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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM T-3
FOR APPLICATION FOR QUALIFICATION OF INDENTURE UNDER
THE TRUST INDENTURE ACT OF 1939
INAMED CORPORATION
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(NAME OF APPLICANT)
3800 Howard Hughes Boulevard, Suite 900, Las Vegas, Nevada 89109
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
Senior Subordinated Secured Notes due $19,605,715
1999
Approximate date of proposed public offering: NOVEMBER 5, 1998
Name and Address of Agent for Service: Ilan K. Reich, INAMED Corporation, 3800
Howard Hughes Parkway, Suite 900, Las Vegas, Nevada 89101.
The applicant hereby amendes this application for qualification on such date or
dates as may be necessary to delay its effectiveness until (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this application, or (ii) such date as the Commission, acting pursuant
to Section 307(c) of the Act, may determine upon the written request of the
applicant.
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GENERAL
1. GENERAL INFORMATION. Furnish the following as to the applicant:
(a) Form of organization: A corporation.
(b) State or other sovereign power under the laws of which organized:
Florida
2. SECURITIES ACT EXEMPTION APPLICABLE.
Inamed Corporation (the "Company"), a Florida corporation, is relying
upon the exemption from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), provided by Section 3(a)(9) thereunder,
in connection with the Company's exchange offer as described herein (the
"Exchange Offer"). The Exchange Offer is being made by the Company pursuant to
its Securities Exchange Agreement dated October 7, 1998 ("Exchange Agreement")
and the related documentation, and consists of an offer to exchange for all of
its issued and outstanding 11% Secured Convertible Notes due January 1999 (the
"Old Notes") (i) the Company's 11% Senior Subordinated Secured Notes due March
31, 1999 or, at the option of the Company as provided therein, September 1, 2000
(the "Notes"), (ii) warrants to acquire up to 3,671,616 shares of the Company's
common stock with an exercise price of $5.50 per share and (iii) warrants to
acquire up to 500,000 shares of the Company's common stock with an exercise
price of $7.50 per share (together with the warrants described in clause (ii),
the "Warrants").
There have not been any sales of securities of the same series as the
Notes or the Old Notes by the Company, nor are there any such other sales
planned by or through an underwriter at or about the same time as the Exchange
Offer.
No consideration has been or is to be given to any person in connection
with the Exchange Offer.
There are no cash payments made or to be made by any holder of the
outstanding Old Notes in connection with the Exchange Offer
AFFILIATIONS
3. AFFILIATES. Furnish a list or diagram of all affiliates of the applicant and
indicate the respective percentages of voting securities or other bases of
control.
The following is a list of direct subsidiaries of the Company. The Company has
no indirect subsidiaries. Other than as set forth below, the Company has no
other affiliates. The Company owns 100% of the voting stock of each of the
subsidiaries listed.
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Biodermis Corporation
Biodermis Ltd.
BioEnterics Corporation
BioEnterics, Latin America SA de CV
BioEnterics, Ltd.
Bioplexus Corporation
Bioplexus Ltd.
Chamfield Ltd.
CUI Corporation
Flowmatrix Corporation
Inamed Development Company
Inamed do Brasil Ltda.
Inamed Japan
IMG Japan Inc.
McGhan Ltd.
McGhan Medical Asia Pacific Ltd.
McGhan Medical Benelux B.V.
McGhan Medical Benelux B.V.B.A.
McGhan Medical B.V.
McGhan Medical Corporation
McGhan Medical GmbH
McGhan Medical Ltd.
McGhan Medical Mexico, SA de CV
McGhan Medical S.A.
McGhan Medical S.A.R.L.
McGhan Medical S.R.L.
Medisyn Technologies Corp.
Medisyn Technologies Ltd.
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MANAGEMENT AND CONTROL
4. DIRECTORS AND EXECUTIVE OFFICERS. List the names and complete mailing
addresses of all directors and executive officers of the applicant and
all persons chosen to become directors and executive officers. Indicate
all offices with the applicant held or to be held by each person named.
The names of the directors and executive officers of the Company are set
forth below. Unless otherwise set forth, the mailing address of each of the
directors and executive officers is: 3800 Howard Hughes Parkway, Suite 900, Las
Vegas, Nevada 89101.
NAME TITLE
Richard G. Babbitt Chairman of the Board, President and Chief
Executive Officer
Ilan K. Reich Executive Vice President and Director
Tom K. Larson, Jr. Vice President, Finance and Administration,
Chief Financial Officer
Jeffrey J. Barber Executive Vice President
Harrison E. Bull, Esq.(1) Director
Jim J. McGhan(2) Director
Richard Wm. Talley(3) Director
John E. Williams, M.D.(4) Director
(1) The address for Mr. Bull is c/o Bull, Cohn and Associates, 1836 State
Street, Santa Barbara, California 93101.
(2) The address for Mr. McGhan is 1865 Meiners Road, Ojai, California 93023.
(3) The address for Mr. Talley is c/o Talley, King & Co., Inc. 19200 Von Karman,
Suite 850, Irvine, California 92612.
(4) The address for Dr. Williams is Post Office Box 5509, Palm Springs,
California 92263.
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5. PRINCIPAL OWNERS OF VOTING SECURITIES. Furnish the following information as
to each person owning 10 percent or more of the voting securities of the
applicant.
The following table sets forth certain information, as of October 9, 1998,
with respect to the beneficial ownership of the outstanding shares of common
stock of the Company held by each person or entity who, insofar as the Company
has been able to ascertain, beneficially owned more than ten percent of the
outstanding common stock of the Company. Unless otherwise indicated in the
footnotes following the table and subject to community property laws where
applicable, the person(s) as to whom the information is given had sole voting
and investment power over the shares of common stock shown as beneficially
owned.
<TABLE>
<CAPTION>
PERCENTAGE OF
TITLE OF VOTING
NAME AND COMPLETE MAILING CLASS SECURITIES
ADDRESS OWNED AMOUNT OWNED OWNED(1)
10% HOLDERS
<S> <C> <C> <C>
Appaloosa Management LP Common 5,172,867(2) 32.8%
26 Main Street Stock
Chatham, New Jersey 07928
Donald K. McGhan Common 2,189,668(3) 19.16%
3800 Howard Hughes Parkway Stock
Suite 1800
Las Vegas, Nevada 89109
Oracle Partners, L.P. Common 1,195,891(4) 9.53%
712 Fifth Avenue, 45th Floor Stock
New York, New York 10019
</TABLE>
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(1) The percentages are calculated on the basis of the amount of
outstanding securities, plus securities underlying each holder's
options, warrants and securities convertible into Common Stock which
have been issued and are exercisable within 60 days hereof.
(2) Includes 2,660,344 shares of which Appaloosa Management, L.P. has
beneficial ownership by reason of the ownership of $14,205,714
aggregate principal amount of the Company's Old Notes. Also includes
1,098,214 shares of Common Stock issuable upon exercise of warrants to
purchase Common Stock at $7.50 per share and 579,510 shares of Common
Stock issuable upon exercise of warrants to purchase Common Stock at
$6.50 per share. In the event Appaloosa Management L.P. participates in
the Exchange Offer, its Old Notes will be exchanged for Notes, together
with Warrants to acquire an aggregate of 3,022,628 shares of Common
Stock.
(3) Includes 207,310 shares of Common Stock owned by Shirley M. McGhan, the
wife of Donald K. McGhan, to which Mr. McGhan disclaims beneficial
ownership; 107,985 shares owned by a corporation of which Mr. McGhan is
the chairman; 8,036 shares owned by a limited partnership of which Mr.
McGhan is the general partner; and 173,453 shares owned by a limited
liability corporation of which Mr. McGhan is the managing member. Also
includes 8,571 shares of Common Stock issuable upon exercise of
warrants to purchase Common Stock at $7.50 per share. Does not include
a four-year warrant to purchase 260,000 shares of Common Stock which is
not exercisable if and to the extent that it would result in Mr. McGhan
and his affiliates becoming the beneficial owners of more than 20% of
the outstanding Common Stock at that time. Pursuant to a letter
agreement dated July 8, 1998, Mr. McGhan agreed for a five-year period
to comply with various traditional "standstill" provisions, including,
among others, to vote all of the Common Stock owned by him in
proportion to the votes (or abstentions) of all other stockholders on
any matter submitted to a vote or consent of stockholders, except for a
vote on any proposed business combination, recapitalization or other
similar transaction.
(4) Includes 749,091 shares of which Oracle Partners L.P. has beneficial
ownership by reason of the ownership of $4,000,000 aggregate principal
amount of the Company's Old Notes. Also includes 375,000 shares of
Common Stock issuable upon exercise of warrants to purchase Common
Stock at $7.50 per share. In the event Oracle Partners L.P.
participates in the Exchange Offer, its Old Notes will be exchanged for
Notes, together with Warrants to acquire an aggregate of 851,102 shares
of Common Stock.
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UNDERWRITERS
6. UNDERWRITERS. Give the name and complete mailing address of (a) each person
who, within three years prior to the date of filing the application, acted as an
underwriter of any securities of the obligor which were outstanding on the date
of filing the application, and (b) each proposed principal underwriter of the
securities proposed to be offered. As to each person specified in (a), give the
title of each class of securities underwritten.
(a) There have been no underwriters of any securities of the obligor which
were outstanding on the date of filing the application within the last
three years.
(b) There are no underwriters of the securities proposed to be offered in
the Exchange Offer.
CAPITAL SECURITIES
7. CAPITALIZATION. (a) Furnish the following information as to each authorized
class of securities of the applicant.
(i) Equity Securities as of October 9, 1998:
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
Common Stock, $.01 par 20,000,000 11,420,363
value
(ii) Debt Securities (after giving effect to the Exchange Offer assuming 100%
participation)
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
Senior Subordinated Secured 19,605,715 19,605,715
Notes due March 31, 1999,
or, at the option of the
Company as provided
therein, September 1, 2000
11% Secured Convertible $35,000,000 0
Notes due January, 1999
10% Senior Secured Notes $8,000,000 $8,000,000
due March 31, 1999 or, at
the option of the Company
as provided therein,
September 1, 2000
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(b) Give a brief outline of the voting rights of each class of voting securities
referred to in paragraph (a) above.
With respect to the voting rights of the common stock of the Company,
each holder of a share of such common stock is entitled to one vote on all
matters on which such stockholders are entitled to vote.
INDENTURE SECURITIES
8. ANALYSIS OF INDENTURE PROVISIONS. Insert at this point the analysis of
indenture provisions required under Section 305(a)(2) of the Trust Indenture Act
of 1939, as amended.
For purposes of this Section 8, the "Indenture" shall refer to the
Indenture pursuant to which the Notes shall be issued, among the Company and
Santa Barbara Bank & Trust, as Trustee (the "Trustee"). Other capitalized but
otherwise undefined terms shall have the meanings ascribed thereto in the
Indenture.
(a) EVENTS OF DEFAULT
An Event of Default with respect to the Notes under the
Indenture include 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, the Indenture, the Notes, or the other documents executed and
delivered in connection with the Indenture (including any Transaction Document)
and to which the Company or any of its Subsidiaries is a party (other than a
covenant or a default in whose performance is elsewhere in this Section
specifically dealt with), which default continues for 5 days following the
Company's receipt of notice (or, if the Company fails to provide notice pursuant
to the Indenture, such default shall be immediate), or any representation or
warranty made in any document executed and delivered in connection with the
Indenture (including any Transaction
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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
Trustee 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 Trustee believes would have a Material
Adverse Effect on the Company or the Holders' 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 the Indenture (including any
Transaction Document) to be invalid or unenforceable and such judgment remains
unstayed and in effect for a period of 20 consecutive days; or any Credit Party
shall assert, in any pleading filed in such a court,
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that any of the documents delivered in connection with the Indenture are invalid
or unenforceable; or
(i) any provision of any Transaction Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Transaction Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Transaction Documents has ceased to
be or otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Transaction Document shall
cease to be a valid and perfected security interest or Lien in any of the
Collateral purported to be covered thereby; or
(j) any Credit Party defaults in the payment of any amounts in excess
of $25,000 due pursuant to the terms of any document executed and delivered by
the Company or such Subsidiary in connection with the Indenture (other than
payments elsewhere in this Section specifically dealt with).
If any Event of Default shall have occurred and be continuing,
the Holders of at least a majority in principal amount of then Outstanding Notes
may, by notice to the Company, declare the entire unpaid principal amount of the
Notes, plus all accrued and unpaid interest thereon to be immediately due and
payable, and upon such declaration all of such amount shall be immediately due
and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived, anything in the Notes or in the
Indenture to the contrary notwithstanding; provided that if an Event of Default
under certain clauses of the Indenture shall have occurred, the entire unpaid
principal amount of the Notes, plus all accrued and unpaid interest thereon
shall immediately become due and payable, without any declaration and without
presentment, demand, protest or further notice, all of which are hereby waived,
anything in the Notes or the Indenture to the contrary notwithstanding.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal or interest
on the Notes or to enforce the performance of any provision of the Notes, the
Guarantee and Security Agreements, the Indenture or the other Documents, or to
realize upon any Collateral. The Trustee may maintain a proceeding even if it
does not possess any of the Notes or does not produce any of them in the
proceeding.
The Holders of a majority in principal amount of Outstanding
Notes by notice to the Trustee may waive an existing Default or Event of Default
and its consequences except a continuing Default or Event of Default in the
payment of the principal of or interest on any Note or in respect of a covenant
or provision of the Indenture that cannot be modified or amended without the
consent of all Holders. Upon such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
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every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
(b) AUTHENTICATION AND DELIVERY OF THE NOTES AND APPLICATION OF
PROCEEDS
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of its
Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile. Notes bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of the
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes; and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes as in the Indenture provided and not
otherwise. No Note shall be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
(c) RELEASE OF PROPERTY SUBJECT TO LIEN
The holders of at least 66-2/3% in principal amount of
outstanding Notes may release any portion of the Collateral (as defined in the
Indenture), whether constituting less than or all or substantially all of the
Collateral, from the liens granted pursuant to the Indenture, unless the
Indenture previously has been qualified under the Trust Indenture Act and the
Trust Indenture Act prohibits such a release. It is the intent of the parties
that any release of Collateral consented to by the Holders of at least 66-2/3%
in principal amount of Outstanding Notes shall not be in contravention of the
provisions of the Indenture within the meaning of Section 314(d) of the Trust
Indenture Act in the event it is applicable to the Indenture.
Upon receipt of a request from the holders of the Notes or the
request of the Trustee, the Trustee shall execute and deliver, within five
Business Days from the receipt of such request, any instruments deemed by the
Company or a guarantor to be necessary or appropriate to release all or a part
of the Collateral from the lien of the Indenture. Any such request shall request
the Trustee to execute one or more specifically described release instruments
(which release instruments shall accompany such request) and shall certify that
no default or event of default has occurred and is continuing and such request
shall also certify
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that one of the following conditions set forth below, and certain other
provisions set forth in the Indenture, if applicable, have been, or
simultaneously with or immediately following the release will be, fulfilled:
(i) the Trustee has released such Collateral;
(ii) there is a deposit of Cash Collateral;
(iii) the Collateral to be released is insurance
proceeds and such Collateral is used for repair, replacement
or deposit as Cash Collateral ; or
(iv) the Company represents in the request that the
Collateral to be released is to be released in connection with
repayment of all Outstanding Notes or defeasance of the
Indenture pursuant to the provisions of the Indenture.
In the event and so long as the Indenture is qualified under
the Trust Indenture Act, as a condition to any release of Collateral, the
Company shall deliver to the Trustee any certificate or opinion required by
Trust Indenture Act Sections 314(c)(3) or 314(d) dated as of a date not more
than 60 days prior to the date of substitution or release. In the case of the
repayment of all Outstanding Notes or defeasance of the Indenture pursuant to
the provisions of the Indenture, such certificate or opinion shall state that
all of the Notes then Outstanding are to be repaid and that all of the
Collateral is to be released on or after the date of payment or the deposit of
funds or other property in accordance with the defeasance provisions of the
Indenture.
Any release of Collateral made in compliance with the
provisions of the Indenture shall be deemed not to impair the Lien of the
Indenture and the Collateral Documentation in contravention of the provisions of
the Indenture.
(d) SATISFACTION AND DISCHARGE
The Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of the Notes as
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of the Indenture, when (1) either (A) all Notes theretofore
authenticated and delivered (other than (i) Notes which have been mutilated,
destroyed, lost or stolen and which have been replaced or paid as provided in
the Indenture and (ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, pursuant to the terms of
the Indenture) have been delivered to the Trustee for cancellation; or (B) all
such Notes not theretofore delivered to the Trustee for cancellation (i) have
become due and payable, or (ii) will become due and payable at their Stated
Maturity within one year, and the Company, in the case of (i) or (ii) above, has
deposited or caused to
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be deposited with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Notes which have become due
and payable) or to the Stated Maturity; (2) the Company has paid or caused to be
paid all other sums payable hereunder by the Company; and (3) the Company has
delivered to the Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent relating to the satisfaction and
discharge of the Indenture have been complied with.
(e) EVIDENCE OF COMPLIANCE WITH CONDITIONS AND COVENANTS
The Company will deliver to the Trustee, within forty-five days after
the end of the four quarters of the Company's fiscal year and within ninety days
after the end of the Company's fiscal year, an Officers' Certificate setting
forth computations in reasonable detail showing, as at the end of such quarter
or fiscal year, as the case may be, the Company's compliance with the conditions
and covenants under the Indenture and (ii) within 45 days after the end of each
fiscal quarter, an Officers' Certificate stating that as of the date of such
certificate, based upon such examination or investigation and review of the
Indenture, as in the opinion of such signer is necessary to enable the signer to
express an informed opinion with respect thereto, to the best knowledge of such
signer, the Company has kept, observed, performed and fulfilled each and every
covenant contained in the Indenture, and is not in default in the performance or
observance of any of the terms, provisions and conditions thereof, 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.
9. OTHER OBLIGORS. Give the name and complete mailing address of any person,
other than the applicant, who is an obligor upon the indenture securities.
1. BioEnterics Corporation
1035 Cindy Lane
Carpenteria, CA 93013
2. CUI Corporation
6440 Via Real
Carpenteria, CA 93013
3. Flowmatrix Corporation
1160 Mark Avenue
Carpenteria, CA 93013
4. Inamed Development Company
1035 Cindy Lane
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Carpenteria, CA 93013
5. McGhan Medical Corporation
460 Ward Drive
Santa Barbara, CA 93111
6. BioEnterics, Latin America SA de CV
Carretera Picacho Ajusco #40
Despacho 701-702
Col. Jardines en la Montana
Mexico 14210 D.F.
7. Chamfield Ltd.
Kilbride Industrial Estates
Arklow, County Wicklow
Ireland
8. McGhan Ltd.
Kilbride Industrial Estates
Arklow, County Wicklow
Ireland
9. McGhan Medical Asia Pacific Ltd.
36a Pagoda Street
Singapore 059859
10. McGhan Medical Benelux B.V.
Takkebijsters 15f
4817 BL BREDA
The Netherlands
11. McGhan Medical Benelux B.V.B.A.
c/o BDO CampsObers
Heerbaan 250
4817 NL Breda
The Netherlands
12. McGhan Medical B.V.
c/o BDO CampsObers
Heerbaan 250
4817 NL Breda
The Netherlands
13. McGhan Medical GmbH
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Jacobstrasse 3-5
40211 Dusseldorf
Germany
14. McGhan Medical Ltd.
Unit 4 Forest Court
Fishponds Estate, Fishponds Road
Workingham Berkshire, RG41, 2QJ
United Kingdom
15. McGhan Medical Mexico, SA de CV
Av. Picacho Ajusco 130-701
Col. Jardines en la Montana C.P.
14210
Mexico, D.F.
16. McGhan Medical S.A.
Bergueda 1, A-2, Edificio Muntadas
08820 Prat LLOB
Barcelona, Spain
17. McGhan Medical S.A.R.L.
77-81 bd de la Republique
92250 La Garenne Colombes
France
18. McGhan Medical S.R.L.
Via Dietro Filipini, 24
37121 Verona
Italy
19. Inamed do Brasil Ltda.
c/o Martins E. Salvia Advogados
Rua Campus Bicudo, 98-9 Andar-Itiam
04536-010 - Sao Paulo-SP
Brazil
CONTENTS OF APPLICATION FOR QUALIFICATION
This application for qualification comprises:
(a) Pages numbered 1 to 17, consecutively;
(b) The statement of eligibility and qualification of the Trustee under the
Indenture to be qualified (on Form T-1)(to be filed by amendment);
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(c) The following exhibits, in addition to those filed as a part of the
statement of eligibility and qualification of the trustee:
(i) Exhibit T3A -- Articles of Incorporation (Incorporated
herein by reference to Exhibit 3.1 of the
Company's Financial Report on Form 10-K
for the year ended December 31, 1995
(Commission File No. 0-7101)
(ii) Exhibit T3B -- Bylaws (Incorporated herein by reference
to Exhibit 3.2 of the Company's Financial
Report on Form 10-K for the year ended
December 3,1 995 (Commission File No.
0-7101)
(iii) Exhibit T3C -- Indenture between the Company and Santa
Barbara Bank and Trust, as trustee.
(iv) Exhibit T3D -- Not applicable.
(v) Exhibit T3E.1 -- Securities Exchange Agreement by and
between Inamed Corporation and the
Securityholders signatory thereto dated
October 7, 1998.
(vi) Exhibit T3E.2 -- Form of Subordinated Security Agreement
(vii) Exhibit T3E.3 -- Form of Subordinated Guarantee and
Security Agreement
(viii) Exhibit T3E.4 -- Form of Subordinated Guarantee Agreement
(ix) Exhibit T3E.5 -- Form of Security
(x) Exhibit T3E.6 -- Form of Exchange Warrant
(xi) Exhibit T3E.7 -- Form of Warrant
(xii) Exhibit T3E.8 -- Form of Registration Rights Agreement
(xiii) Exhibit T3F -- Cross-Reference Sheet
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, INAMED Corporation, a corporation organized and existing under the
laws of Florida, has duly caused this application to be signed on its behalf by
the undersigned, thereunto duly authorized, and its seal to be hereunto affixed
and attested, all in the city of New York on October 14, 1998.
(SEAL)
INAMED CORPORATION
/s/ Ilan K. Reich
----------------------------------------
Name: Ilan K. Reich
Title: Executive Vice President
ATTEST
/s/ Carol Brennan
- -----------------------------
Name: Carol Brennan
Title: Secretary
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<PAGE>
EXHIBIT INDEX
(i) Exhibit T3A -- Articles of Incorporation (Incorporated
herein by reference to Exhibit 3.1 of the
Company's Financial Report on Form 10-K
for the year ended December 31, 1995
(Commission File No. 0-7101)
(ii) Exhibit T3B -- Bylaws (Incorporated herein by reference
to Exhibit 3.2 of the Company's Financial
Report on Form 10-K for the year ended
December 3,1 995 (Commission File No.
0-7101)
(iii) Exhibit T3C -- Indenture between the Company and Santa
Barbara Bank and Trust, as trustee.
(iv) Exhibit T3D -- Not applicable.
(v) Exhibit T3E.1 -- Securities Exchange Agreement by and
between Inamed Corporation and the
Securityholders signatory thereto dated
October 7, 1998.
(vi) Exhibit T3E.2 -- Form of Subordinated Security Agreement
(vii) Exhibit T3E.3 -- Form of Subordinated Guarantee and
Security Agreement
(viii) Exhibit T3E.4 -- Form of Subordinated Guarantee Agreement
(ix) Exhibit T3E.5 -- Form of Security
(x) Exhibit T3E.6 -- Form of Exchange Warrant
(xi) Exhibit T3E.7 -- Form of Warrant
(xii) Exhibit T3E.8 -- Form of Registration Rights Agreement
(xiii) Exhibit T3F -- Cross-Reference Sheet
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Exhibit T3C
INAMED CORPORATION
Issuer
$19,605,715
Senior Subordinated Secured Notes due 1999
SUBORDINATED INDENTURE
Dated as of ______________, 1998
SANTA BARBARA BANK & TRUST
Trustee
<PAGE>
INDENTURE, dated as of ______________, 1998 between Inamed
Corporation, a corporation duly organized and existing under the laws of the
State of Florida (the "Company"), having its principal office at 3800 Howard
Hughes Parkway, Suite 900, Las Vegas, Nevada and Santa Barbara Bank & Trust, a
bank duly organized and existing under the laws of the State of California, as
Trustee (the "Trustee").
The Company's 11% Senior Subordinated Secured Notes due March
31, 1999 (the "Notes") are being issued in exchange (the "Exchange") for the
Company's 11% Secured Convertible Notes due 1999 (the "Old Notes") which were
issued pursuant to the Indenture dated as of January 2, 1996 between the Company
and the Trustee (the "Old Indenture").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as
well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles"
with respect to any computation required or permitted hereunder shall
mean such accounting principles as are generally accepted at the date
of this instrument; and
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article 9, are defined in that
Article.
"Act" when used with respect to any Holder, has the meaning
specified in Section 11.4.
"Additional Warrants" means Warrants to acquire up to 500,000
shares of Common Stock with an exercise price of $7.50 per share.
"Affiliate" shall have meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act. "Affiliate"
shall also include partners of a Person. Notwithstanding the foregoing,
"Affiliate" shall not include the limited partners of any Holder or any limited
partners of a limited partner of any Purchaser.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
Authenticating Agent or co-registrar.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate the Notes.
"Bankruptcy Law" means Title 11, United States Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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"Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease" shall mean, with respect to any Person,
any lease or any other agreement for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligations" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined, the
amount of the liability capitalized or disclosed (or which should be disclosed)
in a balance sheet of such Person in respect of a Capitalized Lease of such
Person.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or hereafter
outstanding.
"Class Action Settlement Agreement" means the Settlement
Agreement dated April 2, 1998 which provides, among other thing, for the
settlement of certain claims against the Company arising out of the litigation
in the United States District Court for the northern District of Alabama,
Southern Division, stylized as "Silicone Gel Breast Implant Products Liability
Litigation (MDL926) (the "Breast Implant Litigation").
"Collateral" means all real and personal property and
interests in real and personal property including, without limitation,
Intellectual Property, rights under leases and royalty rights and agreements,
now owned or hereafter acquired by the Company or its Material Subsidiaries in
or upon which a Lien is granted or made under the Collateral Documentation.
"Collateral Agent" means Appaloosa Management, L.P.
"Collateral Documentation" means the Subordinated Guarantee
and Security Agreements, the Subordinated Guarantee Agreements, the Subordinated
Security Agreement, the Financing Statements, the Intercompany Notes, the
Intercreditor Agreement and the endorsements thereof to the Trustee, and all
other deeds of trust, assignments, endorsements, pledged stock, collateral
assignments and other instruments, documents, agreements or conveyances at any
time creating or evidencing Liens or assigning Liens to the Trustee, to secure
the obligations of the Company or any of its Subsidiaries hereunder and under
the Notes and the Exchange Offer Registration Rights Agreement.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
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<PAGE>
"Consolidated Tangible Assets" shall mean, as at any date for
any Person, the sum for such Person and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following:
(a) the book value of all assets of the Company as reflected
on its most recent balance sheet, MINUS
(b) the sum of the following: the book value of all assets
which should be classified as intangibles, including goodwill, minority
interests, research and development costs, trademarks, trade names, copyrights,
patents and franchises, unamortized debt discount and expense, all reserves and
any write-up in the book value of assets resulting from a revaluation of such
assets subsequent to December 31, 1997.
"Corporate Trust Office" means the principal office of the
Trustee in Santa Barbara, California at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Party" shall mean each of the Company and each of its
Subsidiaries.
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<PAGE>
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"Default" means an event that with notice or lapse of time or
both would become an Event of Default.
"Defaulted Interest" has the meaning specified in Section
2.12.
"Delaware Charter" the Certificate of Incorporation which will
be in effect upon the effectiveness of the merger to effectuate the Company's
Reincorporation Merger.
"Documents" means the Securities Exchange Agreement, the
Indenture, the Notes, the Collateral Documentation, the Subordinated Guarantee
Agreement and all other security agreements, the Intercreditor Agreement, the
Registration Rights Agreement, mortgages, deeds of trust, financing statements,
lease assignments, guaranties and other agreements and instruments, together
with any assignments, endorsements of, exhibits, schedules or other attachments
to all of the foregoing, delivered in connection with the transactions
contemplated hereby or thereby, all as amended, supplemented or otherwise
modified from time to time.
"Domestic Guarantors" means the Subsidiaries of the Company
that shall have issued to the Trustee for the benefit of the Holders Guarantee
and Security Agreements relating to the Company's obligations under this
Indenture and the Notes.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement or
contract between any Credit Party or any ERISA Affiliate and any employee
pursuant to which any Credit Party or any ERISA Affiliate has or may have any
liability contingent or otherwise.
"Environmental Laws" means any and all federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interests" means any Capital Stock, partnership
interest, joint venture interest or other equity interest or warrants, options
or other rights to acquire any Capital Stock, partnership interest, joint
venture interest or other equity interest.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" means each business or entity which is a
member of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the Company
under Section 414(o) of the Code, or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" has the meaning specified in Section 4.1.
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<PAGE>
"Exchange Warrants" means the warrants to be issued by the
Company to the holders of the Notes in connection with the Exchange.
"Financing Statements" means Form UCC-1 financing statements
to be filed in all jurisdictions necessary or desirable in order to perfect the
Trustee's security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Trustee and filings to be made in the U.S.
Patent and Trademark Office and the U.S. Copyright Office.
"Foreign Guarantors" means the Subsidiaries or Affiliates of
the Company who execute and deliver Subordinated Guarantee Agreements.
"GAAP" shall mean U.S. generally accepted accounting
principles.
"Guarantors" means Domestic Guarantors and Foreign Guarantors.
"Holder" means a Person in whose name a Note is registered in
the Note Register.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Intercompany Notes" means the notes from Subsidiaries or
Affiliates of the Company in favor of the Company in the form of Exhibit E, as
the same may be amended, modified or supplemented from time to time in
accordance with their terms, and all other promissory notes or other instruments
evidencing Indebtedness of Affiliates or Subsidiaries of the Company to the
Company between the Company and its Affiliates.
"Intercreditor Agreement" shall mean the agreement dated as of
the date hereof, between the Trustee and the Collateral Agent.
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"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"Knowledge", with respect to the Company, shall mean the
actual knowledge of each member of the board of directors of the Company and
each officer of the Company, and the knowledge that any of the foregoing persons
would have after due and reasonable inquiry and investigation.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Material Adverse Effect" shall mean a material adverse effect
on (a) the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, whether or not in the ordinary
course of business, (b) the ability of any Credit Party to perform its
obligations under any of the Transaction Documents to which it is a party, (c)
the validity or enforceability of any of the Transaction Documents or (d) the
rights, remedies, powers and privileges of the Holders under any of the
Transaction Documents.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, whether or not in the ordinary
course of business, (b) the ability of any Credit Party to perform its
obligations under any of the Transaction Documents to which it is a party, (c)
the validity or enforceability of any of the Transaction Documents, (d) the
rights, remedies, powers and privileges of the Holders under any of the
Transaction Documents or (e) the timely payment or performance of the Secured
Obligations.
"Material Subsidiaries" at any time, shall mean any Subsidiary
of the Company, other than any Non-Significant Subsidiary of the Company.
"Maturity" used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
otherwise.
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with GAAP
on a consolidated basis as reflected in the financial statements furnished to
the Holders in accordance with Section 7.18.
"Non-Significant Subsidiary" at any time, shall mean any
Subsidiary of the Company which at such time has total assets (including the
total assets of any Subsidiaries) that have a fair market value of, or for which
the Company or any of its Subsidiaries shall have paid (including the assumption
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<PAGE>
of Indebtedness) in connection with the acquisition of capital stock (or other
equity interests) or the total assets of such Subsidiary, less than $100,000,
provided that the total assets of all Non-Significant Subsidiaries at any time
does not exceed 5% of the total assets of the Company and its Subsidiaries on a
consolidated basis.
"Note" or "Notes" means the 11.00% Senior Subordinated Secured
Notes due March 31, 1999 or, at the option of the Company exercised as provided
herein, September 1, 2000.
"New Warrants" means the warrants to purchase 590,000 shares
of Common Stock to be issued by the Company to the parties listed on Exhibit A
of the Note Purchase Agreement.
"Note Purchase Agreement" means the note purchase agreement,
dated as of September 30, 1998, between the Company, the parties listed on
Exhibit A thereto and the Collateral Agent.
"Note Register" and "Registrar" have the respective meanings
specified in Section 2.6.
"Officers' Certificate" means a certificate signed by any two
officers of the Company, one of whom must be the Chairman of the Board, the
President, the Chief Executive Officer, the Treasurer or a Vice President of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding," shall mean when used with reference to the
Notes at a particular time, all Notes theretofore issued as provided in this
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.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Notes on behalf of the Company.
"Permitted Indebtedness" means, without duplication, any of
the following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) $25.5 million aggregate principal amount of 6.00% subordinated
notes to be issued pursuant to the Class Action Settlement Agreement having
terms reasonably acceptable to the Holders of at least a majority in principal
amount of Outstanding Notes; (ii) Indebtedness and obligations under the Notes
and the Exchange Notes; (iii) any other Indebtedness and obligations outstanding
on the date hereof and set forth on Schedule 1 hereof; (iv) Indebtedness of a
domestic Subsidiary of the Company to the Company as long as such Subsidiary has
executed the Subordinated Guarantee and Security Agreement and such Indebtedness
is evidenced by Intercompany Notes and the Intercompany Notes are pledged to the
Collateral Agent as Collateral (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
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such other terms as are reasonably acceptable to the Holders of at least a
majority in principal amount of Outstanding Notes.
"Permitted Liens" means (i) Liens existing on the date hereof
and set forth in Schedule 2 hereof; (ii) Liens (other than any Lien imposed
under ERISA or any Environmental Laws) for taxes, assessments or charges of any
governmental authority for claims not yet due or which are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP and
enforcement thereof is stayed; (iii) Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other Liens (other than any Lien imposed under ERISA)
not voluntarily granted for amounts not yet due or which are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP, and
enforcement thereof is stayed; (iv) Liens (other than any Lien imposed under
ERISA), incurred or deposited made in the ordinary course of business, including
without limitation, surety bonds and appeal bonds, in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions, charges
or encumbrances (whether or not recorded) and other Liens incurred in the
ordinary course of business, which do not secure indebtedness or the deferred
purchase price of any asset and which do not interfere materially with the
ordinary conduct of the business of the Company and which do not materially
detract from the value of the property to which they attach or materially impair
the use thereof to the Company; (vi) building restrictions, zoning laws and
other statutes, laws, rules, regulations, ordinances and restrictions, and any
amendments thereto, now or at any time hereafter adopted by any governmental
authority having jurisdiction; (vii) purchase money liens to the extent such
liens secure Permitted Indebtedness and (viii) Liens granted in connection with
the Note Purchase Agreement.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or of
any of its agencies, in either case maturing not more than 90 days from the date
of acquisition of such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank or trust
company organized under the laws of the United States of America or any state or
licensed to conduct a banking or trust business in the United States of America
or any state and having capital, surplus and undivided profits of at least
$35,000,000, maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A- l or better or P- l by Standard & Poor's Corporation
or Moody's Investors Services, Inc., respectively, maturing not more than 90
days from the date of acquisition; (d) money market funds sponsored by
commercial or investment banks unaffiliated with the Company or any of its
Subsidiaries; and (e) loans or advances of money by the Company to its domestic
Subsidiaries that have executed the Subordinated Guarantee and Security
Agreement as long as such loans or advances are evidenced by Intercompany Notes
and the Intercompany Notes are pledged to the Trustee as Collateral.
"Person" or "person" means any individual, corporation,
company, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Proxy Statement" shall have the meaning specified in Section
7.4.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not and would not be, by its terms, or by the terms of any
security into which it is convertible or exchangeable, or upon the happening of
an event, required to be repurchased, including at the option of the holder, in
whole or in part, and that does not and will not have, upon the happening of an
event, a redemption or similar payment due, on or prior to the Stated Maturity
of the Notes.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the March 15, June 15, September 15 or December 15 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date.
"Reincorporation Merger" shall mean the merger, if
consummated, the primary purpose of which is to effect the reincorporation of
the Company in the state of Delaware as described in the Proxy Statement.
"Related Parties" shall mean Affiliates of the Company or any
of its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of directors and officers).
"Responsible Officer" when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Required Holders" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any of its Subsidiaries
shall sell or transfer to any Person (other than the Company or a Subsidiary of
the Company) any property, whether now owned or hereafter acquired, and, as part
of the same transaction or series of transactions, the Company or any of its
Subsidiaries shall rent or lease as lessee (other than pursuant to a Capitalized
Lease), or similarly acquire the right to possession or use of, such property or
one or more properties which it intends to use for the same purpose or purposes
as such property.
"SEC" shall mean the United Stated Securities and Exchange
Commission.
"Senior Indebtedness" means (i) the Company's 10.00% Senior
Secured Notes issued pursuant to the Note Purchase Agreement and (ii)
refinancings, deferrals, refundings, replacements,
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extensions and renewals of or amendments, modifications or supplements to the
Senior Indebtedness, not to exceed $8,000,000 in principal amount (excluding
capitalized interest) in aggregate.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such instalment of interest is
due and payable.
"Subordinated Guarantee Agreements" means the Subordinated
Guarantee Agreements of even date herewith in the form of Exhibit D executed by
certain Subsidiaries of the Company issuing guarantees of the Company's
obligation under the Documents, as the same may be amended modified or
supplemented from time to time in accordance with their terms, including with
respect to Subsidiaries that become Guarantors thereunder in accordance with the
terms of the Exchange Agreement.
"Subordinated Guarantee and Security Agreements" means the
Subordinated Security Agreement of even date herewith in the form of Exhibit B
executed by the Company and the Subordinated Guarantee and Security Agreements
of even date herewith in the form of Exhibit C executed by the Guarantors
issuing guarantees and/or granting Liens on certain of the Collateral as partial
security for their respective obligations under the Documents, as the same may
be amended, modified or supplemented from time to time in accordance with their
terms, including with respect to Subsidiaries that become Guarantors thereunder
in accordance with the terms of the Exchange Agreement.
"Securities Exchange Agreement" shall mean the agreement to be
entered into by the Company and the securityholders parties thereto.
"Subsidiary" means, with respect to any Person, (i) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof, (ii) any other Person (other than a
corporation), including without limitation a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
similar functions) or (iii) any other Person required to be consolidated with
such Person in accordance with generally accepted accounting principles. For
purposes of this definition (and for the determination of whether or not a
Subsidiary is a wholly-owned Subsidiary of a Person), any directors' qualifying
shares or investment by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Transaction Documents" shall mean the Exchange Notes, the
Exchange Warrants, the Additional Warrants, the Indenture, the Securities
Exchange Agreement, the Exchange Offer Registration Rights Agreement to be
entered into between the Trustee and the holders of the Exchange Notes, the
Subordinated Guarantee and Security Agreement, the Subordinated Security
Agreement to be entered into between the Trustee and the Company, providing for
a security interest in the Collateral, the Subordinated Guarantee Agreement and
the Intercreditor Agreement.
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"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S. Code SectionSection 77aaa- 77bbbb), as amended, as in effect on the
date of this Indenture, unless and until such time as this Indenture is
qualified under the Trust Indenture Act, and thereafter as in effect on the date
on which this Indenture is qualified under the Trust Indenture Act, except as
otherwise provided in Section 6.3.
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal of or interest on any such U.S. Government Obligation held
by such custodian for the account of the holder of such depository receipt;
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Vice President" when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
ARTICLE 2
THE NOTES
SECTION 2.1 FORM AND DATING.
The Notes shall be substantially in the form of Exhibit A,
which is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage.
Each Note shall be dated the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture, and to the
extent applicable, the Company, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
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SECTION 2.2 TITLE AND TERMS.
The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $19,605,715,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 2.5, 2.9,
2.10 or 6.5.
The Notes shall be known and designated as the "11% Senior
Subordinated Secured Notes due 1999" of the Company. Their Stated Maturity shall
be March 31, 1999, except as provided in Section 2.16 and, except as otherwise
provided below, they shall bear interest at the rate of 11% per annum, from the
most recent interest payment date of the Old Indenture prior to the date of the
Indenture or the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable quarterly on March 31,
June 30, September 30 and December 31, commencing December 31, 1998, until the
principal thereof is paid or made available for payment.
