UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 9 )*
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INAMED CORPORATION
- -------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- -------------------------------------------------------------------------
(Title of Class of Securities)
453235103
-----------------------------------------------------
(CUSIP Number)
KENNETH MAIMAN, ESQ. ROBERT C. SCHWENKEL, ESQ.
APPALOOSA MANAGEMENT L.P. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
26 MAIN STREET, FIRST FLOOR ONE NEW YORK PLAZA
CHATHAM, NJ 07928 NEW YORK, NY 10004
(973) 701-7000 (212) 859-8000
- -------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
OCTOBER 2, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 453235103 Page 2 of 8 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
APPALOOSA MANAGEMENT L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 5,172,867
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,172,867
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,172,867
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.8%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 453235103 Page 3 of 8 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
DAVID A. TEPPER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
NUMBER OF 7 SOLE VOTING POWER
SHARES 5,172,867
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,172,867
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,172,867
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.8%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
This Amendment No. 9 to the statement on Schedule 13D filed on behalf
of Appaloosa Management L.P. (the "Manager") and David A. Tepper ("Mr.
Tepper" and, together with the Manager, collectively, the "Reporting
Persons") on August 26, 1996, as amended by Amendment No. 1 filed on
September 26, 1996, Amendment No. 2 filed on January 28, 1997, Amendment
No. 3 filed on April 7, 1997, Amendment No. 4 filed on May 13, 1997,
Amendment No. 5 filed on June 12, 1997, Amendment No. 6 filed on July 14,
1997, Amendment No. 7 filed on December 3, 1997 and Amendment No. 8 filed
on December 12, 1997 (the "Schedule 13D"), relates to the common stock of
INAMED Corporation (the "Company"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in
the Schedule 13D. The Schedule 13D is hereby amended and supplemented as
follows:
ITEM 2. Identity and Background
-----------------------
The address of the principal business and principal office of the
Manager is 26 Main Street, 1st Floor, Chatham, New Jersey 07928. The
business address of Mr. Tepper is 26 Main Street, 1st Floor, Chatham, New
Jersey 07928.
In addition to acting as Manager to the Purchasers, the Manager also
acts as investment adviser to Palomino Investment Holdings Ltd., a British
Virgin Islands corporation ("Palomino Holdings"), a wholly-owned subsidiary
of Palomino. The address of the principal business and principal office of
Palomino Holdings is c/o Trident Trust Company (Cayman) Ltd., 1 Capital
Place, P.O. Box 847, Grand Cayman, Cayman Islands.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The Loan Warrants (as defined in Item 5 hereof) representing the right
to purchase 579,510 Shares and $7,857,764 of the New Notes (as defined in
Item 6 hereof) were purchased with the funds of the Partnership and
Palomino.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
Prior to the date hereof, Ferd and Reliance transferred all of their
respective Shares, Notes and Warrants to the Partnership and Palomino such
that as of October 1, 1998, the Partnership and Palomino held 417,400 and
417,400 Shares, respectively; Warrants representing the right to purchase
549,107 and 549,107 Shares, respectively; and $7,102,858 and $7,102,857 in
principal amount of Notes, respectively.
As more fully described in Item 6 below, on October 2, 1998, the
Partnership and Palomino each acquired Warrants to purchase 289,755 Shares
(579,510 Shares in the aggregate) with an exercise price of $6.50 per
share, expiring on September 1, 2002, subject to customary conversion
rights and anti-dilution protection provisions as described therein (the
"Loan Warrants") (a copy of which is attached hereto as Exhibit A and
incorporated by reference herein). The Loan Warrants may be exercised by
payment of the exercise price either in cash or by cashless exercise
through the tendering of Loan Warrants, New Notes (as defined below) or
Exchange Notes (as defined below) to the Company (in the amounts prescribed
in the Loan Warrants). The Loan Warrants provide that the Company will (i)
use its best efforts to register the Shares issuable upon exercise of the
Loan Warrants (the "Warrant Stock") under the Securities Act (as defined
below) and (ii) keep such registration effective for such period of time as
the Loan Warrants or Warrant Stock are held by the Holder (as defined
therein). Furthermore, the Loan Warrants provide for preemptive rights
pursuant to which the Company shall offer to each holder of Loan Warrants
the right to purchase its pro-rata share of any issuance, sale or exchange
of Securities (as defined therein).
All Warrants previously held by Palomino and all of the Loan Warrants
acquired by Palomino were transferred by Palomino to Palomino Holdings.
Accordingly, as of the date hereof, the Partnership, Palomino, and
Palomino Holdings may be deemed to have beneficial ownership of 2,586,434,
1,747,571 and 838,862 Shares, respectively (or 5,172,867 Shares in the
aggregate).
(a) This statement on Schedule 13D relates to 5,172,867 Shares which may
be deemed to be beneficially owned by the Reporting Persons and which
constitute approximately 33.8% of the issued and outstanding Shares.
(b) The Manager may be deemed to have the sole voting and dispositive
power with respect to 5,172,867 Shares. Mr. Tepper may be deemed to
have sole voting power and dispositive power with respect to 5,172,867
Shares.
(c) Not applicable
(d) Not applicable
(e) Not applicable
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
--------------------------------------------------------
The responses to Items 4, 5 and 6 are incorporated herein by
reference.
On October 2, 1998 the Partnership and Palomino acquired $7,857,764 of
the Company's 10% Senior Secured Notes due March 31, 1999 or, at the option
of the Company as provided therein, September 1, 2000 (the "New Notes") (a
copy of which is attached hereto as Exhibit B and incorporated by reference
herein) pursuant to the Note Purchase Agreement, dated as of September 30,
1998, between the Company, the parties listed on Exhibit A thereto and the
Manager, as Collateral Agent (the "New Note Purchase Agreement") (a copy of
which is attached as Exhibit C hereto and incorporated by reference
herein). The New Note Purchase Agreement contains customary representations
and warranties and customary events of default, as well as certain
covenants of the Company including limitations on indebtedness,
encumbrances, dividends and stock issuances and certain requirements of
operating profit and tangible assets.
In connection with the purchase of the Notes, the Manager, as
collateral agent on behalf of holders of the New Notes (the "Collateral
Agent"), was granted a first priority interest and lien on all of the
assets of the Company and its subsidiaries. In furtherance thereof, on
October 2, 1998, the Collateral Agent entered into the Security Agreement,
dated as of September 30, 1998, with the Company (the "Security Agreement")
(a copy of which is attached hereto as Exhibit D and incorporated by
reference herein) whereby the Company pledged as collateral its assets on a
first priority senior secured basis. In addition, on October 2, 1998, (i)
the Collateral Agent entered into the Guarantee and Security Agreement,
dated as of September 30, 1998 (the "Guarantee and Security Agreement") (a
copy of which is attached hereto as Exhibit E and incorporated by reference
herein), made by certain Subsidiaries of the Company (the "Obligors")
whereby subject to certain limitations as set forth therein, each of the
Obligors guaranteed the obligations of the Company under the New Notes and
the New Note Purchase Agreement and pledged as collateral their assets on a
first priority senior secured basis, and (ii) certain foreign subsidiaries
of the Company entered into the Guarantee Agreement, dated as of September
30, 1998, in favor of the holders of the New Notes (the "Guarantee
Agreement") (a copy of which is attached hereto as Exhibit F and
incorporated by reference herein) guaranteeing the New Notes (subject to
certain limitations set forth therein). In addition, on October 2, 1998,
the requisite holders of Notes executed and delivered a consent to amend
the Indenture to increase the amount of Senior Indebtedness (as defined
therein) permitted thereunder from $5 million to $8 million to facilitate
the transactions contemplated by the New Note Purchase Agreement. Finally,
on October 2, 1998, pursuant to the Intercreditor Agreement, dated as of
September 30, 1998 (the "Intercreditor Agreement") (a copy of which is
attached hereto as Exhibit G and incorporated by reference herein) between
the Collateral Agent and Santa Barbara Bank and Trust, as Trustee (the
"Trustee"), the Collateral Agent and the Trustee have agreed that the Notes
are subordinate in right of payment to the New Notes and the liens and
security interests of the Trustee under the Indenture are subject to the
first priority liens and security interests of the Collateral Agent.
In connection with the New Note Purchase Agreement, the Company
entered into the Registration Rights Agreement, dated as of September 30,
1998, by and between the Company and the holders of the New Notes (the
"Registration Rights Agreement") (a copy of which is attached as Exhibit H
hereto and incorporated herein by reference) with respect to the New Notes,
which provides, among other things, that holders of at least 25% or more of
the aggregate principal amount of the New Notes have the right, subject to
certain limitations described therein, to require the Company to register
the sale of the New Notes under the Securities Act of 1933, as amended (the
"Securities Act") (the expenses of three of which registrations will be
paid by the Company) and that the holders of the New Notes have certain
"piggyback rights" to participate in other registered offerings by the
Company.
Pursuant to the New Note Purchase Agreement, the Company has agreed to
commence an Exchange Offer (the "Exchange Offer") for the Notes and,
subject to the terms and conditions of the Exchange Offer, the Company will
exchange therefor (i) the Company's Senior Subordinated Secured Notes due
March 31, 1999 or, at the option of the Company as provided therein,
September 1, 2000 in the aggregate principal amount of $19,605,715 (the
"Exchange Notes"); (ii) Warrants to acquire an aggregate of 3,671,616
Shares with an exercise price of $5.50 per share, expiring on October 1,
2002 (the "Exchange Warrants"); and (iii) Warrants to acquire an aggregate
of 500,000 Shares with an exercise price of $7.50 per share, expiring on
October 1, 2002 (the "Additional Warrants"). The Exchange Offer is being
made pursuant to a Securities Exchange Agreement to be entered into by the
Company and the holders of Notes. The Exchange Offer is expected to be
completed in early November, 1998 (the failure to do so constituting an
event of default under the New Note Purchase Agreement). Assuming all
holders of the Notes exchange all of their Notes in the Exchange Offer,
following the completion of the Exchange Offer, the Partnership will hold
$7,102,858 of Exchange Notes, 1,330,172 of Exchange Warrants and 181,143 of
Additional Warrants; Palomino will hold $7,102,857 in Exchange Notes; and
Palomino Holdings will hold 1,330,171 of Exchange Warrants and 181,143 of
Additional Warrants.
The Company executed Amendment No. 3, dated as of September 29, 1998,
to the Rights Agreement ("Amendment No. 3") (a copy of which is attached
hereto as Exhibit I and incorporated by reference herein). Pursuant to
Amendment No. 3, the Company has exempted the Manager and its affiliates
from the application of certain provisions of the Rights Agreement to the
acquisition of beneficial ownership of additional Shares pursuant to the
New Note Purchase Agreement, the Exchange Offer, the exercise of Warrants
(including, but not limited to Loan Warrants, Exchange Warrants and
Additional Warrants) or the exercise of any preemptive rights.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
Exhibit A: Loan Warrant
Exhibit B: New Note
Exhibit C: New Note Purchase Agreement
Exhibit D: Security Agreement
Exhibit E: Guarantee and Security Agreement
Exhibit F: Guarantee Agreement
Exhibit G: Intercreditor Agreement
Exhibit H: Registration Rights Agreement
Exhibit I: Amendment No. 3 to the Rights Agreement
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: October 6, 1998
APPALOOSA MANAGEMENT L.P.
By: Appaloosa Partners Inc.,
Its General Partner
By: /s/ David A. Tepper
-------------------------------
David A. Tepper
President
David A. Tepper
/s/ David A. Tepper
----------------------------------
EXHIBIT INDEX
Exhibit Exhibit Name
------- ------------
Exhibit A: Form of Loan Warrant
Exhibit B: Form of New Note
Exhibit C: New Note Purchase Agreement
Exhibit D: Security Agreement
Exhibit E: Guarantee and Security Agreement
Exhibit F: Guarantee Agreement
Exhibit G: Intercreditor Agreement
Exhibit H: Registration Rights Agreement
Exhibit I: Amendment No. 3 to the Rights Agreement
Exhibit A
FORM OF WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
No. of Shares of Common Stock: 289,755
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
1. DEFINITIONS......................................................... 1
2. EXERCISE OF WARRANT................................................. 4
2.1. MANNER OF EXERCISE................................................ 4
2.2. PAYMENT OF TAXES.................................................. 6
2.3. FRACTIONAL SHARES................................................. 6
3. TRANSFER, DIVISION AND COMBINATION.................................. 6
3.1. TRANSFER.......................................................... 6
3.2. DIVISION AND COMBINATION.......................................... 6
3.3. EXPENSES.......................................................... 7
3.4. MAINTENANCE OF BOOKS.............................................. 7
4. ADJUSTMENTS......................................................... 7
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.................... 7
4.2. CERTAIN OTHER DISTRIBUTIONS....................................... 7
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK..................... 8
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS.............................. 10
4.5. ISSUANCE OF CONVERTIBLE SECURITIES................................ 10
4.6. SUPERSEDING ADJUSTMENT............................................ 11
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION..... 11
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS............................................. 13
4.9. OTHER ACTION AFFECTING COMMON STOCK............................... 14
4.10. CERTAIN LIMITATIONS.............................................. 14
5. NOTICES TO WARRANT HOLDERS.......................................... 15
5.1. NOTICE OF ADJUSTMENTS............................................. 15
5.2. NOTICE OF CORPORATE ACTION........................................ 15
6. RIGHTS OF HOLDERS................................................... 16
6.1 NO IMPAIRMENT...................................................... 16
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH
OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY........................... 17
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.................. 17
9. RESTRICTIONS ON TRANSFERABILITY..................................... 17
9.1. RESTRICTIVE LEGEND................................................ 17
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION........... 18
9.3. REGISTRATION RIGHTS............................................... 18
9.4. PREEMPTIVE RIGHTS................................................. 21
9.5. TERMINATION OF RESTRICTIONS....................................... 22
10. SUPPLYING INFORMATION.............................................. 22
11. LOSS OR MUTILATION................................................. 23
12. LIMITATION OF LIABILITY............................................ 23
13. MISCELLANEOUS...................................................... 23
13.1. NONWAIVER AND EXPENSES........................................... 23
13.2. NOTICE GENERALLY................................................. 23
13.3. REMEDIES......................................................... 24
13.4. SUCCESSORS AND ASSIGNS........................................... 24
13.5. AMENDMENT........................................................ 24
13.6. SEVERABILITY..................................................... 25
13.7. HEADINGS......................................................... 25
13.8. GOVERNING LAW.................................................... 25
<PAGE>
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 $6.50 per share (subject to adjustment
as provided herein), all on the terms and conditions and pursuant to the
provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than
Warrant Stock.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Closing Date" shall mean September 30, 1998.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted
on the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily volume
weighted average sale price per share of Common Stock for the twenty
Business Days ending five days prior to such date. The closing price for
each day shall be the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc., Automated Quotation System or such other system then in use, or, if
on any such date the Common Stock or such other securities are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date.
"Exchange Notes" shall mean the Company's 11.00% Senior
Subordinated Secured Notes due March 31, 1999 or, at the option of the
Company as provided therein, September 1, 2000.
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of a Warrant, in the event
of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock
then purchasable upon exercise of all Warrants.
"Notes" shall mean the Company's 10.00% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, dated as of the date
hereof, among the purchasers listed on Exhibit A thereto, the Company and
Appaloosa Management, L.P., as Collateral Agent.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock upon exercise of the warrants and options listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may
be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the
Expiration Date, Holder may exercise this Warrant, on any Business Day, for
all or any part of the number of shares of Common Stock purchasable
hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 3800 Howard Hughes
Parkway, Suite 900, Las Vegas, NV 89109 (i) a written notice of Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (ii) payment of the aggregate
Current Warrant Price for such shares and (iii) this Warrant. Such notice
shall be substantially in the form appearing at the end of this Warrant as
Exhibit A, duly executed by Holder. Upon receipt of the items specified in
the second preceding sentence, the Company shall execute or cause to be
executed and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common
Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be in such denomination or denominations as
Holder shall request in the notice and shall be registered in the name of
Holder or, subject to Section 9, such other name as shall be designated in
the notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder
or any other Person so designated shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the notice,
together with the Current Warrant Price and this Warrant, are received by
the Company as described above. If this Warrant shall have been exercised
in part, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the right of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder.
Payment of the Warrant Price shall be made at the option of
Holder (i) by certified or official bank check, (ii) by tendering Notes or
Exchange Notes having a principal face amount such that the amount of such
Notes or Exchange Notes, together with accured and unpaid interest thereon
shall be equal to the Warrant Price (the Company hereby agreeing to reissue
any Notes or Exchange Notes of a Holder into one or more Notes or Exchange
Notes (as applicable) in denominations requested by such Holder) or (iii)
by the surrender of this Warrant to the Company, with a duly executed
exercise notice marked to reflect "Net Issue Exercise," and, in either
case, specifying the number of shares of Common Stock to be purchased,
during normal business hours on any Business Day. Upon a Net Issue
Exercise, Holder shall be entitled to receive shares of Common Stock equal
to the value of this Warrant (or the portion thereof being exercised by Net
Issue Exercise) by surrender of this Warrant to the Company together with
notice of such election, in which event the Company shall issue to Holder a
number of shares of the Company's Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y= the number of shares of Warrant Stock being exercised under
this Warrant;
A = the Current Market Price of one share of the Company's Common
Stock (at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of such
calculation).
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with respect
to, the issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred
to in Section 2.1, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by Holder and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination specified
in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by Holder. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall: (a) take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled to receive after the happening of such event, and (ii) the
Current Warrant Price per share shall be adjusted to equal (A) the Current
Warrant Price multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares for which this Warrant is exercisable immediately
after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such adjustment and a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Share of Common
Stock less than the Current Warrant Price at the time the Additional Shares
of Common Stock are issued, then (i) the Current Warrant Price as to the
number of shares for which this Warrant is exercisable prior to such
adjustment shall be reduced to a price determined by dividing (A) an amount
equal to the sum of (x) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale multiplied by the then existing
Current Warrant Price, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of
Common Stock Outstanding immediately after such issue or sale; and (ii) the
number of shares of Common Stock for which this Warrant is exercisable
shall be adjusted to equal the product obtained by multiplying the Current
Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof by
the Current Warrant Price resulting from the adjustment made pursuant to
clause (i) above.
(b) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, for consideration in an amount per Additional Share of
Common Stock less than the Current Market Price, then (i) the number of
shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such issue or sale by a fraction (A) the numerator of which shall be the
number of shares of Common Stock Outstanding immediately after such issue
or sale, and (B) the denominator of which shall be the number of shares of
Common Stock Outstanding immediately prior to such issue or sale plus the
number of shares which the aggregate offering price of the total number of
such Additional Shares of Common Stock would purchase at the then Current
Market Price; and (ii) the Current Warrant Price as to the number of shares
for which this Warrant is exercisable prior to such adjustment shall be
adjusted by multiplying such Current Warrant Price by a fraction (X) the
numerator of which shall be the number of shares for which this Warrant is
exercisable immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of shares of Common Stock
purchasable immediately after such issue or sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per
Additional Shares of Common Stock which is less than the Current Warrant
Price and the Current Market Price at the time the Additional Shares of
Common Stock are issued, the adjustment required under Section 4.3 shall be
made in accordance with the formula in paragraph (a) or (b) above which
results in the lower Current Warrant Price following such adjustment. The
provisions of paragraphs (a) and (b) of Section 4.3 shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made
under paragraph (a) or (b) of Section 4.3 upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible
Securities, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.4 or Section 4.5 herein.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price or the
Current Market Price in effect immediately prior to the time of such issue
or sale, then the number of shares for which this Warrant is exercisable
and the Current Warrant Price shall be adjusted as provided in Section 4.3
on the basis that the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and outstanding and the Company shall have
received all of the consideration payable therefor, if any, as of the date
of the actual issuance of the number such warrants or other rights. No
further adjustments of the Current Warrant Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities upon
exercise of such warrants or other rights or upon the actual issue of such
Common Stock upon such conversion or exchange of such Convertible
Securities. Notwithstanding the foregoing, no adjustment shall be required
under this Section 4.4 solely by reason of the issuance or distribution of
stock purchase rights pursuant to the Rights Plan or any other rights plan
of the Company, provided that the adjustments required by this Section 4.4
shall be made if any "flip-in" or "flip-over" event shall occur under such
stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Current Warrant
Price or Current Market Price in effect immediately prior to the time of
such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made under this Section
4.5 upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4.
No further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities and, if any issue or sale of such Convertible Securities is made
upon exercise of any warrant or other right to subscribe for or to purchase
any such Convertible Securities for which adjustments of the number of
shares for which this Warrant is exercisable and the Current Warrant Price
have been or are to be made pursuant to other provisions of this Section 4,
no further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made by reason of such
issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5
as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all of such
warrants or rights, or the right of conversion or exchange with respect to
all or a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding Warrant such
previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and
annulled shall no longer be deemed to have been issued by virtue of such
computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
results in an increase or decrease of less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately prior to the making
of such adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, Holder exercises this Warrant, any
Additional Shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that
the event actually takes place, upon payment of the then Current Warrant
Price. Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be canceled by the Company and escrowed property
returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Majority
Holders.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant Price, the
number of shares of common stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and
all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4. For purposes of this Section 4.8, "common stock of
the successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject
to redemption and shall also include any evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable for
any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section
4.8 or 4.9) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 13.2. The Company
shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company (other than the
reincorporation merger described in the Proxy Statement filed with the
Securities and Exchange Commission by the Company on September 18,
1998) with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to,
another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with
Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.
Upon the request of Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of such Warrant, shall be duly and validly issued and fully paid and
nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 4 refers to the taking of a record of such holders,
the Company will in each such case take such a record and will take such
record as of the close of business on a Business Day. The Company will not
at any time, except upon dissolution, liquidation or winding up of the
Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this
Section 9, each Warrant and each certificate for Warrant Stock initially
issued upon the exercise of a Warrant, and each certificate for Warrant
Stock issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing
the manner and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to the Company,
an opinion that the proposed Transfer of such Warrants or such Restricted
Common Stock may be effected without registration under the Securities Act.
After receipt of the Transfer Notice and opinion, the Company shall, within
five days thereof, notify the holder of such Warrants or such Restricted
Common Stock as to whether such opinion is reasonably satisfactory and, if
so, such holder shall thereupon be entitled to Transfer such Warrants or
such Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer and each Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section 9.1, unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Warrants or
the Restricted Common Stock, as the case may be, giving the Transfer Notice
shall not be entitled to Transfer such Warrants or such Restricted Common
Stock until receipt of notice from the Company under this Section 9.2 that
such opinion is reasonably satisfactory.
9.3. REGISTRATION RIGHTS. (a) The Company has agreed to (i) use its
best efforts to register with the Commission on an appropriate form under
the Securities Act, as soon as practicable after issuance of the Warrants
(or cause an appropriate post-effective amendment to be made to any
existing registered registration statement on or prior to such date), and
to use its best efforts to cause to become effective as soon as practicable
thereafter and in any event within six months of the Closing Date, such
registration statement with respect to the Warrant Stock and (ii) keep such
registration statement effective for such period of time as the Warrants or
the Warrant Stock is held by the Holder. The Company will pay all expenses,
including legal and accounting fees and expenses, in connection with
registrations pursuant to this Section 9.3(a).
(b) To the extent that a registration statement is not effective
pursuant to Section 9.3(a), if, at any time, the Company proposes or is
required to register any of its equity securities or securities convertible
into or exchangeable for equity securities under the Securities Act (an
"Incidental Registration"), the Company will give prompt written notice to
all holders of record of the Warrants and the Warrant Stock of its
intention to so register its securities and of such holders' rights under
this Section 9.3(b). Upon the written request of any holder of the Warrants
or the Warrant Stock made within 20 days following the receipt of any such
written notice (which request shall specify the maximum number of Warrants
Stock intended to be disposed of by such holder and the intended method of
distribution thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Warrant Stock which the
Company has been so requested to register by the holders thereof together
with any other securities the Company is obligated to register pursuant to
incidental registration rights of other security holders of the Company. No
registration effected under this Section 9.3(b) shall relieve the Company
of its obligation to effect any registration under Section 9.3(a). Each
holder of Warrants or Warrant Stock shall have the right to withdraw its
request for inclusion of its Warrant Stock in any registration statement
pursuant to this Section 9.3(b) at any time by giving written notice to the
Company of its request to withdraw. There is no limitation on the number of
Incidental Registrations which the Company is obligated to effect pursuant
to this Section 9.3(b). The Company will pay all expenses in connection
with any registration of Warrant Stock requested pursuant to this Section
9.3(b).
(c) In connection with registration of the Warrant Stock under
the Securities Act pursuant to this Section 9.3, the Company shall
indemnify and hold harmless each Person who participated in the offering of
such Warrant Stock and each other Person, if any, who controls such holder
or such participating Person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or participating Person
or controlling Person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse such holder or such director, officer or participating
Person or controlling Person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating Person
or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any alleged
untrue statement or alleged omission made in such registration statement,
preliminary prospectus, prospectus or amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such holder specifically for use therein and provided further that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises from or is based upon the failure
by any holder of Warrants or Warrant Stock to deliver a required prospectus
or prospectus supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder
or such director, officer or participating Person or controlling Person,
and shall survive the transfer of such securities by such holder.
(d) Each holder of Warrants or Warrant Stock registered under the
Securities Act in accordance with the provisions of this Section 9.3,
severally and not jointly, agrees to indemnify and hold harmless the
Company, its directors and officers and each other Person, if any, who
controls the Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director or officer or any such Person may become
subject under the Securities Act or any other statue or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing
provided to the Company by such holder of Warrants or Warrant Stock
specifically for use in any registration statement under which securities
were registered under the Securities Act for resale by such holder, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto or the failure of such holder to deliver
any required prospectus or prospectus supplement; provided, however, that
the indemnification obligations of such holder shall be limited to the
gross proceeds from the offering of the Warrant Stock received by such
holder.
(e) If the indemnification provided for in this Section 9.3 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding provided, however, that the
contribution obligation of any holder shall be limited to the gross
proceeds from the offering of the Warrant Stock received by such holder.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 9.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitle to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
9.4. PREEMPTIVE RIGHTS. (a) The Company shall not issue, sell or
exchange, or agree to issue, sell or exchange (collectively, "Issue," and
any issuance, sale or exchange resulting therefrom, an "Issuance") any
Securities unless the Company shall have first given written notice (the
"Section 9.4 Notice") to each holder of Warrants or Warrant Stock (for
purposes of this Section, each a "Section 9.4 Offeree") that shall (i)
state the Company's intention to Issue Securities, the amount to be issued,
sold or exchanged, the terms of such Securities, the purchase price
therefor and a summary of the other material terms of the proposed
issuance, sale or exchange and (ii) offer (a "Section 9.4 Offer") to Issue
to each Section 9.4 Offeree and their affiliates such Section 9.4 Offeree's
Proportionate Percentage (as defined below) of such Securities (with
respect to each Section 9.4 Offeree, the "Offered Securities") upon the
terms and subject to the conditions set forth in the Section 9.4 Notice,
which Section 9.4 Offer by its terms shall remain open and irrevocable for
a period of 15-days from the date it is delivered by the Company to such
holder, as the case may be (and, to the extent the Section 9.4 Offer is
accepted during such 15-day period, until the closing of the Issuance
contemplated by the Section 9.4 Offer). "Proportionate Percentage" for the
purposes of this Section shall mean the quotient obtained by dividing: (A)
the Warrant Stock held by such Section 9.4 Offeree (assuming for purposes
of this Section 9.4 that all issued and outstanding Warrants have been
exercised) on the date of the Section 9.4 Offer, by (B) the Warrant Stock
issued and outstanding on the date of the Section 9.4 Offer.
(b) Notice of a Section 9.4 Offeree's intention to accept a
Section 9.4 Offer, in whole or in part, shall be evidenced by a writing
signed by such party and delivered to the Company prior to the end of the
15-day period of such Section 9.4 Offer (each, a "Notice of Acceptance"),
setting forth the portion of the Offered Securities that the Section 9.4
Offeree elects to purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not given by a
Section 9.4 Offeree in respect of all the Offered Securities, the Company
shall have 60 days following the 15-day period referred to in clause (b)
above to Issue all or any part of such remaining Offered Securities not
covered by the Notice of Acceptance to any other Person(s), but only at a
price not less than the price, and on terms no more favorable to the person
than the terms, stated in the Section 9.4 Offer Notice. If the Company does
not consummate the Issuance of all or part of the remaining Offered
Securities to such other Person(s) within such period, the right provided
hereunder shall be deemed to be revived and such securities shall not be
offered unless first re-offered to each Section 9.4 Offeree in accordance
with this Section 9.4. Upon the closing of the Issuance to such other
Person(s) (the "Other Buyers") of all or part of the remaining Offered
Securities, each Section 9.4 Offeree shall purchase from the Company, and
the Company shall Issue to each such Section 9.4 Offeree, the Offered
Securities covered by the Notice of Acceptance delivered to the Company by
the Section 9.4 Offeree, on the terms specified in the Section 9.4 Offer.
The purchase by a Section 9.4 Offeree of any Offered Securities is subject
in all cases to the execution and delivery by the Company and the Section
9.4 Offeree of a purchase agreement relating to such Offered Securities in
form and substance similar in all material respects to the extent
applicable to that executed and delivered between the Company and the Other
Buyers.
9.5. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Stock and the Restricted
Common Stock and the legend requirements of Section 9.1 shall terminate as
to any particular Warrant or share of Warrant Stock or Restricted Common
Stock (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto or
(ii) when the Company shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be transferred without registration
thereof under the Securities Act.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Stock in supplying such information as may
be reasonably necessary for such holder to complete and file any reports or
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that, in the case of the initial
holder, the written agreement of Appaloosa Management, L.P. shall be
sufficient indemnity), and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
13. MISCELLANEOUS
13.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
13.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by telecopy and confirmed by telecopy answerback, addressed as
follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for
such purpose.
(b) If to the Company at
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Executive Vice President
Telecopy Number: (702) 791-3205
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
13.3. REMEDIES. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under of
this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
13.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant and, with respect to Section 9 hereof, holders of Warrant Stock,
and shall be enforceable by any such Holder or holder of Warrant Stock.
13.5. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before giving effect
to any adjustment as provided therein) without the prior written consent of
the Holder thereof, provided however, that the foregoing shall not limit
the operation of Section 4.6.
13.6. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Warrant.
13.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
13.8. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY
ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS
RESPECTIVE ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed hereon and attested by
its Secretary or an Assistant Secretary.
Dated: , 1998
------------
INAMED CORPORATION
By:
-------------------------------
Name:
Title:
Exhibit B
INAMED CORPORATION
FORM OF 10.00% SENIOR SECURED NOTE DUE MARCH 31, 1999
THE INTEREST RATE SET FORTH BELOW IS SUBJECT TO INCREASE IN ACCORDANCE
WITH THE LETTER AGREEMENT, DATED AS OF SEPTEMBER 30, 1998, BETWEEN INAMED
CORPORATION AND APPALOOSA MANAGEMENT, L.P.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY AND PURSUANT TO A NOTE
PURCHASE AGREEMENT DATED AS OF SEPTEMBER 30, 1998, A COPY OF WHICH IS ON
FILE AT THE OFFICES OF THE COMPANY. THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS. THIS INSTRUMENT WAS ISSUED WITH ORIGINAL ISSUE
DISCOUNT. FOR INFORMATION REGARDING THE ISSUE PRICE, ISSUE DATE, YIELD TO
MATURITY AND AMOUNT OF ORIGINAL ISSUE DISCOUNT, CONTACT THE EXECUTIVE VICE
PRESIDENT OF INAMED CORPORATION AT (702) 791-3388
No. R- [DATE]
---
- ------------------
FOR VALUE RECEIVED, the undersigned, INAMED CORPORATION (herein
called the "Company"), a corporation organized and existing under the laws
of the state of Florida, hereby promises to pay to
__________________________, or registered assigns, the principal sum of
$_____________ DOLLARS on March 31, 1999 subject to extension as provided
below (the "Maturity Date"), with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at
the rate of 10.00% per annum from the date hereof, payable quarterly, on
December 31, March 31, June 30 and September 30 in each year, commencing
with December 31, 1998, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal or during any period in
which an Event of Default has occurred and is continuing, any overdue
payment of any amount due hereunder or during any period in which an Event
of Default has occurred and is continuing, payable quarterly as aforesaid,
at a rate per annum from time to time equal to 350 basis points per annum
above the rate of interest stated in clause (a) hereof. Notwithstanding the
foregoing, so long as no Event of Default (as defined in the Note Purchase
Agreement (as defined below)) shall have occurred and be continuing, the
Company may, at its option, extend the Maturity Date to September 1, 2000
by delivering to the holder of this Note a written notice of such extension
(in the manner provided in Section 11.6 of the Note Purchase Agreement)
prior to January 1, 1999.
Payments of principal of, interest on and any Premium (as defined
below) with respect to this Note are to be made in lawful money of the
United States of America in Las Vegas, Nevada at the principal office of
Inamed Corporation in such jurisdiction or at such other place as the
Company shall have designated by written notice to the holder of this Note
as provided in the Note Purchase Agreement referred to below. "Premium"
shall mean any amount (other than principal or interest) due in respect of
the Notes pursuant to the Note Purchase Agreement (as defined below).
This Note is one of the Senior Secured Notes (the "Notes") issued
pursuant to the Note Purchase Agreement, dated as of September 30, 1998 (as
from time to time amended, supplemented or otherwise modified, the "Note
Purchase Agreement"), among the Company, the purchasers listed on Exhibit A
thereto and Appaloosa Management, L.P., as Collateral Agent. Each holder of
this Note will be deemed, by its acceptance hereof, to have made the
representations set forth in Sections 3.1, 3.2 and 3.3 of the Note Purchase
Agreement and to have agreed to be bound by the restrictions on transfer
set forth in Section 11.11 of the Note Purchase Agreement.
This Note is a registered note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder's attorney
duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person
in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not
be affected by any notice to the contrary or held liable for allocations of
income, losses, gains, deductions or credits, which are made in good faith
to such registered holder.
The Company will make required payment of principal, at the
Maturity Date, on March 31, 1999 or September 1, 2000, as specified herein
and in the Note Purchase Agreement. This Note is also subject to optional
and mandatory prepayments, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
The Company's obligations under this Note and the Note Purchase
Agreement are secured by a security interest in certain assets of the
Company pursuant to the Security Agreement and by a security interest in
certain assets of certain of the Company's Subsidiaries pursuant to the
Guarantee and Security Agreement (each, as defined in the Note Purchase
Agreement).
The Company's obligations under this Note and the Note Purchase
Agreement are guaranteed by certain of the Company's Subsidiaries (as
defined in the Note Purchase Agreement) under a Guarantee and Security
Agreement and a Guarantee Agreement (each, as defined in the Note Purchase
Agreement).
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Premium) and with the effect provided in the Note
Purchase Agreement.
THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS NOTE, THE NOTE
PURCHASE AGREEMENT, THE SECURITY AGREEMENT, THE GUARANTEE AND SECURITY
AGREEMENT, THE GUARANTEE AGREEMENT OR THE REGISTRATION RIGHTS AGREEMENT (AS
DEFINED IN THE NOTE PURCHASE AGREEMENT).
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
IF ANY ACTION, PROCEEDING OR LITIGATION SHALL BE BROUGHT BY THE HOLDER OF
THIS NOTE IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER THIS NOTE, THE
COMPANY HEREBY CONSENTS AND WILL SUBMIT, AND WILL CAUSE EACH OF ITS
SUBSIDIARIES TO SUBMIT, TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
OF COMPETENT JURISDICTION SITTING WITHIN THE AREA COMPRISING THE SOUTHERN
DISTRICT OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION, PROCEEDING OR LITIGATION IN SUCH
JURISDICTION.
