into any Sale-and-Leaseback Transaction.
SECTION 7.20 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 7.20 in form and with insurers reasonably acceptable to the
Holders of at least a majority in principal amount of Outstanding Notes.
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 Trustee may (at the
direction of the Holders of at least a majority in principal amount of
Outstanding Notes) 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 Holders
of at least a majority in principal amount of Outstanding Notes deem
advisable. Neither the Trustee nor the Holders of at least a majority in
principal amount of Outstanding Notes shall have any obligation to obtain
insurance for the Company or any of its Subsidiaries or pay any premiums
therefor. By doing so, the Trustee 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
Trustee 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.
SECTION 7.21 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.
SECTION 7.22 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply
with any covenant or condition set forth in Sections 7.4 to 7.21,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend
to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such covenant
or condition shall remain in full force and effect.
ARTICLE 8
REDEMPTION OF NOTES
SECTION 8.1 Notices to Trustee.
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 8.7 hereof, it shall furnish to
the Trustee, at least 60 days but not more than 90 days before a redemption
date, an officer's certificate setting forth (i) the redemption date, (ii)
the principal amount of Notes to be redeemed and (iii) the redemption
price.
SECTION 8.2 Selection of Notes to be Redeemed.
If less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes to be redeemed among the Holders
of the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes
are not so listed, on a pro rata basis.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples
of $1,000. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 8.3 Notice of Redemption.
At last 30 days but not more than 90 days before a
redemption date, the Company shall mail or cause to be mailed, by first
class mail, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.
The notice shall identify the Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in a
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) that Notes called for redemption must be
surrendered to the Trustee to collect the redemption price; and
(e) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however,
that the Company shall have delivered to the Trustee, at least 5 days prior
to the Company's proposed date of mailing of the notice, an officer's
certificate requesting that the Trustee give such notice and setting forth
the information to be stated in such notice as provided in the preceding
paragraph (unless a shorter notice shall have been agreed to by the Trustee
in writing).
SECTION 8.4 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 8.3 hereof, Notes called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of
redemption may not be conditional.
SECTION 8.5 Deposit of Redemption Price.
Three Business Days prior to the redemption date, the
Company shall deposit with the Trustee money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on
that date. The Trustee shall promptly return to the Company any money
deposited with the Trustee by the Company in excess of the amounts
necessary to pay the redemption price of and accrued interest on all Notes
to be redeemed.
If the Company complies with the provisions of the
preceding paragraph, on and after the redemption date, interest shall cease
to accrue on the Notes or the portions of Notes called for redemption. If
a Note is redeemed on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Note was registered at the
close of business on such record date. If any Note called for redemption
shall not be so paid upon surrender for redemption because of the failure
of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes.
SECTION 8.6 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon the written order of the Company signed by
two Officers of the Company, the Trustee shall authenticate for the Holder
at the expense of the Company a new Note equal in principal amount to be
unredeemed portion of the Note surrendered.
SECTION 8.7 Optional Redemption.
(a) The Company shall have the option to redeem the
Notes, in whole or in part, at a redemption price of 100% of the principal
amount thereof, plus accrued and unpaid interest thereon, to the applicable
redemption date.
(b) Any redemption pursuant to this Section 8.7 shall
be made pursuant to the provisions of Section 8.1 through Section 8.6
hereof.
SECTION 8.8 Mandatory Redemption.
The Company shall not be required to make mandatory
redemption payments with respect to the Notes.
ARTICLE 9
SUBORDINATION
SECTION 9.1 Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by and the obligations relating to
the Note are subordinated and subject in right of payment, to the extent
and in the manner provided in this Article, to the prior payment in full of
all Senior Indebtedness, and that the subordination is for the benefit of
the holders of Senior Indebtedness. Simultaneously herewith, the Trustee is
entering into an Intercreditor Agreement with the Collateral Agent. The
Trustee acknowledges and agrees that the indebtedness evidenced by and
obligations relating to the Notes are subordinated in right of payment to
the prior payment in full of all Senior Indebtedness and the Trustee
further acknowledges and agrees that the Collateral Agent's liens on the
Collateral are first priority liens.
SECTION 9.2 Certain Definitions.
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 9.3 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
the Company or its property, in an assignment for the benefit of creditors
or any marshalling of the Company's assets and liabilities:
(1) holders of Senior Indebtedness shall receive
payment in full of all Senior Indebtedness before Holders shall be entitled
to receive any payment in respect to the Indebtedness and obligations with
respect to the Notes; and
(2) until all Senior Indebtedness (as provided in
clause (1) above) are paid in full, any distribution to which Holders would
be entitled but for this Article shall be made to holders of Senior
Indebtedness, as their interests may appear.
SECTION 9.4 Default on Senior Indebtedness
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Indebtedness or obligations with
respect to the Notes and may not acquire from the Trustee or any Holder any
Notes for cash or property until all principal and other obligations with
respect to the Senior Indebtedness have been paid in full if:
(i) a default in the payment of any Senior Indebtedness
occurs and is continuing beyond any applicable grace period in the
agreement, indenture or other document governing such Senior Indebtedness;
or
(ii) a default, other than a payment default, on Senior
Indebtedness occurs and is continuing that then permits holders of the
Senior Indebtedness to accelerate its maturity, and the Trustee receives a
notice of the default from a person who may give it pursuant to Section
9.12 hereof. If the Trustee receives any such notice, a subsequent notice
received within 360 days thereafter shall not be effective for purposes of
this section. No nonpayment default that existed or was continuing on the
date of delivery of any such notice to the Trustee shall be, or be made,
the basis for a subsequent notice unless such default shall have been
waived for a period of not less than 180 days.
The Company may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon the earlier
of:
(1) the date upon which the default is cured or waived,
or
(2) in the case of a default referred to in Section
9.4(ii) hereof, 180 days pass after notice is received if the maturity of
such Senior Indebtedness has not been accelerated and such default has not
become the subject of judicial proceedings,
if this Article otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 9.5 Acceleration of Notes.
If payment of the Notes is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration and neither the Company nor the Trustee
shall make any payment to the Holders of the Notes for 120 days after such
default.
SECTION 9.6 When Distribution Must Be Paid Over.
If a payment or distribution is made to the Trustee or any
Holder that because of this Article 9 should not have been made to it, the
Trustee or such Holder who receives the distribution shall hold it in trust
for the benefit of, and, upon written request, pay it over to, the holders
of Senior Indebtedness as their interests may appear, or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all Indebtedness
and obligations with respect to Senior Indebtedness remaining unpaid to the
extent necessary to pay such Indebtedness and obligations in full in
accordance with their terms, after giving effect to any concurrent payment
or distribution or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 9, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee.
SECTION 9.7 Notice by Company.
The Company shall promptly notify the Trustee and the
Paying Agent of any facts known to the Company that would cause a payment
of any obligations with respect to the Notes to violate this Article, but
failure to give such notice shall not affect the subordination of the Notes
to the Senior Indebtedness as provided in this Article.
SECTION 9.8 Subrogation.
After all Senior Indebtedness is indefeasibly paid in full
and until the Notes are paid in full, Holders shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the
rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness that otherwise would have been made to Holders is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 9.9 Relative Rights.
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors
of the Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 9.10 Subordination May Not be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce
the subordination of the Indebtedness evidenced by the Notes shall be
impaired by any act or failure to act by the Company or any holder of
Senior Indebtedness or by the failure of the Company or any holder of
Senior Indebtedness to comply with this Indenture. The holders of Senior
Indebtedness may extend, renew, modify or amend the terms of Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company, all without affecting
the liabilities and obligations of the parties to the Indenture or the
Holders of the Notes or the rights of such Senior Indebtedness hereunder.
SECTION 9.11 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 9, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 9.
SECTION 9.12 Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 9, or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of
any payment or distribution by the Trustee, and the Trustee and the Paying
Agent may continue to make payments on the Notes, unless the Trustee shall
have received at its Corporate Trust Office at least five Business Days
prior to the date of such payment written notice of facts that causes the
payment of any obligations with respect to the Notes to violate this
Article. Only the Company or the Trustee may give the notice. Nothing in
this Article 9 shall impair the claims of, or payments to, the Trustee
under or pursuant to Section 5.7 hereof.
The Trustee in its individual or any other capacity may
hold Senior Indebtedness with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 9.13 Authorization to Effect Subordination.
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
as provided in this Article 9 or as provided in the Intercreditor
Agreement, and appoints the Trustee the Holder's attorney-in-fact for any
and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to
in Article 4 hereof at least 30 days before the expiration of the time to
file such claim, the Representatives of the Senior Indebtedness are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
the Notes.
SECTION 9.14 Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute to
Holders of Notes or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
SECTION 9.15 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture
shall deprive the Trustee of any of its rights as such holder.
SECTION 9.16 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the
term "Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article in addition to or in place of
the Trustee; provided, however, that Section 11.3 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECTION 9.17 Amendment.
The provisions of this Article 9 shall not be amended or
modified without the written consent of the number of holders of all Senior
Indebtedness that would be entitled to amend such subordination provisions
pursuant to the agreements governing the Senior Indebtedness.
ARTICLE 10
SECURITY
SECTION 10.1 Security.
(a) In order to secure the obligations of the Company
and the Guarantors under the Indenture, the Notes and the Collateral
Documentation, the Company, the Guarantors and the Trustee, as applicable,
have entered into the Collateral Documentation in order to create the
security interests contemplated thereby. Each Holder, by accepting a Note,
agrees to all of the terms and provisions of the Collateral Documentation
and the Trustee agrees to all of the terms and provisions of the Collateral
Documentation signed by it.
(b) The Trustee and each Holder, by accepting a Note,
acknowledge that the holders of any Senior Indebtedness have or may in the
future obtain certain rights in and to the Collateral that are senior in
right to the interest of the Trustee (for the benefit of the Holders) in
the Collateral under this Indenture and the Collateral Documentation and
the Trustee agrees to be bound by such intercreditor or subordination
agreements consistent with Article 9 as shall be requested by the holders
of the Senior Indebtedness as such agreements may be in effect from time to
time.
(c) As amongst the Holders, the Collateral as now or
hereafter constituted shall be held for the equal and ratable benefit of
the Holders without preference, priority or distinction of any thereof over
any other by reason of difference in series or in time of issuance, sale or
otherwise, as security for the obligations of the Company and the
Guarantors under the Indenture, the Notes and the Collateral Documentation.
SECTION 10.2 Recording, etc.
The Company will have caused or will cause this Indenture,
the Collateral Documentation and the other Documents and all amendments or
supplements to each of the foregoing to be registered, recorded and filed
and/or re-recorded, re-filed and renewed in such manner and in such place
or places, if any, as may be required by law or reasonably requested by the
Trustee or the Holders of a majority of Outstanding Notes in order fully to
preserve and protect the Lien of the Indenture, the Collateral
Documentation and the other Documents on all parts of the Collateral to
effectuate and preserve the security of the Holders and all rights of the
Trustee.
The Company shall furnish, and shall cause any other
obligor to furnish, to the Trustee:
(i) promptly after the execution and delivery
of the Indenture, and promptly after the execution and delivery of any
Collateral Documentation or other instrument of further assurance or
amendment, an Opinion of Counsel, subject to customary exclusions and
exceptions reasonably acceptable to the Trustee, either (a) stating that,
in the opinion of such counsel, this Indenture, the Collateral
Documentation and all other instruments of further assurance or amendment
have been properly recorded, registered and filed to the extent necessary
to make effective the Lien intended to be created by the Indenture and the
Collateral Documentation and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are given, and
stating that as to the Indenture and Collateral Documentation and such
other instruments such recording, registering and filing are the only
recordings, registerings and filings necessary to give notice thereof and
that no re-recordings, re-registerings or re-filings are necessary to
maintain such notice, and further stating that all financing statements and
continuation statements and mortgages have been executed and filed that are
necessary fully to preserve and protect the rights of the Holders and the
Trustee hereunder and under the Collateral Documentation or (b) stating
that, in the opinion of such counsel, no such action is necessary to make
such Lien and pledge effective; and
(ii) within 60 days after January 1 in each year
beginning with January 1, 1999, an Opinion of Counsel, dated as of such
date, either (a) stating that, in the opinion of such counsel, subject to
customary exclusions and exceptions reasonably acceptable to the Trustee,
such action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and re-filing of the Indenture and all
supplemental indentures, financing statements, continuation statements and
mortgages or other instruments of further assurance as is necessary to
maintain the Lien of the Indenture and the Collateral Documentation and
reciting the details of such action or referring to prior opinions of
Counsel in which such details are given, and stating that all financing
statements and continuation statements and mortgages have been executed and
filed that are necessary fully to preserve and protect the rights of the
Holders and the Trustee hereunder and under the Collateral Documentation or
(b) stating that, in the opinion of such counsel, no such action is
necessary to maintain such Lien.