Notwithstanding the foregoing
(i) if during any period in which the Notes bear
interest at the rate of 11% per annum (an
"Eleven Percent Period"), the daily volume
weighted average sale price as of the close
of trading, on the display designated as
"Page ________" on the Bloomberg Financial
Markets Service Screen (or such other
display as may replace Page _________ on the
Bloomberg Financial Markets Service Screen
or if such price is not reported on the
Bloomberg Financial Markets Service Screen,
then such price shall be determined as
reported by such other reputable reporting
service reasonably satisfactory to the
Company and the Purchaser) of the Common
Stock (the "Daily Market Price") is greater
than $11.00 per share for each of 90
consecutive days (such 90 day period not
having commenced until after all
registration statements have gone effective
with respect to the shares issued or
issuable on exercise of the Exchange
Warrants, the New Warrants and the
Additional Warrants), then the interest rate
at which the Notes shall bear interest for
the 90 day period beginning on the first day
of the next fiscal quarter of the Company
after such 90 day period, shall be 10.00%
(any such period in which the interest rate
is 10.00%, a "Ten Percent Period").
(ii) if during a Ten Percent Period:
(A) the Daily Market Price falls below
$11.00 on any given day, then
commencing on the first day after
such Ten Percent Period, the
interest rate at which the Notes
shall bear interest shall be 11.00%.
(B) the Daily Market Price does not fall
below $11.00 on any given day, then
the interest rate at which the Notes
shall bear interest for the 90 day
period beginning on the day after
such Ten Percent Period shall be
9.00% (any such period in which the
interest rate is 9.00%, a "Nine
Percent Period").
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(iii) if during a Nine Percent Period:
(A) the Daily Market Price falls below
$11.00, then commencing on the first
day after such Nine Percent Period,
the interest rate at which the Notes
shall bear interest shall be 10.00%.
(B) the Daily Market price does not fall
below $11.00, then the interest rate
at which the Notes shall bear
interest for the 90 day period
beginning on the day after such Nine
Percent Period shall remain at
9.00%.
The principal of and interest on the Notes shall be payable at
the office or agency of the Company in Las Vegas, Nevada maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose; PROVIDED, HOWEVER, that payment of interest shall be made by wire
transfer or other transfers of immediately available funds to the bank account
of the Person entitled thereto as such address shall appear in the Note
Register.
The Notes shall be redeemable prior to their maturity as
provided in Article 8.
The Notes shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 9.
SECTION 2.3 DENOMINATIONS.
The Notes shall be issuable only in registered form without
coupons and only in denominations of $100,000 and any integral multiple of
$25,000 in excess thereof, except when such other multiple is required in
connection with the Exchange.
SECTION 2.4 EXECUTION, AUTHENTICATION AND DELIVERY.
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of its
Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes; and the Trustee in accordance with
such Company Order shall authenticate and deliver such Notes as in this
Indenture provided and not otherwise.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form
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provided for herein executed by the Trustee by manual signature, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
SECTION 2.5 TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as evidenced by their execution of
such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at any office or agency
of the Company designated pursuant to Section 8.2, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Notes the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized definitions.
Until so exchanged the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 2.6 REGISTRAR AND PAYING AGENT.
The Company shall maintain or cause to be maintained in such
locations as it shall determine, which may be the Corporate Trust Office, an
office or agency: (i) where Notes may be presented for registration of transfer
or for exchange ("Registrar"); (ii) where Notes may be presented for payment
("Paying Agent"); and (iii) where notices and demands to or upon the Company in
respect of Notes and this Indenture may be served by the Holders of the Notes.
The Registrar shall keep a register of the Notes and of their transfer and
exchange (the "Note Register"). The Company may appoint one or more
co-registrars or one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The Company may change any Paying Agent,
Registrar or co-registrar without prior notice. The Company shall notify the
Trustee of the name and address of any Agent not a party to this Indenture and
shall enter into an appropriate agency agreement with any Registrar, Paying
Agent or co-registrar not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company or any of its subsidiaries may act as Paying Agent, Registrar or
co-registrar. If the Company fails to appoint or maintain another entity as
Registrar, Paying Agent or fails to notify the Trustee of such person, the
Trustee shall act as such, and the Trustee shall be entitled to appropriate
compensation in accordance with Section 5.7.
The Company initially appoints the Company as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes.
SECTION 2.7 PAYING AGENT TO HOLD MONEY IN TRUST.
Not later than each due date of the principal of and interest
on any Notes, the Company shall deposit with the Paying Agent money sufficient
to pay such principal and interest so becoming due.
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The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Notes (whether such money has been paid
to it by the Company, the Guarantors or any other obligor on the Notes or any
other Person), and will notify the Trustee of any default by the Company (or the
Guarantors or any other obligor on the Notes or any other Person) in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent.
SECTION 2.8 NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and, in the event and so long as this Indenture is
qualified under the Trust Indenture Act, shall otherwise comply with Section
312(a) of the Trust Indenture Act. If the Trustee is not the Registrar, the
Company, the Guarantors, the Foreign Guarantors and any other obligor shall
furnish to the Trustee on or before each Interest Payment Date and at such other
times as the Trustee may request in writing, but in any event at least
quarterly, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders and, in the event and so long as
this Indenture is qualified under the Trust Indenture Act, the Company shall
otherwise comply with Section 312(a) of the Trust Indenture Act.
SECTION 2.9 TRANSFER AND EXCHANGE.
(a) When Notes are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of securities of other denominations, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met (including, if required by the Company, an opinion of
counsel to the Holder requesting transfer that an exemption from registration
under the Securities Act of 1933, as amended, is available for such transfer).
To permit registrations of transfer and exchanges, the Company shall issue and
the Trustee shall authenticate Notes at the Registrar's request. No service
charge shall be made to the Holder for any registration of transfer or exchange
(except as otherwise expressly permitted herein), but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges pursuant to Section 2.5 or
6.5)
(b) The Company shall not be required to issue, register the
transfer of or exchange Notes following the redemption date, except the
unredeemed portion of any Note being redeemed in part.
SECTION 2.10 REPLACEMENT NOTES.
If the Holder of a Note claims that the Note has been
mutilated, destroyed, lost or stolen, then, in the absence of notice to the
Company or Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall issue and the Trustee shall authenticate a replacement Note if
the Trustee's requirements are met. In case any Note which has matured or is
about to mature, or has been called for redemption pursuant to Section 8 shall
become mutilated or be destroyed, lost or stolen, the Company
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may, instead of issuing a substitute Note, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated Note), as the
case may be, if the applicant for such payment shall furnish to the Company, to
the Trustee and, if applicable, to the Authenticating Agent such security or
indemnity as may be required by them to save each of them harmless for any loss,
liability, cost or expense caused by or connected with such substitution, and,
in case of destruction, loss or theft, evidence satisfactory to the Company, the
Trustee and, if applicable, any Paying Agent of the destruction, loss or theft
of such Note and of the ownership thereof. If required by the Trustee or the
Company, an indemnity bond must be provided which is sufficient in the judgment
of both to protect the Company, the Trustee, any Agent or any Authenticating
Agent from any loss which any of them may suffer if a Note is replaced. Upon the
issuance of any new Note under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every replacement Note is an additional obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Note shall be
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.11 TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, the Guarantors or any other obligor or an Affiliate of the
Company, shall be considered as though they are not Outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which the Trustee knows are so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.12 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
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(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Note and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Note
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes (or
their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company shall make payment of any Defaulted
Interest by wire transfer or other transfer of immediately available
funds.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13 PERSONS DEEMED OWNERS.
Prior to the presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving payment of principal of and (subject to
Section 2.12) interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 2.14 CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee shall be disposed of as
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directed by a Company Order. Subject to Section 8.6, the Trustee shall cancel
and the Company shall not reissue any Notes that have been surrendered for
payment, redemption or conversion.
SECTION 2.15 COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a year
of twelve 30-day months.
SECTION 2.16 EXTENSION OF MATURITY. At the Company's option,
at any time at least thirty days prior to March 31, 1999, the
Stated Maturity may be extended until September 1, 2000 by the
Company by delivery of a notice to the Holders pursuant to the
provisions of Section 11.6, which notice shall state that the
Stated Maturity of the Notes is being extended until September
1, 2000, so long as no Event of Default shall have occurred
and be continuing at the time of delivery of such notice.
ARTICLE 3
SATISFACTION, DISCHARGE AND DEFEASANCE
SECTION 3.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as
to any surviving rights of registration of transfer or exchange of the Notes
herein expressly provided for and except as provided in Section 3.3), and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when:
(1) either
(A) all Notes theretofore authenticated and
delivered (other than (i) Notes which have been mutilated,
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.10 and (ii) Notes for whose payment
money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, pursuant to the terms
of this Indenture) have been delivered to the Trustee for
cancellation; or
(B) all such Notes not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year,
and the Company, in the case of (i) or (ii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the
case of Notes which have become due and payable) or to the
Stated Maturity;
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(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.7, the obligations of
the Trustee to any Authenticating Agent under Section 5.12 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 3.2 and the last
paragraph of Section 7.3 shall survive.
SECTION 3.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section
7.3, all money deposited with the Trustee pursuant to Section 3.1 shall be held
in trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee.
SECTION 3.3 REINSTATEMENT.
If (i) the Trustee or Paying Agent is unable to apply any
money in accordance with Section 3.2 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application and (ii) the Holders of at least a majority in principal amount
of Outstanding Notes so request by written notice to the Trustee, the Company's
and the Guarantors' obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 3.1
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 3.2.
ARTICLE 4
REMEDIES
SECTION 4.1 EVENTS OF DEFAULT.
EVENT OF DEFAULT," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 5 days;
or
(b) default in the payment of any principal of any Note when it becomes
due and payable; or
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(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 7.18(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
Trustee 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 Trustee believes would have a Material
Adverse Effect on the Company or the Holders' 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
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(i) any provision of any Transaction Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Transaction Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Transaction Documents has ceased to
be or otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Transaction Document shall
cease to be a valid and perfected security interest or Lien in any of the
Collateral purported to be covered thereby; or
(j) any Credit Party defaults in the payment of any amounts in excess
of $25,000 due pursuant to the terms of any document executed and delivered by
the Company or such Subsidiary in connection with this Agreement (other than
payments elsewhere in this Section specifically dealt with).
SECTION 4.2 ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
If any Event of Default shall have occurred and be continuing,
the Holders of at least a majority in principal amount of then Outstanding Notes
may, by notice to the Company, declare the entire unpaid principal amount of the
Notes, plus all accrued and unpaid interest thereon to be immediately due and
payable, and upon such declaration all of such amount shall be immediately due
and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived, anything in the Notes or in this
Agreement to the contrary notwithstanding; provided that if an Event of Default
under clause (f), (g), (h) or (i) of Section 4.1 shall have occurred, the entire
unpaid principal amount of the Notes, plus all accrued and unpaid interest
thereon shall immediately become due and payable, without any declaration and
without presentment, demand, protest or further notice, all of which are hereby
waived, anything in the Notes or this Agreement to the contrary notwithstanding.
SECTION 4.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal or interest
on the Notes or to enforce the performance of any provision of the Notes, the
Guarantee and Security Agreements, this Indenture or the other Documents, or to
realize upon any Collateral.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding.
SECTION 4.4 WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of Outstanding
Notes by notice to the Trustee may waive an existing Default or Event of Default
and its consequences except a continuing Default or Event of Default in the
payment of the principal of or interest on any Note or in respect of a covenant
or provision of this Indenture that cannot be modified or amended without the
consent of all Holders. Upon such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
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SECTION 4.5 CONTROL BY MAJORITY.
The Holders of a majority in principal amount of Outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that is unduly prejudicial to the rights of other
Holders, or would involve the Trustee in personal liability.
SECTION 4.6 LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or
the Notes only if:
(1) the Holder gives to the Trustee notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount
of the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request
within 30 days after receipt of the request and the offer of indemnity;
and
(5) during such 30-day period the Holders of a
majority in principal amount of the then Outstanding Notes do not give
the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 4.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal and interest on
the Note, on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 4.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 4.1(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, the Guarantors or any other
obligor on the Notes for the whole amount of principal and interest remaining
unpaid on the Notes and interest on overdue principal and interest and such
further amount as shall be sufficient to cover the costs and, to the extent
lawful, expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 4.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders allowed in any judicial proceedings relative to the
Company, the Guarantors or any other obligor or their respective creditors
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or property. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 4.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article or
by exercise of its remedies under the Documents, it shall pay out the money in
the following order and, in case of the distribution of such money on account of
principal or interest, upon presentation of the Notes and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section
5.7;
Second: to the Holders of Senior Indebtedness to the
extent required by Article 9; and
Third: to Holders for amounts due and unpaid on the
Notes for principal and interest ratably,
without preference or priority of any kind,
according to the amounts due and payable on the
Notes for principal and interest, respectively;
and
Fourth: to the Company, the Guarantors or any other
obligors on the Notes, as their interests may
appear, or as a court of competent jurisdiction
may direct.
The Trustee may fix a record date and payment date for any
payment to Holders.
SECTION 4.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to any suit instituted by the Company or
by the Trustee, a suit by a Holder for the enforcement of the payment of the
principal of or interest on any Note on or after the respective Stated
Maturities expressed in such Note, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 4.12 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph
of Section 2.10, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity
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otherwise. The assertion or employment of any right or remedy hereunder or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 4.13 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
SECTION 4.14 WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law has been enacted.
ARTICLE 5
THE TRUSTEE
SECTION 5.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by Indenture, and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conducting its own affairs.
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(c) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent action, its
own negligent failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed
to limit the effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
a majority in principal amount of the Outstanding Notes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture;
(4) no provision of this Indenture shall
require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of
any of its duties hereunder;
(5) the Trustee may refuse to perform any
duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or
expense; and
(6) the Trustee shall not be liable for
interest on any money received by it except as the Trustee may
agree in writing with the Company and the Guarantors. Money
held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(e) The Company and the Trustee acknowledge and agree
and the Holders by acquisition of the Notes acknowledge and agree that
(1) in order to enforce some of the rights and duties of the Trustee
under this Indenture, it may be necessary for the Trustee to act or
cause others to take actions in jurisdictions in which Trustee
currently is not or in the future may not be authorized to transact
business as a fiduciary or otherwise, (2) the parties do not expect the
Trustee to become so qualified to transact business in such
jurisdictions, and (3) consequently it is recognized that in the event
of litigation under this Indenture, and in particular in the event of
enforcement of the rights of the Trustee following an Event of Default,
or in the case the Trustee deems that by reason of any present or
future law of any jurisdiction it may not exercise any of the powers,
rights or remedies herein granted to the Trustee or act as Trustee
hereunder in any jurisdiction, or take any action that may be desirable
or necessary in connection therewith, it may be necessary that the
Trustee (and the Trustee is hereby authorized to) appoint an additional
individual or institution as a separate Trustee or co-Trustee.
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If the Trustee appoints any such individual or
institution as a separate co-Trustee, then each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title,
interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect
thereto shall be exercisable by and vest in such separate or co-Trustee
but only to the extent necessary to enable such separate or co-Trustee
to exercise such powers, rights and remedies, and every covenant and
obligation necessary to the exercise thereof by such separate or
co-Trustee shall run to and be enforceable by either of them.
Upon request of the Trustee, the Company shall make,
execute, acknowledge and deliver such documents as may be necessary or
appropriate to perfect or clarify the authority of such separate or
co-Trustee and confirm to it such rights, powers, duties and
obligations as the Trustee determines to be appropriate and as are
consistent with the rights, powers, duties and obligations of the
Trustee under this Indenture.
SECTION 5.2 RIGHTS OF TRUSTEE.
(a) Except as otherwise provided herein, the Trustee
may rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel, or
both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) Subject to Section 5.1, the Trustee shall not be
liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers.
SECTION 5.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or an Affiliate of any of them with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 5.10 and 5.11.
SECTION 5.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation or warranty concerning, and shall
have no liability with regard to (a) the accuracy or reliability or completeness
of any statement, representation or warranty, or of any disclosures (whether
oral or written) made by the Company or the Guarantors in connection with the
sale of the Notes, including in any offering memorandum or circular distributed
in connection with the sale of the Notes, (b) the Company's compliance with
applicable securities rules governing the sale of the Notes, (c) the validity,
adequacy or enforceability of this Indenture, the Notes, the Subordinated
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Guarantee and Security Agreements, (d) the Company's use of the proceeds from
the sale of the Notes, (e) the perfection or priority of any lien created or
intended to be created by the Subordinated Guarantee and Security Agreements, or
(f) any recitation of facts or alleged facts in this Indenture.
SECTION 5.5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall, as soon as practicable
thereafter and in any event within 10 days after it occurs, mail to Holders a
notice of the Default or Event of Default. For purposes of this Indenture, the
Trustee shall not be deemed to "know" or "have knowledge" or "be aware" or
otherwise be charged with knowing any fact or circumstance unless either (i) a
person who is an executive officer of the Trustee (as determined by the
Trustee's Board of Directors for the period for which such determination is
being made) has actual knowledge of such fact or circumstance or (ii) written
notice of such fact or circumstance is sent to the Trustee in accordance with
Section 11.5(1), below.
SECTION 5.6 REPORTS BY TRUSTEE TO HOLDERS.
In the event and so long as this Indenture is qualified under
the Trust Indenture Act, within 60 days after each January 1 beginning on the
January 1 following the date of this Indenture, the Trustee shall mail to
Holders a brief report dated as of such reporting date that complies with Trust
Indenture Act Section 313(a). Whether or not this Indenture is qualified under
the Trust Indenture Act, within 60 days after each January 1 beginning on the
January 1 following the date of this Indenture, the Trustee shall mail to
Holders a brief report dated as of such reporting date that complies with Trust
Indenture Act Section 313(a)(3), (7) and (8). In the event and so long as this
Indenture is qualified under the Trust Indenture Act, the Trustee also shall
comply with Trust Indenture Act Section 313(b)(1) and Trust Indenture Act
Section 313(b)(2) and the Trustee shall transmit by mail all reports as required
by Trust Indenture Act Section 313(c).
Commencing at the time and so long as this Indenture is
qualified under the Trust Indenture Act, a copy of each report at the time of
its mailing to Holders shall be filed with the Commission and each stock
exchange on which the Notes are listed. The Company shall notify the Trustee
when the Notes are listed on any securities exchange.
SECTION 5.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and out-of-pocket expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel, and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
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The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence or bad
faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 4.1(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 5.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section 5.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to the Trustee
under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company and any other obligor shall
promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of
Outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee (at the
expense of the Company), the Company or the Holders of at least 10% in principal
amount of Outstanding Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 5.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien
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provided for in Section 5.7. Notwithstanding replacement of the Trustee pursuant
to this Section 5.8, the Company's obligations under Section 5.7 hereof shall
continue for the benefit of the retiring Trustee with respect to expenses and
liabilities incurred by it prior to such replacement.
SECTION 5.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 5.10 ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of Trust Indenture Act Section 310(a)(1). The Trustee shall always
have a combined capital and surplus of not less than $35,000,000. In the event
and so long as this Indenture is qualified under the Trust Indenture Act, the
Trustee shall be subject to Trust Indenture Act Section 310(b), including the
optional provision permitted by the second sentence of Trust Indenture Act
Section 310(b)(9).
SECTION 5.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall be subject to Trust Indenture Act Section
311(a), excluding any creditor relationship listed in Trust Indenture Act
Section 311(b). A Trustee who has resigned or been removed shall be subject to
Trust Indenture Act Section 311(a) to the extent indicated therein.
SECTION 5.12 APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate Notes
issued upon original issue and upon exchange, registration of transfer or
pursuant to Section 2.10, and Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus required of a Trustee hereunder and
subject to supervision or examination by Federal or State authority. If at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Note Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 5.7.
ARTICLE 6
AMENDMENTS
SECTION 6.1 WITHOUT CONSENT OF HOLDERS.
The Company, the Guarantors and the Trustee may amend this
Indenture, the Notes or the other Documents without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition
to certificated Notes;
(3) to make any change that would provide additional
rights to or benefits to the Holders or that does not adversely affect
the legal rights hereunder of any Holder; and
(4) to comply with any requirements of the Commission
in connection with the qualification or requalification of this
Indenture under the Trust Indenture Act.
SECTION 6.2 WITH CONSENT OF HOLDERS.
Subject to Section 4.7, the Company and the Trustee may amend
this Indenture or the Notes with the written consent of the Holders of at least
a majority in principal amount of Outstanding Notes. Subject to Sections 4.4 and
4.7, the Holders of a majority in principal amount of the Notes then outstanding
may also waive compliance in a particular instance by the Company or the
Guarantors with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an
amendment or waiver under this Section may not:
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(1) reduce the amount of Notes whose Holders must
consent to an amendment or waiver;
(2) reduce the rate of or change the time for
payment of interest on any Note;
(3) reduce the principal of or change the fixed
maturity of any Note or alter the redemption provisions with respect
thereto;
(4) make any Note payable in money other than that
stated in the Note;
(5) make any change in Section 4.4, 4.7 or 6.2 (this
sentence); or
(6) waive a default in the payment of the principal
of, or interest on, any Note.
The Holders of at least 66-2/3% in principal amount of
Outstanding Notes may release any portion of the Collateral, whether
constituting less than or all or substantially all of the Collateral, from the
Liens granted under the Collateral Documentation, without compliance with the
requirements of the last paragraph of Section 10.2 of this Indenture, unless
this Indenture previously has been qualified under the Trust Indenture Act and
the Trust Indenture Act prohibits such a release. It is the intent of the
parties that any release of Collateral consented to by the Holders of at least
66-2/3% in principal amount of Outstanding Notes shall not be in contravention
of the provisions of the Indenture within the meaning of Section 314(d) of the
Trust Indenture Act in the event it is applicable to this Indenture.
To secure a consent of the Holders under this Section it shall
not be necessary for the Holders to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment or waiver.
SECTION 6.3 COMPLIANCE WITH TRUST INDENTURE ACT.
This Indenture and every amendment, waiver or supplement under
this Indenture or the Notes shall comply with the Trust Indenture Act as then in
effect.
SECTION 6.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of a Note if the Trustee receives notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented to the amendment or waiver (or before such later date as may be
required by law or securities exchange rule).
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The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such amendment or waiver or to revoke
any consent previously given, whether or not such Persons continue to be Holders
after such record date. No consent shall be valid or effective for more than 90
days after such record date unless consents from Holders of the principal amount
of Notes required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind
every Holder, unless it is of the type described in any of clauses (1) through
(4) of Section 6.2. In such case, the amendment or waiver shall bind each Holder
of a Note who has consented to it and every subsequent Holder of a Note that
evidences the same debt as the consenting Holder's Note.
SECTION 6.5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment or waiver.
SECTION 6.6 TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except
that the Trustee need not sign any supplemental indenture that adversely affects
its rights. The Trustee may request an Opinion of Counsel and an Officers'
Certificate stating that such supplemental indenture is permitted hereunder and
all conditions precedent have been complied with.
ARTICLE 7
COVENANTS
SECTION 7.1 PAYMENT OF PRINCIPAL AND INTEREST.
The Company shall pay the principal of and interest on Notes
on the dates and in the manner provided in the Notes and in accordance with the
terms hereof. An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company or an Affiliate of the Company) holds in trust on that date U.S.
Legal Tender designated for and sufficient to pay the installment; PROVIDED,
HOWEVER, that U.S. Legal Tender held by the Trustee after receipt of notice
provided for in Section 9.12 below and for the benefit of holders of Senior
Indebtedness pursuant to the provisions of Article 10 hereof shall not be
considered to be designated for the payment of any installment of principal of
or interest on the Notes within the meaning of this Section 7.1.
SECTION 7.2 MAINTENANCE OF OFFICE OR AGENCY.
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The Company shall maintain in Las Vegas, Nevada an office or agency
where Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. The Company may also from time
to time designate one or more other offices or agencies (in or outside Nevada)
where the Notes may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations, provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in Las Vegas, Nevada for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 7.3 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of or interest on any of
the Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided.
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Notes) in the making of any
payment of principal or interest; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
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Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
interest on any Note and remaining unclaimed for two years after such principal
or interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease, PROVIDED, HOWEVER, that the
Company shall attempt, not less than twice prior to the termination of such
two-year period, to contact the Holder at its last known address in the Note
Register or any other address provided by such Holder to the Company or the
Trustee for such purpose and PROVIDED further that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in New York, New York, notice that such money remains unclaimed and that after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 7.4 EXISTENCE.
The Company will do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, Material rights
(charter and statutory) and Material franchises and the existence, Material
rights and Material franchises of all of its Subsidiaries. Neither the Company
nor any of its Subsidiaries shall enter into any transaction of acquisition of,
or merger or consolidation or amalgamation with, any other Person (including any
Subsidiary or Affiliate of the Company or any of its Subsidiaries), or transfer
all or substantially all of its assets to any foreign Subsidiary, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or make
any Material change in the present method of conducting business or engage in
any type of business other than of the same general type now conducted by it.
The Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise modify (i) the Company's Articles of Incorporation, (ii) the Company's
By-Laws or (iii) the charter, by-laws or other organizational documents of any
of the Company's Subsidiaries. Notwithstanding the foregoing, the Company shall
be permitted to (i) consummate the Reincorporation Merger to change the
Company's state of incorporation from Florida to Delaware (substantially upon
the terms described in the Notice of Special Meeting of Stockholders and Proxy
Statement filed by the Company with the SEC on September 18, 1998 (the "Proxy
Statement")).
SECTION 7.5 MAINTENANCE OF PROPERTIES.
The Company shall cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such if such discontinuance
is, in the reasonable, good faith judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any Material respect to the Holders.
SECTION 7.6 PAYMENT OF TAXES AND OTHER CLAIMS.
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The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all Taxes levied or
imposed upon any Credit Party or upon the income, profits or property of any
Credit Party, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by Law become a Lien upon the property of any Credit
Party; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such Tax whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 7.7 LIMITATION ON INDEBTEDNESS.
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or directly or indirectly guarantee or in
any other manner become directly or indirectly liable for the payment of any
Indebtedness (excluding Permitted Indebtedness and Indebtedness which is a
Guaranty of an Indebtedness of a Credit Party that is otherwise Permitted
Indebtedness).
SECTION 7.8 LIMITATION ON ENCUMBRANCES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
suffer to exist or cause or otherwise suffer to become effective any Lien in or
on any right, title or interest to any property (real or personal) that
constitutes all or any portion of the Collateral (a "RESTRICTED ENCUMBRANCE")
which term excludes the Lien created in favor of the Holders) unless such
Restricted Encumbrance is a Permitted Lien.
SECTION 7.9 LIMITATION ON RELATED PARTY TRANSACTIONS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into or be a party to any transaction with any Related
Parties (other than 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.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of any Credit Party.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any employee benefit
plan (within the meaning of Section 3(3) of ERISA) or Employee Agreement or (iv)
grant any bonus, salary increase, severance or termination pay to, any employee,
officer, director or consultant other than in the ordinary course of business
consistent with past practice.
SECTION 7.10 SUBSIDIARY GUARANTEES.
The Company shall cause its existing and future wholly-owned direct and
indirect Material Subsidiaries organized under the laws of any state of the
United States (or the District of Columbia) to jointly and severally guarantee
the obligations of the Company under the Notes and this Agreement pursuant to
the Subordinated Guarantee and Security Agreement. The Company shall cause such
guarantees to be executed and delivered by all of the domestic Material
Subsidiaries in existence on the
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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 Subordinated Guarantee and Security Agreement. The Company shall
cause its existing and future direct and indirect Material Subsidiaries
organized under the laws of any jurisdiction other than any state of the United
States or the District of Columbia to jointly and severally guarantee the
obligations of the Company under the Notes and this Agreement pursuant to the
Subordinated Guarantee Agreement. The Company shall cause such guarantees to be
executed, delivered and approved by all of such foreign Material Subsidiaries in
existence on the date hereof concurrently with the execution and delivery of
this 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 Subordinated Guarantee Agreement.
SECTION 7.11 RESTRICTED INVESTMENTS.
The Company shall not, directly or indirectly, make or cause
or permit, or permit any of its Subsidiaries to, make or cause or permit, (i)
any direct or indirect advance to, (ii) any loan or other extension of credit
to, (iii) any guarantee of any Indebtedness of, (iv) any capital contribution
to, (v) any purchase or other acquisition of any Equity Interests in, (vi) any
purchase or other acquisition of assets (other than in the ordinary course of
business) from or (vii) any merger with, any Person, including, without
limitation, any of the Company's Subsidiaries, in each case other than Permitted
Investments.
SECTION 7.12 OPERATING PROFIT. The Company's Operating Profit (as defined below)
shall be greater than the amounts listed in the following chart for the
applicable period. "OPERATING PROFIT" shall mean, for any given period, Net
Income (exclusive of (A) all amounts in respect of any extraordinary gains or
losses, (B) gains and losses arising from the sale or other disposition of
material assets not in the ordinary course of business and (C) earnings and
losses from discontinued operations) plus, to the extent reflected as a charge
in the statement of Consolidated Net Income for such period, the sum of: (i) all
taxes measured by income (whether paid or deferred), (ii) interest expense (net
of interest income), (iii) non-cash charges related to the Class Action
Settlement Agreement, (iv) restructuring charges disclosed in the 1997 Annual
Report on Form 10-K and the June 30, 1998 Quarterly Report on Form 10-Q and (v)
charges and expenses (including legal and accounting fees) incurred in
connection with the transactions entered into pursuant to the Exchange and as
contemplated by the Note Purchase Agreement.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Minimum Operating Profit Minimum Operating Profit
for three-month period for twelve-month period
DATE ending on 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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C>
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>
SECTION 7.13 TANGIBLE ASSETS.
The Company's Consolidated Tangible Assets shall exceed $50 million on
September 30, 1998 and each quarter thereafter.
SECTION 7.14 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within forty-five
days after the end of the four quarters of the Company's fiscal year and within
ninety days after the end of the Company's fiscal year, an Officers' Certificate
setting forth computations in reasonable detail showing, as at the end of such
quarter or fiscal year, as the case may be, the Company's compliance with
Sections 7.7, 7.8, 7.11, 7.12 and 7.13, and (ii) within 45 days after the end of
each fiscal quarter, an Officers' Certificate in the form of Exhibit 7.18
stating that as of the date of such certificate, based upon such examination or
investigation and review of this Indenture, as in the opinion of such signer is
necessary to enable the signer to express an informed opinion with respect
thereto, to the best Knowledge of such signer, the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture, and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof, and to the best of such signer's Knowledge, no
Default or Event of Default exists or has existed during such period or, if a
Default or Event of Default shall exist or have existed, specifying all such
defaults, and the nature and period of existence thereof, and what action the
Company has taken, is taking or proposes to take with respect thereto.
SECTION 7.15 NO SPECULATIVE TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any transaction involving commodity options, futures contracts or
similar transactions, except solely to hedge against fluctuations in the prices
of commodities owned or purchased by it and except for interest swaps, currency
hedges, caps or collars.
SECTION 7.16 LINE OF BUSINESS.
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business if, as a result, the general nature of the business in
which the Company and its Subsidiaries, taken as a whole, would then be engaged
would be substantially changed from the general nature of the businesses in
which the Company and its Subsidiaries, taken as a whole, are engaged on the
date of this Agreement.
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SECTION 7.17 SALE OF ASSETS.
The Company shall not, and shall not permit any of its Subsidiaries to,
sell, transfer or otherwise dispose of ("TRANSFER") any property or assets,
unless the property or asset that is the subject of such Transfer constitutes
(i) inventory held for sale, (ii) marketable securities available for sale, or
(iii) real estate, equipment, fixtures, supplies or materials no longer required
in the operation of the business of the Company or such Subsidiary or that is
obsolete, and, in the case of any Transfer described in clause (i) or (iii),
such Transfer is in the ordinary course of business.
SECTION 7.18 FINANCIAL STATEMENTS AND INFORMATION.
The Company shall furnish to the Trustee: (a) as soon as practicable
and in any event within 45 days after the end of each of the four quarters of
each fiscal year and within 90 days of the end of each fiscal year (i) copies of
the quarterly and annual reports and of the other information, documents, and
other reports which the Company files or is required to file with the SEC
pursuant to the Exchange Act and of any other reports or information which the
Company delivers or makes available to any of its security holders, at the time
of filing such reports with the SEC or of delivery to the Company's security
holders, as the case may be (but in no event later than the time such filing or
delivery is required pursuant to the Exchange Act) or (ii) as soon as
practicable and in any event within 45 days after the end of each of the four
quarters of each fiscal year and within 90 days of the end of each fiscal year,
quarterly reports for the four quarters of each fiscal year of the Company and
annual reports which the Company would have been required to file under any
provision of the Exchange Act if it had a class of securities listed on a
national securities exchange or was otherwise required to file such reports
under the Exchange Act, within fifteen Business Days of when such report would
have been filed under Section 13 of the Exchange Act, together with copies of a
consolidating balance sheet of the Company and its Subsidiaries as of the end of
each such accounting period and of the related consolidating statements of
income and cash flow for the portion of the fiscal year then ended, all in
reasonable detail and all certified by the principal financial officer of the
Company to present fairly the information contained therein in accordance with
GAAP (and in the case of annual reports, including financial statements, audited
and certified by the Company's independent public accountants as required under
the Exchange Act); (b) within ninety days after the end of each fiscal year, a
written statement by the Company's independent certified public accountants
stating as to the Company whether in connection with their audit examination,
any Default or Event of Default has come to their attention; (c)(i) within
forty-five days after the end of the four quarters of the Company's fiscal year
and within ninety days after the end of the Company's fiscal year, an Officers'
Certificate setting forth computations in reasonable detail showing, as at the
end of such quarter or fiscal year, as the case may be, the Company's compliance
with Sections 7.6, 7.8, 7.11, 7.12 and 7.13, and (ii) within 45 days after the
end of each fiscal quarter, an Officers' Certificate in the form of Exhibit 7.18
stating that as of the date of such certificate, based upon such examination or
investigation and review of this 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
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Documentation, (ii) any default or event of default under any Indebtedness of
the Company or any of its Subsidiaries, (iii) any litigation or proceeding
affecting any Credit Party in which the amount claimed is in excess of $100,000
and not covered by insurance or in which injunctive relief is sought which if
obtained would have a Material Adverse Effect, or (iv) any change that has or is
reasonably likely to have a Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto; and (e) such other
information, including financial statements and computations, relating to the
performance of the provisions of this 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.
SECTION 7.19 SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Subsidiary to, enter
into any Sale-and- Leaseback Transaction.
SECTION 7.20 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.
The Company shall, and shall cause each of its Subsidiaries to, at its
sole cost and expense, maintain the policies of insurance described on Schedule
7.20 in form and with insurers reasonably acceptable to the Holders of at least
a majority in principal amount of Outstanding Notes. If the Company or any of
its Subsidiaries at any time or times hereafter shall fail to obtain or maintain
any of the policies of insurance required above or to pay all premiums relating
thereto, the Trustee may (at the direction of the Holders of at least a majority
in principal amount of Outstanding Notes) at any time or times after ten days
written notice to the Company obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which the
Holders of at least a majority in principal amount of Outstanding Notes deem
advisable. Neither the Trustee nor the Holders of at least a majority in
principal amount of Outstanding Notes shall have any obligation to obtain
insurance for the Company or any of its Subsidiaries or pay any premiums
therefor. By doing so, the Trustee and the Holders shall not be deemed to have
waived any Default or Event of Default arising from any Credit Party's failure
to maintain such insurance or pay any premiums therefor. All sums so disbursed,
including reasonable attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by the Company to the Trustee and shall be
secured by the Collateral. Following the Closing, the Company shall use its
reasonable best efforts to obtain directors' and officers' insurance in amounts,
scope and coverage customarily obtained by comparable businesses.
SECTION 7.21 COMPLIANCE WITH LAWS.
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<PAGE>
The Company shall, and shall cause each of its Subsidiaries to, comply
with all Laws, ordinances or governmental rules or regulations to which each of
them is subject, and shall obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such Laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company shall timely file all proxy statements, reports and
other documents required to be filed by it under the Exchange Act and such
statements, reports and other documents shall be in compliance in all material
respects with the requirements of its respective report form and shall not on
the date of filing contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 7.22 WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 7.4 to 7.21, inclusive, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Notes shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
ARTICLE 8
REDEMPTION OF NOTES
SECTION 8.1 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 8.7 hereof, it shall furnish to the Trustee, at
least 60 days but not more than 90 days before a redemption date, an officer's
certificate setting forth (i) the redemption date, (ii) the principal amount of
Notes to be redeemed and (iii) the redemption price.
SECTION 8.2 SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a PRO RATA basis.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
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<PAGE>
SECTION 8.3 NOTICE OF REDEMPTION.
At last 30 days but not more than 90 days before a redemption
date, the Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its
registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in a principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) that Notes called for redemption must be surrendered to
the Trustee to collect the redemption price; and
(e) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 5 days prior to the
Company's proposed date of mailing of the notice, an officer's certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph (unless a
shorter notice shall have been agreed to by the Trustee in writing).
SECTION 8.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
8.3 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 8.5 DEPOSIT OF REDEMPTION PRICE.
Three Business Days prior to the redemption date, the Company
shall deposit with the Trustee money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee shall
promptly return to the Company any money deposited with the Trustee by the
Company in excess of the amounts necessary to pay the redemption price of and
accrued interest on all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name
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such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes.
SECTION 8.6 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the written order of the Company signed by two Officers of
the Company, the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to be unredeemed portion of the
Note surrendered.
SECTION 8.7 OPTIONAL REDEMPTION.
(a) The Company shall have the option to redeem the Notes, in
whole or in part, at a redemption price of 100% of the principal amount thereof,
plus accrued and unpaid interest thereon, to the applicable redemption date.
(b) Any redemption pursuant to this Section 8.7 shall be made
pursuant to the provisions of Section 8.1 through Section 8.6 hereof.
SECTION 8.8 MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
ARTICLE 9
SUBORDINATION
SECTION 9.1 AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by and the obligations relating to the
Note are subordinated and subject in right of payment, to the extent and in the
manner provided in this Article, to the prior payment in full of all Senior
Indebtedness, and that the subordination is for the benefit of the holders of
Senior Indebtedness. Simultaneously herewith, the Trustee is entering into an
Intercreditor Agreement with the Collateral Agent. The Trustee acknowledges and
agrees that the indebtedness evidenced by and obligations relating to the Notes
are subordinated in right of payment to the prior payment in full of all Senior
Indebtedness and the Trustee further acknowledges and agrees that the Collateral
Agent's liens on the Collateral are first priority liens.
SECTION 9.2 CERTAIN DEFINITIONS.
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"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 9.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:
(1) holders of Senior Indebtedness shall receive payment in
full of all Senior Indebtedness before Holders shall be entitled to
receive any payment in respect to the Indebtedness and obligations with
respect to the Notes; and
(2) until all Senior Indebtedness (as provided in clause (1)
above) are paid in full, any distribution to which Holders would be
entitled but for this Article shall be made to holders of Senior
Indebtedness, as their interests may appear.
SECTION 9.4 DEFAULT ON SENIOR INDEBTEDNESS
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Indebtedness or obligations with respect to
the Notes and may not acquire from the Trustee or any Holder any Notes for cash
or property until all principal and other obligations with respect to the Senior
Indebtedness have been paid in full if:
(i) a default in the payment of any Senior Indebtedness occurs
and is continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Senior Indebtedness; or
(ii) a default, other than a payment default, on Senior
Indebtedness occurs and is continuing that then permits holders of the
Senior Indebtedness to accelerate its maturity, and the Trustee
receives a notice of the default from a person who may give it pursuant
to Section 9.12 hereof. If the Trustee receives any such notice, a
subsequent notice received within 360 days thereafter shall not be
effective for purposes of this section. No nonpayment default that
existed or was continuing on the date of delivery of any such notice to
the Trustee shall be, or be made, the basis for a subsequent notice
unless such default shall have been waived for a period of not less
than 180 days.
The Company may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 9.4(ii)
hereof, 180 days pass after notice is received if the maturity of such
Senior Indebtedness has not been accelerated and such default has not
become the subject of judicial proceedings,
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if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 9.5 ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of the
acceleration and neither the Company nor the Trustee shall make any payment to
the Holders of the Notes for 120 days after such default.
SECTION 9.6 WHEN DISTRIBUTION MUST BE PAID OVER.
If a payment or distribution is made to the Trustee or any
Holder that because of this Article 9 should not have been made to it, the
Trustee or such Holder who receives the distribution shall hold it in trust for
the benefit of, and, upon written request, pay it over to, the holders of Senior
Indebtedness as their interests may appear, or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of all Indebtedness and obligations with respect to Senior
Indebtedness remaining unpaid to the extent necessary to pay such Indebtedness
and obligations in full in accordance with their terms, after giving effect to
any concurrent payment or distribution or for the holders of Senior
Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 9, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.