INAMED CORPORATION
By:
-----------------------------
Name:
Title:
Exhibit C
NOTE PURCHASE AGREEMENT
AMONG
INAMED CORPORATION,
THE PURCHASERS LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
Dated as of September 30, 1998
<PAGE>
TABLE OF CONTENTS
Page
1. Issuance and Sale of Notes.............................................2
1.1. Authorization of Notes; Definitions.........................2
1.2. Issuance, Purchase and Sale of Notes........................2
1.3. Deliveries by the Company...................................2
1.4. Deliveries by the Purchasers................................4
2. Representations and Warranties of the Company..........................4
2.1. Organization and Qualification..............................4
2.2. Due Authorization...........................................4
2.3. Subsidiaries................................................5
2.4. SEC Reports Correspondence..................................6
2.5. Financial Statements........................................6
2.6. Litigation..................................................6
2.7. Title to Properties; Insurance..............................7
2.8. Governmental Consents, etc..................................7
2.9. Holding Company Act and Investment Company Act..............8
2.10. Taxes......................................................8
2.11. Compliance with ERISA......................................9
2.12. Intellectual Property Rights..............................10
2.13. Possession of Franchises, Licenses, Etc...................10
2.14. Compliance with Laws......................................10
2.15. Conflicting Agreements and Charter Provisions.............10
2.16. Capitalization............................................11
2.17. Disclosure................................................11
2.18. Offering of Notes.........................................11
2.19. Existing Indebtedness; Future Liens.......................11
2.20. Environmental Matters.....................................12
2.21. Solvency..................................................12
2.22. Labor Relations...........................................12
2.23. Security Documents........................................13
2.24. Litigation Settlement.....................................13
2.25. Brokers or Finders........................................14
2.26. No Material Adverse Change................................14
2.27. Related Party Transactions................................14
2.28. McGhan Documents..........................................14
2.29. Year 2000.................................................15
2.30. Statements; Omissions.....................................15
2.31. No Registration Required; Trust Indenture Act.............15
3. Representations and Warranties of the Purchasers......................15
3.1. Organization and Qualification.............................15
3.2. Due Authorization..........................................15
3.3. Acquisition for Investment.................................16
3.4. Offering of Notes..........................................16
3.5. Accredited Investor........................................16
3.6. Brokers or Finders.........................................16
4. Registration, Exchange and Transfer of Notes..........................16
4.1. The Note Register; Persons Deemed Owners...................16
4.2. Issuance of New Notes Upon Exchange or Transfer............17
5. Payment of Notes......................................................17
5.1. Home Office Payment........................................17
5.2. Limitation on Interest.....................................17
5.3. Interest...................................................17
5.4. Principal..................................................17
6. Covenants of the Company..............................................18
6.1. Maintenance of Office or Agency............................18
6.2. Money for Security Payments to be Held in Trust............18
6.3. Existence..................................................18
6.4. Maintenance of Properties..................................19
6.5. Payment of Taxes and Other Claims..........................19
6.6. Limitation on Indebtedness.................................19
6.7. Limitation on Encumbrances.................................19
6.8. Limitation on Related Party Transactions...................19
6.9. Limitation on Dividends; Stock Issuances...................20
6.10. Subsidiary Guarantees.....................................20
6.11. Pledges of Intercompany Notes.............................21
6.12. No Speculative Transactions...............................21
6.13. Restricted Investments....................................21
6.14. Operating Profit..........................................22
6.15. Tangible Assets...........................................22
6.16. Line of Business..........................................22
6.17. Sale of Assets............................................23
6.18. Indenture Relating to the Notes...........................23
6.19. Financial Statements and Information......................23
6.20. Inspection................................................25
6.21. Change-in-Control Purchase Offer..........................26
6.22. Sale and Leaseback Transactions...........................26
6.23. Compliance with Laws......................................26
6.24. Supplemental Disclosure...................................27
6.25. Proceeds..................................................27
6.26. Insurance; Damage to or Destruction of Collateral.........27
6.27. Amendment of Litigation Documents and McGhan Documents....28
6.28. Exchange Offer............................................28
6.29. State Takeover Statutes...................................28
7. Events of Default and Remedies........................................28
7.1. Events of Default and Remedies.............................28
7.2. Acceleration of Maturity...................................31
7.3. Other Remedies.............................................31
7.4. Conduct No Waiver; Collection Expenses.....................31
7.5. Annulment of Acceleration..................................32
7.6. Remedies Cumulative........................................32
8. Prepayment of the Notes...............................................32
8.1. Optional Prepayments with Make-Whole Amount................32
8.2. Allocation of Partial Prepayments..........................33
8.3. Maturity; Surrender, etc...................................33
8.4. Purchase of Notes..........................................33
8.5. Make-Whole Amount..........................................33
9. The Collateral Agent..................................................34
9.1 Appointment.................................................34
9.2 Delegation of Duties........................................35
9.3 Exculpatory Provisions......................................35
9.4 Reliance by the Collateral Agent............................35
9.5 Notice of Default...........................................36
9.6 Non-Reliance on Collateral Agent and Other Purchasers.......36
9.7 Indemnification.............................................37
9.8 Collateral Agent in its Individual Capacity.................37
9.9 Successor Collateral Agent..................................37
10. Interpretation.......................................................38
10.1 Definitions................................................38
10.2. Accounting Principles.....................................52
11. Miscellaneous........................................................53
11.1. Payments; Indemnity.......................................53
11.2. Severability..............................................53
11.3. Specific Enforcement......................................54
11.4. Entire Agreement..........................................54
11.5. Counterparts..............................................54
11.6. Notices and other Communications..........................54
11.7. Amendments................................................55
11.8. Successors and Assigns....................................55
11.9. Expenses..................................................55
11.10. Survival.................................................56
11.11. Transfer of Notes........................................56
11.12. GOVERNING LAW............................................56
11.13. Submission to Jurisdiction...............................57
11.14. Service of Process.......................................57
11.15. WAIVER OF JURY TRIAL.....................................57
11.16. Public Announcements.....................................57
11.17. Further Assurances.......................................57
11.18. Representations of Purchasers............................57
11.19. Signatures...............................................58
<PAGE>
THIS NOTE PURCHASE AGREEMENT, dated as of September 30, 1998
(this "Agreement"), among INAMED CORPORATION, a Florida corporation (the
"Company"), the parties listed on Exhibit A hereto (each such party, a
"Purchaser" and collectively, the "Purchasers") and APPALOOSA MANAGEMENT,
L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the Company has entered into (i) a Settlement Agreement,
dated April 2, 1998 (the "Class Action Settlement Agreement"), which
provides, among other things, for the settlement of certain claims against
the Company arising out of the litigation in the United States District
Court for the Northern District of Alabama, Southern Division stylized as
"Silicone Gel Breast Implant Products Liability Litigation (MDL926)," (the
"Breast Implant Litigation") and (ii) an agreement with 3M, dated as of
April 16, 1998 (the "3M Agreement"), which provides, among other things,
for the resolution of certain indemnification claims of 3M against the
Company relating to the Breast Implant Litigation and for the Company to
obtain certain releases (the "Releases");
WHEREAS, on June 2, 1998, the United States District Court for
the Northern District of Alabama issued a court order preliminarily
approving the Class Action Settlement Agreement and the 3M Agreement (the
"June 2, 1998 Court Order");
WHEREAS, in order to finance certain of its obligations under the
Class Action Settlement Agreement and the 3M Agreement and to finance
certain of its working capital requirements, the Company has requested the
Purchasers to loan the Company $8,000,000 (the "Loan") by purchasing the
10.00% Senior Secured Notes due March 31, 1999 or, at the option of the
Company exercised as provided therein, September 1, 2000 (the "Notes"), and
Warrants to acquire up to 590,000 shares of Common Stock with an exercise
price of $6.50 per share (the "Loan Warrants");
WHEREAS, upon the terms and subject to the conditions contained
in this Agreement and in the other Transaction Documents (as hereinafter
defined), the Purchasers are willing to make the Loan to the Company by
purchasing the principal amount of Notes set forth opposite such
Purchaser's name in Exhibit A and the number of Loan Warrants set forth
opposite such Purchaser's name in Exhibit A;
WHEREAS, in connection with the purchase and sale of the Notes,
after the date hereof the Company will consummate an Exchange Offer (the
"Exchange Offer") for its issued and outstanding 11% secured convertible
notes due January, 1999 (the "Old Notes") by exchanging therefor (i) the
Company's 11.00% Senior Subordinated Secured Notes due March 31, 1999 or,
at the option of the Company as provided therein, September 1, 2000, in the
form of Exhibit B (the "Exchange Notes"), (ii) Warrants in the form of
Exhibit C to acquire up to 3,671,616 shares of Common Stock with an
exercise price of $5.50 per share (the "Exchange Warrants") and (iii)
Warrants in the form of Exhibit D to acquire up to 500,000 shares of Common
Stock with an exercise price of $7.50 per share (the "Additional
Warrants"); and
WHEREAS, the Purchasers and the Company desire to provide for the
purchase and sale of the Notes and the Loan Warrants and to establish
various rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes.
--------------------------
1.1. Authorization of Notes; Definitions. The Company has
authorized the issuance and sale of the Notes and the Loan Warrants. The
Notes shall be in the form of Exhibit 1.1A hereto and the Loan Warrants
shall be in the form of Exhibit 1.1B hereto. Certain capitalized terms used
in the Agreement are defined in Section 9 hereof; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
1.2. Issuance, Purchase and Sale of Notes. Upon the terms and
subject to the conditions set forth herein, the Company is selling to the
Purchasers and the Purchasers are purchasing from the Company (i) Notes in
the aggregate principal amount of Eight Million Dollars ($8,000,000) and
(ii) the Loan Warrants, for an aggregate purchase price of $8,000,000 in
cash (the "Purchase Price"). The Company and the Purchasers agree that for
U.S. federal, state and local income Tax purposes, the portion of the
Purchase Price allocable to the Loan Warrants is $300,000.00 and the
portion allocable to the Notes is $7,700,000.00, and the Company and the
Purchasers shall take no position inconsistent with such allocation. The
closing of the transactions contemplated hereby (the "Closing") is taking
place simultaneously herewith at the offices of Fried, Frank, Harris,
Shriver & Jacobson, New York, New York.
1.3. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set
forth below) the following:
(i) duly executed Notes in the principal amounts set forth
opposite such Purchaser's name on Exhibit A hereto;
(ii) duly executed Loan Warrants to purchase shares of
Common Stock in the amounts set forth opposite such Purchaser's
name on Exhibit A hereto;
(iii) an opinion of the Company's counsel, dated as of the
date hereof, addressed to such Purchaser in the form of Exhibit
1.3(iii) hereto;
(iv) an Officers' Certificate, dated as of the date hereof,
certifying that the representations and warranties contained in
Article 2 hereof are true and correct;
(v) good standing certificates for the Company and each of
its Material Subsidiaries, dated no earlier than ten days prior
to the date hereof, from the jurisdiction in which each is
incorporated;
(vi) a copy of the resolutions of the board of directors of
the Company and each of its Material Subsidiaries (as applicable)
authorizing the execution of each of the Transaction Documents
and the performance of the transactions contemplated in the
Transaction Documents which shall be certified as true, correct
and effective as of the date hereof by the Secretary or Assistant
Secretary of the Company or such Material Subsidiary;
(vii) duly executed copies of the Guarantee and Security
Agreement, the Guarantee Agreement, the Security Agreement, and
the Registration Rights Agreement in the forms attached hereto as
Exhibits 1.3(vii) A, B, C, and D, and copies of any other
Collateral Documentation including Financing Statements required
to perfect the Holders' first priority security interest in the
Collateral;
(viii) evidence, satisfactory to each Purchaser, of the
commencement of the Exchange Offer;
(ix) a copy of the Rights Plan as in effect on the date
hereof and, which is attached hereto as Exhibit 1.3(ix);
(x) a duly executed copy of the Intercreditor Agreement, in
the form attached hereto as Exhibit 1.3(x);
(xi) the placement fee of $100,000 to Libra Investments in
immediately available funds by wire transfer to one or more
accounts designated by Libra Investments on or prior to the date
hereof and the placement fee of $200,000 to Appaloosa to be
deducted from the portion of the Purchase Price to be paid by
Appaloosa at the Closing; and
(xii) such other instruments and documents as reasonably
requested by each Purchaser.
1.4. Deliveries by the Purchasers. At the Closing, each Purchaser
is delivering to the Company (or to such other parties as otherwise set
forth below) the following:
(i) the amount set forth opposite such Purchaser's name
in Exhibit 1.4(i), such amount being equal to the pro-rata portion of the
Purchase Price allocable to such Purchaser for the principal amount of
Notes and the Loan Warrants being purchased by such Purchaser as set forth
opposite such Purchaser's name in Exhibit A hereto, and less, in the case
of Appaloosa, (i) the placement fee of $200,000, (ii) $3,000,000 to be wire
transferred in immediately available funds at the Closing to Edgar C.
Gentle, III (the "Escrow Agent") pursuant to the Escrow Agreement, dated as
of October 1, 1998, by and between the Inamed Settlement Fund by and
through the Settlement Class Counsel, the Company and the Escrow Agent (the
"Escrow Agreement") and (iii) its costs and expenses (including the
reasonable fees and expenses of its counsel, Fried, Frank, Harris, Shriver
& Jacobson and accountants, which amounts shall be wire transferred by
Appaloosa in immediately available funds to one or more accounts designated
by such parties on or prior to the date hereof); and
(ii) a duly executed copy of the Registration Rights
Agreement.
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to each Holder as follows:
2.1. Organization and Qualification. Each Credit Party is a
corporation duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated and has the power to own its
respective property and to carry on its respective business as now being
conducted. Except as set forth on Schedule 2.1, each Credit Party is duly
qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification necessary and
where the failure to so qualify would individually or in the aggregate have
a Material Adverse Effect.
2.2. Due Authorization. Each Credit Party has all right, power
and authority to enter into, deliver and perform the Transaction Documents
to which it is a party and to consummate the transactions contemplated
thereby. The execution and delivery of each Transaction Document by each
Credit Party party thereto and the performance by such Credit Party of the
transactions contemplated thereby (including, without limitation, the
issuance and sale of the Notes, the Loan Warrants, the Exchange Notes, the
Exchange Warrants and the Additional Warrants by the Company) and
compliance by each such Credit Party with all the provisions of each
Transaction Document (as applicable) have been duly authorized by all
requisite corporate proceedings on the part of each Credit Party. Each of
the Transaction Documents (other than the Exchange Offer Documents) has
been duly executed and delivered on behalf of each Credit Party party
thereto, and each such Transaction Document constitutes the legal, valid
and binding obligation of such Credit Party, enforceable against such
Credit Party in accordance with their respective terms, except to the
extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or by general principles of equity
relating to creditors' rights generally. The Company has furnished to each
Purchaser true and correct copies of the Company's Certificate of
Incorporation and By-Laws as in effect on the date of this Agreement,
copies of which are attached hereto as Exhibits 2.2(i) and 2.2(ii). In
addition, the Company has furnished to each Purchaser a true and correct
copy of the Proxy Statement, relating to the solicitation of votes to
approve the Reincorporation Merger, filed by the Company with the SEC on
September 18, 1998, a copy of which is attached hereto as Exhibit 2.2(iii)
(the "Proxy Statement").
2.3. Subsidiaries. (a) Schedule 2.3(a) contains (except as noted
therein) complete and correct lists (i) of the Company's Material
Subsidiaries, showing, as to each Material Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding
owned by the Company and each other of the Company's Subsidiaries, and (ii)
of the Company's directors and senior officers.
(b) Except as set forth in Schedule 2.3(a), all of the
outstanding shares of capital stock or similar equity interests of each
Material Subsidiary shown in Schedule 2.3(a) as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another of its Subsidiaries
free and clear of any Lien.
(c) There are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which the Company or
any of its Subsidiaries may be required to issue, sell, repurchase or
redeem any of its capital stock or other equity interests in any of the
Company's Subsidiaries.
(d) The Company has furnished to each Purchaser true and correct
copies of the charter, by-laws and/or other organizational documents of
each of the Company's Material Subsidiaries, as in effect on the date of
this Agreement, copies of which are attached hereto as Exhibit 2.3(d).
(e) Schedule 2.3(e) contains (except as noted therein) a complete
and correct list of all of the Company's Non-Significant Subsidiaries.
2.4. SEC Reports Correspondence. Except as set forth in Schedule
2.4, the Company has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act from and after
January 1, 1995; and the Company has furnished each Purchaser true and
complete copies of all annual reports, quarterly reports, proxy statements
and other reports under the Exchange Act filed by the Company from and
after such date, each as filed with the SEC (collectively, the "SEC
Reports"). Except as set forth on Schedule 2.4, each SEC Report was in
compliance in all material respects with the requirements of its respective
report form and did not on the date of filing contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as of the
date hereof there is no fact or facts not disclosed in the SEC Reports
which relate specifically to the Company and/or any of its Subsidiaries and
which individually or in the aggregate may have a Material Adverse Effect.
The Company has made available for inspection by each Purchaser copies of
all correspondence between the Company and the SEC from and after January
1, 1996.
2.5. Financial Statements. Except as set forth in Schedule 2.5,
the financial statements (including any related schedules and/or notes)
included in the SEC Reports have been prepared in accordance with GAAP
consistently followed (except as indicated in the notes thereto) throughout
the periods involved and fairly present the consolidated financial
condition, results of operations, cash flows and changes in stockholders'
equity of the Company and its Subsidiaries as of the respective dates
thereof and for the respective periods then ended (in each case subject, as
to interim statements, to changes resulting from year-end adjustments, none
of which were material in amount or effect). Except as set forth in
Schedule 2.5 or the SEC Reports, the Company has no liabilities or
obligations, contingent or otherwise, except (i) liabilities and
obligations in the respective amounts reflected or reserved against in the
Company's balance sheet as of December 31, 1997 included in the SEC Reports
or (ii) liabilities and obligations incurred in the ordinary course of
business since December 31, 1997 which individually or in the aggregate do
not have a Material Adverse Effect. Since December 31, 1997, the Company
and its Subsidiaries have operated their respective businesses only in the
ordinary course and there has not been individually or in the aggregate any
Material Adverse Effect, other than changes disclosed in the SEC Reports or
otherwise set forth in Schedule 2.5 hereto.
2.6. Litigation. (a) Except as set forth in Schedule 2.6 hereto
or as disclosed in the SEC Reports, there is no action, suit, investigation
or proceeding pending or, to the Knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of their respective
properties or assets by or before any court, arbitrator or other
Governmental Entity.
(b) Except as set forth in Schedule 2.6 or as disclosed in the
SEC Reports, neither the Company nor any of its Subsidiaries is in default
under or in breach of any order of any court, arbitrator or governmental
entity, and neither the Company nor any of its Subsidiaries is subject to
or a party to any order of any court or governmental entity arising out of
any action, suit or proceeding under any Law.
2.7. Title to Properties; Insurance. (a) Except as set forth in
Schedule 2.7(a), the Company and each of its Subsidiaries have good and
valid title to, or, in the case of property leased by any of them as
lessee, a valid and subsisting leasehold interest in, their respective
properties and assets, free of all Liens and encumbrances, except as sold
or otherwise disposed of in the ordinary course of business and except for
such Liens and encumbrances which would not cause a Material Adverse
Effect.
(b) Schedule 2.7(b) sets forth a complete and correct list of all
insurance coverage carried by the Company or its Subsidiaries, the carrier
and the terms and amount of coverage. All of the material assets of the
Company and the Company's Subsidiaries and all aspects of the Company's and
its Subsidiaries' businesses that are of insurable character are covered by
insurance with insurers against risks of liability, casualty and fire and
other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage which are consistent
with prudent industry practice. Neither the Company nor any of its
Subsidiaries is in default with respect to its obligations under any such
insurance policy maintained by it. All such policies and other instruments
are in full force and effect and no premiums with respect thereto are past
due and owed. Except as set forth in Schedule 2.7(b), neither the Company
nor any of its Subsidiaries has failed to give any notice or present any
material claim under any such insurance policy in due and timely fashion or
as required by any of such insurance policies, neither the Company nor any
of its Subsidiaries has otherwise, through any act, omission or
non-disclosure, jeopardized or impaired full recovery of any claim under
such policies, and there are no claims by the Company or any of its
Subsidiaries under any of such policies to which any insurance company is
denying liability or defending under a reservation of rights or similar
clause. Neither the Company nor any of its Subsidiaries has received notice
of any pending or threatened termination of any of such policies or any
premium increases for the current policy period with respect to any of such
policies and the consummation of the transactions contemplated by the
Transaction Documents will not result in any such termination or premium
increase. The Company does not maintain directors' and officers' insurance.
2.8. Governmental Consents, etc. No Credit Party is required to
obtain any consent, approval or authorization of, or to make any
registration, declaration or filing with, any Governmental Entity or third
party as a condition to or in connection with the valid execution and
delivery of any of the Transaction Documents or the valid offer, issue,
sale or delivery of the Notes or the Loan Warrants, or the performance by
any such Credit Party of its obligations in respect of any thereof, except
for filings required pursuant to state and federal securities laws to
effect any registration of securities pursuant to the Registration Rights
Agreement, the Financing Statements, and filings to be made with the U.S.
Patent and Trademark Office or the U.S. Copyright Office to perfect the
Holders' first priority security interest in the Intellectual Property
constituting Collateral under the Collateral Documentation, and except for
the filing on Form 8K under the Exchange Act to report the consummation of
the transactions contemplated hereby.
2.9. Holding Company Act and Investment Company Act. No Credit
Party is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an
"affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
2.10. Taxes. Except as set forth in Schedule 2.10:
(a) The Company and its Subsidiaries are each members of the
affiliated group (as defined in Code Section 1504) filing a consolidated
federal income Tax Return of which the Company is the common parent. The
Company and its Subsidiaries (i) have timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company or its
Subsidiaries, all of which Tax Returns are true, correct and complete in
all material respects; (ii) have within the time and manner prescribed by
Law paid all Taxes, required to be paid in respect of the periods covered
by such Tax Returns or otherwise due to any Governmental Authority; (iii)
have established and maintained on their respective books and records,
accruals and reserves that are adequate for the payment of all Taxes not
yet due and payable and attributable to any period preceding the date
hereof; and (iv) have not received notice of any deficiencies for any Tax
from any Governmental Authority against the Company or any of its
Subsidiaries, which deficiency has not been satisfied. Neither the Company
nor any of its Subsidiaries is the subject of any currently ongoing audit
or judicial or administrative proceeding relating to Taxes, nor is any such
audit pending or, to the Company's Knowledge, threatened. With respect to
any taxable period ended prior to December 31, 1992, all Tax Returns
including the Company or any of its Subsidiaries have been audited by the
Internal Revenue Service or are closed by the applicable statute of
limitations. The accruals and reserves for Taxes on the December 31, 1997
Balance Sheet are complete and adequate in all material respects to cover
the liability of the Company and its Subsidiaries for Taxes through such
date. There are no Liens with respect to Taxes upon any of the properties
or assets, real or personal, tangible or intangible, of the Company or any
of its Subsidiaries (other than Liens for Taxes not yet due). No claim has
been made or threatened in writing, and no claim has, to the Company's
Knowledge, otherwise been made or threatened, by a Governmental Authority
in a jurisdiction where the Company and its Subsidiaries do not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction. Neither the Company nor any of its
Subsidiaries has filed an election under Section 341(f) of the Code to be
treated as a consenting corporation. Neither the Company nor any of its
Subsidiaries is or has been a party to any Tax Sharing Agreement.
(b) The Company and its Subsidiaries have duly withheld or
collected all Taxes required by law to have been withheld or collected
(including Taxes required by law to be withheld or collected in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party) and any such amounts required
to be remitted to a Governmental Authority have been timely remitted.
2.11. Compliance with ERISA. The Company has provided or made
available to each Purchaser, or has caused to be provided to each Purchaser
(i) current, accurate and complete copies of all documents embodying or
relating to each employee benefit plan (within the meaning of Section 3(3)
of ERISA) and each Employee Agreement, including all amendments thereto,
and trust or funding agreements with respect thereto (excluding any grantor
trusts established to hold assets subject to the claims of Seller's
creditors) maintained or contributed to by and Credit Party or any ERISA
Affiliate; and (ii) all summary plan descriptions and communications of any
material modifications to any employee or employees relating to any
employee benefit plan (within the meaning of Section 3(3) of ERISA) or
Employee Agreement maintained by any Credit Party or any ERISA Affiliate.
Schedule 2.11 sets forth a complete and correct list of all employee
benefit plans and Employee Agreements described in clause (i) above. Each
employee benefit plan (within the meaning of Section 3(3) of ERISA)
maintained or contributed to by any Credit Party or any ERISA Affiliate has
been established and operated in accordance with terms thereof and all
other applicable laws, including, but not limited to the Code and ERISA.
Neither any Credit Party nor any ERISA Affiliate presently sponsors,
maintains, contributes to, or is required to contribute to, nor has any
Credit Party nor any ERISA Affiliate ever sponsored, maintained,
contributed to, or been required to contribute to, an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) which is
subject to Title IV of ERISA or Section 412 of the Code. Neither any Credit
Party nor any ERISA Affiliate has ever maintained or contributed to or been
required to maintain or contribute to any employee welfare benefits plan
(within the meaning of Section 3(1) of ERISA) which provides for
post-retirement medical or other welfare-type benefits and has no liability
for any such benefits to any present or former employee.
2.12. Intellectual Property Rights. Except as disclosed on
Schedule 2.12 hereto, to the Company's Knowledge, (i) the Company or one of
its Subsidiaries owns or has the right to use pursuant to license,
sub-license, agreement or permission all of its Intellectual Property; and
(ii) neither the Company nor any of its Subsidiaries has interfered with,
infringed upon or misappropriated any Intellectual Property rights of third
parties, except for interferences, infringements and misappropriations
which would not individually or in the aggregate have a Material Adverse
Effect, and the Company has no Knowledge of any claim, demand or notice
alleging any such interference, infringement or misappropriation (including
any claim that it must license or refrain from using any Intellectual
Property rights of any third party). To the Company's Knowledge, no third
party has interfered with, infringed upon or misappropriated any
Intellectual Property rights of the Company or any of the Company's
Subsidiaries.
2.13. Possession of Franchises, Licenses, Etc. Each Credit Party
possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from
burdensome restrictions, that are necessary for the ownership, maintenance
and operation of their respective properties and assets, except for those
the absence of which would not individually or in the aggregate have a
Material Adverse Effect, and no Credit Party is in violation of any
thereof, except for violations which would not cause a Material Adverse
Effect.
2.14. Compliance with Laws. Each Credit Party is in compliance
with all applicable Laws including, without limitation, those relating to
protection of the environment, employment opportunity and employee safety,
except where the failure to comply would not individually or in the
aggregate have a Material Adverse Effect. No injunction, order or other
decree has been issued nor any Law enacted which prevents, nor does any Law
prohibit the consummation of the transactions contemplated by any of the
Transaction Documents.
2.15. Conflicting Agreements and Charter Provisions. Other than
the Class Action Settlement Agreement, no Credit Party is a party to any
Contract or is subject to any charter or By-Law provision or any judgment
or decree which individually or in the aggregate has or is reasonably
likely to have a Material Adverse Effect. Neither the execution and
delivery of any of the Transaction Documents, nor the issuance of the Notes
or the Loan Warrants, nor the fulfillment of or compliance with the terms
and provisions hereof or thereof, will conflict with or result in a breach
of the terms, conditions, or provisions of, or give rise to a right of
termination under, or constitute a default under, or result in the creation
of any Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of any Credit
Party or any Contract of any Credit Party except where such conflict,
breach, right of termination, default, Lien or violation would not cause a
Material Adverse Effect. No Credit Party is in default under any
outstanding indenture or other debt instrument or with respect to the
payment of the principal of or interest on any outstanding obligations for
borrowed money, or is in default under any of its Contracts except, in the
case of Contracts, where such default would not cause a Material Adverse
Effect.
2.16. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which, as of the date
hereof, 10,990,290 shares were issued and outstanding. All of the
outstanding shares of Common Stock have been validly issued and are fully
paid and nonassessable. No class of Capital Stock of the Company is
entitled to preemptive rights. Except for the Old Notes and the warrants
and options listed on Schedule 2.16 hereto, there are no outstanding
options, warrants, subscription rights, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any class of Capital Stock of the Company, or Contracts, by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of its Capital Stock or options, warrants or other rights
to purchase or acquire any shares of its Capital Stock. Immediately
following the consummation of the transactions contemplated hereby, the
Company's capitalization will be as set forth in Schedule 2.16. The Company
has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January 1, 1995.
2.17. Disclosure. Neither any Transaction Document nor any
Schedule thereto, nor any certificate furnished to any Purchaser by or on
behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated thereby, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
2.18. Offering of Notes. Neither the Company nor any Person
acting on its behalf has offered the Notes or the Loan Warrants or any
similar securities of the Company for sale to, solicited any offers to buy
the Notes or the Loan Warrants or any similar securities of the Company
from or otherwise approached or negotiated with respect to the Company with
any Person other than the Purchasers and other "accredited investors" (as
defined in Rule 501(a) under the Securities Act). Neither the Company nor
any Person acting on its behalf has taken or, except as contemplated hereby
will take any action (including, without limitation, any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Notes or the Loan
Warrants under the Securities Act) which could reasonably be expected to
subject the offering, issuance or sale of the Notes or the Loan Warrants to
the registration requirements of Section 5 of the Securities Act or violate
the provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
2.19. Existing Indebtedness; Future Liens. (a) Schedule 2.19 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of the date hereof. Neither the Company nor
any of its Subsidiaries is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any such
Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment. None of the Company's 4% convertible
debentures, due January 30, 2000, are outstanding.
(b) No Credit Party has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any
Lien.
2.20. Environmental Matters. No Credit Party has Knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against any Credit Party or any of its real
properties now or formerly owned, leased or operated by any of them or
other assets, alleging any damage to the environment or violation of any
Environmental Laws. Except as otherwise set forth in Schedule 2.20, (i) no
Credit Party has Knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or affecting real properties now
or formerly owned, leased or operated by any of them or to other assets or
their use; (ii) except as set forth on Schedule 2.20, no Credit Party has
stored any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws; and (iii) all
buildings on all real properties now owned, leased or operated by any
Credit Party are in compliance with applicable Environmental Laws; except
in each case for such occurrences which would not cause a Material Adverse
Effect.
2.21. Solvency. No Credit Party is, and after giving effect to
the purchase of the Notes and the application of the proceeds therefrom
will be, insolvent within the meaning of Title 11 of the United States Code
or any comparable state law provision.
2.22. Labor Relations. Except as set forth in Schedule 2.22, no
unfair labor practice complaint or any complaint alleging sexual harassment
or sex, age, race or other employment discrimination has been brought
during the last three years against any Credit Party before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any
other Governmental Authority, nor is there any charge, investigation
(formal or informal) or complaint pending, or to the Knowledge of each
Credit Party, threatened, against any Credit Party regarding any labor or
employment matter. There have been no governmental audits of the equal
employment opportunity practices of any Credit Party and, to the Knowledge
of each Credit Party, no reasonable basis for any such audit exists. Each
Credit Party (i) is in compliance with all applicable federal, state and
local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of
employment, collective bargaining and wages and hours, except for such
laws, rules and regulations which would not cause a Material Adverse Effect
and (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to its employees.
2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of
State of Nevada with respect to the Company and upon proper filing of the
Financing Statements (or assignments thereof) in the locations identified
in the Guarantee and Security Agreement, with respect to the domestic
Material Subsidiaries, the Liens granted under the Transaction Documents
(other than the Exchange Offer Documents) shall constitute fully perfected
first priority security interests in all right, title and interest of the
Company or such domestic Material Subsidiary, as the case may be, in and to
the personal property therein prior to any other security interests against
such property or interests therein.
2.24. Litigation Settlement. (a) Attached hereto as Exhibits
2.24A, 2.24B and 2.24C are true and complete copies of the Class Action
Settlement Agreement, the 3M Agreement, and the June 2, 1998 Court Order
approving the Class Action Settlement Agreement and the 3M Agreement
(including the 30-day extension letter thereto).
(b) The plaintiffs in the Breast Implant Litigation have been
preliminarily certified as a Mandatory (non "opt-out" Limited Fund) Class
under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure.
(c) Except as disclosed in the Company's filing in its 1997 Form
10K, the implementation of the Class Action Settlement Agreement will
preclude further litigation by all persons who are within the scope of the
class and whose claims arise during the class period.
(d) Each Credit Party is in full compliance with all of the terms
of the Class Action Settlement Agreement, the 3M Agreement and the June 2,
1998 Court Order. No Credit Party is in default under or in violation of
the Class Action Settlement Agreement, the 3M Agreement, or the June 2,
1998 Court Order and all of the foregoing are in full force and effect with
respect to each Credit Party. To the Knowledge of each Credit Party, each
Person (other than a Credit Party) who is a party to the Class Action
Settlement Agreement or the 3M Agreement or who is subject to the June 2,
1998 Court Order is in full compliance with the terms of such agreements
and such order, are not in default or in violation of such agreements or
such order, and each of the foregoing is in full force and effect with
respect to such parties.
(e) The Company has delivered to each Purchaser true and correct
copies of the Escrow Agreement and the Interim Agreement for Custodian
Services for the Inamed Settlement Fund, dated as of September 30, 1998, by
and between The Inamed Settlement Fund and Compass Bank (the "Custody
Agreement").
2.25. Brokers or Finders. Other than the $100,000 fee to Libra
Investments and the $200,000 fee to Appaloosa, no agent, broker, investment
banker or other Person is or will be entitled to any broker's fee or any
other commission or similar fee from any Credit Party in connection with
any of the transactions contemplated by this Agreement.
2.26. No Material Adverse Change. Except as set forth in Schedule
2.26, since January 1, 1997, no event has occurred or failed to occur which
has had a Material Adverse Effect.
2.27. Related Party Transactions. (a) Except as set forth in
Schedule 2.27 or as disclosed in the SEC Reports, no Credit Party has
entered into or been a party to any transaction with any Related Party
thereof except in the ordinary course of, and pursuant to the reasonable
requirements of, such party's business and upon fair and reasonable terms
that are at least equivalent to an arms length transaction with a Person
not a Related Party of such party.
(b) Except as set forth in Schedule 2.27 or as disclosed in the
SEC Reports, no Credit Party has entered into any lending or borrowing
transaction with any director, officer or employee of the Company or any of
its Subsidiaries in excess of $10,000 in the aggregate.
2.28. McGhan Documents. (a) Attached hereto as Exhibits 2.28(i)
and 2.28(ii), respectively, are true and complete copies of (i) the
Standstill Agreement and (ii) all documents and agreements relating to the
full discharge of all Indebtedness to International Integrated Industries
LLC.
(b) The Company has discharged in full, in a manner satisfactory
to each Purchaser, all indebtedness to International Integrated Industries
LLC.
(c) Each Credit Party is in full compliance with all of the terms
of the documents listed in Section 2.28(a) and is not in default or in
violation of any of the foregoing. All of the documents listed in Section
2.28(a) are in full force and effect with respect to each Credit Party.
(d) To the Knowledge of each Credit Party, each Person (other
than a Credit Party) who is a party to any of the documents listed in
Section 2.28(a) is in full compliance with the terms of such documents, is
not in default or in violation of the foregoing, and each such document is
in full force and effect with respect to such parties.
2.29. Year 2000. The Company reasonably believes that the Company
and its Subsidiaries will on a timely basis successfully resolve the risk
that computer applications used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates, commonly referred to as the "Year 2000 Problem", if the
Company and its Subsidiaries implement the plans for such resolution
currently in place. The Company reasonably believes that the cost to the
Company and its Subsidiaries of correcting their Year 2000 Problem will not
be Material. The Company and its Subsidiaries, on the basis of inquiries
made, believe that each material supplier and customer of the Company and
each of its Subsidiaries will also successfully resolve on a timely basis
the Year 2000 Problem for all of its computer applications.
2.30. Statements; Omissions. With respect to the Exchange Offer,
the Company has provided (or will have provided prior to the consummation
of the Exchange Offer) to the holders of the Old Notes all material facts
relevant to the Company and the Exchange Offer, and the Company has not
made any untrue statements of a material fact or omitted to state a
material fact necessary in order to make any statements made by the
Company, in the light of the circumstances under which they were made, not
misleading.
2.31. No Registration Required; Trust Indenture Act. Subject to
compliance by the holders of the Old Notes with the representations and
warranties set forth in Article III of the Securities Exchange Agreement,
it is not necessary in connection with the Exchange Offer and the granting
of the Exchange Warrants and Additional Warrants to the Holders and by the
Holders to each subsequent holder in the manner contemplated by the
Securities Exchange Agreement to register the Exchange Notes, the Exchange
Warrants and Additional Warrants under the Act. The Exchange Offer
Documents and the transactions contemplated thereby are in full compliance
with the Trust Indenture Act of 1939, as amended.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with
respect to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized and existing in good standing under the laws of the state of its
formation and has the power to own its respective property and to carry on
its respective business as now being conducted.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. Such Purchaser's execution and delivery of each Transaction
Document to which it is a party and the performance by such Purchaser of
the transactions contemplated thereby and compliance by such Purchaser with
all the provisions of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite proceedings on the
part of such Purchaser. Each of the Transaction Documents (other than the
Exchange Offer Documents) to which it is a party has been duly executed and
delivered on behalf of such Purchaser, and each such Transaction Document
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its respective terms,
except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by general principles of
equity relating to creditors' rights generally.