SECTION 10.3 Requesting Release of Collateral.
(a) Upon receipt of a Company Request or the request of
the Trustee, the Trustee shall execute and deliver, within five Business
Days from the receipt of such Company Request pursuant to this Section
10.3, any instruments deemed by the Company or a Guarantor to be necessary
or appropriate to release all or a part of the Collateral from the Lien of
this Indenture and the Collateral Documentation, if the provisions of this
Section 10.3 have been complied with. Any such Company Request shall
request the Trustee to execute one or more specifically described release
instruments (which release instruments shall accompany such Company
Request) and shall certify that no Default or Event of Default has occurred
and is continuing and such Company Request shall also certify that one of
the following conditions of this Section 10.3(a) set forth below, and the
conditions of Section 10.4 or 10.5, if applicable, have been, or
simultaneously with or immediately following the release will be,
fulfilled:
(i) the Trustee has released such Collateral;
(ii) there is a deposit of Cash Collateral in
accordance with Section 10.6;
(iii) the Collateral to be released is insurance
proceeds and such Collateral is used for repair, replacement or deposit as
Cash Collateral ; or
(iv) the Company represents in the Company
Request that the Collateral to be released is to be released in connection
with repayment of all Outstanding Notes or defeasance of this Indenture
pursuant to the provisions of this Indenture.
(b) In the event and so long as this Indenture is
qualified under the Trust Indenture Act, as a condition to any release of
Collateral under this Section 10.3, the Company shall deliver to the
Trustee any certificate or opinion required by Trust Indenture Act Sections
314(c)(3) or 314(d) dated as of a date not more than 60 days prior to the
date of substitution or release. In the case of the repayment of all
Outstanding Notes or defeasance of this Indenture pursuant to the
provisions of this Indenture, such certificate or opinion shall state that
all of the Notes then Outstanding are to be repaid and that all of the
Collateral is to be released on or after the date of payment or the deposit
of funds or other property in accordance with the defeasance provisions of
Article 3.
(c) Any release of Collateral made in compliance with
the provisions of this Section 11.4 shall be deemed not to impair the Lien
of this Indenture and the Collateral Documentation in contravention of the
provisions of this Indenture.
SECTION 10.4 Reliance on Opinion of Counsel.
The Trustee shall, before taking any action under this
Article 10, be entitled to receive an Opinion of Counsel, stating the legal
effect of such action, and that such action will not be in contravention of
the provisions hereof, and such opinion shall be full protection to the
Trustee for any action taken or omitted to be taken in reliance thereon;
provided that, in the event and so long as this Indenture is qualified
under the Trust Indenture Act, the Trustee's action under this Article 10
shall at all times be and remain subject to its duties under Section 315 of
the Trust Indenture Act.
SECTION 10.5 Purchaser May Rely.
A purchaser in good faith of the Collateral or any part
thereof or interest therein which is purported to be transferred, granted
or released by the Trustee as provided in this Article 10 shall not be
bound (i) to ascertain, and may rely on the authority of the Trustee to
execute, such transfer, grant or release, or (ii) to inquire as to the
satisfaction of any conditions precedent to the exercise of such authority,
or (iii) to determine whether the application of the purchase price
therefor complies with the terms hereof.
SECTION 10.6 Payment of Expenses.
On demand of the Trustee, the Company forthwith shall pay
or satisfactorily provide for all reasonable expenditures incurred by the
Trustee under this Article 10, and all such sums shall be a Lien upon the
Collateral and shall be secured thereby.
SECTION 10.7 Suits to Protect the Collateral.
To the extent permitted thereunder, the Trustee shall have
power to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any acts
which may be unlawful or in violation of the Collateral Documentation or
this Indenture, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interests of the
Holders in the Collateral and the Collateral Documentation or this
Indenture, and in the profits, rents, revenues and other income arising
therefrom, including power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such
enactment, rule or order would impair the Collateral or be prejudicial to
the interests of the Holders or the Trustee.
SECTION 10.8 Trustee's Duties.
The powers conferred upon the Trustee by this Article 10
are solely to protect the Lien of this Indenture and the Collateral
Documentation and shall not impose any duty upon the Trustee to exercise
any such powers except as expressly provided in this Indenture. The
Trustee shall be under no duty whatsoever to make or give any presentment,
demand for performance, notice of nonperformance, protest, notice of
protest, notice of dishonor, or other notice or demand in connection with
any Collateral, or to take any steps necessary to preserve any rights
against prior parties except as expressly provided in this Indenture. The
Trustee shall not be liable for failure to collect or realize upon any or
all of the Collateral, or for any delay in so doing, nor shall the Trustee
be under any duty to take any action whatsoever with regard thereto. The
Trustee shall have no duty to comply with any recording, filing or other
legal requirements necessary to establish or maintain the validity,
priority or enforceability of the Lien of this Indenture and the Collateral
Documentation in, or the Trustee's rights in or to, any of the Collateral.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act.
In the event and so long as this Indenture is qualified
under the Trust Indenture Act, if any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in
this Indenture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
SECTION 11.2 Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing
such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each
such individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion
of each such individual, such condition or covenant has been complied with.
SECTION 11.3 Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or given an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should now, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it related to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not,
be consolidated and form one instrument.
SECTION 11.4 Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 5.1) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Persons
of any such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying that
the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Note shall bind
every future Holder of the same Note and the Holder of every Note issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.5 Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with.
(1) the Trustee by any Holder or by the Company
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administrator or
(2) the Company by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid
to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 11.6 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at its address as it appears in the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval
of the Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 11.7 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a
meeting of Holders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 11.8 Communications by Holders With Other Holders.
Noteholders may communicate pursuant to Section 312(b) of
the Trust Indenture Act with other Noteholders with respect to their rights
under this Indenture or the Notes. The Company, the Trustee, the Registrar
and any other Person shall have the protection of Section 312(c) of the
Trust Indenture Act.
SECTION 11.9 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
SECTION 11.10 No Recourse Against Others.
No director, officer, employee or stockholder, as such, of
the Company shall have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
SECTION 11.11 Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.
SECTION 11.12 Separability Clause.
In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.13 Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness and the Holders of
Notes, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 11.14 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS 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.
SECTION 11.15 Legal Holidays.
In any case where any Interest Payment Date or Stated
Maturity of any Note shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Notes) payment of interest or
principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, or at the Stated Maturity, provided that no interest
shall accrue for the period from and after such Interest Payment Date or
Stated Maturity, as the case may be.
SECTION 11.16 Counterparts.
This Indenture may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 11.17 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.18 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR ANY
GUARANTOR WITH RESPECT TO THIS INDENTURE, THE GUARANTIES, ANY NOTE OR ANY
OTHER DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN NEW YORK, NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
INDENTURE, EACH OF THE COMPANY AND EACH GUARANTOR ACCEPTS, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES
TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
INDENTURE, THE GUARANTIES, ANY NOTE OR ANY OTHER DOCUMENT FROM WHICH NO
APPEAL HAS BEEN TAKEN OR IS AVAILABLE. EACH OF THE COMPANY AND EACH
GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
NOTICE ADDRESS OF THE COMPANY SPECIFIED HEREIN SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE COMPANY AND EACH
GUARANTOR AND THE TRUSTEE IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, 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 OR PROCEEDING IN ANY SUCH JURISDICTION.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO
BRING PROCEEDINGS AGAINST THE COMPANY OR ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 11.19 Waiver of Jury Trial.
EACH OF THE COMPANY, EACH GUARANTOR AND THE TRUSTEE AND
EACH HOLDER BY ACCEPTANCE OF A NOTE HEREBY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS INDENTURE, ANY GUARANTY OR ANY NOTE OR ANY OTHER DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of the transactions contemplated by this Indenture and the
other Documents, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory
claims. The Company, each Guarantor and the Trustee and each Holder by
acceptance of a Note each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Indenture, the Guaranty and the
other Documents and in issuing and purchasing the Notes and that each will
continue to rely on the waiver in their related future dealings. The
Company, each Guarantor and the Trustee and each Holder by acceptance of a
Note further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS INDENTURE OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE NOTES. IN THE EVENT OF LITIGATION, THIS
INDENTURE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Ilan K. Reich
Attest:
/s/ Carol A. Brennan
Carol A. Brennan
SANTA BARBARA BANK & TRUST
By: /s/ Jay D. Smith
Jay D. Smith
Attest:
/s/ Christine M. Sontag
Christine M. Sontag
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT REMEMBERED, that on ______________, 1998, before me,
the subscriber, ___________________________ personally appeared
__________________ who, being by me duly sworn on his oath, deposes and
makes proof to my satisfaction, that he is __________________________ of
INAMED CORPORATION, a Florida corporation, the corporation named in the
within instrument; that ________________________ is a __________________of
said corporation; that the execution, as well as the making of this
Instrument, has been duly authorized by a proper resolution of the Board of
Directors of the said Corporation; that deponent well knows the corporate
seal of said Corporation; and that the seal affixed to said Instrument is
the proper corporate seal and was thereto affixed and said Instrument
signed and delivered by said _____________________ as and for the voluntary
act and deed of said Corporation, in the presence of deponent, who
thereupon subscribed his name thereto as attesting witness.
____________________________
Sworn to and subscribed before
me, the date aforesaid.
______________________________
Notary Public
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT REMEMBERED, that on ______________, 1998, before me,
the subscriber, ______________________ personally appeared
__________________ who, being by me duly sworn on his oath, deposes and
makes proof to my satisfaction, that he is __________________________ of
SANTA BARBARA BANK & TRUST, a California banking corporation, a corporation
named in the within instrument; that ________________________ is a
__________________ of said corporation; that the execution, as well as the
making of this Instrument, has been duly authorized by a proper resolution
of the Board of Directors of the said Corporation; that deponent well knows
the corporate seal of said Corporation; and that the seal affixed to said
Instrument is the proper corporate seal and was thereto affixed and said
Instrument signed and delivered by said _____________________ as and for
the voluntary act and deed of said Corporation, in the presence of
deponent, who thereupon subscribed his name thereto as attesting witness.
____________________________
Sworn to and subscribed before
me, the date aforesaid.
______________________________
Notary Public
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(Insert assignee's Social Security or Tax I.D. No.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint(s)
agent to transfer this Note on the
books of Inamed. The agent may substitute another to act for the agent.
Date: ______________________
Your Signature: ______________________________________
(Sign exactly as your name appears on the other side of this
Note)
[Signature Guarantee]
Exhibit A
Form of Senior Secured Note
Exhibit B
Form of Subordinated Security Agreement
Exhibit C
Form of Subordinated Guarantee and Security Agreement
Exhibit D
Form of Subordinated Guarantee Agreement
Exhibit E
Form of Intercompany Note
Exhibit 99.3
EXCHANGE WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
No. of Shares of Common Stock:
THIS EXCHANGE 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:
EXCHANGE 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
$5.50 per share (subject to adjustment as provided herein, the "Warrant
Price"), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Exchange 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.
"Affiliate" shall have the meaning ascribed to such term 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 Holder
or any limited partners of a limited partner of any Holder.
"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 November 5, 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 Exchange Warrant on such
date.
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this Exchange
Warrant is registered on the books of the Company maintained for such
purpose. "Holders" shall mean, collectively, each Holder of an Exchange
Warrant, in the event of any division of this Exchange Warrant.
"Loan Notes" shall mean the Company's 10% Senior Secured
Notes issued pursuant to the Note Purchase Agreement, dated as of September
30, 1998.
"Majority Holders" shall mean the holders of Exchange
Warrants exercisable for in excess of 50% of the aggregate number of shares
of Warrant Stock then purchasable upon exercise of all Exchange Warrants.
"Notes" shall mean the Company's 11% Senior Subordinated
Secured Notes issued pursuant to the Subordinated Indenture between the
Company and Santa Barbara Bank & Trust, dated as of the date hereof.
"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 Exchange
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 Exchange
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.
"Exchange Warrants" shall mean this Exchange Warrant and
all warrants issued upon transfer, division or combination of, or in
substitution for, any thereof. All Exchange 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 Exchange Warrants upon the exercise
thereof.
2. EXERCISE OF EXCHANGE 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 Exchange 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 Exchange 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 Exchange 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
Exchange Warrant. Such notice shall be substantially in the form appearing
at the end of this Exchange 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
Exchange 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 Exchange Warrant, are
received by the Company as described above. If this Exchange Warrant shall
have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Exchange Warrant Stock,
deliver to Holder a new Exchange Warrant evidencing the right of Holder to
purchase the unpurchased shares of Common Stock called for by this Exchange
Warrant, which new Exchange Warrant shall in all other respects be
identical with this Exchange Warrant, or, at the request of Holder,
appropriate notation may be made on this Exchange 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 or (ii) by tendering Notes
or Loan Notes having a principal face amount such that the amount of such
Notes or Loan Notes, together with accrued and unpaid interest thereon
shall be equal to the Warrant Price (the Company hereby agreeing to reissue
any Notes or Loan Notes of a Holder into one or more Notes or Loan Notes in
denominations requested by such Holder)
2.2. Payment of Taxes. All shares of Common Stock issuable upon
the exercise of this Exchange 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 Exchange
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.