SECTION 9.7 NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
obligations with respect to the Notes to violate this Article, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article.
SECTION 9.8 SUBROGATION.
After all Senior Indebtedness is indefeasibly paid in full and
until the Notes are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness PARI PASSU with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
have been applied to the payment of Senior Indebtedness. A distribution made
under this Article to holders of Senior Indebtedness that otherwise would have
been made to Holders is not, as between the Company and Holders, a payment by
the Company on the Notes.
SECTION 9.9 RELATIVE RIGHTS.
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
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(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article to pay principal
of or interest on a Note on the due date, the failure is still a Default or
Event of Default.
SECTION 9.10 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any holder of Senior Indebtedness or
by the failure of the Company or any holder of Senior Indebtedness to comply
with this Indenture. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of Senior Indebtedness or any security therefor and
release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
the Indenture or the Holders of the Notes or the rights of such Senior
Indebtedness hereunder.
SECTION 9.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 9, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
9.
SECTION 9.12 RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 9, or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that causes the payment of any obligations with
respect to the Notes to violate this Article. Only the Company or the Trustee
may give the notice. Nothing in this Article 9 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 5.7 hereof.
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The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
SECTION 9.13 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article 9 or as provided in the Intercreditor Agreement, and appoints the
Trustee the Holder's attorney-in-fact for any and all such purposes. If the
Trustee does not file a proper proof of claim or proof of debt in the form
required in any proceeding referred to in Article 4 hereof at least 30 days
before the expiration of the time to file such claim, the Representatives of the
Senior Indebtedness are hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
SECTION 9.14 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such holders
if it shall in good faith mistakenly pay over or distribute to Holders of Notes
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 9.15 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR
INDEBTEDNESS; PRESERVATION OF TRUSTEE'S
RIGHTS.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
SECTION 9.16 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that Section 11.3 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 9.17 AMENDMENT.
The provisions of this Article 9 shall not be amended or
modified without the written consent of the number of holders of all Senior
Indebtedness that would be entitled to amend such subordination provisions
pursuant to the agreements governing the Senior Indebtedness.
ARTICLE 10
SECURITY
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SECTION 10.1 SECURITY.
(a) In order to secure the obligations of the Company and the
Guarantors under the Indenture, the Notes and the Collateral Documentation, the
Company, the Guarantors and the Trustee, as applicable, have entered into the
Collateral Documentation in order to create the security interests contemplated
thereby. Each Holder, by accepting a Note, agrees to all of the terms and
provisions of the Collateral Documentation and the Trustee agrees to all of the
terms and provisions of the Collateral Documentation signed by it.
(b) The Trustee and each Holder, by accepting a Note,
acknowledge that the holders of any Senior Indebtedness have or may in the
future obtain certain rights in and to the Collateral that are senior in right
to the interest of the Trustee (for the benefit of the Holders) in the
Collateral under this Indenture and the Collateral Documentation and the Trustee
agrees to be bound by such intercreditor or subordination agreements consistent
with Article 9 as shall be requested by the holders of the Senior Indebtedness
as such agreements may be in effect from time to time.
(c) As amongst the Holders, the Collateral as now or hereafter
constituted shall be held for the equal and ratable benefit of the Holders
without preference, priority or distinction of any thereof over any other by
reason of difference in series or in time of issuance, sale or otherwise, as
security for the obligations of the Company and the Guarantors under the
Indenture, the Notes and the Collateral Documentation.
SECTION 10.2 RECORDING, ETC.
The Company will have caused or will cause this Indenture, the
Collateral Documentation and the other Documents and all amendments or
supplements to each of the foregoing to be registered, recorded and filed and/or
rerecorded, re-filed and renewed in such manner and in such place or places, if
any, as may be required by law or reasonably requested by the Trustee or the
Holders of a majority of Outstanding Notes in order fully to preserve and
protect the Lien of the Indenture, the Collateral Documentation and the other
Documents on all parts of the Collateral to effectuate and preserve the security
of the Holders and all rights of the Trustee.
The Company shall furnish, and shall cause any other obligor
to furnish, to the Trustee:
(i) promptly after the execution and delivery of the
Indenture, and promptly after the execution and delivery of any
Collateral Documentation or other instrument of further assurance or
amendment, an Opinion of Counsel, subject to customary exclusions and
exceptions reasonably acceptable to the Trustee, either (a) stating
that, in the opinion of such counsel, this Indenture, the Collateral
Documentation and all other instruments of further assurance or
amendment have been properly recorded, registered and filed to the
extent necessary to make effective the Lien intended to be created by
the Indenture and the Collateral Documentation and reciting the details
of such action or referring to prior Opinions of Counsel in which such
details are given, and stating that as to the Indenture and Collateral
Documentation and such other instruments such recording, registering
and filing are the only recordings, registerings and filings necessary
to give notice thereof and that no re-recordings, re-registerings or
re-filings are necessary to maintain such notice, and further stating
that all financing statements and continuation statements and mortgages
have been executed and filed that are necessary fully to preserve and
protect the rights of the Holders and the Trustee hereunder and under
the Collateral
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Documentation or (b) stating that, in the opinion of such counsel, no
such action is necessary to make such Lien and pledge effective; and
(ii) within 60 days after January 1 in each year
beginning with January 1, 1999, an Opinion of Counsel, dated as of such
date, either (a) stating that, in the opinion of such counsel, subject
to customary exclusions and exceptions reasonably acceptable to the
Trustee, such action has been taken with respect to the recording,
registering, filing, re-recording, re-registering and re-filing of the
Indenture and all supplemental indentures, financing statements,
continuation statements and mortgages or other instruments of further
assurance as is necessary to maintain the Lien of the Indenture and the
Collateral Documentation and reciting the details of such action or
referring to prior opinions of Counsel in which such details are given,
and stating that all financing statements and continuation statements
and mortgages have been executed and filed that are necessary fully to
preserve and protect the rights of the Holders and the Trustee
hereunder and under the Collateral Documentation or (b) stating that,
in the opinion of such counsel, no such action is necessary to maintain
such Lien.
SECTION 10.3 REQUESTING RELEASE OF COLLATERAL.
(a) Upon receipt of a Company Request or the request of the
Trustee, the Trustee shall execute and deliver, within five Business Days from
the receipt of such Company Request pursuant to this Section 10.3, any
instruments deemed by the Company or a Guarantor to be necessary or appropriate
to release all or a part of the Collateral from the Lien of this Indenture and
the Collateral Documentation, if the provisions of this Section 10.3 have been
complied with. Any such Company Request shall request the Trustee to execute one
or more specifically described release instruments (which release instruments
shall accompany such Company Request) and shall certify that no Default or Event
of Default has occurred and is continuing and such Company Request shall also
certify that one of the following conditions of this Section 10.3(a) set forth
below, and the conditions of Section 10.4 or 10.5, if applicable, have been, or
simultaneously with or immediately following the release will be, fulfilled:
(i) the Trustee has released such Collateral;
(ii) there is a deposit of Cash Collateral in
accordance with Section 10.6;
(iii) the Collateral to be released is insurance
proceeds and such Collateral is used for repair, replacement
or deposit as Cash Collateral ; or
(iv) the Company represents in the Company Request
that the Collateral to be released is to be released in
connection with repayment of all Outstanding Notes or
defeasance of this Indenture pursuant to the provisions of
this Indenture.
(b) In the event and so long as this Indenture is qualified
under the Trust Indenture Act, as a condition to any release of Collateral under
this Section 10.3, the Company shall deliver to the Trustee any certificate or
opinion required by Trust Indenture Act Sections 314(c)(3) or 314(d) dated as of
a date not more than 60 days prior to the date of substitution or release. In
the case of the repayment of all Outstanding Notes or defeasance of this
Indenture pursuant to the provisions of this Indenture, such certificate or
opinion shall state that all of the Notes then Outstanding are to be repaid and
that all of the
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Collateral is to be released on or after the date of payment or the deposit of
funds or other property in accordance with the defeasance provisions of Article
3.
(c) Any release of Collateral made in compliance with the
provisions of this Section 11.4 shall be deemed not to impair the Lien of this
Indenture and the Collateral Documentation in contravention of the provisions of
this Indenture.
SECTION 10.4 RELIANCE ON OPINION OF COUNSEL.
The Trustee shall, before taking any action under this Article
10, be entitled to receive an Opinion of Counsel, stating the legal effect of
such action, and that such action will not be in contravention of the provisions
hereof, and such opinion shall be full protection to the Trustee for any action
taken or omitted to be taken in reliance thereon; PROVIDED THAT, in the event
and so long as this Indenture is qualified under the Trust Indenture Act, the
Trustee's action under this Article 10 shall at all times be and remain subject
to its duties under Section 315 of the Trust Indenture Act.
SECTION 10.5 PURCHASER MAY RELY.
A purchaser in good faith of the Collateral or any part
thereof or interest therein which is purported to be transferred, granted or
released by the Trustee as provided in this Article 10 shall not be bound (i) to
ascertain, and may rely on the authority of the Trustee to execute, such
transfer, grant or release, or (ii) to inquire as to the satisfaction of any
conditions precedent to the exercise of such authority, or (iii) to determine
whether the application of the purchase price therefor complies with the terms
hereof.
SECTION 10.6 PAYMENT OF EXPENSES.
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article 10, and all such sums shall be a Lien upon the Collateral and
shall be secured thereby.
SECTION 10.7 SUITS TO PROTECT THE COLLATERAL.
To the extent permitted thereunder, the Trustee shall have
power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts which may be
unlawful or in violation of the Collateral Documentation or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral and the
Collateral Documentation or this Indenture, and in the profits, rents, revenues
and other income arising therefrom, including power to institute and maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the Collateral or be prejudicial to
the interests of the Holders or the Trustee.
SECTION 10.8 TRUSTEE'S DUTIES.
The powers conferred upon the Trustee by this Article 10 are
solely to protect the Lien of this Indenture and the Collateral Documentation
and shall not impose any duty upon the Trustee to
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exercise any such powers except as expressly provided in this Indenture. The
Trustee shall be under no duty whatsoever to make or give any presentment,
demand for performance, notice of nonperformance, protest, notice of protest,
notice of dishonor, or other notice or demand in connection with any Collateral,
or to take any steps necessary to preserve any rights against prior parties
except as expressly provided in this Indenture. The Trustee shall not be liable
for failure to collect or realize upon any or all of the Collateral, or for any
delay in so doing, nor shall the Trustee be under any duty to take any action
whatsoever with regard thereto. The Trustee shall have no duty to comply with
any recording, filing or other legal requirements necessary to establish or
maintain the validity, priority or enforceability of the Lien of this Indenture
and the Collateral Documentation in, or the Trustee's rights in or to, any of
the Collateral.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 TRUST INDENTURE ACT.
In the event and so long as this Indenture is qualified under
the Trust Indenture Act, if any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this Indenture
by any of the provisions of the Trust Indenture Act, such required provision
shall control.
SECTION 11.2 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
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SECTION 11.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or given an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should now, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it related to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 11.4 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 5.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Persons of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
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(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Note.
SECTION 11.5 NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with.
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administrator or
(2) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 11.6 NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at its address as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 11.7 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 11.8 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS
Noteholders may communicate pursuant to Section 312(b) of the
Trust Indenture Act with other Noteholders with respect to their rights under
the Indenture or the Notes. The Company, the Trustee, the Registrar and any
other Person shall have the protection of Section 312(c) of the Trust Indenture
Act.
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<PAGE>
SECTION 11.9 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 11.10 NO RECOURSE AGAINST OTHERS.
No director, officer, employee or stockholder, as such, of the
Company shall have any liability for any obligations of the Company under the
Notes or the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
SECTION 11.11 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 11.12 SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.13 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 11.14 GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
SECTION 11.15 LEGAL HOLIDAYS.
In any case where any Interest Payment Date or Stated Maturity
of any Note shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or the Notes) payment of interest or principal need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the Interest Payment Date, or at
the Stated Maturity,
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PROVIDED that no interest shall accrue for the period from and after such
Interest Payment Date or Stated Maturity, as the case may be.
SECTION 11.16 COUNTERPARTS.
This Indenture may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 11.17 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 11.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR ANY
GUARANTOR WITH RESPECT TO THIS INDENTURE, THE GUARANTIES, ANY NOTE OR ANY OTHER
DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN NEW YORK, NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
THE COMPANY AND EACH GUARANTOR ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS INDENTURE, THE GUARANTIES, ANY NOTE OR
ANY OTHER DOCUMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. EACH OF
THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
NOTICE ADDRESS OF THE COMPANY SPECIFIED HEREIN SUCH SERVICE TO BECOME EFFECTIVE
TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE COMPANY AND EACH GUARANTOR AND THE
TRUSTEE IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH JURISDICTION. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE TRUSTEE OR ANY HOLDER TO BRING PROCEEDINGS AGAINST THE COMPANY OR
ANY GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 11.19 WAIVER OF JURY TRIAL.
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EACH OF THE COMPANY, EACH GUARANTOR AND THE TRUSTEE AND EACH
HOLDER BY ACCEPTANCE OF A NOTE HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
INDENTURE, ANY GUARANTY OR ANY NOTE OR ANY OTHER DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of the
transactions contemplated by this Indenture and the other Documents, including
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. The Company, each Guarantor and the
Trustee and each Holder by acceptance of a Note each acknowledge that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this Indenture, the Guaranty
and the other Documents and in issuing and purchasing the Notes and that each
will continue to rely on the waiver in their related future dealings. The
Company, each Guarantor and the Trustee and each Holder by acceptance of a Note
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS INDENTURE OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE NOTES. IN
THE EVENT OF LITIGATION, THIS INDENTURE MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
INAMED CORPORATION
By: __________________________
Attest:
- ------------------------------
SANTA BARBARA BANK & TRUST
By: __________________________
Attest:
- ------------------------------
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<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT REMEMBERED, that on ______________, 1998, before me, the
subscriber, ___________________________ personally appeared __________________
who, being by me duly sworn on his oath, deposes and makes proof to my
satisfaction, that he is __________________________ of INAMED CORPORATION, a
Florida corporation, the corporation named in the within instrument; that
________________________ is a __________________of said corporation; that the
execution, as well as the making of this Instrument, has been duly authorized by
a proper resolution of the Board of Directors of the said Corporation; that
deponent well knows the corporate seal of said Corporation; and that the seal
affixed to said Instrument is the proper corporate seal and was thereto affixed
and said Instrument signed and delivered by said _____________________ as and
for the voluntary act and deed of said Corporation, in the presence of deponent,
who thereupon subscribed his name thereto as attesting witness.
----------------------------
Sworn to and subscribed before me, the date aforesaid.
- ------------------------------
Notary Public
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<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT REMEMBERED, that on ______________, 1998, before me, the
subscriber, ______________________ personally appeared __________________ who,
being by me duly sworn on his oath, deposes and makes proof to my satisfaction,
that he is __________________________ of SANTA BARBARA BANK & TRUST, a
California banking corporation, a corporation named in the within instrument;
that ________________________ is a __________________ of said corporation; that
the execution, as well as the making of this Instrument, has been duly
authorized by a proper resolution of the Board of Directors of the said
Corporation; that deponent well knows the corporate seal of said Corporation;
and that the seal affixed to said Instrument is the proper corporate seal and
was thereto affixed and said Instrument signed and delivered by said
_____________________ as and for the voluntary act and deed of said Corporation,
in the presence of deponent, who thereupon subscribed his name thereto as
attesting witness.
----------------------------
Sworn to and subscribed before me, the date aforesaid.
- ------------------------------
Notary Public
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
(Insert assignee's Social Security or Tax I.D. No.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint(s) agent to transfer this Note on the books of Inamed.
The agent may substitute another to act for the agent.
- --------------------------------------------------------------------------------
Date: ____________________ Your Signature: ______________________________
(Sign exactly as your name appears on the other side of this Note)
[Signature Guarantee]
Exhibit T3E.1
SECURITIES EXCHANGE AGREEMENT
by and between
INAMED CORPORATION
and
THE SECURITYHOLDERS
SIGNATORY HERETO
Dated as of October 7, 1998
<PAGE>
THIS SECURITIES EXCHANGE AGREEMENT is dated as of October 7, 1998, by
and between INAMED CORPORATION, a Florida corporation (the "Company"), and the
persons named on the signature pages hereof and signatory hereto (each, a
"Holder").
WHEREAS, the Company has agreed that all interested Holders of Old
Notes (as defined herein) may exchange the Old Notes for a package of new
securities consisting of (i) Exchange Notes (as defined herein) and (ii)
Exchange Warrants (as defined herein); and
WHEREAS, the Company wishes to modify certain covenants contained in
the Old Notes, including among other things, increasing the basket for senior
secured debt and eliminating certain covenants contained therein; and
WHEREAS, agreement by the Holder to the exchange of Old Notes for
Exchange Notes and Exchange Warrants under the terms described herein will
constitute consent to the proposed modifications to the Old Notes, as set forth
in Annex A attached hereto;
THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, and
unless the context requires a different meaning, the following
terms have the meanings indicated:
"ACT" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"ADDITIONAL WARRANTS" means the warrants to acquire up to 500,000
shares of common stock of the Company with an exercise price of $7.50 per share.
<PAGE>
"AGREEMENT" means this Securities Exchange Agreement, as the same may
be amended, supplemented or modified in accordance with the terms hereof and in
effect.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"BREAST IMPLANT LITIGATION" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern Division
stylized as "Silicone Gel Breast Implant Products Liability Litigation (MDL926).
"CAPITAL STOCK" means, in the case of the Company, any and all shares
(however designated) of the capital stock of the Company now or hereafter
outstanding.
"CAPITALIZED LEASE" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"CAPITALIZED LEASE OBLIGATION" of any person shall mean and include, as
of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.
"CLASS ACTION SETTLEMENT AGREEMENT" shall mean a Settlement Agreement,
dated April 2, 1998, which provides, among other things, for the settlement of
certain claims against the Company arising out of the Breast Implant Litigation.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor code thereto, and any reference to the Code shall include a reference
to any successor provisions.
"COLLATERAL DOCUMENTATION" means the Subordinated Guarantee and
Security Agreement, the Subordinated Guarantee Agreements, the Subordinated
Security Agreement, the Financing Statements, the Exchange Offer Intercreditor
Agreement, the Intercompany Notes and the endorsements thereof to the Trustee
(for the benefit of the Holders) or to the Holders, and all other deeds of
trust, assignments, endorsements, pledged stock, collateral assignments and
other instruments, documents, agreements or conveyances at any time creating or
evidencing Liens or assigning Liens to the Trustee (for the benefit of the
Holders) or to the Holders, to secure the obligations of the Company or any of
its Subsidiaries hereunder and under the Exchange Notes and the Exchange Offer
Registration Rights Agreement.
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<PAGE>
"COMMON STOCK" means the common stock of the Company, par value $.01
per share.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" means INAMED CORPORATION, a Florida corporation and any
successor to the Company, whether by contract, assumption, merger,
consolidation, operation of law or otherwise.
"CONSENT" means the consent of the Holders of the Old Notes to the
amendments to the Indenture set forth in Section 2.2.
"CONSOLIDATED" or "CONSOLIDATED", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean the aggregate for two or more Persons of
the amounts signified by such term for all such Persons, with inter-company
items eliminated and, with respect to earnings, after eliminating the portion of
earnings properly attributable to minority interests, if any, in the capital
stock of any such Person or attributable to shares of preferred stock of any
such Person not owned by any other such Person.
"CONTRACTS" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound.
"COPYRIGHTS" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect of all past, present or future infringements) now or hereafter due or
payable under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and (iii)
otherwise accruing under or pertaining to any of the foregoing throughout the
world.
"CREDIT PARTY" shall mean each of the Company and each of its
Material Subsidiaries.
"EMPLOYEE AGREEMENT" shall mean each management, employment, severance,
consulting, non-compete, confidentiality, or similar agreement or contract
between any Credit Party or any ERISA Affiliate and any employee pursuant to
which any Credit Party or any ERISA Affiliate has or may have any liability
contingent or otherwise.
"ENVIRONMENTAL LAWS" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules,
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judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the protection
of the environment or the release of any materials into the environment,
including but not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"EQUITY INTERESTS" means any Capital Stock, partnership interest, joint
venture interest or other equity interest or warrants, options or other rights
to acquire any Capital Stock, partnership interest, joint venture interest or
other equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
at the Time of Exchange and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with the Company within the meaning of Sections 414(b), (c) or
(m) of the Code, or required to be aggregated with the Company under Section
414(o) of the Code, or is under "common control" with the Company, within the
meaning of Section 4001(a)(14) of ERISA.
"ERISA PLAN" means an employee benefit plan as such term is defined in
Section 3(3) of ERISA, with respect to which the Company or an Affiliate is a
disqualified person or a party in interest, as those terms are defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively.
"EXCHANGE" means the exchange of the Old Notes for the Exchange Notes
and Exchange Warrants and the Consent.
"EXCHANGE COLLATERAL" means all real and personal property and
interests in real and personal property including, without limitation,
Intellectual Property, rights under leases and royalty rights and agreements,
now owned or hereafter acquired by the Company or its Material Subsidiaries in
or upon which a Lien is granted or made under the Collateral Documentation.
"EXCHANGE NOTES" means the Company's 11.00% Senior Subordinated Secured
Notes due March 31, 1999 issued pursuant to the Exchange Notes Indenture.
"EXCHANGE NOTES INDENTURE" means the form of indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, in substantially the form as
attached hereto as Exhibit A.
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<PAGE>
"EXCHANGE OFFER DOCUMENTS" shall mean the Exchange Notes, the Exchange
Warrants, the Additional Warrants, the Exchange Notes Indenture, the Securities
Exchange Agreement, the Exchange Offer Registration Rights Agreement, the
Subordinated Guarantee and Security Agreement, the Subordinated Security
Agreement, the Subordinated Guaranty Agreement and the Exchange Offer
Intercreditor Agreement.
"EXCHANGE OFFER INTERCREDITOR AGREEMENT" shall mean the agreement,
dated as of the date hereof, between Appaloosa Management, L.P. as the
Collateral Agent under the New Financing and the Trustee for the Exchange Notes
under the Exchange Notes Indenture.
"EXCHANGE OFFER REGISTRATION RIGHTS AGREEMENT" shall mean the agreement
to be entered into between the Trustee and the holders of the Exchange Notes.
"EXCHANGE WARRANTS" shall mean warrants to acquire up to 3,671,616
shares of Common Stock of the Company with an exercise price of $5.50 per share.
"FINANCING STATEMENTS" means Form UCC-1 financing statements to be
filed in all jurisdictions necessary or desirable in order to perfect the
Holders' security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Holders and filings to be made in the U.S.
Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"GOVERNMENTAL ENTITY" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"GUARANTY" or "GUARANTEE" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (i) to purchase such Indebtedness or
obligation or any property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or
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<PAGE>
obligation of the ability of the primary obligor to make payment of such
Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the outstanding amount of the Indebtedness for borrowed
money which has been guaranteed, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means (i) the Persons who prior to the Time of Exchange
accepts and agrees to the terms hereof as indicated by its signature on the
signature page of this Agreement and (ii) each Person, if any, on whose behalf
the Holder executes this Agreement and whose Old Notes are the subject of any
exchange hereunder.
"INDEBTEDNESS" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
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<PAGE>
protection against fluctuations in interest or currency exchange rates.
"INDENTURE" means the indenture between the Company and Santa Barbara
Bank & Trust, as Trustee, dated as of January 2, 1996, as amended.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereon,
and all Patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all Trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments of the foregoing (in whatever form or medium) and (i) all
licenses or agreements in connection with the foregoing.
"JUNE 2, 1998 COURT ORDER" shall mean the June 2, 1998 preliminary
court order approving the Class Action Settlement Agreement and the 3M Agreement
issued by the United States District Court for the Northern District of Alabama.
"KNOWLEDGE", with respect to the Company, shall mean the actual
knowledge of each member of the board of directors of the Company and each
officer of the Company, and the knowledge that any of the foregoing persons
would have after due and reasonable inquiry and investigation.
"LAW" shall include any foreign, federal, state, or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
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<PAGE>
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MATERIAL" shall mean material in relation to the properties, business,
prospects, operations, earnings, assets, liabilities or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, whether or not
in the ordinary course of business.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the prospects
for the settlement of the Breast Implant Litigation), operations, earnings,
assets, liabilities or the condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of any Credit Party to perform its obligations under
any of the Exchange Offer Documents to which it is a party, (c) the validity or
enforceability of any of the Exchange Offer Documents, (d) the rights, remedies,
powers and privileges of the Holders under any of the Exchange Offer Documents
or (e) the timely payment or performance of the Exchange Notes.
"MATERIAL SUBSIDIARIES" at any time, shall mean any Subsidiary of the
Company, other than any Non-Significant Subsidiary of the Company.
"NEW FINANCING" means the 10% Senior Secured Notes to be issued by the
Company pursuant to the Note Purchase Agreement.
"NON-SIGNIFICANT SUBSIDIARY" at any time, shall mean any Subsidiary of
the Company which at such time has total assets (including the total assets of
any Subsidiaries) that have a fair market value of, or for which the Company or
any of its Subsidiaries shall have paid (including the assumption of
Indebtedness) in connection with the acquisition of capital stock (or other
equity interests) or the total assets of such Subsidiary, less than $100,000,
provided that the total assets of all Non- Significant Subsidiaries at any time
does not exceed 5% of the total assets of the Company and its Subsidiaries on a
consolidated basis.
"NOTE PURCHASE AGREEMENT" means the agreement dated as of September 30,
1998 between the Company, the parties listed on Exhibit A thereto Appaloosa
Management, L.P. as Collateral Agent.
"OLD NOTES" means the 11% Senior Secured Convertible Notes due March
31, 1999 of the Company issued pursuant to the Indenture.
"OUTSTANDING" or "OUTSTANDING" shall mean when used with reference to
the Notes at a particular time, all Notes theretofore issued as provided in this
Agreement, except (i) Notes theretofore reported as lost, stolen, damaged or
destroyed, or surrendered for
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transfer, exchange or replacement, in respect to which replacement Notes have
been issued, (ii) Notes theretofore paid in full, and (iii) Notes therefore
canceled by the Company, except that, for the purpose of determining whether
Holders of the requisite principal amount of Notes have made or concurred in any
waiver, consent, approval, notice or other communication under this Agreement,
Notes registered in the name of, or owned beneficially by, the Company or any of
its Subsidiaries of any thereof, shall not be deemed to be outstanding.
"PATENTS" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"PERSON" means any individual (including an individual when acting in a
fiduciary capacity), corporation, partnership, joint venture, association,
limited liability company, joint-stock company, trust, estate, unincorporated
organization or government or other agency or political subdivision thereof.
"PROHIBITED TRANSACTION" means a transaction described in Section
4975(e) of the Code or in Section 406 of ERISA, for which there is no available
exemption.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated the date hereof between the Purchasers and the Company with
respect to the New Financing.
"REINCORPORATION MERGER" shall mean the merger, if consummated, the
primary purpose of which is to effect the reincorporation of the Company in the
State of Delaware.
"RELATED PARTIES" shall mean Affiliates of the Company or any of its
Subsidiaries and directors or officers of the Company or any of its Subsidiaries
(including any family members of directors and officers).
"RELEASES" shall have the meaning ascribed thereto in the Recitals.
"RIGHTS PLAN" shall mean the plan (as amended) adopted by the Company's
board of directors on June 10, 1997.
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"SALE-AND-LEASEBACK TRANSACTION" shall mean a transaction or series of
transactions pursuant to which the Company or any of its Subsidiaries shall sell
or transfer to any Person (other than the Company or a Subsidiary of the
Company) any property, whether now owned or hereafter acquired, and, as part of
the same transaction or series of transactions, the Company or any of its
Subsidiaries shall rent or lease as lessee (other than pursuant to a Capitalized
Lease), or similarly acquire the right to possession or use of, such property or
one or more properties which it intends to use for the same purpose or purposes
as such property.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC REPORTS" shall have the meaning ascribed thereto in Section 4.4.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"SECURITY" or "SECURITIES" shall mean any equity or debt security of
the Company (including, without limitation, subscriptions, options, warrants,
rights, stock-based or stock- related awards or convertible or exchangeable
securities to which the Company is a party or by which the Company may be bound
of any character relating to, or obligating the Company to issue, grant, award,
transfer or sell any issued or unissued shares of the Company's Capital Stock or
other securities of the Company).
"SECURED OBLIGATIONS" shall mean any and all obligations of any Credit
Party at any time and from time to time for the performance of its agreements,
covenants and undertakings under or in respect of the Exchange Offer Documents
to which it is a party.
"STANDSTILL AGREEMENT" shall mean the agreement, dated July 8, 1998,
between the Company and Mr. Donald K. McGhan restricting Mr. McGhan's ability to
vote his Common Stock.
"STATE" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"SUBORDINATED GUARANTEE AGREEMENT" shall mean the guarantee to be made
by the Company's foreign Material Subsidiaries in favor of the holders of the
Exchange Notes.
"SUBORDINATED GUARANTEE AND SECURITY AGREEMENT" shall mean the
agreement to be entered into by the Company's domestic Material Subsidiaries and
the Trustee.
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"SUBORDINATED SECURITY AGREEMENT" shall mean the agreement to be
entered into by the Company and the Trustee.
"SUBSIDIARY" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof, (ii) any other Person (other than a corporation),
including without limitation a joint venture, in which such Person, one or more
Subsidiaries thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Persons performing similar functions) or
(iii) any other Person required to be consolidated with such Person in
accordance with generally accepted accounting principles. For purposes of this
definition (and for the determination of whether or not a Subsidiary is a
wholly-owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be disregarded
in determining the ownership of a Subsidiary.
"TAX" and "TAXES" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax, imposed by
any Governmental Authority and, including, without limitation, any Taxes of
another person owing under a contract, as transferee or successor, under Treas.
Reg. Section 1.1502-6 or analogous state, local or foreign law, or otherwise.
"TAX RETURN" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
"3M" shall mean the Minnesota Mining & Manufacturing Company.
"3M AGREEMENT" shall mean an agreement with 3M, dated as of April 16,
1998, which provides, among other things, for the resolution of certain
indemnification claims of 3M against the Company relating to the Breast Implant
Litigation and for the Company to obtain certain releases ascribed thereto in
the Recitals.
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"TIME OF EXCHANGE" has the meaning provided therefor in Section 2.1 of
this Agreement.
"TRADEMARKS" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals and
extensions of any of the foregoing and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) now or
hereafter due or payable under or with respect to any of the foregoing, (ii) to
sue for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
"TRUSTEE" means Santa Barbara Bank & Trust.
"YEAR 2000 PROBLEM" shall have the meaning ascribed thereto in Section
4.28.
ARTICLE II
EXCHANGE OF SECURITIES AND CONSENT TO MODIFICATION
Section 2.1 EXCHANGE OF SECURITIES. Subject to the terms and conditions
herein set forth, the Company agrees that it will issue the Exchange Notes,
Exchange Warrants and Additional Warrants to the Holders in exchange for the
Holders' Old Notes in such amounts as set forth on Schedule 2.1 attached hereto,
and the Holders agree that each will tender such Holder's Old Notes to the
Company in exchange for the Exchange Notes, Exchange Warrants and Additional
Warrants, at or prior to 5:00 p.m. New York time on November 5, 1998 (the
"Expiration Date"), which Old Notes, or an Affidavit of Lost Secured Convertible
Note in the event applicable, shall be delivered to the Company, together with
an executed copy of this Agreement. The Company reserves the right to extend the
Expiration Date for receipt of Old Notes. Each Holder that does not tender such
Holder's Old Notes to the Company as set forth herein shall retain their Old
Notes subject to the terms of the Indenture, as modified hereby, and shall
receive the amount of the Additional Warrants set forth on Schedule 2.1.
The acceptance for exchange and the exchange of all outstanding Old
Notes which are validly tendered will be made promptly, but in any event within
3 Business Days, after the Expiration Date. The Company will be deemed to have
accepted for exchange tendered Old Notes as, if and when the Company gives oral
or written notice to each Holder of its acceptance of the tenders of such Old
Notes. Any Old Notes tendered to and accepted by the
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Company prior to the Expiration Date shall be exchanged as of November 5, 1998,
or such other date that is the next business day after the Expiration Date (the
"Time of Exchange"). Delivery of the Exchange Notes and Exchange Warrants in
exchange for the Old Notes will be made by the Company as soon as practicable
after the Expiration Date.
The parties agree that for federal income tax purposes, the fair market
value of the Exchange Notes is $18,687,811 and the fair market value of the
Exchange Warrants is $917,904, and shall take no position inconsistent with such
valuations, except as otherwise required by law.
Section 2.2 CONSENT. The completion and execution of this Agreement
shall also be deemed to constitute the Consent of the Holder upon the Expiration
Date to (i) the proposed modifications to the Old Notes, as permitted by Article
7 of the Indenture, and as set forth in Annex A contained herein, to be
effective upon the Expiration Date and (ii) the release of the Collateral (as
defined in the Indenture) and the assignment of the Collateral to Santa Barbara
Bank and Trust, as Trustee of the Exchange Notes Indenture. The Company intends
to cause the execution of a supplemental Indenture providing for the proposed
modifications to occur on or about the Expiration Date so long as Holders of at
least a majority in aggregate principal amount of the Old Notes have agreed to
tender the Old Notes under the terms of this Agreement. If the requisite
Consents are received and the supplemental indenture reflecting the proposed
modifications becomes operative, all persons who continue to hold Old Notes
thereafter will be subject to the provisions of the supplemental Indenture.
However, the Company's duty to accept Old Notes and to deliver Exchange Notes,
Exchange Warrants and Additional Warrants to Holders under the terms of this
Agreement shall not be affected by the inability of the Company to obtain the
required consents to make the proposed modifications.
Section 2.3 WITHDRAWAL. Tender of Old Notes and Consents may be
withdrawn at any time prior to the Time of Exchange. If the Exchange is amended
in any material respect, the Company will disclose such amendment to each Holder
and will extend the Exchange for a period of at least 5 Business Days to permit
the Holders of the Old Notes to properly deliver or withdraw their Old Notes and
Consents. The Company may not withdraw or otherwise revoke the Exchange, except
as specifically provided herein.
Section 2.4 WAIVER. The completion and execution of this Agreement
shall be deemed to constitute an acknowledgement by each Holder of its receipt
of proper notice pursuant to Section 8.12 of the Indenture relating to the
proposed offering of the New Financing.
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Section 2.5 COMPLIANCE WITH TRUST INDENTURE ACT. Unless already so
qualified, the Company agrees to (i) use its best efforts to cause the Exchange
Notes Indenture to be qualified under the Trust Indenture Act of 1939, as
amended (the "TIA") in connection with the registration of the Exchange Notes
under the Exchange Offer Registration Rights Agreement, (ii) cooperate with the
Trustee to effect such changes to the Exchange Notes Indenture as may be
required for the Exchange Notes Indenture to be so qualified in accordance with
the terms of the TIA, and (iii) execute, and use their best efforts to cause the
Trustee to execute, all documents required to be filed with the Commission to
enable the Exchange Notes Indenture to be so qualified in a timely manner.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
Section 3.1(a) REPRESENTATIONS AND WARRANTIES OF THE HOLDERS. Each
Holder severally represents and warrants to, and covenants and agrees with, the
Company that the Exchange Notes and Exchange Warrants to be received by each
Holder in exchange for Old Notes pursuant to this Agreement are being received
for such Holder's own account and not for the account of any ERISA Plan, for the
purpose of investment and with no intention of distributing or reselling the
Exchange Notes or Exchange Warrants or any part thereof in any transaction,
which would be or result in a Prohibited Transaction or would be in violation of
the securities laws of the United States of America or any State, without
prejudice, however, to each Holder's rights at all times to sell or otherwise
dispose of all or any part of the Exchange Notes or Exchange Warrants under a
registration under the Act or under an exemption from such registration
available under such Act, provided that the disposition of such Holder's
property at the time of the sale or disposition of the Exchange Notes or
Exchange Warrants is within such Holder's control. If a Holder should in the
future decide to dispose of any of the Exchange Notes or Exchange Warrants, such
Holder understands and agrees with the Company that it will do so only (i) if
such disposition will not be or result in a Prohibited Transaction; (ii) if a
subsequent or transferee Holder shall agree in writing to be bound by the
representations and warranties of this Article III; and that such Holder may do
so only in compliance with the Act, as then in effect, and that stop-transfer
instructions to that effect will be in effect with respect to the Exchange Notes
or Exchange Warrants. If a Holder should decide to dispose of any of the
Exchange Notes or Exchange Warrants, the Company must first be in receipt of an
opinion of counsel to the effect that the proposed disposition of the Exchange
Notes or Exchange Warrants would not be in violation of the Act. Each Holder
agrees to the imprinting of legends required by law on certificates representing
all of the Exchange Notes and Exchange
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Warrants including but not limited to the following: "This security has not been
registered under the Securities Act of 1933, as amended, or any state securities
laws and may be reoffered and sold, pledged or otherwise transferred only if so
registered or if an exemption from registration is available."
Each Holder also severally represents and warrants to the Company that
(i) it has received and reviewed (a) the form of the Exchange Notes Indenture
and (b) copies of all annual reports and quarterly reports, proxy statements and
other reports filed by the Company since January 1, 1998 with the Securities and
Exchange Commission pursuant to the terms of the Securities Exchange Act of
1934, as amended; (ii) it is an "accredited investor" within the meaning of Rule
501 promulgated under the Securities Act of 1933, as amended and has been
afforded the opportunity to ask questions and receive answers concerning the
terms and conditions of the Exchange Notes and Exchange Warrants and the
transactions contemplated hereby and has relied solely on the representations
and warranties made herein in determining to exchange the Old Notes for the
Exchange Notes and Exchange Warrants; (iii) it has all requisite corporate power
and authority (A) to execute, deliver and perform its obligations under this
Agreement, (B) to exchange the Old Notes for the Exchange Notes and Exchange
Warrants in the manner and for the purpose contemplated in this Agreement and
(C) to execute, deliver and perform its obligations under all other agreements
and instruments executed and delivered by, or to be executed and delivered by,
the Holder pursuant to or in connection with this Agreement or any of the
transactions contemplated hereby or thereby; (iv) this Agreement has been duly
and validly authorized by each Holder and this Agreement has been duly and
validly executed and delivered by each Holder and constitutes the legal, valid
and binding agreement of each Holder, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally; and (v) the exchange of each Holder's Old
Notes for the Exchange Notes and Exchange Warrants does not violate such
Holders' charter or by-laws or any other governing documents, any material law
or regulation or any court order applicable to it.
Each Holder has relied solely on the representations made herein in
determining to exchange the Holder's Old Notes for the Exchange Notes and
Exchange Warrants pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Holder as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. Except as set forth on
Schedule 4.1, each Credit Party is a corporation duly
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organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated and has the power to own its respective property and to
carry on its respective business as now being conducted. Each Credit Party is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the respective business conducted
or property owned by it makes such qualification necessary and where the failure
to so qualify would individually or in the aggregate have a Material Adverse
Effect.
Section 4.2 DUE AUTHORIZATION. Each Credit Party has all
right, power and authority to enter into, deliver and perform the Exchange Offer
Documents to which it is a party and to consummate the transactions contemplated
thereby. The execution and delivery of each Exchange Offer Document by each
Credit Party thereto and the performance by such Credit Party of the
transactions contemplated thereby (including, without limitation, the issuance
and sale of the Exchange Notes, the Exchange Warrants and the Additional
Warrants by the Company) and compliance by each such Credit Party with all the
provisions of each Exchange Offer Document (as applicable) have been duly
authorized by all requisite corporate proceedings on the part of each Credit
Party. Each of the Exchange Offer Documents has been duly executed and delivered
on behalf of each Credit Party party thereto, and each such Exchange Offer
Document constitutes the legal, valid and binding obligation of such Credit
Party, enforceable against such Credit Party in accordance with their respective
terms, except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by general principles of equity
relating to creditors' rights generally.
Section 4.3 SUBSIDIARIES. (a) Schedule 4.3(a) contains (except
as noted therein) complete and correct lists (i) of the Company's Material
Subsidiaries, showing, as to each Material Subsidiary, the correct name thereof,
the jurisdiction of its organization, and the percentage of shares of each class
of its capital stock or similar equity interests outstanding owned by the
Company and each other of the Company's Subsidiaries, and (ii) of the Company's
directors and senior officers.
