UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10 )*
INAMED CORPORATION
- ---------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- ---------------------------------------------------------------------------
(Title of Class of Securities)
453235103
---------------------------------------------
(CUSIP Number)
Kenneth Maiman, Esq. Robert C. Schwenkel, Esq.
Appaloosa Management L.P. Fried, Frank, Harris, Shriver &
26 Main Street, First Floor Jacobson
Chatham, NJ 07928 One New York Plaza
(973) 701-7000 New York, NY 10004
(212) 859-8000
- ---------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 5, 1998
---------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
Page 1 of 8 Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 453235103 Page 2 of 8 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
APPALOOSA MANAGEMENT L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 5,535,153
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,535,153
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,535,153
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 453235103 Page 3 of 8 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
DAVID A. TEPPER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
NUMBER OF 7 SOLE VOTING POWER
SHARES 5,535,153
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 5,535,153
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,535,153
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.3%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
This Amendment No. 10 to the statement on Schedule 13D filed on behalf
of Appaloosa Management L.P. (the "Manager") and David A. Tepper ("Mr.
Tepper" and, together with the Manager, collectively, the "Reporting
Persons") on August 26, 1996, as amended by Amendment No. 1 filed on
September 26, 1996, Amendment No. 2 filed on January 28, 1997, Amendment
No. 3 filed on April 7, 1997, Amendment No. 4 filed on May 13, 1997,
Amendment No. 5 filed on June 12, 1997, Amendment No. 6 filed on July 14,
1997, Amendment No. 7 filed on December 3, 1997, Amendment No. 8 filed on
December 12, 1997 and Amendment No. 9 filed on October 2, 1998 (the
"Schedule 13D"), relates to the common stock of INAMED Corporation (the
"Company"). Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to such terms in the Schedule 13D. The Schedule
13D is hereby amended and supplemented as follows:
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
As more fully described in Items 5 and 6 below, the Exchange Notes,
Exchange Warrants and Additional Warrants were acquired in the Exchange
Offer in exchange for Notes and, accordingly, no additional funds were
required to acquire such securities.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
As previously reported on Amendment No. 9 to the Schedule 13D, in
connection with the issuance of the New Notes the Company agreed to
commence an Exchange Offer for the Notes. As more fully described in Item 6
below, on November 5, 1998, (i) the Partnership exchanged all Notes held by
it ($7,102,858 in aggregate principal amount) for $7,102,858 in aggregate
principal amount of Exchange Notes, Exchange Warrants representing the
right to purchase 1,330,172 Shares and Additional Warrants representing the
right to purchase 181,143 Shares; and (ii) Palomino exchanged all Notes
held by it ($7,102,857 in aggregate principal amount) for $7,102,857 in
aggregate principal amount of Exchange Notes, Exchange Warrants
representing the right to purchase 1,330,171 Shares and Additional Warrants
representing the right to purchase 181,143 Shares (such Exchange Warrants
and Additional Warrants were, at the instruction of Palomino, issued
directly by the Company to Palomino Holdings).
Accordingly, as of the date hereof, the Partnership, Palomino, and
Palomino Holdings may be deemed to have beneficial ownership of 2,767,577,
417,400 and 2,350,176 Shares, respectively (or 5,535,153 Shares in the
aggregate).
(a) This statement on Schedule 13D relates to 5,535,153 Shares which may
be deemed to be beneficially owned by the Reporting Persons and which
constitute approximately 35.3% of the issued and outstanding Shares.
(b) The Manager may be deemed to have the sole voting and dispositive
power with respect to 5,535,153 Shares. Mr. Tepper may be deemed to
have sole voting power and dispositive power with respect to 5,535,153
Shares.
(c) Not applicable
(d) Not applicable
(e) Not applicable
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
-----------------------------------
The Exchange Offer was made pursuant to the Securities Exchange
Agreement, dated as of October 7, 1998, by and between the Company and the
securityholders signatory thereto (the "Securities Exchange Agreement") (a
copy of which is attached as Exhibit A hereto and incorporated by reference
herein). The Securities Exchange Agreement contains standard terms and
conditions, as well as customary representations and warranties. The
Exchange Notes (the form of which is attached hereto as Exhibit B and
incorporated by reference herein) were issued pursuant to the Subordinated
Indenture, dated as of November 5, 1998, between the Company and the
Trustee (the "Subordinated Indenture") (a copy of which is attached hereto
as Exhibit C and incorporated by reference herein). The Subordinated
Indenture contains customary events of default, as well as standard
financial and operating covenants that limit, among other things, the
incurrence of additional indebtedness by the Company, encumbrances, the
payment of dividends or making of other restricted payments, the sale of
the Company's assets and the ability of the Company to enter into other
lines of business or enter into certain mergers and consolidations. Under
the terms of the Subordinated Indenture, the Trustee, on behalf of the
holders of Exchange Notes, was granted a second priority security interest
and lien on all of the assets of the Company and its subsidiaries. In that
regard, the Trustee and the Collateral Agent entered into the Intercreditor
Agreement, dated as of November 5, 1998 (the "Exchange Offer Intercreditor
Agreement") (a copy of which is attached hereto as Exhibit D and
incorporated by reference herein), whereby the Trustee acknowledged and
agreed that (i) the security interests of the Trustee under the
Subordinated Indenture are subject to the first priority liens and security
interests of the Collateral Agent under the New Note Purchase Agreement and
(ii) the indebtedness evidenced by and obligations relating to the Exchange
Notes are subordinate and subject to the prior payment in full of the New
Notes.
In connection with the Exchange Offer, the Company entered into the
Registration Rights Agreement, dated as of November 5, 1998, by and between
the Company and the Trustee (the "Exchange Offer Registration Rights
Agreement") (a copy of which is attached as Exhibit E hereto and
incorporated herein by reference) with respect to the Exchange Notes, which
provides, among other things, that holders of at least 25% or more of the
aggregate principal amount of the Exchange Notes have the right, subject to
certain limitations described therein, to require the Company to register
the sale of the Exchange Notes under the Securities Act (the expenses of
three of which registrations will be paid by the Company) and that the
holders of the Exchange Notes have certain "piggyback rights" to
participate in other registered offerings by the Company.
The Exchange Warrants (the form of which is attached hereto as Exhibit
F and incorporated by reference herein) contain customary provisions,
including anti-dilution protection. The Exchange Warrants may be exercised
by payment of the exercise price either in cash or by cashless exercise
through the tendering of New Notes or Exchange Notes (in the amounts
prescribed in the Exchange Warrants). Under certain circumstances, the
Company may require partial or full exercise of the Exchange Warrants. In
addition, the Exchange Warrants provide that the Company will (i) use its
best efforts to register the Shares issuable upon exercise of the Exchange
Warrants (the "Exchange Warrant Stock") under the Securities Act and (ii)
keep such registration effective for such period of time as the Exchange
Warrants or Exchange Warrant Stock are held by the Holder (as defined
therein).
The Additional Warrants (the form of which is attached hereto as
Exhibit G and incorporated by reference herein) contain customary
provisions, including anti-dilution protection. The Additional Warrants may
be exercised by payment of the exercise price either in cash or by cashless
exercise through the tendering of New Notes, Exchange Notes or Additional
Warrants (in the amounts prescribed in the Additional Warrants). The
Additional Warrants provide that the Company will (i) use its best efforts
to register the Shares issuable upon exercise of the Additional Warrants
(the "Additional Warrant Stock") under the Securities Act and (ii) keep
such registration effective for such period of time as the Additional
Warrants or Additional Warrant Stock are held by the Holder (as defined
therein).
ITEM 7. Material to be Filed as Exhibits
--------------------------------
Exhibit A: Securities Exchange Agreement
Exhibit B: Form of Exchange Note
Exhibit C: Subordinated Indenture
Exhibit D: Exchange Offer Intercreditor Agreement
Exhibit E: Exchange Offer Registration Rights Agreement
Exhibit F: Form of Exchange Warrant
Exhibit G: Form of Additional Warrant
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: November 9, 1998
APPALOOSA MANAGEMENT L.P.
By: Appaloosa Partners Inc.,
Its General Partner
By: /s/ David A. Tepper
David A. Tepper
President
David A. Tepper
/s/ David A. Tepper
-------------------
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit Name
- ------- ------------
Exhibit A Securities Exchange Agreement
Exhibit B Form of Exchange Note
Exhibit C Subordinated Indenture
Exhibit D Exchange Offer Intercreditor Agreement
Exhibit E Exchange Offer Registration Rights Agreement
Exhibit F Form of Exchange Warrant
Exhibit G Form of Additional Warrant
Exhibit A
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:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
Section I.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Additional Warrants" means the warrants to acquire up to 500,000
shares of common stock of the Company with an exercise price of $7.50 per
share.
"Agreement" means this Securities Exchange Agreement, as the same may
be amended, supplemented or modified in accordance with the terms hereof
and in effect.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Breast Implant Litigation" shall mean the litigation in the United
States District Court for the Northern District of Alabama, Southern
Division stylized as "Silicone Gel Breast Implant Products Liability
Litigation (MDL926).
"Capital Stock" means, in the case of the Company, any and all shares
(however designated) of the capital stock of the Company now or hereafter
outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any person shall mean and include,
as of any date as of which the amount thereof is to be determined, the
amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Class Action Settlement Agreement" shall mean a Settlement Agreement,
dated April 2, 1998, which provides, among other things, for the settlement
of certain claims against the Company arising out of the Breast Implant
Litigation.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor code thereto, and any reference to the Code shall include a
reference to any successor provisions.
"Collateral Documentation" means the Subordinated Guarantee and
Security Agreement, the Subordinated Guarantee Agreements, the Subordinated
Security Agreement, the Financing Statements, the Exchange Offer
Intercreditor Agreement, the Intercompany Notes and the endorsements
thereof to the Trustee (for the benefit of the Holders) or to the Holders,
and all other deeds of trust, assignments, endorsements, pledged stock,
collateral assignments and other instruments, documents, agreements or
conveyances at any time creating or evidencing Liens or assigning Liens to
the Trustee (for the benefit of the Holders) or to the Holders, to secure
the obligations of the Company or any of its Subsidiaries hereunder and
under the Exchange Notes and the Exchange Offer Registration Rights
Agreement.
"Common Stock" means the common stock of the Company, par value $.01
per share.
"Commission" means the Securities and Exchange Commission.
"Company" means INAMED CORPORATION, a Florida corporation and any
successor to the Company, whether by contract, assumption, merger,
consolidation, operation of law or otherwise.
"Consent" means the consent of the Holders of the Old Notes to the
amendments to the Indenture set forth in Section 2.2.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Contracts" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Credit Party" shall mean each of the Company and each of its Material
Subsidiaries.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or contract between any Credit Party or any ERISA Affiliate and any
employee pursuant to which any Credit Party or any ERISA Affiliate has or
may have any liability contingent or otherwise.
"Environmental Laws" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"Equity Interests" means any Capital Stock, partnership interest,
joint venture interest or other equity interest or warrants, options or
other rights to acquire any Capital Stock, partnership interest, joint
venture interest or other equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in
effect at the Time of Exchange and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the
Company under Section 414(o) of the Code, or is under "common control" with
the Company, within the meaning of Section 4001(a)(14) of ERISA.
"ERISA Plan" means an employee benefit plan as such term is defined in
Section 3(3) of ERISA, with respect to which the Company or an Affiliate is
a disqualified person or a party in interest, as those terms are defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively.
"Exchange" means the exchange of the Old Notes for the Exchange Notes
and Exchange Warrants and the Consent.
"Exchange Collateral" means all real and personal property and
interests in real and personal property including, without limitation,
Intellectual Property, rights under leases and royalty rights and
agreements, now owned or hereafter acquired by the Company or its Material
Subsidiaries in or upon which a Lien is granted or made under the
Collateral Documentation.
"Exchange Notes" means the Company's 11.00% Senior Subordinated
Secured Notes due March 31, 1999 issued pursuant to the Exchange Notes
Indenture.