2.4 Mandatory Exercise. (a) Subject to the limitations set forth
in subsection 2.4(c)below, the Company may, at its sole option, require the
exercise (a "Mandatory Exercise") of the Permitted Portion (as defined
below) of the Exchange Warrants.
(b) Upon the election by the Company to require a
Mandatory Exercise, the Company shall deliver to each Holder at least ten
Business Days prior to the date of the Mandatory Exercise a notice (the
"Exercise Notice") which shall include (i) the date of Mandatory Exercise,
(ii) the Permitted Portion of the Exchange Warrants to be exercised and
(iii) a certification that the conditions to the Mandatory Exercise set
forth in subsection 2.4(c) have been satisfied.
Upon receipt of the Exercise Notice, each Holder shall be
required to exercise the Permitted Portion of such Holder's Exchange
Warrants on the date of the Mandatory Exercise pursuant to the provisions
of Section 2.1. Each Holder shall notify the Company prior to the date of
the Mandatory Exercise of its intended method of payment of the Warrant
Price, and satisfy all conditions set forth in Section 2.1 with respect to
such exercise, including without limitation to deliver the Exchange Warrant
to the principal office of the Company as provided therein. Following the
date of the Mandatory Exercise, the Exchange Warrant as it relates to the
Permitted Portion shall be deemed to be cancelled with respect to such
exercised portion.
(c) Notwithstanding the foregoing, a Mandatory Exercise
shall not be permitted except as follows: (i) the date of Mandatory
Exercise is subsequent to September 1, 2000; (ii) the United States
District Court, Northern District of Alabama, Southern Division (or any
successor court with jurisdiction over the Silicone Gel Breast Implant
Products Liability Litigation (MDL 926)) has issued an order certifying the
Company's Mandatory (non "opt-out" Limited Fund) Class under Rule
23(b)(1)(B) of the Federal Rules of Civil Procedure, and such order has
become a final (non-appealable) order, (iii) all registration statements
have been declared effective with respect to the shares of Common Stock
issued or issuable on exercise of the Exchange Warrants and (iv) either
clause (i) or clause (ii) of the definition of Permitted Portion is
applicable.
As used herein, Permitted Portion shall mean (i)
one-half of such Holder's Exchange Warrants in the event the Closing Price
of the Common Stock for each of the 90 days (to the extent such day was a
Business Day) immediately prior to the date of the Exercise Notice is
greater than $11.00 or (ii) all of such Holder's Exchange Warrants in the
event the Closing Price of the Common Stock for each of the 180 days (to
the extent such day was a Business Day) immediately prior to the date of
the Exercise Notice is greater than $11.00.
(d) If a Holder shall not exercise the portion of the
Exchange Warrant as required by the Exercise Notice and this Section 2.4,
then such portion of such Exchange Warrant shall be deemed forfeited and
such option shall be of no further force or effect.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9, transfer
of this Exchange 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 Exchange Warrant at the principal office of
the Company referred to in Section 2.1, together with a written assignment
of this Exchange 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 Exchange Warrant or Exchange 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 Exchange Warrant
evidencing the portion of this Exchange Warrant not so assigned, and this
Exchange Warrant shall promptly be canceled. An Exchange 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
Exchange Warrant issued.
3.2. Division and Combination. Subject to Section 9, this
Exchange Warrant may be divided into multiple Exchange Warrants or combined
with other Exchange 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 Exchange 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 Exchange Warrant
or Exchange Warrants in exchange for the Exchange Warrant or Exchange
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 Exchange Warrant or
Exchange 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 Exchange Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this
Exchange Warrant is exercisable and/or the price at which such shares may
be purchased upon exercise of this Exchange 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 Exchange
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
Exchange 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 Exchange Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for which this
Exchange 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 Exchange
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 Exchange Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for which this
Exchange 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 Exchange 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 Exchange 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 Exchange
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 Exchange 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 Exchange 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 Exchange
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 Exchange 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 Exchange 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 Exchange
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 Exchange
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 Exchange
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 Exchange 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 Exchange 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 Exchange 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 Exchange 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 Exchange 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 Exchange
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 Exchange 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 Exchange 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 Exchange 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.
4.11 Adjustment. Notwithstanding the provisions otherwise set
forth herein, the Warrant Price shall be decreased by $.50, to $5.00 per
share, if (i) the Company shall fail to register with the Commission on an
appropriate form under the Securities Act, and to cause to become effective
a registration statement with respect to the Warrant Stock pursuant to the
provisions of Section 9.3 hereof, prior to September 1, 1999 or (ii) if the
Company shall register and cause to become effective such registration
statement prior to September 1, 1999, but shall not maintain such
effectiveness (after such date) as provided in Section 9.3(a). In addition,
the Warrant Price shall be decreased by an additional $.50, to $4.50 per
share, if (A) the Company shall fail to register with the Commission on an
appropriate form under the Securities Act, and to cause to become effective
a registration statement with respect to the Warrant Stock pursuant to the
provisions of Section 9.3 hereof, prior to March 1, 2000 or (B) if the
Company shall register and cause to become effective such registration
statement prior to March 1, 2000, but shall not maintain such effectiveness
(after such date) as provided in Section 9.3(a). All adjustments to the
Warrant Price made pursuant to this Section 4.11 shall be made prior to
giving effect to all other adjustments made pursuant to this Article 4.
5. NOTICES TO EXCHANGE WARRANT HOLDERS
5.1. Notice of Adjustments. Whenever the number of shares of
Common Stock for which this Exchange Warrant is exercisable, or whenever
the price at which a share of such Common Stock may be purchased upon
exercise of the Exchange 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
Exchange 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 Exchange 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 an Exchange 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 Exchange 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 Exchange 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 Exchange 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 Exchange Warrant.
Upon the request of Holder, the Company will at any time
during the period this Exchange Warrant is outstanding acknowledge in
writing, in form reasonably satisfactory to Holder, the continuing validity
of this Exchange 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 Exchange
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
Exchange Warrants. All shares of Common Stock which shall be so issuable,
when issued upon exercise of any Exchange Warrant and payment therefor in
accordance with the terms of such Exchange Warrant, shall be duly and
validly issued and fully paid and nonassessable.
8. TAKING OF RECORD; STOCK AND Exchange 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 Exchange Warrant transfer books so as to result
in preventing or delaying the exercise or transfer of any Exchange Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Exchange 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 Exchange Warrant or any Warrant Stock. Holder, by
acceptance of this Exchange 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 Exchange Warrant and each certificate for Warrant Stock
initially issued upon the exercise of an Exchange 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 EXCHANGE 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 Exchange Warrants or any
shares of Restricted Common Stock, the holder of such Exchange 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 Exchange
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 Exchange 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 Exchange 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 Exchange 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
Exchange Warrants or the Restricted Common Stock, as the case may be,
giving the Transfer Notice shall not be entitled to Transfer such Exchange
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
Exchange 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 Exchange 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 Exchange 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 Exchange 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 Warrant 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 Exchange 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).
In addition to any other registration rights contained
herein or elsewhere, if, at any time, the Company proposes an Incidental
Registration, the Company will give prompt written notice to Appaloosa
Management, L.P. ("Appaloosa") of its intention to effect such Incidental
Registration and of Appaloosa's rights under this paragraph. Upon the
written request of Appaloosa made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
shares of Common Stock intended to be disposed of by Appaloosa), the
Company will use its best efforts to effect the registration under the
Securities Act of all shares of Common Stock which the Company has been so
requested to effect in such Incidental Registration. Appaloosa shall have
the right to withdraw its request for inclusion of its Common Stock in any
registration statement pursuant to this paragraph at any time by giving
written notice to the Company of its request to withdraw. The Company will
pay all expenses in connection with any registration pursuant to this
paragraph of Common Stock held by Appaloosa or its Affiliates.
(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 Exchange 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 Exchange 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 Exchange 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. Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Exchange Warrants, the Warrant Stock and the
Restricted Common Stock and the legend requirements of Section 9.1 shall
terminate as to any particular Exchange 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 an Exchange 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 Exchange 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 Exchange 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 Exchange
Warrant of like tenor to such Holder; provided, in the case of mutilation,
no indemnity shall be required if this Exchange 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
Exchange 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 Exchange 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 Exchange 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 Exchange 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 Exchange 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 Exchange 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
Exchange Warrant are intended to be for the benefit of all Holders from
time to time of this Exchange Warrant and, with respect to Section 9
hereof, holders of Exchange Warrant Stock, and shall be enforceable by any
such Holder or holder of Warrant Stock.
13.5. Amendment. This Exchange Warrant and all other Exchange
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 Exchange Warrant may be modified or amended to reduce the number of
shares of Common Stock for which such Exchange Warrant is exercisable or to
increase the price at which such shares may be purchased upon exercise of
such Exchange 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
Exchange Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Exchange 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 Exchange Warrant.
13.7. Headings. The headings used in this Exchange Warrant are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Exchange Warrant.
13.8. Governing Law. THIS EXCHANGE 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
Exchange 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 Exchange
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 Exchange 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 EXCHANGE WARRANT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Exchange
Warrant to be duly executed and its corporate seal to be impressed hereon
and attested by its Secretary or an Assistant Secretary.
Dated: November 5, 1998
INAMED CORPORATION
By:
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Exchange 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 99.4
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:
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
$7.50 per share (subject to adjustment as provided herein the "Warrant
Price"), 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.
"Affiliate" shall have the meaning ascribed to such term 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 Holder
or any limited partners of a limited partner of any Holder.
"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 November 5, 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.
"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.
"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.
"Loan Notes" shall mean the Company's 10% Senior Secured
Notes issued pursuant to the Note Purchase Agreement, dated as of September
30, 1998.
"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 either (i) the Company's 11.00% Senior
Subordinated Secured Notes issued pursuant to the indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, dated as of the date
hereof, or (ii) the 11% Senior Secured Convertible Notes due March 31, 1999
of the Company issued pursuant to the indenture between the Company and
Santa Barbara Bank & Trust, as Trustee, dated as of January 2, 1996.
"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
Loan Notes having a principal face amount such that the amount of such
Notes or Loan Notes, together with accrued and unpaid interest thereon
shall be equal to the Warrant Price (the Company hereby agreeing to reissue
any Notes or Loan Notes of a Holder into one or more Notes or Loan Notes 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. 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 at the time the Additional Shares of Common Stock
are issued, 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.
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 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 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
Warrant 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).
In addition to any other registration rights contained
herein or elsewhere, if, at any time, the Company proposes an Incidental
Registration, the Company will give prompt written notice to Appaloosa
Management, L.P. ("Appaloosa") of its intention to effect such Incidental
Registration and of Appaloosa's rights under this paragraph. Upon the
written request of Appaloosa made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
shares of Common Stock intended to be disposed of by Appaloosa), the
Company will use its best efforts to effect the registration under the
Securities Act of all shares of Common Stock which the Company has been so
requested to effect in such Incidental Registration. Appaloosa shall have
the right to withdraw its request for inclusion of its Common Stock in any
registration statement pursuant to this paragraph at any time by giving
written notice to the Company of its request to withdraw. The Company will
pay all expenses in connection with any registration pursuant to this
paragraph of Common Stock held by Appaloosa or its Affiliates.
(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. 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: November 5, 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 99.5
SECURITIES EXCHANGE AGREEMENT
by and between
INAMED CORPORATION
and
THE SECURITYHOLDERS
SIGNATORY HERETO
Dated as of October 7, 1998
THIS SECURITIES EXCHANGE AGREEMENT is dated as of October 7, 1998,
by and between INAMED CORPORATION, a Florida corporation (the "Company"),
and the persons named on the signature pages hereof and signatory hereto
(each, a "Holder").
WHEREAS, the Company has agreed that all interested Holders of Old
Notes (as defined herein) may exchange the Old Notes for a package of new
securities consisting of (i) Exchange Notes (as defined herein) and (ii)
Exchange Warrants (as defined herein); and
WHEREAS, the Company wishes to modify certain covenants contained
in the Old Notes, including among other things, increasing the basket for
senior secured debt and eliminating certain covenants contained therein;
and
WHEREAS, agreement by the Holder to the exchange of Old Notes for
Exchange Notes and Exchange Warrants under the terms described herein will
constitute consent to the proposed modifications to the Old Notes, as set
forth in Annex A attached hereto;
THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section I.1 Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the
meanings indicated:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Additional Warrants" means the warrants to acquire up to 500,000
shares of common stock of the Company with an exercise price of $7.50 per
share.