(b) Except as set forth in Schedule 4.3(a), all of the
outstanding shares of capital stock or similar equity interests of each Material
Subsidiary shown in Schedule 4.3(a) as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another of its Subsidiaries free and clear of any Lien.
(c) There are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which the Company or any of
its Subsidiaries may be required to issue, sell, repurchase or redeem any of its
capital stock or other equity interests in any of the Company's Subsidiaries.
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(e) Schedule 4.3(d) contains (except as noted therein) a
complete and correct list of all of the Company's Non-Significant Subsidiaries.
Section 4.4 SEC REPORTS CORRESPONDENCE. Except as set forth in
Schedule 4.4, the Company has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act from and after
January 1, 1995; and the Company has furnished each Purchaser true and complete
copies of all annual reports, quarterly reports, proxy statements and other
reports under the Exchange Act filed by the Company from and after such date,
each as filed with the SEC (collectively, the "SEC REPORTS"). Except as set
forth on Schedule 4.4, each SEC Report was in compliance in all material
respects with the requirements of its respective report form and did not on the
date of filing contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and as of the date hereof there is no fact or facts not
disclosed in the SEC Reports which relate specifically to the Company and/or any
of its Subsidiaries and which individually or in the aggregate may have a
Material Adverse Effect. The Company has made available for inspection by each
Purchaser copies of all correspondence between the Company and the SEC from and
after January 1, 1996.
Section 4.5 FINANCIAL STATEMENTS. Except as set forth in
Schedule 4.5, the financial statements (including any related schedules and/or
notes) included in the SEC Reports have been prepared in accordance with GAAP
consistently followed (except as indicated in the notes thereto) throughout the
periods involved and fairly present the consolidated financial condition,
results of operations, cash flows and changes in stockholders' equity of the
Company and its Subsidiaries as of the respective dates thereof and for the
respective periods then ended (in each case subject, as to interim statements,
to changes resulting from year-end adjustments, none of which were material in
amount or effect). Except as set forth in Schedule 4.5 or the SEC Reports, the
Company has no liabilities or obligations, contingent or otherwise, except (i)
liabilities and obligations in the respective amounts reflected or reserved
against in the Company's balance sheet as of December 31, 1997 included in the
SEC Reports or (ii) liabilities and obligations incurred in the ordinary course
of business since December 31, 1997 which individually or in the aggregate do
not have a Material Adverse Effect. Since December 31, 1997, the Company and its
Subsidiaries have operated their respective businesses only in the ordinary
course and there has not been individually or in the aggregate any Material
Adverse Effect, other than changes disclosed in the SEC Reports or otherwise set
forth in Schedule 4.5 hereto.
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Section 4.6 LITIGATION. (a) Except as set forth in Schedule
4.6 hereto or as disclosed in the SEC Reports, there is no action, suit,
investigation or proceeding pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective properties or assets by or before any court, arbitrator or other
Governmental Entity.
(b) Except as set forth in Schedule 4.6 or as disclosed in the
SEC Reports, neither the Company nor any of its Subsidiaries is in default under
or in breach of any order of any court, arbitrator or governmental entity, and
neither the Company nor any of its Subsidiaries is subject to or a party to any
order of any court or governmental entity arising out of any action, suit or
proceeding under any Law.
Section 4.7 TITLE TO PROPERTIES; INSURANCE. (a) Except as set
forth in Schedule 4.7(a), the Company and each of its Subsidiaries have good and
valid title to, or, in the case of property leased by any of them as lessee, a
valid and subsisting leasehold interest in, their respective properties and
assets, free of all Liens and encumbrances, except as sold or otherwise disposed
of in the ordinary course of business and except for such Liens and encumbrances
which would not cause a Material Adverse Effect.
(b) Schedule 4.7(b) sets forth a complete and
correct list of all insurance coverage carried by the Company or its
Subsidiaries, the carrier and the terms and amount of coverage. All of the
material assets of the Company and the Company's Subsidiaries and all aspects of
the Company's and its Subsidiaries' businesses that are of insurable character
are covered by insurance with insurers against risks of liability, casualty and
fire and other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage which are consistent with
prudent industry practice. Neither the Company nor any of its Subsidiaries is in
default with respect to its obligations under any such insurance policy
maintained by it. All such policies and other instruments are in full force and
effect and no premiums with respect thereto are past due and owed. Except as set
forth in Schedule 4.7(b), neither the Company nor any of its Subsidiaries has
failed to give any notice or present any material claim under any such insurance
policy in due and timely fashion or as required by any of such insurance
policies, neither the Company nor any of its Subsidiaries has otherwise, through
any act, omission or non-disclosure, jeopardized or impaired full recovery of
any claim under such policies, and there are no claims by the Company or any of
its Subsidiaries under any of such policies to which any insurance company is
denying liability or defending under a reservation of rights or similar clause.
Neither the Company nor any of its Subsidiaries has received notice of any
pending or threatened termination of any of such policies or any premium
increases for the current policy period with respect to any of such policies and
the consummation of the transactions
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contemplated by the Exchange Offer Documents will not result in any such
termination or premium increase. The Company does not maintain directors' and
officers' insurance.
Section 4.8 GOVERNMENTAL CONSENTS, ETC. No Credit Party is
required to obtain any consent, approval or authorization of, or to make any
registration, declaration or filing with, any Governmental Entity or third party
as a condition to or in connection with the valid execution and delivery of any
of the Exchange Offer Documents or the valid offer, issue, sale or delivery of
the Exchange Notes, Exchange Warrants or the Additional Warrants, or the
performance by any such Credit Party of its obligations in respect of any
thereof, except for filings required pursuant to state and federal securities
laws to effect any registration of securities pursuant to the Exchange Offer
Registration Rights Agreement, the Financing Statements, and filings to be made
with the U.S. Patent and Trademark Office or the U.S. Copyright Office to
perfect the Holders' security interest in the Intellectual Property constituting
Collateral under the Collateral Documentation, and except for the filing on Form
8K under the Exchange Act to report the consummation of the transactions
contemplated hereby.
Section 4.9 HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT. No
Credit Party is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility," as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
Section 4.10 TAXES. Except as set forth in Schedule 4.10:
(a) The Company and its Subsidiaries are each
members of the affiliated group (as defined in Code Section 1504) filing a
consolidated federal income Tax Return of which the Company is the common
parent. The Company and its Subsidiaries (i) have timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company or its Subsidiaries,
all of which Tax Returns are true, correct and complete in all material
respects; (ii) have within the time and manner prescribed by Law paid all Taxes,
required to be paid in respect of the periods covered by such Tax Returns or
otherwise due to any Governmental Authority; (iii) have established and
maintained on their respective books and records, accruals and reserves that are
adequate for the payment of all Taxes not yet due and payable and attributable
to any period preceding the date hereof; and (iv) have
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not received notice of any deficiencies for any Tax from any Governmental
Authority against the Company or any of its Subsidiaries, which deficiency has
not been satisfied. Neither the Company nor any of its Subsidiaries is the
subject of any currently ongoing audit or judicial or administrative proceeding
relating to Taxes, nor is any such audit pending or, to the Company's Knowledge,
threatened. With respect to any taxable period ended prior to December 31, 1992,
all Tax Returns including the Company or any of its Subsidiaries have been
audited by the Internal Revenue Service or are closed by the applicable statute
of limitations. The accruals and reserves for Taxes on the December 31, 1997
Balance Sheet are complete and adequate in all material respects to cover the
liability of the Company and its Subsidiaries for Taxes through such date. There
are no Liens with respect to Taxes upon any of the properties or assets, real or
personal, tangible or intangible, of the Company or any of its Subsidiaries
(other than Liens for Taxes not yet due). No claim has been made or threatened
in writing, and no claim has, to the Company's Knowledge, otherwise been made or
threatened, by a Governmental Authority in a jurisdiction where the Company and
its Subsidiaries do not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction. Neither the
Company nor any of its Subsidiaries has filed an election under Section 341(f)
of the Code to be treated as a consenting corporation. Neither the Company nor
any of its Subsidiaries is or has been a party to any Tax Sharing Agreement.
(b) The Company and its Subsidiaries have duly
withheld or collected all Taxes required by law to have been withheld or
collected (including Taxes required by law to be withheld or collected in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party) and any such amounts required to be
remitted to a Governmental Authority have been timely remitted.
Section 4.11 COMPLIANCE WITH ERISA. The Company has provided
or made available to each Purchaser, or has caused to be provided to each
Purchaser (i) current, accurate and complete copies of all documents embodying
or relating to each employee benefit plan (within the meaning of Section 3(3) of
ERISA) and each Employee Agreement, including all amendments thereto, and trust
or funding agreements with respect thereto (excluding any grantor trusts
established to hold assets subject to the claims of Seller's creditors)
maintained or contributed to by and Credit Party or any ERISA Affiliate; and
(ii) all summary plan descriptions and communications of any material
modifications to any employee or employees relating to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) or Employee Agreement maintained
by any Credit Party or any ERISA Affiliate. Schedule 4.11 sets forth a complete
and correct list of all employee benefit plans and Employee Agreements described
in clause (i) above.
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Each employee benefit plan (within the meaning of Section 3(3)
of ERISA) maintained or contributed to by any Credit Party or any ERISA
Affiliate has been established and operated in accordance with terms thereof and
all other applicable laws, including, but not limited to the Code and ERISA.
Neither any Credit Party nor any ERISA Affiliate presently sponsors, maintains,
contributes to, or is required to contribute to, nor has any Credit Party nor
any ERISA Affiliate ever sponsored, maintained, contributed to, or been required
to contribute to, an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) which is subject to Title IV of ERISA or Section 412 of
the Code. Neither any Credit Party nor any ERISA Affiliate has ever maintained
or contributed to or been required to maintain or contribute to any employee
welfare benefits plan (within the meaning of Section 3(1) of ERISA) which
provides for post-retirement medical or other welfare-type benefits and has no
liability for any such benefits to any present or former employee.
Section 4.12 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed
on Schedule 4.12 hereto, to the Company's Knowledge, (i) the Company or one of
its Subsidiaries owns or has the right to use pursuant to license, sub-license,
agreement or permission all of its Intellectual Property; and (ii) neither the
Company nor any of its Subsidiaries has interfered with, infringed upon or
misappropriated any Intellectual Property rights of third parties, except for
interferences, infringements and misappropriations which would not individually
or in the aggregate have a Material Adverse Effect, and the Company has no
Knowledge of any claim, demand or notice alleging any such interference,
infringement or misappropriation (including any claim that it must license or
refrain from using any Intellectual Property rights of any third party). To the
Company's Knowledge, no third party has interfered with, infringed upon or
misappropriated any Intellectual Property rights of the Company or any of the
Company's Subsidiaries.
Section 4.13 POSSESSION OF FRANCHISES, LICENSES, ETC. Each
Credit Party possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from burdensome
restrictions, that are necessary for the ownership, maintenance and operation of
their respective properties and assets, except for those the absence of which
would not individually or in the aggregate have a Material Adverse Effect, and
no Credit Party is in violation of any thereof, except for violations which
would not cause a Material Adverse Effect.
Section 4.14 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
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Law prohibit the consummation of the transactions contemplated by any of the
Exchange Offer Documents.
Section 4.15 CONFLICTING AGREEMENTS AND CHARTER PROVISIONS.
Other than the Class Action Settlement Agreement, no Credit Party is a party to
any Contract or is subject to any charter or by-law provision or any judgment or
decree which individually or in the aggregate has or is reasonably likely to
have a Material Adverse Effect. Neither the execution and delivery of any of the
Exchange Offer Documents, nor the issuance of the Exchange Notes, Exchange
Warrants or the Additional Warrants, nor the fulfillment of or compliance with
the terms and provisions hereof or thereof, will conflict with or result in a
breach of the terms, conditions, or provisions of, or give rise to a right of
termination under, or constitute a default under, or result in the creation of
any Lien, or result in any violation of, the charter or by-laws or other
organizational documents of any Credit Party or any Contract of any Credit Party
except where such conflict, breach, right of termination, default, Lien or
violation would not cause a Material Adverse Effect. No Credit Party is in
default under any outstanding indenture or other debt instrument or with respect
to the payment of the principal of or interest on any outstanding obligations
for borrowed money, or is in default under any of its Contracts except, in the
case of Contracts, where such default would not cause a Material Adverse Effect.
Section 4.16 CAPITALIZATION. The authorized capital stock of
the Company consists of 20,000,000 shares of Common Stock, of which, as of the
date hereof, 10,990,290 shares were issued and outstanding. All of the
outstanding shares of Common Stock have been validly issued and are fully paid
and nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except for the Old Notes and the warrants and options listed
on Schedule 4.16 hereto, there are no outstanding options, warrants,
subscription rights, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, shares of any class of Capital
Stock of the Company, or Contracts, by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of its Capital
Stock or options, warrants or other rights to purchase or acquire any shares of
its Capital Stock. Immediately following the consummation of the transactions
contemplated hereby, the Company's capitalization will be as set forth in
Schedule 4.16. The Company has not declared or paid any dividend or made any
other distribution of cash, stock or other property to its stockholders since
January 1, 1995.
Section 4.17 DISCLOSURE. Neither any Exchange Offer Document
nor any Schedule thereto, nor any certificate furnished to any Purchaser by or
on behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated thereby, taken as a whole, contains any untrue
statement of a
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material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
Section 4.18 OFFERING OF NOTES. Neither the Company nor any
Person acting on its behalf has offered the Exchange Notes, Exchange Warrants or
the Additional Warrants or any similar securities of the Company for sale to,
solicited any offers to buy the Exchange Notes, Exchange Warrants or the
Additional Warrants or any similar securities of the Company from or otherwise
approached or negotiated with respect to the Company with any Person other than
the Holders and other "accredited investors" (as defined in Rule 501(a) under
the Securities Act). Neither the Company nor any Person acting on its behalf has
taken or, except as contemplated hereby will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Exchange Notes, Exchange Warrants or the Additional Warrants under the
Securities Act) which could reasonably be expected to subject the offering,
issuance or sale of the Exchange Notes, Exchange Warrants or the Additional
Warrants to the registration requirements of Section 5 of the Securities Act or
violate the provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
Section 4.19 EXISTING INDEBTEDNESS; FUTURE LIENS. (a) Schedule
4.19 sets forth a complete and correct list of all outstanding Indebtedness of
the Company and its Subsidiaries as of the date hereof. Neither the Company nor
any of its Subsidiaries is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any such Indebtedness and
no event or condition exists with respect to any such Indebtedness that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment. None of the
Company's 4% convertible debentures, due January 30, 2000, are outstanding.
(b) No Credit Party has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any Lien.
Section 4.20 ENVIRONMENTAL MATTERS. No Credit Party has
Knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against any Credit Party or any
of its real properties now or formerly owned, leased or operated by any of them
or other assets, alleging any damage to the environment or violation of any
Environmental Laws. Except as otherwise set forth in Schedule 4.20, (i) no
Credit Party has Knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or damage to
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the environment emanating from, occurring on or affecting real properties now or
formerly owned, leased or operated by any of them or to other assets or their
use; (ii) no Credit Party has stored any Hazardous Materials on real properties
now or formerly owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental Laws; and
(iii) all buildings on all real properties now owned, leased or operated by any
Credit Party are in compliance with applicable Environmental Laws; except in
each case for such occurrences which would not cause a Material Adverse Effect.
Section 4.21 SOLVENCY. No Credit Party is, and after giving
effect to the purchase of the Notes and the application of the proceeds
therefrom will be, insolvent within the meaning of Title 11 of the United States
Code or any comparable state law provision.
Section 4.22 LABOR RELATIONS. Except as set forth in Schedule
4.22, no unfair labor practice complaint or any complaint alleging sexual
harassment or sex, age, race or other employment discrimination has been brought
during the last three years against any Credit Party before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
Governmental Authority, nor is there any charge, investigation (formal or
informal) or complaint pending, or to the Knowledge of each Credit Party,
threatened, against any Credit Party regarding any labor or employment matter.
There have been no governmental audits of the equal employment opportunity
practices of any Credit Party and, to the Knowledge of each Credit Party, no
reasonable basis for any such audit exists. Each Credit Party (i) is in
compliance with all applicable federal, state and local laws, rules and
regulations (domestic and foreign) respecting employment, employment practices,
labor, terms and conditions of employment, collective bargaining and wages and
hours, except for such laws, rules and regulations which would not cause a
Material Adverse Effect and (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to its
employees.
Section 4.23 SECURITY DOCUMENTS. Upon proper filing of the
Financing Statements (or assignments thereof) in the offices of the Secretary of
State of Nevada with respect to the Company and upon proper filing of the
Financing Statements (or assignments thereof) in the locations identified in the
Subordinated Guarantee and Security Agreement, with respect to the domestic
Material Subsidiaries, the Liens granted under the Exchange Offer Documents
shall constitute fully perfected security interests in all right, title and
interest of the Company or such domestic Material Subsidiary, as the case may
be, in and to the personal property therein prior to any other security
interests against such property or interests therein.
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Section 4.24 LITIGATION SETTLEMENT. (a) Attached hereto as
Exhibits 4.24A, 4.24B and 4.24C are true and complete copies of the Class Action
Settlement Agreement, the 3M Agreement, and the June 2, 1998 Court Order
approving the Class Action Settlement Agreement and the 3M Agreement (including
the 30-day extension letter thereto).
(b) The plaintiffs in the Breast Implant Litigation have been
preliminarily certified as a Mandatory (non "opt-out" Limited Fund) Class under
Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure.
(c) Except as disclosed in the Company's filing in its 1997
Form 10K, the implementation of the Class Action Settlement Agreement will
preclude further litigation by all persons who are within the scope of the class
and whose claims arise during the class period.
(d) Each Credit Party is in full compliance with all of the
terms of the Class Action Settlement Agreement, the 3M Agreement and the June 2,
1998 Court Order. No Credit Party is in default under or in violation of the
Class Action Settlement Agreement, the 3M Agreement, or the June 2, 1998 Court
Order and all of the foregoing are in full force and effect with respect to each
Credit Party. To the Knowledge of each Credit Party, each Person (other than a
Credit Party) who is a party to the Class Action Settlement Agreement or the 3M
Agreement or who is subject to the June 2, 1998 Court Order is in full
compliance with the terms of such agreements and such order, are not in default
or in violation of such agreements or such order, and each of the foregoing is
in full force and effect with respect to such parties.
Section 4.25 BROKERS OR FINDERS. Other than the $100,000 fee
to Libra Investments and the $200,000 fee to Appaloosa Management, L.P. to be
paid in connection with the New Financing, no agent, broker, investment banker
or other Person is or will be entitled to any broker's fee or any other
commission or similar fee from any Credit Party in connection with any of the
transactions contemplated by this Agreement.
Section 4.26 NO MATERIAL ADVERSE CHANGE. Except as set forth
in Schedule 4.26, since January 1, 1997, no event has occurred or failed to
occur which has had Material Adverse Effect.
Section 4.27 RELATED PARTY TRANSACTIONS. (a) Except as set
forth in Schedule 4.27 or as disclosed in the SEC Reports, no Credit Party has
entered into or been a party to any transaction with any Related Party thereof
except in the ordinary course of, and pursuant to the reasonable requirements
of, such party's business and upon fair and reasonable terms that are at least
equivalent to an arms length transaction with a Person not a Related Party of
such party.
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(b) Except as set forth in Schedule 4.27 or as disclosed in
the SEC Reports, no Credit Party has entered into any lending or borrowing
transaction with any director, officer or employee of the Company or any of its
Subsidiaries in excess of $10,000 in the aggregate.
Section 4.28 YEAR 2000. The Company reasonably believes that
the Company and its Subsidiaries will on a timely basis successfully resolve the
risk that computer applications used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates, commonly referred to as the "YEAR 2000 PROBLEM", if the Company
and its Subsidiaries implement the plans for such resolution currently in place.
The Company reasonably believes that the cost to the Company and its
Subsidiaries of correcting their Year 2000 Problem will not be Material. The
Company and its Subsidiaries, on the basis of inquiries made, believe that each
material supplier and customer of the Company and each of its Subsidiaries will
also successfully resolve on a timely basis the Year 2000 Problem for all of its
computer applications.
Section 4.29 STATEMENTS; OMISSIONS. With respect to the
Exchange, the Company has provided to the Holders all material facts relevant to
the Company and the Exchange, and the Company has not made any untrue statements
of a material fact or omitted to state a material fact necessary in order to
make any statements made by the Company, in the light of the circumstances under
which they were made, not misleading
Section 4.30 NO REGISTRATION REQUIRED; TRUST INDENTURE ACT.
Subject to compliance by the Holders with the representations and warranties set
forth in Article III, it is not necessary in connection with the offer, sale and
delivery of the Exchange Notes, Exchange Warrants and Additional Warrants to the
Holders and by the Holders to each subsequent holder in the manner contemplated
by this Agreement to register the Exchange Notes, Exchange Warrants or the
Additional Warrants under the Act. This Agreement, the Exchange Notes Indenture
and the transactions contemplated hereby and thereby are in full compliance with
the Trust Indenture Act of 1939, as amended ("Trust Indenture Act").
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to issue the Exchange Notes and Exchange Warrants in
exchange for each Holder's Old Notes pursuant to this Agreement are subject, at
the Time of Exchange, to the satisfaction of the following conditions:
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(a) The representations and warranties made by each Holder
herein shall be true and correct in all material respects on and as of
the Time of Exchange with the same effect as though such
representations and warranties had been made on and as of the Time of
Exchange and each Holder shall have complied in all material respects
with all agreements and conditions set forth or contemplated herein
that are required to be performed or complied with by such Holder at or
prior to the Time of Exchange. It is understood and agreed that the
Company shall be entitled to request and receive such certificates or
opinions from the Holder at the Time of Exchange as shall be
satisfactory to the Company to demonstrate compliance with the
provisions of this Section 5.1(a)
(b) The issuance of the Exchange Notes and Exchange Warrants
by the Company in exchange for each Holder's Old Notes shall not be
enjoined (temporarily or permanently) at the Time of Exchange under the
laws of any jurisdiction to which the Company is subject.
(c) The New Financing shall have closed and the Company shall
have received the net proceeds of such financing pursuant to the terms
thereto.
Section 5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE HOLDERS. The
obligations of the Holders to exchange the Holder's Old Notes for the Exchange
Notes and Exchange Warrants is subject, at the Time of Exchange, to the
satisfaction of the following conditions:
(a) The representations and warranties of the Company shall be
true and correct in all material respects on and as of the Time of
Exchange with the same effect as though such representations and
warranties had been made on and as of the Time of Exchange and the
Company shall have complied in all material respects with all
agreements and conditions set forth or contemplated herein that are
required to be performed or complied with by the Company at or prior to
the Time of Exchange.
(b) The issuance of the Exchange Notes and Exchange Warrants
by the Company in exchange for each Holder's Old Notes shall not be
enjoined (temporarily or permanently) at the Time of Exchange under the
laws of any jurisdiction to which the Company is subject.
(c) The New Financing shall have closed and the Company shall
have received the net proceeds of such financing pursuant to the terms
thereto.
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<PAGE>
(d) Each Holder shall have received the opinion of the
Company's counsel in the form of Exhibit 5.2
ARTICLE VI
EXPENSES
Section 6.1 EXPENSES. The Company agrees to pay the following expenses
relating to this Agreement:
(a) the cost of reproducing, executing and delivering this
Agreement and any other documents contemplated hereby or thereby;
(b) the cost of delivering to the Holder the Exchange Notes
and Exchange Warrants issued to the Holder at the Time of Exchange; and
(c) all other expenses incurred by the Company.
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 REGISTRATION RIGHTS. Pursuant to the Exchange Warrants and
the Exchange Offer Registration Rights Agreement, the Company shall register
with the Commission (i) the shares of common stock of the Company underlying the
Exchange Warrants no later than the first anniversary of the date hereof and
(ii) upon demand by at least 50% of the holders in interest of Exchange Notes,
the Exchange Notes.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NO WAIVER; MODIFICATIONS IN WRITING; SURVIVAL. No failure
or delay on the part of the Company or a Holder in exercising any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or a Holder at law or in equity or
otherwise. No waiver of or consent to any departure by the Company or a Holder
from any provision of this Agreement shall be effective unless signed in writing
by the parties hereto. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or a Holder from the terms of any
provision of this Agreement, shall
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<PAGE>
be effective only in the specific instance and for the specific purpose for
which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances. The representations, warranties and covenants of the Company set
forth herein shall survive the Time of Exchange and shall not terminate.
Section 8.2 COMMUNICATIONS. All notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally or sent by overnight delivery
service, registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
any party as shall be specified by like notice, provided that notices of a
change of address shall be effective only upon receipt thereof). Notices sent by
mail shall be effective two days after mailing, notices delivered personally
shall be effective upon receipt, and notices sent by overnight delivery service
guaranteeing next day delivery shall be effective on the next business day after
timely delivery to the courier:
i) if to a Holder at the most current address given by the
Holder to the Company in writing (the address set forth on the Holder's
signature page hereof to be such address initially);
ii) if to the Company at the following address:
Inamed Corporation
1120 Avenue of the Americas, 4th Floor
New York, New York 10036
Attention: Ilan Reich, Executive Vice President
with copies to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Adam W. Finerman, Esq.
Section 8.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts and by the parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.
Section 8.4 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns
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(including, without limitation, any subsequent holder of an Exchange Note or
Exchange Warrant).
Section 8.5 GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State, without regard to
principles of conflict of laws.
Section 8.6 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.7 CERTAIN TAXES. The Company shall pay any sales, transfer,
stamp, documentary or similar taxes incurred in connection with the transactions
contemplated by this Agreement.
Section 8.8 HEADINGS. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
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<PAGE>
SECURITIES EXCHANGE AGREEMENT SIGNATURE PAGE 1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
INAMED CORPORATION
By:________________________________
Title:
Accepted and Agreed as of the date
first above written. The
completion, execution and delivery
of this Agreement constitutes a
consent to the proposed amendments
set forth in Annex A attached
hereto
______________________________________
Name of Holder (Please type or print)
By:____________________________________
(Please sign)
Name:
Title:
NOTE: Please sign exactly as name
appears on the Old Note. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. When signing on behalf
of a corporation, you should be an
authorized officer of such
corporation, and please give your
title as such.
Address:______________________________
______________________________
______________________________
Social Security Number or Tax I.D. Number
Aggregate principal amount of Old
Notes to be delivered by you:
$________________________________________
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<PAGE>
ANNEX A
PROPOSED MODIFICATIONS TO INDENTURE
SELECTED INDENTURE PROVISIONS PROPOSED MODIFICATION
AS CURRENTLY IN EFFECT
Section 8.2 MAINTENANCE OF [DELETED IN ITS ENTIRETY]
OFFICE OR AGENCY
Section 8.6 PAYMENT OF TAXES [DELETED IN ITS ENTIRETY]
AND OTHER CLAIMS
Section 8.7 LIMITATION ON [DELETED IN ITS ENTIRETY]
INDEBTEDNESS
Section 8.8 LIMITATION ON [DELETED IN ITS ENTIRETY]
ENCUMBRANCES
Section 8.9 LIMITATION ON [DELETED IN ITS ENTIRETY]
RELATED PARTY TRANSACTIONS
Section 8.10 LIMITATION ON [DELETED IN ITS ENTIRETY]
DIVIDENDS
Section 8.11 SUBSIDIARY [DELETED IN ITS ENTIRETY]
GUARANTEES
Section 8.12 ADDITIONAL [DELETED IN ITS ENTIRETY]
OFFERINGS OF SECURITIES
Section 8.13 PLEDGES OF [DELETED IN ITS ENTIRETY]
INTERCOMPANY NOTES
Section 8.14 REGISTRATION [DELETED IN ITS ENTIRETY]
RIGHTS
Section 8.15 RESTRICTED [DELETED IN ITS ENTIRETY]
INVESTMENT
Section 8.16 OPERATING PROFIT [DELETED IN ITS ENTIRETY]
Section 8.17 TANGIBLE ASSETS [DELETED IN ITS ENTIRETY]
Section 8.18 STATEMENT BY [DELETED IN ITS ENTIRETY]
OFFICERS AS TO DEFAULT
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Exhibit T3E.2
Form of Subordinated Security Agreement
SUBORDINATED SECURITY AGREEMENT
This SUBORDINATED SECURITY AGREEMENT (this "Agreement") dated as of
____________, 1998, is made by Inamed Corporation, a Florida corporation (the
"Obligor"), and Santa Barbara Bank & Trust, as trustee for the benefit of the
holders of the Obligor's 11% Senior Subordinated Secured Notes due March 31,
1999, or at the option of the Obligor exercised as provided therein, September
1, 2000 (in such capacity, the "Trustee").
RECITALS
The Indenture dated as of ___________, 1998 (the "Subordinated
Indenture") between the Obligor and the Trustee provides, subject to its terms
and conditions, for the issuance by the Obligor of its 11% Senior Subordinated
Secured Notes due March 31, 1999, or at the option of the Obligor as provided
therein, September 1, 2000 (the "Exchange Notes") as well as certain warrants to
purchase the Obligor's common stock, $.01 per share, (the "Warrants") to be
issued in exchange for the Obligor's 11% Secured Convertible Notes due 1999 (the
"Old Notes") to the holders thereof (the "Holders") pursuant to the Securities
Exchange Agreement dated as of October 7, 1998 (the "Securities Exchange
Agreement"). It is a condition to the exchange of the Old Notes for the Notes
and Warrants by the Purchasers that the Obligor shall have executed and
delivered, and granted the Liens provided for in, this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligor has agreed to pledge and grant a security interest in
the Collateral as security for the Secured Obligations. Accordingly, the Obligor
agrees with the Trustee as follows:
Article I. Definitions and Interpretation.
1.01 CERTAIN DEFINED TERMS. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Subordinated Indenture or
in the Exchange Agreement (including those terms incorporated therein by
reference) shall have the respective meanings assigned to them in the
Subordinated Indenture or the Exchange Agreement, as applicable. In addition,
the following terms shall have the following meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in Section
2.01(b).
"Breast Implant Litigation" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern Division
stylized as "Silicone Gel Breast Implant Products Liability Litigation
(MDL926)."
<PAGE>
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include, as
of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in Section
2.01.
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by the Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect of all past, present or future infringements) now or hereafter due or
payable under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and (iii)
otherwise accruing under or pertaining to any of the foregoing throughout the
world.
"Documents" shall have the meaning assigned to that term in Section
2.01(f).
"Equipment" shall have the meaning assigned to that term in Section
2.01(e).
"Equity Rights" shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"Event of Default" shall mean each of the happenings or circumstances
enumerated in Section 4.1 of the Subordinated Indenture.
"Exchange Documents" shall mean the Securities Exchange Agreement dated
as of ___________, 1998 between the Company, the holders listed on Exhibit A
thereto and the Collateral Agent, the Exchange Notes, this Agreement, the
Subordinated Guarantee Agreement, dated as of the date hereof, by and between
certain Subsidiaries of the Company and the Collateral Agent (the "Subordinated
Guarantee Agreement"), the Subordinated Guarantee and
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Security Agreement, dated as of the date hereof, by and between certain
Subsidiaries of the Company and the Collateral Agent (the "Subordinated
Guarantee and Security Agreement"),the Subordinated Indenture, the Exchange
Offer Registration Rights Agreement, dated as of the date hereof, by and between
the Company and the Holders and the Intercreditor Agreement, dated as of the
date hereof, by and between the Collateral Agent and the Trustee.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Instruments" shall have the meaning assigned to that term in Section
2.01(c).
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereon,
and all Patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all Trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, (h) all copies and
tangible embodiments of the foregoing (in whatever form or medium) and (i) all
licenses or agreements in connection with the foregoing.
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"Intercreditor Agreement" means the Intercreditor Agreement dated as of
____________, 1998 between the Trustee and Appaloosa Management, L.P. as
Collateral Agent under the Note Purchase Agreement.
"Inventory" shall have the meaning assigned to that term in Section
2.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Obligor that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter acquired
by the Obligor.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the prospects
for the settlement of the Breast Implant Litigation), operations, earnings,
assets, liabilities or the condition (financial or otherwise) of the Obligor and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of the Obligor to perform its obligations under any of
the Exchange Documents to which it is a party, (c) the validity or
enforceability of any of the Exchange Documents, (d) the rights, remedies,
powers and privileges of the Holders under any of the Exchange Documents or (e)
the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is governed
by a certificate of title or ownership.
"Note Purchase Agreement" means the agreement dated as of September 30,
1998 between the Company, the parties listed on Exhibit A thereto and the
Collateral Agent.
"Obligations" shall mean the principal and interest due under the
Exchange Notes and all other obligations and liabilities of the Obligor to the
Holders of every nature whatsoever now existing or hereafter arising, including,
without limitation, all prepayment premiums, indemnities, reimbursement
obligations, fees, costs and expenses, arising under or in connection the
Exchange Documents (including, without limitation, any interest accruing
subsequent to (or that would accrue but for) the commencement of any proceeding
involving the bankruptcy, insolvency, reorganization, liquidation, receivership
or the like of the Obligor), and any and all expenses which may be incurred by
the Holders in collecting any or all of the obligations of the Obligor under
this Agreement and/or enforcing any rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Obligor.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii)
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otherwise accruing under or pertaining to any of the foregoing throughout the
world, including all inventions and improvements described or discussed in all
such patents and patent applications.
"Permitted Investments" shall mean (a) direct obligations of the United
States of America, or of any of its agencies, or obligations guaranteed as to
principal and interest by the United States of America, or of any of its
agencies, in either case maturing not more than 90 days from the date of
acquisition of such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank or trust
company organized under the laws of the United States of America or any state or
licensed to conduct a banking or trust business in the United States of America
or any state and having capital, surplus and undivided profits of at least
$35,000,000, maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A-1 or better or P-1 by Standard & Poor's Corporation or
Moody's Investors Services, Inc., respectively, maturing not more than 90 days
from the date of acquisition; and (d) money market funds sponsored by commercial
or investment banks unaffiliated with the Obligor.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning assigned to that term in Section
2.01(a).
"Pledged Stock" shall have the meaning assigned to that term in Section
2.01(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"Secured Obligations" shall mean any and all obligations of the Obligor
at any time and from time to time for the performance of its agreements,
covenants and undertakings under or in respect of the Exchange Documents.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which the Obligor shall sign and
deliver this Agreement.
"Stock Collateral" shall have the meaning assigned to that term in
Section 2.01(a).
"Subordinated Indenture" means the Indenture dated as of __________,
1998 between the Obligor as issuer of the Exchange Notes, and Santa Barbara Bank
& Trust, as Trustee.
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by the Obligor. Notwithstanding the foregoing, the Trademark
Collateral shall not include any Trademark which would be rendered invalid,
abandoned, void or unenforceable by reason of its being included as part of the
Trademark Collateral.
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"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals and
extensions of any of the foregoing and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) now or
hereafter due or payable under or with respect to any of the foregoing, (ii) to
sue for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
1.02 INTERPRETATION. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any Exchange Document); and references to Persons
include their respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
Article II. Collateral.
2.01 GRANT. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and performance
of the Secured Obligations, and subject to the terms and provisions of the
Intercreditor Agreement, the Obligor hereby pledges and grants to the Trustee,
for the ratable benefit of the Holders a security interest in all of the
Obligor's right, title and interest in and to the following property, whether
now owned or hereafter acquired by the Obligor and whether now existing or
hereafter coming into existence including, without limitation, all real and
personal property and interests in real and personal property (collectively, the
"Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by the Obligor as set forth in Schedule 2.01
together with in each case the certificates
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representing the same (collectively, the "Pledged Stock"); (ii) all shares,
securities, moneys or property representing a dividend on, or a distribution or
return of capital in respect of, any of the Pledged Stock, resulting from a
split-up, revision, reclassification or other like change of any of the Pledged
Stock or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of the
Pledged Stock; and (iii) without affecting the obligations of the Obligor under
any provision prohibiting such action under any Exchange Document, in the event
of any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Obligor itself) formed by
or resulting from such consolidation or merger (collectively, and together with
the property described in clauses (i) and (ii) above, the "Stock Collateral");
(iv) the Indebtedness described in Annex I and issued by the obligors named
therein (the "Pledged Debt"); (v) all additional Indebtedness for money borrowed
or for the deferred purchase price of property from time to time owed to the
Obligor by any obligor of the Pledged Debt, and all additional Indebtedness in
excess of $25,000 for money borrowed or for the deferred purchase price of
property from time to time owed to the Obligor by any other Person who, after
the date of this Agreement, becomes, as a result of any occurrence, a Subsidiary
of the Obligor or an Affiliate of the Obligor (any such Indebtedness being
"Additional Debt"); (vi) all notes or other instruments evidencing the
Indebtedness referred to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of the Obligor constituting a right to the payment
of money, whether or not earned by performance, including all moneys due and to
become due to the Obligor in repayment of any loans or advances (including loans
and advances to Subsidiaries of the Obligor), in payment for goods (including
Inventory and Equipment) sold or leased or for services rendered, in payment of
tax refunds and in payment of any guarantee of any of the foregoing
(collectively, the "Accounts");
(c) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of the Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts (collectively, the
"Instruments");
(d) all inventory (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of the Obligor that are held by
the Obligor for sale, lease or furnishing under a contract of service (including
to its Subsidiaries or Affiliates), that are so leased or furnished or that
constitute raw materials, work in process or material used or consumed in its
business, including all spare parts and related supplies, all goods obtained by
the Obligor in exchange for any such goods, all products made or processed from
any such goods and all substances, if any, commingled with or added to any such
goods (collectively, the "Inventory");
(e) all equipment (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of the Obligor that are used or
bought for use primarily in its business, including all spare parts and related
supplies, all goods obtained by the Obligor in
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exchange for any such goods, all substances, if any, commingled with or added to
such goods and all upgrades and other improvements to such goods, in each case
to the extent not constituting Inventory (collectively, the "Equipment");
(f) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of the Obligor relating
to the sale or other disposition of all or any part of the Inventory, Equipment
or Documents and all rights, warranties, claims and benefits of the Obligor
against any Person arising out of, relating to or in connection with all or any
part of the Inventory, Equipment or Documents of the Obligor, including any such
rights, warranties, claims or benefits against any Person storing or
transporting any such Inventory or Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of the Obligor
not constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Obligor or any computer bureau or service
company from time to time acting for the Obligor;
(i) the balance from time to time in the Collateral Account;
(j) all other tangible and intangible property of the Obligor,
including all Intellectual Property; and
(k) all proceeds and products in whatever form of all or any
part of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all rights to
recover and proceed with respect to the same), and all accessories to,
substitutions for and replacements of all or any part of the other Collateral.
2.02 INTELLECTUAL PROPERTY. For the purpose of enabling the Trustee to
exercise its rights, remedies, powers and privileges under Article VI at such
time or times as the Trustee shall be lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no other purpose, the Obligor hereby
grants to the Trustee, to the extent assignable, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to the
Obligor) to use, assign, license or sublicense any of the Intellectual Property
of the Obligor, together with reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout of such items.
2.03 PERFECTION. Concurrently with the execution and delivery of this
Agreement, and subject to the terms and provisions of the Intercreditor
Agreement, the Obligor shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Trustee
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may request to perfect and establish the security interest (subject only to
Liens permitted under Section 7.8 of the Subordinated Indenture) of the Liens
granted by this Agreement (including promptly filing the Assignment for
Security--Trademarks and Patents, in the form executed on the date hereof by the
Obligor, in the United States Patent and Trademark Office), (ii) deliver and
pledge to the Trustee any and all Instruments, endorsed or accompanied by such
instruments of assignment and transfer in such form and substance as the Trustee
may request, (iii) cause the Trustee (to the extent requested by the Trustee) to
be listed as the lienholder on all certificates of title or ownership relating
to Motor Vehicles owned by the Obligor and deliver to the Trustee originals of
all such certificates of title or ownership for the Motor Vehicles together with
the odometer statements for each respective Motor Vehicle, (iv) deliver and
pledge to the Trustee all certificates for the Pledged Stock and notes,
instruments or other documents evidencing the Pledged Debt, accompanied by
undated stock or bond powers, as the case may be, duly executed in blank and (v)
take all such other actions as shall be necessary or as the Trustee may request
to perfect and establish the security interest (subject only to such Permitted
Liens) of the Liens granted by this Agreement. The Trustee shall have the right,
at any time in its discretion and with notice to the Obligor, to transfer to or
to register in its name or in the name of any of its nominees any or all of the
Pledged Stock or Pledged Debt.