"Exchange Notes Indenture" means the form of indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, in substantially the
form as attached hereto as Exhibit A.
"Exchange Offer Documents" shall mean the Exchange Notes, the Exchange
Warrants, the Additional Warrants, the Exchange Notes Indenture, the
Securities Exchange Agreement, the Exchange Offer Registration Rights
Agreement, the Subordinated Guarantee and Security Agreement, the
Subordinated Security Agreement, the Subordinated Guaranty Agreement and
the Exchange Offer Intercreditor Agreement.
"Exchange Offer Intercreditor Agreement" shall mean the agreement,
dated as of the date hereof, between Appaloosa Management, L.P. as the
Collateral Agent under the New Financing and the Trustee for the Exchange
Notes under the Exchange Notes Indenture.
"Exchange Offer Registration Rights Agreement" shall mean the
agreement to be entered into between the Trustee and the holders of the
Exchange Notes.
"Exchange Warrants" shall mean warrants to acquire up to 3,671,616
shares of Common Stock of the Company with an exercise price of $5.50 per
share.
"Financing Statements" means Form UCC-1 financing statements to be
filed in all jurisdictions necessary or desirable in order to perfect the
Holders' security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holders and filings to be made
in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of any Person guaranteeing, or in
effect guaranteeing, any Indebtedness, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligation, (iii)
to lease property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of such
Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed
to be Indebtedness equal to the outstanding amount of the Indebtedness for
borrowed money which has been guaranteed, and a Guarantee in respect of any
other obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and
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 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.
"Knowledged", with respect to the Company, shall mean the actual
knowledge of each member of the board of directors of the Company and each
officer of the Company, and the knowledge that any of the foregoing persons
would have after due and reasonable inquiry and investigation.
"Law" shall include any foreign, federal, state, or local law,
statute, ordinance, rule, regulation, order, judgment or decree.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or Capital
Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business, (b) the ability of any Credit Party to perform
its obligations under any of the Exchange Offer Documents to which it is a
party, (c) the validity or enforceability of any of the Exchange Offer
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Exchange Offer Documents or (e) the timely payment or
performance of the Exchange Notes.
"Material Subsidiaries" at any time, shall mean any Subsidiary of the
Company, other than any Non-Significant Subsidiary of the Company.
"New Financing" means the 10% Senior Secured Notes to be issued by the
Company pursuant to the Note Purchase Agreement.
"Non-Significant Subsidiary" at any time, shall mean any Subsidiary of
the Company which at such time has total assets (including the total assets
of any Subsidiaries) that have a fair market value of, or for which the
Company or any of its Subsidiaries shall have paid (including the
assumption of Indebtedness) in connection with the acquisition of capital
stock (or other equity interests) or the total assets of such Subsidiary,
less than $100,000, provided that the total assets of all Non-Significant
Subsidiaries at any time does not exceed 5% of the total assets of the
Company and its Subsidiaries on a consolidated basis.
"Note Purchase Agreement" means the agreement dated as of September
30, 1998 between the Company, the parties listed on Exhibit A thereto and
Appaloosa Management, L.P. as Collateral Agent.
"Old Notes" means the 11% Senior Secured Convertible Notes due March
31, 1999 of the Company issued pursuant to the Indenture.
"Outstanding" or "outstanding" shall mean when used with reference to
the Notes at a particular time, all Notes theretofore issued as provided in
this Agreement, except (i) Notes theretofore reported as lost, stolen,
damaged or destroyed, or surrendered for transfer, exchange or replacement,
in respect to which replacement Notes have been issued, (ii) Notes
theretofore paid in full, and (iii) Notes therefore canceled by the
Company, except that, for the purpose of determining whether Holders of the
requisite principal amount of Notes have made or concurred in any waiver,
consent, approval, notice or other communication under this Agreement,
Notes registered in the name of, or owned beneficially by, the Company or
any of its Subsidiaries of any thereof, shall not be deemed to be
outstanding.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Person" means any individual (including an individual when acting in
a fiduciary capacity), corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, estate,
unincorporated organization or government or other agency or political
subdivision thereof.
"Prohibited Transaction" means a transaction described in Section
4975(e) of the Code or in Section 406 of ERISA, for which there is no
available exemption.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated the date hereof between the Purchasers and the Company with
respect to the New Financing.
"Reincorporation Merger" shall mean the merger, if consummated, the
primary purpose of which is to effect the reincorporation of the Company in
the State of Delaware.
"Related Parties" shall mean Affiliates of the Company or any of its
Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of directors and officers).
"Releases" shall have the meaning ascribed thereto in the Recitals.
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Sale-and-Leaseback Transaction" shall mean a transaction or series of
transactions pursuant to which the Company or any of its Subsidiaries shall
sell or transfer to any Person (other than the Company or a Subsidiary of
the Company) any property, whether now owned or hereafter acquired, and, as
part of the same transaction or series of transactions, the Company or any
of its Subsidiaries shall rent or lease as lessee (other than pursuant to a
Capitalized Lease), or similarly acquire the right to possession or use of,
such property or one or more properties which it intends to use for the
same purpose or purposes as such property.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section 4.4.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Security" or "Securities" shall mean any equity or debt security of
the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Secured Obligations" shall mean any and all obligations of any Credit
Party at any time and from time to time for the performance of its
agreements, covenants and undertakings under or in respect of the Exchange
Offer Documents to which it is a party.
"Standstill Agreement" shall mean the agreement, dated July 8, 1998,
between the Company and Mr. Donald K. McGhan restricting Mr. McGhan's
ability to vote his Common Stock.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
"Subordinated Guarantee Agreement" shall mean the guarantee to be made
by the Company's foreign Material Subsidiaries in favor of the holders of
the Exchange Notes.
"Subordinated Guarantee and Security Agreement" shall mean the
agreement to be entered into by the Company's domestic Material
Subsidiaries and the Trustee.
"Subordinated Security Agreement" shall mean the agreement to be
entered into by the Company and the Trustee.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including without limitation a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions) or (iii) any other Person required to
be consolidated with such Person in accordance with generally accepted
accounting principles. For purposes of this definition (and for the
determination of whether or not a Subsidiary is a wholly-owned Subsidiary
of a Person), any directors' qualifying shares or investment by foreign
nationals mandated by applicable law shall be disregarded in determining
the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Authority and, including, without limitation,
any Taxes of another person owing under a contract, as transferee or
successor, under Treas. Reg. ' 1.1502-6 or analogous state, local or
foreign law, or otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"3M" shall mean the Minnesota Mining & Manufacturing Company.
"3M Agreement" shall mean an agreement with 3M, dated as of April 16,
1998, which provides, among other things, for the resolution of certain
indemnification claims of 3M against the Company relating to the Breast
Implant Litigation and for the Company to obtain certain releases ascribed
thereto in the Recitals.
"Time of Exchange" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service mark registrations and
applications for trademark and service mark registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world,
together, in each case, with the product lines and goodwill of the business
connected with the use of, or otherwise symbolized by, each such trade
name, trademark and service mark.
"Trustee" means Santa Barbara Bank & Trust.
"Year 2000 Problem" shall have the meaning ascribed thereto in Section
4.28.
ARTICLE II
EXCHANGE OF SECURITIES AND CONSENT TO MODIFICATION
--------------------------------------------------
Section II.1 Exchange of Securities. Subject to the terms and
conditions herein set forth, the Company agrees that it will issue the
Exchange Notes, Exchange Warrants and Additional Warrants to the Holders in
exchange for the Holders' Old Notes in such amounts as set forth on
Schedule 2.1 attached hereto, and the Holders agree that each will tender
such Holder's Old Notes to the Company in exchange for the Exchange Notes,
Exchange Warrants and Additional Warrants, at or prior to 5:00 p.m. New
York time on November 5, 1998 (the "Expiration Date"), which Old Notes, or
an Affidavit of Lost Secured Convertible Note in the event applicable,
shall be delivered to the Company, together with an executed copy of this
Agreement. The Company reserves the right to extend the Expiration Date for
receipt of Old Notes. Each Holder that does not tender such Holder's Old
Notes to the Company as set forth herein shall retain their Old Notes
subject to the terms of the Indenture, as modified hereby, and shall
receive the amount of the Additional Warrants set forth on Schedule 2.1.
The acceptance for exchange and the exchange of all outstanding Old
Notes which are validly tendered will be made promptly, but in any event
within 3 Business Days, after the Expiration Date. The Company will be
deemed to have accepted for exchange tendered Old Notes as, if and when the
Company gives oral or written notice to each Holder of its acceptance of
the tenders of such Old Notes. Any Old Notes tendered to and accepted by
the Company prior to the Expiration Date shall be exchanged as of November
5, 1998, or such other date that is the next business day after the
Expiration Date (the "Time of Exchange"). Delivery of the Exchange Notes
and Exchange Warrants in exchange for the Old Notes will be made by the
Company as soon as practicable after the Expiration Date.
The parties agree that for federal income tax purposes, the fair
market value of the Exchange Notes is $18,687,811 and the fair market value
of the Exchange Warrants is $917,904, and shall take no position
inconsistent with such valuations, except as otherwise required by law.
Section II.2 Consent. The completion and execution of this Agreement
shall also be deemed to constitute the Consent of the Holder upon the
Expiration Date to (i) the proposed modifications to the Old Notes, as
permitted by Article 7 of the Indenture, and as set forth in Annex A
contained herein, to be effective upon the Expiration Date and (ii) the
release of the Collateral (as defined in the Indenture) and the assignment
of the Collateral to Santa Barbara Bank and Trust, as Trustee of the
Exchange Notes Indenture. The Company intends to cause the execution of a
supplemental Indenture providing for the proposed modifications to occur on
or about the Expiration Date so long as Holders of at least a majority in
aggregate principal amount of the Old Notes have agreed to tender the Old
Notes under the terms of this Agreement. If the requisite Consents are
received and the supplemental indenture reflecting the proposed
modifications becomes operative, all persons who continue to hold Old Notes
thereafter will be subject to the provisions of the supplemental Indenture.
However, the Company's duty to accept Old Notes and to deliver Exchange
Notes, Exchange Warrants and Additional Warrants to Holders under the terms
of this Agreement shall not be affected by the inability of the Company to
obtain the required consents to make the proposed modifications.
Section II.3 Withdrawal. Tender of Old Notes and Consents may be
withdrawn at any time prior to the Time of Exchange. If the Exchange is
amended in any material respect, the Company will disclose such amendment
to each Holder and will extend the Exchange for a period of at least 5
Business Days to permit the Holders of the Old Notes to properly deliver or
withdraw their Old Notes and Consents. The Company may not withdraw or
otherwise revoke the Exchange, except as specifically provided herein.
Section II.4 Waiver. The completion and execution of this Agreement
shall be deemed to constitute an acknowledgement by each Holder of its
receipt of proper notice pursuant to Section 8.12 of the Indenture relating
to the proposed offering of the New Financing.