3.3. Acquisition for Investment. Such Purchaser is acquiring the
Notes being purchased by it for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof except in compliance with all applicable securities
Laws.
3.4. Offering of Notes. Such Purchaser has not offered the Notes
for sale by any means of general solicitation or general advertising
including, but not limited to, any advertisements, articles, notices or
other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees were invited by any general solicitation or general advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act. Such Purchaser represents that it has been afforded the opportunity to
ask questions and receive answers concerning the terms and conditions of
the Transaction Documents and the transactions contemplated thereby.
3.6. Brokers or Finders. No agent, broker, investment banker or
other Person is or will be entitled to any broker's fee or any other
commission or similar fee from such Purchaser in connection with any of the
transactions contemplated by this Agreement.
4. Registration, Exchange and Transfer of Notes.
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4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section
11.6, a register for the Notes (the "Note Register"), in which the Company
shall record the name and address of the person in whose name each Note has
been issued and the name and address of each transferee and prior owner of
each Note. The Company may deem and treat the person in whose name a Note
is so registered as the Holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of
such Note for registration of transfer as provided in this Article 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the
office of the Company designated for notices in accordance with Section
11.6, the Company shall execute and deliver, at its expense, one or more
new Notes as requested by the Holder of the surrendered Note, each dated
the date to which interest has been paid on the Note so surrendered (or, if
no interest has been paid, the date of such surrendered Note), but in the
same aggregate unpaid principal amount as such surrendered Note, and
registered in the name of such person or persons as shall be designated in
writing by such Holder. Every Note surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the Holder of such Note or by his attorney duly
authorized in writing. The Company may also condition the issuance of any
new Note or Notes to a Person other than the Holder thereof on the payment
of a sum sufficient to cover any stamp tax or other governmental charge
imposed in respect of such transfer.
5. Payment of Notes.
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5.1. Home Office Payment. The Company will pay to each Purchaser
or any transferee thereof all sums becoming due on the Notes held by such
Purchaser or transferee (including all sums which become due on the Notes
at the maturity thereof) (a) prior to the date of execution of an indenture
(the "Indenture Date") at the account/address to be specified by such
Purchaser or transferee for such purpose by notice to the Company, by wire
transfer of immediately available funds, or at such other address or by
such other method as such Purchaser or transferee shall have designated by
notice to the Company and (b) at any time after the Indenture Date, by wire
transfer to the Trustee, as specified in the indenture. Before selling or
otherwise transferring any Note, such Purchaser or transferee will make a
notation thereon of the aggregate amount of all payments of principal, if
any, theretofore made, and of the date to which interest has been paid.
5.2. Limitation on Interest. No provision of this Agreement or of
the Notes shall require the payment or permit the collection of interest in
excess of the maximum rate which is permitted by Law. If any such excess
interest is provided for herein or in the Notes, or shall be adjudicated to
be so provided for, then the Company shall not be obligated to pay such
interest in excess of the maximum rate permitted by Law, and the right to
demand payment of any such excess interest is hereby waived, any other
provisions in this Agreement or in the Notes to the contrary
notwithstanding.
5.3. Interest. Interest on the principal amount of the Notes
shall be due and payable as provided in the Notes.
5.4. Principal. Unless otherwise provided herein, payment of the
principal amount of the Notes shall be due and payable as provided in the
Notes.
6. Covenants of the Company. The Company covenants that for so long
as any of the Notes are outstanding:
6.1. Maintenance of Office or Agency. The Company shall maintain
in Las Vegas, Nevada an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company
in respect of the Notes may be served. The Company shall give prompt
written notice to the Holders of the location, and any change in the
location, of such office or agency. The Company may also from time to time
designate one or more other offices or agencies (in or outside Nevada)
where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations, provided,
however, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency in Las Vegas,
Nevada for such purposes. The Company shall give prompt written notice to
the Holders of any such designation or rescission and of any change in the
location of any such other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or
before each due date of the principal of or interest on any of the Notes,
the Company shall segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided.
6.3. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, Material rights (charter and statutory) and Material franchises
and the existence, Material rights and Material franchises of all of its
Subsidiaries. Neither the Company nor any of its Subsidiaries shall enter
into any transaction of acquisition of, or merger or consolidation or
amalgamation with, any other Person (including any Subsidiary or Affiliate
of the Company or any of its Subsidiaries), or transfer all or
substantially all of its assets to any foreign Subsidiary, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
make any Material change in the present method of conducting business or
engage in any type of business other than of the same general type now
conducted by it. The Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise modify (i) the Company's articles of
incorporation or certificate of incorporation (as the case may be), (ii)
the Company's by-laws or (iii) the charter, by-laws or other organizational
documents of any of the Company's Subsidiaries. Notwithstanding the
foregoing, the Company shall be permitted to (A) consummate the
Reincorporation Merger to change the Company's state of incorporation from
Florida to Delaware (substantially on the terms described in the Proxy
Statement, the Delaware Charter and the Delaware By-Laws, but in no event
on terms more adverse to the Holders than those contained in the Proxy
Statement, Delaware Charter and Delaware By-Laws and in no event increasing
the number of authorized shares contained therein), provided, however, that
the Company shall not, without the prior written consent of the Required
Holders, amend or otherwise modify the Delaware Charter or the Delaware
By-Laws and (B) effect any transaction otherwise prohibited under this
Section 6.3 solely with respect to its Non-Significant Subsidiaries except
for the provisions of the first two sentences of this Section 6.3.
6.4. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such if such discontinuance is, in the
reasonable, good faith judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in
any Material respect to the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon any Credit Party or upon
the income, profits or property of any Credit Party, and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by Law
become a Lien upon the property of any Credit Party; provided, however,
that the Company shall not be required to pay or discharge or cause to be
paid or discharged any such Tax whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
6.6. Limitation on Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly
liable for the payment of any Indebtedness (excluding Permitted
Indebtedness and Indebtedness which is a Guaranty of an Indebtedness of a
Credit Party that is otherwise Permitted Indebtedness).
6.7. Limitation on Encumbrances. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or otherwise suffer to exist or cause or otherwise suffer to
become effective any Lien in or on any right, title or interest to any
property (real or personal) that constitutes all or any portion of the
Collateral (a "Restricted Encumbrance," which term excludes the Lien
created in favor of the Holders) unless such Restricted Encumbrance is a
Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, enter into or
be a party to any transaction with any Related Parties (other than an
Appaloosa or its Affiliates) except in the ordinary course of, and pursuant
to the reasonable requirements of, such party's business and upon fair and
reasonable terms that are at least equivalent to an arms length transaction
with a Person that is not a Related Party. In addition, if any such
transaction or series of related transactions involves payments in excess
of $25,000 in the aggregate, the terms of those transactions must be
disclosed in advance to each Holder. All such transactions existing as of
the date hereof are set forth in Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of any Credit Party.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any employee
benefit plan (within the meaning of Section 3(3) of ERISA) or Employee
Agreement or (iv) grant any bonus, salary increase, severance or
termination pay to, any employee, officer, director or consultant other
than in the ordinary course of business consistent with past practice.
6.9. Limitation on Dividends; Stock Issuances. The Company shall
not offer or issue any shares of preferred stock of the Company for any
purpose whatsoever including, without limitation, any shares of "blank
check" preferred stock authorized under Article FOURTH of the Delaware
Charter following the effectiveness of the Reincorporation Merger. The
Company shall not offer or issue any shares of Common Stock of the Company
that, if consummated, would cause the aggregate number of shares of Common
Stock outstanding to be greater than 20,000,000 (adjusted for reverse stock
splits and similar transactions). The Company shall not declare any
dividends on any shares of its Capital Stock, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any shares of
its Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash, Securities, property or in obligations of any Credit Party.
6.10. Subsidiary Guarantees. The Company shall cause its existing
and future wholly-owned direct and indirect Material Subsidiaries organized
under the laws of any state of the United States (or the District of
Columbia) to jointly and severally guarantee the obligations of the Company
under the Notes and this Agreement pursuant to the Guarantee and Security
Agreement. The Company shall cause such guarantees to be executed and
delivered by all of the domestic Material Subsidiaries in existence on the
date hereof concurrently with the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, to the extent that the
Company establishes or acquires a direct or indirect Subsidiary that
constitutes a Material Subsidiary, or if an existing Non-Significant
Subsidiary shall become a Material Subsidiary, and such Subsidiary is
organized under the laws of a state of the United States and doing business
in the United States after the date hereof, the Company shall cause such
Subsidiary to jointly and severally guarantee the obligations of the
Company under the Notes and this Agreement pursuant to the Guarantee and
Security Agreement. The Company shall cause its existing and future direct
and indirect Material Subsidiaries organized under the laws of any
jurisdiction other than any state of the United States or the District of
Columbia to jointly and severally guarantee the obligations of the Company
under the Notes and this Agreement pursuant to the Guarantee Agreement. The
Company shall cause such guarantees to be executed, delivered and approved
by all of such foreign Material Subsidiaries in existence on the date
hereof concurrently with the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, to the extent that the
Company establishes or acquires a direct or indirect Subsidiary that
constitutes a Material Subsidiary, or if an existing Non-Significant
Subsidiary shall become a Material Subsidiary, and such Subsidiary is
organized under the laws of any jurisdiction other than any state of the
United States or the District of Columbia, the Company shall cause such
Subsidiary to jointly and severally guarantee the obligations of the
Company under the Notes and this Agreement pursuant to the Guarantee
Agreement.
6.11. Pledges of Intercompany Notes. The Company shall, and shall
cause each of its Material Subsidiaries to, promptly pledge all
Intercompany Notes (and all security agreements and documents relating
thereto), whether in existence or created after the date hereof, to the
Collateral Agent as Collateral under the Collateral Documentation. To the
extent that, on or after the date hereof, the Company makes any cash
investment in any of its Subsidiaries (in accordance with Section 6.13)
which are organized under the laws of and doing business in the United
States, such investment shall be required to be made in the form of a loan,
which shall be evidenced by an Intercompany Note and all such Intercompany
Notes shall be pledged by the Company to the Collateral Agent as Collateral
under the Collateral Documentation.
6.12. No Speculative Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in any transaction
involving commodity options, futures contracts or similar transactions,
except solely to hedge against fluctuations in the prices of commodities
owned or purchased by it and except for interest swaps, currency hedges,
caps or collars.
6.13. Restricted Investments. The Company shall not, directly or
indirectly, make or cause or permit, or permit any of its Subsidiaries to,
make or cause or permit, (i) any direct or indirect advance to, (ii) any
loan or other extension of credit to, (iii) any guarantee of any
Indebtedness of, (iv) any capital contribution to, (v) any purchase or
other acquisition of any Equity Interests in, (vi) any purchase or other
acquisition of assets (other than in the ordinary course of business) from
or (vii) any merger with, any Person, including, without limitation, any of
the Company's Subsidiaries, in each case other than Permitted Investments.
6.14. Operating Profit. The Company's Operating Profit (as
defined below) shall be greater than the amounts listed in the following
chart for the applicable period. "Operating Profit" shall mean, for any
given period, Net Income for such period (exclusive of (A) all amounts in
respect of any extraordinary gains or losses, (B) gains and losses arising
from the sale or other disposition of material assets not in the ordinary
course of business, (C) earnings and losses from discontinued operations
and (D) fees and expenses incurred by the Company (including reasonable
attorneys' and accountants' fees and expenses) in connection with the offer
and sale of the Notes and the Exchange Offer) plus, to the extent reflected
as a charge in the statement of Consolidated Net Income for such period,
the sum of: (i) all taxes measured by income (whether paid or deferred),
(ii) interest expense (net of interest income), (iii) non-cash charges
related to the Class Action Settlement Agreement, and (iv) restructuring
charges disclosed in the 1997 Annual Report on Form 10-K and the June 30,
1998 Quarterly Report on Form 10-Q.
<TABLE>
<CAPTION>
- ----------------------------- ------------------------------ -----------------------------
MINIMUM OPERATING PROFIT FOR MINIMUM OPERATING PROFIT
THREE-MONTH PERIOD ENDING ON FOR TWELVE-MONTH PERIOD
DATE DATE INDICATED ENDING ON DATE INDICATED
- ----------------------------- ------------------------------ -----------------------------
<S> <C> <C>
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 $3,750,000 $15,000,000
day of each calendar
quarter thereafter
</TABLE>
6.15. Tangible Assets. The Company's Consolidated Tangible Assets
shall exceed $50 million on September 30, 1998 and each quarter thereafter.
6.16. Line of Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the businesses in which
the Company and its Subsidiaries, taken as a whole, are engaged on the date
of this Agreement.
6.17. Sale of Assets. The Company shall not, and shall not permit
any of its Subsidiaries to, sell, transfer or otherwise dispose of
("Transfer") any property or assets, unless the property or asset that is
the subject of such Transfer constitutes (i) inventory held for sale, (ii)
marketable securities available for sale, or (iii) real estate, equipment,
fixtures, supplies or materials no longer required in the operation of the
business of the Company or such Subsidiary or that is obsolete, and, in the
case of any Transfer described in clause (i) or (iii), such Transfer is in
the ordinary course of business.
6.18. Indenture Relating to the Notes. Upon the written request
of the Required Holders, the Company, at its expense, shall cause to be
prepared, executed and delivered within 30 days after such request an
indenture (including a new form of note, any necessary related
documentation and, from time to time thereafter, any necessary supplements
thereto) with respect to the Notes, which indenture (and form of note)
shall contain terms and provisions substantially the same as those set
forth in Articles 6, 8 and 9 hereof and such other terms and provisions as
are required under the Trust Indenture Act of 1939 and such other items and
provisions as are customary in indentures relating to publicly traded
senior secured debt securities having a rating comparable to the rating
that the Notes would receive if rated by a nationally recognized rating
agency. In such event, the Company shall also appoint as trustee under such
indenture a national banking association reasonably acceptable to the
Required Holders having its principal offices in New York, New York, and
having capital, surplus, and undivided profits of at least $50,000,000. In
connection with the execution of any such indenture, the Holders shall
exchange all outstanding Notes for new notes in the form contemplated by
such indenture, and upon such exchange such new notes shall be deemed to be
"Notes" for purposes hereof.
6.19. Financial Statements and Information. The Company shall
furnish to each Holder: (a) as soon as practicable and in any event within
45 days after the end of each of the four quarters of each fiscal year and
within 90 days of the end of each fiscal year (i) copies of the quarterly
and annual reports and of the other information, documents, and other
reports which the Company files or is required to file with the SEC
pursuant to the Exchange Act and of any other reports or information which
the Company delivers or makes available to any of its security holders, at
the time of filing such reports with the SEC or of delivery to the
Company's security holders, as the case may be (but in no event later than
the time such filing or delivery is required pursuant to the Exchange Act)
or (ii) as soon as practicable and in any event within 45 days after the
end of each of the four quarters of each fiscal year and within 90 days of
the end of each fiscal year, quarterly reports for the four quarters of
each fiscal year of the Company and annual reports which the Company would
have been required to file under any provision of the Exchange Act if it
had a class of securities listed on a national securities exchange or was
otherwise required to file such reports under the Exchange Act, within
fifteen Business Days of when such report would have been filed under
Section 13 of the Exchange Act, together with copies of a consolidating
balance sheet of the Company and its Subsidiaries as of the end of each
such accounting period and of the related consolidating statements of
income and cash flow for the portion of the fiscal year then ended, all in
reasonable detail and all certified by the principal financial officer of
the Company to present fairly the information contained therein in
accordance with GAAP (and in the case of annual reports, including
financial statements, audited and certified by the Company's independent
public accountants as required under the Exchange Act); (b) within ninety
days after the end of each fiscal year, a written statement by the
Company's independent certified public accountants stating as to the
Company whether in connection with their audit examination, any Default or
Event of Default has come to their attention; (c)(i) within forty-five days
after the end of the four quarters of the Company's fiscal year and within
ninety days after the end of the Company's fiscal year, an Officers'
Certificate setting forth computations in reasonable detail showing, as at
the end of such quarter or fiscal year, as the case may be, the Company's
compliance with Sections 6.6, 6.7, 6.13, 6.14 and 6.15, and (ii) within 45
days after the end of each fiscal quarter, an Officers' Certificate in the
form of Exhibit 6.19 stating that as of the date of such certificate, based
upon such examination or investigation and review of this Agreement, as in
the opinion of such signer is necessary to enable the signer to express an
informed opinion with respect thereto, to the best Knowledge of such
signer, the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Agreement, and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof, and to the best of such signer's Knowledge, no Default or Event of
Default exists or has existed during such period or, if a Default or Event
of Default shall exist or have existed, specifying all such defaults, and
the nature and period of existence thereof, and what action the Company has
taken, is taking or proposes to take with respect thereto; (d) promptly
after becoming aware of (i) the existence of a Default or Event of Default
or any default in any of the Collateral Documentation, or (ii) any default
or event of default under any Indebtedness of the Company or any of its
Subsidiaries, an Officers' Certificate specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take
with respect thereto, or (iii) any litigation or proceeding affecting any
Credit Party in which the amount claimed is in excess of $100,000 and not
covered by insurance or in which injunctive relief is sought which if
obtained would have a Material Adverse Effect, or (iv) any change that has
or is reasonably likely to have a Material Adverse Effect; and (e) such
other information, including financial statements and computations,
relating to the performance of the provisions of this Agreement and the
affairs of the Company and any of its Subsidiaries as each Holder may from
time to time reasonably request. In addition, the Company shall make
available to securities analysts and broker-dealers, upon their reasonable
request, copies of all annual, quarterly and interim reports filed by the
Company with the SEC pursuant to the Exchange Act (including, without
limitation, copies of (i) each financial statement, report, notice or proxy
statement sent by any Credit Party to public securities holders generally,
and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by any Credit Party with the
SEC and of all press releases and other statements made available generally
by any Credit Party to the public concerning developments that are
Material). The Company shall keep at its principal executive office a true
copy of this Agreement (as at the time in effect), and cause the same to be
available for inspection at said office, during normal business hours and
after reasonable notice to the Company by any Holder.
6.20. Inspection. (a) Any Holder or Holders holding in excess of
25% of the aggregate principal amount of Notes issued and outstanding shall
have the right to visit and inspect any of the properties of any Credit
Party, to examine the books of account and records of any Credit Party, to
be provided with copies and extracts therefrom, to discuss the affairs,
finances and accounts of any Credit Party with, and to be advised as to the
same by, its and their executive officers, and its and their independent
public accountants (and the Company authorizes such independent public
accountants to discuss the Company's or any Subsidiaries' financial matters
with such Holder and its representatives, regardless of whether any
representative of the Company is present, but provided that an officer of
the Company will be afforded a reasonable opportunity to be present at any
such discussion), all at such reasonable times and intervals during normal
business hours, and upon reasonable prior notice to the Company as such
Holder and the Company shall agree and at the expense of the Company
(including the costs incurred by such Holder in hiring accountants to
conduct an audit). The Company will likewise afford each Holder the
opportunity to obtain any information necessary to verify the accuracy of
any of the representations and warranties made by the Company hereunder or
in any Transaction Document or compliance by the Company and its
Subsidiaries with any covenant made hereunder or in any Transaction
Document.
(b) By receipt of information under this Section 6.20, such
Holder agrees that all information (other than such information that is
publicly available or any other information that is in such Holder's
possession prior to any disclosure under this Section 6.20) provided to it
pursuant to this Section 6.20 shall be used by such Holder solely in
connection with its investment in the Company and for no other purpose, and
such Holder shall treat such information as confidential in accordance with
such reasonable internal procedures as it applies generally to information
of this kind and shall not disclose such information to any Person, except
(i) to any governmental entity having jurisdiction over such Holder in the
ordinary course of business to the extent so required by law, (ii) to any
other Person pursuant to subpoena or other process, whether legal,
administrative or other (and such Holder hereby agrees to provide the
Company with prompt notice of any such subpoena or other process and
provide the Company with an opportunity to contest such disclosure), (iii)
to such Holder's officers, directors, trustees, employees, partners, legal
counsel, financial advisors or auditors or accountants who need access to
such information in connection with their duties, (iv) to any transferee or
prospective purchaser of a Note or interest therein who agrees to be bound
by this paragraph, or (v) to the extent necessary in the enforcement of
such Holder's rights hereunder and under the Notes during the continuance
of a Default or Event of Default.
6.21. Change-in-Control Purchase Offer. (a) The Company shall
make an offer, in accordance with the procedures set forth in Section
6.21(b) to acquire the Notes for cash at 101% of the principal amount
thereof (plus accrued and unpaid interest to the date of repurchase) in the
event of (i) a Change of Control, a merger, consolidation or other
combination involving the Company, or (ii) a Change of Control of a
Subsidiary of the Company or a group of Subsidiaries of the Company occurs
and such Subsidiary or group of Subsidiaries, individually or in the
aggregate, together with their consolidated Subsidiaries and all other
Subsidiaries previously subject to a Change of Control, if any, represent
more than 50% of the revenues or net assets of the Company and its
Subsidiaries on a consolidated basis as of the last date of the immediately
preceding fiscal quarter of the Company or for the twelve month period then
ended.
(b) Notice of any redemption of Notes pursuant to this Section
6.21 shall be mailed at least 30 but not more than 60 days prior to the
date fixed for redemption to each Holder. In order to facilitate the
redemption of Notes, the board of directors of the Company may fix a record
date for the determination of Notes to be redeemed which shall be a date at
least 20 days following the date of the notice. Promptly following a Change
in Control (but in no event more than five Business Days thereafter), the
Company shall mail to each Holder, notice of such Change in Control, which
notice shall set forth such Holder's right to require the Company to redeem
any or all Notes held by it. The Company shall thereafter, during a period
of 90 days from the date of such notice redeem any Notes, in whole or in
part, at the option of the such Holder, upon at least five days' written
notice to the Company by such Holder specifying (i) the principal amount of
Notes to be redeemed and (ii) the redemption date. On the date of any
redemption being made pursuant to this Section 6.21 which is specified in a
notice given pursuant to this Section 6.21, the Company shall wire transfer
to such Holder the amount determined in accordance with Section 6.21(a) for
the principal amount of Notes so redeemed, together with an amount equal to
all accrued and unpaid interest thereon to the date of redemption.
6.22. Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Subsidiary to, enter into any Sale-and-Leaseback
Transaction.
6.23. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply with all Laws, ordinances or
governmental rules or regulations to which each of them is subject, and
shall obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such Laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. The Company shall timely file all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act and such statements, reports and other documents shall be
in compliance in all material respects with the requirements of its
respective report form and shall not on the date of filing contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
6.24. Supplemental Disclosure. From time to time as may be
requested by the Required Holders, the Company shall supplement each
Schedule hereto, or any representation herein or in any other Transaction
Document, with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and,
in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show changes made therein); provided that no such
supplement to any such Schedule or representation shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters
disclosed therein.
6.25. Proceeds. The proceeds of the sale of the Notes shall be
used for the purposes set forth in Schedule 6.25. No part of the proceeds
from the sale of the Notes hereunder shall be used, directly or indirectly,
for the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System, or for any purpose which
violates or would be inconsistent with the provisions of Regulations T, U
or X of said Board.
6.26. Insurance; Damage to or Destruction of Collateral. The
Company shall, and shall cause each of its Subsidiaries to, at its sole
cost and expense, maintain the policies of insurance described on Schedule
2.7(b) in form and with insurers reasonably acceptable to the Required
Holders. If the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, the Collateral
Agent may (at the direction of the Required Holders) at any time or times
after ten days written notice to the Company obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Required Holders deem advisable. Neither the
Collateral Agent nor the Required Holders shall have any obligation to
obtain insurance for the Company or any of its Subsidiaries or pay any
premiums therefor. By doing so, the Collateral Agent and the Holders shall
not be deemed to have waived any Default or Event of Default arising from
any Credit Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including reasonable attorneys' fees,
court costs and other charges related thereto, shall be payable on demand
by the Company to the Collateral Agent and shall be secured by the
Collateral. Following the Closing, the Company shall use its reasonable
best efforts to obtain directors' and officers' insurance in amounts, scope
and coverage customarily obtained by comparable businesses.
6.27. Amendment of Litigation Documents and McGhan Documents.
Without the prior written consent of the Required Holders, the Company
shall not, and shall not permit any other Credit Party to, amend or
otherwise modify, or waive or relinquish any rights under, or fail to
enforce any rights under, (i) the Standstill Agreement, (ii) any document
or agreement relating to the full discharge of all Indebtedness to
International Integrated Industries, (iii) the Rights Plan (except that the
Company may amend the Rights Plan in accordance with Section 27 thereof (as
amended by Amendment No. 2 thereto, dated as of July 2, 1997)), (iv) the
Class Action Settlement Agreement, (v) the 3M Agreement, (vi) the June 2,
1998 Court Order, (vii) the Escrow Agreement, (viii) the Custody Agreement
or (vii) any instrument, agreement or other document executed or delivered
in connection therewith.
6.28. Exchange Offer. The Company shall consummate the Exchange
Offer pursuant to the Exchange Offer Documents.
6.29. State Takeover Statutes. Prior to the consummation of the
Reincorporation Merger, the Board of Directors of the Company shall, and
shall cause the board of directors of the Delaware Subsidiary into which
the Company will merge, to take all action required to (i) determine that
Appaloosa and its affiliates are not (individually or in groups) an
"interested shareholder" within the meaning of Section 607.0901 of the
Florida 1989 Business Corporation Act, and (ii) approve the Reincorporation
Merger (pursuant to which the Company would merge with and into a
wholly-owned Delaware Subsidiary of the Company for the purpose of changing
the Company's state of incorporation from Florida to Delaware). In
addition, the Company shall, and shall cause each of its Subsidiaries to,
take any other board action necessary to render inapplicable to Appaloosa
and its affiliates the restriction on certain business combinations (at the
time of the Reincorporation Merger or thereafter) pursuant to the
provisions of Section 203(a) of the Delaware General Corporation Law.
7. Events of Default and Remedies.
------------------------------
7.1. Events of Default and Remedies. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative
or governmental body):
(a) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 5
days; or
(b) default in the payment of any principal of any Note when it
becomes due and payable; or
(c) default in the performance of any agreement or covenant in,
or provision of, this Agreement, the Notes, or the other documents executed
and delivered in connection with this Agreement (including any Transaction
Document) and to which the Company or any of its Subsidiaries is a party
(other than a covenant or a default in whose performance is elsewhere in
this Section specifically dealt with), which default continues for 5 days
following the Company's receipt of notice (or, if the Company fails to
provide notice pursuant to Section 6.19(d), such default shall be
immediate), or any representation or warranty made in any document executed
and delivered in connection with this Agreement (including any Transaction
Document) was false in any material respect on the date as of which made or
deemed made; or
(d) a default under any mortgage, indenture, instrument or
agreement other than under clause (c) above under which there may be issued
or by which there may be secured or evidenced any Indebtedness of any
Credit Party, whether such Indebtedness now exists or shall be created
hereafter, if the holder or holders of at least $500,000 in principal
amount of such Indebtedness cause such $500,000 (or more) of principal
amount of Indebtedness to become due and payable prior to its stated
maturity; or
(e) other than the Class Action Settlement Agreement, a final
judgment or judgments for the payment of money are entered by a court or
courts of competent jurisdiction against any Credit Party and such remains
undischarged for a period (during which execution shall not effectively be
stayed) of 90 days, provided that the aggregate of all such judgments that
are not covered by insurance under which the Company is a beneficiary
exceeds $1,000,000, or the Required Holders shall determine that any
regulatory body having jurisdiction over any Credit Party including,
without limitation, the SEC, shall have taken or proposed to take any
action that the Required Holders believe would have a Material Adverse
Effect or that adversely affects the Holders' first priority security
interest in the Collateral; or
(f) any Credit Party (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by any Credit Party, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of any Credit Party, or
any such petition shall be filed against any Credit Party and such petition
shall not be dismissed within 60 days; or
(h) a court of competent jurisdiction enters a final judgment
holding any of the documents delivered in connection with this Agreement
(including any Transaction Document) to be invalid or unenforceable and
such judgment remains unstayed and in effect for a period of 20 consecutive
days; or any Credit Party shall assert, in any pleading filed in such a
court, that any of the documents delivered in connection with this
Agreement are invalid or unenforceable; or
(i) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with its
terms (or any Credit Party (or the Trustee in the case of the Intercreditor
Agreement) shall challenge the enforceability of any Transaction Document
or shall assert in writing, or engage in any action or inaction based on
any such assertion, that any provision of any of the Transaction Documents
has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms (other than because such document has not yet
been entered into)), or any security interest created under any Transaction
Document (other than the Exchange Offer Documents) shall cease to be a
valid and perfected first priority security interest or Lien in any of the
Collateral purported to be covered thereby;
(j) (A) any Credit Party shall fail to comply with the terms of,
or violate or fail to enforce its rights under (i) the Class Action
Settlement Agreement, (ii) the 3M Agreement, (iii) the June 2, 1998 Court
Order, (iv) the Standstill Agreement, (v) the agreements relating to the
full discharge of all Indebtedness to International Integrated Industries
or (vi) the Class Action Settlement Agreement is not approved by the United
States District Court for the Northern District of Alabama prior to
February 1, 1998 (or any such approval is reversed) or (B) either of the
Class Action Settlement Agreement or the 3M Agreement shall terminate in
accordance with its terms or any other party thereto shall assert in
writing that any such agreement has terminated;
(k) any Credit Party shall default in the payment of any amounts
in excess of $25,000 due pursuant to the terms of any document executed and
delivered by the Company or such Subsidiary in connection with this
Agreement (other than payments elsewhere in this Section specifically dealt
with); or
(l) the Company shall fail to consummate the Exchange Offer by
November 16, 1998 pursuant to the Exchange Offer Documents.
7.2. Acceleration of Maturity. If any Event of Default shall have
occurred and be continuing, the Required Holders may, by notice to the
Company, declare the entire unpaid principal amount of the Notes, plus (x)
all accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law) to be immediately due and payable, and upon
such declaration all of such amount shall be immediately due and payable,
in each and every case without presentment, demand, protest or further
notice, all of which are hereby waived, anything in the Notes or in this
Agreement to the contrary notwithstanding; provided that if an Event of
Default under clause (f), (g), (h), (i) or (j) of Section 7.1 shall have
occurred, the entire unpaid principal amount of the Notes, plus (x) all
accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law), shall immediately become due and payable,
without any declaration and without presentment, demand, protest or further
notice, all of which are hereby waived, anything in the Notes or this
Agreement to the contrary notwithstanding; and provided, further, that the
Company acknowledges, and the parties hereto agree, that each Holder of a
Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and
that the provision for payment of a Make-Whole Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event
of Default, is intended to provide compensation for the deprivation of such
right under such circumstances.
7.3. Other Remedies. If any Event of Default shall have occurred
and be continuing, from and including the date of such Event of Default to
but not including the date such Event of Default is cured or waived, each
Holder may enforce its rights by suit in equity, by action at law, or by
any other appropriate proceedings, whether for the specific performance (to
the extent permitted by Law) of any covenant or agreement contained in this
Agreement or the Notes or in aid of the exercise of any power granted in
this Agreement or the Notes, and each Holder may enforce the payment of any
Note held by such Holder and any of its other legal or equitable rights.
7.4. Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such
right or otherwise prejudice any Holder's rights, powers and remedies. If
the Company fails to pay, when due, the principal or the premium, if any,
or the interest on any Note, the Company will pay to such Holder, to the
extent permitted by Law, on demand, all costs and expenses incurred by such
Holder in the collection of any amount due in respect of any Note
hereunder, including reasonable legal fees incurred by such Holder in
enforcing its rights hereunder.
7.5. Annulment of Acceleration. If a declaration is made in
accordance with Section 7.2, then and in every such case, the Required
Holders may, by an instrument delivered to the Company, annul such
declaration and the consequences thereof.
7.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under
this Agreement is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now and hereafter existing under
applicable law. Every right and remedy given by this Agreement or by
applicable Law to each Purchaser or the Collateral Agent or the Holders may
be exercised from time to time and as often as may be deemed expedient by
such Purchaser or the Collateral Agent or the Holders.
8. Prepayment of the Notes.
-----------------------
8.1. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all,
or from time to time any part of, the Notes, in an amount not less than
$2,000,000 in the case of a partial prepayment, at 100% of the principal
amount so prepaid, together with interest on such principal amount accrued
to the date of such prepayment, plus the Make-Whole Amount determined for
the prepayment date with respect to such principal amount. The Company will
give each Holder written notice of each optional prepayment under this
Section 8.1 not less than 30 days and not more than 90 days prior to the
date fixed for such prepayment (the "Prepayment Date"). Each such notice
shall specify the Prepayment Date, the aggregate principal amount of the
Notes to be prepaid on the Prepayment Date, the amount of each Note held by
such Holder to be prepaid (determined in accordance with Section 8.2), and
the interest to be paid on the Prepayment Date with respect to such
principal amount being prepaid, and shall be accompanied by a certificate
of an executive officer of the Company as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of
such notice were the date of the prepayment), setting forth the details of
such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder a certificate of an executive officer of the
Company specifying the calculation of such Make-Whole Amount as of the
specified Prepayment Date. Notwithstanding the foregoing, at any time prior
to the date of any such prepayment, any Holders shall be entitled to object
to such computation of the Make-Whole Amount by delivering a notice of
objection to the Company setting forth such holders' computation of the
Make-Whole Amount. If any Holders shall deliver such a notice of objection
to the Company, the Make-Whole Amount specified in such notice shall be
binding, absent manifest error, on the holders and the Company.
8.2. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.1, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.3. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Article 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such
date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any,
as aforesaid, interest on such principal amount shall cease to accrue. Any
Note paid or prepaid in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
8.4. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and
the Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.
8.5. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of all remaining payments of interest and principal with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.1 or has become or
is declared to be immediately due and payable pursuant to Section 7.2, as
the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all remaining payments of
interest and principal with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as
of 10:00 A.M. (New York City time) on the third Business Day preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page USD" on the Bloomberg Financial Markets Service Screen
(or such other display as may replace Page USD on the Bloomberg Financial
Markets Service Screen) for actively traded U.S. Treasury securities issued
on the Settlement Date and maturing on September 30, 2000, or (ii) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as
of the third Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded U.S. Treasury
securities. Such implied yield will be determined, if necessary, by (A)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (B) interpolating linearly
between (1) the actively traded U.S. Treasury security with the duration
closest to and greater than the period between the Settlement Date and
September 30, 2000 and (2) the actively traded U.S. Treasury security with
the duration closest to and less than the period between the Settlement
Date and September 30, 2000.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant
to Section 8.1 or has become or is declared to be immediately due and
payable pursuant to Section 7.2, as the context requires.
9. The Collateral Agent.
--------------------
9.1 Appointment. Each Purchaser for itself and for future Holders
hereby irrevocably designates and appoints Appaloosa Management, L.P. as
the Collateral Agent under this Agreement, and irrevocably authorizes the
Collateral Agent to take such action on such Purchaser's behalf and any
future Holder's behalf and to exercise such powers and perform such duties
as are expressly delegated to the Collateral Agent by the terms of the
Transaction Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
in this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser or future Holder, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any of the Transaction Documents or otherwise
exist against the Collateral Agent.
9.2 Delegation of Duties. The Collateral Agent may execute any of
its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in Section 9.3.
9.3 Exculpatory Provisions. Neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or Subsidiaries shall be (i) liable for any action taken or
omitted to be taken by any of them under or in connection with this
Agreement or any of the Transaction Documents, or (ii) responsible in any
manner to any of the Purchasers or future Holders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Transaction Documents or in any
certificate, report, statement or other document referred to or provided
for in, or received by the Collateral Agent under or in connection with,
the Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or
for any failure of any Credit Party to perform its obligation thereunder.
The Collateral Agent shall not be under any obligation to any Purchaser or
future Holder to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, any
Transaction Document, or to inspect the properties, books or records of any
Credit Party.
9.4 Reliance by the Collateral Agent. The Collateral Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without limitation,
counsel to the Company), independent accountants and other experts selected
by the Collateral Agent. The Collateral Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with
the Collateral Agent. The Collateral Agent shall be fully justified in
failing or refusing to take any action under any Transaction Document
unless it shall first receive such advice or concurrence of the Required
Holders (or, where unanimous consent of the Holders is expressly required
hereunder or thereunder, such Holders) as it deems appropriate or it shall
first be indemnified to its satisfaction by the Holders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, under any
Transaction Document in accordance with a request of the Required Holders,
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Purchasers and all future Holders of the
Notes.