2.04 PRESERVATION AND PROTECTION OF SECURITY INTERESTS. The Obligor
shall, subject to the terms and provisions of the Intercreditor Agreement:
(a) upon the acquisition after the Signing Date by the Obligor
of any Securities Collateral, promptly either (x) transfer and deliver to the
Trustee all such Securities Collateral (together with the certificates or
instruments representing such Securities Collateral securities duly endorsed in
blank or accompanied by undated powers duly executed in blank) or (y) take such
other action as the Trustee shall deem necessary or appropriate to perfect, and
establish the security interest of, the Liens granted by this Agreement in such
Securities Collateral;
(b) upon the acquisition after the Signing Date by the Obligor
of any Instrument, promptly deliver and pledge to the Trustee all such
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Trustee may request;
(c) upon the acquisition after the Signing Date by the Obligor
of any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Trustee to be listed as the lienholder on such
certificate of title and within 45 days of the acquisition of such property
deliver evidence of the same to the Trustee;
(d) upon the Obligor's acquiring, or otherwise becoming
entitled to the benefits of, any Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to the Obligor's filing, either directly
or through any agent, licensee or other designee, of any application with any
governmental Person for any Copyright, Patent, Trademark, or other Intellectual
Property, in each case after the Signing Date, execute and deliver such
contracts, agreements and other instruments
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as the Trustee may request to evidence, validate, perfect and establish the
security interest (subject only to Liens permitted under Section 7.8 of the
Subordinated Indenture) of the Liens granted by this Agreement in such and any
related Intellectual Property; and
(e) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all governmental approvals and take any and all steps that may be
necessary or as the Trustee may request to create, and establish the security
interest of, or to preserve the validity, perfection or priority (subject only
to such Permitted Liens) of, the Liens granted by this Agreement or to enable
the Trustee to exercise and enforce its rights, remedies, powers and privileges
under this Agreement with respect to such Liens, including causing any or all of
the Securities Collateral to be transferred of record into the name of the
Trustee or its nominee (and the Trustee agrees that if any Securities Collateral
is transferred into its name or the name of its nominee, the Trustee will
thereafter promptly give to the Obligor copies of any notices and communications
received by it with respect to the Stock Collateral pledged by the Obligor),
provided that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of Section 3.02(b).
2.05 ATTORNEY-IN-FACT. (a) Subject to the rights of the Obligor under
Sections 2.06, 2.07, 2.08 and 2.09, and subject to the terms and provisions of
the Intercreditor Agreement, the Trustee is hereby appointed the
attorney-in-fact of the Obligor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Trustee may deem necessary or advisable to accomplish the purposes of this
Agreement, to preserve the validity and security interest of the Liens granted
by this Agreement and, following any Default, to exercise its rights, remedies,
powers and privileges under this Agreement. This appointment as attorney-in-fact
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Trustee shall be entitled under this Agreement upon the
occurrence and continuation of any Event of Default (or, in respect of Section
3.02(b), any Default) (i) to ask, demand, collect, sue for, recover, receive and
give receipt and discharge for amounts due and to become due under and in
respect of all or any part of the Collateral; (ii) to receive, endorse and
collect any Instruments or other drafts, instruments, documents and chattel
paper in connection with clause (i) above (including any draft or check
representing the proceeds of insurance or the return of unearned premiums);
(iii) to file any claims or take any action or proceeding that the Trustee may
deem necessary or advisable for the collection of all or any part of the
Collateral, including the collection of any compensation due and to become due
under any contract or agreement with respect to all or any part of the
Collateral; and (iv) to execute, in connection with any sale or disposition of
the Collateral under Article VI, any endorsements, assignments, bills of sale or
other instruments of conveyance or transfer with respect to all or any part of
the Collateral. In any suit, proceeding or action brought by the Trustee
relating to any Account, contract or Instrument for any sum owing thereunder, or
to enforce any provision of any Account, contract or Instrument, the Obligor
will save, indemnify and keep the Trustee harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the obligor thereunder,
arising out of a breach by the Obligor of any obligation thereunder or arising
out of any other agreement, Indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from
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the Obligor, and all such obligations of the Obligor shall be and remain
enforceable against and only against the Obligor and shall not be enforceable
against the Trustee.
(b) Without limiting the rights and powers of the Trustee
under Section 2.05(a), the Obligor hereby appoints the Trustee as its
attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of (i) executing on behalf of the
Obligor title or ownership applications for filing with appropriate state
agencies to enable Motor Vehicles now owned or hereafter acquired by the Obligor
to be retitled and the Trustee to be listed as lienholder as to such Motor
Vehicles, (ii) filing such applications with such state agencies and (iii)
executing such other documents and instruments on behalf of, and taking such
other action in the name of, the Obligor as the Trustee may deem necessary or
advisable to accomplish the purposes of this Agreement (including the purpose of
creating in favor of the Trustee a security interest on the Motor Vehicles and
exercising the rights and remedies of the Trustee under Article VI). This
appointment as attorney-in-fact is irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Trustee
under Section 2.05(a), the Obligor hereby appoints the Trustee as its
attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by Section
2.04(d). This appointment as attorney-in-fact is irrevocable and coupled with an
interest.
2.06 SPECIAL PROVISIONS RELATING TO SECURITIES COLLATERAL. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligor shall
have the right to exercise all voting, consensual and other powers of ownership
pertaining to the Securities Collateral for all purposes not inconsistent with
the terms of any Exchange Document, provided that the Obligor agrees that it
will not vote the Securities Collateral in any manner that is inconsistent with
the terms of any Exchange Document; and the Trustee shall, at the Obligor'
expense, execute and deliver to the Obligor or cause to be executed and
delivered to the Obligor all such proxies, powers of attorney, dividends and
other orders and other instruments, without recourse, as the Obligor may
reasonably request for the purpose of enabling the Obligor to exercise the
rights and powers which it is entitled to exercise pursuant to this Section
2.06(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall be entitled to receive and retain any dividends or
distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Trustee exercise any available
right to declare any Secured Obligation due and payable or seek or pursue any
other right, remedy, power or privilege available to them under applicable law,
this Agreement or any other Exchange Document, all dividends and other
distributions on the Securities Collateral shall be paid directly to the Trustee
and retained by it in the Collateral Account as part of the Securities
Collateral, subject to the terms of this Agreement, and, if the Trustee shall so
request, the Obligor agrees to execute and deliver to the
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Trustee appropriate additional dividend, distribution and other orders and
instruments to that end, provided that if such Event of Default is cured, any
such dividend or distribution paid to the Trustee prior to such cure shall, upon
request of the Obligor (except to the extent applied to the Secured
Obligations), be returned by the Trustee to the Obligor.
2.07 USE OF INTELLECTUAL PROPERTY. Subject to such action not otherwise
constituting a Default and so long as no Event of Default shall have occurred
and be continuing, the Obligor will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property in the ordinary course of the business
of the Obligor. In furtherance of the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Trustee shall from time to time, upon
the request of the Obligor, execute and deliver any instruments, certificates or
other documents, in the form so requested, which the Obligor shall have
certified are appropriate (in its reasonable judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to Section 2.02 as to any specific Intellectual Property). The exercise
of rights, remedies, powers and privileges under Article VI by the Trustee shall
not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by the Obligor in accordance with the first sentence of this
Section 2.07.
2.08 INSTRUMENTS. So long as no Default or Event of Default shall have
occurred and be continuing, the Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Trustee shall, promptly upon the request, and at the
expense of the Obligor, make appropriate arrangements for making any Instruments
pledged by the Obligor available to the Obligor for purposes of presentation,
collection or renewal. Any such arrangement shall be effected, to the extent
deemed appropriate by the Trustee, against trust receipt or like document.
2.09 USE OF COLLATERAL. So long as no Event of Default shall have
occurred and be continuing, the Obligor shall, in addition to its rights under
Sections 2.06, 2.07 and 2.08 in respect of the Collateral contemplated in those
sections, be entitled to (i) use and possess the other Collateral and to
exercise its rights, title and interest in all contracts, agreements, licenses
and governmental approvals, and (ii) sell items of Inventory to customers in the
ordinary course of business, in each case subject to the rights, remedies,
powers and privileges of the Trustee under Articles III and VI and to such use,
possession or exercise not otherwise constituting a Default.
2.10 RIGHTS AND OBLIGATIONS. (a) The Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements included
in the Collateral in accordance with their respective terms to the same extent
as if this Agreement had not been executed and delivered. The exercise by the
Trustee of any right, remedy, power or privilege in respect of this Agreement
shall not release the Obligor from any of its duties and obligations under such
contracts and agreements and the Obligor shall save, indemnify and keep the
Trustee harmless from and against all expense, loss or damage suffered by reason
of such exercise. The Trustee shall have no duty, obligation or liability under
such contracts and agreements or with respect to
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any governmental approval included in the Collateral by reason of this Agreement
or any other Exchange Document, nor shall the Trustee be obligated to perform
any of the duties or obligations of the Obligor under any such contract or
agreement or any such governmental approval or to take any action to collect or
enforce any claim (for payment) under any such contract or agreement or
governmental approval.
(b) No Lien granted by this Agreement in the Obligor's right,
title and interest in any contract, agreement or governmental approval shall be
deemed to be a consent by the Trustee to any such contract, agreement or
governmental approval.
(c) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Exchange Document.
(d) The Trustee shall not be required to take steps necessary
to preserve any rights against prior parties to any part of the Collateral.
2.11 RELEASE OF MOTOR VEHICLES. So long as no Default shall have
occurred and be continuing, and subject to the terms and provisions of the
Intercreditor Agreement, upon the request of, and at the expense of, the
Obligor, the Trustee shall execute and deliver to the Obligor such instruments
as the Obligor shall reasonably request to remove the notation of the Trustee as
lienholder on any certificate of title for any Motor Vehicle; provided that any
such instruments shall be delivered, and the release shall be effective, only
upon receipt by the Trustee of a certificate from the Obligor stating that the
Motor Vehicle the Lien on which is to be released is to be sold or has suffered
a casualty loss (with title passing to the appropriate casualty insurance
company in settlement of the claim for such loss).
2.12 TERMINATION. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall terminate, and the Trustee
shall, at the expense of the Obligor, forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect of the Collateral, to or on the order of the Obligor and to be released,
canceled and granted back all licenses and rights referred to in Section 2.02.
The Trustee shall also, at the expense of the Obligor, execute and deliver to
the Obligor upon such termination such Uniform Commercial Code termination
statements, certificates for terminating the Liens on the Motor Vehicles and
such other documentation as shall be reasonably requested by the Obligor to
effect the termination and release of the Liens granted by this Agreement on the
Collateral.
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Article III. Cash Proceeds of Collateral.
3.01 COLLATERAL ACCOUNT. There is hereby established with the Trustee a
cash collateral account (the "Collateral Account") in the name and under the
exclusive domain and control of the Trustee into which there shall be deposited
from time to time the cash proceeds of any of the Collateral (including proceeds
resulting from insurance or condemnation) required to be delivered to the
Trustee pursuant to this Agreement and into which the Obligor may from time to
time deposit any additional amounts which it wishes to pledge to the Trustee as
additional collateral security under this Agreement. The balance from time to
time in the Collateral Account shall constitute part of the Collateral and shall
not constitute payment of the Secured Obligations until applied as provided in
this Agreement. If any Event of Default shall have occurred and be continuing,
the Trustee may in its discretion apply (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Article VI. The balance
from time to time in the Collateral Account shall be subject to withdrawal only
as provided in this Agreement.
3.02 CERTAIN PROCEEDS. (a) If any Default or Event of Default shall
have occurred and be continuing, the Obligor shall, subject to the terms and
provisions of the Intercreditor Agreement, upon request of the Trustee, promptly
notify (and the Obligor hereby authorizes the Trustee so to notify) each account
debtor in respect of any Accounts or Instruments that such Collateral has been
assigned to the Trustee under this Agreement and that any payments due or to
become due in respect of such Collateral are to be made directly to the Trustee.
All such payments made to the Trustee shall be immediately deposited in the
Collateral Account.
(b) The Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, the Obligor shall as promptly as possible deposit such proceeds into
the Collateral Account. Until so deposited, all such proceeds shall be held in
trust by the Obligor for and as the property of the Trustee and shall not be
commingled with any other funds or property of the Obligor.
3.03 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit in
the Collateral Account shall be invested from time to time in such Permitted
Investments as the Obligor (or, if any Default or Event of Default shall have
occurred and be continuing, the Trustee) shall determine. All such investments
shall be held in the name and be under the control of the Trustee. At any time
after the occurrence and during the continuance of an Event of Default, the
Trustee may in its discretion at any time and from time to time elect to
liquidate any such investments and to apply or cause to be applied the proceeds
of such action to the payment of the Secured Obligations in the manner specified
in Article VI.
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Article IV. Representations and Warranties.
The Obligor hereby represents and warrants to the Trustee for the
benefit of the Holders as follows:
4.01 TITLE. The Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and, except as
set forth in Schedule 4.01, such Collateral is free and clear of all Liens. The
security interest granted by this Agreement in favor of the Trustee for the
benefit of the Trustee and the Holders have attached and, upon filing of the
respective financing statements in the jurisdictions listed on Annex II, this
Agreement is effective to create a security interest in all of such Collateral.
4.02 SECURITIES COLLATERAL. (a) The Pledged Stock presently owned by
the Obligor is duly authorized, validly existing, fully paid and nonassessable,
and none of such Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of such
Pledged Stock, upon the transfer of such Pledged Stock (except for any such
restriction contained in any Exchange Document). The Pledged Debt pledged by the
Obligor has been duly authorized, authenticated or issued and delivered, and is
the legal, valid and binding obligation of the issuers thereof, and is not in
default. The Pledged Debt constitutes all of the outstanding Indebtedness for
money borrowed or for the deferred purchase price of property owed to the
Obligor by any of its Subsidiaries or Affiliates.
(b) The Pledged Stock pledged by the Obligor constitutes all
of the issued and outstanding shares of capital stock of any class of the
Issuers beneficially owned by the Obligor on the Signing Date (whether or not
registered in the name of the Obligor).
4.03 INTELLECTUAL PROPERTY. (a) Except pursuant to licenses and other
user agreements entered into by the Obligor in the ordinary course of business,
the Obligor owns and possesses the right to use, and has done nothing to
authorize or enable any other Person to use, any Copyright, Patent or Trademark
constituting Intellectual Property.
(b) The Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
4.04 GOODS. Any goods now or hereafter manufactured or otherwise
produced by the Obligor or any of its Subsidiaries included in the Collateral
have been and will be produced in compliance with the requirements of the Fair
Labor Standards Act.
Article V. Covenants.
5.01 BOOKS AND RECORDS. The Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark such
books and records in such manner as the Trustee may reasonably require in order
to reflect the Liens granted by this Agreement; (b) furnish to the Trustee from
time to time (but, unless a Default shall have occurred
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and be continuing, no more frequently than quarterly) statements and schedules
further identifying and describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such other reports in connection
with the Copyright Collateral, the Patent Collateral and the Trademark
Collateral, as the Trustee may reasonably request, all in reasonable detail; (c)
prior to filing, either directly or through an agent, licensee or other
designee, any application for any Copyright, Patent or Trademark, furnish to the
Trustee prompt notice of such proposed filing; and (d) permit representatives of
the Trustee, upon reasonable notice, at any time during normal business hours to
inspect and make abstracts from its books and records pertaining to the
Collateral, permit representatives of the Trustee to be present at the Obligor's
place of business to receive copies of all communications and remittances
relating to the Collateral and forward copies of any notices or communications
received by the Obligor with respect to the Collateral, all in such manner as
the Trustee may reasonably request.
5.02 REMOVALS, ETC. Without at least 30 days' prior written notice to
the Trustee, the Obligor shall (i) not maintain any of its books and records
with respect to the Collateral at any office or maintain its principal place of
business at any place, or permit any Inventory or Equipment to be located
anywhere, other than (a) at the address initially indicated for notices to it
under Article VII, (b) at one of the other business locations presently owned or
operated by the Obligor or any of its Affiliates and identified in Annex III or
IV or (c) in transit from one of such locations to another, or (ii) change its
corporate name, or the name under which it does business, from the name shown on
the signature pages to this Agreement, provided that the Obligor shall be
permitted to consummate the reincorporation merger whereby the Obligor would
merge with a Delaware Subsidiary of the Obligor to change the Obligor's state of
incorporation from Florida to Delaware (as described in the Notice of Special
Meeting of Stockholders and Proxy Statement filed by the Obligor with the SEC on
September 18, 1998).
5.03 STOCK COLLATERAL. The Obligor will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligor shall cause all such
shares to be duly authorized, validly issued, fully paid and nonassessable and
to be free of any contractual restriction or any restriction under the charter
or bylaws of the respective Issuer of such Stock Collateral, upon the transfer
of such Stock Collateral (except for any such restriction contained in any
Exchange Document). The Obligor, subject to the terms and provisions of the
Intercreditor Agreement, agrees that it will (i) cause each issuer of the
Pledged Stock not to issue any shares of stock or other securities in addition
to or in substitution for the Pledged Stock, (ii) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of capital stock issued to the Obligor (the "Additional Stock") and any
and all Additional Debt, and (iii) promptly (and in any event within three
business days) deliver to the Trustee an amendment to this Agreement, duly
executed by the Obligor, in respect of the Additional Shares or Additional Debt,
together with all certificates, notes or other instruments representing or
evidencing the same. The Obligor agrees that all Additional Shares and
Additional Debt listed on any such amendment delivered to the Trustee shall for
all purposes hereunder constitute Pledged Stock and Pledged Debt, respectively,
and (iii) is deemed to have made, upon such delivery, the representations and
warranties contained in Article IV hereof with respect to such Collateral.
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5.04 INTELLECTUAL PROPERTY. (a) The Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force and effect free from any claim of abandonment for
nonuse, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) employ such Trademark with the appropriate
notice of registration and (iv) not (and not permit any licensee or sublicensee
to) do any act or knowingly omit to do any act whereby any Trademark material to
the conduct of its business may become invalidated.
(b) The Obligor (either itself or through licensees) will not
do any act or knowingly omit to do any act whereby any Patent material to the
conduct of its business may become abandoned or dedicated.
(c) The Obligor shall notify the Trustee immediately if it
knows or has reason to know that any Intellectual Property material to the
conduct of its business may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding before any governmental Person)
regarding the Obligor's ownership of any Intellectual Property material to its
business, its right to copyright, patent or register the same (as the case may
be), or its right to keep, use and maintain the same.
(d) The Obligor will take all necessary steps that are
consistent with good business practices in any proceeding before any appropriate
governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to maintain
each registration material to the conduct of its business, including payment of
maintenance fees, filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings.
(e) In the event that any Intellectual Property material to
the conduct of its business is infringed, misappropriated or diluted by a third
party, the Obligor shall notify the Trustee within ten days after it learns of
such event and shall, if consistent with good business practice, promptly sue
for infringement, misappropriation or dilution, seek temporary restraints and
preliminary injunctive relief to the extent practicable, seek to recover any and
all damages for such infringement, misappropriation or dilution and take such
other actions as are appropriate under the circumstances to protect such
Collateral.
(f) The Obligor shall prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or thereafter
made until the termination of this Agreement, make application on uncopyrighted
but copyrightable material, unpatented but patentable inventions and
unregistered but 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
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imprudent in the good faith business judgment of the Obligor. Any expenses
incurred in connection with such an application shall be borne by the Obligor.
(g) The Trustee shall have the right but shall in no way be
obligated to bring suit in its own name to enforce the Copyrights, Patents and
Trademarks and any license under such Intellectual Property, in which event the
Obligor shall, at the request of the Trustee, do any and all lawful acts and
execute and deliver any and all proper documents required by the Trustee in aid
of such enforcement action.
Article VI. Remedies.
6.01 EVENTS OF DEFAULT, ETC. If any Event of Default shall have
occurred and be continuing and subject to the terms and provisions of the
Intercreditor Agreement:
(a) the Trustee in its discretion may require the Obligor to,
and the Obligor shall, assemble the Collateral owned by it at such place or
places, reasonably convenient to both the Trustee and the Obligor, designated in
the Trustee's request;
(b) the Trustee in its discretion may make any reasonable
compromise or settlement it deems desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Trustee in its discretion may, in its name or in the
name of the Obligor or otherwise, demand, sue for, collect or receive any money
or property at any time payable or receivable on account of or in exchange for
all or any part of the Collateral, but shall be under no obligation to do so;
(d) the Trustee in its discretion may, upon five business
days' prior written notice to the Obligor of the time and place, with respect to
all or any part of the Collateral which shall then be or shall thereafter come
into the possession, custody or control of the Trustee, or its agents, sell,
lease or otherwise dispose of all or any part of such Collateral, at such place
or places as the Trustee deems best, for cash, for credit or for future delivery
(without thereby assuming any credit risk) and at public or private sale,
without demand of performance or notice of intention to effect any such
disposition or of time or place of any such sale (except such notice as is
required above or by applicable statute and cannot be waived), and the Trustee
or any other Person may be the purchaser, lessee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Obligor, any such demand, notice and right or
equity being hereby expressly waived and released. In the event of any sale,
license or other disposition of any of the Trademark Collateral, the goodwill
connected with and symbolized by the Trademark Collateral subject to such
disposition shall be included, and the Obligor shall supply to the Trustee or
its designee, for inclusion in such sale, assignment or other disposition,
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all Intellectual Property relating to such Trademark Collateral. The Trustee
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned; and
(e) the Trustee shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privileges are asserted) and such additional rights,
remedies, powers and privileges to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Trustee were the sole and absolute owner of the Collateral (and the
Obligor agrees to take all such action as may be appropriate to give effect to
such right).
The proceeds of, and other realization upon, the Collateral by
virtue of the exercise of remedies under this Section 6.01 and of the exercise
of the license granted to the Trustee in Section 2.02 shall be applied in
accordance with Section 6.04.
6.02 DEFICIENCY. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 6.01 and of the
exercise of the license granted to the Trustee in Section 2.02 are insufficient
to cover the costs and expenses (including attorneys fees) of such exercise and
the payment in full of the other Secured Obligations, the Obligor shall remain
liable for any deficiency.
6.03 PRIVATE SALE. (a) The Trustee shall incur no liability as a result
of the sale, lease or other disposition of all or any part of the Collateral at
any private sale pursuant to Section 6.01 conducted in a commercially reasonable
manner. The Obligor hereby waives any claims against the Trustee arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Secured Obligations,
even if the Trustee accepts the first offer received and does not offer the
Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, the Trustee may be compelled, with respect to any sale of all or any part
of the Collateral, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to distribution or resale. The Obligor acknowledges that any such
private sales may be at prices and on terms less favorable to the Trustee than
those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Trustee shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral
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for the period of time necessary to permit the respective Issuer of such
Collateral to register it for public sale.
6.04 APPLICATION OF PROCEEDS. Except as otherwise expressly provided in
this Agreement, except as provided below in this Section 6.04 and except as
provided for by the terms and provisions of the Intercreditor Agreement, the
proceeds of, or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under Section 6.01 or of the exercise of the
license granted in Section 2.02, and any other cash at the time held by the
Trustee under Article III or this Article VI, shall be applied by the Trustee:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the Trustee,
the fees and expenses of its agents and counsel and all other expenses incurred
and advances made by the Trustee in that connection;
Second, to the Trustee for amounts due and unpaid on the Exchange Notes
for principal and interest and all other amounts due and unpaid under the
Exchange Documents; and
Third, to the Obligor or any other obligor on the Exchange Notes, as
their interests may appear, or as a court of competent jurisdiction may direct.
As used in this Article VI, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Article VII. Miscellaneous.
7.01 WAIVER. No failure on the part of the Trustee or any Holder to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, remedy, power or privilege under this Agreement shall operate as a
waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
7.02 NOTICES. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Obligor: Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
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if to the Trustee: Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administrator
7.03 EXPENSES, ETC. The Obligor agrees to pay or to reimburse the
Trustee for all costs and expenses (including reasonable attorney's fees and
expenses) that may be incurred by the Trustee in any effort to enforce any of
the provisions of Article VI, or any of the obligations of the Obligor in
respect of the Collateral or in connection with (a) the preservation of the Lien
of, or the rights of the Trustee under this Agreement or (b) any actual or
attempted sale, lease, disposition, exchange, collection, compromise, settlement
or other realization in respect of, or care of, the Collateral, including all
such costs and expenses (and reasonable attorney's fees and expenses) incurred
in any bankruptcy, reorganization, workout or other similar proceeding.
7.04 AMENDMENTS. This Agreement may be amended as to the Trustee and
its respective successors and assigns, and the Obligor may take any action
herein prohibited, or omit to perform any act required to be performed by it, if
the Obligor shall obtain the written consent of the Trustee. This Agreement may
not be waived, changed, modified, or discharged orally, but only by an agreement
in writing signed by the party or parties against whom enforcement of any
waiver, change, modification or discharge is sought or by parties with the right
to consent to such waiver, change, modification or discharge on behalf of such
party.
7.05 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
7.06 SURVIVAL. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant hereto in
connection with the transactions contemplated hereby shall survive the Closing
and the delivery of the Exchange Documents, regardless of any investigation made
by or on behalf of any party.
7.07 AGREEMENTS SUPERSEDED. Except with respect to express references
to other Exchange Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter of this Agreement.
7.08 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
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7.09 CAPTIONS. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN
SUCH STATE.
7.12 SUBMISSION TO JURISDICTION. If any action, proceeding or
litigation shall be brought by the Trustee in order to enforce any right or
remedy under this Agreement, the Obligor hereby consents and will submit, and
will cause each of its Subsidiaries to submit, to the jurisdiction of any state
or federal court of competent jurisdiction sitting within the area comprising
the Southern District of New York on the date of this Agreement. The Obligor
hereby irrevocably waives any objection, including, but not limited to, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
7.13. SERVICE OF PROCESS. Nothing herein shall affect the right of the
Trustee to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Obligor in any other
jurisdiction.
7.14. WAIVER OF JURY TRIAL. THE OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT.
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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:________________________
Name:
Title:
SANTA BARBARA BANK & TRUST
By:________________________
Name:
Title:
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Exhibit T3E.3
Form of Subordinated Guarantee and Security Agreement
SUBORDINATED GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT (this "Agreement") dated as of
________________, 1998, is made by the certain Subsidiaries of Inamed
Corporation, a Florida corporation (the "Company") that are signatories hereto
and who execute a Joinder hereto in the form of Exhibit A hereto (collectively,
the "Obligors") and Santa Barbara Bank & Trust, as trustee for the benefit of
the holders of the Obligor's 11% Senior Subordinated Secured Notes due March 31,
1999, or at the option of the Obligor exercised as provided therein, September
1, 2000 (in such capacity, the "Trustee").
RECITALS
The Indenture dated as of ___________, 1998 (the "Subordinated
Indenture") between the Company and the Trustee provides, subject to its terms
and conditions, for the issuance by the Company of its 11% Senior Subordinated
Secured Notes due March 31, 1999, or at the option of the Obligor as provided
therein, September 1, 2000 (the "Notes") as well as certain warrants to purchase
the Company's common stock, $.01 per share, (the "Warrants") to be issued in
exchange for the Company's 11% Secured Convertible Notes due 1999 (the "Old
Notes") to the holders thereof pursuant to the Securities Exchange Agreement
dated as of October 7, 1998 (the "Securities Exchange Agreement"). It is a
condition to the exchange of the Old Notes for the Notes and Warrants by the
Purchasers that the Obligors shall have executed and delivered this Agreement,
and granted the Liens provided for in this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligors have agreed to pledge and grant a security interest
in the Collateral as security for the Secured Obligations. Accordingly, the
Obligors agree with the Trustee as follows:
ARTICLE I. DEFINITIONS AND INTERPRETATION.
1.01 CERTAIN DEFINED TERMS. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Subordinated Indenture or
in the Securities Exchange Agreement (including those terms incorporated therein
by reference) shall have the respective meanings assigned to them in the
Subordinated Indenture or the Securities Exchange Agreement, as applicable. In
addition, the following terms shall have the following meanings under this
Agreement:
"Accounts" shall have the meaning assigned to that term in Section
3.01(b).
"Breast Implant Litigation" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern Division
stylized as "Silicone Gel Breast Implant Products Liability Litigation
(MDL926)."
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"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include, as
of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in Section
3.01.
"Collateral Account" shall have the meaning assigned to that term in
Section 4.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by any Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect of all past, present or future infringements) now or hereafter due or
payable under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and (iii)
otherwise accruing under or pertaining to any of the foregoing throughout the
world.
"Documents" shall have the meaning assigned to that term in Section
3.01(f).
"Event of Default" shall mean each of the happenings or circumstances
enumerated in Section 4.1 of the Subordinated Indenture.
"Equipment" shall have the meaning assigned to that term in Section
3.01(e).
"Equity Rights" shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"Exchange Documents" shall mean the Securities Exchange Agreement dated
as of October __, 1998 between the Company, the holders listed on Exhibit A
thereto and the Collateral Agent, the Exchange Notes, this Agreement, the
Subordinated Security Agreement, dated as of the date hereof, between the
Company and the Collateral Agent (the "Subordinated
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Security Agreement"), the Subordinated Guarantee and Security Agreement, dated
as of the date hereof, by and between certain Subsidiaries of the Company and
the Collateral Agent (the "Subordinated Guarantee Agreement"), the Subordinated
Indenture, the Exchange Offer Registration Rights Agreement, dated as of the
date hereof, by and between the Company and the Holders and the Intercreditor
Agreement, dated as of the date hereof, by and between the Collateral Agent and
the Trustee.
"Holder" shall mean, at anytime of reference, a person in whose name a
Note is registered in the Note Register at such time.
"Guaranteed Obligations" means any and all Obligations and any and all
obligations of the Company for the performance by it of its agreements,
covenants and undertakings under or in respect of the Exchange Documents.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Instruments" shall have the meaning assigned to that term in Section
3.01(c).
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereon,
and all Patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all Trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals), (f) all computer software (including data and
related
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documentation), (g) all other proprietary rights, (h) all copies and tangible
embodiments of the foregoing (in whatever form or medium) and (i) all licenses
or agreements in connection with the foregoing.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
____________, 1998 between the Trustee and Appaloosa Management, L.P. as
Collateral Agent under the Note Purchase Agreement.
"Inventory" shall have the meaning assigned to that term in Section
3.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Company that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter acquired
by any Obligor.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the prospects
for the settlement of the Breast Implant Litigation), operations, earnings,
assets, liabilities or the condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of any Obligor to perform its obligations under any of
the Exchange Documents to which it is a party, (c) the validity or
enforceability of any of the Exchange Documents, (d) the rights, remedies,
powers and privileges of the Holders under any of the Exchange Documents or (e)
the timely payment of the Secured Obligations.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is governed
by a certificate of title or ownership.
"Note Purchase Agreement" means the agreement dated as of September 30,
1998 between the Company, the parties listed on Exhibit A thereto and the
Collateral Agent.
"Note Register" shall have the meaning ascribed thereto in the
Subordinated Indenture.
"Obligations" shall mean the principal and interest due under the
Exchange Notes and all other obligations and liabilities of the Company to the
Holders of every nature whatsoever now existing or hereafter arising, including,
without limitation, all prepayment premiums, indemnities, reimbursement
obligations, fees, costs and expenses, arising under or in connection the
Exchange Documents (including, without limitation, any interest accruing
subsequent to (or that would accrue but for) the commencement of any proceeding
involving the bankruptcy, insolvency, reorganization, liquidation, receivership
or the like of the Company), and any and all expenses which may be incurred by
the Holders in collecting any or all of the obligations of such Obligor under
this Agreement and/or enforcing any rights under this Agreement.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by any Obligor.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
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royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Permitted Investments" shall mean (a) direct obligations of the United
States of America, or of any of its agencies, or obligations guaranteed as to
principal and interest by the United States of America, or of any of its
agencies, in either case maturing not more than 90 days from the date of
acquisition of such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank or trust
company organized under the laws of the United States of America or any state or
licensed to conduct a banking or trust business in the United States of America
or any state and having capital, surplus and undivided profits of at least
$35,000,000, maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A-1 or better or P-1 by Standard & Poor's Corporation or
Moody's Investors Services, Inc., respectively, maturing not more than 90 days
from the date of acquisition; and (d) money market funds sponsored by commercial
or investment banks unaffiliated with the Company.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning assigned to that term in Section
3.01(a).
"Pledged Stock" shall have the meaning assigned to that term in Section
3.01(a).
"SEC" shall mean the United States Securities and Exchange Commission.
"Secured Obligations" shall mean (a) any and all Guaranteed Obligations
and (b) any and all obligations of the Obligors at any time and from time to
time for the performance of their agreements, covenants and undertakings under
or in respect of the Exchange Documents.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which a respective Obligor shall
sign and deliver this Agreement, whether directly or through execution and
delivery of a Joinder hereto.
"Stock Collateral" shall have the meaning assigned to that term in
Section 3.01(a).
"Subordinated Indenture" means the indenture dated as of ________,
1998, between the Company, as issuer of the Exchange Notes, and Santa Barbara
Bank and Trust, as Trustee.
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by any Obligor. Notwithstanding the foregoing, the Trademark
Collateral shall not include any Trademark which would be rendered invalid,
abandoned, void or unenforceable by reason of its being included as part of the
Trademark Collateral.
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<PAGE>
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals and
extensions of any of the foregoing and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) now or
hereafter due or payable under or with respect to any of the foregoing, (ii) to
sue for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
"Trustee" shall mean Santa Barbara Bank & Trust.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
1.02 INTERPRETATION. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any Exchange Document); and references to Persons
include their respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
ARTICLE II. GUARANTEE.
2.01 GUARANTEE. (a) Subject to the limitation set forth in Section
2.08, each of the Obligors, as a primary obligor and not merely as a surety,
hereby jointly and severally guarantees to the Holders the prompt and complete
payment when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Guaranteed Obligations in each case strictly in accordance
with their terms. The Obligors hereby further jointly and severally agree that
if the Company shall fail to pay in full when due (whether at stated maturity,
by acceleration or otherwise) all or any part of the Guaranteed Obligations, the
Obligors will immediately pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of all or
any part of the Guaranteed Obligations, the same will be timely paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal. The obligations of the
Obligors under this Article II are irrevocable and unconditional in nature and
are made with respect to any Guaranteed Obligations now existing or in the
future arising. The Obligors' liability under this Agreement shall continue
until full satisfaction of all Guaranteed Obligations. The obligations of the
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Obligors constitute a guarantee of due and punctual payment and performance and
not merely a guarantee of collection, and each of the Obligors specifically
agrees that it shall not be necessary or required that the Holders exercise any
right, assert any claim or demand or enforce any remedy whatsoever against the
Company (or any other Person) before or as a condition to the obligations of
such Obligor hereunder.
(b) No payment or payments made by the Company or any other
Person or received or collected by the Holders from the Company or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Guaranteed Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Obligors hereunder which shall,
notwithstanding any such payment or payments, remain liable for the Guaranteed
Obligations until the date upon which the Guaranteed Obligations are fully
performed and paid in full.
2.02 ACKNOWLEDGMENTS, WAIVERS AND CONSENTS. Each Obligor acknowledges
that the obligations undertaken by it under this Agreement involve the guarantee
of obligations of Persons other than such Obligor and that such obligations of
such Obligor are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, each
Obligor agrees that:
(a) Without affecting the enforceability or effectiveness of
this Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of such Obligor, or the
rights, remedies, powers and privileges of the Holders under this Agreement, the
Trustee may, at any time and from time to time and without notice or demand of
any kind or nature whatsoever: (i) amend, supplement, modify, extend, renew,
waive, accelerate or otherwise change the time for payment or performance of, or
the terms of, all or any part of the Guaranteed Obligations (including any
increase or decrease in the rate or rates of interest on all or any part of the
Guaranteed Obligations); (ii) amend, supplement, modify, extend, renew, waive or
otherwise change, or enter into or give, any Exchange Document or any agreement,
security document, guarantee, approval, consent or other instrument with respect
to all or any part of the Guaranteed Obligations, any Exchange Document or any
such other instrument or any term or provision of the foregoing; (iii) accept or
enter into new or additional agreements, security documents, guarantees or other
instruments in addition to, in exchange for or relative to any Exchange
Document, all or any part of the Guaranteed Obligations or any collateral now or
in the future serving as security for the Guaranteed Obligations; (iv) accept or
receive (including from any other Obligor) partial payments or performance on
the Guaranteed Obligations (whether as a result of the exercise of any right,
remedy, power or privilege or otherwise); (v) accept, receive and hold any
additional collateral for all or any part of the Guaranteed Obligations
(including from any other Obligor); (vi) release, reconvey, terminate, waive,
abandon, allow to lapse or expire, fail to perfect, subordinate, exchange,
substitute, transfer, foreclose upon or enforce any collateral, security
documents or guarantees (including the obligations of any other Obligor) for or
relative to all or any part of the Guaranteed Obligations; (vii) apply any
collateral or the proceeds of any collateral or guarantee (including the
obligations of any other Obligor) to all or any part of the Guaranteed
Obligations in such manner and extent as the Trustee may in its discretion
determine; (viii) release any Person (including any other Obligor) from any
personal liability with respect to all or any part of the Guaranteed
Obligations; (ix) settle, compromise, release, liquidate or enforce upon such
terms and in such manner as the
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Trustee may determine or as applicable law may dictate all or any part of the
Guaranteed Obligations or any collateral on or guarantee of all or any part of
the Guaranteed Obligations (including with any other Obligor); (x) consent to
the merger or consolidation of, the sale of substantial assets by, or other
restructuring or termination of the corporate existence of the Company or any
other Person (including any other Obligor); (xi) proceed against the Company,
such or any other Obligor or any other guarantor of all or any part of the
Guaranteed Obligations or any collateral provided by any Person and exercise the
rights, remedies, powers and privileges of the Holders under the Exchange
Documents or otherwise in such order and such manner as the Trustee may, in its
discretion, determine, without any necessity to proceed upon or against or
exhaust any collateral, right, remedy, power or privilege before proceeding to
call upon or otherwise enforce this Agreement as to any Obligor; (xii) foreclose
upon any deed of trust, mortgage or other instrument creating or granting liens
on any interest in real property by judicial or nonjudicial sale or by deed in
lieu of foreclosure, bid any amount or make no bid in any foreclosure sale or
make any other election of remedies with respect to such liens or exercise any
right of set-off; (xiii) obtain the appointment of a receiver with respect to
any collateral for all or any part of the Guaranteed Obligations and apply the
proceeds of such receivership as the Trustee may in its discretion determine (it
being agreed that nothing in this clause (xiii) shall be deemed to make the
Trustee a party in possession in contemplation of law, except at its option);
(xiv) enter into such other transactions or business dealings with any other
Obligor, the Company, any Subsidiary or Affiliate of the Company or any other
guarantor of all or any part of the Guaranteed Obligations as the Trustee may
desire; and (xv) do all or any combination of the actions set forth in this
Section 2.02(a).