Section 2.5 Compliance with Trust Indenture Act. Unless already so
qualified, the Company agrees to (i) use its best efforts to cause the
Exchange Notes Indenture to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA") in connection with the registration of the
Exchange Notes under the Exchange Offer Registration Rights Agreement, (ii)
cooperate with the Trustee to effect such changes to the Exchange Notes
Indenture as may be required for the Exchange Notes Indenture to be so
qualified in accordance with the terms of the TIA, and (iii) execute, and
use their best efforts to cause the Trustee to execute, all documents
required to be filed with the Commission to enable the Exchange Notes
Indenture to be so qualified in a timely manner.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
---------------------------------------------
Section III.1(a) Representations and Warranties of the Holders. Each
Holder severally represents and warrants to, and covenants and agrees with,
the Company that the Exchange Notes and Exchange Warrants to be received by
each Holder in exchange for Old Notes pursuant to this Agreement are being
received for such Holder's own account and not for the account of any ERISA
Plan, for the purpose of investment and with no intention of distributing
or reselling the Exchange Notes or Exchange Warrants or any part thereof in
any transaction, which would be or result in a Prohibited Transaction or
would be in violation of the securities laws of the United States of
America or any State, without prejudice, however, to each Holder's rights
at all times to sell or otherwise dispose of all or any part of the
Exchange Notes or Exchange Warrants under a registration under the Act or
under an exemption from such registration available under such Act,
provided that the disposition of such Holder's property at the time of the
sale or disposition of the Exchange Notes or Exchange Warrants is within
such Holder's control. If a Holder should in the future decide to dispose
of any of the Exchange Notes or Exchange Warrants, such Holder understands
and agrees with the Company that it will do so only (i) if such disposition
will not be or result in a Prohibited Transaction; (ii) if a subsequent or
transferee Holder shall agree in writing to be bound by the representations
and warranties of this Article III; and that such Holder may do so only in
compliance with the Act, as then in effect, and that stop-transfer
instructions to that effect will be in effect with respect to the Exchange
Notes or Exchange Warrants. If a Holder should decide to dispose of any of
the Exchange Notes or Exchange Warrants, the Company must first be in
receipt of an opinion of counsel to the effect that the proposed
disposition of the Exchange Notes or Exchange Warrants would not be in
violation of the Act. Each Holder agrees to the imprinting of legends
required by law on certificates representing all of the Exchange Notes and
Exchange Warrants including but not limited to the following: "This
security has not been registered under the Securities Act of 1933, as
amended, or any state securities laws and may be reoffered and sold,
pledged or otherwise transferred only if so registered or if an exemption
from registration is available."
Each Holder also severally represents and warrants to the Company that
(i) it has received and reviewed (a) the form of the Exchange Notes
Indenture and (b) copies of all annual reports and quarterly reports, proxy
statements and other reports filed by the Company since January 1, 1998
with the Securities and Exchange Commission pursuant to the terms of the
Securities Exchange Act of 1934, as amended; (ii) it is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act of 1933, as amended and has been afforded the opportunity to ask
questions and receive answers concerning the terms and conditions of the
Exchange Notes and Exchange Warrants and the transactions contemplated
hereby and has relied solely on the representations and warranties made
herein in determining to exchange the Old Notes for the Exchange Notes and
Exchange Warrants; (iii) it has all requisite corporate power and authority
(A) to execute, deliver and perform its obligations under this Agreement,
(B) to exchange the Old Notes for the Exchange Notes and Exchange Warrants
in the manner and for the purpose contemplated in this Agreement and (C) to
execute, deliver and perform its obligations under all other agreements and
instruments executed and delivered by, or to be executed and delivered by,
the Holder pursuant to or in connection with this Agreement or any of the
transactions contemplated hereby or thereby; (iv) this Agreement has been
duly and validly authorized by each Holder and this Agreement has been duly
and validly executed and delivered by each Holder and constitutes the
legal, valid and binding agreement of each Holder, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally;
and (v) the exchange of each Holder's Old Notes for the Exchange Notes and
Exchange Warrants does not violate such Holders' charter or by-laws or any
other governing documents, any material law or regulation or any court
order applicable to it.
Each Holder has relied solely on the representations made herein in
determining to exchange the Holder's Old Notes for the Exchange Notes and
Exchange Warrants pursuant hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to each Holder as follows:
Section IV.1 Organization and Qualification. Except as set forth
on Schedule 4.1, each Credit Party is a corporation duly organized and
existing in good standing under the laws of the jurisdiction in which it is
incorporated and has the power to own its respective property and to carry
on its respective business as now being conducted. Each Credit Party is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the respective
business conducted or property owned by it makes such qualification
necessary and where the failure to so qualify would individually or in the
aggregate have a Material Adverse Effect.
Section IV.2 Due Authorization. Each Credit Party has all right,
power and authority to enter into, deliver and perform the Exchange Offer
Documents to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery of each Exchange Offer
Document by each Credit Party thereto and the performance by such Credit
Party of the transactions contemplated thereby (including, without
limitation, the issuance and sale of the Exchange Notes, the Exchange
Warrants and the Additional Warrants by the Company) and compliance by each
such Credit Party with all the provisions of each Exchange Offer Document
(as applicable) have been duly authorized by all requisite corporate
proceedings on the part of each Credit Party. Each of the Exchange Offer
Documents has been duly executed and delivered on behalf of each Credit
Party party thereto, and each such Exchange Offer Document constitutes the
legal, valid and binding obligation of such Credit Party, enforceable
against such Credit Party in accordance with their respective terms, except
to the extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or by general principles of equity
relating to creditors' rights generally.
Section IV.3 Subsidiaries. (a) Schedule 4.3(a) contains (except
as noted therein) complete and correct lists (i) of the Company's Material
Subsidiaries, showing, as to each Material Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding
owned by the Company and each other of the Company's Subsidiaries, and (ii)
of the Company's directors and senior officers.
(b) Except as set forth in Schedule 4.3(a), all of the
outstanding shares of capital stock or similar equity interests of each
Material Subsidiary shown in Schedule 4.3(a) as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another of its Subsidiaries
free and clear of any Lien.
(c) There are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which the Company or
any of its Subsidiaries may be required to issue, sell, repurchase or
redeem any of its capital stock or other equity interests in any of the
Company's Subsidiaries.
(e) Schedule 4.3(d) contains (except as noted therein) a complete
and correct list of all of the Company's Non-Significant Subsidiaries.
Section IV.4 SEC Reports Correspondence. Except as set forth in
Schedule 4.4, the Company has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act from and after
January 1, 1995; and the Company has furnished each Purchaser true and
complete copies of all annual reports, quarterly reports, proxy statements
and other reports under the Exchange Act filed by the Company from and
after such date, each as filed with the SEC (collectively, the "SEC
Reports"). Except as set forth on Schedule 4.4, each SEC Report was in
compliance in all material respects with the requirements of its respective
report form and did not on the date of filing contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as of the
date hereof there is no fact or facts not disclosed in the SEC Reports
which relate specifically to the Company and/or any of its Subsidiaries and
which individually or in the aggregate may have a Material Adverse Effect.
The Company has made available for inspection by each Purchaser copies of
all correspondence between the Company and the SEC from and after January
1, 1996.
Section IV.5 Financial Statements. Except as set forth in
Schedule 4.5, the financial statements (including any related schedules
and/or notes) included in the SEC Reports have been prepared in accordance
with GAAP consistently followed (except as indicated in the notes thereto)
throughout the periods involved and fairly present the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company and its Subsidiaries as of the
respective dates thereof and for the respective periods then ended (in each
case subject, as to interim statements, to changes resulting from year-end
adjustments, none of which were material in amount or effect). Except as
set forth in Schedule 4.5 or the SEC Reports, the Company has no
liabilities or obligations, contingent or otherwise, except (i) liabilities
and obligations in the respective amounts reflected or reserved against in
the Company's balance sheet as of December 31, 1997 included in the SEC
Reports or (ii) liabilities and obligations incurred in the ordinary course
of business since December 31, 1997 which individually or in the aggregate
do not have a Material Adverse Effect. Since December 31, 1997, the Company
and its Subsidiaries have operated their respective businesses only in the
ordinary course and there has not been individually or in the aggregate any
Material Adverse Effect, other than changes disclosed in the SEC Reports or
otherwise set forth in Schedule 4.5 hereto.
Section IV.6 Litigation. (a) Except as set forth in Schedule 4.6
hereto or as disclosed in the SEC Reports, there is no action, suit,
investigation or proceeding pending or, to the Knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective properties or assets by or before any court, arbitrator or other
Governmental Entity.
(b) Except as set forth in Schedule 4.6 or as disclosed in the
SEC Reports, neither the Company nor any of its Subsidiaries is in default
under or in breach of any order of any court, arbitrator or governmental
entity, and neither the Company nor any of its Subsidiaries is subject to
or a party to any order of any court or governmental entity arising out of
any action, suit or proceeding under any Law.
Section IV.7 Title to Properties; Insurance. (a) Except as set
forth in Schedule 4.7(a), the Company and each of its Subsidiaries have
good and valid title to, or, in the case of property leased by any of them
as lessee, a valid and subsisting leasehold interest in, their respective
properties and assets, free of all Liens and encumbrances, except as sold
or otherwise disposed of in the ordinary course of business and except for
such Liens and encumbrances which would not cause a Material Adverse
Effect.
(b) Schedule 4.7(b) sets forth a complete and correct list of all
insurance coverage carried by the Company or its Subsidiaries, the carrier
and the terms and amount of coverage. All of the material assets of the
Company and the Company's Subsidiaries and all aspects of the Company's and
its Subsidiaries' businesses that are of insurable character are covered by
insurance with insurers against risks of liability, casualty and fire and
other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage which are consistent
with prudent industry practice. Neither the Company nor any of its
Subsidiaries is in default with respect to its obligations under any such
insurance policy maintained by it. All such policies and other instruments
are in full force and effect and no premiums with respect thereto are past
due and owed. Except as set forth in Schedule 4.7(b), neither the Company
nor any of its Subsidiaries has failed to give any notice or present any
material claim under any such insurance policy in due and timely fashion or
as required by any of such insurance policies, neither the Company nor any
of its Subsidiaries has otherwise, through any act, omission or
non-disclosure, jeopardized or impaired full recovery of any claim under
such policies, and there are no claims by the Company or any of its
Subsidiaries under any of such policies to which any insurance company is
denying liability or defending under a reservation of rights or similar
clause. Neither the Company nor any of its Subsidiaries has received notice
of any pending or threatened termination of any of such policies or any
premium increases for the current policy period with respect to any of such
policies and the consummation of the transactions contemplated by the
Exchange Offer Documents will not result in any such termination or premium
increase. The Company does not maintain directors' and officers' insurance.
Section IV.8 Governmental Consents, etc. No Credit Party is
required to obtain any consent, approval or authorization of, or to make
any registration, declaration or filing with, any Governmental Entity or
third party as a condition to or in connection with the valid execution and
delivery of any of the Exchange Offer Documents or the valid offer, issue,
sale or delivery of the Exchange Notes, Exchange Warrants or the Additional
Warrants, or the performance by any such Credit Party of its obligations in
respect of any thereof, except for filings required pursuant to state and
federal securities laws to effect any registration of securities pursuant
to the Exchange Offer Registration Rights Agreement, the Financing
Statements, and filings to be made with the U.S. Patent and Trademark
Office or the U.S. Copyright Office to perfect the Holders' security
interest in the Intellectual Property constituting Collateral under the
Collateral Documentation, and except for the filing on Form 8K under the
Exchange Act to report the consummation of the transactions contemplated
hereby.
Section IV.9 Holding Company Act and Investment Company Act. No
Credit Party is: (i) a "public utility company" or a "holding company," or
an "affiliate" or a "subsidiary company" of a "holding company," or an
"affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
Section IV.10 Taxes. Except as set forth in Schedule 4.10:
(a) The Company and its Subsidiaries are each members of the
affiliated group (as defined in Code Section 1504) filing a consolidated
federal income Tax Return of which the Company is the common parent. The
Company and its Subsidiaries (i) have timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company or its
Subsidiaries, all of which Tax Returns are true, correct and complete in
all material respects; (ii) have within the time and manner prescribed by
Law paid all Taxes, required to be paid in respect of the periods covered
by such Tax Returns or otherwise due to any Governmental Authority; (iii)
have established and maintained on their respective books and records,
accruals and reserves that are adequate for the payment of all Taxes not
yet due and payable and attributable to any period preceding the date
hereof; and (iv) have not received notice of any deficiencies for any Tax
from any Governmental Authority against the Company or any of its
Subsidiaries, which deficiency has not been satisfied. Neither the Company
nor any of its Subsidiaries is the subject of any currently ongoing audit
or judicial or administrative proceeding relating to Taxes, nor is any such
audit pending or, to the Company's Knowledge, threatened. With respect to
any taxable period ended prior to December 31, 1992, all Tax Returns
including the Company or any of its Subsidiaries have been audited by the
Internal Revenue Service or are closed by the applicable statute of
limitations. The accruals and reserves for Taxes on the December 31, 1997
Balance Sheet are complete and adequate in all material respects to cover
the liability of the Company and its Subsidiaries for Taxes through such
date. There are no Liens with respect to Taxes upon any of the properties
or assets, real or personal, tangible or intangible, of the Company or any
of its Subsidiaries (other than Liens for Taxes not yet due). No claim has
been made or threatened in writing, and no claim has, to the Company's
Knowledge, otherwise been made or threatened, by a Governmental Authority
in a jurisdiction where the Company and its Subsidiaries do not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction. Neither the Company nor any of its
Subsidiaries has filed an election under Section 341(f) of the Code to be
treated as a consenting corporation. Neither the Company nor any of its
Subsidiaries is or has been a party to any Tax Sharing Agreement.