"Agreement" means this Securities Exchange Agreement, as the same
may be amended, supplemented or modified in accordance with the terms
hereof and in effect.
"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.
"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).
"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.
"Class Action Settlement Agreement" shall mean a Settlement
Agreement, dated April 2, 1998, which provides, among other things, for the
settlement of certain claims against the Company arising out of the Breast
Implant Litigation.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor code thereto, and any reference to the Code shall include a
reference to any successor provisions.
"Collateral Documentation" means the Subordinated Guarantee and
Security Agreement, the Subordinated Guarantee Agreements, the Subordinated
Security Agreement, the Financing Statements, the Exchange Offer
Intercreditor Agreement, the Intercompany Notes and the endorsements
thereof to the Trustee (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 Trustee (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 Exchange Notes and the Exchange Offer Registration Rights
Agreement.
"Common Stock" means the common stock of the Company, par value
$.01 per share.
"Commission" means the Securities and Exchange Commission.
"Company" means INAMED CORPORATION, a Florida corporation and any
successor to the Company, whether by contract, assumption, merger,
consolidation, operation of law or otherwise.
"Consent" means the consent of the Holders of the Old Notes to the
amendments to the Indenture set forth in Section 2.2.
"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.
"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
Material Subsidiaries.
"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" means the Employee Retirement Income Security Act of 1974,
as amended from time to time. Section references to ERISA are to ERISA as
in effect at the Time of Exchange and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"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.
"ERISA Plan" means an employee benefit plan as such term is defined
in Section 3(3) of ERISA, with respect to which the Company or an Affiliate
is a disqualified person or a party in interest, as those terms are defined
in Section 4975 of the Code and Section 3(14) of ERISA, respectively.
"Exchange" means the exchange of the Old Notes for the Exchange
Notes and Exchange Warrants and the Consent.
"Exchange 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.
"Exchange Notes" means the Company's 11.00% Senior Subordinated
Secured Notes due March 31, 1999 issued pursuant to the Exchange Notes
Indenture.
"Exchange Notes Indenture" means the form of indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, in substantially the
form as attached hereto as Exhibit A.
"Exchange Offer Documents" shall mean the Exchange Notes, the
Exchange Warrants, the Additional Warrants, the Exchange Notes Indenture,
the Securities Exchange Agreement, the Exchange Offer Registration Rights
Agreement, the Subordinated Guarantee and Security Agreement, the
Subordinated Security Agreement, the Subordinated Guaranty Agreement and
the Exchange Offer Intercreditor Agreement.
"Exchange Offer Intercreditor Agreement" shall mean the agreement,
dated as of the date hereof, between Appaloosa Management, L.P. as the
Collateral Agent under the New Financing and the Trustee for the Exchange
Notes under the Exchange Notes Indenture.
"Exchange Offer Registration Rights Agreement" shall mean the
agreement to be entered into between the Trustee and the holders of the
Exchange Notes.
"Exchange Warrants" shall mean warrants to acquire up to 3,671,616
shares of Common Stock of the Company with an exercise price of $5.50 per
share.
"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.
"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" means (i) the Persons who prior to the Time of Exchange
accepts and agrees to the terms hereof as indicated by its signature on the
signature page of this Agreement and (ii) each Person, if any, on whose
behalf the Holder executes this Agreement and whose Old Notes are the
subject of any exchange hereunder.
"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.
"Indenture" means the indenture between the Company and Santa
Barbara Bank & Trust, as Trustee, dated as of January 2, 1996, as amended.
"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.
"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).
"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 Exchange Offer Documents to which it is a
party, (c) the validity or enforceability of any of the Exchange Offer
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Exchange Offer Documents or (e) the timely payment or
performance of the Exchange Notes.
"Material Subsidiaries" at any time, shall mean any Subsidiary of
the Company, other than any Non-Significant Subsidiary of the Company.
"New Financing" means the 10% Senior Secured Notes to be issued by
the Company pursuant to the Note Purchase Agreement.
"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 Purchase Agreement" means the agreement dated as of September
30, 1998 between the Company, the parties listed on Exhibit A thereto and
Appaloosa Management, L.P. as Collateral Agent.
"Old Notes" means the 11% Senior Secured Convertible Notes due
March 31, 1999 of the Company issued pursuant to the Indenture.
"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.
"Person" means any individual (including an individual when acting
in a fiduciary capacity), corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, estate,
unincorporated organization or government or other agency or political
subdivision thereof.
"Prohibited Transaction" means a transaction described in Section
4975(e) of the Code or in Section 406 of ERISA, for which there is no
available exemption.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated the date hereof between the Purchasers and the Company with
respect to the New Financing.
"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.
"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.
"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
4.4.
"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 Exchange
Offer Documents to which it is a party.
"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.
"State" means each of the states of the United States, the District
of Columbia and the Commonwealth of Puerto Rico.
"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.
"Subordinated Guarantee and Security Agreement" shall mean the
agreement to be entered into by the Company's domestic Material
Subsidiaries and the Trustee.
"Subordinated Security Agreement" shall mean the agreement to be
entered into by the Company and the Trustee.
"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. <section> 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 mean an agreement with 3M, dated as of April
16, 1998, 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 ascribed
thereto in the Recitals.
"Time of Exchange" has the meaning provided therefor in Section 2.1
of this Agreement.
"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" means Santa Barbara Bank & Trust.
"Year 2000 Problem" shall have the meaning ascribed thereto in
Section 4.28.
ARTICLE II
EXCHANGE OF SECURITIES AND CONSENT TO MODIFICATION
Section II.1 Exchange of Securities. Subject to the terms and
conditions herein set forth, the Company agrees that it will issue the
Exchange Notes, Exchange Warrants and Additional Warrants to the Holders in
exchange for the Holders' Old Notes in such amounts as set forth on
Schedule 2.1 attached hereto, and the Holders agree that each will tender
such Holder's Old Notes to the Company in exchange for the Exchange Notes,
Exchange Warrants and Additional Warrants, at or prior to 5:00 p.m. New
York time on November 5, 1998 (the "Expiration Date"), which Old Notes, or
an Affidavit of Lost Secured Convertible Note in the event applicable,
shall be delivered to the Company, together with an executed copy of this
Agreement. The Company reserves the right to extend the Expiration Date
for receipt of Old Notes. Each Holder that does not tender such Holder's
Old Notes to the Company as set forth herein shall retain their Old Notes
subject to the terms of the Indenture, as modified hereby, and shall
receive the amount of the Additional Warrants set forth on Schedule 2.1.
The acceptance for exchange and the exchange of all outstanding Old
Notes which are validly tendered will be made promptly, but in any event
within 3 Business Days, after the Expiration Date. The Company will be
deemed to have accepted for exchange tendered Old Notes as, if and when the
Company gives oral or written notice to each Holder of its acceptance of
the tenders of such Old Notes. Any Old Notes tendered to and accepted by
the Company prior to the Expiration Date shall be exchanged as of November
5, 1998, or such other date that is the next business day after the
Expiration Date (the "Time of Exchange"). Delivery of the Exchange Notes
and Exchange Warrants in exchange for the Old Notes will be made by the
Company as soon as practicable after the Expiration Date.
The parties agree that for federal income tax purposes, the fair
market value of the Exchange Notes is $18,687,811 and the fair market value
of the Exchange Warrants is $917,904, and shall take no position
inconsistent with such valuations, except as otherwise required by law.
Section II.2 Consent. The completion and execution of
this Agreement shall also be deemed to constitute the Consent of the Holder
upon the Expiration Date to (i) the proposed modifications to the Old
Notes, as permitted by Article 7 of the Indenture, and as set forth in
Annex A contained herein, to be effective upon the Expiration Date and (ii)
the release of the Collateral (as defined in the Indenture) and the
assignment of the Collateral to Santa Barbara Bank and Trust, as Trustee of
the Exchange Notes Indenture. The Company intends to cause the execution
of a supplemental Indenture providing for the proposed modifications to
occur on or about the Expiration Date so long as Holders of at least a
majority in aggregate principal amount of the Old Notes have agreed to
tender the Old Notes under the terms of this Agreement. If the requisite
Consents are received and the supplemental indenture reflecting the
proposed modifications becomes operative, all persons who continue to hold
Old Notes thereafter will be subject to the provisions of the supplemental
Indenture. However, the Company's duty to accept Old Notes and to deliver
Exchange Notes, Exchange Warrants and Additional Warrants to Holders under
the terms of this Agreement shall not be affected by the inability of the
Company to obtain the required consents to make the proposed modifications.
Section II.3 Withdrawal. Tender of Old Notes and Consents may
be withdrawn at any time prior to the Time of Exchange. If the Exchange is
amended in any material respect, the Company will disclose such amendment
to each Holder and will extend the Exchange for a period of at least 5
Business Days to permit the Holders of the Old Notes to properly deliver or
withdraw their Old Notes and Consents. The Company may not withdraw or
otherwise revoke the Exchange, except as specifically provided herein.
Section II.4 Waiver. The completion and execution of this
Agreement shall be deemed to constitute an acknowledgement by each Holder
of its receipt of proper notice pursuant to Section 8.12 of the Indenture
relating to the proposed offering of the New Financing.
Section 2.5 Compliance with Trust Indenture Act. Unless already
so qualified, the Company agrees to (i) use its best efforts to cause the
Exchange Notes Indenture to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA") in connection with the registration of the
Exchange Notes under the Exchange Offer Registration Rights Agreement, (ii)
cooperate with the Trustee to effect such changes to the Exchange Notes
Indenture as may be required for the Exchange Notes Indenture to be so
qualified in accordance with the terms of the TIA, and (iii) execute, and
use their best efforts to cause the Trustee to execute, all documents
required to be filed with the Commission to enable the Exchange Notes
Indenture to be so qualified in a timely manner.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Section III.1(a) Representations and Warranties of the
Holders. Each Holder severally represents and warrants to, and covenants
and agrees with, the Company that the Exchange Notes and Exchange Warrants
to be received by each Holder in exchange for Old Notes pursuant to this
Agreement are being received for such Holder's own account and not for the
account of any ERISA Plan, for the purpose of investment and with no
intention of distributing or reselling the Exchange Notes or Exchange
Warrants or any part thereof in any transaction, which would be or result
in a Prohibited Transaction or would be in violation of the securities laws
of the United States of America or any State, without prejudice, however,
to each Holder's rights at all times to sell or otherwise dispose of all or
any part of the Exchange Notes or Exchange Warrants under a registration
under the Act or under an exemption from such registration available under
such Act, provided that the disposition of such Holder's property at the
time of the sale or disposition of the Exchange Notes or Exchange Warrants
is within such Holder's control. If a Holder should in the future decide
to dispose of any of the Exchange Notes or Exchange Warrants, such Holder
understands and agrees with the Company that it will do so only (i) if such
disposition will not be or result in a Prohibited Transaction; (ii) if a
subsequent or transferee Holder shall agree in writing to be bound by the
representations and warranties of this Article III; and that such Holder
may do so only in compliance with the Act, as then in effect, and that
stop-transfer instructions to that effect will be in effect with respect to
the Exchange Notes or Exchange Warrants. If a Holder should decide to
dispose of any of the Exchange Notes or Exchange Warrants, the Company must
first be in receipt of an opinion of counsel to the effect that the
proposed disposition of the Exchange Notes or Exchange Warrants would not
be in violation of the Act. Each Holder agrees to the imprinting of
legends required by law on certificates representing all of the Exchange
Notes and Exchange Warrants including but not limited to the following:
"This security has not been registered under the Securities Act of 1933, as
amended, or any state securities laws and may be reoffered and sold,
pledged or otherwise transferred only if so registered or if an exemption
from registration is available."
Each Holder also severally represents and warrants to the Company
that (i) it has received and reviewed (a) the form of the Exchange Notes
Indenture and (b) copies of all annual reports and quarterly reports, proxy
statements and other reports filed by the Company since January 1, 1998
with the Securities and Exchange Commission pursuant to the terms of the
Securities Exchange Act of 1934, as amended; (ii) it is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act of 1933, as amended and has been afforded the opportunity to ask
questions and receive answers concerning the terms and conditions of the
Exchange Notes and Exchange Warrants and the transactions contemplated
hereby and has relied solely on the representations and warranties made
herein in determining to exchange the Old Notes for the Exchange Notes and
Exchange Warrants; (iii) it has all requisite corporate power and authority
(A) to execute, deliver and perform its obligations under this Agreement,
(B) to exchange the Old Notes for the Exchange Notes and Exchange Warrants
in the manner and for the purpose contemplated in this Agreement and (C) to
execute, deliver and perform its obligations under all other agreements and
instruments executed and delivered by, or to be executed and delivered by,
the Holder pursuant to or in connection with this Agreement or any of the
transactions contemplated hereby or thereby; (iv) this Agreement has been
duly and validly authorized by each Holder and this Agreement has been duly
and validly executed and delivered by each Holder and constitutes the
legal, valid and binding agreement of each Holder, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally;
and (v) the exchange of each Holder's Old Notes for the Exchange Notes and
Exchange Warrants does not violate such Holders' charter or by-laws or any
other governing documents, any material law or regulation or any court
order applicable to it.