9.5 Notice of Default. The Collateral Agent shall not be deemed
to have knowledge or notice of the occurrence of any default or Event of
Default hereunder unless the Collateral Agent has received written notice
from a Holder or the Company referring to this Agreement, describing such
default or Event of Default and stating that such notice is a "notice of
default". In the event that the Collateral Agent receives such a notice,
the Collateral Agent shall promptly give notice thereof to all Holders. The
Collateral Agent shall take such action with respect to such default or
Event of Default as shall be directed by the Required Holders; provided
that (i) the Collateral Agent shall not be required to take any action that
exposes the Collateral Agent to liability or that is contrary to this
Agreement or applicable law and (ii) unless and until the Collateral Agent
shall have received such directions, the Collateral Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such default or Event or Default as it shall deem advisable
in the best interests of the Holders.
9.6 Non-Reliance on Collateral Agent and Other Purchasers. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representation or warranties to it
and that no act by the Collateral Agent hereafter taken, including any
review of the affairs of the Credit Parties, shall be deemed to constitute
any representation or warranty by the Collateral Agent to any such
Purchaser or Holder. Each Purchaser for itself and all future Holders of
the Notes acquired by such Purchaser represents to the Collateral Agent
that it has, independently and without reliance upon the Collateral Agent
or any other Holder, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operation, property, financial and other condition and
creditworthiness of the Credit Parties and made its own decision to make
its loan hereunder and to enter into this Agreement. Each Purchaser also
represents for itself and all future Holders of the Notes acquired by such
Purchaser that it will, independently and without reliance upon the
Collateral Agent or any other Holder, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under the Transaction Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Credit
Parties. Except for notices, reports and other documents expressly required
to be furnished to the Holders by the Collateral Agent hereunder, the
Collateral Agent shall not have any duty or responsibility to provide any
Holder with any credit or other information concerning the business,
financial condition, assets, liabilities, net assets, properties, results
of operations, value, prospects and other condition or creditworthiness of
the Credit Parties which may come into the possession of the Collateral
Agent or any of its officers, directors, employees, agents,
attorneys-in-fact, Affiliates or any of its Subsidiaries.
9.7 Indemnification. The Purchasers and the future Holders
jointly and severally agree to indemnify the Collateral Agent in its
capacity as such (to the extent not reimbursed by the Credit Parties and
without limiting the obligation of the Credit Parties to do so), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of the
Transaction Documents or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or
omitted by the Collateral Agent under or in connection with any of the
foregoing; provided that no Purchaser or future Holder shall be liable for
the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Collateral Agent's gross negligence
or willful misconduct. The agreements contained in this Section 9.7 shall
survive the payment of the Notes and all other amounts payable hereunder.
9.8 Collateral Agent in its Individual Capacity. The Collateral
Agent and its Affiliates and Subsidiaries may make loans to, accept
deposits from and generally engage in any kind of business with the Credit
Parties as though the Collateral Agent were not the Collateral Agent
hereunder. With respect to its loans made or renewed by it or any Note
issued to it, the Collateral Agent shall have the same rights and powers,
duties and liabilities under the Transaction Documents as any Holder and
may exercise the same as though it were not the Collateral Agent and the
terms "Purchaser", "Purchasers", "Holder" and "Holders" shall include the
Collateral Agent in its individual capacities.
9.9 Successor Collateral Agent. The Collateral Agent may resign
as Collateral Agent upon 30 days' notice to the Company (and the Company
shall promptly notify the Holders). If the Collateral Agent shall resign as
Collateral Agent under the Transaction Documents, then the Required Holders
shall appoint a successor agent for the Holders which successor agent shall
be approved by the Company (which approval shall not be unreasonably
withheld) whereupon such successor agent shall succeed to the rights,
powers and duties of the Collateral Agent and the term "Collateral Agent"
shall mean such successor agent effective upon its appointment, and the
former Collateral Agent's rights, powers and duties as Collateral Agent
shall be terminated, without any other or further act or deed on the part
of such former Collateral Agent or any of the parties to this Agreement or
any Holders of the Notes. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Article 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Collateral Agent under the Transaction Documents.
10. Interpretation.
--------------
10.1 Definitions.
-----------
"Additional Warrants" shall have the meaning ascribed thereto in
the Recitals.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of any Purchaser or Holder or any limited partners of a
limited partner of any Purchaser or Holder.
"Appaloosa" shall mean Appaloosa Investment Limited Partnership I.
"Beneficially Own" with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
"Breast Implant Litigation" shall have the meaning ascribed
thereto in the Recitals.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Called Principal" shall have the meaning ascribed to such term
in Section 8.5.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Change in Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), other than Appaloosa or its Affiliates, of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the
combined voting power of the then outstanding Voting Securities
of the Company, but excluding, for this purpose, any such
acquisition by (i) the Company or any of its Subsidiaries, (ii)
any employee benefit plan (or related trust) of the Company or
any of its Subsidiaries, or (iii) any corporation with respect to
which, following such acquisition, 50% or more of the combined
voting power of the then outstanding Voting Securities of such
corporation is then beneficially owned, directly or indirectly,
by individuals and entities who were the beneficial owners of
Voting Securities of the Company immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the combined
voting power of the then outstanding Voting Securities of the
Company; or
(b) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the Persons
who were the respective Beneficial Owners of the Voting
Securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 35% of the combined voting
power of the then outstanding Voting Securities of the
corporation resulting from such reorganization, merger or
consolidation; or
(c) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board; or
(d) the sale, lease or other disposition of all or a
substantial part of the Company's assets in one transaction or a
series of related transactions.
"Class Action Settlement Agreement" shall have the meaning
ascribed thereto in the Recitals.
"Closing" shall have the meaning ascribed thereto in Section 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" means all real and personal property and interests
in real and personal property including, without limitation, Intellectual
Property, rights under leases and royalty rights and agreements, now owned
or hereafter acquired by the Company or its Material Subsidiaries in or
upon which a Lien is granted or made under the Collateral Documentation.
"Collateral Agent" shall mean Appaloosa Management, L.P.
"Collateral Documentation" means the Guarantee and Security
Agreements, the Guarantee Agreements, the Security Agreement, the Financing
Statements, the Intercompany Notes and the endorsements thereof to the
Collateral Agent (for the benefit of the Holders) or to the Holders, and
all other deeds of trust, assignments, endorsements, pledged stock,
collateral assignments and other instruments, documents, agreements or
conveyances at any time creating or evidencing Liens or assigning Liens to
the Collateral Agent (for the benefit of the Holders) or to the Holders, to
secure the obligations of the Company or any of its Subsidiaries hereunder
and under the Notes and the Registration Rights Agreement.
"Common Stock" shall mean the Common Stock of the Company, par
value $0.01 per share.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Consolidated Tangible Assets" shall mean, as at any date for any
Person, the sum for such Person and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following:
(a) the book value of all assets of the Company as reflected on
its most recent balance sheet, minus
(b) the sum of the following: the book value of all assets which
should be classified as intangibles, including goodwill, minority
interests, research and development costs, trademarks, trade names,
copyrights, patents and franchises, unamortized debt discount and expense,
all reserves and any write-up in the book value of assets resulting from a
revaluation of such assets subsequent to December 31, 1997.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b)
all renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Credit Party" shall mean each of the Company and each of its
Subsidiaries.
"Delaware By-Laws" shall mean the by-laws, to be used by the
Company after the Reincorporation Merger, in the form included in the Proxy
Statement.
"Delaware Charter" shall mean the certificate of incorporation,
to be used by the Company after the Reincorporation Merger, in the form
included in the Proxy Statement.
"Discounted Value" shall have the meaning ascribed to such term
in Section 8.5.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or contract between any Credit Party or any ERISA Affiliate and any
employee pursuant to which any Credit Party or any ERISA Affiliate has or
may have any liability contingent or otherwise.
"Environmental Laws" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"Equity Interests" means any Capital Stock, partnership interest,
joint venture interest or other equity interest or warrants, options or
other rights to acquire any Capital Stock, partnership interest, joint
venture interest or other equity interest.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member
of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the
Company under Section 414(o) of the Code, or is under "common control" with
the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Escrow Agent" shall have the meaning ascribed thereto in Section
1.4.
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Exchange Notes" shall have the meaning ascribed thereto in the
Recitals.
"Exchange Offer" shall have the meaning ascribed thereto in the
Recitals.
"Exchange Offer Documents" shall mean the Exchange Notes, the
Exchange Warrants, the Additional Warrants, the Subordinated Indenture, the
Securities Exchange Agreement, the Exchange Offer Registration Rights
Agreement, the Subordinated Guarantee and Security Agreement, the
Subordinated Security Agreement, the Subordinated Guarantee and the
Exchange Offer Intercreditor Agreement.
"Exchange Offer Intercreditor Agreement" shall mean the
agreement, dated as of the date hereof, between the Collateral Agent and
the Trustee for the Exchange Notes under the Subordinated Indenture, in the
form of Exhibit 10.1A.
"Exchange Offer Registration Rights Agreement" shall mean the
agreement to be entered into between the Trustee and the holders of the
Exchange Notes in the form of Exhibit 10.1B.
"Exchange Warrants" shall have the meaning ascribed thereto in
the Recitals.
"Financing Statements" means Form UCC-1 financing statements to
be filed in all jurisdictions necessary or desirable in order to perfect
the Holders' security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holders and filings to be made
in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other obligation or
liability or any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or dividend.
"Guarantee Agreement" shall mean the agreement, dated as of the
date hereof, made by the Company's foreign Material Subsidiaries in favor
of the Holders providing for Guarantees from such Material Subsidiaries.
"Guarantee and Security Agreement" shall mean the agreement,
dated as of the date hereof, between the Collateral Agent and the Company's
domestic Material Subsidiaries, providing for a first priority security
interest in the domestic Material Subsidiaries' Collateral and Guarantees
from such Material Subsidiaries.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose
name a Note is registered in the Note Register at such time.
"Incumbent Board" shall mean the individuals who, immediately
after the Closing, constitute the board of directors of the Company;
provided, however, that any individual becoming a director subsequent to
the Closing whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed to be a
member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 11.1.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereon, and all Patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(b) all Trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and
all applications, registrations and renewals in connection therewith, (e)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Intercompany Notes" means the notes from the Subsidiaries or
Affiliates of the Company in favor of the Company in the form of Exhibit
10.1C, as the same may be amended, modified or supplemented from time to
time in accordance with their terms, and all other promissory notes or
other instruments evidencing Indebtedness of Affiliates or Subsidiaries of
the Company to the Company between the Company and its Affiliates.
"Intercreditor Agreement" shall mean the agreement, dated as of
the date hereof, between the Collateral Agent and the Trustee for the Old
Notes under the Indenture, dated as of January 2, 1996, between the Trustee
and the Company (as amended).
"June 2, 1998 Court Order" shall mean the June 2, 1998
preliminary court order approving the Class Action Settlement Agreement and
the 3M Agreement issued by the United States District Court for the
Northern District of Alabama.
"Knowledge", with respect to the Company, shall mean the actual
knowledge of each member of the board of directors of the Company and each
officer of the Company, and the knowledge that any of the foregoing persons
would have after due and reasonable inquiry and investigation.
"Law" shall include any foreign, federal, state, or local law,
statute, ordinance, rule, regulation, order, judgment or decree.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Loan" shall have the meaning ascribed thereto in the Recitals.
"Loan Warrants" shall have the meaning ascribed thereto in the
Recitals.
"Make-Whole Amount" shall have the meaning ascribed thereto in
Section 8.5.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business, (b) the ability of any Credit Party to perform
its obligations under any of the Transaction Documents to which it is a
party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
"Material Subsidiaries" at any time, shall mean any Subsidiary of
the Company, other than any Non-Significant Subsidiary of the Company.
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with
GAAP on a consolidated basis as reflected in the financial statements
furnished to the Holders in accordance with Section 6.19.
"Non-Significant Subsidiary" at any time, shall mean any
Subsidiary of the Company which at such time has total assets (including
the total assets of any Subsidiaries) that have a fair market value of, or
for which the Company or any of its Subsidiaries shall have paid (including
the assumption of Indebtedness) in connection with the acquisition of
capital stock (or other equity interests) or the total assets of such
Subsidiary, less than $100,000, provided that the total assets of all
Non-Significant Subsidiaries at any time does not exceed 5% of the total
assets of the Company and its Subsidiaries on a consolidated basis.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Officers' Certificate" means a certificate signed by any two
officers of the Company, one of whom must be the Chairman of the Board, the
President, the Chief Executive Officer, the Treasurer or a Vice President
of the Company.
"Old Notes" shall have the meaning ascribed thereto in the
Recitals.
"Operating Profit" shall have the meaning ascribed to it in
Section 6.14.
"Outstanding" or "outstanding" shall mean when used with
reference to the Notes at a particular time, all Notes theretofore issued
as provided in this Agreement, except (i) Notes theretofore reported as
lost, stolen, damaged or destroyed, or surrendered for transfer, exchange
or replacement, in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes therefore canceled by
the Company, except that, for the purpose of determining whether Holders of
the requisite principal amount of Notes have made or concurred in any
waiver, consent, approval, notice or other communication under this
Agreement, Notes registered in the name of, or owned beneficially by, the
Company or any of its Subsidiaries of any thereof, shall not be deemed to
be outstanding.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) $25.5 million aggregate principal amount of 6.00%
subordinated notes to be issued pursuant to the Class Action Settlement
Agreement (having the terms set forth therein); (ii) Indebtedness and
obligations under the Notes and the Exchange Notes; (iii) any other
Indebtedness and obligations outstanding on the date hereof and set forth
on Schedule 2.19 hereof; (iv) Indebtedness of a domestic Subsidiary of the
Company to the Company as long as such Subsidiary has executed the
Guarantee and Security Agreement and such Indebtedness is evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral as provided in Section 6.11 or (v) Indebtedness which
refinances any of the Indebtedness specified herein, provided that the
terms of such refinancing Indebtedness shall not have a Material Adverse
Effect (in comparison to the terms of the Indebtedness being refinanced),
such refinancing Indebtedness shall be unsecured and subordinate in right
of payment to the Notes, shall mature at least one year after all of the
Notes have matured and shall have such other terms as are reasonably
acceptable to the Required Holders.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
(d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company or any of its Subsidiaries; and (e) loans or
advances of money by the Company or any Material Subsidiary to the
Company's domestic Subsidiaries that have executed the Guarantee and
Security Agreement as long as such loans or advances are evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral as provided in Section 6.11 hereof.
"Permitted Liens" means (i) Liens existing on the date hereof and
set forth in Schedule 2.19, all of which are subordinate to the Lien of the
Collateral Documentation; (ii) Liens (other than any Lien imposed under
ERISA or any Environmental Laws) for taxes, assessments or charges of any
governmental authority for claims not yet due or which are being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP
and enforcement thereof is stayed; (iii) Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) not voluntarily granted for amounts not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with the provisions of GAAP, and enforcement thereof is stayed; (iv) Liens
(other than any Lien imposed under ERISA), incurred or deposited made in
the ordinary course of business, including without limitation, surety bonds
and appeal bonds, in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions,
charges or encumbrances (whether or not recorded) and other Liens incurred
in the ordinary course of business, which do not secure indebtedness or the
deferred purchase price of any asset and which do not interfere materially
with the ordinary conduct of the business of the Company and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Company; (vi) building
restrictions, zoning laws and other statutes, laws, rules, regulations,
ordinances and restrictions, and any amendments thereto, now or at any time
hereafter adopted by any governmental authority having jurisdiction; and
(vii) purchase money liens to the extent such liens secure Permitted
Indebtedness.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Prepayment Date" shall have the meaning ascribed thereto in
Section 8.1.
"Proxy Statement" shall have the meaning ascribed thereto in
Section 2.2.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof between the Purchasers and the
Company with respect to the Notes.
"Reincorporation Merger" shall mean the merger, if consummated,
the primary purpose of which is to effect the reincorporation of the
Company in the state of Delaware as described in the Proxy Statement.
"Reinvestment Yield" shall have the meaning ascribed to such term
in Section 8.5.
"Related Parties" shall mean Affiliates of the Company or any of
its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of directors and officers).
"Releases" shall have the meaning ascribed thereto in the
Recitals.
"Required Holders" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 6.7.
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any of its
Subsidiaries shall sell or transfer to any Person (other than the Company
or a Subsidiary of the Company) any property, whether now owned or
hereafter acquired, and, as part of the same transaction or series of
transactions, the Company or any of its Subsidiaries shall rent or lease as
lessee (other than pursuant to a Capitalized Lease), or similarly acquire
the right to possession or use of, such property or one or more properties
which it intends to use for the same purpose or purposes as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Secured Obligations" shall mean any and all obligations of any
Credit Party at any time and from time to time for the performance of its
agreements, covenants and undertakings under or in respect of the
Transaction Documents to which it is a party.
"Securities Exchange Agreement" shall mean the agreement to be
entered into by the Company and the securityholders parties thereto in the
form of Exhibit 10.1D.
"Security Agreement" shall mean the agreement, dated as of the
date hereof, between the Collateral Agent and the Company, providing for a
first priority security interest in the Collateral.
"Standstill Agreement" shall mean the agreement, dated July 8,
1998, between the Company and Mr. Donald K. McGhan restricting Mr. McGhan's
ability to vote his Common Stock.
"Stated Maturity" when used with respect to any security or any
installment of interest thereon, means the date specified in such security
as the fixed date on which the principal of such security or such
installment of interest is due and payable.
"Subordinated Guarantee Agreement" shall mean the guarantee to be
made by the Company's foreign Material Subsidiaries in favor of the holders
of the Exchange Notes in the form of Exhibit 10.1E.
"Subordinated Guarantee and Security Agreement" shall mean the
agreement to be entered into by the Company's domestic Material
Subsidiaries and the Trustee in the form of Exhibit 10.1F.
"Subordinated Indenture" shall mean the agreement to be entered
into between the Company and the Trustee in the form of Exhibit 10.1G.
"Subordinated Security Agreement" shall mean the agreement to be
entered into by the Company and the Trustee in the form of Exhibit 10.1H
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including without limitation a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions) or (iii) any other Person required to
be consolidated with such Person in accordance with generally accepted
accounting principles. For purposes of this definition (and for the
determination of whether or not a Subsidiary is a wholly-owned Subsidiary
of a Person), any directors' qualifying shares or investment by foreign
nationals mandated by applicable law shall be disregarded in determining
the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Authority and, including, without limitation,
any Taxes of another person owing under a contract, as transferee or
successor, under Treas. Reg. ss. 1.1502-6 or analogous state, local or
foreign law, or otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"3M" shall mean the Minnesota Mining & Manufacturing Company.
"3M Agreement" shall have the meaning ascribed thereto in the
Recitals.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark
registrations and applications for trademark and service mark
registrations, (b) all renewals and extensions of any of the foregoing and
(c) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, together, in each case, with the product lines and
goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
"Transaction Documents" shall mean this Agreement, the Notes, the
Registration Rights Agreement, the Security Agreement, the Guarantee and
Security Agreement, the Guarantee Agreement, the Loan Warrants, the
Intercreditor Agreement, the Assignment, dated as of the date hereof, from
the Company to the Collateral Agent, the Letter Agreement, dated as of the
date hereof, between the Company and the Collateral Agent and the Exchange
Offer Documents.
"Transfer" shall have the meaning ascribed thereto in Section
6.17.
"Voting Securities" shall mean at any time shares of any class of
capital stock of the Company (or other corporation) which are then entitled
to vote generally in the election of directors of the Company (or such
other corporation).
"Year 2000 Problem" shall have the meaning ascribed thereto in
Section 2.29.
10.2. Accounting Principles. The character or amount of any
asset, liability, capital account or reserve and of any item of income or
expense required to be determined pursuant to this Agreement, and any
consolidation or other accounting computation required to be made pursuant
to this Agreement, and the construction of any definition in this Agreement
containing a financial term, shall be determined or made, as the case may
be, in accordance with generally accepted accounting principles, to the
extent applicable, unless such principles are inconsistent with the express
requirements of this Agreement.
11. Miscellaneous.
-------------
11.1. Payments; Indemnity. (a) The Company agrees that, so long
any Notes shall remain outstanding, it will make all interest, principal
and other payments hereunder and under the Notes in immediately available
funds by wire transfer on the date due in such manner as each Holder may
reasonably request in writing. Anything in this Agreement or the Notes to
the contrary notwithstanding, any payment of principal of or interest on
any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day. If the date for payment is extended to
the next succeeding Business Day by reason of the preceding sentence, the
period of such extension will be included in the computation of the
interest payable on such next succeeding Business Day.
(b) Each Credit Party shall jointly and severally indemnify and
hold harmless each Purchaser, each Holder and each of their respective
Affiliates, and each such Person's respective officers, directors,
partners, members, employees, attorneys, agents and representatives (each,
an "Indemnified Person") from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and out-of-pocket
expenses (including reasonable attorneys' fees and disbursements and other
costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended
or terminated under this Agreement and the other Transaction Documents and
the administration of such credit, and in connection with or arising out of
the transactions contemplated hereunder and thereunder and any actions or
failures to act in connection therewith.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Person from and against any
such Taxes.
11.2. Severability. If any term, provision, covenant or
restriction of this Agreement or any exhibit hereto is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement and
such exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
11.3. Specific Enforcement. The Purchasers, on the one hand, and
the Company, on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
11.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
11.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
Attention: Ilan K. Reich, Executive Vice President
With a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attention: Adam W. Finerman, Esq.
The Purchasers, to each Purchaser's address as set forth in the
Note Register
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
The Collateral Agent, to:
Appaloosa Management, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. Jim Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
11.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written
consent of the Required Holders. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
11.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent holder of a Note).
11.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents or any
of the Notes (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of such Holder relating to the
enforcement of any of the Transaction Documents.
11.10. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Transaction Documents,
regardless of any investigation made by or on behalf of any party.
11.11. Transfer of Notes. Each Purchaser understands and agrees
that the Notes have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws, or transactions as to
which an exemption from the registration requirements of the Securities Act
and, where applicable, such laws are available. Each Purchaser acknowledges
that, except as provided in the Registration Rights Agreement, such
Purchaser has no right to require the Company to register the Notes. Each
Purchaser understands and agrees that each Note or certificate representing
the Notes shall bear the following legends:
"THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS CERTIFICATE]
[THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A NOTE PURCHASE AGREEMENT
DATED AS OF SEPTEMBER _, 1998, A COPY OF WHICH IS ON FILE AT THE
OFFICES OF THE COMPANY."
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS NOTE HAS]
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS. THIS INSTRUMENT
WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR INFORMATION REGARDING THE
ISSUE PRICE, ISSUE DATE, YIELD TO MATURITY AND AMOUNT OF ORIGINAL
ISSUE DISCOUNT, CONTACT EXECUTIVE VICE PRESIDENT, AT INAMED
CORPORATION."
11.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
11.13. Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by any Holder in order to enforce any right or
remedy under this Agreement or any of the Notes, the Company hereby
consents and will submit, and will cause each of its Subsidiaries to
submit, to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of
New York on the date of this Agreement. The Company hereby irrevocably
waives any objection, including, but not limited to, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action, proceeding or
litigation in such jurisdiction.
11.14. Service of Process. Nothing herein shall affect the right
of any Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
11.15. WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OF THE NOTES.
11.16. Public Announcements. Neither the Company nor any
Purchaser shall make any public statements, including, without limitation,
any press releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other party
(which consent shall not be unreasonably withheld) except as may be
required by law. If a public statement is required to be made by law, the
parties shall consult with each other in advance as to the contents and
timing thereof.
11.17. Further Assurances. The Company and each of its
Subsidiaries agrees that it shall and shall cause each other to, at the
Company's expense and upon the reasonable request of Collateral Agent, duly
execute and deliver, or cause to be duly executed and delivered, to the
Collateral Agent such further instruments, agreements and documents
(including, without limitation, financing statements under the Code,
security agreements in respect of Intellectual Property, stock powers
executed in blank and other items necessary or desirable in connection with
the perfection of Liens in the Collateral) and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of the
Collateral Agent to carry out more effectually the provisions and purposes
of the Transaction Documents.
Each Purchaser (other than Appaloosa and its affiliates),
severally and not jointly, represents and warrants to Appaloosa with
respect to such Purchaser as follows: (i) such Purchaser acknowledges that
Fried, Frank, Harris, Shriver & Jacobson is acting solely on behalf of
Appaloosa, (ii) such Purchaser has, or such Purchaser together with its
advisers, if any, have, such knowledge and experience in financial and
business matters that such Purchaser is, or such Purchaser together with
its advisers, if any, are, and will be capable of evaluating the merits and
risks relating to such Purchaser's purchase of the Notes and Loan Warrants
under this Agreement, (iii) such Purchaser has been given the opportunity
to obtain information and documents relating to the Company and to ask
questions of and receive answers from representatives of the Company
concerning the Company and such Purchaser's investment in the Notes and the
Loan Warrants and such Purchaser's decision to invest in the Company has
been based upon independent investigations made by such Purchaser and its
advisers, if any.
11.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed
by each of the parties hereto.
IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and delivered by
their respective officers or partners thereunto duly authorized.
INAMED CORPORATION
By: /s/ Ilan K. Reich
------------------------------------
Name: Ilan K. Reich
------------------------------
Title: Executive V.P.
-----------------------------
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its general
partner
By: /s/ James Bolin
------------------------------------
Name: James Bolin
------------------------------
Title:
-----------------------------
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By: /s/ James Bolin
------------------------------------
Name: James Bolin
------------------------------
Title: Vice President
-----------------------------
PALOMINO FUND LTD.
By: Appaloosa Management L.P., its
Investment Advisor
By: Appaloosa Partners Inc., its General
Partner
By: /s/ James Bolin
------------------------------------
Name: James Bolin
------------------------------
Title: Vice President
-----------------------------
Exhibit D
SECURITY AGREEMENT
------------------
This SECURITY AGREEMENT (this "Agreement") dated as of September 30,
1998, is made by Inamed Corporation, a Florida corporation (the "Obligor"),
and APPALOOSA MANAGEMENT, L.P., as collateral agent (the "Collateral
Agent") for the benefit of the holders of the Obligor's 10.00% Senior
Secured Notes due March 31, 1999 or, at the option of the Obligor exercised
as provided therein, September 1, 2000 (the "Notes").
RECITALS
--------
A. Pursuant to the Note Purchase Agreement, dated as of the date
hereof (as amended, supplemented, restated or otherwise modified from time
to time, the "Note Purchase Agreement"), among the purchasers listed on
Exhibit A thereto (the "Purchasers"), the Collateral Agent and the Obligor,
the Purchasers are purchasing Notes from the Obligor in the aggregate
principal amount of $8,000,000 and Warrants to acquire up to 590,000 shares
of Common Stock with an exercise price of $6.50 per share (the "Loan
Warrants");
B. As a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes and the Loan Warrants, the Purchasers
required that the Obligor deliver this Agreement to the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Obligor agrees with
the Collateral Agent as follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Note Purchase
Agreement (including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note Purchase
Agreement. In addition, the following terms shall have the following
meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in Section
2.01(b).
"Breast Implant Litigation" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern
Division stylized as "Silicone Gel Breast Implant Products Liability
Litigation (MDL926)."
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include,
as of any date as of which the amount thereof is to be determined, the
amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Collateral" shall have the meaning assigned to that term in Section
2.01.
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by the Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in Section
2.01(f).
"Equipment" shall have the meaning assigned to that term in Section
2.01(e).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive
rights or agreements of any kind (including any stockholders' or voting
trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital
stock of any class, or partnership or other ownership interests of any type
in, such Person.
"Event of Default" shall mean each of the happenings or circumstances
enumerated in Section 7.1 of the Note Purchase Agreement.
"Holder" shall mean, at any time of reference, a Person in whose name
a Note is registered in the Note Register at such time.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Instruments" shall have the meaning assigned to that term in Section
2.01(c).
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereon, and all Patents, patent applications and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all Copyrights and all applications, registrations and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Inventory" shall have the meaning assigned to that term in Section
2.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Obligor that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter
acquired by the Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the Notes,
this Agreement, the Guarantee and Security Agreement, dated as of the date
hereof, between certain Subsidiaries of the Obligor and the Collateral
Agent, the Guarantee Agreement, dated as of the date hereof, made by
certain Subsidiaries of the Obligor in favor of the Holders, the
Registration Rights Agreement, dated as of the date hereof, by and between
the Obligor and the Purchasers and the Intercreditor Agreement, dated as of
the date hereof, by and between the Collateral Agent and the Trustee.
"Loan Warrants" shall have the meaning assigned to that term in the
Recitals.
"Make-Whole Amount" shall have the meaning assigned to that term in
the Note Purchase Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of
the Obligor and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business, (b) the ability of the Obligor to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights,
remedies, powers and privileges of the Holders under any of the Loan
Documents or (e) the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
"Note Register" shall have the meaning ascribed thereto in the Note
Purchase Agreement.
"Obligations" shall mean the principal and interest due under the
Notes and all other obligations and liabilities of the Obligor to the
Holders of every nature whatsoever now existing or hereafter arising,
including, without limitation, all prepayment premiums, indemnities,
reimbursement obligations, fees, costs and expenses, arising under or in
connection the Loan Documents (including, without limitation, any interest
accruing subsequent to (or that would accrue but for) the commencement of
any proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Obligor), and any and all
expenses which may be incurred by the Holders in collecting any or all of
the obligations of the Obligor under this Agreement and/or enforcing any
rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired
by the Obligor.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
and (d) money market funds sponsored by commercial or investment banks
unaffiliated with the Obligor.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning assigned to that term in Section
2.01(a).
"Pledged Stock" shall have the meaning assigned to that term in
Section 2.01(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"Secured Obligations" shall mean any and all obligations of the
Obligor at any time and from time to time for the performance of its
agreements, covenants and undertakings under or in respect of the Loan
Documents.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which the Obligor shall sign and
deliver this Agreement.
"Stock Collateral" shall have the meaning assigned to that term in
Section 2.01(a).
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by the Obligor. Notwithstanding the foregoing, the
Trademark Collateral shall not include any Trademark which would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world,
together, in each case, with the product lines and goodwill of the business
connected with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
1.02 Interpretation. In this Agreement, unless otherwise indicated,
the singular includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or
subdivisions of sections), exhibits, annexes or schedules are to this
Agreement; references to agreements and other contractual instruments shall
be deemed to include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other modifications by
the terms of any Loan Document); and references to Persons include their
respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
Article II. Collateral.
2.01 Grant. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Obligor hereby pledges and
grants to the Collateral Agent, for the ratable benefit of the Holders a
security interest in all of the Obligor's right, title and interest in and
to the following property, whether now owned or hereafter acquired by the
Obligor and whether now existing or hereafter coming into existence
including, without limitation, all real and personal property and interests
in real and personal property (collectively, the "Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by the Obligor as set forth in Schedule 2.01
together with in each case the certificates representing the same
(collectively, the "Pledged Stock"); (ii) all shares, securities, moneys or
property representing a dividend on, or a distribution or return of capital
in respect of, any of the Pledged Stock, resulting from a split-up,
revision, reclassification or other like change of any of the Pledged Stock
or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of
the Pledged Stock; and (iii) without affecting the obligations of the
Obligor under any provision prohibiting such action under any Loan
Document, in the event of any consolidation or merger in which any Issuer
is not the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor corporation is
the Obligor itself) formed by or resulting from such consolidation or
merger (collectively, and together with the property described in clauses
(i) and (ii) above, the "Stock Collateral"); (iv) the Indebtedness
described in Annex I and issued by the obligors named therein (the "Pledged
Debt"); (v) all additional Indebtedness for money borrowed or for the
deferred purchase price of property from time to time owed to the Obligor
by any obligor of the Pledged Debt, and all additional Indebtedness in
excess of $25,000 for money borrowed or for the deferred purchase price of
property from time to time owed to the Obligor by any other Person who,
after the date of this Agreement, becomes, as a result of any occurrence, a
Subsidiary of the Obligor or an Affiliate of the Obligor (any such
Indebtedness being "Additional Debt"); (vi) all notes or other instruments
evidencing the Indebtedness referred to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Obligor constituting a right to the payment
of money, whether or not earned by performance, including all moneys due
and to become due to the Obligor in repayment of any loans or advances
(including loans and advances to Subsidiaries of the Obligor), in payment
for goods (including Inventory and Equipment) sold or leased or for
services rendered, in payment of tax refunds and in payment of any
guarantee of any of the foregoing (collectively, the "Accounts");
(c) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts (collectively,
the "Instruments");
(d) all inventory (as defined in the Uniform Commercial Code) and
all other goods (including Motor Vehicles) of the Obligor that are held by
the Obligor for sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates), that are so leased or
furnished or that constitute raw materials, work in process or material
used or consumed in its business, including all spare parts and related
supplies, all goods obtained by the Obligor in exchange for any such goods,
all products made or processed from any such goods and all substances, if
any, commingled with or added to any such goods (collectively, the
"Inventory");
(e) all equipment (as defined in the Uniform Commercial Code) and
all other goods (including Motor Vehicles) of the Obligor that are used or
bought for use primarily in its business, including all spare parts and
related supplies, all goods obtained by the Obligor in exchange for any
such goods, all substances, if any, commingled with or added to such goods
and all upgrades and other improvements to such goods, in each case to the
extent not constituting Inventory (collectively, the "Equipment");
(f) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of the Obligor covering, evidencing or representing
Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of the Obligor relating to
the sale or other disposition of all or any part of the Inventory,
Equipment or Documents and all rights, warranties, claims and benefits of
the Obligor against any Person arising out of, relating to or in connection
with all or any part of the Inventory, Equipment or Documents of the
Obligor, including any such rights, warranties, claims or benefits against
any Person storing or transporting any such Inventory or Equipment or
issuing any such Documents;
(h) all other accounts or general intangibles of the Obligor not
constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Obligor or any computer bureau or
service company from time to time acting for the Obligor;
(i) the balance from time to time in the Collateral Account;
(j) all other tangible and intangible property of the Obligor,
including all Intellectual Property; and
(k) all proceeds and products in whatever form of all or any part
of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all
rights to recover and proceed with respect to the same), and all
accessories to, substitutions for and replacements of all or any part of
the other Collateral.
2.02 Intellectual Property. For the purpose of enabling the Collateral
Agent to exercise its rights, remedies, powers and privileges under Article
VI at such time or times as the Collateral Agent shall be lawfully entitled
to exercise such rights, remedies, powers and privileges, and for no other
purpose, the Obligor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Obligor) to use, assign,
license or sublicense any of the Intellectual Property of the Obligor,
together with reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout of such items.
2.03 Perfection. Concurrently with the execution and delivery of this
Agreement, the Obligor shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Collateral Agent
may request to perfect and establish the first priority (subject only to
Liens permitted under Section 6.7 of the Note Purchase Agreement) of the
Liens granted by this Agreement (including promptly filing the Assignment
for Security--Trademarks and Patents, in the form executed on the date
hereof by the Obligor, in the United States Patent and Trademark Office),
(ii) deliver and pledge to the Collateral Agent any and all Instruments,
endorsed or accompanied by such instruments of assignment and transfer in
such form and substance as the Collateral Agent may request, (iii) cause
the Collateral Agent (to the extent requested by the Collateral Agent) to
be listed as the lienholder on all certificates of title or ownership
relating to Motor Vehicles owned by the Obligor and deliver to the
Collateral Agent originals of all such certificates of title or ownership
for the Motor Vehicles together with the odometer statements for each
respective Motor Vehicle, (iv) deliver and pledge to the Collateral Agent
all certificates for the Pledged Stock and notes, instruments or other
documents evidencing the Pledged Debt, accompanied by undated stock or bond
powers, as the case may be, duly executed in blank and (v) take all such
other actions as shall be necessary or as the Collateral Agent may request
to perfect and establish the first priority (subject only to such Permitted
Liens) of the Liens granted by this Agreement. The Collateral Agent shall
have the right, at any time in its discretion and with notice to the
Obligor, to transfer to or to register in its name or in the name of any of
its nominees any or all of the Pledged Stock or Pledged Debt.