(b) The Company and its Subsidiaries have duly withheld or
collected all Taxes required by law to have been withheld or collected
(including Taxes required by law to be withheld or collected in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party) and any such amounts required
to be remitted to a Governmental Authority have been timely remitted.
Section IV.11 Compliance with ERISA. The Company has provided or
made available to each Purchaser, or has caused to be provided to each
Purchaser (i) current, accurate and complete copies of all documents
embodying or relating to each employee benefit plan (within the meaning of
Section 3(3) of ERISA) and each Employee Agreement, including all
amendments thereto, and trust or funding agreements with respect thereto
(excluding any grantor trusts established to hold assets subject to the
claims of Seller's creditors) maintained or contributed to by and Credit
Party or any ERISA Affiliate; and (ii) all summary plan descriptions and
communications of any material modifications to any employee or employees
relating to any employee benefit plan (within the meaning of Section 3(3)
of ERISA) or Employee Agreement maintained by any Credit Party or any ERISA
Affiliate. Schedule 4.11 sets forth a complete and correct list of all
employee benefit plans and Employee Agreements described in clause (i)
above.
Each employee benefit plan (within the meaning of Section 3(3) of
ERISA) maintained or contributed to by any Credit Party or any ERISA
Affiliate has been established and operated in accordance with terms
thereof and all other applicable laws, including, but not limited to the
Code and ERISA. Neither any Credit Party nor any ERISA Affiliate presently
sponsors, maintains, contributes to, or is required to contribute to, nor
has any Credit Party nor any ERISA Affiliate ever sponsored, maintained,
contributed to, or been required to contribute to, an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) which is
subject to Title IV of ERISA or Section 412 of the Code. Neither any Credit
Party nor any ERISA Affiliate has ever maintained or contributed to or been
required to maintain or contribute to any employee welfare benefits plan
(within the meaning of Section 3(1) of ERISA) which provides for
post-retirement medical or other welfare-type benefits and has no liability
for any such benefits to any present or former employee.
Section IV.12 Intellectual Property Rights. Except as disclosed
on Schedule 4.12 hereto, to the Company's Knowledge, (i) the Company or one
of its Subsidiaries owns or has the right to use pursuant to license,
sub-license, agreement or permission all of its Intellectual Property; and
(ii) neither the Company nor any of its Subsidiaries has interfered with,
infringed upon or misappropriated any Intellectual Property rights of third
parties, except for interferences, infringements and misappropriations
which would not individually or in the aggregate have a Material Adverse
Effect, and the Company has no Knowledge of any claim, demand or notice
alleging any such interference, infringement or misappropriation (including
any claim that it must license or refrain from using any Intellectual
Property rights of any third party). To the Company's Knowledge, no third
party has interfered with, infringed upon or misappropriated any
Intellectual Property rights of the Company or any of the Company's
Subsidiaries.
Section IV.13 Possession of Franchises, Licenses, Etc. Each
Credit Party possesses all franchises, certificates, licenses, permits and
other authorizations from Governmental Entities and other rights, free from
burdensome restrictions, that are necessary for the ownership, maintenance
and operation of their respective properties and assets, except for those
the absence of which would not individually or in the aggregate have a
Material Adverse Effect, and no Credit Party is in violation of any
thereof, except for violations which would not cause a Material Adverse
Effect.
Section IV.14 Compliance with Laws. Each Credit Party is in
compliance with all applicable Laws including, without limitation, those
relating to protection of the environment, employment opportunity and
employee safety, except where the failure to comply would not individually
or in the aggregate have a Material Adverse Effect. No injunction, order or
other decree has been issued nor any Law enacted which prevents, nor does
any Law prohibit the consummation of the transactions contemplated by any
of the Exchange Offer Documents.
Section IV.15 Conflicting Agreements and Charter Provisions.
Other than the Class Action Settlement Agreement, no Credit Party is a
party to any Contract or is subject to any charter or by-law provision or
any judgment or decree which individually or in the aggregate has or is
reasonably likely to have a Material Adverse Effect. Neither the execution
and delivery of any of the Exchange Offer Documents, nor the issuance of
the Exchange Notes, Exchange Warrants or the Additional Warrants, nor the
fulfillment of or compliance with the terms and provisions hereof or
thereof, will conflict with or result in a breach of the terms, conditions,
or provisions of, or give rise to a right of termination under, or
constitute a default under, or result in the creation of any Lien, or
result in any violation of, the charter or by-laws or other organizational
documents of any Credit Party or any Contract of any Credit Party except
where such conflict, breach, right of termination, default, Lien or
violation would not cause a Material Adverse Effect. No Credit Party is in
default under any outstanding indenture or other debt instrument or with
respect to the payment of the principal of or interest on any outstanding
obligations for borrowed money, or is in default under any of its Contracts
except, in the case of Contracts, where such default would not cause a
Material Adverse Effect.
Section IV.16 Capitalization. The authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, of which, as of the
date hereof, 10,990,290 shares were issued and outstanding. All of the
outstanding shares of Common Stock have been validly issued and are fully
paid and nonassessable. No class of Capital Stock of the Company is
entitled to preemptive rights. Except for the Old Notes and the warrants
and options listed on Schedule 4.16 hereto, there are no outstanding
options, warrants, subscription rights, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any class of Capital Stock of the Company, or Contracts, by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of its Capital Stock or options, warrants or other rights
to purchase or acquire any shares of its Capital Stock. Immediately
following the consummation of the transactions contemplated hereby, the
Company's capitalization will be as set forth in Schedule 4.16. The Company
has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January 1, 1995.
Section IV.17 Disclosure. Neither any Exchange Offer Document nor
any Schedule thereto, nor any certificate furnished to any Purchaser by or
on behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated thereby, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
Section IV.18 Offering of Notes. Neither the Company nor any
Person acting on its behalf has offered the Exchange Notes, Exchange
Warrants or the Additional Warrants or any similar securities of the
Company for sale to, solicited any offers to buy the Exchange Notes,
Exchange Warrants or the Additional Warrants or any similar securities of
the Company from or otherwise approached or negotiated with respect to the
Company with any Person other than the Holders and other "accredited
investors" (as defined in Rule 501(a) under the Securities Act). Neither
the Company nor any Person acting on its behalf has taken or, except as
contemplated hereby will take any action (including, without limitation,
any offering of any securities of the Company under circumstances which
would require the integration of such offering with the offering of the
Exchange Notes, Exchange Warrants or the Additional Warrants under the
Securities Act) which could reasonably be expected to subject the offering,
issuance or sale of the Exchange Notes, Exchange Warrants or the Additional
Warrants to the registration requirements of Section 5 of the Securities
Act or violate the provisions of any securities, "blue sky", or similar law
of any applicable jurisdiction.
Section IV.19 Existing Indebtedness; Future Liens. (a) Schedule
4.19 sets forth a complete and correct list of all outstanding Indebtedness
of the Company and its Subsidiaries as of the date hereof. Neither the
Company nor any of its Subsidiaries is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any
such Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment. None of the Company's 4% convertible
debentures, due January 30, 2000, are outstanding.
(b) No Credit Party has agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be subject to
any Lien.
Section IV.20 Environmental Matters. No Credit Party has
Knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against any Credit Party or
any of its real properties now or formerly owned, leased or operated by any
of them or other assets, alleging any damage to the environment or violation
of any Environmental Laws. Except as otherwise set forth in Schedule 4.20,
(i) no Credit Party has Knowledge of any facts which would give rise to any
claim, public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or affecting real properties now or
formerly owned, leased or operated by any of them or to other assets or their
use; (ii) no Credit Party has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws; and (iii) all buildings on all real properties now
owned, leased or operated by any Credit Party are in compliance with
applicable Environmental Laws; except in each case for such occurrences which
would not cause a Material Adverse Effect.
Section IV.21 Solvency. No Credit Party is, and after giving
effect to the purchase of the Notes and the application of the proceeds
therefrom will be, insolvent within the meaning of Title 11 of the United
States Code or any comparable state law provision.
Section IV.22 Labor Relations. Except as set forth in Schedule
4.22, no unfair labor practice complaint or any complaint alleging sexual
harassment or sex, age, race or other employment discrimination has been
brought during the last three years against any Credit Party before the
National Labor Relations Board, the Equal Employment Opportunity Commission
or any other Governmental Authority, nor is there any charge, investigation
(formal or informal) or complaint pending, or to the Knowledge of each
Credit Party, threatened, against any Credit Party regarding any labor or
employment matter. There have been no governmental audits of the equal
employment opportunity practices of any Credit Party and, to the Knowledge
of each Credit Party, no reasonable basis for any such audit exists. Each
Credit Party (i) is in compliance with all applicable federal, state and
local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of
employment, collective bargaining and wages and hours, except for such
laws, rules and regulations which would not cause a Material Adverse Effect
and (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to its employees.
Section IV.23 Security Documents. Upon proper filing of the
Financing Statements (or assignments thereof) in the offices of the
Secretary of State of Nevada with respect to the Company and upon proper
filing of the Financing Statements (or assignments thereof) in the
locations identified in the Subordinated Guarantee and Security Agreement,
with respect to the domestic Material Subsidiaries, the Liens granted under
the Exchange Offer Documents shall constitute fully perfected security
interests in all right, title and interest of the Company or such domestic
Material Subsidiary, as the case may be, in and to the personal property
therein prior to any other security interests against such property or
interests therein.
Section IV.24 Litigation Settlement. (a) Attached hereto as
Exhibits 4.24A, 4.24B and 4.24C are true and complete copies of the Class
Action Settlement Agreement, the 3M Agreement, and the June 2, 1998 Court
Order approving the Class Action Settlement Agreement and the 3M Agreement
(including the 30-day extension letter thereto).
(b) The plaintiffs in the Breast Implant Litigation have
been preliminarily certified as a Mandatory (non "opt-out" Limited Fund)
Class under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure.
(c) Except as disclosed in the Company's filing in its 1997
Form 10K, the implementation of the Class Action Settlement Agreement will
preclude further litigation by all persons who are within the scope of the
class and whose claims arise during the class period.
(d) Each Credit Party is in full compliance with all of the
terms of the Class Action Settlement Agreement, the 3M Agreement and the
June 2, 1998 Court Order. No Credit Party is in default under or in
violation of the Class Action Settlement Agreement, the 3M Agreement, or
the June 2, 1998 Court Order and all of the foregoing are in full force and
effect with respect to each Credit Party. To the Knowledge of each Credit
Party, each Person (other than a Credit Party) who is a party to the Class
Action Settlement Agreement or the 3M Agreement or who is subject to the
June 2, 1998 Court Order is in full compliance with the terms of such
agreements and such order, are not in default or in violation of such
agreements or such order, and each of the foregoing is in full force and
effect with respect to such parties.
Section IV.25 Brokers or Finders. Other than the $100,000 fee to
Libra Investments and the $200,000 fee to Appaloosa Management, L.P. to be
paid in connection with the New Financing, no agent, broker, investment
banker or other Person is or will be entitled to any broker's fee or any
other commission or similar fee from any Credit Party in connection with
any of the transactions contemplated by this Agreement.
Section IV.26 No Material Adverse Change. Except as set forth in
Schedule 4.26, since January 1, 1997, no event has occurred or failed to
occur which has had Material Adverse Effect.