Each Holder has relied solely on the representations made herein in
determining to exchange the Holder's Old Notes for the Exchange Notes and
Exchange Warrants pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Holder as follows:
Section IV.1 Organization and Qualification. Except as
set forth on Schedule 4.1, 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.
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.
Section IV.2 Due Authorization. Each Credit Party has
all right, power and authority to enter into, deliver and perform the
Exchange Offer Documents to which it is a party and to consummate the
transactions contemplated thereby. The execution and delivery of each
Exchange Offer Document by each Credit Party thereto and the performance by
such Credit Party of the transactions contemplated thereby (including,
without limitation, the issuance and sale of 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
Exchange Offer Document (as applicable) have been duly authorized by all
requisite corporate proceedings on the part of each Credit Party. Each of
the Exchange Offer Documents has been duly executed and delivered on behalf
of each Credit Party party thereto, and each such Exchange Offer 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.
Section IV.3 Subsidiaries. (a) Schedule 4.3(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 4.3(a), all of the
outstanding shares of capital stock or similar equity interests of each
Material Subsidiary shown in Schedule 4.3(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.
(e) Schedule 4.3(d) contains (except as noted therein)
a complete and correct list of all of the Company's Non-Significant
Subsidiaries.
Section IV.4 SEC Reports Correspondence. Except as set
forth in Schedule 4.4, 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 4.4, 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.
Section IV.5 Financial Statements. Except as set forth
in Schedule 4.5, 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 4.5 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 4.5 hereto.
Section IV.6 Litigation. (a) Except as set forth in
Schedule 4.6 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 4.6 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.
Section IV.7 Title to Properties; Insurance. (a) Except
as set forth in Schedule 4.7(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 4.7(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 4.7(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 Exchange Offer Documents will not result in any such
termination or premium increase. The Company does not maintain directors'
and officers' insurance.
Section IV.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 Exchange Offer Documents or the valid
offer, issue, sale or delivery of the Exchange Notes, Exchange Warrants or
the Additional 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 Exchange Offer 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'
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.
Section IV.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.
Section IV.10 Taxes. Except as set forth in Schedule
4.10:
(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.
Section IV.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 4.11 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.
Section IV.12 Intellectual Property Rights. Except as
disclosed on Schedule 4.12 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.
Section IV.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.
Section IV.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 Exchange Offer Documents.
Section IV.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 Exchange Offer Documents, nor the
issuance of the Exchange Notes, Exchange Warrants or the Additional
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 charter 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.
Section IV.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 4.16 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 4.16. 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.
Section IV.17 Disclosure. Neither any Exchange Offer
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.
Section IV.18 Offering of Notes. Neither the Company nor
any Person acting on its behalf has offered the Exchange Notes, Exchange
Warrants or the Additional Warrants or any similar securities of the
Company for sale to, solicited any offers to buy the Exchange Notes,
Exchange Warrants or the Additional 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 Holders 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
Exchange Notes, Exchange Warrants or the Additional Warrants under the
Securities Act) which could reasonably be expected to subject the offering,
issuance or sale of the Exchange Notes, Exchange Warrants or the Additional
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.
Section IV.19 Existing Indebtedness; Future Liens. (a)
Schedule 4.19 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.
Section IV.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 4.20, (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) 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.
Section IV.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.
Section IV.22 Labor Relations. Except as set forth in
Schedule 4.22, 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.
Section IV.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 Subordinated Guarantee and Security Agreement,
with respect to the domestic Material Subsidiaries, the Liens granted under
the Exchange Offer Documents shall constitute fully perfected 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.
Section IV.24 Litigation Settlement. (a) Attached hereto
as Exhibits 4.24A, 4.24B and 4.24C 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.
Section IV.25 Brokers or Finders. Other than the
$100,000 fee to Libra Investments and the $200,000 fee to Appaloosa
Management, L.P. to be paid in connection with the New Financing, 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.
Section IV.26 No Material Adverse Change. Except as set
forth in Schedule 4.26, since January 1, 1997, no event has occurred or
failed to occur which has had Material Adverse Effect.
Section IV.27 Related Party Transactions. (a) Except as
set forth in Schedule 4.27 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 4.27 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.
Section IV.28 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.
Section IV.29 Statements; Omissions. With respect to the
Exchange, the Company has provided to the Holders all material facts
relevant to the Company and the Exchange, 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
Section IV.30 No Registration Required; Trust Indenture
Act. Subject to compliance by the Holders with the representations and
warranties set forth in Article III, it is not necessary in connection with
the offer, sale and delivery of the Exchange Notes, Exchange Warrants and
Additional Warrants to the Holders and by the Holders to each subsequent
holder in the manner contemplated by this Agreement to register the
Exchange Notes, Exchange Warrants or the Additional Warrants under the Act.
This Agreement, the Exchange Notes Indenture and the transactions
contemplated hereby and thereby are in full compliance with the Trust
Indenture Act of 1939, as amended ("Trust Indenture Act").
ARTICLE V
CONDITIONS PRECEDENT
Section V.1 Conditions Precedent to Obligations of the Company.
The obligations of the Company to issue the Exchange Notes and Exchange
Warrants in exchange for each Holder's Old Notes pursuant to this Agreement
are subject, at the Time of Exchange, to the satisfaction of the following
conditions:
(a) The representations and warranties made by each
Holder herein shall be true and correct in all material respects on and as
of the Time of Exchange with the same effect as though such representations
and warranties had been made on and as of the Time of Exchange and each
Holder shall have complied in all material respects with all agreements and
conditions set forth or contemplated herein that are required to be
performed or complied with by such Holder at or prior to the Time of
Exchange. It is understood and agreed that the Company shall be entitled
to request and receive such certificates or opinions from the Holder at the
Time of Exchange as shall be satisfactory to the Company to demonstrate
compliance with the provisions of this Section 5.1(a)
(b) The issuance of the Exchange Notes and Exchange
Warrants by the Company in exchange for each Holder's Old Notes shall not
be enjoined (temporarily or permanently) at the Time of Exchange under the
laws of any jurisdiction to which the Company is subject.
(c) The New Financing shall have closed and the Company
shall have received the net proceeds of such financing pursuant to the
terms thereto.
Section V.2 Conditions Precedent to Obligations of the Holders.
The obligations of the Holders to exchange the Holder's Old Notes for the
Exchange Notes and Exchange Warrants is subject, at the Time of Exchange,
to the satisfaction of the following conditions:
(a) The representations and warranties of the Company
shall be true and correct in all material respects on and as of the Time of
Exchange with the same effect as though such representations and warranties
had been made on and as of the Time of Exchange and the Company shall have
complied in all material respects with all agreements and conditions set
forth or contemplated herein that are required to be performed or complied
with by the Company at or prior to the Time of Exchange.
(b) The issuance of the Exchange Notes and Exchange
Warrants by the Company in exchange for each Holder's Old Notes shall not
be enjoined (temporarily or permanently) at the Time of Exchange under the
laws of any jurisdiction to which the Company is subject.
(c) The New Financing shall have closed and the Company
shall have received the net proceeds of such financing pursuant to the
terms thereto.
(d) Each Holder shall have received the opinion of the
Company's counsel in the form of Exhibit 5.2
ARTICLE VI
EXPENSES
Section VI.1 Expenses. The Company agrees to pay the following
expenses relating to this Agreement:
(a) the cost of reproducing, executing and delivering
this Agreement and any other documents contemplated hereby or thereby;
(b) the cost of delivering to the Holder the Exchange
Notes and Exchange Warrants issued to the Holder at the Time of Exchange;
and
(c) all other expenses incurred by the Company.
ARTICLE VII
REGISTRATION RIGHTS
Section VII.1 Registration Rights. Pursuant to the Exchange
Warrants and the Exchange Offer Registration Rights Agreement, the Company
shall register with the Commission (i) the shares of common stock of the
Company underlying the Exchange Warrants no later than the first
anniversary of the date hereof and (ii) upon demand by at least 50% of the
holders in interest of Exchange Notes, the Exchange Notes.
ARTICLE VIII
MISCELLANEOUS
Section VIII.1 No Waiver; Modifications in Writing; Survival. No
failure or delay on the part of the Company or a Holder in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company
or a Holder at law or in equity or otherwise. No waiver of or consent to
any departure by the Company or a Holder from any provision of this
Agreement shall be effective unless signed in writing by the parties
hereto. Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by the Company or a Holder from the terms of any
provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances. The
representations, warranties and covenants of the Company set forth herein
shall survive the Time of Exchange and shall not terminate.
Section VIII.2 Communications. All notices and other
communications provided for or permitted hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
overnight delivery service, registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or
at such other address for any party as shall be specified by like notice,
provided that notices of a change of address shall be effective only upon
receipt thereof). Notices sent by mail shall be effective two days after
mailing, notices delivered personally shall be effective upon receipt, and
notices sent by overnight delivery service guaranteeing next day delivery
shall be effective on the next business day after timely delivery to the
courier:
i) if to a Holder at the most current address given by
the Holder to the Company in writing (the address set forth on the Holder's
signature page hereof to be such address initially);
ii) if to the Company at the following address:
Inamed Corporation
1120 Avenue of the Americas, 4th Floor
New York, New York 10036
Attention: Ilan Reich, Executive Vice President
with copies to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Adam W. Finerman, Esq.
Section VIII.3 Execution in Counterparts. This Agreement may be
executed in counterparts and by the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Agreement.
Section VIII.4 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 an Exchange Note or Exchange
Warrant).
Section VIII.5 Governing Law. This Agreement shall be deemed to
be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State,
without regard to principles of conflict of laws.
Section VIII.6 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section VIII.7 Certain Taxes. The Company shall pay any sales,
transfer, stamp, documentary or similar taxes incurred in connection with
the transactions contemplated by this Agreement.
Section VIII.8 Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
SECURITIES EXCHANGE AGREEMENT SIGNATURE PAGE 1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
Title: Executive Vice President
Accepted and Agreed as of the
date first above written. The
completion, execution and delivery
of this Agreement constitutes a
consent to the proposed amendments
set forth in Annex A attached
hereto
/s/ Atticus Partners, L.P.
/s/ Atticus Qualified Partners, L.P.
/s/ Atticus International, Ltd.
/s/ Anaconda Opportunity Fund, L.P.
/s/ Roger D. Miles
/s/ Ferd L.P.
/s/ Appaloosa Investment Limited Partnership I
/s/ Palomino Fund Ltd.
/s/ Oracle Partners, L.P.
/s/ GSAM Oracle Fund, Inc.
/s/ Quasar International Partners C.V.
/s/ Oracle Institutional Partners, L.P.
/s/ R.H. Capital Associates, #1, L.P.
/s/ Little Wing, L.P.
Name of Holder (Please type or print)
By:
(Please sign)
Name:
Title:
NOTE: Please sign exactly as name appears on the Old Note. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. When signing on
behalf of a corporation, you should be an authorized officer of such
corporation, and please give your title as such.