2.04 Preservation and Protection of Security Interests. The Obligor
shall:
(a) upon the acquisition after the Signing Date by the Obligor of
any Securities Collateral, promptly either (x) transfer and deliver to the
Collateral Agent all such Securities Collateral (together with the
certificates or instruments representing such Securities Collateral
securities duly endorsed in blank or accompanied by undated powers duly
executed in blank) or (y) take such other action as the Collateral Agent
shall deem necessary or appropriate to perfect, and establish the priority
of, the Liens granted by this Agreement in such Securities Collateral;
(b) upon the acquisition after the Signing Date by the Obligor of
any Instrument, promptly deliver and pledge to the Collateral Agent all
such Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Collateral Agent may
request;
(c) upon the acquisition after the Signing Date by the Obligor of
any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Collateral Agent to be listed as the
lienholder on such certificate of title and within 45 days of the
acquisition of such property deliver evidence of the same to the Collateral
Agent;
(d) upon the Obligor's acquiring, or otherwise becoming entitled
to the benefits of, any Copyright (or copyrightable material), Patent (or
patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to the Obligor's filing, either
directly or through any agent, licensee or other designee, of any
application with any governmental Person for any Copyright, Patent,
Trademark, or other Intellectual Property, in each case after the Signing
Date, execute and deliver such contracts, agreements and other instruments
as the Collateral Agent may request to evidence, validate, perfect and
establish the first priority (subject only to Liens permitted under Section
6.7 of the Note Purchase Agreement) of the Liens granted by this Agreement
in such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any
and all governmental approvals and take any and all steps that may be
necessary or as the Collateral Agent may request to create, perfect,
establish the first priority (subject only to Liens permitted under Section
6.7 of the Note Purchase Agreement) of, or to preserve the validity,
perfection or first priority (subject only to such Permitted Liens) of, the
Liens granted by this Agreement or to enable the Collateral Agent to
exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Liens, including causing any or all of the
Securities Collateral to be transferred of record into the name of the
Collateral Agent or its nominee (and the Collateral Agent agrees that if
any Securities Collateral is transferred into its name or the name of its
nominee, the Collateral Agent will thereafter promptly give to the Obligor
copies of any notices and communications received by it with respect to the
Stock Collateral pledged by the Obligor), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 3.02(b).
2.05 Attorney-in-Fact. (a) Subject to the rights of the Obligor under
Sections 2.06, 2.07, 2.08 and 2.09, the Collateral Agent is hereby
appointed the attorney-in-fact of the Obligor for the purpose of carrying
out the provisions of this Agreement and taking any action and executing
any instruments which the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, to preserve the validity,
perfection and first priority (subject only to Liens permitted under
Section 6.7 of the Note Purchase Agreement) of the Liens granted by this
Agreement and, following any Default, to exercise its rights, remedies,
powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Collateral Agent shall be
entitled under this Agreement upon the occurrence and continuation of any
Event of Default (or, in respect of Section 3.02(b), any Default) (i) to
ask, demand, collect, sue for, recover, receive and give receipt and
discharge for amounts due and to become due under and in respect of all or
any part of the Collateral; (ii) to receive, endorse and collect any
Instruments or other drafts, instruments, documents and chattel paper in
connection with clause (i) above (including any draft or check representing
the proceeds of insurance or the return of unearned premiums); (iii) to
file any claims or take any action or proceeding that the Collateral Agent
may deem necessary or advisable for the collection of all or any part of
the Collateral, including the collection of any compensation due and to
become due under any contract or agreement with respect to all or any part
of the Collateral; and (iv) to execute, in connection with any sale or
disposition of the Collateral under Article VI, any endorsements,
assignments, bills of sale or other instruments of conveyance or transfer
with respect to all or any part of the Collateral. In any suit, proceeding
or action brought by the Collateral Agent relating to any Account, contract
or Instrument for any sum owing thereunder, or to enforce any provision of
any Account, contract or Instrument, the Obligor will save, indemnify and
keep the Collateral Agent harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment
or reduction or liability whatsoever of the obligor thereunder, arising out
of a breach by the Obligor of any obligation thereunder or arising out of
any other agreement, Indebtedness or liability at any time owing to, or in
favor of, such obligor or its successors from the Obligor, and all such
obligations of the Obligor shall be and remain enforceable against and only
against the Obligor and shall not be enforceable against the Collateral
Agent.
(b) Without limiting the rights and powers of the Collateral
Agent under Section 2.05(a), the Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the Signing Date and terminating
upon the termination of this Agreement, for the purpose of (i) executing on
behalf of the Obligor title or ownership applications for filing with
appropriate state agencies to enable Motor Vehicles now owned or hereafter
acquired by the Obligor to be retitled and the Collateral Agent to be
listed as lienholder as to such Motor Vehicles, (ii) filing such
applications with such state agencies and (iii) executing such other
documents and instruments on behalf of, and taking such other action in the
name of, the Obligor as the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement (including the
purpose of creating in favor of the Collateral Agent a first priority
perfected lien on the Motor Vehicles and exercising the rights and remedies
of the Collateral Agent under Article VI). This appointment as
attorney-in-fact is irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Collateral
Agent under Section 2.05(a), the Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the Signing Date and terminating
upon the termination of this Agreement, for the purpose of executing and
filing all such contracts, agreements and other documents as are
contemplated by Section 2.04(d). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
2.06 Special Provisions Relating to Securities Collateral. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligor
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Securities Collateral for all purposes not
inconsistent with the terms of any Loan Document, provided that the Obligor
agrees that it will not vote the Securities Collateral in any manner that
is inconsistent with the terms of any Loan Document; and the Collateral
Agent shall, at the Obligor' expense, execute and deliver to the Obligor or
cause to be executed and delivered to the Obligor all such proxies, powers
of attorney, dividends and other orders and other instruments, without
recourse, as the Obligor may reasonably request for the purpose of enabling
the Obligor to exercise the rights and powers which it is entitled to
exercise pursuant to this Section 2.06(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall be entitled to receive and retain any
dividends or distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Collateral Agent exercise
any available right to declare any Secured Obligation due and payable or
seek or pursue any other right, remedy, power or privilege available to
them under applicable law, this Agreement or any other Loan Document, all
dividends and other distributions on the Securities Collateral shall be
paid directly to the Collateral Agent and retained by it in the Collateral
Account as part of the Securities Collateral, subject to the terms of this
Agreement, and, if the Collateral Agent shall so request, the Obligor
agrees to execute and deliver to the Collateral Agent appropriate
additional dividend, distribution and other orders and instruments to that
end, provided that if such Event of Default is cured, any such dividend or
distribution paid to the Collateral Agent prior to such cure shall, upon
request of the Obligor (except to the extent applied to the Secured
Obligations), be returned by the Collateral Agent to the Obligor.
2.07 Use of Intellectual Property. Subject to such action not
otherwise constituting a Default and so long as no Event of Default shall
have occurred and be continuing, the Obligor will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take
other actions with respect to the Intellectual Property in the ordinary
course of the business of the Obligor. In furtherance of the foregoing, so
long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall from time to time, upon the request of the Obligor,
execute and deliver any instruments, certificates or other documents, in
the form so requested, which the Obligor shall have certified are
appropriate (in its reasonable judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant
to Section 2.02 as to any specific Intellectual Property). The exercise of
rights, remedies, powers and privileges under Article VI by the Collateral
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Obligor in accordance with the first
sentence of this Section 2.07.
2.08 Instruments. So long as no Default or Event of Default shall have
occurred and be continuing, the Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Collateral Agent shall, promptly upon the
request, and at the expense of the Obligor, make appropriate arrangements
for making any Instruments pledged by the Obligor available to the Obligor
for purposes of presentation, collection or renewal. Any such arrangement
shall be effected, to the extent deemed appropriate by the Collateral
Agent, against trust receipt or like document.
2.09 Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, the Obligor shall, in addition to its rights
under Sections 2.06, 2.07 and 2.08 hereof and Section 6.17 of the Note
Purchase Agreement, in respect of the Collateral contemplated in those
sections, be entitled to use and possess the other Collateral and to
exercise its rights, title and interest in all contracts, agreements,
licenses and governmental approvals, subject to the rights, remedies,
powers and privileges of the Collateral Agent under Articles III and VI and
to such use, possession or exercise not otherwise constituting a Default.
2.10 Rights and Obligations. (a) The Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements
included in the Collateral in accordance with their respective terms to the
same extent as if this Agreement had not been executed and delivered. The
exercise by the Collateral Agent of any right, remedy, power or privilege
in respect of this Agreement shall not release the Obligor from any of its
duties and obligations under such contracts and agreements and the Obligor
shall save, indemnify and keep the Collateral Agent harmless from and
against all expense, loss or damage suffered by reason of such exercise.
The Collateral Agent shall have no duty, obligation or liability under such
contracts and agreements or with respect to any governmental approval
included in the Collateral by reason of this Agreement or any other Loan
Document, nor shall the Collateral Agent be obligated to perform any of the
duties or obligations of the Obligor under any such contract or agreement
or any such governmental approval or to take any action to collect or
enforce any claim (for payment) under any such contract or agreement or
governmental approval.
(b) No Lien granted by this Agreement in the Obligor's right,
title and interest in any contract, agreement or governmental approval
shall be deemed to be a consent by the Collateral Agent to any such
contract, agreement or governmental approval.
(c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise
expressly permitted by the terms of any Loan Document.
(d) The Collateral Agent shall not be required to take steps
necessary to preserve any rights against prior parties to any part of the
Collateral.
2.11 Release of Motor Vehicles. So long as no Default shall have
occurred and be continuing, upon the request of, and at the expense of, the
Obligor, the Collateral Agent shall execute and deliver to the Obligor such
instruments as the Obligor shall reasonably request to remove the notation
of the Collateral Agent as lienholder on any certificate of title for any
Motor Vehicle; provided that any such instruments shall be delivered, and
the release shall be effective, only upon receipt by the Collateral Agent
of a certificate from the Obligor stating that the Motor Vehicle the Lien
on which is to be released is to be sold or has suffered a casualty loss
(with title passing to the appropriate casualty insurance company in
settlement of the claim for such loss).
2.12 Termination. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall terminate, and the
Collateral Agent shall, at the expense of the Obligor, forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral
and money received in respect of the Collateral, to or on the order of the
Obligor and to be released, canceled and granted back all licenses and
rights referred to in Section 2.02. The Collateral Agent shall also, at the
expense of the Obligor, execute and deliver to the Obligor upon such
termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Obligor to effect the
termination and release of the Liens granted by this Agreement on the
Collateral.
Article III. Cash Proceeds of Collateral.
3.01 Collateral Account. There is hereby established with the
Collateral Agent a cash collateral account (the "Collateral Account") in
the name and under the exclusive domain and control of the Collateral Agent
into which there shall be deposited from time to time the cash proceeds of
any of the Collateral (including proceeds resulting from insurance or
condemnation) required to be delivered to the Collateral Agent pursuant to
this Agreement and into which the Obligor may from time to time deposit any
additional amounts which it wishes to pledge to the Collateral Agent as
additional collateral security under this Agreement. The balance from time
to time in the Collateral Account shall constitute part of the Collateral
and shall not constitute payment of the Secured Obligations until applied
as provided in this Agreement. If any Event of Default shall have occurred
and be continuing, the Collateral Agent may in its discretion apply
(subject to collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Secured Obligations
in the manner specified in Article VI. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided in this
Agreement.
3.02 Certain Proceeds. (a) If any Default or Event of Default shall
have occurred and be continuing, the Obligor shall, upon request of the
Collateral Agent, promptly notify (and the Obligor hereby authorizes the
Collateral Agent so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the
Collateral Agent under this Agreement and that any payments due or to
become due in respect of such Collateral are to be made directly to the
Collateral Agent. All such payments made to the Collateral Agent shall be
immediately deposited in the Collateral Account.
(b) The Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, the Obligor shall as promptly as possible deposit such proceeds
into the Collateral Account. Until so deposited, all such proceeds shall be
held in trust by the Obligor for and as the property of the Collateral
Agent and shall not be commingled with any other funds or property of the
Obligor.
3.03 Investment of Balance in Collateral Account. Amounts on deposit
in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Obligor (or, if any Default or Event of
Default shall have occurred and be continuing, the Collateral Agent) shall
determine. All such investments shall be held in the name and be under the
control of the Collateral Agent. At any time after the occurrence and
during the continuance of an Event of Default, the Collateral Agent may in
its discretion at any time and from time to time elect to liquidate any
such investments and to apply or cause to be applied the proceeds of such
action to the payment of the Secured Obligations in the manner specified in
Article VI.
Article IV. Representations and Warranties.
The Obligor hereby represents and warrants to the Collateral Agent for
the benefit of the Holders as follows:
4.01 Title. The Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and,
except as set forth in Schedule 4.01, such Collateral is free and clear of
all Liens. The first priority Liens granted by this Agreement in favor of
the Collateral Agent for the benefit of the Collateral Agent and the
Holders have attached and, upon filing of the respective financing
statements in the jurisdictions listed on Annex II, this Agreement is
effective to create a perfected first priority security interest in all of
such Collateral prior to all other Liens. With respect to the Pledged
Stock, the Pledged Debt and the cash in the Collateral Account, the pledge
of such Collateral pursuant to this Agreement creates a valid and perfected
first priority security interest in such Collateral in favor of the
Collateral Agent for the benefit of the Holders.
4.02 Securities Collateral. (a) The Pledged Stock presently owned by
the Obligor is duly authorized, validly existing, fully paid and
nonassessable, and none of such Pledged Stock is subject to any contractual
restriction, or any restriction under the charter or by-laws of the
respective Issuer of such Pledged Stock, upon the transfer of such Pledged
Stock (except for any such restriction contained in any Loan Document). The
Pledged Debt pledged by the Obligor has been duly authorized, authenticated
or issued and delivered, and is the legal, valid and binding obligation of
the issuers thereof, and is not in default. The Pledged Debt constitutes
all of the outstanding Indebtedness for money borrowed or for the deferred
purchase price of property owed to the Obligor by any of its Subsidiaries
or Affiliates.
(b) The Pledged Stock pledged by the Obligor constitutes all of
the issued and outstanding shares of capital stock of any class of the
Issuers beneficially owned by the Obligor on the Signing Date (whether or
not registered in the name of the Obligor).
4.03 Intellectual Property. (a) Except pursuant to licenses and other
user agreements entered into by the Obligor in the ordinary course of
business, the Obligor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Copyright,
Patent or Trademark constituting Intellectual Property.
(b) The Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
4.04 Goods. Any goods now or hereafter manufactured or otherwise
produced by the Obligor or any of its Subsidiaries included in the
Collateral have been and will be produced in compliance with the
requirements of the Fair Labor Standards Act.
Article V. Covenants.
5.01 Books and Records. The Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark
such books and records in such manner as the Collateral Agent may
reasonably require in order to reflect the Liens granted by this Agreement;
(b) furnish to the Collateral Agent from time to time (but, unless a
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral
and such other reports in connection with the Copyright Collateral, the
Patent Collateral and the Trademark Collateral, as the Collateral Agent may
reasonably request, all in reasonable detail; (c) prior to filing, either
directly or through an agent, licensee or other designee, any application
for any Copyright, Patent or Trademark, furnish to the Collateral Agent
prompt notice of such proposed filing; and (d) permit representatives of
the Collateral Agent, upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, permit representatives of the Collateral
Agent to be present at the Obligor's place of business to receive copies of
all communications and remittances relating to the Collateral and forward
copies of any notices or communications received by the Obligor with
respect to the Collateral, all in such manner as the Collateral Agent may
reasonably request.
5.02 Removals, Etc. Without at least 30 days' prior written notice to
the Collateral Agent, the Obligor shall (i) not maintain any of its books
and records with respect to the Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than (a) at the address initially
indicated for notices to it under Article VII, (b) at one of the other
business locations presently owned or operated by the Obligor or any of its
Affiliates and identified in Annex II or III or (c) in transit from one of
such locations to another, or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages to
this Agreement, provided that the Company shall be permitted to consummate
the reincorporation merger whereby the Company would merge with a Delaware
Subsidiary of the Company to change the Company's state of incorporation
from Florida to Delaware (as described in the Notice of Special Meeting of
Stockholders and Proxy Statement filed by the Company with the SEC on
September 18, 1998).
5.03 Stock Collateral. The Obligor will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligor shall cause all
such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any
restriction under the charter or bylaws of the respective Issuer of such
Stock Collateral, upon the transfer of such Stock Collateral (except for
any such restriction contained in any Loan Document). The Obligor agrees
that it will (i) cause each issuer of the Pledged Stock not to issue any
shares of stock or other securities in addition to or in substitution for
the Pledged Stock, (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of capital
stock issued to the Obligor (the "Additional Stock") and any and all
Additional Debt, and (iii) promptly (and in any event within three business
days) deliver to the Collateral Agent an amendment to this Agreement, duly
executed by the Obligor, in respect of the Additional Shares or Additional
Debt, together with all certificates, notes or other instruments
representing or evidencing the same. The Obligor agrees that all Additional
Shares and Additional Debt listed on any such amendment delivered to the
Collateral Agent shall for all purposes hereunder constitute Pledged Stock
and Pledged Debt, respectively, and (iii) is deemed to have made, upon such
delivery, the representations and warranties contained in Article IV hereof
with respect to such Collateral.
5.04 Intellectual Property. (a) The Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such Trademark on each
and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force and effect free from any claim of
abandonment for nonuse, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration and (iv) not (and not
permit any licensee or sublicensee to) do any act or knowingly omit to do
any act whereby any Trademark material to the conduct of its business may
become invalidated.
(b) The Obligor (either itself or through licensees) will not do
any act or knowingly omit to do any act whereby any Patent material to the
conduct of its business may become abandoned or dedicated.
(c) The Obligor shall notify the Collateral Agent immediately if
it knows or has reason to know that any Intellectual Property material to
the conduct of its business may become abandoned or dedicated, or of any
adverse determination or development (including the institution of, or any
such determination or development in, any proceeding before any
governmental Person) regarding the Obligor's ownership of any Intellectual
Property material to its business, its right to copyright, patent or
register the same (as the case may be), or its right to keep, use and
maintain the same.
(d) The Obligor will take all necessary steps that are consistent
with good business practices in any proceeding before any appropriate
governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to
maintain each registration material to the conduct of its business,
including payment of maintenance fees, filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings.
(e) In the event that any Intellectual Property material to the
conduct of its business is infringed, misappropriated or diluted by a third
party, the Obligor shall notify the Collateral Agent within ten days after
it learns of such event and shall, if consistent with good business
practice, promptly sue for infringement, misappropriation or dilution, seek
temporary restraints and preliminary injunctive relief to the extent
practicable, seek to recover any and all damages for such infringement,
misappropriation or dilution and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(f) The Obligor shall prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or
thereafter made until the termination of this Agreement, make application
on uncopyrighted but copyrightable material, unpatented but patentable
inventions and unregistered but registerable Trademarks and preserve and
maintain all rights in applications for any Intellectual Property;
provided, however, that the Obligor shall have no obligation to make any
such application if making such application would be unnecessary or
imprudent in the good faith business judgment of the Obligor. Any expenses
incurred in connection with such an application shall be borne by the
Obligor.
(g) The Collateral Agent shall have the right but shall in no way
be obligated to bring suit in its own name to enforce the Copyrights,
Patents and Trademarks and any license under such Intellectual Property, in
which event the Obligor shall, at the request of the Collateral Agent, do
any and all lawful acts and execute and deliver any and all proper
documents required by the Collateral Agent in aid of such enforcement
action.
Article VI. Remedies.
6.01 Events of Default, Etc. If any Event of Default shall have
occurred and be continuing:
(a) the Collateral Agent in its discretion may require the
Obligor to, and the Obligor shall, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Collateral Agent
and the Obligor, designated in the Collateral Agent's request;
(b) the Collateral Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Collateral Agent in its discretion may, in its name or in
the name of the Obligor or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(d) the Collateral Agent in its discretion may, upon five
business days' prior written notice to the Obligor of the time and place,
with respect to all or any part of the Collateral which shall then be or
shall thereafter come into the possession, custody or control of the
Collateral Agent, or its agents, sell, lease or otherwise dispose of all or
any part of such Collateral, at such place or places as the Collateral
Agent deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale, without
demand of performance or notice of intention to effect any such disposition
or of time or place of any such sale (except such notice as is required
above or by applicable statute and cannot be waived), and the Collateral
Agent or any other Person may be the purchaser, lessee or recipient of any
or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Obligor, any
such demand, notice and right or equity being hereby expressly waived and
released. In the event of any sale, license or other disposition of any of
the Trademark Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be included, and the
Obligor shall supply to the Collateral Agent or its designee, for inclusion
in such sale, assignment or other disposition, all Intellectual Property
relating to such Trademark Collateral. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which
the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not the Uniform Commercial Code is in effect in the
jurisdiction where such rights, remedies, powers and privileges are
asserted) and such additional rights, remedies, powers and privileges to
which a secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in respect
of this Agreement or the Collateral may be asserted, including the right,
to the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the
Collateral Agent were the sole and absolute owner of the Collateral (and
the Obligor agrees to take all such action as may be appropriate to give
effect to such right).
The proceeds of, and other realization upon, the Collateral by
virtue of the exercise of remedies under this Section 6.01 and of the
exercise of the license granted to the Collateral Agent in Section 2.02
shall be applied in accordance with Section 6.04.
6.02 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 6.01 and of
the exercise of the license granted to the Collateral Agent in Section 2.02
are insufficient to cover the costs and expenses (including attorneys fees)
of such exercise and the payment in full of the other Secured Obligations,
the Obligor shall remain liable for any deficiency.
6.03 Private Sale. (a) The Collateral Agent shall incur no liability
as a result of the sale, lease or other disposition of all or any part of
the Collateral at any private sale pursuant to Section 6.01 conducted in a
commercially reasonable manner. The Obligor hereby waives any claims
against the Collateral Agent arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale or was less
than the aggregate amount of the Secured Obligations, even if the
Collateral Agent accepts the first offer received and does not offer the
Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale. The
Obligor acknowledges that any such private sales may be at prices and on
terms less favorable to the Collateral Agent than those obtainable through
a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Collateral Agent
shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit
the respective Issuer of such Collateral to register it for public sale.
6.04 Application of Proceeds. Except as otherwise expressly provided
in this Agreement and except as provided below in this Section 6.04, the
proceeds of, or other realization upon, all or any part of the Collateral
by virtue of the exercise of remedies under Section 6.01 or of the exercise
of the license granted in Section 2.02, and any other cash at the time held
by the Collateral Agent under Article III or this Article VI, shall be
applied by the Collateral Agent:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Collateral Agent, the fees and expenses of its agents and counsel and all
other expenses incurred and advances made by the Collateral Agent in that
connection;
Second, to the Collateral Agent for amounts due and unpaid on the
Notes for principal and interest and all other amounts due and unpaid under
the Loan Documents including the Make-Whole Amount; and
Third, to the Obligor or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
As used in this Article VI, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer
of, or account debtor or other obligor on, any of the Collateral.
Article VII. Miscellaneous.
7.01 Waiver. No failure on the part of the Collateral Agent or any
Holder to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy, power or privilege, nor
shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise of
any such right, remedy, power or privilege or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
7.02 Notices. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Obligor: Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
7.03 Expenses, Etc. The Obligor agrees to pay or to reimburse the
Collateral Agent for all costs and expenses (including reasonable
attorney's fees and expenses) that may be incurred by the Collateral Agent
in any effort to enforce any of the provisions of Article VI, or any of the
obligations of the Obligor in respect of the Collateral or in connection
with (a) the preservation of the Lien of, or the rights of the Collateral
Agent under this Agreement or (b) any actual or attempted sale, lease,
disposition, exchange, collection, compromise, settlement or other
realization in respect of, or care of, the Collateral, including all such
costs and expenses (and reasonable attorney's fees and expenses) incurred
in any bankruptcy, reorganization, workout or other similar proceeding.
7.04 Amendments. This Agreement may be amended as to the Collateral
Agent and its respective successors and assigns, and the Obligor may take
any action herein prohibited, or omit to perform any act required to be
performed by it, if the Obligor shall obtain the written consent of the
Collateral Agent. This Agreement may not be waived, changed, modified, or
discharged orally, but only by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification or
discharge is sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
7.05 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
7.06 Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Loan Documents, regardless of
any investigation made by or on behalf of any party.
7.07 Agreements Superseded. Except with respect to express references
to other Loan Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the
subject matter of this Agreement.
7.08 Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement and such
exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
7.09 Captions. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
7.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
7.12 Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by the Collateral Agent in order to enforce any
right or remedy under this Agreement, the Obligor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. The Obligor hereby irrevocably waives any
objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
7.13. Service of Process. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Obligor in
any other jurisdiction.
7.14. WAIVER OF JURY TRIAL. THE OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
---------------------------
Name: Ilan K. Reich
Title: Executive V.P.
APPALOOSA MANAGEMENT, L.P.
By: /s/ James Bolin
---------------------------
Name: James Bolin
Title:
Exhibit E
GUARANTEE AND SECURITY AGREEMENT
--------------------------------
This GUARANTEE AND SECURITY AGREEMENT (this "Agreement") dated as of
September 30, 1998, is made by the certain Subsidiaries of Inamed
Corporation, a Florida corporation (the "Company") that are signatories
hereto and who execute a Joinder hereto in the form of Exhibit A hereto
(collectively, the "Obligors") and APPALOOSA MANAGEMENT, L.P., as
collateral agent (the "Collateral Agent") for the benefit of the holders of
the Company's 10.00% Senior Secured Notes due March 31, 1999 or, at the
option of the Company exercised as provided therein, September 1, 2000 (the
"Notes").
RECITALS
--------
A. Pursuant to the Note Purchase Agreement, dated as of the date
hereof (as amended, supplemented, restated or otherwise modified from time
to time, the "Note Purchase Agreement"), among the purchasers listed on
Exhibit A thereto (the "Purchasers"), the Collateral Agent and the Company,
the Purchasers are purchasing Notes from the Company in the aggregate
principal amount of $8,000,000 and Warrants to acquire up to 590,000 shares
of Common Stock with an exercise price of $6.50 per share (the "Loan
Warrants");
B. The Obligors are direct or indirect Subsidiaries of the Company;
C. As a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes and the Loan Warrants, the Purchasers
required that the Obligors deliver this Agreement to the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Obligors agree with
the Collateral Agent as follows:
ARTICLE I. DEFINITIONS AND INTERPRETATION.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Note Purchase
Agreement (including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note Purchase
Agreement. In addition, the following terms shall have the following
meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in Section
3.01(b).
"Breast Implant Litigation" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern
Division stylized as "Silicone Gel Breast Implant Products Liability
Litigation (MDL926)."
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include,
as of any date as of which the amount thereof is to be determined, the
amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Collateral" shall have the meaning assigned to that term in Section
3.01.
"Collateral Account" shall have the meaning assigned to that term in
Section 4.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by any Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Documents" shall have the meaning assigned to that term in Section
3.01(f).
"Event of Default" shall mean each of the happenings or circumstances
enumerated in Section 7.1 of the Note Purchase Agreement.
"Equipment" shall have the meaning assigned to that term in Section
3.01(e).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive
rights or agreements of any kind (including any stockholders' or voting
trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital
stock of any class, or partnership or other ownership interests of any type
in, such Person.
"Guaranteed Obligations" means any and all Obligations and any and all
obligations of the Company for the performance by it of its agreements,
covenants and undertakings under or in respect of the Loan Documents.
"Holder" shall mean, at any time of reference, a Person in whose name
a Note is registered in the Note Register at such time.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Instruments" shall have the meaning assigned to that term in Section
3.01(c).
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereon, and all Patents, patent applications and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof, (b) all Trademarks,
service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all Copyrights and all applications, registrations and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Inventory" shall have the meaning assigned to that term in Section
3.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Company that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter
acquired by any Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the Notes,
this Agreement, the Security Agreement, dated as of the date hereof, by and
between the Company and the Collateral Agent (the "Security Agreement"),
the Guarantee Agreement, dated as of the date hereof, made by certain
Subsidiaries of the Obligor in favor of the Holders, and the Registration
Rights Agreement, dated as of the date hereof, by and between the Company
and the Purchasers and the Intercreditor Agreement, dated as of the date
hereof, by and between the Collateral Agent and the Trustee.
"Loan Warrants" shall have the meaning assigned to that term in the
Recitals.
"Make-Whole Amount" shall have the meaning assigned to that term in
the Note Purchase Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business, (b) the ability of any Obligor to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights,
remedies, powers and privileges of the Holders under any of the Loan
Documents or (e) the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
"Note Register" shall have the meaning ascribed thereto in the Note
Purchase Agreement.
"Obligations" shall mean the principal and interest due under the
Notes and all other obligations and liabilities of the Company to the
Holders of every nature whatsoever now existing or hereafter arising,
including, without limitation, all prepayment premiums, indemnities,
reimbursement obligations, fees, costs and expenses, arising under or in
connection the Loan Documents (including, without limitation, any interest
accruing subsequent to (or that would accrue but for) the commencement of
any proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Company), and any and all
expenses which may be incurred by the Holders in collecting any or all of
the obligations of such Obligor under this Agreement and/or enforcing any
rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by any Obligor.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
and (d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning assigned to that term in Section
3.01(a).
"Pledged Stock" shall have the meaning assigned to that term in
Section 3.01(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"Secured Obligations" shall mean (a) any and all Guaranteed
Obligations and (b) any and all obligations of the Obligors at any time and
from time to time for the performance of their agreements, covenants and
undertakings under or in respect of the Loan Documents.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which a respective Obligor shall
sign and deliver this Agreement, whether directly or through execution and
delivery of a Joinder hereto.
"Stock Collateral" shall have the meaning assigned to that term in
Section 3.01(a).
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by any Obligor. Notwithstanding the foregoing, the
Trademark Collateral shall not include any Trademark which would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world,
together, in each case, with the product lines and goodwill of the business
connected with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
1.02 Interpretation. In this Agreement, unless otherwise indicated,
the singular includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or
subdivisions of sections), exhibits, annexes or schedules are to this
Agreement; references to agreements and other contractual instruments shall
be deemed to include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other modifications by
the terms of any Loan Document); and references to Persons include their
respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
ARTICLE II. GUARANTEE.
2.01 Guarantee. (a) Subject to the limitation set forth in Section
2.08, each of the Obligors, as a primary obligor and not merely as a
surety, hereby jointly and severally guarantees to the Holders the prompt
and complete payment when due (whether at stated maturity, by acceleration
or otherwise) and performance of the Guaranteed Obligations in each case
strictly in accordance with their terms. The Obligors hereby further
jointly and severally agree that if the Company shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) all or
any part of the Guaranteed Obligations, the Obligors will immediately pay
the same, without any demand or notice whatsoever, and that in the case of
any extension of time of payment or renewal of all or any part of the
Guaranteed Obligations, the same will be timely paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal. The obligations of the
Obligors under this Article II are irrevocable and unconditional in nature
and are made with respect to any Guaranteed Obligations now existing or in
the future arising. The Obligors' liability under this Agreement shall
continue until full satisfaction of all Guaranteed Obligations. The
obligations of the Obligors constitute a guarantee of due and punctual
payment and performance and not merely a guarantee of collection, and each
of the Obligors specifically agrees that it shall not be necessary or
required that the Holders exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the Company (or any other Person)
before or as a condition to the obligations of such Obligor hereunder.
(b) No payment or payments made by the Company or any other
Person or received or collected by the Holders from the Company or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction
of or in payment of the Guaranteed Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of the Obligors hereunder
which shall, notwithstanding any such payment or payments, remain liable
for the Guaranteed Obligations until the date upon which the Guaranteed
Obligations are fully performed and paid in full.
2.02 Acknowledgments, Waivers and Consents. Each Obligor acknowledges
that the obligations undertaken by it under this Agreement involve the
guarantee of obligations of Persons other than such Obligor and that such
obligations of such Obligor are absolute, irrevocable and unconditional
under any and all circumstances. In full recognition and in furtherance of
the foregoing, each Obligor agrees that:
(a) Without affecting the enforceability or effectiveness of this
Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of such Obligor, or the
rights, remedies, powers and privileges of the Holders under this
Agreement, the Collateral Agent may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever: (i) amend,
supplement, modify, extend, renew, waive, accelerate or otherwise change
the time for payment or performance of, or the terms of, all or any part of
the Guaranteed Obligations (including any increase or decrease in the rate
or rates of interest on all or any part of the Guaranteed Obligations);
(ii) amend, supplement, modify, extend, renew, waive or otherwise change,
or enter into or give, any Loan Document or any agreement, security
document, guarantee, approval, consent or other instrument with respect to
all or any part of the Guaranteed Obligations, any Loan Document or any
such other instrument or any term or provision of the foregoing; (iii)
accept or enter into new or additional agreements, security documents,
guarantees or other instruments in addition to, in exchange for or relative
to any Loan Document, all or any part of the Guaranteed Obligations or any
collateral now or in the future serving as security for the Guaranteed
Obligations; (iv) accept or receive (including from any other Obligor)
partial payments or performance on the Guaranteed Obligations (whether as a
result of the exercise of any right, remedy, power or privilege or
otherwise); (v) accept, receive and hold any additional collateral for all
or any part of the Guaranteed Obligations (including from any other
Obligor); (vi) release, reconvey, terminate, waive, abandon, allow to lapse
or expire, fail to perfect, subordinate, exchange, substitute, transfer,
foreclose upon or enforce any collateral, security documents or guarantees
(including the obligations of any other Obligor) for or relative to all or
any part of the Guaranteed Obligations; (vii) apply any collateral or the
proceeds of any collateral or guarantee (including the obligations of any
other Obligor) to all or any part of the Guaranteed Obligations in such
manner and extent as the Collateral Agent may in its discretion determine;
(viii) release any Person (including any other Obligor) from any personal
liability with respect to all or any part of the Guaranteed Obligations;
(ix) settle, compromise, release, liquidate or enforce upon such terms and
in such manner as the Collateral Agent may determine or as applicable law
may dictate all or any part of the Guaranteed Obligations or any collateral
on or guarantee of all or any part of the Guaranteed Obligations (including
with any other Obligor); (x) consent to the merger or consolidation of, the
sale of substantial assets by, or other restructuring or termination of the
corporate existence of the Company or any other Person (including any other
Obligor); (xi) proceed against the Company, such or any other Obligor or
any other guarantor of all or any part of the Guaranteed Obligations or any
collateral provided by any Person and exercise the rights, remedies, powers
and privileges of the Holders under the Loan Documents or otherwise in such
order and such manner as the Collateral Agent may, in its discretion,
determine, without any necessity to proceed upon or against or exhaust any
collateral, right, remedy, power or privilege before proceeding to call
upon or otherwise enforce this Agreement as to any Obligor; (xii) foreclose
upon any deed of trust, mortgage or other instrument creating or granting
liens on any interest in real property by judicial or nonjudicial sale or
by deed in lieu of foreclosure, bid any amount or make no bid in any
foreclosure sale or make any other election of remedies with respect to
such liens or exercise any right of set-off; (xiii) obtain the appointment
of a receiver with respect to any collateral for all or any part of the
Guaranteed Obligations and apply the proceeds of such receivership as the
Collateral Agent may in its discretion determine (it being agreed that
nothing in this clause (xiii) shall be deemed to make the Collateral Agent
a party in possession in contemplation of law, except at its option); (xiv)
enter into such other transactions or business dealings with any other
Obligor, the Company, any Subsidiary or Affiliate of the Company or any
other guarantor of all or any part of the Guaranteed Obligations as the
Collateral Agent may desire; and (xv) do all or any combination of the
actions set forth in this Section 2.02(a).