Section IV.27 Related Party Transactions. (a) Except as set forth
in Schedule 4.27 or as disclosed in the SEC Reports, no Credit Party has
entered into or been a party to any transaction with any Related Party
thereof except in the ordinary course of, and pursuant to the reasonable
requirements of, such party's business and upon fair and reasonable terms
that are at least equivalent to an arms length transaction with a Person
not a Related Party of such party.
(b) Except as set forth in Schedule 4.27 or as disclosed in
the SEC Reports, no Credit Party has entered into any lending or borrowing
transaction with any director, officer or employee of the Company or any of
its Subsidiaries in excess of $10,000 in the aggregate.
Section IV.28 Year 2000. The Company reasonably believes that the
Company and its Subsidiaries will on a timely basis successfully resolve
the risk that computer applications used by the Company and its
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates, commonly referred to as the "Year 2000
Problem", if the Company and its Subsidiaries implement the plans for such
resolution currently in place. The Company reasonably believes that the
cost to the Company and its Subsidiaries of correcting their Year 2000
Problem will not be Material. The Company and its Subsidiaries, on the
basis of inquiries made, believe that each material supplier and customer
of the Company and each of its Subsidiaries will also successfully resolve
on a timely basis the Year 2000 Problem for all of its computer
applications.
Section IV.29 Statements; Omissions. With respect to the
Exchange, the Company has provided to the Holders all material facts
relevant to the Company and the Exchange, and the Company has not made any
untrue statements of a material fact or omitted to state a material fact
necessary in order to make any statements made by the Company, in the light
of the circumstances under which they were made, not misleading
Section IV.30 No Registration Required; Trust Indenture Act.
Subject to compliance by the Holders with the representations and
warranties set forth in Article III, it is not necessary in connection with
the offer, sale and delivery of the Exchange Notes, Exchange Warrants and
Additional Warrants to the Holders and by the Holders to each subsequent
holder in the manner contemplated by this Agreement to register the
Exchange Notes, Exchange Warrants or the Additional Warrants under the Act.
This Agreement, the Exchange Notes Indenture and the transactions
contemplated hereby and thereby are in full compliance with the Trust
Indenture Act of 1939, as amended ("Trust Indenture Act").
ARTICLE V
CONDITIONS PRECEDENT
--------------------
Section V.1 Conditions Precedent to Obligations of the Company. The
obligations of the Company to issue the Exchange Notes and Exchange
Warrants in exchange for each Holder's Old Notes pursuant to this Agreement
are subject, at the Time of Exchange, to the satisfaction of the following
conditions:
(a) The representations and warranties made by each Holder
herein shall be true and correct in all material respects on and
as of the Time of Exchange with the same effect as though such
representations and warranties had been made on and as of the
Time of Exchange and each Holder shall have complied in all
material respects with all agreements and conditions set forth or
contemplated herein that are required to be performed or complied
with by such Holder at or prior to the Time of Exchange. It is
understood and agreed that the Company shall be entitled to
request and receive such certificates or opinions from the Holder
at the Time of Exchange as shall be satisfactory to the Company
to demonstrate compliance with the provisions of this Section
5.1(a)
(b) The issuance of the Exchange Notes and Exchange Warrants
by the Company in exchange for each Holder's Old Notes shall not
be enjoined (temporarily or permanently) at the Time of Exchange
under the laws of any jurisdiction to which the Company is
subject.
(c) The New Financing shall have closed and the Company
shall have received the net proceeds of such financing pursuant
to the terms thereto.
Section V.2 Conditions Precedent to Obligations of the Holders. The
obligations of the Holders to exchange the Holder's Old Notes for the
Exchange Notes and Exchange Warrants is subject, at the Time of Exchange,
to the satisfaction of the following conditions:
(a) The representations and warranties of the Company shall
be true and correct in all material respects on and as of the
Time of Exchange with the same effect as though such
representations and warranties had been made on and as of the
Time of Exchange and the Company shall have complied in all
material respects with all agreements and conditions set forth or
contemplated herein that are required to be performed or complied
with by the Company at or prior to the Time of Exchange.
(b) The issuance of the Exchange Notes and Exchange Warrants
by the Company in exchange for each Holder's Old Notes shall not
be enjoined (temporarily or permanently) at the Time of Exchange
under the laws of any jurisdiction to which the Company is
subject.
(c) The New Financing shall have closed and the Company
shall have received the net proceeds of such financing pursuant
to the terms thereto.
(d) Each Holder shall have received the opinion of the
Company's counsel in the form of Exhibit 5.2
ARTICLE VI
EXPENSES
--------
Section VI.1 Expenses. The Company agrees to pay the following
expenses relating to this Agreement:
(a) the cost of reproducing, executing and delivering this
Agreement and any other documents contemplated hereby or thereby;
(b) the cost of delivering to the Holder the Exchange Notes
and Exchange Warrants issued to the Holder at the Time of
Exchange; and
(c) all other expenses incurred by the Company.
ARTICLE VII
REGISTRATION RIGHTS
-------------------
Section VII.1 Registration Rights. Pursuant to the Exchange Warrants
and the Exchange Offer Registration Rights Agreement, the Company shall
register with the Commission (i) the shares of common stock of the Company
underlying the Exchange Warrants no later than the first anniversary of the
date hereof and (ii) upon demand by at least 50% of the holders in interest
of Exchange Notes, the Exchange Notes.
ARTICLE VIII
MISCELLANEOUS
-------------
Section VIII.1 No Waiver; Modifications in Writing; Survival. No
failure or delay on the part of the Company or a Holder in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to the Company or a
Holder at law or in equity or otherwise. No waiver of or consent to any
departure by the Company or a Holder from any provision of this Agreement
shall be effective unless signed in writing by the parties hereto. Any
amendment, supplement or modification of or to any provision of this
Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by the Company or a Holder from the terms of any provision
of this Agreement, shall be effective only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on the
Company in any case shall entitle the Company to any other or further
notice or demand in similar or other circumstances. The representations,
warranties and covenants of the Company set forth herein shall survive the
Time of Exchange and shall not terminate.
Section VIII.2 Communications. All notices and other communications
provided for or permitted hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally or sent by overnight
delivery service, registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such
other address for any party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof). Notices sent by mail shall be effective two days after mailing,
notices delivered personally shall be effective upon receipt, and notices
sent by overnight delivery service guaranteeing next day delivery shall be
effective on the next business day after timely delivery to the courier:
i) if to a Holder at the most current address given by the
Holder to the Company in writing (the address set forth on the
Holder's signature page hereof to be such address initially);
ii) if to the Company at the following address:
Inamed Corporation
1120 Avenue of the Americas, 4th Floor
New York, New York 10036
Attention: Ilan Reich, Executive Vice President
with copies to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Adam W. Finerman, Esq.
Section VIII.3 Execution in Counterparts. This Agreement may be
executed in counterparts and by the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Agreement.
Section VIII.4 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent holder of an Exchange Note or Exchange Warrant).
Section VIII.5 Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State, without
regard to principles of conflict of laws.
Section VIII.6 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section VIII.7 Certain Taxes. The Company shall pay any sales,
transfer, stamp, documentary or similar taxes incurred in connection with
the transactions contemplated by this Agreement.
Section VIII.8 Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
<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: /s/Ilan K. Reich
-----------------------
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
Ferd L.P.
- -------------------------------------
Name of Holder (Please type or print)
By: /s/ James E. Bolin
-------------------------
(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: c/o Appaloosa Management
----------------------------
26 Main Street, 1st Floor
----------------------------
Chatham, NJ 07928
----------------------------
Social Security Number or Tax I.D. Number
22-3467312
- ----------------------------------------------
Aggregate principal amount of
Old Notes to be delivered by you:
$ ALL
---------------------------------------------
<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: /s/Ilan K. Reich
-----------------------
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
Appaloosa Investment Limited Partnership I
- ------------------------------------------
Name of Holder (Please type or print)
By: /s/ James E. Bolin
-------------------------
(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: c/o Appaloosa Management
----------------------------
26 Main Street, 1st Floor
----------------------------
Chatham, NJ 07928
----------------------------
Social Security Number or Tax I.D. Number
22-3220838
- ----------------------------------------------
Aggregate principal amount of
Old Notes to be delivered by you:
$ ALL
---------------------------------------------
<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: /s/Ilan K. Reich
-----------------------
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
Palomino Fund Ltd.
- -------------------------------------
Name of Holder (Please type or print)
By: /s/ James E. Bolin
-------------------------
(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: c/o Appaloosa Management
----------------------------
26 Main Street, 1st Floor
----------------------------
Chatham, NJ 07928
----------------------------
Social Security Number or Tax I.D. Number
98-0150431
- ----------------------------------------------
Aggregate principal amount of
Old Notes to be delivered by you:
$ ALL
---------------------------------------------
<PAGE>
Schedule 2.1
PRINCIPAL
RECORD NAME OF AMOUNT OF EXCHANGE ADDITIONAL
NOTEHOLDER NOTES WARRANTS WARRANTS
- -------------- ----- -------- --------
Appaloosa Investment $7,102,858 1,330,172 181,143
Ltd. Partnership I
Palamino Fund Ltd. 7,102,857 0 0
Palamino Investment 0 1,330,171 181,143
Holdings Ltd.
Ananconda Opportunity 285,714 53,506 7,286
Fund, L.P.
Atticus 171,428 32,104 4,372
International, Ltd.
Atticus Partners, 41,686 7,807 1,063
L.P.
Atticus Qualified 72,600 13,596 1,852
Partners, L.P.
RH Capital Associates 514,286 96,312 13,116
Number One
Little Wing L.P. 200,000 37,455 5,101
Miles, Roger 57,143 10,701 1,457
GSAM Oracle Fund 1,440,000 269,673 36,724
Oracle Institutional 280,000 52,436 7,141
Partners, L.P.
Oracle Partners, L.P. 1,800,000 337,091 45,905
Quasar International 480,000 89,891 12,241
Partners, C.V.
TOTAL 19,548,572 3,660,915 498,544
<PAGE>
ANNEX A
PROPOSED MODIFICATIONS TO INDENTURE
SELECTED INDENTURE PROVISIONS
AS CURRENTLY IN EFFECT
Section 8.2 Maintenance of PROPOSED MODIFICATION
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
Exhibit B
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SECURITY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. THE INDENTURE UNDER WHICH
THIS SECURITY IS ISSUED HAS NOT BEEN QUALIFIED UNDER THE
TRUST INDENTURE ACT OF 1939, AS AMENDED.
No. $
INAMED CORPORATION
promises to pay to
or registered assigns, the principal sum of Dollars on March 31, 1999, or
at the option of the Company as provided in the Subordinated Indenture,
September 1, 2000.
11.00% SENIOR SUBORDINATED SECURED NOTE DUE MARCH 31, 1999, OR AT THE
OPTION OF THE COMPANY AS PROVIDED IN THE SUBORDINATED INDENTURE,
SEPTEMBER 1, 2000.
Interest Payment Dates: March 31, June 30, September 30 and December 31
Record Dates: March 15, June 15, September 15 and December 31
Dated: November 5, 1998
INAMED CORPORATION
By:
----------------------------------
Authenticated:
SANTA BARBARA BANK & TRUST OR [Authenticating Agent's name]
By: By:
----------------------------- -----------------------------------
Authorized Signature Authorized Signature
<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 the
Security to a Paying Agent to collect principal payments. The Company will
pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The
Company shall pay principal and interest by wire transfer or other
transfers of immediately available funds to the bank account of each holder
thereto.
3. Paying Agent and Registrar. The Company will initially act as
Paying Agent and Registrar. The Company may change the Paying Agent,
Registrar or co-registrar without prior notice. Subject to certain
limitations in the Subordinated Indenture, the Company or any of its
Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Securities under a
Subordinated Indenture dated as of November 5, 1998 (the "Subordinated
Indenture") between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb as in effect on the date of the Indenture (the "Trust
Indenture Act"). The Securities are subject to, and qualified by, all such
terms, certain of which are summarized hereon, and holders are referred to
the Indenture and the Trust Indenture Act for a statement of such terms.