Address:
Social Security Number or Tax I.D. Number
Aggregate principal amount of
Old Notes to be delivered by you:
$
Schedule 2.1
Principal
Record Name of Amount of Exchange Additional
Noteholder Notes Warrants Warrants
Appaloosa Investment
Ltd. Partnership I $6,956,910 1,302,840 177,420
Palomino Fund Ltd. 5,653,609 1,058,767 144,183
Ferd, L.P. 1,595,196 298,737 40,682
Anaconda Opportunity
Fund, L.P. 285,714 53,506 7,286
Atticus International,
Ltd. 171,428 32,104 4,372
Atticus Partners, L.P. 41,686 7,807 1,063
Atticus Qualified
Partners, L.P. 72,600 13,596 1,852
Blatt, L.D and Tracy A. 57,143 10,701 1,457
RH Capital Associates
Number One 514,286 96,312 13,116
Little Wing L.P. 200,000 37,455 5,101
Miles, Roger 57,143 10,701 1,457
GSAM Oracle Fund 1,440,000 269,673 36,724
Oracle Institutional
Partners, L.P. 280,000 52,436 7,141
Oracle Partners, L.P. 1,800,000 337,091 45,905
Quasar International
Partners, C.V. 480,000 89,891 12,241
Total 19,605,715 3,671,616 500,000
ANNEX A
Proposed Modifications to Indenture
SELECTED INDENTURE PROVISIONS AS PROPOSED MODIFICATION
CURRENTLY IN EFFECT
Section 8.2 Maintenance of Office or Agency [Deleted in its Entirety]
Section 8.6 Payment of Taxes and Other Claims [Deleted in its Entirety]
Section 8.7 Limitation on Indebtedness [Deleted in its Entirety]
Section 8.8 Limitation on Encumbrances [Deleted in its Entirety]
Section 8.9 Limitation on Related Party
Transactions [Deleted in its Entirety]
Section 8.10 Limitation on Dividends [Deleted in its Entirety]
Section 8.11 Subsidiary Guarantees [Deleted in its Entirety]
Section 8.12 Additional Offerings of Securities [Deleted in its Entirety]
Section 8.13 Pledges of Intercompany Notes [Deleted in its Entirety]
Section 8.14 Registration Rights [Deleted in its Entirety]
Section 8.15 Restricted Investment [Deleted in its Entirety]
Section 8.16 Operating Profit [Deleted in its Entirety]
Section 8.17 Tangible Assets [Deleted in its Entirety]
Section 8.18 Statement by Officers as to Default [Deleted in its Entirety]
Exhibit 99.6
SUBORDINATED SECURITY AGREEMENT
This SUBORDINATED SECURITY AGREEMENT (this "Agreement") dated as of
November 5, 1998, is made by Inamed Corporation, a Florida corporation (the
"Obligor"), and Santa Barbara Bank & Trust, as trustee for the benefit of
the holders of the Obligor's 11% Senior Subordinated Secured Notes due
March 31, 1999, or at the option of the Obligor exercised as provided
therein, September 1, 2000 (in such capacity, the "Trustee").
RECITALS
The Indenture dated as of November 5, 1998 (the "Subordinated
Indenture") between the Obligor and the Trustee provides, subject to its
terms and conditions, for the issuance by the Obligor of its 11% Senior
Subordinated Secured Notes due March 31, 1999, or at the option of the
Obligor as provided therein, September 1, 2000 (the "Exchange Notes") as
well as certain warrants to purchase the Obligor's common stock, $.01 per
share, (the "Warrants") to be issued in exchange for the Obligor's 11%
Secured Convertible Notes due 1999 (the "Old Notes") to the holders thereof
(the "Holders") pursuant to the Exchange Agreement dated as of October 7,
1998 (the "Exchange Agreement"). It is a condition to the exchange of the
Old Notes for the Notes and Warrants by the Purchasers that the Obligor
shall have executed and delivered, and granted the Liens provided for in,
this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Obligor has agreed to pledge and grant a
security interest in the Collateral as security for the Secured
Obligations. Accordingly, the Obligor agrees with the Trustee 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
Subordinated Indenture or in the Exchange Agreement (including those terms
incorporated therein by reference) shall have the respective meanings
assigned to them in the Subordinated Indenture or the Exchange Agreement,
as applicable. 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 4.1 of the Subordinated Indenture.
"Exchange Documents" shall mean the Exchange Agreement, the
Exchange Notes, this Agreement, the Subordinated Guarantee Agreement, dated
as of the date hereof, by and between certain Subsidiaries of the Company
and the Collateral Agent (the "Subordinated Guarantee Agreement"), the
Subordinated Guarantee and Security Agreement, dated as of the date hereof,
by and between certain Subsidiaries of the Company and the Collateral Agent
(the "Subordinated Guarantee and Security Agreement"),the Subordinated
Indenture, the Exchange Offer Registration Rights Agreement, dated as of
the date hereof, by and between the Company and the Holders and the
Intercreditor Agreement, dated as of the date hereof, by and between the
Collateral Agent and the Trustee.
"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.
"Intercreditor Agreement" means the Intercreditor Agreement dated
as of November 5, 1998 between the Trustee and Appaloosa Management L.P.,
as Collateral Agent under the Note Purchase Agreement.
"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.
"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 Exchange Documents to which it is a party, (c)
the validity or enforceability of any of the Exchange Documents, (d) the
rights, remedies, powers and privileges of the Holders under any of the
Exchange 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 Purchase Agreement" means the agreement dated as of September
30, 1998 between the Company, the parties listed on Exhibit A thereto and
the Collateral Agent.
"Obligations" shall mean the principal and interest due under the
Exchange 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 Exchange 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 Exchange
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).
"Subordinated Indenture" means the Indenture dated as of November
5, 1998 between the Obligor as issuer of the Exchange Notes, and Santa
Barbara Bank & Trust, as Trustee.
"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 Exchange 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, and subject to the terms and
provisions of the Intercreditor Agreement, the Obligor hereby pledges and
grants to the Trustee, 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 Exchange
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
Trustee to exercise its rights, remedies, powers and privileges under
Article VI at such time or times as the Trustee shall be lawfully entitled
to exercise such rights, remedies, powers and privileges, and for no other
purpose, the Obligor hereby grants to the Trustee, 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, and subject to the terms and provisions of the
Intercreditor Agreement, the Obligor shall (i) file such financing
statements and other documents in such offices as shall be necessary or as
the Trustee may request to perfect and establish the security interest
(subject only to Liens permitted under Section 7.8 of the Subordinated
Indenture) 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 Trustee any and all
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Trustee may request, (iii) cause
the Trustee (to the extent requested by the Trustee) 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 Trustee 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 Trustee 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 Trustee may request to perfect and establish the security
interest (subject only to such Permitted Liens) of the Liens granted by
this Agreement. The Trustee 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, subject to the terms and provisions of the Intercreditor
Agreement:
(a) upon the acquisition after the Signing Date by the
Obligor of any Securities Collateral, promptly either (x) transfer and
deliver to the Trustee 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 Trustee shall deem
necessary or appropriate to perfect, and establish the security interest
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 Trustee all
such Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Trustee 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 Trustee 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 Trustee;
(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 Trustee may request to evidence, validate, perfect and establish the
security interest (subject only to Liens permitted under Section 7.8 of the
Subordinated Indenture) 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 Trustee may request to create, and establish the
security interest of, or to preserve the validity, perfection or priority
(subject only to such Permitted Liens) of, the Liens granted by this
Agreement or to enable the Trustee 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 Trustee or its nominee (and the
Trustee agrees that if any Securities Collateral is transferred into its
name or the name of its nominee, the Trustee 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, and subject to the terms and
provisions of the Intercreditor Agreement, the Trustee 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 Trustee may deem necessary or advisable to accomplish
the purposes of this Agreement, to preserve the validity and security
interest 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
Trustee 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 Trustee
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 Trustee 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 Trustee 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 Trustee.
(b) Without limiting the rights and powers of the Trustee
under Section 2.05(a), the Obligor hereby appoints the Trustee 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 Trustee 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 Trustee may
deem necessary or advisable to accomplish the purposes of this Agreement
(including the purpose of creating in favor of the Trustee a security
interest on the Motor Vehicles and exercising the rights and remedies of
the Trustee 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 Trustee
under Section 2.05(a), the Obligor hereby appoints the Trustee 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 Exchange 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 Exchange Document;
and the Trustee 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 Trustee 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 Exchange Document, all
dividends and other distributions on the Securities Collateral shall be
paid directly to the Trustee and retained by it in the Collateral Account
as part of the Securities Collateral, subject to the terms of this
Agreement, and, if the Trustee shall so request, the Obligor agrees to
execute and deliver to the Trustee 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 Trustee prior to such cure shall, upon request of the Obligor (except
to the extent applied to the Secured Obligations), be returned by the
Trustee 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
Trustee 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 Trustee 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 Trustee 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
Trustee, 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 in respect of the Collateral
contemplated in those sections, be entitled to (i) use and possess the
other Collateral and to exercise its rights, title and interest in all
contracts, agreements, licenses and governmental approvals, and (ii) sell
items of Inventory to customers in the ordinary course of business, in each
case subject to the rights, remedies, powers and privileges of the Trustee
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 Trustee 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 Trustee harmless from and
against all expense, loss or damage suffered by reason of such exercise.
The Trustee 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
Exchange Document, nor shall the Trustee 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 Trustee 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 Exchange Document.
(d) The Trustee 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, and subject to the terms and provisions of
the Intercreditor Agreement, upon the request of, and at the expense of,
the Obligor, the Trustee shall execute and deliver to the Obligor such
instruments as the Obligor shall reasonably request to remove the notation
of the Trustee 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 Trustee 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 Trustee
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 Trustee 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
Trustee a cash collateral account (the "Collateral Account") in the name
and under the exclusive domain and control of the Trustee 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 Trustee 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 Trustee 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 Trustee 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, subject to the
terms and provisions of the Intercreditor Agreement, upon request of the
Trustee, promptly notify (and the Obligor hereby authorizes the Trustee so
to notify) each account debtor in respect of any Accounts or Instruments
that such Collateral has been assigned to the Trustee under this Agreement
and that any payments due or to become due in respect of such Collateral
are to be made directly to the Trustee. All such payments made to the
Trustee 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 Trustee 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 Trustee) shall
determine. All such investments shall be held in the name and be under the
control of the Trustee. At any time after the occurrence and during the
continuance of an Event of Default, the Trustee 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 Trustee 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 security interest granted by this Agreement in
favor of the Trustee for the benefit of the Trustee 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
security interest in all of such Collateral.
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 Exchange 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 Trustee may
reasonably require in order to reflect the Liens granted by this Agreement;
(b) furnish to the Trustee 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 Trustee 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 Trustee prompt notice of
such proposed filing; and (d) permit representatives of the Trustee, 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 Trustee 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 Trustee may reasonably request.
5.02 Removals, Etc. Without at least 30 days' prior written
notice to the Trustee, 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 III or IV 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 Obligor shall be permitted to consummate
the reincorporation merger whereby the Obligor would merge with a Delaware
Subsidiary of the Obligor to change the Obligor's state of incorporation
from Florida to Delaware (as described in the Notice of Special Meeting of
Stockholders and Proxy Statement filed by the Obligor 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 Exchange Document). The Obligor,
subject to the terms and provisions of the Intercreditor Agreement, 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee, do any and
all lawful acts and execute and deliver any and all proper documents
required by the Trustee 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 and subject to the terms and provisions of the
Intercreditor Agreement:
(a) the Trustee 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 Trustee and the Obligor,
designated in the Trustee's request;
(b) the Trustee 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 Trustee 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 Trustee 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 Trustee, or
its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Trustee 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 Trustee 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
Trustee or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Trustee 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 Trustee 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
Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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, except as provided below in this Section 6.04
and except as provided for by the terms and provisions of the Intercreditor
Agreement, 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 Trustee under Article III or this Article VI, shall
be applied by the Trustee:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Trustee, the fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Trustee in that connection;
Second, to the Trustee for amounts due and unpaid on the Exchange
Notes for principal and interest and all other amounts due and unpaid under
the Exchange Documents; and
Third, to the Obligor or any other obligor on the Exchange 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 Trustee 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 Trustee: Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention:Corporate Trust Administrator
7.03 Expenses, Etc. The Obligor agrees to pay or to reimburse
the Trustee for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Trustee 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 Trustee 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
Trustee 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
Trustee. 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 Exchange 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 Exchange 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 Trustee 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 Trustee 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
SANTA BARBARA BANK & TRUST
By: /s/ Jay D. Smith
Name: Jay D. Smith
Title: Senior Vice President
Exhibit 99.7
SUBORDINATED GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT (this "Agreement") dated as
of November 5, 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 Santa Barbara Bank & Trust, as trustee
for the benefit of the holders of the Obligor's 11% Senior Subordinated
Secured Notes due March 31, 1999, or at the option of the Obligor exercised
as provided therein, September 1, 2000 (in such capacity, the "Trustee").
RECITALS
The Indenture dated as of November 5, 1998 (the "Subordinated
Indenture") between the Company and the Trustee provides, subject to its
terms and conditions, for the issuance by the Company of its 11% Senior
Subordinated Secured Notes due March 31, 1999, or at the option of the
Obligor as provided therein, September 1, 2000 (the "Notes") as well as
certain warrants to purchase the Company's common stock, $.01 per share,
(the "Warrants") to be issued in exchange for the Company's 11% Secured
Convertible Notes due 1999 (the "Old Notes") to the holders thereof
pursuant to the Securities Exchange Agreement dated as of October 7, 1998
(the "Exchange Agreement"). It is a condition to the exchange of the Old
Notes for the Notes and Warrants by the Purchasers that the Obligors shall
have executed and delivered this Agreement, and granted the Liens provided
for in this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Obligors have agreed to pledge and grant a
security interest in the Collateral as security for the Secured
Obligations. Accordingly, the Obligors agree with the Trustee 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
Subordinated Indenture or in the Exchange Agreement (including those terms
incorporated therein by reference) shall have the respective meanings
assigned to them in the Subordinated Indenture or the Exchange Agreement,
as applicable. 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 4.1 of the Subordinated Indenture.