(b) The enforceability and effectiveness of this Agreement and
the liability of the Obligors, and the rights, remedies, powers and privileges
of the Holders and the Trustee, under this Agreement shall not be affected,
limited, reduced, discharged or terminated, and each Obligor hereby expressly
waives to the fullest extent permitted by law any defense now or in the future
arising, by reason of: (i) the illegality, invalidity or unenforceability of all
or any part of the Guaranteed Obligations, any Exchange Document or any
agreement, security document, guarantee or other instrument relative to all or
any part of the Guaranteed Obligations; (ii) any disability or other defense
with respect to all or any part of the Guaranteed Obligations of the Company,
any other Obligor or any other guarantor of all or any part of the Guaranteed
Obligations, including the effect of any statute of limitations that may bar the
enforcement of all or any part of the Guaranteed Obligations or the obligations
of any such other guarantor; (iii) the illegality, invalidity or
unenforceability of any security or guarantee for all or any part of the
Guaranteed Obligations or the lack of perfection or continuing perfection or
failure of the priority of any lien on any collateral for all or any part of the
Guaranteed Obligations; (iv) the cessation, for any cause whatsoever, of the
liability of the Company, any other Obligor or any other guarantor of all or any
part of the Guaranteed Obligations (other than, subject to Section 2.05, by
reason of the full payment and performance of all Guaranteed Obligations); (v)
any failure of the Holders or the Trustee to marshal assets in favor of the
Company or any other Person (including any other Obligor), to exhaust any
collateral for all or any part of the Guaranteed Obligations, to pursue or
exhaust any right, remedy, power or privilege it may have against any other
Obligor, the Company, any other guarantor of all or any part of the Guaranteed
Obligations or any other Person or to take any action whatsoever to mitigate or
reduce such or any other Obligor's liability under this Agreement, the Holders
and the Trustee being under no obligation to take any such action
notwithstanding the fact that all or any part of the Guaranteed Obligations may
be due and
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payable and that the Company may be in default of its obligations under any
Exchange Document; (vi) any failure of the Holders or the Trustee to give notice
of sale or other disposition of any Collateral (including any notice of any
judicial or nonjudicial foreclosure or sale of any interest in real property
serving as collateral for all or any part of the Guaranteed Obligations) for all
or any part of the Guaranteed Obligations to the Company, any Obligor or any
other Person or any defect in, or any failure by any Obligor or any other Person
to receive, any notice that may be given in connection with any sale or
disposition of any Collateral; (vii) any failure of the Holders or the Trustee
to comply with applicable laws in connection with the sale or other disposition
of any Collateral for all or any part of the Guaranteed Obligations; (viii) any
judicial or nonjudicial foreclosure or sale of, or other election of remedies
with respect to, any interest in real property or other Collateral serving as
security for all or any part of the Guaranteed Obligations, even though such
foreclosure, sale or election of remedies may impair the subrogation rights of
any Obligor or may preclude any Obligor from obtaining reimbursement,
contribution, indemnification or other recovery from any other Obligor, the
Company, any other guarantor or any other Person and even though the Company may
not, as a result of such foreclosure, sale or election of remedies, be liable
for any deficiency; (ix) any benefits the Company, any Obligor or any other
guarantor may otherwise derive from the laws of any jurisdiction of the nature
of a "one-form-of-action," "anti-deficiency" or "security-first" rule; (x) any
act or omission of the Holders, the Trustee or any other Person that directly or
indirectly results in or aids the discharge or release of the Company or any
other Obligor of all or any part of the Guaranteed Obligations or any security
or guarantee for all or any part of the Guaranteed Obligations by operation of
law or otherwise; (xi) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation; (xii) the possibility that the
obligations of the Company to the Holders or the Trustee may at any time and
from time to time exceed the aggregate liability of the Obligors under this
Agreement; (xiii) any counterclaim, set-off or other claim which the Company or
any other Obligor has or alleges to have with respect to all or any part of the
Guaranteed Obligations; (xiv) any failure of the Holders or the Trustee to file
or enforce a claim in any bankruptcy or other proceeding with respect to any
Person; (xv) the election by the Holders or the Trustee, in any bankruptcy
proceeding of any Person, of the application or nonapplication of Section
1111(b)(2) of the Bankruptcy Code; (xvi) any extension of credit or the grant of
any Lien under Section 364 of the Bankruptcy Code; (xvii) any use of cash
collateral under Section 363 of the Bankruptcy Code; (xviii) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person; (xix) the avoidance of any Lien in favor of
the Holders or the Trustee for any reason; (xx) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any Person, including any discharge of, or
bar or stay against collecting, all or any part of the Guaranteed Obligations
(or any interest on all or any part of the Guaranteed Obligations) in or as a
result of any such proceeding; (xxi) any action taken by the Trustee that is
authorized by this Section 2.02 or otherwise in this Agreement or by any other
provision of any Exchange Document or any omission to take any such action; or
(xxii) any other circumstance whatsoever that might otherwise constitute a legal
or equitable discharge or defense of a surety or guarantor.
(c) Each Obligor expressly waives, for the benefit of the
Trustee and the Holders, all set-offs and counterclaims and all presentments,
demands for payment or performance, notices of nonpayment or nonperformance,
protests, notices of protest, notices of dishonor and all other
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notices or demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this Agreement or of
the existence, creation, incurring or assumption of new or additional Guaranteed
Obligations. Each Obligor further expressly waives the benefit of any and all
statutes of limitation and any and all laws providing for the exemption of
property from execution or for valuation and appraisal upon foreclosure, to the
maximum extent permitted by applicable law.
(d) Each Obligor represents and warrants to the Holders that
it has established adequate means of obtaining financial and other information
pertaining to the business, operations and condition (financial and otherwise)
of the Company and its properties on a continuing basis and that such Obligor is
now and will in the future remain fully familiar with the business, operations
and condition (financial and otherwise) of the Company and its properties. Each
Obligor further represents and warrants that it has reviewed and approved each
of the Exchange Documents and is fully familiar with the transactions
contemplated by the Exchange Documents and that it will in the future remain
fully familiar with such transactions and with any new Exchange Documents and
the transactions contemplated by such Exchange Documents. Each Obligor hereby
expressly waives and relinquishes any duty on the part of the Holders (should
any such duty exist) to disclose to such or any other Obligor any matter of fact
or other information related to the business, operations or condition (financial
or otherwise) of the Company or its properties or to any Exchange Document or
the transactions undertaken pursuant to, or contemplated by, any such Exchange
Document, whether now or in the future known by the Holders.
(e) Each Obligor intends that its rights and obligations shall
be those expressly set forth in this Agreement and that its obligations shall
not be affected, limited, reduced, discharged or terminated by reason of any
principles or provisions of law which conflict with the terms of this Agreement.
2.03 UNDERSTANDING WITH RESPECT TO WAIVERS AND CONSENTS. Each Obligor
warrants and agrees that each of the waivers and consents set forth in this
Agreement are made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such or any other Obligor otherwise may have against the Company, the Holders,
the Trustee or any other Person or against any Collateral. If, notwithstanding
the intent of the parties that the terms of this Agreement shall control in any
and all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.
2.04 SUBROGATION. Notwithstanding any payment or payments made by the
Obligors hereunder, or any set-off or application of funds of the Obligors by
the Trustee, no Obligors shall exercise any of the rights of the Trustee or any
Holder which any Obligor may acquire by way of subrogation, by any payment made
hereunder, by reason of such set-off or application of funds or otherwise,
against the Company or against any collateral security or guarantee or right of
set-off held by the Trustee or any Holder for the payment of the Guaranteed
Obligations, and no Obligor shall seek or be entitled to seek any contribution
or reimbursement from the Company in respect of payments made by the Obligors
hereunder, until all amounts owing to the Trustee
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and the Holders by the Company on account of the Guaranteed Obligations are paid
in full. If any amount shall be paid to any Obligor on account of such
subrogation rights at any time when all of the Guaranteed Obligations shall not
have been paid in full, such amount shall be held by such Obligor in trust for
the Trustee and the Holders, segregated from other funds of such Obligor, and
shall, forthwith upon receipt by such Obligor, be turned over to the Trustee in
the exact form received by such Obligor (duly indorsed by such Obligor to the
Trustee, if required), to be applied against the Guaranteed Obligations, whether
matured or unmatured, in such order as required by the applicable Exchange
Documents.
2.05 REINSTATEMENT. The obligations of each Obligor under this Article
II shall be automatically reinstated if and to the extent that for any reason
any payment by or on behalf of the Company, any other Obligor or any other
Person or any other application of funds (including the proceeds of any
collateral for all or any part of the Guaranteed Obligations) in respect of all
or any part of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of such Guaranteed Obligations, whether as a result of
any proceedings in bankruptcy, reorganization or otherwise and the Obligors
jointly and severally agree that it will indemnify the Holders and the Trustee
on demand for all reasonable costs and expenses (including fees and expenses of
counsel) incurred by the Holders in connection with such rescission or
restoration.
2.06 REMEDIES. The Obligors hereby jointly and severally agree that,
between each of them and the Trustee (for the benefit of the Holders) the
obligations of the Company under the Exchange Documents may be declared to be
forthwith (or may become automatically) due and payable as provided in Section
4.2 of the Subordinated Indenture for purposes of Section 2.01 notwithstanding
any stay, injunction or other prohibition preventing such declaration (or such
obligations becoming due and payable as against the Company) and that, in the
event of such declaration (or such obligation being deemed due and payable),
such obligations (whether or not due and payable by the Company) shall forthwith
become due and payable for purposes of Section 2.01.
2.07 SUBORDINATION OF INDEBTEDNESS OF THE COMPANY; SECURITY INTEREST.
(a) Each Obligor agrees that any indebtedness of the Company now or in the
future owed to such Obligor is hereby subordinated to the Guaranteed
Obligations. If the Trustee so requests, any such indebtedness shall be
collected, enforced and received by such Obligor as trustee for the Trustee and
shall be paid over to the Trustee (for the benefit of the Holders) in kind on
account of the Guaranteed Obligations. If, after the Trustee's request, such
Obligor fails to collect or enforce any such indebtedness or to pay the proceeds
of such indebtedness to the Trustee, the Trustee as such Obligor's
attorney-in-fact may do such acts and sign such documents in such Obligor's name
and on such Obligor's behalf as the Trustee considers necessary or desirable to
effect such collection, enforcement or payment, the Trustee being hereby
appointed such Obligor's attorney-in-fact for such purpose.
(b) Each Obligor hereby grants to the Trustee (for the benefit
of the Holders) a security interest in any indebtedness referred to in Section
2.07(a) and in any personal property of the Company in which such Obligor now
has or in the future acquires any right, title or interest. Each Obligor agrees
that such security interest shall be additional security for the Guaranteed
Obligations and shall be superior to any right of such Obligor in such property
until the Guaranteed Obligations have been fully satisfied and performed.
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2.08 LIMITATION ON GUARANTEE. In any proceeding involving any state
corporate law or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of the
Obligors under Section 2.01 would otherwise be held or determined to be void,
invalid or unenforceable or if the claims of the Holders in respect of such
obligations would be subordinated to the claims of any other creditors on
account of the Obligors' liability under Section 2.01, then, notwithstanding any
other provision of this Agreement to the contrary, the amount of such liability
shall, without any further action by the Obligors, the Holders or any other
Person, be automatically limited and reduced to the highest amount which is
valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
ARTICLE III. COLLATERAL.
3.01 GRANT. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and performance
of the Secured Obligations, and subject to the terms and provisions of the
Exchange Offer Intercreditor Agreement, each Obligor hereby pledges and grants
to the Trustee, for the ratable benefit of the Holders a security interest in
all of such Obligor's right, title and interest in and to the following
property, whether now owned or hereafter acquired by such Obligor and whether
now existing or hereafter coming into existence, including, without limitation,
all real and personal property and interests in real and personal property
(collectively, the "Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by such Obligor as set forth in Schedule 3.01
together with in each case the certificates representing the same (collectively,
the "Pledged Stock"); (ii) all shares, securities, moneys or property
representing a dividend on, or a distribution or return of capital in respect
of, any of the Pledged Stock, resulting from a split-up, revision,
reclassification or other like change of any of the Pledged Stock or otherwise
received in exchange for any of the Pledged Stock and all Equity Rights issued
to the holders of, or otherwise in respect of, any of the Pledged Stock; and
(iii) without affecting the obligations of any Obligor under any provision
prohibiting such action under any Exchange Document, in the event of any
consolidation or merger in which any Issuer is not the surviving corporation,
all shares of each class of the capital stock of the successor corporation
(unless such successor corporation is the Company itself) formed by or resulting
from such consolidation or merger (collectively, and together with the property
described in clauses (i) and (ii) above, the "Stock Collateral"); (iv) the
Indebtedness described in Annex I issued by the obligors named therein (the
"Pledged Debt"); (v) all additional Indebtedness for money borrowed or for the
deferred purchase price of property from time to time owed to such Obligor by
any obligor of the Pledged Debt, and all additional Indebtedness in excess of
$25,000 for money borrowed or for the deferred purchase price of property from
time to time owed to such Obligor by any other Person who, after the date of
this Agreement, becomes, as a result of any occurrence, a Subsidiary of such
Obligor or an Affiliate of such Obligor (any such Indebtedness being "Additional
Debt"); (vi) all notes or other instruments evidencing the Indebtedness referred
to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of such Obligor constituting a right to the payment
of money, whether or not earned by performance, including all moneys due and to
become due to such Obligor in
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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
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(k) all proceeds and products in whatever form of all or any
part of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all rights to
recover and proceed with respect to the same), and all accessories to,
substitutions for and replacements of all or any part of the other Collateral.
3.02 INTELLECTUAL PROPERTY. For the purpose of enabling the Trustee to
exercise its rights, remedies, powers and privileges under Article VII at such
time or times as the Trustee shall be lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no other purpose, each Obligor hereby
grants to the Trustee, to the extent assignable, and subject to the terms and
provisions of the Exchange Offer Intercreditor Agreement, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Obligor) to use, assign, license or sublicense any of the
Intellectual Property of such Obligor, together with reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout of such items.
3.03 PERFECTION. Concurrently with the execution and delivery of this
Agreement, and subject to the terms and provisions of the Exchange Offer
Intercreditor Agreement, each Obligor shall (i) file such financing statements
and other documents in such offices as shall be necessary or as the Trustee may
request to establish a security interest of the Liens granted by this Agreement
(including promptly filing the Assignment for Security--Trademarks and Patents,
in the form executed on the date hereof by the Obligors, in the United States
Patent and Trademark Office), (ii) deliver and pledge to the Trustee any and all
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Trustee may request, (iii) cause the
Trustee (to the extent requested by the Trustee) to be listed as the lienholder
on all certificates of title or ownership relating to Motor Vehicles owned by
such Obligor and deliver to the Trustee originals of all such certificates of
title or ownership for the Motor Vehicles together with the odometer statements
for each respective Motor Vehicle, (iv) deliver and pledge to the Trustee all
certificates for the Pledged Stock and notes, instruments or other documents
evidencing the Pledged Debt, accompanied by undated stock or bond powers, as the
case may be, duly executed in blank and (v) take all such other actions as shall
be necessary or as the Trustee may request to perfect and establish the security
interest of the Liens granted by this Agreement. The Trustee shall have the
right, at any time in its discretion and with notice to the Company, to transfer
to or to register in its name or in the name of any of its nominees any or all
of the Pledged Stock or Pledged Debt.
3.04 PRESERVATION AND PROTECTION OF SECURITY INTERESTS. Each Obligor
shall, subject to the terms and provisions of the Exchange Offer Intercreditor
Agreement:
(a) upon the acquisition after the Signing Date by such
Obligor of any Securities Collateral, promptly either (x) transfer and deliver
to the Trustee all such Securities Collateral (together with the certificates or
instruments representing such Securities Collateral securities duly endorsed in
blank or accompanied by undated powers duly executed in blank) or (y) take such
other action as the Trustee shall deem necessary or appropriate to establish a
security interest in the Liens granted by this Agreement in such Securities
Collateral;
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(b) upon the acquisition after the Signing Date by such
Obligor of any Instrument, promptly deliver and pledge to the Trustee all such
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Trustee may request;
(c) upon the acquisition after the Signing Date by such
Obligor of any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Trustee to be listed as the lienholder on such
certificate of title and within 45 days of the acquisition of such property
deliver evidence of the same to the Trustee;
(d) upon such Obligor's acquiring, or otherwise becoming
entitled to the benefits of, any Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to such Obligor's filing, either directly
or through any agent, licensee or other designee, of any application with any
governmental Person for any Copyright, Patent, Trademark, or other Intellectual
Property, in each case after the Signing Date, execute and deliver such
contracts, agreements and other instruments as the Trustee may request to
evidence, validate, perfect and establish the Liens (subject only to Liens
permitted under Section 7.8 of the Subordinated Indenture) granted by this
Agreement in such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all governmental approvals and take any and all steps that may be
necessary or as the Trustee may request to create and establish a security
interest of, or to preserve the validity, perfection or priority of, the Liens
granted by this Agreement or to enable the Trustee to exercise and enforce its
rights, remedies, powers and privileges under this Agreement with respect to
such Liens, including causing any or all of the Securities Collateral to be
transferred of record into the name of the Trustee or its nominee (and the
Trustee agrees that if any Securities Collateral is transferred into its name or
the name of its nominee, the Trustee will thereafter promptly give to such
Obligor copies of any notices and communications received by it with respect to
the Stock Collateral pledged by such Obligor), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 4.02(b).
3.05 ATTORNEY-IN-FACT. (a) Subject to the rights of such Obligor under
Sections 3.06, 3.07, 3.08 and 3.09, and subject to the terms and provisions of
the Exchange Offer Intercreditor Agreement, the Trustee is hereby appointed the
attorney-in-fact of each Obligor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Trustee may deem necessary or advisable to accomplish the purposes of this
Agreement, to preserve the validity, and security interest of the Liens granted
by this Agreement and, following any Default, to exercise its rights, remedies,
powers and privileges under this Agreement. This appointment as attorney-in-fact
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Trustee shall be entitled under this Agreement upon the
occurrence and continuation of any Event of Default (or, in respect of Section
4.02(b), any Default) (i) to ask, demand, collect, sue for, recover, receive and
give receipt and discharge for amounts due and to become due under and in
respect of all or any part of the Collateral; (ii) to receive, endorse and
collect any Instruments or other drafts, instruments, documents and chattel
paper in connection with clause (i) above (including any draft or check
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representing the proceeds of insurance or the return of unearned premiums);
(iii) to file any claims or take any action or proceeding that the Trustee may
deem necessary or advisable for the collection of all or any part of the
Collateral, including the collection of any compensation due and to become due
under any contract or agreement with respect to all or any part of the
Collateral; and (iv) to execute, in connection with any sale or disposition of
the Collateral under Article VII, any endorsements, assignments, bills of sale
or other instruments of conveyance or transfer with respect to all or any part
of the Collateral. In any suit, proceeding or action brought by the Trustee
relating to any Account, contract or Instrument for any sum owing thereunder, or
to enforce any provision of any Account, contract or Instrument, the Obligors,
jointly and severally, will save, indemnify and keep the Trustee harmless from
and against all expense, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of the
obligor thereunder, arising out of a breach by any Obligor of any obligation
thereunder or arising out of any other agreement, Indebtedness or liability at
any time owing to, or in favor of, such obligor or its successors from the
Obligors, and all such obligations of the Obligors shall be and remain
enforceable against and only against the Obligors and shall not be enforceable
against the Trustee.
(b) Without limiting the rights and powers of the Trustee
under Section 3.05(a), and subject to the terms and provisions of the Exchange
Offer Intercreditor Agreement, each Obligor hereby appoints the Trustee as its
attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of (i) executing on behalf of
such Obligor title or ownership applications for filing with appropriate state
agencies to enable Motor Vehicles now owned or hereafter acquired by such
Obligor to be retitled and the Trustee to be listed as lienholder as to such
Motor Vehicles, (ii) filing such applications with such state agencies and (iii)
executing such other documents and instruments on behalf of, and taking such
other action in the name of, such Obligor as the Trustee may deem necessary or
advisable to accomplish the purposes of this Agreement (including the purpose of
creating in favor of the Trustee security interest in the Motor Vehicles and
exercising the rights and remedies of the Trustee under Article VII). This
appointment as attorney-in-fact is irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Trustee
under Section 3.05(a), and subject to the terms and provisions of the Exchange
Offer Intercreditor Agreement,each Obligor hereby appoints the Trustee as its
attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by Section
3.04(d). This appointment as attorney-in-fact is irrevocable and coupled with an
interest.
3.06 SPECIAL PROVISIONS RELATING TO SECURITIES COLLATERAL. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligors shall
have the right to exercise all voting, consensual and other powers of ownership
pertaining to the Securities Collateral for all purposes not inconsistent with
the terms of any Exchange Document, provided that the Obligors jointly and
severally agree that they will not vote the Securities Collateral in any manner
that is inconsistent with the terms of any Exchange Document; and the Trustee
shall, at the Obligors' expense, execute and deliver to the Obligors or cause to
be executed and delivered to the Obligors all such proxies, powers of attorney,
dividends and other orders and other instruments, without recourse, as the
Obligors may reasonably request for the purpose of enabling the Obligors
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to exercise the rights and powers which they are entitled to exercise pursuant
to this Section 3.06(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligors shall be entitled to receive and retain any dividends
or distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Trustee exercise any available
right to declare any Secured Obligation due and payable or seek or pursue any
other right, remedy, power or privilege available to them under applicable law,
this Agreement or any other Exchange Document, all dividends and other
distributions on the Securities Collateral shall be paid directly to the Trustee
and retained by it in the Collateral Account as part of the Securities
Collateral, subject to the terms of this Agreement, and, if the Trustee shall so
request, the Obligors jointly and severally agree to execute and deliver to the
Trustee appropriate additional dividend, distribution and other orders and
instruments to that end, provided that if such Event of Default is cured, any
such dividend or distribution paid to the Trustee prior to such cure shall, upon
request of the Obligors (except to the extent applied to the Secured
Obligations), be returned by the Trustee to the Obligors.
3.07 USE OF INTELLECTUAL PROPERTY. Subject to such action not otherwise
constituting a Default and so long as no Event of Default shall have occurred
and be continuing, the Obligors will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property in the ordinary course of the business
of the Obligors. In furtherance of the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Trustee shall from time to time, upon
the request of the Obligors through the Company, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
such Obligors through the Company shall have certified are appropriate (in their
reasonable judgment) to allow them to take any action permitted above (including
relinquishment of the license provided pursuant to Section 3.02 as to any
specific Intellectual Property). The exercise of rights, remedies, powers and
privileges under Article VII by the Trustee shall not terminate the rights of
the holders of any licenses or sublicenses theretofore granted by the Obligors
in accordance with the first sentence of this Section 3.07.
3.08 INSTRUMENTS. So long as no Default or Event of Default shall have
occurred and be continuing, each Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Trustee shall, promptly upon the request, and at the
expense of, such Obligor through the Company, make appropriate arrangements for
making any Instruments pledged by the Obligors available to the respective
Obligor for purposes of presentation, collection or renewal. Any such
arrangement shall be effected, to the extent deemed appropriate by the Trustee,
against trust receipt or like document.
3.09 USE OF COLLATERAL. So long as no Event of Default shall have
occurred and be continuing, each Obligor shall, in addition to its rights under
Sections 3.06, 3.07 and 3.08 in respect of the Collateral contemplated in those
sections, be entitled to (i) use and possess the other Collateral and to
exercise its rights, title and interest in all contracts, agreements, licenses
and governmental approvals, and (ii) sell items of Inventory to customers in the
ordinary course of business, in each case subject to the rights, remedies,
powers and privileges of the Trustee
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under Articles IV and VII and to such use, possession or exercise not otherwise
constituting a Default.
3.10 RIGHTS AND OBLIGATIONS. (a) Each Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements included
in the Collateral in accordance with their respective terms to the same extent
as if this Agreement had not been executed and delivered. The exercise by the
Trustee of any right, remedy, power or privilege in respect of this Agreement
shall not release any Obligor from any of its duties and obligations under such
contracts and agreements and the Obligors shall save, indemnify and keep the
Trustee harmless from and against all expense, loss or damage suffered by reason
of such exercise. The Trustee shall have no duty, obligation or liability under
such contracts and agreements or with respect to any governmental approval
included in the Collateral by reason of this Agreement or any other Exchange
Document, nor shall the Trustee be obligated to perform any of the duties or
obligations of any Obligor under any such contract or agreement or any such
governmental approval or to take any action to collect or enforce any claim (for
payment) under any such contract or agreement or governmental approval.
(b) No Lien granted by this Agreement in the Obligors' right,
title and interest in any contract, agreement or governmental approval shall be
deemed to be a consent by the Trustee to any such contract, agreement or
governmental approval.
(c) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize any Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Exchange Document.
(d) The Trustee shall not be required to take steps necessary
to preserve any rights against prior parties to any part of the Collateral.
3.11 RELEASE OF MOTOR VEHICLES. So long as no Default shall have
occurred and be continuing and subject to the Exchange Offer Intercreditor
Agreement, upon the request of, and at the expense of, any Obligor, the Trustee
shall execute and deliver to such Obligor such instruments as such Obligor shall
reasonably request to remove the notation of the Trustee as lienholder on any
certificate of title for any Motor Vehicle; provided that any such instruments
shall be delivered, and the release shall be effective, only upon receipt by the
Trustee of a certificate from such Obligor stating that the Motor Vehicle the
Lien on which is to be released is to be sold or has suffered a casualty loss
(with title passing to the appropriate casualty insurance company in settlement
of the claim for such loss).
3.12 TERMINATION. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall (subject, however, to Section
2.05) terminate, and the Trustee shall, at the expense of the respective
Obligor, forthwith cause to be assigned, transferred and delivered, against
receipt but without any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect of the Collateral, to or on
the order of the respective Obligors and to be released, canceled and granted
back all licenses and rights referred to in Section 3.02. The Trustee shall
also, at the expense of the respective Obligor, execute and deliver to the
respective Obligors upon such termination such Uniform Commercial Code
termination statements, certificates for terminating the Liens on the Motor
Vehicles and such
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other documentation as shall be reasonably requested by the respective Obligors
to effect the termination and release of the Liens granted by this Agreement on
the Collateral.
ARTICLE IV. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. There is hereby established with the Trustee a
cash collateral account (the "Collateral Account") in the name and under the
exclusive domain and control of the Trustee into which there shall be deposited
from time to time the cash proceeds of any of the Collateral (including proceeds
resulting from insurance or condemnation) required to be delivered to the
Trustee pursuant to this Agreement and into which any Obligor may from time to
time deposit any additional amounts which it wishes to pledge to the Trustee as
additional collateral security under this Agreement. The balance from time to
time in the Collateral Account shall constitute part of the Collateral and shall
not constitute payment of the Secured Obligations until applied as provided in
this Agreement. If any Event of Default shall have occurred and be continuing,
the Trustee may in its discretion apply (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Article VII. The balance
from time to time in the Collateral Account shall be subject to withdrawal only
as provided in this Agreement.
4.02 CERTAIN PROCEEDS. (a) If any Default or Event of Default shall
have occurred and be continuing, each Obligor shall, subject to the terms and
provisions of the Exchange Offer Intercreditor Agreement, upon request of the
Trustee, promptly notify (and such Obligor hereby authorizes the Trustee so to
notify) each account debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Trustee under this Agreement and that any
payments due or to become due in respect of such Collateral are to be made
directly to the Trustee. All such payments made to the Trustee shall be
immediately deposited in the Collateral Account.
(b) Each Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, such Obligor shall as promptly as possible deposit such proceeds into
the Collateral Account. Until so deposited, all such proceeds shall be held in
trust by each Obligor for and as the property of the Trustee and shall not be
commingled with any other funds or property of such Obligor.
4.03 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit in
the Collateral Account shall be invested from time to time in such Permitted
Investments as the Obligors through the Company (or, if any Default or Event of
Default shall have occurred and be continuing, the Trustee) shall determine. All
such investments shall be held in the name and be under the control of the
Trustee. At any time after the occurrence and during the continuance of an Event
of Default, the Trustee may in its discretion at any time and from time to time
elect to liquidate any such investments and to apply or cause to be applied the
proceeds of such action to the payment of the Secured Obligations in the manner
specified in Article VII.
ARTICLE V. REPRESENTATIONS AND WARRANTIES.
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Each Obligor hereby represents and warrants to the Trustee for the
benefit of the Holders as follows:
5.01 TITLE. Such Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and, except as
set forth in Schedule 4.01, and subject to any and all Liens created under the
Note Purchase Agreement, such Collateral is free and clear of all Liens. The
security interest granted by this Agreement in favor of the Trustee for the
benefit of the Trustee and the Holders have attached and, upon filing of the
respective financing statements in the jurisdictions listed on Annex II, this
Agreement is effective to create a security interest in all of such Collateral.
5.02 SECURITIES COLLATERAL. (a) The Pledged Stock presently owned by
such Obligor is duly authorized, validly existing, fully paid and nonassessable,
and none of such Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of such
Pledged Stock, upon the transfer of such Pledged Stock (except for any such
restriction contained in any Exchange Document). The Pledged Debt pledged by
such Obligor has been duly authorized, authenticated or issued and delivered,
and is the legal, valid and binding obligation of the issuers thereof, and is
not in default. The Pledged Debt constitutes all of the outstanding Indebtedness
for money borrowed or for the deferred purchase price of property owed to such
Obligor by any of its Subsidiaries or Affiliates.
(b) The Pledged Stock pledged by such Obligor constitutes all
of the issued and outstanding shares of capital stock of any class of the
Issuers beneficially owned by such Obligor on the Signing Date (whether or not
registered in the name of such Obligor).
5.03 INTELLECTUAL PROPERTY. (a) Except pursuant to licenses and other
user agreements entered into by such Obligor in the ordinary course of business,
such Obligor owns and possesses the right to use, and has done nothing to
authorize or enable any other Person to use, any Copyright, Patent or Trademark
constituting Intellectual Property.
(b) No Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
5.04 GOODS. Any goods now or hereafter manufactured or otherwise
produced by any Obligor or any of its Subsidiaries included in the Collateral
have been and will be produced in compliance with the requirements of the Fair
Labor Standards Act.
ARTICLE VI. COVENANTS.
6.01 BOOKS AND RECORDS. Each Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark such
books and records in such manner as the Trustee may reasonably require in order
to reflect the Liens granted by this Agreement; (b) furnish to the Trustee from
time to time (but, unless a Default shall have occurred and be continuing, no
more frequently than quarterly) statements and schedules further identifying and
describing the Copyright Collateral, the Patent Collateral and the Trademark
Collateral and such other reports in connection with the Copyright Collateral,
the Patent Collateral and the Trademark Collateral, as the Trustee may
reasonably request, all in reasonable detail; (c) prior
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to filing, either directly or through an agent, licensee or other designee, any
application for any Copyright, Patent or Trademark, furnish to the Trustee
prompt notice of such proposed filing; and (d) permit representatives of the
Trustee, upon reasonable notice, at any time during normal business hours to
inspect and make abstracts from its books and records pertaining to the
Collateral, permit representatives of the Trustee to be present at such
Obligor's place of business to receive copies of all communications and
remittances relating to the Collateral and forward copies of any notices or
communications received by such Obligor with respect to the Collateral, all in
such manner as the Trustee may reasonably request.
6.02 REMOVALS, ETC. Without at least 30 days' prior written notice to
the Trustee, each Obligor shall (i) not maintain any of its books and records
with respect to the Collateral at any office or maintain its principal place of
business at any place, or permit any Inventory or Equipment to be located
anywhere, other than (a) at the address initially indicated for notices to it
under Article VIII, (b) at one of the other business locations presently owned
or operated by such Obligor or any of its Affiliates and identified in Annex II
or III or (c) in transit from one of such locations to another, or (ii) change
its corporate name, or the name under which it does business, from the name
shown on the signature pages to this Agreement, provided that the Company shall
be permitted to consummate the reincorporation merger whereby the Company would
merge with a Delaware Subsidiary of the Company to change the Company's state of
incorporation from Florida to Delaware (as described in the Notice of Special
Meeting of Stockholders and Proxy Statement filed by the Company with the SEC on
September 18, 1998).
6.03 STOCK COLLATERAL. The Obligors will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligors shall cause all such
shares to be duly authorized, validly issued, fully paid and nonassessable and
to be free of any contractual restriction or any restriction under the charter
or bylaws of the respective Issuer of such Stock Collateral, upon the transfer
of such Stock Collateral (except for any such restriction contained in any
Exchange Document). Such Obligor, subject to the terms and provisions of the
Exchange Offer Intercreditor Agreement, agrees that it will (i) cause each
issuer of the Pledged Stock not to issue any shares of stock or other securities
in addition to or in substitution for the Pledged Stock, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of capital stock issued to such Obligor (the "Additional
Stock") and any and all Additional Debt, and (iii) promptly (and in any event
within three business days) deliver to the Trustee an amendment to this
Agreement, duly executed by such Obligor, in respect of the Additional Shares or
Additional Debt, together with all certificates, notes or other instruments
representing or evidencing the same. Such Obligor agrees that all Additional
Shares and Additional Debt listed on any such amendment delivered to the Trustee
shall for all purposes hereunder constitute Pledged Stock and Pledged Debt,
respectively, and (iii) is deemed to have made, upon such delivery, the
representations and warranties contained in Article IV hereof with respect to
such Collateral.
6.04 INTELLECTUAL PROPERTY. (a) Each Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force and effect free from any claim of abandonment for
nonuse, (ii) maintain
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as in the past the quality of products and services offered under such
Trademark, (iii) employ such Trademark with the appropriate notice of
registration and (iv) not (and not permit any licensee or sublicensee to) do any
act or knowingly omit to do any act whereby any Trademark material to the
conduct of its business may become invalidated.
(b) Each Obligor (either itself or through licensees) will not
do any act or knowingly omit to do any act whereby any Patent material to the
conduct of its business may become abandoned or dedicated.
(c) Each Obligor shall notify the Trustee immediately if it
knows or has reason to know that any Intellectual Property material to the
conduct of its business may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding before any governmental Person)
regarding each Obligor's ownership of any Intellectual Property material to its
business, its right to copyright, patent or register the same (as the case may
be), or its right to keep, use and maintain the same.
(d) Each Obligor will take all necessary steps that are
consistent with good business practices in any proceeding before any appropriate
governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to maintain
each registration material to the conduct of its business, including payment of
maintenance fees, filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings.
(e) In the event that any Intellectual Property material to
the conduct of its business is infringed, misappropriated or diluted by a third
party, each Obligor shall notify the Trustee within ten days after it learns of
such event and shall, if consistent with good business practice, promptly sue
for infringement, misappropriation or dilution, seek temporary restraints and
preliminary injunctive relief to the extent practicable, seek to recover any and
all damages for such infringement, misappropriation or dilution and take such
other actions as are appropriate under the circumstances to protect such
Collateral.
(f) Each Obligor shall prosecute diligently any application
for any Intellectual Property pending as of the date of this Agreement or
thereafter made until the termination of this Agreement, make application on
uncopyrighted but copyrightable material, unpatented but patentable inventions
and unregistered but 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 Trustee shall have the right but shall in no way be
obligated to bring suit in its own name to enforce the Copyrights, Patents and
Trademarks and any license under such Intellectual Property, in which event each
Obligor shall, at the request of the Trustee, do any and all lawful acts and
execute and deliver any and all proper documents required by the Trustee in aid
of such enforcement action.
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ARTICLE VII. REMEDIES.
7.01 EVENTS OF DEFAULT, ETC. Without limitation on the rights,
remedies, powers and privileges of the Trustee under Article II, if any Event of
Default shall have occurred and be continuing and subject to the Exchange Offer
Intercreditor Agreement:
(a) the Trustee in its discretion may require each Obligor to,
and each Obligor shall, assemble the Collateral owned by it at such place or
places, reasonably convenient to both the Trustee and such Obligor, designated
in the Trustee's request;
(b) the Trustee in its discretion may make any reasonable
compromise or settlement it deems desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Trustee in its discretion may, in its name or in the
names of the Obligors or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for all or any part of the Collateral, but shall be under no obligation to do
so;
(d) the Trustee in its discretion may, upon five business
days' prior written notice to the Obligors of the time and place, with respect
to all or any part of the Collateral which shall then be or shall thereafter
come into the possession, custody or control of the Trustee, or its agents,
sell, lease or otherwise dispose of all or any part of such Collateral, at such
place or places as the Trustee deems best, for cash, for credit or for future
delivery (without thereby assuming any credit risk) and at public or private
sale, without demand of performance or notice of intention to effect any such
disposition or of time or place of any such sale (except such notice as is
required above or by applicable statute and cannot be waived), and the Trustee
or any other Person may be the purchaser, lessee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Obligors, any such demand, notice and right or
equity being hereby expressly waived and released. In the event of any sale,
license or other disposition of any of the Trademark Collateral, the goodwill
connected with and symbolized by the Trademark Collateral subject to such
disposition shall be included, and the Obligors shall supply to the Trustee or
its designee, for inclusion in such sale, assignment or other disposition, all
Intellectual Property relating to such Trademark Collateral. The Trustee may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned; and
(e) the Trustee shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privileges are asserted) and such additional rights,
remedies, powers and privileges to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this
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Agreement or the Collateral may be asserted, including the right, to the maximum
extent permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Trustee were the sole and
absolute owner of the Collateral (and each Obligor agrees to take all such
action as may be appropriate to give effect to such right).
The proceeds of, and other realization upon, the Collateral by virtue
of the exercise of remedies under this Section 7.01 and of the exercise of the
license granted to the Trustee in Section 3.02 shall be applied in accordance
with Section 7.04.
7.02 DEFICIENCY. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 7.01 and of the
exercise of the license granted to the Trustee in Section 3.02 are insufficient
to cover the costs and expenses (including attorneys fees) of such exercise and
the payment in full of the other Secured Obligations, the Obligors shall remain
liable for any deficiency.
7.03 PRIVATE SALE. (a) The Trustee shall incur no liability as a result
of the sale, lease or other disposition of all or any part of the Collateral at
any private sale pursuant to Section 7.01 conducted in a commercially reasonable
manner. Each Obligor hereby waives any claims against the Trustee arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Secured Obligations,
even if the Trustee accepts the first offer received and does not offer the
Collateral to more than one offeree.
(b) The Obligors recognize that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, the Trustee may be compelled, with respect to any sale of all or any part
of the Collateral, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to distribution or resale. The Obligors acknowledge that any such
private sales may be at prices and on terms less favorable to the Trustee than
those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Trustee shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit the
respective Issuer of such Collateral to register it for public sale.
7.04 APPLICATION OF PROCEEDS. Except as otherwise expressly provided in
this Agreement, except as provided below in this Section 7.04 and except as
provided under the terms and provisions of the Exchange Offer Intercreditor
Agreement, the proceeds of, or other realization upon, all or any part of the
Collateral by virtue of the exercise of remedies under Section 7.01 or of the
exercise of the license granted in Section 3.02, and any other cash at the time
held by the Trustee under Article IV or this Article VII, shall be applied by
the Trustee:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the Trustee,
the fees and expenses of its agents and counsel and all other expenses incurred
and advances made by the Trustee in that connection;
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Second, to the Trustee for amounts due and unpaid on the Exchange Notes
for principal and interest and all other amounts due and unpaid under the
Exchange Documents; and
Third, to the Company, the Obligors or any other obligors on the
Exchange Notes, as their interests may appear, or as a court of competent
jurisdiction may direct.
As used in this Article VII, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to any Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
ARTICLE VIII. MISCELLANEOUS.
8.01 WAIVER. No failure on the part of the Trustee or any Holder to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, remedy, power or privilege under this Agreement shall operate as a
waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.02 NOTICES. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Obligors: Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Trustee: Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administrator
8.03 EXPENSES, ETC. The Obligors jointly and severally agree to pay or
to reimburse the Trustee for all costs and expenses (including reasonable
attorney's fees and expenses) that may be incurred by the Trustee in any effort
to enforce any of the provisions of Article II or Article VII, or any of the
obligations of the Obligors in respect of the Collateral or in connection with
(a) the preservation of the Lien of, or the rights of the Trustee under this
Agreement or (b) any actual or attempted sale, lease, disposition, exchange,
collection, compromise, settlement or other realization in respect of, or care
of, the Collateral, including all such costs and expenses (and reasonable
attorney's fees and expenses) incurred in any bankruptcy, reorganization,
workout or other similar proceeding.
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<PAGE>
8.04 AMENDMENTS. This Agreement may be amended as to the Trustee and
its respective successors and assigns, and the Obligors may take any action
herein prohibited, or omit to perform any act required to be performed by it, if
the Obligors shall obtain the written consent of the Trustee. This Agreement may
not be waived, changed, modified, or discharged orally, but only by an agreement
in writing signed by the party or parties against whom enforcement of any
waiver, change, modification or discharge is sought or by parties with the right
to consent to such waiver, change, modification or discharge on behalf of such
party.
8.05 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
8.06 SURVIVAL. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant hereto in
connection with the transactions contemplated hereby shall survive the Closing
and the delivery of the Exchange Documents, regardless of any investigation made
by or on behalf of any party.
8.07 AGREEMENTS SUPERSEDED. Except with respect to express references
to other Exchange Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter of this Agreement.
8.08 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
8.09 CAPTIONS. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
8.12 SUBMISSION TO JURISDICTION. If any action, proceeding or
litigation shall be brought by the Trustee in order to enforce any right or
remedy under this Agreement, each Obligor hereby consents and will submit, and
will cause each of its Subsidiaries to submit, to the jurisdiction of
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any state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement. Each
Obligor hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
8.13. SERVICE OF PROCESS. Nothing herein shall affect the right of the
Trustee to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Obligor in any other
jurisdiction.
8.14. WAIVER OF JURY TRIAL. EACH OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT.
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<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.
SANTA BARBARA BANK & TRUST
By:_____________________
Name:
Title:
------------------------,
a ____________corporation
By:_____________________
Name:
Title:
------------------------,
a ____________corporation
By:_____________________
Name:
Title:
-------------------------,
a _____________corporation
By:______________________
Name:
Title:
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Exhibit T3E.4
Form of Subordinated Guarantee Agreement
SUBORDINATED GUARANTEE AGREEMENT
This SUBORDINATED GUARANTEE (this "Agreement") dated as of _________,
1998, is made by certain Subsidiaries of Inamed Corporation, a Florida
corporation (the "Company") that are signatories hereto and who execute a
Joinder hereto in the form of Exhibit A hereto (collectively, the "Guarantors")
in favor of the holders of the Company's 11.00% Senior Subordinated Secured
Notes due March 31, 1999 or at the option of the Obligor exercised as provided
therein, September 1, 2000 (the "Exchange Notes") issued pursuant to the
Subordinated Indenture dated as of _______, 1998 between the Company and Santa
Barbara Bank & Trust, as trustee (the "Trustee").