(b) The enforceability and effectiveness of this Agreement and
the liability of the Obligors, and the rights, remedies, powers and
privileges of the Holders and the Collateral Agent, under this Agreement
shall not be affected, limited, reduced, discharged or terminated, and each
Obligor hereby expressly waives to the fullest extent permitted by law any
defense now or in the future arising, by reason of: (i) the illegality,
invalidity or unenforceability of all or any part of the Guaranteed
Obligations, any Loan Document or any agreement, security document,
guarantee or other instrument relative to all or any part of the Guaranteed
Obligations; (ii) any disability or other defense with respect to all or
any part of the Guaranteed Obligations of the Company, any other Obligor or
any other guarantor of all or any part of the Guaranteed Obligations,
including the effect of any statute of limitations that may bar the
enforcement of all or any part of the Guaranteed Obligations or the
obligations of any such other guarantor; (iii) the illegality, invalidity
or unenforceability of any security or guarantee for all or any part of the
Guaranteed Obligations or the lack of perfection or continuing perfection
or failure of the priority of any lien on any collateral for all or any
part of the Guaranteed Obligations; (iv) the cessation, for any cause
whatsoever, of the liability of the Company, any other Obligor or any other
guarantor of all or any part of the Guaranteed Obligations (other than,
subject to Section 2.05, by reason of the full payment and performance of
all Guaranteed Obligations); (v) any failure of the Holders or the
Collateral Agent to marshal assets in favor of the Company or any other
Person (including any other Obligor), to exhaust any collateral for all or
any part of the Guaranteed Obligations, to pursue or exhaust any right,
remedy, power or privilege it may have against any other Obligor, the
Company, any other guarantor of all or any part of the Guaranteed
Obligations or any other Person or to take any action whatsoever to
mitigate or reduce such or any other Obligor's liability under this
Agreement, the Holders and the Collateral Agent being under no obligation
to take any such action notwithstanding the fact that all or any part of
the Guaranteed Obligations may be due and payable and that the Company may
be in default of its obligations under any Loan Document; (vi) any failure
of the Holders or the Collateral Agent to give notice of sale or other
disposition of any Collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral for all or any part of the Guaranteed Obligations) for all or
any part of the Guaranteed Obligations to the Company, any Obligor or any
other Person or any defect in, or any failure by any Obligor or any other
Person to receive, any notice that may be given in connection with any sale
or disposition of any Collateral; (vii) any failure of the Holders or the
Collateral Agent to comply with applicable laws in connection with the sale
or other disposition of any Collateral for all or any part of the
Guaranteed Obligations; (viii) any judicial or nonjudicial foreclosure or
sale of, or other election of remedies with respect to, any interest in
real property or other Collateral serving as security for all or any part
of the Guaranteed Obligations, even though such foreclosure, sale or
election of remedies may impair the subrogation rights of any Obligor or
may preclude any Obligor from obtaining reimbursement, contribution,
indemnification or other recovery from any other Obligor, the Company, any
other guarantor or any other Person and even though the Company may not, as
a result of such foreclosure, sale or election of remedies, be liable for
any deficiency; (ix) any benefits the Company, any Obligor or any other
guarantor may otherwise derive from the laws of any jurisdiction of the
nature of a "one-form-of-action," "anti-deficiency" or "security-first"
rule; (x) any act or omission of the Holders, the Collateral Agent or any
other Person that directly or indirectly results in or aids the discharge
or release of the Company or any other Obligor of all or any part of the
Guaranteed Obligations or any security or guarantee for all or any part of
the Guaranteed Obligations by operation of law or otherwise; (xi) any law
which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation; (xii) the possibility that the
obligations of the Company to the Holders or the Collateral Agent may at
any time and from time to time exceed the aggregate liability of the
Obligors under this Agreement; (xiii) any counterclaim, set-off or other
claim which the Company or any other Obligor has or alleges to have with
respect to all or any part of the Guaranteed Obligations; (xiv) any failure
of the Holders or the Collateral Agent to file or enforce a claim in any
bankruptcy or other proceeding with respect to any Person; (xv) the
election by the Holders or the Collateral Agent, in any bankruptcy
proceeding of any Person, of the application or nonapplication of Section
1111(b)(2) of the Bankruptcy Code; (xvi) any extension of credit or the
grant of any Lien under Section 364 of the Bankruptcy Code; (xvii) any use
of cash collateral under Section 363 of the Bankruptcy Code; (xviii) any
agreement or stipulation with respect to the provision of adequate
protection in any bankruptcy proceeding of any Person; (xix) the avoidance
of any Lien in favor of the Holders or the Collateral Agent for any reason;
(xx) any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, liquidation or dissolution proceeding commenced by or against any
Person, including any discharge of, or bar or stay against collecting, all
or any part of the Guaranteed Obligations (or any interest on all or any
part of the Guaranteed Obligations) in or as a result of any such
proceeding; (xxi) any action taken by the Collateral Agent that is
authorized by this Section 2.02 or otherwise in this Agreement or by any
other provision of any Loan Document or any omission to take any such
action; or (xxii) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor.
(c) Each Obligor expressly waives, for the benefit of the
Collateral Agent and the Holders, all set-offs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to
the Guaranteed Obligations, and all notices of acceptance of this Agreement
or of the existence, creation, incurring or assumption of new or additional
Guaranteed Obligations. Each Obligor further expressly waives the benefit
of any and all statutes of limitation and any and all laws providing for
the exemption of property from execution or for valuation and appraisal
upon foreclosure, to the maximum extent permitted by applicable law.
(d) Each Obligor represents and warrants to the Holders that it
has established adequate means of obtaining financial and other information
pertaining to the business, operations and condition (financial and
otherwise) of the Company and its properties on a continuing basis and that
such Obligor is now and will in the future remain fully familiar with the
business, operations and condition (financial and otherwise) of the Company
and its properties. Each Obligor further represents and warrants that it
has reviewed and approved each of the Loan Documents and is fully familiar
with the transactions contemplated by the Loan Documents and that it will
in the future remain fully familiar with such transactions and with any new
Loan Documents and the transactions contemplated by such Loan Documents.
Each Obligor hereby expressly waives and relinquishes any duty on the part
of the Holders (should any such duty exist) to disclose to such or any
other Obligor any matter of fact or other information related to the
business, operations or condition (financial or otherwise) of the Company
or its properties or to any Loan Document or the transactions undertaken
pursuant to, or contemplated by, any such Loan Document, whether now or in
the future known by the Holders.
(e) Each Obligor intends that its rights and obligations shall be
those expressly set forth in this Agreement and that its obligations shall
not be affected, limited, reduced, discharged or terminated by reason of
any principles or provisions of law which conflict with the terms of this
Agreement.
2.03 Understanding With Respect to Waivers and Consents. Each Obligor
warrants and agrees that each of the waivers and consents set forth in this
Agreement are made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense
or right waived may diminish, destroy or otherwise adversely affect rights
which such or any other Obligor otherwise may have against the Company, the
Holders, the Collateral Agent or any other Person or against any
Collateral. If, notwithstanding the intent of the parties that the terms of
this Agreement shall control in any and all circumstances, any such waivers
or consents are determined to be unenforceable under applicable law, such
waivers and consents shall be effective to the maximum extent permitted by
law.
2.04 Subrogation. Notwithstanding any payment or payments made by the
Obligors hereunder, or any set-off or application of funds of the Obligors
by the Collateral Agent, no Obligors shall exercise any of the rights of
the Collateral Agent or any Holder which any Obligor may acquire by way of
subrogation, by any payment made hereunder, by reason of such set-off or
application of funds or otherwise, against the Company or against any
collateral security or guarantee or right of set-off held by the Collateral
Agent or any Holder for the payment of the Guaranteed Obligations, and no
Obligor shall seek or be entitled to seek any contribution or reimbursement
from the Company in respect of payments made by the Obligors hereunder,
until all amounts owing to the Collateral Agent and the Holders by the
Company on account of the Guaranteed Obligations are paid in full. If any
amount shall be paid to any Obligor on account of such subrogation rights
at any time when all of the Guaranteed Obligations shall not have been paid
in full, such amount shall be held by such Obligor in trust for the
Collateral Agent and the Holders, segregated from other funds of such
Obligor, and shall, forthwith upon receipt by such Obligor, be turned over
to the Collateral Agent in the exact form received by such Obligor (duly
indorsed by such Obligor to the Collateral Agent, if required), to be
applied against the Guaranteed Obligations, whether matured or unmatured,
in such order as required by the applicable Loan Documents.
2.05 Reinstatement. The obligations of each Obligor under this Article
II shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Company, any other Obligor or any
other Person or any other application of funds (including the proceeds of
any collateral for all or any part of the Guaranteed Obligations) in
respect of all or any part of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of such Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy, reorganization or
otherwise and the Obligors jointly and severally agree that it will
indemnify the Holders and the Collateral Agent on demand for all reasonable
costs and expenses (including fees and expenses of counsel) incurred by the
Holders in connection with such rescission or restoration.
2.06 Remedies. The Obligors hereby jointly and severally agree that,
between each of them and the Collateral Agent (for the benefit of the
Holders) the obligations of the Company under the Loan Documents may be
declared to be forthwith (or may become automatically) due and payable as
provided in Section 7.2 of the Note Purchase Agreement for purposes of
Section 2.01 notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations becoming due and payable
as against the Company) and that, in the event of such declaration (or such
obligation being deemed due and payable), such obligations (whether or not
due and payable by the Company) shall forthwith become due and payable for
purposes of Section 2.01.
2.07 Subordination of Indebtedness of the Company; Security Interest.
(a) Each Obligor agrees that any indebtedness of the Company now or in the
future owed to such Obligor is hereby subordinated to the Guaranteed
Obligations. If the Collateral Agent so requests, any such indebtedness
shall be collected, enforced and received by such Obligor as trustee for
the Collateral Agent and shall be paid over to the Collateral Agent (for
the benefit of the Holders) in kind on account of the Guaranteed
Obligations. If, after the Collateral Agent's request, such Obligor fails
to collect or enforce any such indebtedness or to pay the proceeds of such
indebtedness to the Collateral Agent, the Collateral Agent as such
Obligor's attorney-in-fact may do such acts and sign such documents in such
Obligor's name and on such Obligor's behalf as the Collateral Agent
considers necessary or desirable to effect such collection, enforcement or
payment, the Collateral Agent being hereby appointed such Obligor's
attorney-in-fact for such purpose.
(b) Each Obligor hereby grants to the Collateral Agent (for the
benefit of the Holders) a security interest in any indebtedness referred to
in Section 2.07(a) and in any personal property of the Company in which
such Obligor now has or in the future acquires any right, title or
interest. Each Obligor agrees that such security interest shall be
additional security for the Guaranteed Obligations and shall be superior to
any right of such Obligor in such property until the Guaranteed Obligations
have been fully satisfied and performed.
2.08 Limitation on Guarantee. In any proceeding involving any state
corporate law or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if
the obligations of the Obligors under Section 2.01 would otherwise be held
or determined to be void, invalid or unenforceable or if the claims of the
Holders in respect of such obligations would be subordinated to the claims
of any other creditors on account of the Obligors' liability under Section
2.01, then, notwithstanding any other provision of this Agreement to the
contrary, the amount of such liability shall, without any further action by
the Obligors, the Holders or any other Person, be automatically limited and
reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action
or proceeding.
ARTICLE III. COLLATERAL.
3.01 Grant. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, each Obligor hereby pledges and
grants to the Collateral Agent, for the ratable benefit of the Holders a
security interest in all of such Obligor's right, title and interest in and
to the following property, whether now owned or hereafter acquired by such
Obligor and whether now existing or hereafter coming into existence,
including, without limitation, all real and personal property and interests
in real and personal property (collectively, the "Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by such Obligor as set forth in Schedule 3.01
together with in each case the certificates representing the same
(collectively, the "Pledged Stock"); (ii) all shares, securities, moneys or
property representing a dividend on, or a distribution or return of capital
in respect of, any of the Pledged Stock, resulting from a split-up,
revision, reclassification or other like change of any of the Pledged Stock
or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of
the Pledged Stock; and (iii) without affecting the obligations of any
Obligor under any provision prohibiting such action under any Loan
Document, in the event of any consolidation or merger in which any Issuer
is not the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor corporation is
the Company itself) formed by or resulting from such consolidation or
merger (collectively, and together with the property described in clauses
(i) and (ii) above, the "Stock Collateral"); (iv) the Indebtedness
described in Annex I issued by the obligors named therein (the "Pledged
Debt"); (v) all additional Indebtedness for money borrowed or for the
deferred purchase price of property from time to time owed to such Obligor
by any obligor of the Pledged Debt, and all additional Indebtedness in
excess of $25,000 for money borrowed or for the deferred purchase price of
property from time to time owed to such Obligor by any other Person who,
after the date of this Agreement, becomes, as a result of any occurrence, a
Subsidiary of such Obligor or an Affiliate of such Obligor (any such
Indebtedness being "Additional Debt"); (vi) all notes or other instruments
evidencing the Indebtedness referred to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Obligor constituting a right to the
payment of money, whether or not earned by performance, including all
moneys due and to become due to such Obligor in repayment of any loans or
advances, in payment for goods (including Inventory and Equipment) sold or
leased or for services rendered, in payment of tax refunds and in payment
of any guarantee of any of the foregoing (collectively, the "Accounts");
(c) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of such Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts (collectively,
the "Instruments");
(d) all inventory (as defined in the Uniform Commercial Code) and
all other goods (including Motor Vehicles) of such Obligor that are held by
such Obligor for sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates), that are so leased or
furnished or that constitute raw materials, work in process or material
used or consumed in its business, including all spare parts and related
supplies, all goods obtained by such Obligor in exchange for any such
goods, all products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods
(collectively, the "Inventory");
(e) all equipment (as defined in the Uniform Commercial Code) and
all other goods (including Motor Vehicles) of such Obligor that are used or
bought for use primarily in its business, including all spare parts and
related supplies, all goods obtained by such Obligor in exchange for any
such goods, all substances, if any, commingled with or added to such goods
and all upgrades and other improvements to such goods, in each case to the
extent not constituting Inventory (collectively, the "Equipment");
(f) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of such Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of such Obligor relating
to the sale or other disposition of all or any part of the Inventory,
Equipment or Documents and all rights, warranties, claims and benefits of
such Obligor against any Person arising out of, relating to or in
connection with all or any part of the Inventory, Equipment or Documents of
such Obligor, including any such rights, warranties, claims or benefits
against any Person storing or transporting any such Inventory or Equipment
or issuing any such Documents;
(h) all other accounts or general intangibles of such Obligor not
constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Obligor or any computer bureau or
service company from time to time acting for such Obligor;
(i) the balance from time to time in the Collateral Account;
(j) all other tangible and intangible property of such Obligor,
including all Intellectual Property; and
(k) all proceeds and products in whatever form of all or any part
of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all
rights to recover and proceed with respect to the same), and all
accessories to, substitutions for and replacements of all or any part of
the other Collateral.
3.02 Intellectual Property. For the purpose of enabling the Collateral
Agent to exercise its rights, remedies, powers and privileges under Article
VII at such time or times as the Collateral Agent shall be lawfully
entitled to exercise such rights, remedies, powers and privileges, and for
no other purpose, each Obligor hereby grants to the Collateral Agent, to
the extent assignable, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Obligor) to use,
assign, license or sublicense any of the Intellectual Property of such
Obligor, together with reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used
for the compilation or printout of such items.
3.03 Perfection. Concurrently with the execution and delivery of this
Agreement, each Obligor shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Collateral Agent
may request to perfect and establish the first priority (subject only to
Liens permitted under Section 6.7 of the Note Purchase Agreement) of the
Liens granted by this Agreement (including promptly filing the Assignment
for Security--Trademarks and Patents, in the form executed on the date
hereof by the Obligors, in the United States Patent and Trademark Office),
(ii) deliver and pledge to the Collateral Agent any and all Instruments,
endorsed or accompanied by such instruments of assignment and transfer in
such form and substance as the Collateral Agent may request, (iii) cause
the Collateral Agent (to the extent requested by the Collateral Agent) to
be listed as the lienholder on all certificates of title or ownership
relating to Motor Vehicles owned by such Obligor and deliver to the
Collateral Agent originals of all such certificates of title or ownership
for the Motor Vehicles together with the odometer statements for each
respective Motor Vehicle, (iv) deliver and pledge to the Collateral Agent
all certificates for the Pledged Stock and notes, instruments or other
documents evidencing the Pledged Debt, accompanied by undated stock or bond
powers, as the case may be, duly executed in blank and (v) take all such
other actions as shall be necessary or as the Collateral Agent may request
to perfect and establish the first priority (subject only to such Permitted
Liens) of the Liens granted by this Agreement. The Collateral Agent shall
have the right, at any time in its discretion and with notice to the
Company, to transfer to or to register in its name or in the name of any of
its nominees any or all of the Pledged Stock or Pledged Debt.
3.04 Preservation and Protection of Security Interests. Each Obligor
shall:
(a) upon the acquisition after the Signing Date by such Obligor
of any Securities Collateral, promptly either (x) transfer and deliver to
the Collateral Agent all such Securities Collateral (together with the
certificates or instruments representing such Securities Collateral
securities duly endorsed in blank or accompanied by undated powers duly
executed in blank) or (y) take such other action as the Collateral Agent
shall deem necessary or appropriate to perfect, and establish the priority
of, the Liens granted by this Agreement in such Securities Collateral;
(b) upon the acquisition after the Signing Date by such Obligor
of any Instrument, promptly deliver and pledge to the Collateral Agent all
such Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Collateral Agent may
request;
(c) upon the acquisition after the Signing Date by such Obligor
of any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Collateral Agent to be listed as the
lienholder on such certificate of title and within 45 days of the
acquisition of such property deliver evidence of the same to the Collateral
Agent;
(d) upon such Obligor's acquiring, or otherwise becoming entitled
to the benefits of, any Copyright (or copyrightable material), Patent (or
patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to such Obligor's filing, either
directly or through any agent, licensee or other designee, of any
application with any governmental Person for any Copyright, Patent,
Trademark, or other Intellectual Property, in each case after the Signing
Date, execute and deliver such contracts, agreements and other instruments
as the Collateral Agent may request to evidence, validate, perfect and
establish the first priority (subject only to Liens permitted under Section
6.7 of the Note Purchase Agreement) of the Liens granted by this Agreement
in such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any
and all governmental approvals and take any and all steps that may be
necessary or as the Collateral Agent may request to create, perfect,
establish the first priority (subject only to Liens permitted under Section
6.7 of the Note Purchase Agreement) of, or to preserve the validity,
perfection or first priority (subject only to such Permitted Liens) of, the
Liens granted by this Agreement or to enable the Collateral Agent to
exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Liens, including causing any or all of the
Securities Collateral to be transferred of record into the name of the
Collateral Agent or its nominee (and the Collateral Agent agrees that if
any Securities Collateral is transferred into its name or the name of its
nominee, the Collateral Agent will thereafter promptly give to such Obligor
copies of any notices and communications received by it with respect to the
Stock Collateral pledged by such Obligor), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 4.02(b).
3.05 Attorney-in-Fact. (a) Subject to the rights of such Obligor under
Sections 3.06, 3.07, 3.08 and 3.09, the Collateral Agent is hereby
appointed the attorney-in-fact of each Obligor for the purpose of carrying
out the provisions of this Agreement and taking any action and executing
any instruments which the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, to preserve the validity,
perfection and first priority (subject only to Liens permitted under
Section 6.7 of the Note Purchase Agreement) of the Liens granted by this
Agreement and, following any Default, to exercise its rights, remedies,
powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Collateral Agent shall be
entitled under this Agreement upon the occurrence and continuation of any
Event of Default (or, in respect of Section 4.02(b), any Default) (i) to
ask, demand, collect, sue for, recover, receive and give receipt and
discharge for amounts due and to become due under and in respect of all or
any part of the Collateral; (ii) to receive, endorse and collect any
Instruments or other drafts, instruments, documents and chattel paper in
connection with clause (i) above (including any draft or check representing
the proceeds of insurance or the return of unearned premiums); (iii) to
file any claims or take any action or proceeding that the Collateral Agent
may deem necessary or advisable for the collection of all or any part of
the Collateral, including the collection of any compensation due and to
become due under any contract or agreement with respect to all or any part
of the Collateral; and (iv) to execute, in connection with any sale or
disposition of the Collateral under Article VII, any endorsements,
assignments, bills of sale or other instruments of conveyance or transfer
with respect to all or any part of the Collateral. In any suit, proceeding
or action brought by the Collateral Agent relating to any Account, contract
or Instrument for any sum owing thereunder, or to enforce any provision of
any Account, contract or Instrument, the Obligors, jointly and severally,
will save, indemnify and keep the Collateral Agent harmless from and
against all expense, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of
the obligor thereunder, arising out of a breach by any Obligor of any
obligation thereunder or arising out of any other agreement, Indebtedness
or liability at any time owing to, or in favor of, such obligor or its
successors from the Obligors, and all such obligations of the Obligors
shall be and remain enforceable against and only against the Obligors and
shall not be enforceable against the Collateral Agent.
(b) Without limiting the rights and powers of the Collateral
Agent under Section 3.05(a), each Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the Signing Date and terminating
upon the termination of this Agreement, for the purpose of (i) executing on
behalf of such Obligor title or ownership applications for filing with
appropriate state agencies to enable Motor Vehicles now owned or hereafter
acquired by such Obligor to be retitled and the Collateral Agent to be
listed as lienholder as to such Motor Vehicles, (ii) filing such
applications with such state agencies and (iii) executing such other
documents and instruments on behalf of, and taking such other action in the
name of, such Obligor as the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement (including the
purpose of creating in favor of the Collateral Agent a first priority
perfected lien on the Motor Vehicles and exercising the rights and remedies
of the Collateral Agent under Article VII). This appointment as
attorney-in-fact is irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Collateral
Agent under Section 3.05(a), each Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the Signing Date and terminating
upon the termination of this Agreement, for the purpose of executing and
filing all such contracts, agreements and other documents as are
contemplated by Section 3.04(d). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
3.06 Special Provisions Relating to Securities Collateral. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligors
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Securities Collateral for all purposes not
inconsistent with the terms of any Loan Document, provided that the
Obligors jointly and severally agree that they will not vote the Securities
Collateral in any manner that is inconsistent with the terms of any Loan
Document; and the Collateral Agent shall, at the Obligors' expense, execute
and deliver to the Obligors or cause to be executed and delivered to the
Obligors all such proxies, powers of attorney, dividends and other orders
and other instruments, without recourse, as the Obligors may reasonably
request for the purpose of enabling the Obligors to exercise the rights and
powers which they are entitled to exercise pursuant to this Section
3.06(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligors shall be entitled to receive and retain any
dividends or distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Collateral Agent exercise
any available right to declare any Secured Obligation due and payable or
seek or pursue any other right, remedy, power or privilege available to
them under applicable law, this Agreement or any other Loan Document, all
dividends and other distributions on the Securities Collateral shall be
paid directly to the Collateral Agent and retained by it in the Collateral
Account as part of the Securities Collateral, subject to the terms of this
Agreement, and, if the Collateral Agent shall so request, the Obligors
jointly and severally agree to execute and deliver to the Collateral Agent
appropriate additional dividend, distribution and other orders and
instruments to that end, provided that if such Event of Default is cured,
any such dividend or distribution paid to the Collateral Agent prior to
such cure shall, upon request of the Obligors (except to the extent applied
to the Secured Obligations), be returned by the Collateral Agent to the
Obligors.
3.07 Use of Intellectual Property. Subject to such action not
otherwise constituting a Default and so long as no Event of Default shall
have occurred and be continuing, the Obligors will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take
other actions with respect to the Intellectual Property in the ordinary
course of the business of the Obligors. In furtherance of the foregoing, so
long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall from time to time, upon the request of the Obligors
through the Company, execute and deliver any instruments, certificates or
other documents, in the form so requested, which such Obligors through the
Company shall have certified are appropriate (in their reasonable judgment)
to allow them to take any action permitted above (including relinquishment
of the license provided pursuant to Section 3.02 as to any specific
Intellectual Property). The exercise of rights, remedies, powers and
privileges under Article VII by the Collateral Agent shall not terminate
the rights of the holders of any licenses or sublicenses theretofore
granted by the Obligors in accordance with the first sentence of this
Section 3.07.
3.08 Instruments. So long as no Default or Event of Default shall have
occurred and be continuing, each Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Collateral Agent shall, promptly upon the
request, and at the expense of, such Obligor through the Company, make
appropriate arrangements for making any Instruments pledged by the Obligors
available to the respective Obligor for purposes of presentation,
collection or renewal. Any such arrangement shall be effected, to the
extent deemed appropriate by the Collateral Agent, against trust receipt or
like document.
3.09 Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, each Obligor shall, in addition to its rights
under Sections 3.06, 3.07 and 3.08 hereof and Section 6.17 of the Note
Purchase Agreement, in respect of the Collateral contemplated in those
sections, be entitled to use and possess the other Collateral and to
exercise its rights, title and interest in all contracts, agreements,
licenses and governmental approvals, subject to the rights, remedies,
powers and privileges of the Collateral Agent under Articles IV and VII and
to such use, possession or exercise not otherwise constituting a Default.
3.10 Rights and Obligations. (a) Each Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements
included in the Collateral in accordance with their respective terms to the
same extent as if this Agreement had not been executed and delivered. The
exercise by the Collateral Agent of any right, remedy, power or privilege
in respect of this Agreement shall not release any Obligor from any of its
duties and obligations under such contracts and agreements and the Obligors
shall save, indemnify and keep the Collateral Agent harmless from and
against all expense, loss or damage suffered by reason of such exercise.
The Collateral Agent shall have no duty, obligation or liability under such
contracts and agreements or with respect to any governmental approval
included in the Collateral by reason of this Agreement or any other Loan
Document, nor shall the Collateral Agent be obligated to perform any of the
duties or obligations of any Obligor under any such contract or agreement
or any such governmental approval or to take any action to collect or
enforce any claim (for payment) under any such contract or agreement or
governmental approval.
(b) No Lien granted by this Agreement in the Obligors' right,
title and interest in any contract, agreement or governmental approval
shall be deemed to be a consent by the Collateral Agent to any such
contract, agreement or governmental approval.
(c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize any Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise
expressly permitted by the terms of any Loan Document.
(d) The Collateral Agent shall not be required to take steps
necessary to preserve any rights against prior parties to any part of the
Collateral.
3.11 Release of Motor Vehicles. So long as no Default shall have
occurred and be continuing, upon the request of, and at the expense of, any
Obligor, the Collateral Agent shall execute and deliver to such Obligor
such instruments as such Obligor shall reasonably request to remove the
notation of the Collateral Agent as lienholder on any certificate of title
for any Motor Vehicle; provided that any such instruments shall be
delivered, and the release shall be effective, only upon receipt by the
Collateral Agent of a certificate from such Obligor stating that the Motor
Vehicle the Lien on which is to be released is to be sold or has suffered a
casualty loss (with title passing to the appropriate casualty insurance
company in settlement of the claim for such loss).
3.12 Termination. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall (subject, however, to
Section 2.05) terminate, and the Collateral Agent shall, at the expense of
the respective Obligor, forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect of the Collateral, to or on the order of the respective Obligors
and to be released, canceled and granted back all licenses and rights
referred to in Section 3.02. The Collateral Agent shall also, at the
expense of the respective Obligor, execute and deliver to the respective
Obligors upon such termination such Uniform Commercial Code termination
statements, certificates for terminating the Liens on the Motor Vehicles
and such other documentation as shall be reasonably requested by the
respective Obligors to effect the termination and release of the Liens
granted by this Agreement on the Collateral.
ARTICLE IV. CASH PROCEEDS OF COLLATERAL.
4.01 Collateral Account. There is hereby established with the
Collateral Agent a cash collateral account (the "Collateral Account") in
the name and under the exclusive domain and control of the Collateral Agent
into which there shall be deposited from time to time the cash proceeds of
any of the Collateral (including proceeds resulting from insurance or
condemnation) required to be delivered to the Collateral Agent pursuant to
this Agreement and into which any Obligor may from time to time deposit any
additional amounts which it wishes to pledge to the Collateral Agent as
additional collateral security under this Agreement. The balance from time
to time in the Collateral Account shall constitute part of the Collateral
and shall not constitute payment of the Secured Obligations until applied
as provided in this Agreement. If any Event of Default shall have occurred
and be continuing, the Collateral Agent may in its discretion apply
(subject to collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Secured Obligations
in the manner specified in Article VII. The balance from time to time in
the Collateral Account shall be subject to withdrawal only as provided in
this Agreement.
4.02 Certain Proceeds. (a) If any Default or Event of Default shall
have occurred and be continuing, each Obligor shall, upon request of the
Collateral Agent, promptly notify (and such Obligor hereby authorizes the
Collateral Agent so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the
Collateral Agent under this Agreement and that any payments due or to
become due in respect of such Collateral are to be made directly to the
Collateral Agent. All such payments made to the Collateral Agent shall be
immediately deposited in the Collateral Account.
(b) Each Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, such Obligor shall as promptly as possible deposit such proceeds
into the Collateral Account. Until so deposited, all such proceeds shall be
held in trust by each Obligor for and as the property of the Collateral
Agent and shall not be commingled with any other funds or property of such
Obligor.
4.03 Investment of Balance in Collateral Account. Amounts on deposit
in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Obligors through the Company (or, if any
Default or Event of Default shall have occurred and be continuing, the
Collateral Agent) shall determine. All such investments shall be held in
the name and be under the control of the Collateral Agent. At any time
after the occurrence and during the continuance of an Event of Default, the
Collateral Agent may in its discretion at any time and from time to time
elect to liquidate any such investments and to apply or cause to be applied
the proceeds of such action to the payment of the Secured Obligations in
the manner specified in Article VII.
ARTICLE V. REPRESENTATIONS AND WARRANTIES.
Each Obligor hereby represents and warrants to the Collateral Agent
for the benefit of the Holders as follows:
5.01 Title. Such Obligor is the sole beneficial owner of the
Collateral in which it purports to grant a Lien pursuant to this Agreement,
and, except as set forth in Schedule 5.01, such Collateral is free and
clear of all Liens. The first priority Liens granted by this Agreement in
favor of the Collateral Agent for the benefit of the Collateral Agent and
the Holders have attached and, upon filing of the respective financing
statements in the jurisdictions listed on Annex II, this Agreement is
effective to create a perfected first priority security interest in all of
such Collateral prior to all other Liens. With respect to the Pledged
Stock, the Pledged Debt and the cash in the Collateral Account, the pledge
of such Collateral pursuant to this Agreement creates a valid and perfected
first priority security interest in such Collateral in favor of the
Collateral Agent for the benefit of the Holders.
5.02 Securities Collateral. (a) The Pledged Stock presently owned by
such Obligor is duly authorized, validly existing, fully paid and
nonassessable, and none of such Pledged Stock is subject to any contractual
restriction, or any restriction under the charter or by-laws of the
respective Issuer of such Pledged Stock, upon the transfer of such Pledged
Stock (except for any such restriction contained in any Loan Document). The
Pledged Debt pledged by such Obligor has been duly authorized,
authenticated or issued and delivered, and is the legal, valid and binding
obligation of the issuers thereof, and is not in default. The Pledged Debt
constitutes all of the outstanding Indebtedness for money borrowed or for
the deferred purchase price of property owed to such Obligor by any of its
Subsidiaries or Affiliates.
(b) The Pledged Stock pledged by such Obligor constitutes all of
the issued and outstanding shares of capital stock of any class of the
Issuers beneficially owned by such Obligor on the Signing Date (whether or
not registered in the name of such Obligor).
5.03 Intellectual Property. (a) Except pursuant to licenses and other
user agreements entered into by such Obligor in the ordinary course of
business, such Obligor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Copyright,
Patent or Trademark constituting Intellectual Property.
(b) No Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
5.04 Goods. Any goods now or hereafter manufactured or otherwise
produced by any Obligor or any of its Subsidiaries included in the
Collateral have been and will be produced in compliance with the
requirements of the Fair Labor Standards Act.
ARTICLE VI. COVENANTS.
6.01 Books and Records. Each Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark
such books and records in such manner as the Collateral Agent may
reasonably require in order to reflect the Liens granted by this Agreement;
(b) furnish to the Collateral Agent from time to time (but, unless a
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral
and such other reports in connection with the Copyright Collateral, the
Patent Collateral and the Trademark Collateral, as the Collateral Agent may
reasonably request, all in reasonable detail; (c) prior to filing, either
directly or through an agent, licensee or other designee, any application
for any Copyright, Patent or Trademark, furnish to the Collateral Agent
prompt notice of such proposed filing; and (d) permit representatives of
the Collateral Agent, upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, permit representatives of the Collateral
Agent to be present at such Obligor's place of business to receive copies
of all communications and remittances relating to the Collateral and
forward copies of any notices or communications received by such Obligor
with respect to the Collateral, all in such manner as the Collateral Agent
may reasonably request.
6.02 Removals, Etc. Without at least 30 days' prior written notice to
the Collateral Agent, each Obligor shall (i) not maintain any of its books
and records with respect to the Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than (a) at the address initially
indicated for notices to it under Article VIII, (b) at one of the other
business locations presently owned or operated by such Obligor or any of
its Affiliates and identified in Annex II or III or (c) in transit from one
of such locations to another, or (ii) change its corporate name, or the
name under which it does business, from the name shown on the signature
pages to this Agreement, provided that the Company shall be permitted to
consummate the reincorporation merger whereby the Company would merge with
a Delaware Subsidiary of the Company to change the Company's state of
incorporation from Florida to Delaware (as described in the Notice of
Special Meeting of Stockholders and Proxy Statement filed by the Company
with the SEC on September 18, 1998).
6.03 Stock Collateral. The Obligors will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligors shall cause all
such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any
restriction under the charter or bylaws of the respective Issuer of such
Stock Collateral, upon the transfer of such Stock Collateral (except for
any such restriction contained in any Loan Document). Such Obligor agrees
that it will (i) cause each issuer of the Pledged Stock not to issue any
shares of stock or other securities in addition to or in substitution for
the Pledged Stock, (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of capital
stock issued to such Obligor (the "Additional Stock") and any and all
Additional Debt, and (iii) promptly (and in any event within three business
days) deliver to the Collateral Agent an amendment to this Agreement, duly
executed by such Obligor, in respect of the Additional Shares or Additional
Debt, together with all certificates, notes or other instruments
representing or evidencing the same. Such Obligor agrees that all
Additional Shares and Additional Debt listed on any such amendment
delivered to the Collateral Agent shall for all purposes hereunder
constitute Pledged Stock and Pledged Debt, respectively, and (iii) is
deemed to have made, upon such delivery, the representations and warranties
contained in Article IV hereof with respect to such Collateral.
6.04 Intellectual Property. (a) Each Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such Trademark on each
and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force and effect free from any claim of
abandonment for nonuse, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration and (iv) not (and not
permit any licensee or sublicensee to) do any act or knowingly omit to do
any act whereby any Trademark material to the conduct of its business may
become invalidated.
(b) Each Obligor (either itself or through licensees) will not do
any act or knowingly omit to do any act whereby any Patent material to the
conduct of its business may become abandoned or dedicated.
(c) Each Obligor shall notify the Collateral Agent immediately if
it knows or has reason to know that any Intellectual Property material to
the conduct of its business may become abandoned or dedicated, or of any
adverse determination or development (including the institution of, or any
such determination or development in, any proceeding before any
governmental Person) regarding each Obligor's ownership of any Intellectual
Property material to its business, its right to copyright, patent or
register the same (as the case may be), or its right to keep, use and
maintain the same.
(d) Each Obligor will take all necessary steps that are
consistent with good business practices in any proceeding before any
appropriate governmental Person to maintain and pursue each application
relating to any Intellectual Property (and to obtain the relevant
registrations) and to maintain each registration material to the conduct of
its business, including payment of maintenance fees, filing of applications
for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings.
(e) In the event that any Intellectual Property material to the
conduct of its business is infringed, misappropriated or diluted by a third
party, each Obligor shall notify the Collateral Agent within ten days after
it learns of such event and shall, if consistent with good business
practice, promptly sue for infringement, misappropriation or dilution, seek
temporary restraints and preliminary injunctive relief to the extent
practicable, seek to recover any and all damages for such infringement,
misappropriation or dilution and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(f) Each Obligor shall prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or
thereafter made until the termination of this Agreement, make application
on uncopyrighted but copyrightable material, unpatented but patentable
inventions and unregistered but registerable Trademarks and preserve and
maintain all rights in applications for any Intellectual Property;
provided, however, that the Obligors shall have no obligation to make any
such application if making such application would be unnecessary or
imprudent in the good faith business judgment of the respective Obligor.
Any expenses incurred in connection with such an application shall be borne
by the Obligors.
(g) The Collateral Agent shall have the right but shall in no way
be obligated to bring suit in its own name to enforce the Copyrights,
Patents and Trademarks and any license under such Intellectual Property, in
which event each Obligor shall, at the request of the Collateral Agent, do
any and all lawful acts and execute and deliver any and all proper
documents required by the Collateral Agent in aid of such enforcement
action.
ARTICLE VII. REMEDIES.