"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.
"Exchange Documents" shall mean the Exchange Agreement, the
Exchange Notes, this Agreement, the Subordinated Security Agreement, dated
as of the date hereof, between the Company and the Collateral Agent (the
"Subordinated Security Agreement"), the Subordinated Guarantee and Security
Agreement, dated as of the date hereof, by and between certain Subsidiaries
of the Company and the Collateral Agent (the "Subordinated Guarantee
Agreement"), the Subordinated Indenture, the Exchange Offer Registration
Rights Agreement, dated as of the date hereof, by and between the Company
and the Holders and the Intercreditor Agreement, dated as of the date
hereof, by and between the Collateral Agent and the Trustee.
"Holder" shall mean, at anytime of reference, a person in whose
name a Note is registered in the Note Register at such time.
"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 Exchange Documents.
"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.
"Intercreditor Agreement" means the Intercreditor Agreement dated
as of November 5, 1998 between the Trustee and Appaloosa Management L.P.,
as Collateral Agent under the Note Purchase Agreement.
"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.
"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 Exchange Documents to which it is a party, (c)
the validity or enforceability of any of the Exchange Documents, (d) the
rights, remedies, powers and privileges of the Holders under any of the
Exchange 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 Purchase Agreement" means the agreement dated as of September
30, 1998 between the Company, the parties listed on Exhibit A thereto and
the Collateral Agent.
"Note Register" shall have the meaning ascribed thereto in the
Subordinated Indenture.
"Obligations" shall mean the principal and interest due under the
Exchange 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 Exchange 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 Exchange 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).
"Subordinated Indenture" means the indenture dated as of November
5, 1998, between the Company, as issuer of the Exchange Notes, and Santa
Barbara Bank and Trust, as Trustee.
"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 Exchange 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 Trustee 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 Exchange Document or any agreement, security
document, guarantee, approval, consent or other instrument with respect to
all or any part of the Guaranteed Obligations, any Exchange 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 Exchange 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 Trustee 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 Trustee 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 Exchange Documents or otherwise in
such order and such manner as the Trustee 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
Trustee may in its discretion determine (it being agreed that nothing in
this clause (xiii) shall be deemed to make the Trustee 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 Trustee 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 Trustee, 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
Exchange 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 Trustee 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 Trustee 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 Exchange Document; (vi) any failure
of the Holders or the Trustee 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
Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee, 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
Trustee 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 Trustee that
is authorized by this Section 2.02 or otherwise in this Agreement or by any
other provision of any Exchange 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
Trustee 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 Exchange Documents and is
fully familiar with the transactions contemplated by the Exchange Documents
and that it will in the future remain fully familiar with such transactions
and with any new Exchange Documents and the transactions contemplated by
such Exchange 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 Exchange Document or
the transactions undertaken pursuant to, or contemplated by, any such
Exchange 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 Trustee 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 Trustee, no Obligors shall exercise any of the rights of
the Trustee 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 Trustee 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 Trustee 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 Trustee and the
Holders, segregated from other funds of such Obligor, and shall, forthwith
upon receipt by such Obligor, be turned over to the Trustee in the exact
form received by such Obligor (duly indorsed by such Obligor to the
Trustee, if required), to be applied against the Guaranteed Obligations,
whether matured or unmatured, in such order as required by the applicable
Exchange 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 Trustee 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 Trustee (for the benefit of the Holders)
the obligations of the Company under the Exchange Documents may be declared
to be forthwith (or may become automatically) due and payable as provided
in Section 4.2 of the Subordinated Indenture 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 Trustee so requests, any such indebtedness
shall be collected, enforced and received by such Obligor as trustee for
the Trustee and shall be paid over to the Trustee (for the benefit of the
Holders) in kind on account of the Guaranteed Obligations. If, after the
Trustee's request, such Obligor fails to collect or enforce any such
indebtedness or to pay the proceeds of such indebtedness to the Trustee,
the Trustee 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
Trustee considers necessary or desirable to effect such collection,
enforcement or payment, the Trustee being hereby appointed such Obligor's
attorney-in-fact for such purpose.
(b) Each Obligor hereby grants to the Trustee (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, and subject to the terms and
provisions of the Exchange Offer Intercreditor Agreement, each Obligor
hereby pledges and grants to the Trustee, 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 Exchange
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
Trustee to exercise its rights, remedies, powers and privileges under
Article VII at such time or times as the Trustee shall be lawfully entitled
to exercise such rights, remedies, powers and privileges, and for no other
purpose, each Obligor hereby grants to the Trustee, to the extent
assignable, and subject to the terms and provisions of the Exchange Offer
Intercreditor Agreement, 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, and subject to the terms and provisions of the Exchange
Offer Intercreditor Agreement, each Obligor shall (i) file such financing
statements and other documents in such offices as shall be necessary or as
the Trustee may request to establish a security interest 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 Trustee any and all Instruments, endorsed or
accompanied by such instruments of assignment and transfer in such form and
substance as the Trustee may request, (iii) cause the Trustee (to the
extent requested by the Trustee) 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 Trustee 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 Trustee 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 Trustee may
request to perfect and establish the security interest of the Liens granted
by this Agreement. The Trustee 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, subject to the terms and provisions of the Exchange Offer
Intercreditor Agreement:
(a) upon the acquisition after the Signing Date by such
Obligor of any Securities Collateral, promptly either (x) transfer and
deliver to the Trustee 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 Trustee shall deem
necessary or appropriate to establish a security interest in 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 Trustee all
such Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Trustee 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 Trustee 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 Trustee;
(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 Trustee may request to evidence, validate, perfect and establish the
Liens (subject only to Liens permitted under Section 7.8 of the
Subordinated Indenture) 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 Trustee may request to create and establish a
security interest of, or to preserve the validity, perfection or priority
of, the Liens granted by this Agreement or to enable the Trustee 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
Trustee or its nominee (and the Trustee agrees that if any Securities
Collateral is transferred into its name or the name of its nominee, the
Trustee 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, and subject to the terms
and provisions of the Exchange Offer Intercreditor Agreement, the Trustee
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 Trustee may deem necessary or advisable
to accomplish the purposes of this Agreement, to preserve the validity, and
security interest 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
Trustee 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 Trustee
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 Trustee 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 Trustee 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 Trustee.
(b) Without limiting the rights and powers of the Trustee
under Section 3.05(a), and subject to the terms and provisions of the
Exchange Offer Intercreditor Agreement, each Obligor hereby appoints the
Trustee 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 Trustee 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 Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement (including the purpose of creating in favor of
the Trustee security interest in the Motor Vehicles and exercising the
rights and remedies of the Trustee 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 Trustee under Section
3.05(a), and subject to the terms and provisions of the Exchange Offer
Intercreditor Agreement, each Obligor hereby appoints the Trustee 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 Exchange 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 Exchange Document; and the Trustee 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 Trustee 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 Exchange Document, all
dividends and other distributions on the Securities Collateral shall be
paid directly to the Trustee and retained by it in the Collateral Account
as part of the Securities Collateral, subject to the terms of this
Agreement, and, if the Trustee shall so request, the Obligors jointly and
severally agree to execute and deliver to the Trustee 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 Trustee prior to such cure shall, upon request of
the Obligors (except to the extent applied to the Secured Obligations), be
returned by the Trustee 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
Trustee 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 Trustee 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 Trustee 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 Trustee, 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 in respect of the Collateral
contemplated in those sections, be entitled to (i) use and possess the
other Collateral and to exercise its rights, title and interest in all
contracts, agreements, licenses and governmental approvals, and (ii) sell
items of Inventory to customers in the ordinary course of business, in each
case subject to the rights, remedies, powers and privileges of the Trustee
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 Trustee 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 Trustee harmless from and
against all expense, loss or damage suffered by reason of such exercise.
The Trustee 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
Exchange Document, nor shall the Trustee 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 Trustee 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 Exchange Document.
(d) The Trustee 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 and subject to the Exchange Offer
Intercreditor Agreement, upon the request of, and at the expense of, any
Obligor, the Trustee shall execute and deliver to such Obligor such
instruments as such Obligor shall reasonably request to remove the notation
of the Trustee 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 Trustee 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 Trustee 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 Trustee 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
Trustee a cash collateral account (the "Collateral Account") in the name
and under the exclusive domain and control of the Trustee 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 Trustee 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 Trustee 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 Trustee 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, subject to the
terms and provisions of the Exchange Offer Intercreditor Agreement, upon
request of the Trustee, promptly notify (and such Obligor hereby authorizes
the Trustee so to notify) each account debtor in respect of any Accounts or
Instruments that such Collateral has been assigned to the Trustee under
this Agreement and that any payments due or to become due in respect of
such Collateral are to be made directly to the Trustee. All such payments
made to the Trustee 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 Trustee 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
Trustee) shall determine. All such investments shall be held in the name
and be under the control of the Trustee. At any time after the occurrence
and during the continuance of an Event of Default, the Trustee 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 Trustee 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 4.01, and subject to any and all Liens
created under the Note Purchase Agreement, such Collateral is free and
clear of all Liens. The security interest granted by this Agreement in
favor of the Trustee for the benefit of the Trustee 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
security interest in all of such Collateral.
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 Exchange 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 Trustee may
reasonably require in order to reflect the Liens granted by this Agreement;
(b) furnish to the Trustee 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 Trustee 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 Trustee prompt notice of
such proposed filing; and (d) permit representatives of the Trustee, 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 Trustee 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 Trustee may reasonably request.
6.02 Removals, Etc. Without at least 30 days' prior written
notice to the Trustee, 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 Exchange Document). Such Obligor,
subject to the terms and provisions of the Exchange Offer Intercreditor
Agreement, 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee, do any and
all lawful acts and execute and deliver any and all proper documents
required by the Trustee 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 Trustee under Article II, if any
Event of Default shall have occurred and be continuing and subject to the
Exchange Offer Intercreditor Agreement:
(a) the Trustee 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 Trustee and such
Obligor, designated in the Trustee's request;
(b) the Trustee 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 Trustee 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 Trustee 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 Trustee, or
its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Trustee 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 Trustee 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 Trustee or its designee, for inclusion in such sale,
assignment or other disposition, all Intellectual Property relating to such
Trademark Collateral. The Trustee 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 Trustee 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
Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee 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, except as provided below in this Section 7.04
and except as provided under the terms and provisions of the Exchange Offer
Intercreditor Agreement, 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 Trustee under Article IV or this
Article VII, shall be applied by the Trustee:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Trustee, the fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Trustee in that connection;
Second, to the Trustee for amounts due and unpaid on the Exchange
Notes for principal and interest and all other amounts due and unpaid under
the Exchange Documents; and
Third, to the Company, the Obligors or any other obligors on the
Exchange 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 Trustee 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 Trustee: Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention:Corporate Trust Administrator
8.03 Expenses, Etc. The Obligors jointly and severally agree to
pay or to reimburse the Trustee for all costs and expenses (including
reasonable attorney's fees and expenses) that may be incurred by the
Trustee 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 Trustee 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
Trustee 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
Trustee. 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 Exchange 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 Exchange 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 Trustee 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 Trustee 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.
SANTA BARBARA BANK & TRUST
By: s/s Jay D. Smith
Name: Jay D. Smith
Title: Senior 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
SUBORDINATED GUARANTEE AGREEMENT
This SUBORDINATED GUARANTEE (this "Agreement") dated as of November
5, 1998, 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 11.00% Senior
Subordinated Secured Notes due March 31, 1999 or at the option of the
Company exercised as provided therein, September 1, 2000 (the "Exchange
Notes") issued pursuant to the Subordinated Indenture dated as of November
5, 1998 between the Company and Santa Barbara Bank & Trust, as trustee (the
"Trustee").
RECITALS
The Indenture dated as of November 5, 1998 (the "Subordinated
Indenture") between the Company and the Trustee provides, subject to its
terms and conditions, for the issuance by the Company of its 11% Senior
Subordinated Secured Notes due March 31, 1999, or at the option of the
Company as provided therein, September 1, 2000 (the "Exchange Notes") as
well as certain warrants to purchase the Company's common stock, $.01 per
share, (the "Warrants") to be issued in exchange for the Company's 11%
Secured Convertible Notes due 1999 (the "Old Notes") to the holders thereof
(the "Holders") pursuant to the Securities Exchange Agreement dated as of
October 7, 1998 (the "Exchange Agreement"). It is a condition to the
exchange of the Old Notes for the Notes and Warrants by the Purchasers that
the Guarantors shall have executed and delivered, and granted the Liens
provided for in, this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Guarantors have agreed to pledge and grant a
security interest in the Collateral as security for the Secured
Obligations. Accordingly, the Guarantors agree with the Trustee 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
Subordinated Indenture or in the Exchange Agreement (including those terms
incorporated therein by reference) shall have the respective meanings
assigned to them in the Subordinated Indenture or the Exchange Agreement,
as applicable. In addition, the following terms shall have the following
meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in the
Subordinated Indenture.