RECITALS
The Indenture dated as of ___________, 1998 (the "Subordinated
Indenture") between the Company and the Trustee provides, subject to its terms
and conditions, for the issuance by the Company of its 11% Senior Subordinated
Secured Notes due March 31, 1999, or at the option of the Obligor as provided
therein, September 1, 2000 (the "Exchange Notes") as well as certain warrants to
purchase the Company's common stock, $.01 per share, (the "Warrants") to be
issued in exchange for the Company's 11% Secured Convertible Notes due 1999 (the
"Old Notes") to the holders thereof (the "Holders") pursuant to the Securities
Exchange Agreement dated as of October 7, 1998 (the "Exchange Agreement"). It is
a condition to the exchange of the Old Notes for the Notes and Warrants by the
Purchasers that the Guarantors shall have executed and delivered, and granted
the Liens provided for in, this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors have agreed to pledge and grant a security interest
in the Collateral as security for the Secured Obligations. Accordingly, the
Obligors agree with the Trustee as follows:
Article I. Definitions and Interpretation.
1.01 CERTAIN DEFINED TERMS. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Subordinated Indenture or
in the Exchange Agreement (including those terms incorporated therein by
reference) shall have the respective meanings assigned to them in the
Subordinated Indenture or the Exchange Agreement, as applicable. In addition,
the following terms shall have the following meanings under this Agreement:
"Collateral" shall have the meaning assigned to that term in the
Subordinated Indenture.
"Exchange Documents" shall mean the Securities Exchange Agreement dated
as of ___________, 1998 between the Company, the holders listed on Exhibit A
thereto and the Collateral Agent, the Exchange Notes, this Agreement, the
Subordinated Security Agreement, dated as of the date hereof, between the
Company and the Collateral Agent (the "Subordinated
<PAGE>
Security Agreement"), the Subordinated Guarantee and Security Agreement, dated
as of the date hereof, by and between certain Subsidiaries of the Company and
the Collateral Agent (the "Subordinated Guarantee and Security Agreement"),the
Subordinated Indenture, the Exchange Offer Registration Rights Agreement, dated
as of the date hereof, by and between the Company and the Holders and the
Intercreditor Agreement, dated as of the date hereof, by and between the
Collateral Agent and the Trustee.
"Guaranteed Obligations" means any and all Obligations and any and all
obligations of the Company for the performance by it of its agreements,
covenants and undertakings under or in respect of the Exchange Documents.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
September 30, 1998 between the Trustee and Appaloosa Management, L.P. as
Collateral Agent (the "Collateral Agent") under the Note Purchase Agreement.
"Note Purchase Agreement" means the agreement dated as of September 30,
1998 between the Company, the parties listed on Exhibit A thereto and the
Collateral Agent.
"Obligations" shall mean the principal and interest due under the
Exchange Notes and all other obligations and liabilities of the Company to the
Holders of every nature whatsoever now existing or hereafter arising, including,
without limitation, all prepayment premiums, indemnities, reimbursement
obligations, fees, costs and expenses, arising under or in connection the
Exchange Documents (including, without limitation, any interest accruing
subsequent to (or that would accrue but for) the commencement of any proceeding
involving the bankruptcy, insolvency, reorganization, liquidation, receivership
or the like of the Company), and any and all expenses which may be incurred by
the Holders in collecting any or all of the obligations of such Guarantor under
this Agreement and/or enforcing any rights under this Agreement.
"Subordinated Indenture" means the indenture dated September __, 1998,
between the Company, as issuer of the Exchange Notes, and Santa Barbara Bank and
Trust, as Trustee.
1.02 INTERPRETATION. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any Exchange Document); and references to Persons
include their respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
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Article II. Guarantee.
2.01 GUARANTEE. (a) Subject to the limitation set forth in Section
2.08, each of the Guarantors, as a primary guarantor and not merely as a surety,
hereby jointly and severally guarantees to the Holders the prompt and complete
payment when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Guaranteed Obligations in each case strictly in accordance
with their terms. The Guarantors hereby further jointly and severally agree that
if the Company shall fail to pay in full when due (whether at stated maturity,
by acceleration or otherwise) all or any part of the Guaranteed Obligations, the
Guarantors will immediately pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of all or any part of the Guaranteed Obligations, the same will be timely paid
in full when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal. The obligations of the
Guarantors under this Article II are irrevocable and unconditional in nature and
are made with respect to any Guaranteed Obligations now existing or in the
future arising. The Guarantors' liability under this Agreement shall continue
until full satisfaction of all Guaranteed Obligations. The obligations of the
Guarantors constitute a guarantee of due and punctual payment and performance
and not merely a guarantee of collection, and each of the Guarantors
specifically agrees that it shall not be necessary or required that the Holders
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Company (or any other Person) before or as a condition to the
obligations of such Guarantor hereunder.
(b) No payment or payments made by the Company or any other
Person or received or collected by the Holders from the Company or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Guaranteed Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantors hereunder which shall,
notwithstanding any such payment or payments, remain liable for the Guaranteed
Obligations until the date upon which the Guaranteed Obligations are fully
performed and paid in full.
2.02 ACKNOWLEDGMENTS, WAIVERS AND CONSENTS. Each Guarantor acknowledges
that the obligations undertaken by it under this Agreement involve the guarantee
of obligations of Persons other than such Guarantor and that such obligations of
such Guarantor are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, each
Guarantor agrees that:
(a) Without affecting the enforceability or effectiveness of
this Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of such Guarantor, or the
rights, remedies, powers and privileges of the Holders under this Agreement, the
Trustee may, at any time and from time to time and without notice or demand of
any kind or nature whatsoever: (i) amend, supplement, modify, extend, renew,
waive, accelerate or otherwise change the time for payment or performance of, or
the terms of, all or any part of the Guaranteed Obligations (including any
increase or decrease in the rate or rates of interest on all or any part of the
Guaranteed Obligations); (ii) amend, supplement, modify, extend,
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renew, waive or otherwise change, or enter into or give, any Exchange Document
or any agreement, security document, guarantee, approval, consent or other
instrument with respect to all or any part of the Guaranteed Obligations, any
Exchange Document or any such other instrument or any term or provision of the
foregoing; (iii) accept or enter into new or additional agreements, security
documents, guarantees or other instruments in addition to, in exchange for or
relative to any Exchange Document, all or any part of the Guaranteed Obligations
or any collateral now or in the future serving as security for the Guaranteed
Obligations; (iv) accept or receive (including from any other Guarantor) partial
payments or performance on the Guaranteed Obligations (whether as a result of
the exercise of any right, remedy, power or privilege or otherwise); (v) accept,
receive and hold any additional collateral for all or any part of the Guaranteed
Obligations (including from any other Guarantor); (vi) release, reconvey,
terminate, waive, abandon, allow to lapse or expire, fail to perfect,
subordinate, exchange, substitute, transfer, foreclose upon or enforce any
collateral, security documents or guarantees (including the obligations of any
other Guarantor) for or relative to all or any part of the Guaranteed
Obligations; (vii) apply any collateral or the proceeds of any collateral or
guarantee (including the obligations of any other Guarantor) to all or any part
of the Guaranteed Obligations in such manner and extent as the Trustee may in
its discretion determine; (viii) release any Person (including any other
Guarantor) from any personal liability with respect to all or any part of the
Guaranteed Obligations; (ix) settle, compromise, release, liquidate or enforce
upon such terms and in such manner as the Trustee may determine or as applicable
law may dictate all or any part of the Guaranteed Obligations or any collateral
on or guarantee of all or any part of the Guaranteed Obligations (including with
any other Guarantor); (x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Company or any other Person (including any other Guarantor);
(xi) proceed against the Company, such or any other Guarantor or any other
guarantor of all or any part of the Guaranteed Obligations or any collateral
provided by any Person and exercise the rights, remedies, powers and privileges
of the Holders under the Exchange Documents or otherwise in such order and such
manner as the Trustee may, in its discretion, determine, without any necessity
to proceed upon or against or exhaust any collateral, right, remedy, power or
privilege before proceeding to call upon or otherwise enforce this Agreement as
to any Guarantor; (xii) foreclose upon any deed of trust, mortgage or other
instrument creating or granting liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure, bid any amount
or make no bid in any foreclosure sale or make any other election of remedies
with respect to such liens or exercise any right of set-off; (xiii) obtain the
appointment of a receiver with respect to any collateral for all or any part of
the Guaranteed Obligations and apply the proceeds of such receivership as the
Trustee may in its discretion determine (it being agreed that nothing in this
clause (xiii) shall be deemed to make the Trustee a party in possession in
contemplation of law, except at its option); (xiv) enter into such other
transactions or business dealings with any other Guarantor, the Company, any
Subsidiary or Affiliate of the Company or any other guarantor of all or any part
of the Guaranteed Obligations as the Trustee may desire; and (xv) do all or any
combination of the actions set forth in this Section 2.02(a).
(b) The enforceability and effectiveness of this Agreement and
the liability of the Guarantors, and the rights, remedies, powers and privileges
of the Holders and the Trustee, under
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this Agreement shall not be affected, limited, reduced, discharged or
terminated, and each Guarantor hereby expressly waives to the fullest extent
permitted by law any defense now or in the future arising, by reason of: (i) the
illegality, invalidity or unenforceability of all or any part of the Guaranteed
Obligations, any Exchange Document or any agreement, security document,
guarantee or other instrument relative to all or any part of the Guaranteed
Obligations; (ii) any disability or other defense with respect to all or any
part of the Guaranteed Obligations of the Company, any other Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations, including the
effect of any statute of limitations that may bar the enforcement of all or any
part of the Guaranteed Obligations or the obligations of any such other
guarantor; (iii) the illegality, invalidity or unenforceability of any security
or guarantee for all or any part of the Guaranteed Obligations or the lack of
perfection or continuing perfection or failure of the priority of any lien on
any collateral for all or any part of the Guaranteed Obligations; (iv) the
cessation, for any cause whatsoever, of the liability of the Company, any other
Guarantor or any other guarantor of all or any part of the Guaranteed
Obligations (other than, subject to Section 2.05, by reason of the full payment
and performance of all Guaranteed Obligations); (v) any failure of the Holders
or the Trustee to marshal assets in favor of the Company or any other Person
(including any other Guarantor), to exhaust any collateral for all or any part
of the Guaranteed Obligations, to pursue or exhaust any right, remedy, power or
privilege it may have against any other Guarantor, the Company, any other
guarantor of all or any part of the Guaranteed Obligations or any other Person
or to take any action whatsoever to mitigate or reduce such or any other
Guarantor's liability under this Agreement, the Holders and the Trustee being
under no obligation to take any such action notwithstanding the fact that all or
any part of the Guaranteed Obligations may be due and payable and that the
Company may be in default of its obligations under any Exchange Document; (vi)
any failure of the Holders or the Trustee to give notice of sale or other
disposition of any Collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral for all or any part of the Guaranteed Obligations) for all or any
part of the Guaranteed Obligations to the Company, any Guarantor or any other
Person or any defect in, or any failure by any Guarantor or any other Person to
receive, any notice that may be given in connection with any sale or disposition
of any Collateral; (vii) any failure of the Holders or the Trustee to comply
with applicable laws in connection with the sale or other disposition of any
Collateral for all or any part of the Guaranteed Obligations; (viii) any
judicial or nonjudicial foreclosure or sale of, or other election of remedies
with respect to, any interest in real property or other Collateral serving as
security for all or any part of the Guaranteed Obligations, even though such
foreclosure, sale or election of remedies may impair the subrogation rights of
any Guarantor or may preclude any Guarantor from obtaining reimbursement,
contribution, indemnification or other recovery from any other Guarantor, the
Company, any other guarantor or any other Person and even though the Company may
not, as a result of such foreclosure, sale or election of remedies, be liable
for any deficiency; (ix) any benefits the Company, any Guarantor or any other
guarantor may otherwise derive from the laws of any jurisdiction of the nature
of a "one-form-of-action," "anti-deficiency" or "security-first" rule; (x) any
act or omission of the Holders, the Trustee or any other Person that directly or
indirectly results in or aids the discharge or release of the Company or any
other Guarantor of all or any part of the Guaranteed Obligations or any security
or guarantee for all or any part of the Guaranteed Obligations by operation of
law or otherwise; (xi) any law which
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provides that the obligation of a surety or guarantor must neither be larger in
amount nor in other respects more burdensome than that of the principal or which
reduces a surety's or guarantor's obligation in proportion to the principal
obligation; (xii) the possibility that the obligations of the Company to the
Holders or the Trustee may at any time and from time to time exceed the
aggregate liability of the Guarantors under this Agreement; (xiii) any
counterclaim, set-off or other claim which the Company or any other Guarantor
has or alleges to have with respect to all or any part of the Guaranteed
Obligations; (xiv) any failure of the Holders or the Trustee to file or enforce
a claim in any bankruptcy or other proceeding with respect to any Person; (xv)
the election by the Holders or the Trustee, in any bankruptcy proceeding of any
Person, of the application or nonapplication of Section 1111(b)(2) of the
Bankruptcy Code; (xvi) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code; (xvii) any use of cash collateral under
Section 363 of the Bankruptcy Code; (xviii) any agreement or stipulation with
respect to the provision of adequate protection in any bankruptcy proceeding of
any Person; (xix) the avoidance of any Lien in favor of the Holders or the
Trustee for any reason; (xx) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, including any discharge of, or bar or stay
against collecting, all or any part of the Guaranteed Obligations (or any
interest on all or any part of the Guaranteed Obligations) in or as a result of
any such proceeding; (xxi) any action taken by the Trustee that is authorized by
this Section 2.02 or otherwise in this Agreement or by any other provision of
any Exchange Document or any omission to take any such action; or (xxii) any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.
(c) Each Guarantor expressly waives, for the benefit of the
Trustee and the Holders, all set-offs and counterclaims and all presentments,
demands for payment or performance, notices of nonpayment or nonperformance,
protests, notices of protest, notices of dishonor and all other notices or
demands of any kind or nature whatsoever with respect to the Guaranteed
Obligations, and all notices of acceptance of this Agreement or of the
existence, creation, incurring or assumption of new or additional Guaranteed
Obligations. Each Guarantor further expressly waives the benefit of any and all
statutes of limitation and any and all laws providing for the exemption of
property from execution or for valuation and appraisal upon foreclosure, to the
maximum extent permitted by applicable law.
(d) Each Guarantor represents and warrants to the Holders that
it has established adequate means of obtaining financial and other information
pertaining to the business, operations and condition (financial and otherwise)
of the Company and its properties on a continuing basis and that such Guarantor
is now and will in the future remain fully familiar with the business,
operations and condition (financial and otherwise) of the Company and its
properties. Each Guarantor further represents and warrants that it has reviewed
and approved each of the Exchange Documents and is fully familiar with the
transactions contemplated by the Exchange Documents and that it will in the
future remain fully familiar with such transactions and with any new Exchange
Documents and the transactions contemplated by such Exchange Documents. Each
Guarantor hereby expressly waives and relinquishes any duty on the part of the
Holders (should any such duty exist) to disclose to such or any other Guarantor
any matter of fact or other
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information related to the business, operations or condition (financial or
otherwise) of the Company or its properties or to any Exchange Document or the
transactions undertaken pursuant to, or contemplated by, any such Exchange
Document, whether now or in the future known by the Holders.
(e) Each Guarantor intends that its rights and obligations
shall be those expressly set forth in this Agreement and that its obligations
shall not be affected, limited, reduced, discharged or terminated by reason of
any principles or provisions of law which conflict with the terms of this
Agreement.
2.03 UNDERSTANDING WITH RESPECT TO WAIVERS AND CONSENTS. Each Guarantor
warrants and agrees that each of the waivers and consents set forth in this
Agreement are made voluntarily and unconditionally after consultation with
outside legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such or any other Guarantor otherwise may have against the Company, the Holders,
the Trustee or any other Person or against any Collateral. If, notwithstanding
the intent of the parties that the terms of this Agreement shall control in any
and all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.
2.04 SUBROGATION. Notwithstanding any payment or payments made by the
Guarantors hereunder, or any set-off or application of funds of the Guarantors
by the Trustee, no Guarantors shall exercise any of the rights of the Trustee or
any Holder which any Guarantor may acquire by way of subrogation, by any payment
made hereunder, by reason of such set-off or application of funds or otherwise,
against the Company or against any collateral security or guarantee or right of
set-off held by the Trustee or any Holder for the payment of the Guaranteed
Obligations, and no Guarantor shall seek or be entitled to seek any contribution
or reimbursement from the Company in respect of payments made by the Guarantors
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Guaranteed Obligations are paid in full. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when
all of the Guaranteed Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Trustee in the exact form received by
such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to
be applied against the Guaranteed Obligations, whether matured or unmatured, in
such order as required by the applicable Exchange Documents.
2.05 REINSTATEMENT. The obligations of each Guarantor under this
Article II shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Company, any other Guarantor or any
other Person or any other application of funds (including the proceeds of any
collateral for all or any part of the Guaranteed Obligations) in respect of all
or any part of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of such Guaranteed Obligations, whether as a result of
any proceedings in
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bankruptcy, reorganization or otherwise and the Guarantors jointly and severally
agree that it will indemnify the Holders and the Trustee on demand for all
reasonable costs and expenses (including fees and expenses of counsel) incurred
by the Holders in connection with such rescission or restoration.
2.06 REMEDIES. The Guarantors hereby jointly and severally agree that,
between each of them and the Trustee (for the benefit of the Holders) the
obligations of the Company under the Exchange Documents may be declared to be
forthwith (or may become automatically) due and payable as provided in Section
4.2 of the Subordinated Indenture for purposes of Section 2.01 notwithstanding
any stay, injunction or other prohibition preventing such declaration (or such
obligations becoming due and payable as against the Company) and that, in the
event of such declaration (or such obligation being deemed due and payable),
such obligations (whether or not due and payable by the Company) shall forthwith
become due and payable for purposes of Section 2.01.
2.07 SUBORDINATION OF INDEBTEDNESS OF THE COMPANY; SECURITY INTEREST.
(a) Each Guarantor agrees that any indebtedness of the Company now or in the
future owed to such Guarantor is hereby subordinated to the Guaranteed
Obligations. If the Trustee so requests, any such indebtedness shall be
collected, enforced and received by such Guarantor as trustee for the Trustee
and shall be paid over to the Trustee (for the benefit of the Holders) in kind
on account of the Guaranteed Obligations. If, after the Trustee's request, such
Guarantor fails to collect or enforce any such indebtedness or to pay the
proceeds of such indebtedness to the Trustee, the Trustee as such Guarantor's
attorney-in-fact may do such acts and sign such documents in such Guarantor's
name and on such Guarantor's behalf as the Trustee considers necessary or
desirable to effect such collection, enforcement or payment, the Trustee being
hereby appointed such Guarantor's attorney-in-fact for such purpose.
(b) Each Guarantor hereby grants to the Trustee (for the
benefit of the Holders) a security interest in any indebtedness referred to in
Section 2.07(a) and in any personal property of the Company in which such
Guarantor now has or in the future acquires any right, title or interest. Each
Guarantor agrees that such security interest shall be additional security for
the Guaranteed Obligations and shall be superior to any right of such Guarantor
in such property until the Guaranteed Obligations have been fully satisfied and
performed.
2.08 LIMITATION ON GUARANTEE. In any proceeding involving any state
corporate law or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of the
Guarantors under Section 2.01 would otherwise be held or determined to be void,
invalid or unenforceable or if the claims of the Holders in respect of such
obligations would be subordinated to the claims of any other creditors on
account of the Guarantors' liability under Section 2.01, then, notwithstanding
any other provision of this Agreement to the contrary, the amount of such
liability shall, without any further action by the Guarantors, the Holders or
any other Person, be automatically limited and reduced to the highest amount
which is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
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Article III. Covenants.
3.01 BOOKS AND RECORDS. Each Guarantor shall: (a) keep full and
accurate books and records relating to its business; and (b) permit
representatives of the Trustee, upon reasonable notice, at any time during
normal business hours to inspect and make abstracts from its books and records
pertaining to financial matters, in such manner as the Trustee may request.
Article IV. Miscellaneous.
4.01 WAIVER. No failure on the part of the Trustee or any Holder to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, remedy, power or privilege under this Agreement shall operate as a
waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
4.02 NOTICES. All notices and communications to be given under this
Agreement shall be deemed given, if in writing and delivered personally, by
telecopy or sent by registered mail, postage prepaid to:
if to the Guarantors:
Inamed Corporation
3800 Howard Hughes Parkway, #900
Las Vegas, Nevada
Attention: Ilan Reich
if to the Trustee
Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administrator
4.03 EXPENSES, ETC. The Guarantors jointly and severally agree to pay
or to reimburse the Trustee for all costs and expenses (including reasonable
attorney's fees and expenses) that may be incurred by the Trustee in any effort
to enforce any of the provisions of Article II, or any of the obligations of the
Guarantors in respect of the Collateral or in connection with (a) the
preservation of the Lien of, or the rights of the Trustee under this Agreement
or (b) any actual
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or attempted sale, lease, disposition, exchange, collection, compromise,
settlement or other realization in respect of, or care of, the Collateral,
including all such costs and expenses (and reasonable attorney's fees and
expenses) incurred in any bankruptcy, reorganization, workout or other similar
proceeding.
4.04 AMENDMENTS. This Agreement may be amended as to the Trustee and
its respective successors and assigns, and the Guarantors may take any action
herein prohibited, or omit to perform any act required to be performed by it, if
the Guarantors shall obtain the written consent of the Trustee. This Agreement
may not be waived, changed, modified, or discharged orally, but only by an
agreement in writing signed by the party or parties against whom enforcement of
any waiver, change, modification or discharge is sought or by parties with the
right to consent to such waiver, change, modification or discharge on behalf of
such party.
4.05 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
4.06 SURVIVAL. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant hereto in
connection with the transactions contemplated hereby shall survive the Closing
and the delivery of the Exchange Documents, regardless of any investigation made
by or on behalf of any party.
4.07 AGREEMENTS SUPERSEDED. Except with respect to express references
to other Exchange Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter of this Agreement.
4.08 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable
4.09 CAPTIONS. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
4.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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4.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE.
4.12 SUBMISSION TO JURISDICTION. If any action, proceeding or
litigation shall be brought by the Trustee in order to enforce any right or
remedy under this Agreement, each Guarantor hereby consents and will submit, and
will cause each of its Subsidiaries to submit, to the jurisdiction of any state
or federal court of competent jurisdiction sitting within the area comprising
the Southern District of New York on the date of this Agreement. Each Guarantor
hereby irrevocably waives any objection, including, but not limited to, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any such
action, proceeding or litigation in such jurisdiction.
4.13. SERVICE OF PROCESS. Nothing herein shall affect the right of the
Trustee to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Guarantor in any other
jurisdiction.
4.14. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT.
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<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.
------------------------,
a ____________corporation
By:____________________
Name:
Title:
------------------------,
a ____________corporation
By:____________________
Name:
Title:
------------------------,
a ____________corporation
By:____________________
Name:
Title:
-12-
Exhibit T3E.5
[FORM OF SECURITY]
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SECURITY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. THE INDENTURE UNDER WHICH
THIS SECURITY IS ISSUED HAS NOT BEEN QUALIFIED
UNDER THE TRUST INDENTURE ACT OF 1939, AS
AMENDED.
No. $
INAMED CORPORATION
promises to pay to
or registered assigns, the principal sum of Dollars on March 31, 1999, or at the
option of the Company as provided in the Subordinated Indenture, September 1,
2000.
11.00% SENIOR SUBORDINATED SECURED NOTE DUE MARCH 31, 1999, OR AT
THE OPTION OF THE COMPANY AS PROVIDED IN THE SUBORDINATED
INDENTURE, SEPTEMBER 1, 2000.
Interest Payment Dates: March 31, June 30, September 30 and December 31
Record Dates: March 15, June 15, September 15 and December 31
Dated:
INAMED CORPORATION
By:______________________________________
Authenticated:
[Insert Name of Trustee] OR [Authenticating Agent's name]
By:______________________________ By:_____________________________________
Authorized Signature Authorized Signature
<PAGE>
INAMED CORPORATION
11.00% Senior Subordinated Secured Note due March 31, 1999 or at
the option of INAMED Corporation, September 1, 2000.
1. INTEREST AND MATURITY.
INAMED CORPORATION, a Florida corporation (the "Company"),
which term includes any successor issuer under the Indenture referred to
herein), hereby promises to pay interest on the principal amount of this 11.00%
Senior Subordinated Secured Note due March 31, 1999, or at the option of the
Company as provided in the Subordinated Indenture (as defined herein), September
1, 2000 (this "Security") at a rate per annum (the "Applicable Rate") for any
Interest Period until March 31, 1999, or at the option of the Company as
provided in the Subordinated Indenture, September 1, 2000 (the "Maturity Date")
equal to 11.00% or such other rate as set forth in Section 2.2 of the
Subordinated Indenture.
Upon the occurrence of any Event of Default (as defined in the
Subordinated Indenture) except for a failure to file a registration statement as
described in the next sentence, the Applicable Rate shall be immediately
increased by 350 basis points, until such Event of Default is no longer
continuing, in which case the Applicable Rate shall return to the interest rate
that would otherwise then be applicable to the Securities.
"Interest Period" means the period from and including the
first day of each January, April and July and October through the next
applicable Interest Payment Date (as defined below); provided that the first
"Interest Period" shall commence on and include the date following the most
recent interest payment date of the Indenture dated January 2, 1996 between the
Company and Santa Barbara Bank & Trust, as Trustee prior to the date on which
this Security is issued and the last "Interest Period" shall terminate on the
Maturity Date or such earlier date as this Security is redeemed.
The Company will pay interest quarterly in arrears on March
31, June 30, September 30 and December 31 of each year until the Maturity Date,
commencing on the first such date after issuance, or if any such date is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on this Security will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance of this Security through the date on which interest is paid. The
Company shall pay interest on overdue principal and, to the extent lawful, on
overdue installments of interest (without regard to any applicable grace
periods) at the Default Rate. Interest will be computed on the basis of a
360-day year composed of 12 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except Defaulted Interest) to the person in whose name each Security
is registered at the close of business on the March 31, June 30, September 30
and December 31 immediately preceding the relevant Interest Payment Date (each a
"Regular Record Date"). The Holder must surrender
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<PAGE>
the Security to a Paying Agent to collect principal payments. The Company will
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company
shall pay principal and interest by wire transfer or other transfers of
immediately available funds to the bank account of each holder thereto.
3. Paying Agent and Registrar. The Company will initially act
as Paying Agent and Registrar. The Company may change the Paying Agent,
Registrar or co-registrar without prior notice. Subject to certain limitations
in the Subordinated Indenture, the Company or any of its Subsidiaries may act in
any such capacity.
4. Indenture. The Company issued the Securities under a
Subordinated Indenture dated as of _________, 1998 (the "Subordinated
Indenture") between the Company and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb
as in effect on the date of the Indenture (the "Trust Indenture Act"). The
Securities are subject to, and qualified by, all such terms, certain of which
are summarized hereon, and holders are referred to the Indenture and the Trust
Indenture Act for a statement of such terms.
The Securities are secured obligations of the Company limited
to $19,605,715 aggregate principal amount (subject to Section 2.9 of the
Indenture). The Indenture imposes certain limitations on the Company and the
Guarantors, including, subject to certain exceptions, the incurrence of
Indebtedness, the payment of dividends on, and redemption of, the Capital Stock
of the Company, the sale by the Company and certain of its Subsidiaries of
assets, transactions with certain related persons, Liens on the Collateral
securing the Securities and consolidations and mergers and transfer of all or
substantially all the Company's and certain of its Subsidiaries' assets.
As provided in the Subordinated Indenture, the Securities are
secured by the Lien of the Subordinated Indenture and the other Collateral
Documentation in respect of the Collateral. Each Holder, by accepting a
Security, shall be bound by and entitled to the benefits of the Collateral
Documentation, as the same may be amended from time to time pursuant to the
provisions thereof and of the Indenture. The Securities and each Holder's rights
thereunder and with respect to the Collateral are subject to the terms of the
subordination in favor of all Senior Indebtedness, including any subordination
or intercreditor agreements as may be requested by such holders of Senior
Indebtedness.
5. Redemption. This Security will be subject to optional
redemption, at any time, upon no less than 30 days notice and no more than 30
days notice, at par plus accrued. In such event, this Security will be redeemed
based upon its pro rata share (based upon all originally issued Securities) of
certain escrowed amounts established in connection with the offering of the
Securities as provided in the Subordinated Indenture.
6. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $100,000 and integral
multiples of $25,000 in excess
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<PAGE>
thereof. The transfer of Securities may be registered, and the Securities may be
exchanged, as provided in the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture.
7. Persons Deemed Owners. The registered holder of a Security
shall be treated as its owner for all purposes.
8. Amendments and Waivers. Subject to certain exceptions, the
Indenture, the Securities and the other documents executed and delivered in
connection therewith may be amended with the consent of the Holders of at least
a majority in principal amount of the then outstanding Securities, and any
existing Default or Event of Default may be waived with the consent of the
Holders of a majority in principal amount of then outstanding Securities.
Without the consent of any Holder, the Indenture, the Securities or the other
documents delivered in connection herewith may be amended, among other things,
to cure any ambiguity, defect or inconsistency or to make any change that does
not adversely affect the rights of any Holder.
9. Defaults and Remedies. An Event of Default is defined in
Section 4.1 of the Subordinated Indenture. If certain Events of Default occur
and are continuing, the Holders of at least a majority in principal amount of
the then outstanding Securities may declare all the Securities to be due and
payable immediately, except that, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all outstanding Securities
become due and payable immediately without further action or notice. Holders may
not enforce the Indenture, the Securities or the Collateral Documentation except
as provided in the Subordinated Indenture. The Trustee does not have a right
independent of the instruction of a majority in principal amount of Securities
then outstanding to enforce the Indenture, the Securities or the Collateral
Documentation. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations, the
Holders of a majority in principal amount of the then outstanding Securities may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on it. The
Trustee may withhold from Holders notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in their best interests. The Company must furnish an annual compliance
certificate to the Trustee.
10. Trustee Dealings with the Company. Santa Barbara Bank &
Trust, the Trustee under the Subordinated Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services for
the Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
11. No Recourse Against Others. No director, officer, employee
or stockholder, as such, of the Company or any of its Subsidiaries (other than
Company or any other Subsidiary), shall have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each
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<PAGE>
Holder by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
12. Discharge and Defeasance. Subject to certain conditions,
the Company at any time may terminate some of or all its obligations under the
Securities and the Subordinated Indenture if the Company deposits with the
Trustee money or U.S. Government Obligations for the payment of principal and
interest on the Securities to redemption or maturity, as the case may be.
13. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and UIGIMIA (=
Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
INAMED CORPORATION
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Ilan K. Reich
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert Assignee's Social Security or Tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint(s)______________________________________________________
agent to transfer this Note on the books of Inamed. The agent may substitute
another to act for the agent.
- --------------------------------------------------------------------------------
Date:____________________ Your Signature:______________________________
(Sign exactly as your name appears on the other side of this
Note)
[Signature Guarantee]
-6-
Exhibit T3E6
EXCHANGE WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
No. of Shares of Common Stock:
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
1. DEFINITIONS...........................................................................1
2. EXERCISE OF Exchange Warrant..........................................................4
2.1. Manner of Exercise...........................................................4
2.2. Payment of Taxes.............................................................5
2.3. Fractional Shares............................................................5
3. TRANSFER, DIVISION AND COMBINATION....................................................6
3.1. Transfer.....................................................................6
3.2. Division and Combination.....................................................7
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..................................................8
4.3. Issuance of Additional Shares of Common Stock................................9
4.4. Issuance of Exchange 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
4.11 Adjustment..................................................................14
5. NOTICES TO EXCHANGE 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
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
<S> <C> <C>
8. TAKING OF RECORD; STOCK AND Exchange 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. Termination of Restrictions.................................................20
10. SUPPLYING INFORMATION................................................................21
11. LOSS OR MUTILATION...................................................................21
12. LIMITATION OF LIABILITY..............................................................21
13. MISCELLANEOUS........................................................................21
13.1. Nonwaiver and Expenses.............................................21
13.2. Notice Generally...................................................21
13.3. Remedies...........................................................22
13.4. Successors and Assigns.............................................22
13.5. Amendment..........................................................22
13.6. Severability.......................................................23
13.7. Headings...........................................................23
13.8. Governing Law......................................................23
</TABLE>
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<PAGE>
<PAGE>
THIS EXCHANGE WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH LAWS
No. of Shares of Common Stock: [3,671,616 shares in the aggregate]
EXCHANGE WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
THIS IS TO CERTIFY THAT __________________________, or
registered assigns, is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from INAMED CORPORATION, a Florida corporation
(the "Company"), _______ (subject to adjustment as provided herein) shares of
Common Stock (as hereinafter defined), in whole or in part, at a purchase price
of $5.50 per share (subject to adjustment as provided herein, the "Warrant
Price"), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Exchange Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Affiliate" shall also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of any Holder or
any limited partners of a limited partner of any Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
<PAGE>
"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 ____________, 1998.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof and (ii) shares of
common stock of any successor or acquiring corporation (as defined in Section
4.8) received by or distributed to the holders of Common Stock of the Company in
the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
or exercisable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily volume
weighted average sale price per share of Common Stock for the twenty Business
Days ending five days prior to such date. The "Closing Price" for each day shall
be the last quoted sale price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc., Automated Quotation System or such
other system then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock selected by the Board of Directors of the Company. If the
Common Stock is listed or admitted to trading on a national securities exchange,
the Closing Price shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Exchange Warrant on such date.
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<PAGE>
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this Exchange
Warrant is registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of an Exchange Warrant, in the
event of any division of this Exchange Warrant.
"Loan Notes" shall mean the Company's 10% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, dated as of September 30, 1998.
"Majority Holders" shall mean the holders of Exchange Warrants
exercisable for in excess of 50% of the aggregate number of shares of Warrant
Stock then purchasable upon exercise of all Exchange Warrants.
"Notes" shall mean the Company's 11% Senior Subordinated
Secured Notes issued pursuant to the Subordinated Indenture between the Company
and Santa Barbara Bank & Trust, dated as of the date hereof.
"Other Property" shall have the meaning set forth in Section
4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock. For the purposes of Sections
4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock Outstanding shall include all shares of
Common Stock issuable in respect of options or warrants to purchase, or
securities convertible into, shares of Common Stock, the exercise or conversion
price of which is less than the Current Market Price as of any date on which the
number of shares of Common Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock upon exercise of the warrants and options listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Exchange Warrant
would be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
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<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt
security of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the Company
may be bound of any character relating to, or obligating the Company to issue,
grant, award, transfer or sell any issued or unissued shares of the Company's
Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Exchange Warrant
or Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Exchange Warrants" shall mean this Exchange Warrant and all
warrants issued upon transfer, division or combination of, or in substitution
for, any thereof. All Exchange Warrants shall at all times be identical as to
terms and conditions and date, except as to the number of shares of Common Stock
for which they may be exercised.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Exchange Warrants upon the exercise thereof.
2. EXERCISE OF EXCHANGE WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Exchange Warrant, on any Business Day, for all or
any part of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Exchange Warrant, in whole or in
part, Holder shall deliver to the Company at its principal office at 3800 Howard
Hughes Parkway, Suite 900, Las Vegas, NV 89109 (i) a written notice of Holder's
election to exercise this Exchange Warrant, which notice shall specify the
number of shares of Common Stock to be purchased, (ii) payment of the aggregate
Current Warrant Price for such shares and (iii) this Exchange Warrant. Such
notice shall be substantially in the form appearing at the end of this Exchange
Warrant as Exhibit A, duly executed by Holder. Upon receipt of the items
specified in the second preceding sentence, the Company shall execute or cause
to be executed and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share, as hereinafter provided. The stock certificate or certificates so
delivered shall be in such denomination or denominations as Holder shall request
in the notice and shall be registered in
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<PAGE>
the name of Holder or, subject to Section 9, such other name as shall be
designated in the notice. This Exchange Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
notice, together with the Current Warrant Price and this Exchange Warrant, are
received by the Company as described above. If this Exchange Warrant shall have
been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Exchange Warrant Stock, deliver to
Holder a new Exchange Warrant evidencing the right of Holder to purchase the
unpurchased shares of Common Stock called for by this Exchange Warrant, which
new Exchange Warrant shall in all other respects be identical with this Exchange
Warrant, or, at the request of Holder, appropriate notation may be made on this
Exchange Warrant and the same returned to Holder.
Payment of the Warrant Price shall be made at the option of
Holder (i) by certified or official bank check or (ii) by tendering Notes or
Loan Notes having a principal face amount such that the amount of such Notes or
Loan Notes, together with accrued and unpaid interest thereon shall be equal to
the Warrant Price (the Company hereby agreeing to reissue any Notes or Loan
Notes of a Holder into one or more Notes or Loan Notes in denominations
requested by such Holder)
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Exchange Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and all
taxes and other governmental charges that may be imposed with respect to, the
issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Exchange Warrant. As to
any fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Current Market Price per
share of Common Stock on the date of exercise.
2.4 MANDATORY EXERCISE. (a) Subject to the limitations set forth in
subsection 2.4(c) below, the Company may, at its sole option, require
the exercise (a "Mandatory Exercise") of the Permitted Portion (as
defined below) of the Exchange Warrants.
(b) Upon the election by the Company to require a Mandatory
Exercise, the Company shall deliver to each Holder at least ten
Business Days prior to the date of the Mandatory Exercise a notice (the
"Exercise Notice") which shall include (i) the date of Mandatory
Exercise, (ii) the Permitted Portion of the Exchange Warrants to be
exercised and (iii) a certification that the conditions to the
Mandatory Exercise set forth in subsection 2.4(c) have been satisfied.
Upon receipt of the Exercise Notice, each Holder shall be
required to exercise the Permitted Portion of such Holder's Exchange
Warrants on the date of the Mandatory
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<PAGE>
Exercise pursuant to the provisions of Section 2.1. Each Holder shall
notify the Company prior to the date of the Mandatory Exercise of its
intended method of payment of the Warrant Price, and satisfy all
conditions set forth in Section 2.1 with respect to such exercise,
including without limitation to deliver the Exchange Warrant to the
principal office of the Company as provided therein. Following the date
of the Mandatory Exercise, the Exchange Warrant as it relates to the
Permitted Portion shall be deemed to be cancelled with respect to such
exercised portion.
(c) Notwithstanding the foregoing, a Mandatory Exercise shall
not be permitted except as follows: (i) the date of Mandatory Exercise
is subsequent to September 1, 2000; (ii) the United States District
Court, Northern District of Alabama, Southern Division (or any
successor court with jurisdiction over the Silicone Gel Breast Implant
Products Liability Litigation (MDL 926)) has issued an order certifying
the Company's Mandatory (non "opt-out" Limited Fund) Class under Rule
23(b)(1)(B) of the Federal Rules of Civil Procedure, and such order has
become a final (non-appealable) order, (iii) all registration
statements have been declared effective with respect to the shares of
Common Stock issued or issuable on exercise of the Exchange Warrants
and (iv) either clause (i) or clause (ii) of the definition of
Permitted Portion is applicable.
As used herein, Permitted Portion shall mean (i) one-half of
such Holder's Exchange Warrants in the event the Closing Price of the
Common Stock for each of the 90 days (to the extent such day was a
Business Day) immediately prior to the date of the Exercise Notice is
greater than $11.00 or (ii) all of such Holder's Exchange Warrants in
the event the Closing Price of the Common Stock for each of the 180
days (to the extent such day was a Business Day) immediately prior to
the date of the Exercise Notice is greater than $11.00.
(d) If a Holder shall not exercise the portion of the Exchange
Warrant as required by the Exercise Notice and this Section 2.4, then
such portion of such Exchange Warrant shall be deemed forfeited and
such option shall be of no further force or effect.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Exchange Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Exchange Warrant at the principal office of the Company
referred to in Section 2.1, together with a written assignment of this Exchange
Warrant substantially in the form of Exhibit B hereto duly executed by Holder
and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Section 9, execute and deliver a new Exchange Warrant or Exchange
Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor a
new Exchange Warrant evidencing the portion of this Exchange Warrant not so
assigned, and this Exchange Warrant shall promptly be canceled. A Exchange
Warrant, if
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<PAGE>
properly assigned in compliance with Section 9, may be exercised by a new Holder
for the purchase of shares of Common Stock without having a new Exchange Warrant
issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Exchange
Warrant may be divided into multiple Exchange Warrants or combined with other
Exchange Warrants upon presentation hereof at the aforesaid office or agency of
the Company, together with a written notice specifying the names and
denominations in which new Exchange Warrants are to be issued, signed by Holder.