The Securities are secured obligations of the Company limited to
$19,605,715 aggregate principal amount (subject to Section 2.9 of the
Indenture). The Indenture imposes certain limitations on the Company and
the Guarantors, including, subject to certain exceptions, the incurrence of
Indebtedness, the payment of dividends on, and redemption of, the Capital
Stock of the Company, the sale by the Company and certain of its
Subsidiaries of assets, transactions with certain related persons, Liens on
the Collateral securing the Securities and consolidations and mergers and
transfer of all or substantially all the Company's and certain of its
Subsidiaries' assets.
As provided in the Subordinated Indenture, the Securities are
secured by the Lien of the Subordinated Indenture and the other Collateral
Documentation in respect of the Collateral. Each Holder, by accepting a
Security, shall be bound by and entitled to the benefits of the Collateral
Documentation, as the same may be amended from time to time pursuant to the
provisions thereof and of the Indenture. The Securities and each Holder's
rights thereunder and with respect to the Collateral are subject to the
terms of the subordination in favor of all Senior Indebtedness, including
any subordination or intercreditor agreements as may be requested by such
holders of Senior Indebtedness.
5. Redemption. This Security will be subject to optional
redemption, at any time, upon no less than 30 days notice and no more than
30 days notice, at par plus accrued. In such event, this Security will be
redeemed based upon its pro rata share (based upon all originally issued
Securities) of certain escrowed amounts established in connection with the
offering of the Securities as provided in the Subordinated Indenture.
6. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $100,000 and integral
multiples of $25,000 in excess thereof. The transfer of Securities may be
registered, and the Securities may be exchanged, as provided in the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
7. Persons Deemed Owners. The registered holder of a Security
shall be treated as its owner for all purposes.
8. Amendments and Waivers. Subject to certain exceptions, the
Indenture, the Securities and the other documents executed and delivered in
connection therewith may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Securities,
and any existing Default or Event of Default may be waived with the consent
of the Holders of a majority in principal amount of then outstanding
Securities. Without the consent of any Holder, the Indenture, the
Securities or the other documents delivered in connection herewith may be
amended, among other things, to cure any ambiguity, defect or inconsistency
or to make any change that does not adversely affect the rights of any
Holder.
9. Defaults and Remedies. An Event of Default is defined in
Section 4.1 of the Subordinated Indenture. If certain Events of Default
occur and are continuing, the Holders of at least a majority in principal
amount of the then outstanding Securities may declare all the Securities to
be due and payable immediately, except that, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further
action or notice. Holders may not enforce the Indenture, the Securities or
the Collateral Documentation except as provided in the Subordinated
Indenture. The Trustee does not have a right independent of the instruction
of a majority in principal amount of Securities then outstanding to enforce
the Indenture, the Securities or the Collateral Documentation. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, the Holders of a
majority in principal amount of the then outstanding Securities may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on it.
The Trustee may withhold from Holders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines
that withholding notice is in their best interests. The Company must
furnish an annual compliance certificate to the Trustee.
10. Trustee Dealings with the Company. Santa Barbara Bank &
Trust, the Trustee under the Subordinated Indenture, in its individual or
any other capacity, may make loans to, accept deposits from and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
11. No Recourse Against Others. No director, officer, employee or
stockholder, as such, of the Company or any of its Subsidiaries (other than
Company or any other Subsidiary), shall have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the
issue of the Securities.
12. Discharge and Defeasance. Subject to certain conditions, the
Company at any time may terminate some of or all its obligations under the
Securities and the Subordinated Indenture if the Company deposits with the
Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may
be.
13. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
14. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and
UIGIMIA (= Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
INAMED CORPORATION
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Ilan K. Reich
<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 C
INAMED CORPORATION
Issuer
------------------
$19,605,715
Senior Subordinated Secured Notes due 1999
------------------
SUBORDINATED INDENTURE
Dated as of November 5, 1998
------------------
SANTA BARBARA BANK & TRUST
Trustee
<PAGE>
TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN PROVISIONS OF TRUST
INDENTURE ACT OF 1939
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
ss. 310 (a)(1)......................................... 5.10
(a)(2)......................................... 5.10
(a)(3)......................................... 5.1(e)
(a)(4)......................................... N/A
(b)............................................ 5.8, 5.10, 11.6
(c)............................................ N/A
ss.311 (a)................................................. 5.11
(b)............................................ 5.11
(c)............................................ N/A
ss.312 (a)................................................. 2.8
(b)............................................ 11.7
(c)............................................ 11.7
ss.313 (a)................................................. 5.6
(b) (1)........................................ 5.6
(b) (2)........................................ 5.6
(c)............................................ 5.6, 11.6
(d)............................................ 5.6
ss.314 (a)................................................. 7.18, 11.5
(b)............................................ N/A
(c)............................................ 11.2
(d)............................................ 6.3
(e)............................................ 11.2
ss.315 (a)................................................. 5.1(a)
(b)............................................ 5.5, 11.6
(c)............................................ 5.1(b)
(d)............................................ 5.1(c)
(e)............................................ 4.11
ss.316 (a)(last sentence).................................. 2.11
(a) (1) (A).................................... 4.5
(a) (1) (B).................................... 4.4
(a) (2)........................................ N/A
(b)............................................ 4.7
(c)............................................ 6.4
ss.317 (a)(1).............................................. 4.8
(a) (2)........................................ 4.9
(b)............................................ 2.7
ss.318 (a)................................................. 11.1
- -------------------
N/A means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS......................................................1
Section 1.1 Definitions................................................1
Article 2 THE NOTES.......................................................11
Section 2.1 Form and Dating...........................................11
Section 2.2 Title and Terms...........................................12
Section 2.3 Denominations.............................................13
Section 2.4 Execution, Authentication and Delivery....................13
Section 2.5 Temporary Notes...........................................14
Section 2.6 Registrar and Paying Agent................................14
Section 2.7 Paying Agent to Hold Money in Trust.......................14
Section 2.8 Noteholder Lists..........................................15
Section 2.9 Transfer and Exchange.....................................15
Section 2.10 Replacement Notes.........................................15
Section 2.11 Treasury Notes............................................16
Section 2.12 Payment of Interest; Interest Rights Preserved............16
Section 2.13 Persons Deemed Owners.....................................17
Section 2.14 Cancellation..............................................17
Section 2.15 Computation of Interest...................................18
Section 2.16 Extension of Maturity.....................................18
Article 3 SATISFACTION, DISCHARGE AND DEFEASANCE..........................18
Section 3.1 Satisfaction and Discharge of Indenture...................18
Section 3.2 Application of Trust Money................................19
Section 3.3 Reinstatement.............................................19
Article 4 REMEDIES........................................................19
Section 4.1 Events of Default.........................................19
Section 4.2 Acceleration of Maturity; Rescission and Annulment........21
Section 4.3 Other Remedies............................................21
Section 4.4 Waiver of Past Defaults...................................21
Section 4.5 Control by Majority.......................................21
Section 4.6 Limitation on Suits.......................................22
Section 4.7 Rights of Holders to Receive Payment......................22
Section 4.8 Collection Suit by Trustee................................22
Section 4.9 Trustee May File Proofs of Claim..........................22
Section 4.10 Priorities................................................23
Section 4.11 Undertaking for Costs.....................................23
Section 4.12 Rights and Remedies Cumulative............................23
Section 4.13 Delay or Omission Not Waiver..............................24
Section 4.14 Waiver of Stay or Extension Laws..........................24
Article 5 THE TRUSTEE.....................................................24
Section 5.1 Certain Duties and Responsibilities.......................24
Section 5.2 Rights of Trustee.........................................26
Section 5.3 Individual Rights of Trustee..............................26
Section 5.4 Trustee's Disclaimer......................................26
Section 5.5 Notice of Defaults........................................27
Section 5.6 Reports by Trustee to Holders.............................27
Section 5.7 Compensation and Indemnity................................27
Section 5.8 Replacement of Trustee....................................28
Section 5.9 Successor Trustee by Merger, etc..........................29
Section 5.10 Eligibility; Disqualification.............................29
Section 5.11 Preferential Collection of Claims Against Company.........29
Section 5.12 Appointment of Authenticating Agent.......................29
Article 6 AMENDMENTS......................................................30
Section 6.1 Without Consent of Holders................................30
Section 6.2 With Consent of Holders...................................30
Section 6.3 Compliance with Trust Indenture Act.......................31
Section 6.4 Revocation and Effect of Consents.........................31
Section 6.5 Notation on or Exchange of Notes..........................32
Section 6.6 Trustee Protected.........................................32
Article 7 COVENANTS.......................................................32
Section 7.1 Payment of Principal and Interest.........................32
Section 7.2 Maintenance of Office or Agency...........................32
Section 7.3 Money for Note Payments to Be Held in Trust...............33
Section 7.4 Existence.................................................34
Section 7.5 Maintenance of Properties.................................34
Section 7.6 Payment of Taxes and Other Claims.........................34
Section 7.7 Limitation on Indebtedness................................35
Section 7.8 Limitation on Encumbrances................................35
Section 7.9 Limitation on Related Party Transactions..................35
Section 7.10 Subsidiary Guarantees.....................................35
Section 7.11 Restricted Investments....................................36
Section 7.12 Operating Profit..........................................36
Section 7.13 Tangible Assets...........................................37
Section 7.14 Statement by Officers as to Default.......................37
Section 7.17 Sale of Assets............................................38
Section 7.18 Financial Statements and Information......................38
Section 7.19 Sale and Leaseback Transactions...........................39
Section 7.20 Insurance; Damage to or Destruction of Collateral.........39
Section 7.21 Compliance with Laws......................................39
Section 7.22 Waiver of Certain Covenants...............................40
Article 8 REDEMPTION OF NOTES.............................................40
Section 8.1 Notices to Trustee........................................40
Section 8.2 Selection of Notes to be Redeemed.........................40
Section 8.3 Notice of Redemption......................................40
Section 8.4 Effect of Notice of Redemption............................41
Section 8.5 Deposit of Redemption Price...............................41
Section 8.6 Notes Redeemed in Part....................................42
Section 8.7 Optional Redemption.......................................42
Section 8.8 Mandatory Redemption......................................42
Article 9 SUBORDINATION...................................................42
Section 9.1 Agreement to Subordinate..................................42
Section 9.2 Certain Definitions.......................................42
Section 9.3 Liquidation; Dissolution; Bankruptcy......................43
Section 9.4 Default on Senior Indebtedness............................43
Section 9.5 Acceleration of Notes.....................................44
Section 9.6 When Distribution Must Be Paid Over.......................44
Section 9.7 Notice by Company.........................................44
Section 9.8 Subrogation...............................................44
Section 9.9 Relative Rights...........................................44
Section 9.10 Subordination May Not be Impaired by Company..............45
Section 9.11 Distribution or Notice to Representative..................45
Section 9.12 Rights of Trustee and Paying Agent........................45
Section 9.13 Authorization to Effect Subordination.....................45
Section 9.14 Trustee Not Fiduciary for Holders of Senior Indebtedness..46
Section 9.15 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights..........................46
Section 9.16 Article Applicable to Paying Agents.......................46
Section 9.17 Amendment.................................................46
Article 10 SECURITY........................................................46
Section 10.1 Security..................................................46
Section 10.2 Recording, etc............................................47
Section 10.3 Requesting Release of Collateral..........................48
Section 10.4 Reliance on Opinion of Counsel............................49
Section 10.5 Purchaser May Rely........................................49
Section 10.6 Payment of Expenses.......................................49
Section 10.7 Suits to Protect the Collateral...........................49
Section 10.8 Trustee's Duties..........................................49
Article 11 MISCELLANEOUS...................................................50
Section 11.1 Trust Indenture Act.......................................50
Section 11.2 Compliance Certificates and Opinions......................50
Section 11.3 Form of Documents Delivered to Trustee....................50
Section 11.4 Acts of Holders...........................................51
Section 11.5 Notices, Etc., to Trustee and Company.....................52
Section 11.6 Notice to Holders; Waiver.................................52
Section 11.7 Rules by Trustee and Agents...............................52
Section 11.8 Communications by Holders With Other Holders..............52
Section 11.9 Effect of Headings and Table of Contents..................53
Section 11.10 No Recourse Against Others................................53
Section 11.11 Successors and Assigns....................................53
Section 11.12 Separability Clause.......................................53
Section 11.13 Benefits of Indenture.....................................53
Section 11.14 Governing Law.............................................53
Section 11.15 Legal Holidays............................................53
Section 11.16 Counterparts..............................................54
Section 11.17 No Adverse Interpretation of Other Agreements.............54
Section 11.18 Consent to Jurisdiction and Service of Process............54
Section 11.19 Waiver of Jury Trial......................................54
<PAGE>
INDENTURE, dated as of November 5, 1998 between Inamed
Corporation, a corporation duly organized and existing under the laws of
the State of Florida (the "Company"), having its principal office at 3800
Howard Hughes Parkway, Suite 900, Las Vegas, Nevada and Santa Barbara Bank
& Trust, a bank duly organized and existing under the laws of the State of
California, as Trustee (the "Trustee").