7.01 Events of Default, Etc. Without limitation on the rights,
remedies, powers and privileges of the Collateral Agent under Article II,
if any Event of Default shall have occurred and be continuing:
(a) the Collateral Agent in its discretion may require each
Obligor to, and each Obligor shall, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Collateral Agent
and such Obligor, designated in the Collateral Agent's request;
(b) the Collateral Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Collateral Agent in its discretion may, in its name or in
the names of the Obligors or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(d) the Collateral Agent in its discretion may, upon five
business days' prior written notice to the Obligors of the time and place,
with respect to all or any part of the Collateral which shall then be or
shall thereafter come into the possession, custody or control of the
Collateral Agent, or its agents, sell, lease or otherwise dispose of all or
any part of such Collateral, at such place or places as the Collateral
Agent deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale, without
demand of performance or notice of intention to effect any such disposition
or of time or place of any such sale (except such notice as is required
above or by applicable statute and cannot be waived), and the Collateral
Agent or any other Person may be the purchaser, lessee or recipient of any
or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Obligors,
any such demand, notice and right or equity being hereby expressly waived
and released. In the event of any sale, license or other disposition of any
of the Trademark Collateral, the goodwill connected with and symbolized by
the Trademark Collateral subject to such disposition shall be included, and
the Obligors shall supply to the Collateral Agent or its designee, for
inclusion in such sale, assignment or other disposition, all Intellectual
Property relating to such Trademark Collateral. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not the Uniform Commercial Code is in effect in the
jurisdiction where such rights, remedies, powers and privileges are
asserted) and such additional rights, remedies, powers and privileges to
which a secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in respect
of this Agreement or the Collateral may be asserted, including the right,
to the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the
Collateral Agent were the sole and absolute owner of the Collateral (and
each Obligor agrees to take all such action as may be appropriate to give
effect to such right).
The proceeds of, and other realization upon, the Collateral by virtue
of the exercise of remedies under this Section 7.01 and of the exercise of
the license granted to the Collateral Agent in Section 3.02 shall be
applied in accordance with Section 7.04.
7.02 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 7.01 and of
the exercise of the license granted to the Collateral Agent in Section 3.02
are insufficient to cover the costs and expenses (including attorneys fees)
of such exercise and the payment in full of the other Secured Obligations,
the Obligors shall remain liable for any deficiency.
7.03 Private Sale. (a) The Collateral Agent shall incur no liability
as a result of the sale, lease or other disposition of all or any part of
the Collateral at any private sale pursuant to Section 7.01 conducted in a
commercially reasonable manner. Each Obligor hereby waives any claims
against the Collateral Agent arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale or was less
than the aggregate amount of the Secured Obligations, even if the
Collateral Agent accepts the first offer received and does not offer the
Collateral to more than one offeree.
(b) The Obligors recognize that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale. The
Obligors acknowledge that any such private sales may be at prices and on
terms less favorable to the Collateral Agent than those obtainable through
a public sale without such restrictions, and, notwithstanding such
circumstances, agree that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Collateral Agent
shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit
the respective Issuer of such Collateral to register it for public sale.
7.04 Application of Proceeds. Except as otherwise expressly provided
in this Agreement and except as provided below in this Section 7.04, the
proceeds of, or other realization upon, all or any part of the Collateral
by virtue of the exercise of remedies under Section 7.01 or of the exercise
of the license granted in Section 3.02, and any other cash at the time held
by the Collateral Agent under Article IV or this Article VII, shall be
applied by the Collateral Agent:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Collateral Agent, the fees and expenses of its agents and counsel and all
other expenses incurred and advances made by the Collateral Agent in that
connection;
Second, to the Collateral Agent for amounts due and unpaid on the
Notes for principal and interest and all other amounts due and unpaid under
the Loan Documents including the Make-Whole Amount; and
Third, to the Company, the Obligors or any other obligors on the
Notes, as their interests may appear, or as a court of competent
jurisdiction may direct.
As used in this Article VII, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to any Obligor or any issuer
of, or account debtor or other obligor on, any of the Collateral.
ARTICLE VIII. MISCELLANEOUS.
8.01 Waiver. No failure on the part of the Collateral Agent or any
Holder to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy, power or privilege, nor
shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise of
any such right, remedy, power or privilege or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
8.02 Notices. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Obligors: Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
8.03 Expenses, Etc. The Obligors jointly and severally agree to pay or
to reimburse the Collateral Agent for all costs and expenses (including
reasonable attorney's fees and expenses) that may be incurred by the
Collateral Agent in any effort to enforce any of the provisions of Article
II or Article VII, or any of the obligations of the Obligors in respect of
the Collateral or in connection with (a) the preservation of the Lien of,
or the rights of the Collateral Agent under this Agreement or (b) any
actual or attempted sale, lease, disposition, exchange, collection,
compromise, settlement or other realization in respect of, or care of, the
Collateral, including all such costs and expenses (and reasonable
attorney's fees and expenses) incurred in any bankruptcy, reorganization,
workout or other similar proceeding.
8.04 Amendments. This Agreement may be amended as to the Collateral
Agent and its respective successors and assigns, and the Obligors may take
any action herein prohibited, or omit to perform any act required to be
performed by it, if the Obligors shall obtain the written consent of the
Collateral Agent. This Agreement may not be waived, changed, modified, or
discharged orally, but only by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification or
discharge is sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
8.05 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
8.06 Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Loan Documents, regardless of
any investigation made by or on behalf of any party.
8.07 Agreements Superseded. Except with respect to express references
to other Loan Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the
subject matter of this Agreement.
8.08 Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement and such
exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
8.09 Captions. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
8.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
8.12 Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by the Collateral Agent in order to enforce any
right or remedy under this Agreement, each Obligor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. Each Obligor hereby irrevocably waives any
objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
8.13. Service of Process. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Obligor in
any other jurisdiction.
8.14. WAIVER OF JURY TRIAL. EACH OBLIGOR HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
APPALOOSA MANAGEMENT, L.P.
as Collateral Agent
By: Appaloosa Partners, Inc.,
its General Partner
By: /s/ Jim Bolin
-------------------------------
Name: Jim Bolin
Title:
BIOENTERICS CORPORATION,
a California corporation
By: /s/ Ilan Reich
-------------------------------
Name: Ilan Reich
Title:
CUI CORPORATION,
a California corporation
By: /s/ Ilan Reich
-------------------------------
Title:
FLOWMATRIX CORPORATION,
a California corporation
By: /s/ Ilan Reich
-------------------------------
Title:
INAMED DEVELOPMENT COMPANY,
a California corporation
By: /s/ Ilan Reich
-------------------------------
Title:
MCGHAN MEDICAL CORPORATION,
a California corporation
By: /s/ Ilan Reich
-------------------------------
Title:
EXHIBIT F
GUARANTEE AGREEMENT
-------------------
This GUARANTEE (this "Agreement") dated as of September 30, 1998, is
made by certain Subsidiaries of Inamed Corporation, a Florida corporation
(the "Company") that are signatories hereto and who execute a Joinder
hereto in the form of Exhibit A hereto (collectively, the "Guarantors") in
favor of the holders of the Company's 10.00% Senior Secured Notes due March
31, 1999 or, at the option of the Company exercised as provided therein,
September 1, 2000 (the "Notes") issued pursuant to the Note Purchase
Agreement, dated as of the date hereof, among the purchasers listed on
Exhibit A thereto (the "Purchasers"), Appaloosa Management, L.P., as
Collateral Agent and the Company (the "Note Purchase Agreement").
RECITALS
--------
A. Pursuant to the Note Purchase Agreement, the Purchasers are
purchasing Notes from the Company in the aggregate principal amount of
$8,000,000 and Warrants to acquire up to 590,000 shares of Common Stock
with an exercise price of $6.50 per share (the "Loan Warrants");
B. The Guarantors are direct or indirect Subsidiaries of the Company;
C. As a condition, and material inducement, to the Purchasers'
agreement to purchase the notes and the Loan Warrants, the Purchasers
required that the Guarantors execute this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Purchasers and the Collateral Agent to enter into the Note Purchase
Agreement, each Guarantor hereby agrees as follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Note Purchase
Agreement (including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note Purchase
Agreement. In addition, the following terms shall have the following
meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in the Note
Purchase Agreement.
"Guaranteed Obligations" means any and all Obligations and any and all
obligations of the Company for the performance by it of its agreements,
covenants and undertakings under or in respect of the Loan Documents.
"Loan Documents" shall mean the Note Purchase Agreement, the Notes,
this Agreement, the Security Agreement, dated as of the date hereof,
between the Company and the Collateral Agent (the "Security Agreement"),
the Guarantee and Security Agreement, dated as of the date hereof, by and
between certain Subsidiaries of the Company and the Collateral Agent (the
"Guarantee and Security Agreement"), the Registration Rights Agreement,
dated as of the date hereof, by and between the Company and the Purchasers
and the Intercreditor Agreement, dated as of the date hereof, by and
between the Collateral Agent and the Trustee.
"Loan Warrants" shall have the meaning assigned to that term in the
Recitals.
"Obligations" shall mean the principal and interest due under the
Notes and all other obligations and liabilities of the Company to the
Holders of every nature whatsoever now existing or hereafter arising,
including, without limitation, all prepayment premiums, indemnities,
reimbursement obligations, fees, costs and expenses, arising under or in
connection the Loan Documents (including, without limitation, any interest
accruing subsequent to (or that would accrue but for) the commencement of
any proceeding involving the bankruptcy, insolvency, reorganization,
liquidation, receivership or the like of the Company), and any and all
expenses which may be incurred by the Holders in collecting any or all of
the obligations of such Guarantor under this Agreement and/or enforcing any
rights under this Agreement.
1.02 Interpretation. In this Agreement, unless otherwise indicated,
the singular includes the plural and plural the singular; words importing
either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography
and other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or
subdivisions of sections), exhibits, annexes or schedules are to this
Agreement; references to agreements and other contractual instruments shall
be deemed to include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any
prohibition on any such amendments, extensions and other modifications by
the terms of any Loan Document); and references to Persons include their
respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
Article II. Guarantee.
2.01 Guarantee. (a) Subject to the limitation set forth in Section
2.08, each of the Guarantors, as a primary guarantor and not merely as a
surety, hereby jointly and severally guarantees to the Holders the prompt
and complete payment when due (whether at stated maturity, by acceleration
or otherwise) and performance of the Guaranteed Obligations in each case
strictly in accordance with their terms. The Guarantors hereby further
jointly and severally agree that if the Company shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) all or
any part of the Guaranteed Obligations, the Guarantors will immediately pay
the same, without any demand or notice whatsoever, and that in the case of
any extension of time of payment or renewal of all or any part of the
Guaranteed Obligations, the same will be timely paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal. The obligations of the
Guarantors under this Article II are irrevocable and unconditional in
nature and are made with respect to any Guaranteed Obligations now existing
or in the future arising. The Guarantors' liability under this Agreement
shall continue until full satisfaction of all Guaranteed Obligations. The
obligations of the Guarantors constitute a guarantee of due and punctual
payment and performance and not merely a guarantee of collection, and each
of the Guarantors specifically agrees that it shall not be necessary or
required that the Holders exercise any right, assert any claim or demand or
enforce any remedy whatsoever against the Company (or any other Person)
before or as a condition to the obligations of such Guarantor hereunder.
(b) No payment or payments made by the Company or any other
Person or received or collected by the Holders from the Company or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction
of or in payment of the Guaranteed Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of the Guarantors
hereunder which shall, notwithstanding any such payment or payments, remain
liable for the Guaranteed Obligations until the date upon which the
Guaranteed Obligations are fully performed and paid in full.
2.02 Acknowledgments, Waivers and Consents. Each Guarantor
acknowledges that the obligations undertaken by it under this Agreement
involve the guarantee of obligations of Persons other than such Guarantor
and that such obligations of such Guarantor are absolute, irrevocable and
unconditional under any and all circumstances. In full recognition and in
furtherance of the foregoing, each Guarantor agrees that:
(a) Without affecting the enforceability or effectiveness of this
Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of such Guarantor, or
the rights, remedies, powers and privileges of the Holders under this
Agreement, the Collateral Agent may, at any time and from time to time and
without notice or demand of any kind or nature whatsoever: (i) amend,
supplement, modify, extend, renew, waive, accelerate or otherwise change
the time for payment or performance of, or the terms of, all or any part of
the Guaranteed Obligations (including any increase or decrease in the rate
or rates of interest on all or any part of the Guaranteed Obligations);
(ii) amend, supplement, modify, extend, renew, waive or otherwise change,
or enter into or give, any Loan Document or any agreement, security
document, guarantee, approval, consent or other instrument with respect to
all or any part of the Guaranteed Obligations, any Loan Document or any
such other instrument or any term or provision of the foregoing; (iii)
accept or enter into new or additional agreements, security documents,
guarantees or other instruments in addition to, in exchange for or relative
to any Loan Document, all or any part of the Guaranteed Obligations or any
collateral now or in the future serving as security for the Guaranteed
Obligations; (iv) accept or receive (including from any other Guarantor)
partial payments or performance on the Guaranteed Obligations (whether as a
result of the exercise of any right, remedy, power or privilege or
otherwise); (v) accept, receive and hold any additional collateral for all
or any part of the Guaranteed Obligations (including from any other
Guarantor); (vi) release, reconvey, terminate, waive, abandon, allow to
lapse or expire, fail to perfect, subordinate, exchange, substitute,
transfer, foreclose upon or enforce any collateral, security documents or
guarantees (including the obligations of any other Guarantor) for or
relative to all or any part of the Guaranteed Obligations; (vii) apply any
collateral or the proceeds of any collateral or guarantee (including the
obligations of any other Guarantor) to all or any part of the Guaranteed
Obligations in such manner and extent as the Collateral Agent may in its
discretion determine; (viii) release any Person (including any other
Guarantor) from any personal liability with respect to all or any part of
the Guaranteed Obligations; (ix) settle, compromise, release, liquidate or
enforce upon such terms and in such manner as the Collateral Agent may
determine or as applicable law may dictate all or any part of the
Guaranteed Obligations or any collateral on or guarantee of all or any part
of the Guaranteed Obligations (including with any other Guarantor); (x)
consent to the merger or consolidation of, the sale of substantial assets
by, or other restructuring or termination of the corporate existence of the
Company or any other Person (including any other Guarantor); (xi) proceed
against the Company, such or any other Guarantor or any other guarantor of
all or any part of the Guaranteed Obligations or any collateral provided by
any Person and exercise the rights, remedies, powers and privileges of the
Holders under the Loan Documents or otherwise in such order and such manner
as the Collateral Agent may, in its discretion, determine, without any
necessity to proceed upon or against or exhaust any collateral, right,
remedy, power or privilege before proceeding to call upon or otherwise
enforce this Agreement as to any Guarantor; (xii) foreclose upon any deed
of trust, mortgage or other instrument creating or granting liens on any
interest in real property by judicial or nonjudicial sale or by deed in
lieu of foreclosure, bid any amount or make no bid in any foreclosure sale
or make any other election of remedies with respect to such liens or
exercise any right of set-off; (xiii) obtain the appointment of a receiver
with respect to any collateral for all or any part of the Guaranteed
Obligations and apply the proceeds of such receivership as the Collateral
Agent may in its discretion determine (it being agreed that nothing in this
clause (xiii) shall be deemed to make the Collateral Agent a party in
possession in contemplation of law, except at its option); (xiv) enter into
such other transactions or business dealings with any other Guarantor, the
Company, any Subsidiary or Affiliate of the Company or any other guarantor
of all or any part of the Guaranteed Obligations as the Collateral Agent
may desire; and (xv) do all or any combination of the actions set forth in
this Section 2.02(a).
(b) The enforceability and effectiveness of this Agreement and
the liability of the Guarantors, and the rights, remedies, powers and
privileges of the Holders and the Collateral Agent, under this Agreement
shall not be affected, limited, reduced, discharged or terminated, and each
Guarantor hereby expressly waives to the fullest extent permitted by law
any defense now or in the future arising, by reason of: (i) the illegality,
invalidity or unenforceability of all or any part of the Guaranteed
Obligations, any Loan Document or any agreement, security document,
guarantee or other instrument relative to all or any part of the Guaranteed
Obligations; (ii) any disability or other defense with respect to all or
any part of the Guaranteed Obligations of the Company, any other Guarantor
or any other guarantor of all or any part of the Guaranteed Obligations,
including the effect of any statute of limitations that may bar the
enforcement of all or any part of the Guaranteed Obligations or the
obligations of any such other guarantor; (iii) the illegality, invalidity
or unenforceability of any security or guarantee for all or any part of the
Guaranteed Obligations or the lack of perfection or continuing perfection
or failure of the priority of any lien on any collateral for all or any
part of the Guaranteed Obligations; (iv) the cessation, for any cause
whatsoever, of the liability of the Company, any other Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations (other
than, subject to Section 2.05, by reason of the full payment and
performance of all Guaranteed Obligations); (v) any failure of the Holders
or the Collateral Agent to marshal assets in favor of the Company or any
other Person (including any other Guarantor), to exhaust any collateral for
all or any part of the Guaranteed Obligations, to pursue or exhaust any
right, remedy, power or privilege it may have against any other Guarantor,
the Company, any other guarantor of all or any part of the Guaranteed
Obligations or any other Person or to take any action whatsoever to
mitigate or reduce such or any other Guarantor's liability under this
Agreement, the Holders and the Collateral Agent being under no obligation
to take any such action notwithstanding the fact that all or any part of
the Guaranteed Obligations may be due and payable and that the Company may
be in default of its obligations under any Loan Document; (vi) any failure
of the Holders or the Collateral Agent to give notice of sale or other
disposition of any Collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral for all or any part of the Guaranteed Obligations) for all or
any part of the Guaranteed Obligations to the Company, any Guarantor or any
other Person or any defect in, or any failure by any Guarantor or any other
Person to receive, any notice that may be given in connection with any sale
or disposition of any Collateral; (vii) any failure of the Holders or the
Collateral Agent to comply with applicable laws in connection with the sale
or other disposition of any Collateral for all or any part of the
Guaranteed Obligations; (viii) any judicial or nonjudicial foreclosure or
sale of, or other election of remedies with respect to, any interest in
real property or other Collateral serving as security for all or any part
of the Guaranteed Obligations, even though such foreclosure, sale or
election of remedies may impair the subrogation rights of any Guarantor or
may preclude any Guarantor from obtaining reimbursement, contribution,
indemnification or other recovery from any other Guarantor, the Company,
any other guarantor or any other Person and even though the Company may
not, as a result of such foreclosure, sale or election of remedies, be
liable for any deficiency; (ix) any benefits the Company, any Guarantor or
any other guarantor may otherwise derive from the laws of any jurisdiction
of the nature of a "one-form-of-action," "anti-deficiency" or
"security-first" rule; (x) any act or omission of the Holders, the
Collateral Agent or any other Person that directly or indirectly results in
or aids the discharge or release of the Company or any other Guarantor of
all or any part of the Guaranteed Obligations or any security or guarantee
for all or any part of the Guaranteed Obligations by operation of law or
otherwise; (xi) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation; (xii) the
possibility that the obligations of the Company to the Holders or the
Collateral Agent may at any time and from time to time exceed the aggregate
liability of the Guarantors under this Agreement; (xiii) any counterclaim,
set-off or other claim which the Company or any other Guarantor has or
alleges to have with respect to all or any part of the Guaranteed
Obligations; (xiv) any failure of the Holders or the Collateral Agent to
file or enforce a claim in any bankruptcy or other proceeding with respect
to any Person; (xv) the election by the Holders or the Collateral Agent, in
any bankruptcy proceeding of any Person, of the application or
nonapplication of Section 1111(b)(2) of the Bankruptcy Code; (xvi) any
extension of credit or the grant of any Lien under Section 364 of the
Bankruptcy Code; (xvii) any use of cash collateral under Section 363 of the
Bankruptcy Code; (xviii) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any
Person; (xix) the avoidance of any Lien in favor of the Holders or the
Collateral Agent for any reason; (xx) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any part of the
Guaranteed Obligations (or any interest on all or any part of the
Guaranteed Obligations) in or as a result of any such proceeding; (xxi) any
action taken by the Collateral Agent that is authorized by this Section
2.02 or otherwise in this Agreement or by any other provision of any Loan
Document or any omission to take any such action; or (xxii) any other
circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.
(c) Each Guarantor expressly waives, for the benefit of the
Collateral Agent and the Holders, all set-offs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to
the Guaranteed Obligations, and all notices of acceptance of this Agreement
or of the existence, creation, incurring or assumption of new or additional
Guaranteed Obligations. Each Guarantor further expressly waives the benefit
of any and all statutes of limitation and any and all laws providing for
the exemption of property from execution or for valuation and appraisal
upon foreclosure, to the maximum extent permitted by applicable law.
(d) Each Guarantor represents and warrants to the Holders that it
has established adequate means of obtaining financial and other information
pertaining to the business, operations and condition (financial and
otherwise) of the Company and its properties on a continuing basis and that
such Guarantor is now and will in the future remain fully familiar with the
business, operations and condition (financial and otherwise) of the Company
and its properties. Each Guarantor further represents and warrants that it
has reviewed and approved each of the Loan Documents and is fully familiar
with the transactions contemplated by the Loan Documents and that it will
in the future remain fully familiar with such transactions and with any new
Loan Documents and the transactions contemplated by such Loan Documents.
Each Guarantor hereby expressly waives and relinquishes any duty on the
part of the Holders (should any such duty exist) to disclose to such or any
other Guarantor any matter of fact or other information related to the
business, operations or condition (financial or otherwise) of the Company
or its properties or to any Loan Document or the transactions undertaken
pursuant to, or contemplated by, any such Loan Document, whether now or in
the future known by the Holders.
(e) Each Guarantor intends that its rights and obligations shall
be those expressly set forth in this Agreement and that its obligations
shall not be affected, limited, reduced, discharged or terminated by reason
of any principles or provisions of law which conflict with the terms of
this Agreement.
2.03 Understanding With Respect to Waivers and Consents. Each
Guarantor warrants and agrees that each of the waivers and consents set
forth in this Agreement are made voluntarily and unconditionally after
consultation with outside legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving
rise to any defense or right waived may diminish, destroy or otherwise
adversely affect rights which such or any other Guarantor otherwise may
have against the Company, the Holders, the Collateral Agent or any other
Person or against any Collateral. If, notwithstanding the intent of the
parties that the terms of this Agreement shall control in any and all
circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be
effective to the maximum extent permitted by law.
2.04 Subrogation. Notwithstanding any payment or payments made by the
Guarantors hereunder, or any set-off or application of funds of the
Guarantors by the Collateral Agent, no Guarantors shall exercise any of the
rights of the Collateral Agent or any Holder which any Guarantor may
acquire by way of subrogation, by any payment made hereunder, by reason of
such set-off or application of funds or otherwise, against the Company or
against any collateral security or guarantee or right of set-off held by
the Collateral Agent or any Holder for the payment of the Guaranteed
Obligations, and no Guarantor shall seek or be entitled to seek any
contribution or reimbursement from the Company in respect of payments made
by the Guarantors hereunder, until all amounts owing to the Collateral
Agent and the Holders by the Company on account of the Guaranteed
Obligations are paid in full. If any amount shall be paid to any Guarantor
on account of such subrogation rights at any time when all of the
Guaranteed Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Collateral Agent and the
Holders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Collateral
Agent in the exact form received by such Guarantor (duly indorsed by such
Guarantor to the Collateral Agent, if required), to be applied against the
Guaranteed Obligations, whether matured or unmatured, in such order as
required by the applicable Loan Documents.
2.05 Reinstatement. The obligations of each Guarantor under this
Article II shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of the Company, any other Guarantor
or any other Person or any other application of funds (including the
proceeds of any collateral for all or any part of the Guaranteed
Obligations) in respect of all or any part of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of such Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy,
reorganization or otherwise and the Guarantors jointly and severally agree
that it will indemnify the Holders and the Collateral Agent on demand for
all reasonable costs and expenses (including fees and expenses of counsel)
incurred by the Holders in connection with such rescission or restoration.
2.06 Remedies. The Guarantors hereby jointly and severally agree that,
between each of them and the Collateral Agent (for the benefit of the
Holders) the obligations of the Company under the Loan Documents may be
declared to be forthwith (or may become automatically) due and payable as
provided in Section 7.2 of the Note Purchase Agreement for purposes of
Section 2.01 notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations becoming due and payable
as against the Company) and that, in the event of such declaration (or such
obligation being deemed due and payable), such obligations (whether or not
due and payable by the Company) shall forthwith become due and payable for
purposes of Section 2.01.
2.07 Subordination of Indebtedness of the Company; Security Interest.
(a) Each Guarantor agrees that any indebtedness of the Company now or in
the future owed to such Guarantor is hereby subordinated to the Guaranteed
Obligations. If the Collateral Agent so requests, any such indebtedness
shall be collected, enforced and received by such Guarantor as trustee for
the Collateral Agent and shall be paid over to the Collateral Agent (for
the benefit of the Holders) in kind on account of the Guaranteed
Obligations. If, after the Collateral Agent's request, such Guarantor fails
to collect or enforce any such indebtedness or to pay the proceeds of such
indebtedness to the Collateral Agent, the Collateral Agent as such
Guarantor's attorney-in-fact may do such acts and sign such documents in
such Guarantor's name and on such Guarantor's behalf as the Collateral
Agent considers necessary or desirable to effect such collection,
enforcement or payment, the Collateral Agent being hereby appointed such
Guarantor's attorney-in-fact for such purpose.
(b) Each Guarantor hereby grants to the Collateral Agent (for the
benefit of the Holders) a security interest in any indebtedness referred to
in Section 2.07(a) and in any personal property of the Company in which
such Guarantor now has or in the future acquires any right, title or
interest. Each Guarantor agrees that such security interest shall be
additional security for the Guaranteed Obligations and shall be superior to
any right of such Guarantor in such property until the Guaranteed
Obligations have been fully satisfied and performed.
2.08 Limitation on Guarantee. In any proceeding involving any state
corporate law or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if
the obligations of the Guarantors under Section 2.01 would otherwise be
held or determined to be void, invalid or unenforceable or if the claims of
the Holders in respect of such obligations would be subordinated to the
claims of any other creditors on account of the Guarantors' liability under
Section 2.01, then, notwithstanding any other provision of this Agreement
to the contrary, the amount of such liability shall, without any further
action by the Guarantors, the Holders or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable
and not subordinated to the claims of other creditors as determined in such
action or proceeding.
Article III. Covenants.
3.01 Books and Records. Each Guarantor shall: (a) keep full and
accurate books and records relating to its business; and (b) permit
representatives of the Collateral Agent, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its
books and records pertaining to financial matters, in such manner as the
Collateral Agent may request.
Article IV. Miscellaneous.
4.01 Waiver. No failure on the part of the Collateral Agent or any
Holder to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy, power or privilege, nor
shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise of
any such right, remedy, power or privilege or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
4.02 Notices. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Guarantors: Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, N.J. 07928
Attention: James Bolin
4.03 Expenses, Etc. The Guarantors jointly and severally agree to pay
or to reimburse the Collateral Agent for all costs and expenses (including
reasonable attorney's fees and expenses) that may be incurred by the
Collateral Agent in any effort to enforce any of the provisions of Article
II, or any of the obligations of the Guarantors in respect of the
Collateral or in connection with (a) the preservation of the Lien of, or
the rights of the Collateral Agent under this Agreement or (b) any actual
or attempted sale, lease, disposition, exchange, collection, compromise,
settlement or other realization in respect of, or care of, the Collateral,
including all such costs and expenses (and reasonable attorney's fees and
expenses) incurred in any bankruptcy, reorganization, workout or other
similar proceeding.
4.04 Amendments. This Agreement may be amended as to the Collateral
Agent and its respective successors and assigns, and the Guarantors may
take any action herein prohibited, or omit to perform any act required to
be performed by it, if the Guarantors shall obtain the written consent of
the Collateral Agent. This Agreement may not be waived, changed, modified,
or discharged orally, but only by an agreement in writing signed by the
party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
4.05 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
4.06 Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Loan Documents, regardless of
any investigation made by or on behalf of any party.
4.07 Agreements Superseded. Except with respect to express references
to other Loan Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the
subject matter of this Agreement.
4.08 Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement and such
exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
4.09 Captions. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
4.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
4.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
4.12 Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by the Collateral Agent in order to enforce any
right or remedy under this Agreement, each Guarantor hereby consents and
will submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. Each Guarantor hereby irrevocably waives any
objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
4.13. Service of Process. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Guarantor in
any other jurisdiction.
4.14. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
<PAGE>
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 Reich
---------------------
Name: Ilan Reich
Title:
CHAMFIELD LTD.,
a Ireland corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
INAMED DO BRASIL LTDA,
a Brazil corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN LTD.,
a Ireland corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
<PAGE>
MCGHAN MEDICAL ASIA/PACIFIC LTD.,
a Hong Kong corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL B.V.,
a Netherlands corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL BENELUX B.V.,
a Netherlands corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL BENELUX B.V.B.A,
a Belgium corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL GMBH,
a Germany corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
<PAGE>
MCGHAN MEDICAL LTD.,
a United Kingdom corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL MEXICO, S.A.
DE C.V,
a Mexico corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL S.A.,
a Spain corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL S.A.R.L.,
a France corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
MCGHAN MEDICAL S.R.L.,
a Italy corporation
By:
/s/ Ilan Reich
---------------------
Name: Ilan Reich
Title:
EXHIBIT G
INTERCREDITOR AGREEMENT
dated as of September 30, 1998
Between
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
and
SANTA BARBARA BANK & TRUST
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions.............................................................2
2. Priorities..............................................................6
3. Enforcement of Security.................................................7
4. Representations and Warranties..........................................8
5. Waiver of Marshalling and Similar Rights................................8
6. Security Notices, etc...................................................9
7. Reliance................................................................9
8. Termination.............................................................9
9. No Trust Relationship, etc..............................................9
10. Benefit of Agreement...................................................9
11. Amendment, Modification, Waiver of Documents..........................10
12. Notices, etc..........................................................10
13. GOVERNING LAW.........................................................10
14. Submission to Jurisdiction............................................11
15. Service of Process....................................................11
16. WAIVER OF JURY TRIAL..................................................11
17. Miscellaneous.........................................................11
<PAGE>
- 12 - 226848.09
226848.09
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement"), dated as of
September 30, 1998, between APPALOOSA MANAGEMENT L.P., as Collateral Agent
("Appaloosa") and SANTA BARBARA BANK & TRUST (the "Trustee").
WHEREAS:
A. Pursuant to the Note Purchase Agreement, dated as of the date
hereof (the "Note Purchase Agreement"), between the purchasers listed
on Exhibit A thereto (the "Purchasers"), Appaloosa and Inamed
Corporation, a Florida corporation (the "Company"), the Purchasers are
purchasing 10.00% Senior Secured Notes (the "Notes") from the Company
in the aggregate principal amount of $8,000,000 and Warrants to
acquire up to 590,000 shares of Common Stock with an exercise price of
$6.50 per share;
B. In connection with the purchase and sale of the Notes,
simultaneously herewith the Company is commencing an exchange offer
for all of its issued and outstanding 11.00% secured convertible notes
due January, 1999 (the "Old Notes") pursuant to which the Company will
issue 11.00% Senior Subordinated Secured Notes due March 31, 1999 or,
at the option of the Company as provided therein, September 1, 2000
(the "Exchange Notes"), (ii) Warrants to acquire up to 3,671,616
shares of Common Stock with an exercise price of $5.50 per share and
(iii) Warrants to acquire up to 500,000 shares of Common Stock with an
exercise price of $7.50 per share; and
C. The Company and the Trustee have previously entered into an
Indenture, dated as of January 2, 1996 (as amended, the "Indenture")
with respect to the Old Notes; and
D. Pursuant to the Note Purchase Agreement, Appaloosa has been
appointed Collateral Agent to act on behalf of the Holders in
connection with administering the Collateral (as hereinafter defined);
and
E. Pursuant to the Indenture, the Trustee obtained liens and
security interests in the Collateral;
F. The Collateral Agent and the Trustee have agreed that the Old
Notes are subordinate in right of payment to the Notes and the liens
and security interests of the Trustee are subject to the liens and
security interests of Appaloosa; and
G. The parties hereto have agreed to allocate priorities and
share the proceeds of the Collateral on the terms and conditions
contained herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Definitions. (a) As used herein, the following terms have the
following meanings:
"Accounts" shall have the meaning ascribed thereto in the
definition of Collateral.
"Affiliate" shall have the meanings ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of Appaloosa or any limited partners of a limited partner
of Appaloosa.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and any regulations promulgated or proposed thereunder.
"Collateral" shall mean all of each Obligor's real and personal
property and interests in real and personal property including, without
limitation, (i) all of the shares of capital stock of the Issuers now owned
as set forth in Schedule 2(a) or hereafter acquired by such Obligor
together with in each case the certificates representing the same
(collectively, the "Pledged Stock"); (ii) all shares, securities, moneys or
property representing a dividend on, or a distribution or return of capital
in respect of, any of the Pledged Stock, resulting from a split-up,
revision, reclassification or other like change of any of the Pledged Stock
or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of
the Pledged Stock; (iii) without affecting the obligations of any Obligor
under any provision prohibiting such action under the Note Purchase
Agreement, in the event of any consolidation or merger in which any Issuer
is not the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor corporation is
the Company itself) formed by or resulting from such consolidation or
merger (collectively, and together with the property described in clauses
(i) and (ii) above, the "Stock Collateral"); (iv) the Indebtedness
described in Annex I with respect to such Obligor and issued by the
obligors named therein (the "Pledged Debt"); (v) all additional
Indebtedness for money borrowed or for the deferred purchase price of
property from time to time owed to such Obligor by any obligor of the
Pledged Debt, and all additional Indebtedness in excess of $25,000 for
money borrowed or for the deferred purchase price of property from time to
time owed to such Obligor by any other Person who, after the date hereof,
becomes, as a result of any occurrence, a Subsidiary of such Obligor or an
Affiliate of such Obligor (any such Indebtedness being "Additional Debt");
(vi) all notes or other instruments evidencing the Indebtedness referred to
in clauses (iv) and (v) above; (vii) all accounts and general intangibles
(each as defined in the Uniform Commercial Code) of such Obligor
constituting a right to the payment of money, whether or not earned by
performance, including all moneys due and to become due to such Obligor in
repayment of any loans or advances, in payment for goods (including
Inventory and Equipment) sold or leased or for services rendered, in
payment of tax refunds and in payment of any guarantee of any of the
foregoing (collectively, the "Accounts"); (viii) all instruments, chattel
paper or letters of credit (each as defined in the Uniform Commercial Code)
of such Obligor evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of,
any of the Accounts; (ix) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles) of such
Obligor that are held by such Obligor for sale, lease or furnishing under a
contract of service (including to its Subsidiaries or Affiliates), that are
so leased or furnished or that constitute raw materials, work in process or
material used or consumed in its business, including all spare parts and
related supplies, all goods obtained by such Obligor in exchange for any
such goods, all products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods
(collectively, the "Inventory"); (x) all equipment (as defined in the
Uniform Commercial Code) and all other goods (including Motor Vehicles) of
such Obligor that are used or bought for use primarily in its business,
including all spare parts and related supplies, all goods obtained by such
Obligor in exchange for any such goods, all substances, if any, commingled
with or added to such goods and all upgrades and other improvements to such
goods, in each case to the extent not constituting Inventory (collectively,
the "Equipment"); (xi) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of such Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents"); (xii)
all contracts and other agreements of such Obligor relating to the sale or
other disposition of all or any part of the Inventory, Equipment or
Documents and all rights, warranties, claims and benefits of such Obligor
against any Person arising out of, relating to or in connection with all or
any part of the Inventory, Equipment or Documents of such Obligor,
including any such rights, warranties, claims or benefits against any
Person storing or transporting any such Inventory or Equipment or issuing
any such Documents; (xiii) all other accounts or general intangibles of
such Obligor not constituting Accounts, including, to the extent related to
all or any part of the other Collateral, all books, correspondence, credit
files, records, invoices, tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Obligor or any
computer bureau or service company from time to time acting for such
Obligor; (xiv) the balances from time to time in the Collateral Accounts;
(xv) all other tangible and intangible property of such Obligor, including
all Intellectual Property; and (xvi) all proceeds and products in whatever
form of all or any part of the other Collateral, including all proceeds of
insurance and all condemnation awards and all other compensation for any
Casualty Event with respect to all or any part of the other Collateral
(together with all rights to recover and proceed with respect to the same),
and all accessories to, substitutions for and replacements of all or any
part of the other Collateral.
"Collateral Accounts" shall refer to the collateral accounts
maintained by Appaloosa pursuant to the Security Documents.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b)
all renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Documents" shall have the meaning ascribed thereto in the
definition of Collateral.
"Equipment" shall have the meaning ascribed thereto in the
definition of Collateral.
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive
rights or agreements of any kind (including any stockholders' or voting
trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital
stock of any class, or partnership or other ownership interests of any type
in, such Person.
"Exchange Notes" shall have the meaning ascribed thereto in the
Recitals.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereon, and all Patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(b) all Trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and
all applications, registrations and renewals in connection therewith, (e)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Inventory" shall have the meaning ascribed thereto the
definition of Collateral.