Subject to compliance with Section 3.1 and with Section 9, as to any transfer
which may be involved in such division or combination, the Company shall execute
and deliver a new Exchange Warrant or Exchange Warrants in exchange for the
Exchange Warrant or Exchange Warrants to be divided or combined in accordance
with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Exchange Warrant or Exchange
Warrants under this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of transfer of
the Exchange Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Exchange
Warrant is exercisable and/or the price at which such shares may be purchased
upon exercise of this Exchange Warrant, shall be subject to adjustment from time
to time as set forth in this Section 4. The Company shall give each Holder
notice of any event described below which requires an adjustment pursuant to
this Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Exchange Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Exchange Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current
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Warrant Price per share shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Exchange
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Exchange Warrant is exercisable immediately
after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Exchange Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment and a fraction (A) the numerator of which shall be the Current Market
Price per share of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Current Market Price per share of Common
Stock minus the amount allocable to one share of Common Stock of any such cash
so distributable and of the fair value (as determined in good faith by the Board
of Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable, and (ii) the Current Warrant Price shall be
adjusted to equal (A) the Current Warrant Price multiplied by the number of
shares of Common Stock for which this Exchange Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Exchange Warrant is exercisable immediately after such adjustment. A
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional
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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
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previously have been made upon the issuance of such warrants or other rights or
upon the issuance of such Convertible Securities (or upon the issuance of any
warrant or other rights therefor) pursuant to Section 4.4 or Section 4.5 herein.
4.4. ISSUANCE OF EXCHANGE WARRANTS OR OTHER RIGHTS. If at any time the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities
(other than Permitted Issuances), whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such warrants or other
rights or upon conversion or exchange of such Convertible Securities shall be
less than the Current Warrant Price or the Current Market Price in effect
immediately prior to the time of such issue or sale, then the number of shares
for which this Exchange Warrant is exercisable and the Current Warrant Price
shall be adjusted as provided in Section 4.3 on the basis that the maximum
number of Additional Shares of Common Stock issuable pursuant to all such
warrants or other rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration payable
therefor, if any, as of the date of the actual issuance of the number such
warrants or other rights. No further adjustments of the Current Warrant Price
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities. Notwithstanding the foregoing, no adjustment shall be required under
this Section 4.4 solely by reason of the issuance or distribution of stock
purchase rights pursuant to the Rights Plan or any other rights plan of the
Company, provided that the adjustments required by this Section 4.4 shall be
made if any "flip-in" or "flip-over" event shall occur under such stockholder
rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price or Current Market Price in
effect immediately prior to the time of such issue or sale, then the number of
shares for which this Exchange Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the maximum
number of Additional shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the number of shares for which
this Exchange Warrant is exercisable and the Current Warrant Price shall be made
under this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment
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shall previously have been made upon the issuance of such warrants or other
rights pursuant to Section 4.4. No further adjustments of the number of shares
for which this Exchange Warrant is exercisable and the Current Warrant Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and, if any issue or sale of such
Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of shares for which this Exchange Warrant is
exercisable and the Current Warrant Price have been or are to be made pursuant
to other provisions of this Section 4, no further adjustments of the number of
shares for which this Exchange Warrant is exercisable and the Current Warrant
Price shall be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Exchange Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or Section
4.5 as the result of any issuance of warrants, rights or Convertible Securities,
such warrants or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all of such warrants or rights, or the
right of conversion or exchange with respect to all or a portion of such other
Convertible Securities, as the case may be, shall not have been exercised and no
outstanding Exchange Warrant shall have been exercised (in whole or in part),
then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Exchange Warrant is exercisable
and the Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by the Company therefor shall be the amount of the cash
received by the Company therefor, or, if such Additional Shares of Common Stock
or Convertible Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or Convertible
Securities are sold to underwriters or dealers for public offering without a
subscription offering, the public offering price (in any such case subtracting
any amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined in good faith by the Board of Directors of
the Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase such
Additional Shares of Common Stock or Convertible Securities shall be issued in
connection with
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any merger in which the Company issues any securities, the amount of
consideration therefor shall be deemed to be the fair value, as determined in
good faith by the Board of Directors of the Company, of such portion of the
assets and business of the nonsurviving corporation as such Board in good faith
shall determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, warrants or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other rights
plus the additional consideration payable to the Company upon exercise of such
warrants or other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Convertible Securities shall be the
consideration received by the Company for issuing warrants or other rights to
subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to the Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, the Company shall
be deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Exchange Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4.1) up
to, but not beyond the date of exercise if such adjustment either by itself or
with other adjustments not previously made results in an increase or decrease of
less than 1% of the shares of Common Stock for which this Exchange Warrant is
exercisable immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4 and not previously
made, would result in a minimum adjustment or on the date of exercise. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the
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taking of such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(e) ESCROW OF EXCHANGE WARRANT STOCK. If after any property
becomes distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the event
for which such record is taken, Holder exercises this Exchange Warrant, any
Additional Shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Exchange Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that the
event actually takes place, upon payment of the then Current Warrant Price.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Company and escrowed property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board
of Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such determination may
be challenged in good faith by the Majority Holders, and any dispute shall be
resolved by an investment banking firm of recognized national standing selected
by the Company and acceptable to the Majority Holders.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Exchange Warrant and payment of the Current Warrant Price, the
number of shares of common stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and Other Property receivable
upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock for which this Exchange Warrant is exercisable immediately prior to
such event. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Exchange Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the Common Stock for
which this Exchange
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Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than any action described in this Section 4, then, unless such action will
not have a materially adverse effect upon the rights of the Holders, the number
of shares of Common Stock or other stock for which this Exchange Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
4.11 ADJUSTMENT. Notwithstanding the provisions otherwise set forth
herein, the Warrant Price shall be decreased by $.50, to $5.00 per share, if (i)
the Company shall fail to register with the Commission on an appropriate form
under the Securities Act, and to cause to become effective a registration
statement with respect to the Warrant Stock pursuant to the provisions of
Section 9.3 hereof, prior to September 1, 1999 or (ii) if the Company shall
register and cause to become effective such registration statement prior to
September 1, 1999, but shall not maintain such effectiveness (after such date)
as provided in Section 9.3(a). In addition, the Warrant Price shall be decreased
by an additional $.50, to $4.50 per share, if (A) the Company shall fail to
register with the Commission on an appropriate form under the Securities Act,
and to cause to become effective a registration statement with respect to the
Warrant Stock pursuant to the provisions of Section 9.3 hereof, prior to March
1, 2000 or (B) if the Company shall register and cause to become effective such
registration statement prior to March 1, 2000, but shall not maintain such
effectiveness (after such date) as provided in Section 9.3(a). All adjustments
to the Warrant Price made pursuant to this Section 4.11 shall be made prior to
giving effect to all other adjustments made pursuant to this Article 4.
5. NOTICES TO EXCHANGE WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Exchange Warrant is exercisable, or whenever the price at
which a share of such Common Stock may be purchased upon exercise of the
Exchange Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the
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chief financial officer of the Company setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of Directors
of the Company determined the fair value of any evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights referred to in Section 4.2 or 4.7(a)), specifying the number
of shares of Common Stock for which this Exchange Warrant is exercisable and (if
such adjustment was made pursuant to Section 4.8 or 4.9) describing the number
and kind of any other shares of stock or Other Property for which this Exchange
Warrant is exercisable, and any change in the purchase price or prices thereof,
after giving effect to such adjustment or change. The Company shall promptly
cause a signed copy of such certificate to be delivered to each Holder in
accordance with Section 13.2. The Company shall keep at its principal office
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Exchange Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
(other than a cash dividend payable out of earnings or earned surplus
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or
any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company (other than the
reincorporation merger described in the Proxy Statement filed with the
Securities and Exchange Commission by the Company on September 18,
1998) with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to,
another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be
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entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Exchange Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Exchange Warrant above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Exchange Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Exchange Warrant.
Upon the request of Holder, the Company will at any time
during the period this Exchange Warrant is outstanding acknowledge in writing,
in form reasonably satisfactory to Holder, the continuing validity of this
Exchange Warrant and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY
From and after the Closing Date, the Company shall at all
times reserve and keep available for issue upon the exercise of Exchange
Warrants such number of its authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of all outstanding Exchange
Warrants. All shares of Common Stock which shall be so issuable, when issued
upon exercise of any Exchange Warrant and payment therefor in accordance with
the terms of such Exchange Warrant, shall be duly and validly issued and fully
paid and nonassessable.
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8. TAKING OF RECORD; STOCK AND EXCHANGE WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Exchange Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Exchange Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Exchange Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Exchange
Warrant or any Warrant Stock. Holder, by acceptance of this Exchange Warrant,
agrees to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Exchange Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Exchange Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"[THIS EXCHANGE WARRANT AND THE SECURITIES
REPRESENTED HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Exchange Warrants or any shares of
Restricted Common Stock, the holder of such Exchange Warrants or Restricted
Common Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing the
manner and circumstances of the proposed Transfer, and obtain from counsel to
such holder who shall be reasonably satisfactory to the Company, an opinion that
the proposed Transfer of such Exchange Warrants or such Restricted Common Stock
may be effected without registration under the Securities Act. After receipt of
the Transfer Notice and opinion, the
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Company shall, within five days thereof, notify the holder of such Exchange
Warrants or such Restricted Common Stock as to whether such opinion is
reasonably satisfactory and, if so, such holder shall thereupon be entitled to
Transfer such Exchange Warrants or such Restricted Common Stock, in accordance
with the terms of the Transfer Notice. Each certificate, if any, evidencing such
shares of Restricted Common Stock issued upon such Transfer and each Exchange
Warrant issued upon such Transfer shall bear the restrictive legend set forth in
Section 9.1, unless in the opinion of such counsel such legend is not required
in order to ensure compliance with the Securities Act. The holder of the
Exchange Warrants or the Restricted Common Stock, as the case may be, giving the
Transfer Notice shall not be entitled to Transfer such Exchange Warrants or such
Restricted Common Stock until receipt of notice from the Company under this
Section 9.2 that such opinion is reasonably satisfactory.
9.3. REGISTRATION RIGHTS. (a) The Company has agreed to (i) use its
best efforts to register with the Commission on an appropriate form under the
Securities Act, as soon as practicable after issuance of the Exchange Warrants
(or cause an appropriate post-effective amendment to be made to any existing
registered registration statement on or prior to such date), and to use its best
efforts to cause to become effective as soon as practicable thereafter and in
any event within six months of the Closing Date, such registration statement
with respect to the Warrant Stock and (ii) keep such registration statement
effective for such period of time as the Exchange Warrants or the Warrant Stock
is held by the Holder. The Company will pay all expenses, including legal and
accounting fees and expenses, in connection with registrations pursuant to this
Section 9.3(a).
(b) To the extent that a registration statement is not
effective pursuant to Section 9.3(a), if, at any time, the Company proposes or
is required to register any of its equity securities or securities convertible
into or exchangeable for equity securities under the Securities Act (an
"Incidental Registration"), the Company will give prompt written notice to all
holders of record of the Exchange Warrants and the Warrant Stock of its
intention to so register its securities and of such holders' rights under this
Section 9.3(b). Upon the written request of any holder of the Exchange Warrants
or the Warrant Stock made within 20 days following the receipt of any such
written notice (which request shall specify the maximum number of Warrant Stock
intended to be disposed of by such holder and the intended method of
distribution thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Warrant Stock which the Company has
been so requested to register by the holders thereof together with any other
securities the Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No registration
effected under this Section 9.3(b) shall relieve the Company of its obligation
to effect any registration under Section 9.3(a). Each holder of Exchange
Warrants or Warrant Stock shall have the right to withdraw its request for
inclusion of its Warrant Stock in any registration statement pursuant to this
Section 9.3(b) at any time by giving written notice to the Company of its
request to withdraw. There is no limitation on the number of Incidental
Registrations which the Company is obligated to effect pursuant to this Section
9.3(b). The Company will pay all expenses in connection with any registration of
Warrant Stock requested pursuant to this Section 9.3(b).
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In addition to any other registration rights contained herein
or elsewhere, if, at any time, the Company proposes an Incidental Registration,
the Company will give prompt written notice to Appaloosa Management, L.P.
("Appaloosa") of its intention to effect such Incidental Registration and of
Appaloosa's rights under this paragraph. Upon the written request of Appaloosa
made within 20 days following the receipt of any such written notice (which
request shall specify the maximum number of shares of Common Stock intended to
be disposed of by Appaloosa), the Company will use its best efforts to effect
the registration under the Securities Act of all shares of Common Stock which
the Company has been so requested to effect in such Incidental Registration.
Appaloosa shall have the right to withdraw its request for inclusion of its
Common Stock in any registration statement pursuant to this paragraph at any
time by giving written notice to the Company of its request to withdraw. The
Company will pay all expenses in connection with any registration pursuant to
this paragraph of Common Stock held by Appaloosa or its Affiliates.
(c) In connection with registration of the Warrant Stock under
the Securities Act pursuant to this Section 9.3, the Company shall indemnify and
hold harmless each Person who participated in the offering of such Warrant Stock
and each other Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such holder or any such
director or officer or participating Person or controlling Person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or participating Person or
controlling Person for any legal or any other expenses reasonably incurred by
such holder or such director, officer or participating Person or controlling
Person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue statement or alleged
omission made in such registration statement, preliminary prospectus, prospectus
or amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such holder specifically for use therein
and provided further that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises from or is
based upon the failure by any holder of Exchange Warrants or Warrant Stock to
deliver a required prospectus or prospectus supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such holder or such director, officer or participating Person or
controlling Person, and shall survive the transfer of such securities by such
holder.
(d) Each holder of Exchange Warrants or Warrant Stock
registered under the Securities Act in accordance with the provisions of this
Section 9.3, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors and officers and each other Person, if any, who
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controls the Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director or officer or any such Person may become subject under the
Securities Act or any other statue or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon information in writing provided to the Company by such holder of
Exchange Warrants or Warrant Stock specifically for use in any registration
statement under which securities were registered under the Securities Act for
resale by such holder, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto or the failure of such holder to
deliver any required prospectus or prospectus supplement; provided, however,
that the indemnification obligations of such holder shall be limited to the
gross proceeds from the offering of the Warrant Stock received by such holder.
(e) If the indemnification provided for in this Section 9.3
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding provided, however, that the contribution obligation
of any holder shall be limited to the gross proceeds from the offering of the
Warrant Stock received by such holder.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitle to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon the
transferability of the Exchange Warrants, the Warrant Stock and the Restricted
Common Stock and the legend requirements of Section 9.1 shall terminate as to
any particular Exchange Warrant or share of Warrant Stock or Restricted Common
Stock (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto or (ii)
when the Company shall have received an opinion of counsel reasonably
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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 Exchange Warrant and
each holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any reports or forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Exchange Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Exchange Warrant and indemnity reasonably satisfactory to it
(it being understood that, in the case of the initial holder, the written
agreement of Appaloosa Management, L.P. shall be sufficient indemnity), and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Exchange Warrant of like tenor to such
Holder; PROVIDED, in the case of mutilation, no indemnity shall be required if
this Exchange Warrant in identifiable form is surrendered to the Company for
cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
13. MISCELLANEOUS
13.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Exchange Warrant, the Company
shall pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
13.2. NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Exchange Warrant shall be sufficiently given or made if
in writing and either delivered in person with receipt acknowledged or sent by
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registered or certified mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for such
purpose.
(b) If to the Company at
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Executive Vice President
Telecopy Number: (702) 791-3205
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three Business Days after the same shall have been deposited in
the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
13.3. REMEDIES. Each holder of Exchange Warrant and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under of this Exchange Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Exchange Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
13.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Exchange Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of Holder. The provisions of this Exchange Warrant are intended to
be for the benefit of all Holders from time to time of this Exchange Warrant
and, with respect to Section 9 hereof, holders of Exchange Warrant Stock, and
shall be enforceable by any such Holder or holder of Warrant Stock.
13.5. AMENDMENT. This Exchange Warrant and all other Exchange Warrants
may be modified or amended or the provisions hereof waived with the written
consent of the Company and the Majority Holders, PROVIDED that no such Exchange
Warrant may be modified or amended to reduce the number of shares of Common
Stock for which such Exchange Warrant is exercisable or to increase the price at
which such shares may be purchased upon exercise of such Exchange Warrant
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(before giving effect to any adjustment as provided therein) without the prior
written consent of the Holder thereof, provided however, that the foregoing
shall not limit the operation of Section 4.6.
13.6. SEVERABILITY. Wherever possible, each provision of this Exchange
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Exchange Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Exchange Warrant.
13.7. HEADINGS. The headings used in this Exchange Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Exchange Warrant.
13.8. GOVERNING LAW. THIS Exchange Warrant SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS Exchange Warrant AND THE TRANSACTIONS
CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO
EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS,
NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH
IN THIS Exchange Warrant SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY LITIGATION ARISING OUT OF THIS Exchange Warrant OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES
OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO
THIS Exchange Warrant OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Company has caused this Exchange
Warrant to be duly executed and its corporate seal to be impressed hereon and
attested by its Secretary or an Assistant Secretary.
Dated: _________________, 1998
INAMED CORPORATION
By:____________________________________
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise _____No ______Yes
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock of
Inamed Corporation and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _____________ whose address is ________________ and, if such shares
of Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
________________________________________
(Name of Registered Owner)
________________________________________
(Signature of Registered Owner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF COMMON STOCK
---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of INAMED CORPORATION
maintained for the purpose, with full power of substitution in the premises.
Dated:_______________ Print Name:________________________________
Signature:_________________________________
Witness:___________________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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Exhibit T3E.7
WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
No. of Shares of Common Stock:
<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..................................................5
2.3. Fractional Shares.................................................5
3. TRANSFER, DIVISION AND COMBINATION.....................................5
3.1. Transfer..........................................................5
3.2. Division and Combination..........................................5
3.3. Expenses..........................................................6
3.4. Maintenance of Books..............................................6
4. ADJUSTMENTS............................................................6
4.1. Stock Dividends, Subdivisions and Combinations....................6
4.2. Certain Other Distributions.......................................6
4.3. Issuance of Additional Shares of Common Stock.....................7
4.4. Issuance of Warrants or Other Rights..............................8
4.5. Issuance of Convertible Securities................................8
4.6. Superseding Adjustment............................................9
4.7. Other Provisions Applicable to Adjustments under this Section.....9
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets............................................11
4.9. Other Action Affecting Common Stock..............................12
4.10.Certain Limitations..............................................12
5. NOTICES TO WARRANT HOLDERS............................................12
5.1. Notice of Adjustments............................................12
5.2. Notice of Corporate Action.......................................12
6. RIGHTS OF HOLDERS.....................................................13
6.1 No Impairment....................................................13
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY.............................................................14
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS....................14
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9. RESTRICTIONS ON TRANSFERABILITY.......................................14
9.1. Restrictive Legend...............................................14
9.2. Notice of Proposed Transfers; Requests for Registration..........15
9.3. Registration Rights..............................................15
9.4. Termination of Restrictions......................................18
10. SUPPLYING INFORMATION.................................................18
11. LOSS OR MUTILATION....................................................18
12. LIMITATION OF LIABILITY...............................................18
13. MISCELLANEOUS.........................................................18
13.1. Nonwaiver and Expenses..........................................18
13.2. Notice Generally................................................19
13.3. Remedies........................................................19
13.4. Successors and Assigns..........................................19
13.5. Amendment.......................................................20
13.6. Severability....................................................20
13.7. Headings........................................................20
13.8. Governing Law...................................................20
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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: [500,000 in the aggregate]
WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
THIS IS TO CERTIFY THAT ________________, or registered
assigns, is entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from INAMED CORPORATION, a Florida corporation (the
"Company"), ___________ (subject to adjustment as provided herein) shares of
Common Stock (as hereinafter defined), in whole or in part, at a purchase price
of $7.50 per share (subject to adjustment as provided herein the "Warrant
Price"), all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"Affiliate" shall also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of any Holder or
any limited partners of a limited partner of any Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or hereafter
outstanding.
<PAGE>
"Closing Date" shall mean ____________, 1998.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof and (ii) shares of
common stock of any successor or acquiring corporation (as defined in Section
4.8) received by or distributed to the holders of Common Stock of the Company in
the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
or exercisable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily volume
weighted average sale price per share of Common Stock for the twenty Business
Days ending five days prior to such date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Expiration Date" shall mean September __, 2002.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose. "Holders"
shall mean, collectively, each Holder of a Warrant, in the event of any division
of this Warrant.
"Loan Notes" shall mean the Company's 10% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, dated as of September 30, 1998.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of shares of Warrant
Stock then purchasable upon exercise of all Warrants.
"Notes" shall mean either (i) the Company's 11.00% Senior
Subordinated Secured Notes issued pursuant to the indenture between the Company
and Santa Barbara Bank & Trust, as Trustee, dated as of the date hereof, or (ii)
the 11% Senior Secured Convertible Notes due
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March 31, 1999 of the Company issued pursuant to the indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, dated as of January 2, 1996.
"Other Property" shall have the meaning set forth in Section
4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock. For the purposes of Sections
4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock Outstanding shall include all shares of
Common Stock issuable in respect of options or warrants to purchase, or
securities convertible into, shares of Common Stock, the exercise or conversion
price of which is less than the Current Market Price as of any date on which the
number of shares of Common Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock upon exercise of the warrants and options listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt
security of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the Company
may be bound of any character relating to, or obligating the Company to issue,
grant, award, transfer or sell any issued or unissued shares of the Company's
Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
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"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Warrant, on any Business Day, for all or any part
of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 3800 Howard Hughes
Parkway, Suite 900, Las Vegas, NV 89109 (i) a written notice of Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (ii) payment of the aggregate Current
Warrant Price for such shares and (iii) this Warrant. Such notice shall be
substantially in the form appearing at the end of this Warrant as Exhibit A,
duly executed by Holder. Upon receipt of the items specified in the second
preceding sentence, the Company shall execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be in such denomination or denominations as Holder shall request in the notice
and shall be registered in the name of Holder or, subject to Section 9, such
other name as shall be designated in the notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and Holder or any other Person so designated shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the notice, together with the Current Warrant Price and this Warrant, are
received by the Company as described above. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the right of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of Holder, appropriate
notation may be made on this Warrant and the same returned to Holder.
Payment of the Warrant Price shall be made at the option of
Holder (i) by certified or official bank check, (ii) by tendering Notes or Loan
Notes having a principal face amount such that the amount of such Notes or Loan
Notes, together with accrued and unpaid interest thereon shall be equal to the
Warrant Price (the Company hereby agreeing to reissue any Notes or Loan Notes of
a Holder into one or more Notes or Loan Notes in denominations requested by such
Holder) or (iii) by the surrender of this Warrant to the Company, with a duly
executed exercise
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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.
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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.
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4.2. Certain Other Distributions. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment and a fraction (A) the numerator of which shall be the Current Market
Price per share of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Current Market Price per share of Common
Stock minus the amount allocable to one share of Common Stock of any such cash
so distributable and of the fair value (as determined in good faith by the Board
of Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable, and (ii) the Current Warrant Price shall be
adjusted to equal (A) the Current Warrant Price multiplied by the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of stock within
the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
4.3. Issuance of Additional Shares of Common Stock. If at any time the
Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock, other than Permitted Issuances, for consideration in an
amount per Additional Share of Common Stock less than the Current Market Price
at the time the Additional Shares of Common Stock are issued, then (i) the
number of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
issue or sale by a fraction (A) the numerator of which shall be the number of
shares of Common Stock Outstanding immediately
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after such issue or sale, and (B) the denominator of which shall be the number
of shares of Common Stock Outstanding immediately prior to such issue or sale
plus the number of shares which the aggregate offering price of the total number
of such Additional Shares of Common Stock would purchase at the then Current
Market Price; and (ii) the Current Warrant Price as to the number of shares for
which this Warrant is exercisable prior to such adjustment shall be adjusted by
multiplying such Current Warrant Price by a fraction (X) the numerator of which
shall be the number of shares for which this Warrant is exercisable immediately
prior to such issue or sale; and (Y) the denominator of which shall be the
number of shares of Common Stock purchasable immediately after such issue or
sale.
4.4. Issuance of Warrants or Other Rights. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities
(other than Permitted Issuances), whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such warrants or other
rights or upon conversion or exchange of such Convertible Securities shall be
less than the Current Market Price in effect immediately prior to the time of
such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further adjustments of
the Current Warrant Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities. Notwithstanding the foregoing, no
adjustment shall be required under this Section 4.4 solely by reason of the
issuance or distribution of stock purchase rights pursuant to the Rights Plan or
any other rights plan of the Company, provided that the adjustments required by
this Section 4.4 shall be made if any "flip-in" or "flip-over" event shall occur
under such stockholder rights plan.
4.5. Issuance of Convertible Securities. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Market Price in effect immediately prior
to the time of such issue or sale, then the number of shares for which this
Warrant is exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
shares of Common Stock necessary to effect the conversion or exchange of all
such Convertible Securities shall be
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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,
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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.
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(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
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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
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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.
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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
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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
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six months of the Closing Date, such registration statement with respect to the
Warrant Stock and (ii) keep such registration statement effective for such
period of time as the Warrants or the Warrant Stock is held by the Holder. The
Company will pay all expenses, including legal and accounting fees and expenses,
in connection with registrations pursuant to this Section 9.3(a).
(b) To the extent that a registration statement is not
effective pursuant to Section 9.3(a), if, at any time, the Company proposes or
is required to register any of its equity securities or securities convertible
into or exchangeable for equity securities under the Securities Act (an
"Incidental Registration"), the Company will give prompt written notice to all
holders of record of the Warrants and the Warrant Stock of its intention to so
register its securities and of such holders' rights under this Section 9.3(b).
Upon the written request of any holder of the Warrants or the Warrant Stock made
within 20 days following the receipt of any such written notice (which request
shall specify the maximum number of Warrant Stock intended to be disposed of by
such holder and the intended method of distribution thereof), the Company will
use its best efforts to effect the registration under the Securities Act of all
Warrant Stock which the Company has been so requested to register by the holders
thereof together with any other securities the Company is obligated to register
pursuant to incidental registration rights of other security holders of the
Company. No registration effected under this Section 9.3(b) shall relieve the
Company of its obligation to effect any registration under Section 9.3(a). Each
holder of Warrants or Warrant Stock shall have the right to withdraw its request
for inclusion of its Warrant Stock in any registration statement pursuant to
this Section 9.3(b) at any time by giving written notice to the Company of its
request to withdraw. There is no limitation on the number of Incidental
Registrations which the Company is obligated to effect pursuant to this Section
9.3(b). The Company will pay all expenses in connection with any registration of
Warrant Stock requested pursuant to this Section 9.3(b).
In addition to any other registration rights contained herein
or elsewhere, if, at any time, the Company proposes an Incidental Registration,
the Company will give prompt written notice to Appaloosa Management, L.P.
("Appaloosa") of its intention to effect such Incidental Registration and of
Appaloosa's rights under this paragraph. Upon the written request of Appaloosa
made within 20 days following the receipt of any such written notice (which
request shall specify the maximum number of shares of Common Stock intended to
be disposed of by Appaloosa), the Company will use its best efforts to effect
the registration under the Securities Act of all shares of Common Stock which
the Company has been so requested to effect in such Incidental Registration.
Appaloosa shall have the right to withdraw its request for inclusion of its
Common Stock in any registration statement pursuant to this paragraph at any
time by giving written notice to the Company of its request to withdraw. The
Company will pay all expenses in connection with any registration pursuant to
this paragraph of Common Stock held by Appaloosa or its Affiliates.
(c) In connection with registration of the Warrant Stock under
the Securities Act pursuant to this Section 9.3, the Company shall indemnify and
hold harmless each Person who participated in the offering of such Warrant Stock
and each other Person, if any, who controls such holder or such participating
Person within the meaning of the Securities Act, against
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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
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parties in connection with the actions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding provided, however, that the contribution obligation
of any holder shall be limited to the gross proceeds from the offering of the
Warrant Stock received by such holder.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitle to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
9.4. Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock and the legend requirements of Section 9.1 shall terminate as to any
particular Warrant or share of Warrant Stock or Restricted Common Stock (i) when
and so long as such security shall have been effectively registered under the
Securities Act and disposed of pursuant thereto or (ii) when the Company shall
have received an opinion of counsel reasonably satisfactory to it that such
shares may be transferred without registration thereof under the Securities Act.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any reports or forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that, in the case of the initial holder, the written agreement of
Appaloosa Management, L.P. shall be sufficient indemnity), and in case of
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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
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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
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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.
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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:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise _____No ______Yes
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock of
Inamed Corporation and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _____________ whose address is ________________ and, if such shares
of Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
(Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF COMMON STOCK
and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of INAMED CORPORATION
maintained for the purpose, with full power of substitution in the premises.
Dated:_______________ Print Name:_________________________________
Signature:__________________________________
Witness:___________________________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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Exhibit T3E8
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September __, 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 "Holder" and collectively, the "Holders").
1. BACKGROUND. The Indenture dated as of ___________, 1998 (the
"Subordinated Indenture") between the Company and the Trustee provides, subject
to its terms and conditions, for the issuance by the Company of its 11% Senior
Subordinated Secured Notes due March 31, 1999, or at the option of the Company
as provided therein, September 1, 2000 (the "Exchange Notes") as well as certain
warrants to purchase the Company's common stock, $.01 per share, (the
"Warrants") to be issued in exchange for the Company's 11% Secured Convertible
Notes due 1999 (the "Old Notes") to the holders thereof pursuant to the
Securities Exchange Agreement dated as of ______________, 1998 (the "Exchange
Agreement"). It is a condition to the exchange of the Old Notes for the Exchange
Notes and Warrants by the Purchasers that the Company shall have executed and
delivered this Agreement.
To induce the Trustee to enter into the Subordinated
Indenture, and to induce the Purchasers to exchange the Old Notes, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company has agreed to grant the registration rights provided
for hereunder. Accordingly, the Company agrees with the Trustee as follows:
2. DEFINITIONS. Unless otherwise defined, all capitalized terms used in
this Agreement that are defined in the Subordinated Indenture or in the Exchange
Agreement (including those terms incorporated therein by reference) shall have
the respective meanings assigned to them in the Subordinated Indenture or the
Exchange Agreement, as applicable. In addition, the following terms shall have
the following meanings under this Agreement:
"EXCHANGE NOTES" means the Company's 11.00% Senior
Subordinated Secured Notes due March 31, 1999 or at the option of the Company
exercised as provided therein, September 1, 2000 (the "Exchange Notes") issued
pursuant to the Subordinated Indenture dated as of _______, 1998 between the
Company and Santa Barbara Bank & Trust, as trustee.
"NOTE PURCHASE AGREEMENT" shall mean the agreement dated as of
September 30, 1998 between the Company, the parties listed on Exhibit A thereto
and Appaloosa Management, L.P., as Collateral Agent.
"INCIDENTAL REGISTRATION" is defined in Section 3.2.
"PARTICIPATING HOLDERS" means the holders of Registrable
Securities participating in the particular registration.
<PAGE>
"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 Exchange Notes. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities (a) when a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) when such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer under
the Securities Act shall have been delivered by the Company and subsequent
public distribution of them shall not require registration of them under the
Securities Act, (c) when such securities are sold pursuant to Rule 144 (or
similar rule adopted by the Commission) under the Securities Act, or (d) when
such securities cease to be outstanding.
"REQUESTED REGISTRATION" is defined in Section 3.1(a).
"REQUISITE PERCENTAGE OF OUTSTANDING HOLDERS" means the
holders of Registrable Securities who hold 25% or more of the aggregate
principal amount of the Exchange Notes that are then outstanding.
"REQUISITE PERCENTAGE OF PARTICIPATING HOLDERS" means
Participating Holders of Registrable Securities who hold a majority of the
Exchange Notes that are then being held by all Participating Holders.
3. REGISTRATION UNDER SECURITIES ACT, ETC.
3.1 REQUESTED REGISTRATIONS.
(a) REQUEST FOR REGISTRATION. Subject to the
limitations imposed by Sections 3.1(c), at any time and from time to time, one
or more holders of Registrable Securities
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<PAGE>
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, on 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
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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 Exchange Notes held by
each such Participating Holder so requested to be registered, and any securities
of the Company included in such registration pursuant to Section 3.1(b) shall be
reduced proportionately.
(h) POSTPONEMENT. The Company shall be entitled once
in any six- month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Company determines,
in its reasonable judgment, that such registration and offering would interfere
with any financing, corporate reorganization or other material transaction or
development involving the Company or any subsidiary or would require premature
disclosure thereof, and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to this Section 3.1 written notice of
such determination, containing a statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company shall so postpone
the filing of a registration statement, the 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
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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.
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(e) UNDERWRITERS' CUTBACK IN INCIDENTAL
REGISTRATIONS. If the managing underwriter of any underwritten offering shall
inform the Company by letter of its belief that the number of Registrable
Securities requested to be included in such registration would materially
adversely affect such offering, then the Company will include in such
registration, FIRST, the securities proposed by the Company to be sold for its
own account, SECOND, if applicable, the securities proposed by the Company to be
sold for the account of a holder of securities who has made a demand for
registration pursuant to a section of a registration rights agreement between
such holder and the Company analogous to Section 3.1 hereof, and THIRD, the
Registrable Securities and all other securities of the Company to be included in
such registration to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering, pro rata among the
Participating Holders and such other holders requesting such registration in
accordance with the principal amount of Exchange Notes held by each
Participating Holder and each such other holder so requested to be registered.
3.3 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 3.1 or 3.2 hereof,
the Company will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect
such registration (and shall include all financial statements
required by the Commission to be filed therewith) and
thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements
under securities or blue sky laws of any jurisdiction, the
Company shall furnish such documents to the 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
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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
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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;
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(i) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration
statement from and after a date not later than the effective
date of such registration;
(j) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed
on a national securities exchange or to secure designation of
all such Registrable Securities as a National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
"national market system security" within the meaning of Rule
11Aa2-1 of the Commission;
(k) deliver promptly to counsel to the Participating
Holders and each underwriter, if any, participating in the
offering of the Registrable Securities, copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such
registration statement;
(l) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement;
(m) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the
registration statement; and
(n) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's businesses) in
their marketing of Registrable Securities.
The Company may require each Participating Holder as to the Registrable
Securities of whom any registration is being effected to furnish the Company
such information regarding such holder and the distribution of such securities
as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the kind
described in subsection (g) (iii) or (v) of this Section 3.3, the Participating
Holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until, in the case of subsection (g)(iii) of this Section 3.3, such
stop order is removed or proceedings therefor terminated, and, in the case of
subsection (g)(v) of this Section 3.3, such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subsection (g)(v) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
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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
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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
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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
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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
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such registration statement. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any action or
claim effected without such Person's consent, which consent shall not be
unreasonably withheld. Notwithstanding anything in this subsection (d) to the
contrary, no indemnifying party (other than the Company) shall be required to
contribute any amount in excess of the net proceeds received by such party from
the sale of the Registrable Securities in the offering to which the losses,
claims, damages or liabilities of the indemnified parties relate.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 3.6 (with appropriate modifications) shall be given by the Company and
each Participating Holder with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. The indemnification
agreements contained in this Section 3.6 shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the transfer of any of the Registrable Securities by any
of the Participating Holders.
(f) INDEMNIFICATION PAYMENTS. The indemnification and
contribution required by this Section 3.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3.7 CERTAIN RIGHTS OF THE HOLDERS IF NAMED IN A REGISTRATION
STATEMENT. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to any Holder by name or otherwise as the holder of any
securities of the Company, then such Holder shall have the right to require (i)
the insertion therein of language, in form and substance satisfactory to such
Holder, to the effect that the holding by such Holder of such securities does
not necessarily make such Holder a "controlling person" of the Company within
the meaning of the Securities Act and is not to be construed as a recommendation
by such Holder of the investment quality of the Company's debt or equity
securities covered thereby and that such holding does not imply that such Holder
will assist in meeting any future financial requirements of the Company or (ii)
in the event that such reference to such Holder by name or otherwise is not, in
the reasonable judgment of such Holder as advised by its counsel, required by
the Securities Act or any of the rules and regulations promulgated thereunder,
or any state securities laws of any jurisdiction, the deletion of the reference
to such Holder.
3.8 UNLEGENDED EXCHANGE NOTES. In connection with the offering
of any Registrable Securities registered pursuant to this Article 3, the Company
shall (i) facilitate the timely preparation and delivery to Participating
Holders and the underwriters, if any, participating in such offering, of
unlegended Exchange Notes representing ownership of such Registrable Securities
being sold in such denominations and registered in such names as requested by
such
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<PAGE>
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 Exchange Notes. The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, in each case only if the Company shall have obtained the
written consent to such action or omission to act, of holders of at least 51% in
aggregate principal amount of the outstanding Exchange Notes. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its
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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 Holder, addressed to it in the manner set forth
in the Exchange Agreement, or at such other address as it shall have furnished
to the Company in writing;
(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 Exchange Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by such Holder to any
one or more transferees or distributees of all or part of such Holder's
Registrable Securities. A holder of Registrable Securities shall be permitted,
in connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a holder
of Registrable Securities, to request a registration pursuant to Section 3.1 and
shall provide the Company with copies of such conditions or constraints and the
identity of such transferees.
9. REMEDIES. 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
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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 and except for the registration rights
granted in connection with the Note Purchase Agreement pursuant to the
Registration Rights Agreement dated as of _______________, 1998 by and between
the purchasers listed on Exhibit A thereto and the Company, the Company has not
previously entered into any agreement with respect to its securities granting
any registration rights to any Person other than the registration rights granted
pursuant to this Agreement. Except as set forth on Exhibit 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 holders of the Exchange Notes, then the terms and conditions of this
Agreement shall immediately be deemed to have been amended without further
action by the Company or any of the holders of Registrable Securities so that
such holders shall be entitled to the benefit of any such more favorable or less
restrictive terms or conditions.
11. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
12. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New York,
without regard to the conflicts of laws principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and the United
States of America located in New York, New York for any action or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any action or proceeding relating thereto
except in such courts). Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action or
proceeding arising out of this Agreement or the transactions contemplated hereby
in the courts of the State of New York or the United States of America located
in New York, New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
The Company hereby waives any right it may have to a trial by jury in respect of
any action, proceeding or litigation directly or indirectly arising out of,
under or in connection with, this Agreement.
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13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
INAMED CORPORATION
By:___________________________
Name:
Title:
-----------------------------
By:___________________________
Name:
Title:
-----------------------------
By:___________________________
Name:
Title:
-----------------------------
By:___________________________
Name:
Title:
-----------------------------
By:___________________________
Name:
Title:
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<PAGE>
EXHIBIT -- 3F
TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN PROVISIONS OF
TRUST INDENTURE ACT OF 1939
TRUST INDENTURE ACT SECTION INDENTURE SECTION
ss. 310 (a)(1)................................... 5.10
(a)(2)................................... 5.10
(a)(3)................................... 5.1(e)
(a)(4)................................... N/A
(b)...................................... 5.8, 5.10, 11.6
(c)...................................... N/A
ss.311 (a)...................................... 5.11
(b)...................................... 5.11
(c)...................................... N/A
ss.312 (a)...................................... 2.8
(b)...................................... 11.7
(c)...................................... 11.7
ss.313 (a)...................................... 5.6
(b) (1).................................. 5.6
(b) (2).................................. 5.6
(c)...................................... 5.6, 11.6
(d)...................................... 5.6
ss.314 (a)...................................... 7.18, 11.5
(b)...................................... N/A
(c)...................................... 11.2
(d)...................................... 6.3
(e)...................................... 11.2
ss.315 (a)...................................... 5.1(a)
(b)...................................... 5.5, 11.6
(c)...................................... 5.1(b)
(d)...................................... 5.1(c)
(e)...................................... 4.11
ss.316 (a)(last sentence)....................... 2.11
<PAGE>
(a) (1) (A).............................. 4.5
(a) (1) (B).............................. 4.4
(a) (2).................................. N/A
(b)...................................... 4.7
(c)...................................... 6.4
ss.317 (a) (1).................................. 4.8
(a) (2).................................. 4.9
(b)...................................... 2.7
ss.318 (a)...................................... 11.1
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