The Company's 11% Senior Subordinated Secured Notes due
March 31, 1999 (the "Notes") are being issued in exchange (the "Exchange")
for the Company's 11% Secured Convertible Notes due 1999 (the "Old Notes")
which were issued pursuant to the Indenture dated as of January 2, 1996
between the Company and the Trustee (the "Old Indenture").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
-----------
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of this instrument; and
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article 9, are defined in that
Article.
"Act" when used with respect to any Holder, has the meaning
specified in Section 11.4.
"Additional Warrants" means Warrants to acquire up to
500,000 shares of Common Stock with an exercise price of $7.50 per share.
"Affiliate" shall have meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations of the Exchange Act. "Affiliate"
shall also include partners of a Person. Notwithstanding the foregoing,
"Affiliate" shall not include the limited partners of any Holder or any
limited partners of a limited partner of any Purchaser.
"Agent" means any Registrar, Paying Agent, Conversion Agent,
Authenticating Agent or co-registrar.
"Authenticating Agent" means any Person authorized by the
Trustee to act on behalf of the Trustee to authenticate the Notes.
"Bankruptcy Law" means Title 11, United States Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease" shall mean, with respect to any Person,
any lease or any other agreement for the use of property which, in
accordance with generally accepted accounting principles, should be
capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligations" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Capital Stock" means, in the case of the Company, any and
all shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Class Action Settlement Agreement" means the Settlement
Agreement dated April 2, 1998 which provides, among other thing, for the
settlement of certain claims against the Company arising out of the
litigation in the United States District Court for the northern District of
Alabama, Southern Division, stylized as "Silicone Gel Breast Implant
Products Liability Litigation (MDL926) (the "Breast Implant Litigation").
"Collateral" means all real and personal property and
interests in real and personal property including, without limitation,
Intellectual Property, rights under leases and royalty rights and
agreements, now owned or hereafter acquired by the Company or its Material
Subsidiaries in or upon which a Lien is granted or made under the
Collateral Documentation.
"Collateral Agent" means Appaloosa Management L.P.
"Collateral Documentation" means the Subordinated Guarantee
and Security Agreements, the Subordinated Guarantee Agreements, the
Subordinated Security Agreement, the Financing Statements, the Intercompany
Notes, the Intercreditor Agreement and the endorsements thereof to the
Trustee, and all other deeds of trust, assignments, endorsements, pledged
stock, collateral assignments and other instruments, documents, agreements
or conveyances at any time creating or evidencing Liens or assigning Liens
to the Trustee, to secure the obligations of the Company or any of its
Subsidiaries hereunder and under the Notes and the Exchange Offer
Registration Rights Agreement.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities Exchange Act
of 1934, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
"Common Stock" includes any stock of any class of the
Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to
redemption by the Company.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board,
its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Consolidated Tangible Assets" shall mean, as at any date
for any Person, the sum for such Person and its Subsidiaries (determined on
a consolidated basis without duplication in accordance with GAAP), of the
following:
(a) the book value of all assets of the Company as reflected
on its most recent balance sheet, minus -----
(b) the sum of the following: the book value of all assets
which should be classified as intangibles, including goodwill, minority
interests, research and development costs, trademarks, trade names,
copyrights, patents and franchises, unamortized debt discount and expense,
all reserves and any write-up in the book value of assets resulting from a
revaluation of such assets subsequent to December 31, 1997.
"Corporate Trust Office" means the principal office of the
Trustee in Santa Barbara, California at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Credit Party" shall mean each of the Company and each of
its Subsidiaries.
"Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"Default" means an event that with notice or lapse of time
or both would become an Event of Default.
"Defaulted Interest" has the meaning specified in Section
2.12.
"Delaware Charter" the Certificate of Incorporation which
will be in effect upon the effectiveness of the merger to effectuate the
Company's Reincorporation Merger.
"Documents" means the Securities Exchange Agreement, the
Indenture, the Notes, the Collateral Documentation, the Subordinated
Guarantee Agreement and all other security agreements, the Intercreditor
Agreement, the Registration Rights Agreement, mortgages, deeds of trust,
financing statements, lease assignments, guaranties and other agreements
and instruments, together with any assignments, endorsements of, exhibits,
schedules or other attachments to all of the foregoing, delivered in
connection with the transactions contemplated hereby or thereby, all as
amended, supplemented or otherwise modified from time to time.
"Domestic Guarantors" means the Subsidiaries of the Company
that shall have issued to the Trustee for the benefit of the Holders
Guarantee and Security Agreements relating to the Company's obligations
under this Indenture and the Notes.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or contract between any Credit Party or any ERISA Affiliate and any
employee pursuant to which any Credit Party or any ERISA Affiliate has or
may have any liability contingent or otherwise.
"Environmental Laws" means any and all federal, state,
local, and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems.
"Equity Interests" means any Capital Stock, partnership
interest, joint venture interest or other equity interest or warrants,
options or other rights to acquire any Capital Stock, partnership interest,
joint venture interest or other equity interest.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" means each business or entity which is a
member of a "controlled group of corporations," under "common control" or
an "affiliated service group" with the Company within the meaning of
Sections 414(b), (c) or (m) of the Code, or required to be aggregated with
the Company under Section 414(o) of the Code, or is under "common control"
with the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" has the meaning specified in Section 4.1.
"Exchange Warrants" means the warrants to be issued by the
Company to the holders of the Notes in connection with the Exchange.
"Financing Statements" means Form UCC-1 financing statements
to be filed in all jurisdictions necessary or desirable in order to perfect
the Trustee's security interest in the Collateral and shall include any
Form UCC-1 financing statements assigned to the Trustee and filings to be
made in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"Foreign Guarantors" means the Subsidiaries or Affiliates of
the Company who execute and deliver Subordinated Guarantee Agreements.
"GAAP" shall mean U.S. generally accepted accounting
principles.
"Guarantors" means Domestic Guarantors and Foreign
Guarantors.
"Holder" means a Person in whose name a Note is registered
in the Note Register.
"Indebtedness" shall mean, with respect to any Person, (i)
all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (iv) all
obligations of such Person issued or assumed as the deferred purchase price
of property or services (other than accounts payable to suppliers and
similar accrued liabilities incurred in the ordinary course of business and
paid in a manner consistent with industry practice), (v) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien or
security interest on property owned or acquired by such Person whether or
not the obligations secured thereby have been assumed, (vi) all Capitalized
Lease Obligations of such Person, (vii) all Guarantees of such Person,
(viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account
of such Person, (ix) all obligations arising out of foreign exchange
contracts, and (x) all obligations arising out of interest rate and
currency swap agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other agreements or
arrangements designed to provide protection against fluctuations in
interest or currency exchange rates.
"Indenture" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Intercompany Notes" means the notes from Subsidiaries or
Affiliates of the Company in favor of the Company in the form of Exhibit E,
as the same may be amended, modified or supplemented from time to time in
accordance with their terms, and all other promissory notes or other
instruments evidencing Indebtedness of Affiliates or Subsidiaries of the
Company to the Company between the Company and its Affiliates.
"Intercreditor Agreement" shall mean the agreement dated as
of the date hereof, between the Trustee and the Collateral Agent.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Notes.
"Knowledge", with respect to the Company, shall mean the
actual knowledge of each member of the board of directors of the Company
and each officer of the Company, and the knowledge that any of the
foregoing persons would have after due and reasonable inquiry and
investigation.
"Lien" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"Material Adverse Effect" shall mean a material adverse
effect on (a) the property, business, prospects (including, without
limitation, the prospects for the settlement of the Breast Implant
Litigation), operations, earnings, assets, liabilities or the condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business, (b) the ability
of any Credit Party to perform its obligations under any of the Transaction
Documents to which it is a party, (c) the validity or enforceability of any
of the Transaction Documents or (d) the rights, remedies, powers and
privileges of the Holders under any of the Transaction Documents.
"Material" shall mean material in relation to the
properties, business, prospects, operations, earnings, assets, liabilities
or condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the property, business, prospects (including, without
limitation, the prospects for the settlement of the Breast Implant
Litigation), operations, earnings, assets, liabilities or the condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business, (b) the ability
of any Credit Party to perform its obligations under any of the Transaction
Documents to which it is a party, (c) the validity or enforceability of any
of the Transaction Documents, (d) the rights, remedies, powers and
privileges of the Holders under any of the Transaction Documents or (e) the
timely payment or performance of the Secured Obligations.
"Material Subsidiaries" at any time, shall mean any
Subsidiary of the Company, other than any Non-Significant Subsidiary of the
Company.
"Maturity" used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration or otherwise.
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with
GAAP on a consolidated basis as reflected in the financial statements
furnished to the Holders in accordance with Section 7.18.
"Non-Significant Subsidiary" at any time, shall mean any
Subsidiary of the Company which at such time has total assets (including
the total assets of any Subsidiaries) that have a fair market value of, or
for which the Company or any of its Subsidiaries shall have paid (including
the assumption of Indebtedness) in connection with the acquisition of
capital stock (or other equity interests) or the total assets of such
Subsidiary, less than $100,000, provided that the total assets of all
Non-Significant Subsidiaries at any time does not exceed 5% of the total
assets of the Company and its Subsidiaries on a consolidated basis.
"Note" or "Notes" means the 11.00% Senior Subordinated
Secured Notes due March 31, 1999 or, at the option of the Company exercised
as provided herein, September 1, 2000.
"New Warrants" means the warrants to purchase 590,000 shares
of Common Stock to be issued by the Company to the parties listed on
Exhibit A of the Note Purchase Agreement.
"Note Purchase Agreement" means the note purchase agreement,
dated as of September 30, 1998, between the Company, the parties listed on
Exhibit A thereto and the Collateral Agent.
"Note Register" and "Registrar" have the respective meanings
specified in Section 2.6.
"Officers' Certificate" means a certificate signed by any
two officers of the Company, one of whom must be the Chairman of the Board,
the President, the Chief Executive Officer, the Treasurer or a Vice
President of the Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding," shall mean when used with reference to the
Notes at a particular time, all Notes theretofore issued as provided in
this Indenture, except (i) Notes theretofore reported as lost, stolen,
damaged or destroyed, or surrendered for transfer, exchange or replacement,
in respect to which replacement Notes have been issued, (ii) Notes
theretofore paid in full, and (iii) Notes therefore canceled by the
Company, except that, for the purpose of determining whether Holders of the
requisite principal amount of Notes have made or concurred in any waiver,
consent, approval, notice or other communication under this Indenture,
Notes registered in the name of, or owned beneficially by, the Company or
any of its Subsidiaries of any thereof, shall not be deemed to be
outstanding.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Notes on behalf of the Company.