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Company that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter
acquired by any Obligor.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Obligor" or "Obligors" shall mean each of the Company and each
the Company's Subsidiaries that, at any time, execute the Guaranty and
Security Agreement.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning ascribed thereto in the
definition of Collateral.
"Pledged Stock" shall have the meaning ascribed thereto in the
definition of Collateral.
"Security Documents" shall mean (i) the Guarantee and Security
Agreement, dated as of the date hereof, among Appaloosa and certain of the
Company's domestic Subsidiaries, providing for a first priority security
interest in such Subsidiaries' Collateral and guarantees from such
Subsidiaries, (ii) the Guarantee Agreement, dated as of the date hereof,
made by certain of the Company's foreign Subsidiaries in favor of Appaloosa
and (iii) the Security Agreement, dated as of the date hereof, between
Appaloosa and the Company, providing for a first priority security interest
in the Collateral.
"Indenture" has the meaning ascribed thereto in the Recitals.
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark
registrations and applications for trademark and service mark
registrations, (b) all renewals and extensions of any of the foregoing and
(c) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, together, in each case, with the product lines and
goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
(b) Terms defined in Article 9 of the Uniform Commercial Code
currently in effect in the State of New York and not otherwise defined
herein are used herein as therein defined.
2. Priorities. (a) Appaloosa and the Trustee hereby acknowledge
and agree that the liens and security interests of Appaloosa (for the
benefit of the holders of the Notes) in each Obligor's right, title and
interest in and to the Collateral, whether now owned or hereafter acquired
by such Obligor and whether now existing or hereafter coming into existence
shall constitute first priority liens and security interests in such
Collateral, prior in right to the liens and security interests of the
Trustee (for the benefit of the holders of the Old Notes) in the
Collateral. Appaloosa and the Trustee further acknowledge and agree that
the payment of the principal of (and premium, if any) and interest on the
Old Notes are subordinated and subject in right of payment to the prior
payment in full of the principal of (and premium, if any) and interest on
the Notes. The Trustee is hereby delivering to Appaloosa all Collateral in
its possession.
(b) The priorities set forth in this Agreement are applicable
irrespective of the order of creation, attachment or perfection of any of
such liens or security interests or any priority that might otherwise be
available to any Person under applicable law and notwithstanding any
representation or warranty of the Company to the contrary in the Note
Purchase Agreement or the Indenture.
(c) The Trustee agrees not to contest, or to bring (or
voluntarily join in) any action or proceeding for the purpose of
contesting, the validity, perfection or priority (as herein provided) of,
or seeking to avoid, Appaloosa's liens and security interests in the
Collateral, provided that nothing herein shall be deemed or construed to
prevent the Trustee from commencing an action or proceeding against each
other to assert any right or claim it may have arising under or in
connection with this Agreement.
(d) The Trustee and Appaloosa agree that they shall, at their own
expense and upon the reasonable request of the other party, duly execute
and deliver, or cause to be duly executed and delivered, to each other such
further instruments, agreements and documents (including, without
limitation, financing statements under the Code, security agreements in
respect of Intellectual Property, stock powers executed in blank and other
items necessary or desirable in connection with the perfection of liens in
the Collateral) and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of either party to carry out
more effectually the provisions and purposes of this Agreement. The Trustee
hereby agrees to amend all financing statements presently filed by it in
any location (including, without limitation, the U.S. Patent and Trademark
Office and the U.S. Copyright Office) with respect to the Collateral to
reflect Appaloosa's first priority security interest (for the benefit of
the holders of the Notes) on the Collateral.
3. Enforcement of Security. (a) Appaloosa and the Trustee may
from time to time in their sole discretion and in accordance with the terms
of their respective loan documents take or authorize the taking of such
action with regard to the protection, exercise and enforcement of their
rights in and to the Collateral as they may determine to be necessary or
appropriate; provided, however, that the Trustee will not (i) take any
action to enforce, collect on or exercise any of its rights in respect of
its liens and security interests in the Collateral or (ii) interfere with
any exercise by or on behalf of Appaloosa of its rights in respect of its
liens and security interests in the Collateral, in each case unless and
until Appaloosa has given written notice to the Trustee that the Company
has satisfied, in full, all amounts (whether representing principal,
interest, fees, expenses or otherwise) owing to the holders of the Notes in
respect of the Notes and otherwise pursuant to the Note Purchase Agreement
(and Appaloosa hereby agrees to promptly give such notification following
satisfaction of all such amounts).
(b) Except as otherwise provided in Section 3(a) of this
Agreement, Appaloosa may from time to time, at its discretion and in
accordance with its applicable loan documentation, enforce, collect on or
exercise any of its respective rights in respect of such liens and security
interests. Each right, power and remedy of any of Appaloosa or the Trustee
provided for in this Agreement, the Note Purchase Agreement, the Indenture
or any other loan document relating to any of the foregoing, whether now
existing or hereafter available at law or in equity or by statute or
otherwise, shall be cumulative and concurrent (except to the extent
otherwise provided in any such document) and shall be in addition to every
other such right, power or remedy. Except to the extent otherwise provided
in this Agreement, the Note Purchase Agreement, the Indenture or any other
loan document relating to any thereof, the exercise or beginning of the
exercise by Appaloosa or the Trustee of any one or more of such rights,
powers or remedies shall not preclude the simultaneous or later exercise of
all other such rights, powers or remedies, and no course of dealing or
failure or delay on the part of any party hereto in exercising any such
right, power or remedy shall operate as a waiver thereof or otherwise
prejudice its rights, powers or remedies.
(c) Each of Appaloosa and the Trustee agrees to hold any
Collateral received by it, in or against which a security interest or lien
may be perfected by possession, on behalf of the other as well as itself,
and upon satisfaction, in full, of its respective obligations, to turn over
to the other all such Collateral, provided that this subparagraph (c) is
intended solely to assure continuous perfection of the liens and security
interests granted under the Note Purchase Agreement and the Indenture,
respectively, and nothing in this paragraph (c) shall be deemed or
construed as altering the priorities or obligations set forth elsewhere in
this Agreement.
(d) Upon the written request of Appaloosa, the Trustee agrees to
release any Collateral specified in such request provided that Appaloosa
has previously released such Collateral.
4. Representations and Warranties. Each of Appaloosa and the
Trustee represents and warrants to each other as follows:
(a) This Agreement has been duly executed and delivered by its
duly authorized officer and constitutes its legal, valid and binding
obligation enforceable against it in accordance with the terms hereof.
(b) The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action
and do not and will not (i) violate any provision of any law, rule or
regulation having applicability to it or of its charter or articles of
association or by-laws, (ii) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other
material agreement, lease or instrument to which it is a party, or
(iii) require the consent or approval of any governmental authority or
arbitrator.
5. Waiver of Marshalling and Similar Rights. Each of the parties
hereto, to the fullest extent permitted by applicable law, waives any
requirement regarding, and agrees not to demand, request, plead or
otherwise claim the benefit of, any marshalling, appraisement, valuation or
other similar right that may otherwise be available under applicable law.
6. Security Notices, etc. Appaloosa and the Trustee each agree to
give the other written notice of their intention to exercise any remedies
in respect of any Event of Default (as defined in the Note Purchase
Agreement or the Indenture, as applicable) and copies of any written notice
of default sent to the Company and of the time and place of any public sale
or the time after which any private sale or other intended disposition is
to be made by either of them of the Collateral, and agree to use reasonable
efforts to make available to the other (but shall have no liability to the
other for failure to do so) information received by them from the Company
which the recipient considers to be of common interest with respect to the
payment of the Notes or the Collateral, provided that the Trustee's rights
to exercise any remedy is subject to Section 3(a) hereof. This Agreement is
intended, in part, to constitute a request for notice and a written notice
of a claim by each party hereto to the other of an interest in the
Collateral in accordance with the provisions of Sections 9-504 and 9-505 of
the Uniform Commercial Code.
7. Reliance. In acting in respect of this Agreement, each of
Appaloosa and the Trustee will be entitled (a) to rely on any communication
believed by it to be genuine and to have been made, sent or signed by the
person by whom it purports to have been made, sent or signed, or (b) to
rely on the advice or services or opinions and statements of any
professional advisor whose advice or services to it seem necessary,
expedient or desirable and are given or made in connection with this
Agreement, including, without limitation, the opinion of counsel (including
counsel for the Company).
8. Termination. Upon receipt by the Trustee of the notices
referred to in Section 3, this Agreement shall terminate; provided,
however, that if after termination any payment received by any party hereto
is rescinded or must otherwise be returned or paid over to or for the
account of any Obligor by such party for any reason, this Agreement shall
forthwith be reinstated until the giving of a further notice by such party
of the type referred to in Section 3.
9. No Trust Relationship, etc. This Agreement is intended to
create a relationship among independent contractors, and nothing in this
Agreement shall be deemed to create a fiduciary, agency or trust
relationship between or among any of the parties hereto.
10. Benefit of Agreement. This Agreement is solely for the
benefit of Appaloosa and the Trustee, and no other person or entity shall
be entitled to rely on, or is, intended to receive any benefit under, this
Agreement.
11. Amendment, Modification, Waiver of Documents. No provision of
the Agreement may be amended, modified or waived except by a writing signed
each of Appaloosa and the Trustee, provided that nothing in this Agreement
shall affect the right of either Appaloosa or the Trustee to amend, modify
or waive any provision of any other loan document related to this
transaction in accordance with the terms thereof. Each of Appaloosa and the
Trustee agrees to give the other written notice of any material amendment,
modification or waiver to the other loan documents related to this
transaction.
12. Notices, etc. All notices, consents, requests, instructions,
approvals, financial statements, proxy statements, reports and other
communications provided for herein shall be deemed given, if in writing and
delivered personally, by telecopy or sent by registered mail, postage
prepaid, if to:
Appaloosa, to:
Appaloosa Investment Partnership I, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. James Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
The Trustee, to:
Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administration
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF
THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
14. Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by either party hereto in order to enforce any
right or remedy under this Agreement or any of the Notes, both parties
hereby consent and will submit to the jurisdiction of any state or federal
court of competent jurisdiction sitting within the area comprising the
Southern District of New York on the date of this Agreement. Both parties
hereby irrevocably waive any objection, including, but not limited to, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
15. Service of Process. Nothing herein shall affect the right of
any either party to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against each other in
any other jurisdiction.
16. WAIVER OF JURY TRIAL. BOTH PARTIES HEREBY WAIVE ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
17. Miscellaneous. This Agreement, until its termination, shall
be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. The headings in
this Agreement are for the purpose of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
APPALOOSA MANAGEMENT L.P.
as Collateral Agent
By: Appaloosa Partners Inc.
its general partner
By: /s/ James Bolin
---------------------------
Name: James Bolin
Title: Vice President
SANTA BARBARA BANK & TRUST,
By: /s/ Christine M. Sontag
---------------------------
Name: Christine M. Sontag
Title: Ass't V.P. & Associate
General Counsel
Acknowledged as of the
date first above written:
INAMED CORPORATION
By /s/ Ilan K. Reich
-----------------------
Name: Ilan K. Reich
Title: Executive V.P.
EXHIBIT H
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 30, 1998
(this "Registration Rights Agreement"), by and between INAMED CORPORATION,
a Florida corporation (the "Company"), and the parties listed on Exhibit A
hereto (each such party, a "Purchaser" and collectively, the "Purchasers").
1. Background. The Company and the Purchasers have entered into a Note
Purchase Agreement, dated as of the date hereof (as amended, supplemented,
amended and restated, restructured or otherwise modified from time to time,
the "Note Purchase Agreement") whereby the Purchasers have purchased the
Company's $8,000,000 principal amount 10.00% Senior Secured Notes due March
31, 1999, or, at the option of the Company as provided therein, to
September 1, 2000 (the "Notes"). In order to induce the Purchasers to enter
into and consummate the transactions contemplated by the Purchase
Agreement, the Company has agreed to provide the registration rights set
forth in this Registration Rights Agreement. The execution and delivery of
this Registration Rights Agreement is a condition to the execution and
delivery of, and Closing under, the Note Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings given to them in the Purchase Agreement. As
used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
"Incidental Registration" is defined in Section 3.2.
"Participating Holders" means the holders of Registrable
Securities participating in the particular registration.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including, without
limitation, all registration, filing and applicable fees of the Commission,
stock exchange or NASD registration and filing fees and all listing fees
and fees with respect to the inclusion of securities in NASDAQ (as defined
in Section 3.3(j)), all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to
the underwriters or the Participating Holders in connection with "blue sky"
qualification of the Registrable Securities and determination of their
eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants including the expenses of "cold
comfort" letters required by or incident to such registration, all fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, all transfer taxes, and the fees and expenses of one counsel to
the Participating Holders (selected by the Requisite Percentage of
Participating Holders); provided, however, that Registration Expenses shall
exclude and the Participating Holders shall pay underwriters' fees and
underwriting discounts and commissions in respect of the Registrable
Securities being registered.
"Registrable Securities" means the Notes. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities (a) when a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, (b) when such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer under the Securities Act shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration of them under the Securities Act, (c) when such securities are
sold pursuant to Rule 144 (or similar rule adopted by the Commission) under
the Securities Act, or (d) when such securities cease to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Outstanding Holders" means the holders
of Registrable Securities who hold 25% or more of the aggregate principal
amount of the Notes that are then outstanding.
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a majority of the
Notes that are then being held by all Participating Holders.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the limitations
imposed by Sections 3.1(c), at any time and from time to time, one or more
holders of Registrable Securities representing the Requisite Percentage of
Outstanding Holders shall have the right to require the Company to file a
registration statement under the Securities Act covering all or any part of
their respective Registrable Securities, by delivering a written request
therefor to the Company specifying the number and amount of Registrable
Securities and the intended method of distribution thereof. Any such
request pursuant to this Section 3.1(a) is referred to herein as a
"Requested Registration." The Company shall give prompt written notice of
each Requested Registration to all other holders of record of Registrable
Securities, and thereupon the Company shall use its best efforts to effect
the registration under the Securities Act so as to permit promptly the
sale, in accordance with the intended method of distribution, of the
Registrable Securities which the Company has been so requested to register
in the Requested Registration and all other Registrable Securities which
the Company has been requested to register by the holders thereof by
written request given to the Company within 30 days after the giving of
such written notice by the Company.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 3.1 in connection with
an underwritten offering by one or more Participating Holders of
Registrable Securities, securities other than Registrable Securities shall
not be included among the securities covered by such registration to the
extent that the managing underwriter of such underwritten offering shall
inform the Company by letter of its belief that the inclusion of such other
securities would materially adversely affect such offering (including,
without limitation, the pricing of the offering).
(c) Limitations on Requested Registrations; Expenses. The
rights of holders of Registrable Securities to request Requested
Registrations pursuant to Section 3.1(a) are subject to the following
limitations: (i) the Company shall not be obligated to effect a Requested
Registration having an aggregate anticipated offering price of less than
U.S. $1,000,000 unless such offering shall cover all remaining Registrable
Securities; (ii) the Company shall not be obligated to effect a Requested
Registration within six months after the effective date of any other
registration of securities (other than pursuant to a registration on Form
S-8 or any successor or similar form which is then in effect); and (iii)
the Company will pay all Registration Expenses only in connection with the
first three Requested Registrations of Registrable Securities pursuant to
this Section 3.1 that have become effective under the Securities Act.
(d) Registration Statement Form. Registrations under this
Section 3.1 shall be on Form S-1, Form S-3 or any successor forms, if
permitted, or such appropriate registration form of the Commission as shall
be selected by the Company and as shall be reasonably acceptable to the
Requisite Percentage of Participating Holders. The Company agrees to
include in any such registration statement all information which, in the
opinion of counsel to the Participating Holders and counsel to the Company,
is required to be included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been
effected (including for purposes of paragraph (c) of this Section 3.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 90 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other Governmental Authority or court for any reason
not attributable to the Participating Holders and has not thereafter become
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure
on the part of the Participating Holders.
(f) Selection of Underwriters. The managing underwriter or
underwriters of each underwritten offering of the Registrable Securities
registered under this Section 3.1 shall be selected by the Requisite
Percentage of Participating Holders (and shall be reasonably acceptable to
the Company).
(g) Cutbacks in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in
writing (with a copy to each Participating Holder) that, in its opinion,
the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the Requisite Percentage of Participating Holders, the
Company will include in such registration, to the extent of the number
which the Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration, pro rata among
the Participating Holders requesting such registration in accordance with
the principal amount of Notes held by each such Participating Holder so
requested to be registered, and any securities of the Company included in
such registration pursuant to Section 3.1(b) shall be reduced
proportionately.
(h) Postponement. The Company shall be entitled once in any
six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Company
determines, in its reasonable judgment, that such registration and offering
would interfere with any financing, corporate reorganization or other
material transaction or development involving the Company or any subsidiary
or would require premature disclosure thereof, and promptly gives the
holders of Registrable Securities requesting registration thereof pursuant
to this Section 3.1 written notice of such determination, containing a
statement of the reasons for such postponement and an approximation of the
anticipated delay. If the Company shall so postpone the filing of a
registration statement, the Participating Holders representing the
Requisite Percentage of Participating Holders shall have the right to
withdraw the request for registration by giving written notice to the
Company within 20 days after receipt of the notice of postponement and, in
the event of such withdrawal, such request shall not be counted toward the
number of Requested Registrations (including for purposes of paragraph (c)
of this Section 3.1).
(i) Holder's Right to Withdraw. The Requisite Percentage of
Participating Holders shall have the right to withdraw the request of the
Requisite Percentage of Outstanding Holders for registration pursuant to
Section 3.1 at any time by giving written notice to the Company of its
request to withdraw and such request (if made before the filing of the
registration statement with the Securities and Exchange Commission) shall
not be counted toward the number of Requested Registrations (including for
purposes of paragraph (c) of this Section 3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the Company
proposes or is required to register any of its securities under the
Securities Act (other than pursuant to registrations on such form or
similar form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan) (an "Incidental
Registration"), the Company will give prompt written notice to all holders
of record of Registrable Securities of its intention to so register its
securities and of such holders' rights under this Section 3.2. Upon the
written request of any holder of Registrable Securities made within 20 days
following the receipt of any such written notice (which request shall
specify the maximum number of Registrable Securities intended to be
disposed of by such holder and the intended method of distribution
thereof), the Company will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company
has been so requested to register by the holders thereof together with any
other securities the Company is obligated to register pursuant to
incidental registration rights of other security holders of the Company. No
registration effected under this Section 3.2 shall relieve the Company of
its obligation to effect any Requested Registration under Section 3.1.
(b) Abandonment or Delay. If, at any time after the Company
has giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination and its reasons
therefor to all holders of record of Registrable Securities and (i) in the
case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of any holder or holders of Registrable Securities entitled
to do so to request that such registration be effected as a registration
under Section 3.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities.
(c) Holder's Right to Withdraw. Each holder of Registrable
Securities shall have the right to withdraw its request for inclusion of
its Registrable Securities in any registration statement pursuant to this
Section 3.2 at any time by giving written notice to the Company of its
request to withdraw.
(d) Unlimited Number of Registrations; Expenses. There is no
limitation on the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 3.2. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the
Company by letter of its belief that the number of Registrable Securities
requested to be included in such registration would materially adversely
affect such offering, then the Company will include in such registration,
first, the securities proposed by the Company to be sold for its own
account, second, if applicable, the securities proposed by the Company to
be sold for the account of a holder of securities who has made a demand for
registration pursuant to a section of a registration rights agreement
between such holder and the Company analogous to Section 3.1 hereof, and
third, the Registrable Securities and all other securities of the Company
to be included in such registration to the extent of the number and type
which the Company is so advised can be sold in (or during the time of) such
offering, pro rata among the Participating Holders and such other holders
requesting such registration in accordance with the principal amount of
Notes held by each Participating Holder and each such other holder so
requested to be registered.
3.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 3.1
or 3.2 hereof, the Company will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required by the
Commission to be filed therewith) and thereafter use its best efforts to
cause such registration statement to become effective; provided, however,
that before filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements under
securities or blue sky laws of any jurisdiction, the Company shall furnish
such documents to the Participating Holders, their counsel, and each
underwriter, if any, participating in the offering of the Registrable
Securities and its counsel; and provided, further, however, that the
Company may discontinue any registration of its securities which are not
Registrable Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify each Participating Holder of the Commission's
requests for amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement for such period as shall be required for the
disposition of all of such Registrable Securities, provided, that such
period need not exceed 90 days;
(c) furnish, without charge, to each Participating Holder
such number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such Participating Holder may reasonably
request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the
Participating Holders shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other action which may
be reasonably necessary or advisable to enable such Participating Holders
to consummate the disposition in such jurisdictions of the securities to be
sold by such Participating Holders, except that the Company shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state or foreign governmental
agencies or authorities as may be necessary in the opinion of
counsel to the Company and counsel to the Participating Holders
to consummate the disposition of such Registrable Securities;
(f) furnish to each Participating Holder and each
underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of
(i) an opinion of outside counsel (or inside counsel if
satisfactory to each underwriter) for the Company, and
(ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's
financial statements included or incorporated by reference
in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters, and, in
the case of the accountants' comfort letter, such other financial
matters, as the Requisite Percentage of Participating Holders, or
the underwriters, may reasonably request;
(g) promptly notify each Participating Holder and each
managing underwriter, if any, participating in the offering of
the securities covered by such registration statement (i) when
such registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; (v) at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and in the case of this
clause (v), at the request of any Participating Holder, promptly
prepare and furnish to it and each managing underwriter, if any,
participating in the offering of the Registrable Securities a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and (vi)
at any time when the representations and warranties of the
Company contemplated by Section 3.4(a) hereof cease to be true
and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and promptly furnish to each such
Participating Holder a copy of any amendment or supplement to
such registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) use its best efforts to cause all Registrable Securities
covered by such registration statement to be listed on a national
securities exchange or to secure designation of all such
Registrable Securities as a National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") "national
market system security" within the meaning of Rule 11Aa2-1 of the
Commission;
(k) deliver promptly to counsel to the Participating Holders
and each underwriter, if any, participating in the offering of
the Registrable Securities, copies of all correspondence between
the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its
staff with respect to such registration statement;
(1) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration
statement;
(m) provide a CUSIP number for all Registrable Securities,
no later than the effective date of the registration statement;
and
(n) make available its employees and personnel and otherwise
provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses) in their marketing
of Registrable Securities.
The Company may require each Participating Holder as to the Registrable
Securities of whom any registration is being effected to furnish the Company
such information regarding such holder and the distribution of such
securities as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in subsection (g) (iii) or (v) of this Section 3.3, the
Participating Holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating
to such Registrable Securities until, in the case of subsection (g)(iii) of
this Section 3.3, such stop order is removed or proceedings therefor
terminated, and, in the case of subsection (g)(v) of this Section 3.3, such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subsection (g)(v) of this Section 3.3 and, if so directed
by the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such holder's possession,
of the prospectus relating to such Registrable Securities current at the
time of receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by Participating Holders
pursuant to a registration requested under Section 3.1, the Company will
use its best efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, each such holder and the
underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to
the extent provided in Section 3.6 hereof. The Participating Holders will
cooperate with the Company in the negotiation of the underwriting agreement
and will give consideration to the reasonable suggestions of the Company
regarding the form thereof. The Participating Holders shall be parties to
such underwriting agreement and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of the Participating Holders and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of the Participating Holders. No Participating Holder shall
be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's ownership of and title to
the Registrable Securities, such holder's intended method of distribution
and any other representations required by law, and any liability of the
Participating Holder to any underwriter or other person under such
underwriting agreement shall be limited to liability arising from
misstatements in or omissions from its representations and warranties and
shall be limited to an amount equal to the net proceeds that the
Participating Holder derives from such registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any Participating Holder, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered
and sold by such Participating Holder among the securities of the Company
to be distributed by such underwriters. The Participating Holders shall be
parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Participating Holders and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Participating Holders. No Participating Holder shall be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Participating
Holder to any underwriter or other person under such underwriting agreement
shall be limited to liability arising from misstatements in or omissions
from its representations and warranties and shall be limited to an amount
equal to the net proceeds that the Participating Holder derives from such
registration.
3.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Participating
Holders, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and, to the extent practicable, each amendment thereof or
supplement thereto, and give each of them such access to its books and
records and such opportunities to discuss the business of the Company with
its officers and employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitting by law, each Participating Holder, its directors,
officers, partners, attorneys, agents and affiliates or general and limited
partners (and the directors, officers, employees, stockholders and
affiliates thereof), and each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such Participating Holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened) to which such Participating
Holder or any such director, officer, partner, agent or affiliate or
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities,
joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances in which they were made not misleading, and the Company
will reimburse such Participating Holder and each such director, officer,
partner, agent or affiliate, or general or limited partner, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on
behalf of such Participating Holder or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; and
provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or
give a copy of the final prospectus, as the same may be then supplemented
or amended, to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force regardless of any investigation made
by or on behalf of such Participating Holder or any such director, officer,
partner, attorney, agent or affiliate or controlling Person and shall
survive the transfer of such securities by such Participating Holder.
(b) Indemnification by the Participating Holders. As a
condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking satisfactory to
it from the Participating Holders to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subsection (a) of this
Section 3.6) the Company, each director and officer of the Company, and
each other Person, if any, who controls the Company within the meaning of
the Securities Act, with respect to any statement or alleged statement in
or omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only if such statement
or alleged statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by such Participating Holder
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability
of such indemnifying party under this Section 3.6(b) shall be limited to
the amount of net proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling person and shall
survive the transfer of such securities by the Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section
3.6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action or proceeding; provided, however, that the
failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subsections of this Section 3.6, except to the extent that the indemnifying
party is materially prejudiced by such failure to give notice, and shall
not relieve the indemnifying party from any liability which it may have to
the indemnified party otherwise than under this Section 3.6. In case any
such action or proceeding is brought against an indemnified party, the
indemnifying party shall be entitled to participate therein and, unless in
the opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in
respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action or proceeding include
both the indemnified party and the indemnifying party and if in the opinion
of outside counsel to the indemnified party there may be legal defenses
available to such indemnified party and/or other indemnified parties which
are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to defend such action or proceeding on behalf of such
indemnified party or parties, provided, further, that the indemnifying
party shall be obligated to pay for only one counsel for all indemnified
parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation (unless the first proviso in the
preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in
this Section 3.6 shall for any reason be held by a court to be unavailable
to an indemnified party under subsection (a) or (b) hereof in respect of
any loss, claim, damage or liability, or any action in respect thereof,
then, in lieu of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party under subsection
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the
Participating Holders which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as shall be appropriate
to reflect not only the relative fault but also the relative benefits
received by the Company and the Participating Holders from the offering of
the securities covered by such registration statement as well as any other
relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 3.6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Participating Holders' obligations to contribute as
provided in this subsection (d) are several and not joint in proportion to
the relative value of their respective Registrable Securities covered by
such registration statement. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any
action or claim effected without such Person's consent, which consent shall
not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall
be required to contribute any amount in excess of the net proceeds received
by such party from the sale of the Registrable Securities in the offering
to which the losses, claims, damages or liabilities of the indemnified
parties relate.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 3.6
(with appropriate modifications) shall be given by the Company and each
Participating Holder with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 3.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by any of the Participating Holders.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
3.7 Certain Rights of the Purchasers If Named in a Registration
Statement. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to any Purchaser by name or otherwise as the holder of
any securities of the Company, then such Purchaser shall have the right to
require (i) the insertion therein of language, in form and substance
satisfactory to such Purchaser, to the effect that the holding by such
Purchaser of such securities does not necessarily make such Purchaser a
"controlling person" of the Company within the meaning of the Securities
Act and is not to be construed as a recommendation by such Purchaser of the
investment quality of the Company's debt or equity securities covered
thereby and that such holding does not imply that such Purchaser will
assist in meeting any future financial requirements of the Company or (ii)
in the event that such reference to such Purchaser by name or otherwise is
not, in the reasonable judgment of such Purchaser as advised by its
counsel, required by the Securities Act or any of the rules and regulations
promulgated thereunder, or any state securities laws of any jurisdiction,
the deletion of the reference to such Purchaser.
3.8 Unlegended Notes. In connection with the offering of any
Registrable Securities registered pursuant to this Article 3, the Company
shall (i) facilitate the timely preparation and delivery to Participating
Holders and the underwriters, if any, participating in such offering, of
unlegended Notes representing ownership of such Registrable Securities
being sold in such denominations and registered in such names as requested
by such Participating Holders or such underwriters and (ii) instruct any
transfer agent and registrar of such Registrable Securities to release any
stop transfer orders with respect to any such Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The
Company hereby agrees that, if it shall previously have received a request
for registration pursuant to Section 3.1 or 3.2 hereof, and if such
previous registration shall not have been withdrawn or abandoned, (i) the
Company shall not effect any public or private offer, sale or other
distribution of its securities or effect any registration of any of its
equity securities under the Securities Act (subject to the provisions of
Section 3.2 hereof) (other than a registration on Form S-8 or any successor
or similar form which is then in effect), whether or not for sale for its
own account, until a period of 90 days (or such shorter period as the
Requisite Majority of Participating Holders shall agree) shall have elapsed
after the effective date of such previous registration (and the Company
shall so provide in any registration rights agreements hereafter entered
into with respect to any of its securities); and (ii) the Company shall use
its best efforts to cause each holder of its equity securities purchased
from the Company at any time after the date of this Agreement other than in
a public offering to agree not to effect any public sale or distribution of
any such securities during such period, including a sale pursuant to Rule
144 under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed
to create an independent obligation on the part of any Participating Holder
to sell any Registrable Securities pursuant to any effective registration
statement.
4. Rule 144. The Company shall take all actions reasonably necessary
to enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144, or (b) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the
generality of the foregoing, filing on a timely basis all reports required
to be filed by the Exchange Act. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of (i) the Company and (ii) the holders of at least 51% in
aggregate principal amount of the outstanding Notes. The Company may take
any action herein prohibited, or omit to perform any act herein required to
be performed by it, in each case only if the Company shall have obtained
the written consent to such action or omission to act, of holders of at
least 51% in aggregate principal amount of the outstanding Notes. Each
holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5, whether or not
such Registrable Securities shall have been marked to indicate such
consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects to be treated as the holder of such Registrable
Securities, the Company may require assurances reasonably satisfactory to
it of such owner's beneficial ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or
by a reputable overnight courier, and shall be addressed as follows:
(a) if to any Purchaser, addressed to it in the manner set forth
in the Purchase Agreement, or at such other address as it shall have
furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address,
then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth in
the Purchase Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by such
Purchaser to any one or more transferees or distributees of all or part of
such Purchaser's Registrable Securities. A holder of Registrable Securities
shall be permitted, in connection with a transfer or disposition of
Registrable Securities, to impose conditions or constraints on the ability
of the transferee, as a holder of Registrable Securities, to request a
registration pursuant to Section 3.1 and shall provide the Company with
copies of such conditions or constraints and the identity of such
transferees.
9. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions
thereof), the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other
available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Exhibit B hereto, the Company has
not previously entered into any agreement with respect to its securities
granting any registration rights to any Person other than the registration
rights granted pursuant to this Agreement. Except as set forth on Exhibit C
hereto, the rights granted to the holders of Registrable Securities
hereunder do not in any way conflict with and are not inconsistent with any
other agreements to which the Company is a party or by which it is bound.
The Company further agrees that if any other registration rights agreement
entered into after the date of this Agreement with respect to any of its
securities contains terms which are more favorable to, or less restrictive
on, the other party thereto than the terms and conditions contained in this
Agreement are (insofar as they are applicable) to the Purchasers, then the
terms and conditions of this Agreement shall immediately be deemed to have
been amended without further action by the Company or any of the holders of
Registrable Securities so that such holders shall be entitled to the
benefit of any such more favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New
York, without regard to the conflicts of laws principles thereof. Each of
the parties hereto hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State of New York
and the United States of America located in New York, New York for any
action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts). Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New
York or the United States of America located in New York, New York, and
hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum. The Company
hereby waives any right it may have to a trial by jury in respect of any
action, proceeding or litigation directly or indirectly arising out of,
under or in connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
INAMED CORPORATION
By: /s/ Ilan K. Reich
----------------------------
Name: Ilan K. Reich
Title: Executive V.P.
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its
General Partner
By: /s/ James Bolin
----------------------------
Name: James Bolin
Title: Vice President
Palomino Fund Ltd.
-------------------------------
By: Appaloosa Management L.P.,
its investment advisor
By: Appaloosa Partners Inc.,
its general partner
By: /s/ James Bolin
------------------------------
Name: James Bolin
Title: Vice President
Exhibit I
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
-----------------------------------
This third amendment, dated as of September 30, 1998, amends the
Rights Agreement dated as of June 2, 1997, as amended by Amendment No. 1
dated as of June 13, 1997 and Amendment No. 2 dated as of July 2, 1997 (the
"Rights Agreement") between Inamed Corporation (the "Company") and U.S.
Stock Transfer Corporation, as Rights Agent (the "Rights Agent"). Terms
defined in the Rights Agreement and not otherwise defined herein are used
herein as so defined.
W I T N E S S E T H
-------------------
WHEREAS, on May 23, 1997, the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to
the provisions of the Rights Agreement, one share of the Company's Common
Stock; and
WHEREAS, the Board of Directors of the Company authorized and declared
a dividend distribution of one Right for every share of Common Stock of the
Company outstanding on June 13, 1997 and authorized the issuance of one
Right (subject to certain adjustments) for each share of Common Stock of
the Company issued between the Record Date and the Distribution Date; and
WHEREAS, simultaneously herewith the Company is entering into
financing transactions with Appaloosa Management, L.P., pursuant to which
the Company has agreed to amend certain provisions of the Rights Agreement;
and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board of
Directors now unanimously desire to amend certain provisions of the Rights
Agreement in order to supplement certain provisions therein;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(a) is hereby amended by deleting Section 1(a) in its
entirety and substituting the following therefor:
"(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, after the date hereof, shall become
the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan.
Notwithstanding anything in this Agreement that might
otherwise be deemed to the contrary; (i) no Person shall
become an "Acquiring Person" as the result of an acquisition
of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or
more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person"; (ii) if the Board of
Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person" has
become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring
Person," then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement; (iii)
no officer or director of the Company who or which, together
with all Affiliates of such Person, is the Beneficial Owner
of 15% or more of the outstanding shares of Common Stock of
the Company as of the Record Date shall be deemed an
"Acquiring Person" for any purpose of this Agreement,
provided, that such officer or director together with his
Affiliates does not become the Beneficial Owner of 20% or
more of the outstanding shares of Common Stock of the
Company, and provided further that such officer or director
need not continue in such capacity after the Record Date;
and (iv) Appaloosa Management L.P., together with its
Affiliates and Associates, (collectively, "Appaloosa") shall
not be deemed an "Acquiring Person" for any purpose of this
Agreement with respect to Beneficial Ownership of 15% or
more of the outstanding shares of the Company's Common Stock
so long as Appaloosa does not become the Beneficial Owner of
Common Shares in an amount in excess of the Appaloosa
Threshold. For purposes of this Agreement, the Appaloosa
Threshold as at any date shall mean an amount equal to the
sum of (A) all Common Shares beneficially owned by Appaloosa
as of the date hereof (the "Grandfather Date"), including
any Common Shares which may be deemed to be Beneficially
Owned by Appaloosa through Warrants or other similar rights
held by Appaloosa as of the Grandfather Date, plus (B) all
Common Shares in which Appaloosa may acquire beneficial
ownership after the Grandfather Date (I) pursuant to the
Note Purchase Agreement (the "Note Purchase Agreement"),
dated as of September 30, 1998, among the Company, the
Purchasers listed on Exhibit A thereto and Appaloosa, (II)
pursuant to or in connection with the Exchange Offer (as
defined in the Note Purchase Agreement) as amended or
modified from time to time after the date hereof or (III)
through the exercise of preemptive or similar rights held by
Appaloosa. The provisions of clause (iv) above shall not
apply to (x) any third party transferees not Affiliated with
Appaloosa who may acquire any securities from Appaloosa, or
(y) any Common Shares in which Appaloosa may acquire
beneficial ownership of after the Grandfather Date other
than as described under (B) of clause (iv).
2. This Amendment may be executed in any number of
counterparts, and each of such counterparts shall for all
purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, this Amendment No. 3 has been signed to be
effective as of the close of business on this 30th day of September, 1998
by authorized representatives of each of the Company and the Rights Agent.
INAMED CORPORATION
By: /s/ Ilan K. Reich
-----------------------------------
Ilan K. Reich
Executive Vice President
U.S. STOCK TRANSFER CORPORATION
By: /s/ Richard C. Brown
-----------------------------------
Richard C. Brown
Vice President