"Exchange Documents" shall mean the Exchange Agreement, the
Exchange Notes, this Agreement, the Subordinated Security Agreement, dated
as of the date hereof, between the Company and the Collateral Agent (the
"Subordinated Security Agreement"), the Subordinated Guarantee and Security
Agreement, dated as of the date hereof, by and between certain Subsidiaries
of the Company and the Collateral Agent (the "Subordinated Guarantee and
Security Agreement"),the Subordinated Indenture, the Exchange Offer
Registration Rights Agreement, dated as of the date hereof, by and between
the Company and the Holders and the Intercreditor Agreement, dated as of
the date hereof, by and between the Collateral Agent and the Trustee.
"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 Exchange Documents.
"Intercreditor Agreement" means the Intercreditor Agreement dated
as of September 30, 1998 between the Trustee and Appaloosa Management L.P.,
as Collateral Agent (the "Collateral Agent") under the Note Purchase
Agreement.
"Note Purchase Agreement" means the agreement dated as of September
30, 1998 between the Company, the parties listed on Exhibit A thereto and
the Collateral Agent.
"Obligations" shall mean the principal and interest due under the
Exchange 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 Exchange 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.
"Subordinated Indenture" means the indenture dated November 5,
1998, between the Company, as issuer of the Exchange Notes, and Santa
Barbara Bank and Trust, as Trustee.
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 Exchange 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 Trustee 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 Exchange Document or any agreement, security
document, guarantee, approval, consent or other instrument with respect to
all or any part of the Guaranteed Obligations, any Exchange 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 Exchange 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 Trustee 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 Trustee 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 Exchange Documents or otherwise in such order and such manner as the
Trustee 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 Trustee may in its
discretion determine (it being agreed that nothing in this clause (xiii)
shall be deemed to make the Trustee 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 Trustee 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 Trustee, 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
Exchange 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 Trustee 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 Trustee 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 Exchange Document; (vi) any failure
of the Holders or the Trustee 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
Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee, 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
Trustee 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 Trustee that
is authorized by this Section 2.02 or otherwise in this Agreement or by any
other provision of any Exchange 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 Trustee 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 Exchange Documents
and is fully familiar with the transactions contemplated by the Exchange
Documents and that it will in the future remain fully familiar with such
transactions and with any new Exchange Documents and the transactions
contemplated by such Exchange 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
Exchange Document or the transactions undertaken pursuant to, or
contemplated by, any such Exchange 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 Trustee 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 Trustee, no Guarantors shall exercise any of the rights
of the Trustee 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 Trustee 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 Trustee 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 Trustee and
the Holders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Trustee in
the exact form received by such Guarantor (duly indorsed by such Guarantor
to the Trustee, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as required by the
applicable Exchange 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 Trustee 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 Trustee (for the benefit of the
Holders) the obligations of the Company under the Exchange Documents may be
declared to be forthwith (or may become automatically) due and payable as
provided in Section 4.2 of the Subordinated Indenture 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 Trustee so requests, any such indebtedness
shall be collected, enforced and received by such Guarantor as trustee for
the Trustee and shall be paid over to the Trustee (for the benefit of the
Holders) in kind on account of the Guaranteed Obligations. If, after the
Trustee's request, such Guarantor fails to collect or enforce any such
indebtedness or to pay the proceeds of such indebtedness to the Trustee,
the Trustee 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 Trustee considers necessary or desirable to effect such collection,
enforcement or payment, the Trustee being hereby appointed such Guarantor's
attorney-in-fact for such purpose.
(b) Each Guarantor hereby grants to the Trustee (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 Trustee, 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 Trustee may
request.
Article IV. Miscellaneous.
4.01 Waiver. No failure on the part of the Trustee 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 Trustee
Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administrator
4.03 Expenses, Etc. The Guarantors jointly and severally agree
to pay or to reimburse the Trustee for all costs and expenses (including
reasonable attorney's fees and expenses) that may be incurred by the
Trustee 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
Trustee 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
Trustee 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 Trustee. 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 Exchange 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 Exchange 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 Trustee 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 Trustee 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 Reich
Title: Executive Vice President
CHAMFIELD LTD.,
an Ireland corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
INAMED DO BRASIL LTDA,
a Brazil corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN LTD., an Ireland corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL ASIA/PACIFIC LTD.,
a Hong Kong corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL B.V.,
a Netherlands corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL BENELUX B.V.,
a Netherlands corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL BENELUX B.V.B.A.,
a Belgium corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL GMBH,
a Germany corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL LTD.,
a United Kingdom corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL MEXICO, S.A. DE C.V.,
a Mexico corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL S.A.,
a Spain corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL MEXICO, S.A.R.L.,
a France corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
MCGHAN MEDICAL S.R.L.,
an Italy corporation
By: s/ Ilan K. Reich
Name: Ilan Reich
Title: Executive Vice President
Exhibit 99.9
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 5, 1998
(this "Registration Rights Agreement"), between INAMED CORPORATION, a
Florida corporation (the "Company"), and Santa Barbara Bank & Trust, as
trustee for the benefit of the holders of the Company's 11% Senior
Subordinated Secured Notes due March 31, 1999, or at the option of the
Company exercised as provided therein, September 1, 2000 (in such capacity,
the "Trustee").
1. Background. The Indenture dated as of November 5, 1998
(the "Subordinated Indenture") between the Company and the Trustee
provides, subject to its terms and conditions, for the issuance by the
Company of its 11% Senior Subordinated Secured Notes due March 31, 1999, or
at the option of the Company as provided therein, September 1, 2000 (the
"Exchange Notes") as well as certain warrants to purchase the Company's
common stock, $.01 per share, (the "Warrants") to be issued in exchange for
the Company's 11% Secured Convertible Notes due 1999 (the "Old Notes") to
the holders thereof pursuant to the Securities Exchange Agreement dated as
of October 7, 1998 (the "Exchange Agreement"). It is a condition to the
exchange of the Old Notes for the Exchange Notes and Warrants by the
Purchasers that the Company shall have executed and delivered this
Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company has agreed to grant the registration
rights provided for hereunder. Accordingly, the Company agrees with the
Trustee as follows:
2. Definitions. Unless otherwise defined, all capitalized terms
used in this Agreement that are defined in the Subordinated Indenture or in
the Exchange Agreement (including those terms incorporated therein by
reference) shall have the respective meanings assigned to them in the
Subordinated Indenture or the Exchange Agreement, as applicable. In
addition, the following terms shall have the following meanings under this
Agreement:
"Exchange Notes" means the Company's 11.00% Senior
Subordinated Secured Notes due March 31, 1999 or at the option of the
Company exercised as provided therein, September 1, 2000 (the "Exchange
Notes") issued pursuant to the Subordinated Indenture dated as of November
5, 1998 between the Company and Santa Barbara Bank & Trust, as trustee.
"Note Purchase Agreement" shall mean the agreement dated as
of September 30, 1998 between the Company, the parties listed on Exhibit A
thereto and Appaloosa Management L.P., as Collateral Agent.
"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 (to be selected by the Trustee on behalf of, and
upon notice from, the Requisite Percentage of Participating Holders);
provided, however, that Registration Expenses shall exclude and the
Participating Holders shall agree to pay underwriters' fees and
underwriting discounts and commissions in respect of the Registrable
Securities being registered in connection with their inclusion in any
registration under Sections 3.1 or 3.2 hereunder.
"Registrable Securities" means the Exchange 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 Exchange Notes that are then outstanding.
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a majority of the
Exchange 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,
the Trustee, on behalf of, and upon notice from, 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 the
Registrable Securities of such Holders, 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 Trustee, on behalf of,
and upon notice from, 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, on the pricing of the
offering).
(c) Limitations on Requested Registrations;
Expenses. The rights of the Trustee, on behalf of the 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 Trustee, on behalf of, and upon notice from, 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 Trustee, on behalf of, and upon notice from, 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 the Trustee and 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 Exchange 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 Trustee, on behalf of,
and upon notice from, 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 Trustee,
on behalf of, and upon notice from, the Requisite Percentage of
Participating Holders, shall have the right to withdraw the request 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 the Trustee
and 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 the Trustee, on behalf of, and upon notice
from, 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 Trustee, on behalf of, and upon notice from, 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 the Trustee and 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 the Trustee, on
behalf of, and upon notice from, 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. The Trustee,
on behalf of, and upon notice from, any holder of Registrable Securities,
shall have the right to withdraw its request for inclusion of the
Registrable Securities of such holder 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 Exchange 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 Trustee, the Participating Holders and 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 the Trustee and 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 the Trustee and
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 the
Trustee may reasonably request on behalf of and upon notice from such
Participating Holders;
(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 Trustee shall reasonably request on behalf of, and upon notice
from, the Participating Holders, (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 the Trustee, 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 Trustee,
on behalf of, and upon notice from, the
Requisite Percentage of Participating
Holders, or the underwriters, may
reasonably request;
(g) promptly notify the Trustee, 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 the Trustee, on behalf of,
and upon notice from, 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 the Trustee
and 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 the Trustee, 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.
Prior to their inclusion in any registration under Sections 3.1 or 3.2
hereunder, 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.
Prior to their inclusion in any registration under Sections
3.1 or 3.2 hereunder, each holder of Registrable Securities shall agree
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. Prior to
their participation in such underwritten offering, 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 and 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 the Trustee, on behalf of, and upon notice from, 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. Prior to their participation in such underwritten
offering, 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 Trustee, the Participating Holders and 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 Holders 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 Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such Holder, to the effect that the
holding by such Holder of such securities does not necessarily make such
Holder a "controlling person" of the Company within the meaning of the
Securities Act and is not to be construed as a recommendation by such
Holder of the investment quality of the Company's debt or equity securities
covered thereby and that such holding does not imply that such Holder will
assist in meeting any future financial requirements of the Company or (ii)
in the event that such reference to such Holder by name or otherwise is
not, in the reasonable judgment of such Holder 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 Holder.
3.8 Unlegended Exchange 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 Exchange 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 Trustee shall agree, on behalf of, and upon notice from, the
Requisite Majority of Participating Holders) 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 the
Trustee, on behalf of and upon notice from any holder of Registrable
Securities, the Company will deliver to the Trustee and 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 Trustee, on behalf of, and upon
notice from, the holders of at least 51% in aggregate principal amount of
the outstanding Exchange 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 the Trustee, on behalf of,
and upon notice from, the holders of at least 51% in aggregate principal
amount of the outstanding Exchange 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 the Trustee, addressed to it in the manner
set forth in the Exchange Agreement, or at such other address as it shall
have furnished to the Company in writing;
(b) if to any Holder, addressed to it in the manner set
forth in the Exchange Agreement, or at such other address as it shall have
furnished to the Company in writing;
(c) 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
(d) if to the Company, addressed to it in the manner
set forth in the Exchange 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 the Trustee, on behalf of, and upon notice from, any Holder, to any one
or more transferees or distributees of all or part of such Holder'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. The Trustee, on behalf of 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 Trustee
on behalf of the holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. Except as set forth on
Exhibit A hereto and except for the registration rights granted in
connection with the Note Purchase Agreement pursuant to the Registration
Rights Agreement dated as of September 30, 1998 by and between the
purchasers listed on Exhibit A thereto and the Company, 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
B hereto, the rights granted to the Trustee on behalf of 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 holders of the Exchange Notes, 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/ Richard G. Babbitt
Name: Richard G. Babbitt
Title: Chairman and CEO
SANTA BARBARA BANK & TRUST
By: /s/ Jay D. Smith
Name: Jay D. Smith
Title: Senior Vice President
Exhibit A
Other Registration Rights Agreements
1. Registration Rights for Holders of New Notes
2. Registration Rights for Holders of Exchange Notes
3. Registration Rights for Holders of Old Notes
4. Registration Rights for Holders of New Warrants
5. Registration Rights for Holders of Additional Warrants
6. Registration Rights for Holders of Exchange Warrants
7. Registration Rights under the terms of the Employment Agreement of
Ilan K. Reich
8. Registration Rights under the terms of the Employment Agreement of
Richard G. Babbitt
9. Registration Rights Agreement in connection with 4% Convertible
Debentures
Exhibit B
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.