"Permitted Indebtedness" means, without duplication, any of
the following Indebtedness of the Company or any of its Subsidiaries, as
the case may be: (i) $25.5 million aggregate principal amount of 6.00%
subordinated notes to be issued pursuant to the Class Action Settlement
Agreement having terms reasonably acceptable to the Holders of at least a
majority in principal amount of Outstanding Notes; (ii) Indebtedness and
obligations under the Notes and the Exchange Notes; (iii) any other
Indebtedness and obligations outstanding on the date hereof and set forth
on Schedule 1 hereof; (iv) Indebtedness of a domestic Subsidiary of the
Company to the Company as long as such Subsidiary has executed the
Subordinated Guarantee and Security Agreement and such Indebtedness is
evidenced by Intercompany Notes and the Intercompany Notes are pledged to
the Collateral Agent as Collateral; and (v) Indebtedness which refinances
any of the Indebtedness specified herein, provided that the terms of such
refinancing Indebtedness shall not have a Material Adverse Effect (in
comparison to the terms of the Indebtedness being refinanced), such
refinancing Indebtedness shall be unsecured and subordinate in right of
payment to the Notes, shall mature at least one year after all of the Notes
have matured and shall have such other terms as are reasonably acceptable
to the Holders of at least a majority in principal amount of Outstanding
Notes.
"Permitted Liens" means (i) Liens existing on the date
hereof and set forth in Schedule 2 hereof; (ii) Liens (other than any Lien
imposed under ERISA or any Environmental Laws) for taxes, assessments or
charges of any governmental authority for claims not yet due or which are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with the provisions of GAAP and enforcement thereof is stayed; (iii) Liens
of landlords, carriers, warehousemen, mechanics, materialmen and other
Liens (other than any Lien imposed under ERISA) not voluntarily granted for
amounts not yet due or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with the provisions of GAAP, and enforcement
thereof is stayed; (iv) Liens (other than any Lien imposed under ERISA),
incurred or deposited made in the ordinary course of business, including
without limitation, surety bonds and appeal bonds, in connection with
workers' compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of indebtedness), statutory
obligations and other similar obligations or arising as a result of
progress payments under government contracts; (v) easements (including
without limitation reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, encroachments, variations
and other similar restrictions, charges or encumbrances (whether or not
recorded) and other Liens incurred in the ordinary course of business,
which do not secure indebtedness or the deferred purchase price of any
asset and which do not interfere materially with the ordinary conduct of
the business of the Company and which do not materially detract from the
value of the property to which they attach or materially impair the use
thereof to the Company; (vi) building restrictions, zoning laws and other
statutes, laws, rules, regulations, ordinances and restrictions, and any
amendments thereto, now or at any time hereafter adopted by any
governmental authority having jurisdiction; (vii) purchase money liens to
the extent such liens secure Permitted Indebtedness and (viii) Liens
granted in connection with the Note Purchase Agreement.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A- l or better or
P- l by Standard & Poor's Corporation or Moody's Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
(d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company or any of its Subsidiaries; and (e) loans or
advances of money by the Company to its domestic Subsidiaries that have
executed the Subordinated Guarantee and Security Agreement as long as such
loans or advances are evidenced by Intercompany Notes and the Intercompany
Notes are pledged to the Trustee as Collateral.
"Person" or "person" means any individual, corporation,
company, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Note" of any particular Note means every
previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note.
"Proxy Statement" shall have the meaning specified in
Section 7.4.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not and would not be, by its terms, or by the terms of any
security into which it is convertible or exchangeable, or upon the
happening of an event, required to be repurchased, including at the option
of the holder, in whole or in part, and that does not and will not have,
upon the happening of an event, a redemption or similar payment due, on or
prior to the Stated Maturity of the Notes.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the March 15, June 15, September 15 or December
15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Reincorporation Merger" shall mean the merger, if
consummated, the primary purpose of which is to effect the reincorporation
of the Company in the state of Delaware as described in the Proxy
Statement.
"Related Parties" shall mean Affiliates of the Company or
any of its Subsidiaries and directors or officers of the Company or any of
its Subsidiaries (including any family members of directors and officers).
"Responsible Officer" when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or
any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"Required Holders" means, at any time, the holders of at
least 51% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"Sale-and-Leaseback Transaction" shall mean a transaction or series of
transactions pursuant to which the Company or any of its Subsidiaries shall
sell or transfer to any Person (other than the Company or a Subsidiary of
the Company) any property, whether now owned or hereafter acquired, and, as
part of the same transaction or series of transactions, the Company or any
of its Subsidiaries shall rent or lease as lessee (other than pursuant to a
Capitalized Lease), or similarly acquire the right to possession or use of,
such property or one or more properties which it intends to use for the
same purpose or purposes as such property.
"SEC" shall mean the United Stated Securities and Exchange
Commission.
"Senior Indebtedness" means (i) the Company's 10.00% Senior
Secured Notes issued pursuant to the Note Purchase Agreement and (ii)
refinancings, deferrals, refundings, replacements, extensions and renewals
of or amendments, modifications or supplements to the Senior Indebtedness,
not to exceed $8,000,000 in principal amount (excluding capitalized
interest) in aggregate.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as
the fixed date on which the principal of such Note or such 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.
"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 " 77aaa-77bbbb), as amended, as in effect on the date of this
Indenture, unless and until such time as this Indenture is qualified under
the Trust Indenture Act, and thereafter as in effect on the date on which
this Indenture is qualified under the Trust Indenture Act, except as
otherwise provided in Section 6.3.
"U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the timely payment
of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt; provided that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"U.S. Legal Tender" means such coin or currency of the
United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
"Vice President" when used with respect to the Company or
the Trustee, means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
ARTICLE 2
THE NOTES
SECTION 2.1 Form and Dating.
---------------
The Notes shall be substantially in the form of Exhibit A,
which is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall
be dated the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture, and to
the extent applicable, the Company, the Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such
terms and provisions and to be bound thereby.
SECTION 2.2 Title and Terms.
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The aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $19,605,715,
except for Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Notes pursuant to Sections
2.5, 2.9, 2.10 or 6.5.
The Notes shall be known and designated as the "11% Senior
Subordinated Secured Notes due 1999" of the Company. Their Stated Maturity
shall be March 31, 1999, except as provided in Section 2.16 and, except as
otherwise provided below, they shall bear interest at the rate of 11% per
annum, from the most recent interest payment date of the Old Indenture
prior to the date of the Indenture or the most recent Interest Payment Date
to which interest has been paid or duly provided for, as the case may be,
payable quarterly on March 31, June 30, September 30 and December 31,
commencing December 31, 1998, until the principal thereof is paid or made
available for payment.
Notwithstanding the foregoing
(i) if during any period in which the Notes bear
interest at the rate of 11% per annum (an "Eleven
Percent Period"), the daily volume weighted
average sale price as of the close of trading, on
the display on the applicable Bloomberg Financial
Markets Service Screen (or if such price is not
reported on the Bloomberg Financial Markets
Service Screen, then such price shall be
determined as reported by such other reputable
reporting service reasonably satisfactory to the
Company and the Purchaser) of the Common Stock
(the "Daily Market Price") is greater than $11.00
per share for each of 90 consecutive days (such 90
day period not having commenced until after all
registration statements have gone effective with
respect to the shares issued or issuable on
exercise of the Exchange Warrants, the New
Warrants and the Additional Warrants), then the
interest rate at which the Notes shall bear
interest for the 90 day period beginning on the
first day of the next fiscal quarter of the
Company after such 90 day period, shall be 10.00%
(any such period in which the interest rate is
10.00%, a "Ten Percent Period").
(ii) if during a Ten Percent Period:
(A) the Daily Market Price falls below $11.00 on
any given day, then commencing on the first
day after such Ten Percent Period, the
interest rate at which the Notes shall bear
interest shall be 11.00%.
(B) the Daily Market Price does not fall below
$11.00 on any given day, then the interest
rate at which the Notes shall bear interest
for the 90 day period beginning on the day
after such Ten Percent Period shall be 9.00%
(any such period in which the interest rate
is 9.00%, a "Nine Percent Period").
(iii)if during a Nine Percent Period:
(A) the Daily Market Price falls below $11.00,
then commencing on the first day after such
Nine Percent Period, the interest rate at
which the Notes shall bear interest shall be
10.00%.
(B) the Daily Market price does not fall below
$11.00, then the interest rate at which the
Notes shall bear interest for the 90 day
period beginning on the day after such Nine
Percent Period shall remain at 9.00%.
The principal of and interest on the Notes shall be payable
at the office or agency of the Company in Las Vegas, Nevada maintained for
such purpose and at any other office or agency maintained by the Company
for such purpose; provided, however, that payment of interest shall be made
by wire transfer or other transfers of immediately available funds to the
bank account of the Person entitled thereto as such address shall appear in
the Note Register.
The Notes shall be redeemable prior to their maturity as
provided in Article 8.
The Notes shall be subordinated in right of payment to
Senior Indebtedness as provided in Article 9.
SECTION 2.3 Denominations.
-------------
The Notes shall be issuable only in registered form without
coupons and only in denominations of $100,000 and any integral multiple of
$25,000 in excess thereof, except when such other multiple is required in
connection with the Exchange.
SECTION 2.4 Execution, Authentication and Delivery.
--------------------------------------
The Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President, its Chief Executive Officer or one of
its Vice Presidents, under its corporate seal reproduced thereon attested
by its Secretary or one of its Assistant Secretaries. The signature of any
of these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Notes or did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Notes; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Notes as in this Indenture provided and not otherwise.
No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Note a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.5 Temporary Notes.
---------------
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Notes in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable
for definitive Notes upon surrender of the temporary Notes at any office or
agency of the Company designated pursuant to Section 8.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Notes the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes of
authorized definitions. Until so exchanged the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.6 Registrar and Paying Agent.
--------------------------
The Company shall maintain or cause to be maintained in such
locations as it shall determine, which may be the Corporate Trust Office,
an office or agency: (i) where Notes may be presented for registration of
transfer or for exchange ("Registrar"); (ii) where Notes may be presented
for payment ("Paying Agent"); and (iii) where notices and demands to or
upon the Company in respect of Notes and this Indenture may be served by
the Holders of the Notes. The Registrar shall keep a register of the Notes
and of their transfer and exchange (the "Note Register"). The Company may
appoint one or more co-registrars or one or more additional paying agents.
The term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent, Registrar or co-registrar without prior
notice. The Company shall notify the Trustee of the name and address of any
Agent not a party to this Indenture and shall enter into an appropriate
agency agreement with any Registrar, Paying Agent or co-registrar not a
party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company or any of its
subsidiaries may act as Paying Agent, Registrar or co-registrar. If the
Company fails to appoint or maintain another entity as Registrar, Paying
Agent or fails to notify the Trustee of such person, the Trustee shall act
as such, and the Trustee shall be entitled to appropriate compensation in
accordance with Section 5.7.
The Company initially appoints the Company as Registrar,
Paying Agent and agent for service of notices and demands in connection
with the Notes.
SECTION 2.7 Paying Agent to Hold Money in Trust.
------------------------------------
Not later than each due date of the principal of and
interest on any Notes, the Company shall deposit with the Paying Agent
money sufficient to pay such principal and interest so becoming due.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal or interest on the Notes (whether such money
has been paid to it by the Company, the Guarantors or any other obligor on
the Notes or any other Person), and will notify the Trustee of any default
by the Company (or the Guarantors or any other obligor on the Notes or any
other Person) in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
SECTION 2.8 Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names
and addresses of Holders and, in the event and so long as this Indenture is
qualified under the Trust Indenture Act, shall otherwise comply with
Section 312(a) of the Trust Indenture Act. If the Trustee is not the
Registrar, the Company, the Guarantors, the Foreign Guarantors and any
other obligor shall furnish to the Trustee on or before each Interest
Payment Date and at such other times as the Trustee may request in writing,
but in any event at least quarterly, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders and, in the event and so long as this Indenture is qualified under
the Trust Indenture Act, the Company shall otherwise comply with Section
312(a) of the Trust Indenture Act.
SECTION 2.9 Transfer and Exchange.
---------------------
(a) When Notes are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for
an equal principal amount of securities of other denominations, the
Registrar shall register the transfer or make the exchange if its
requirements for such transactions are met (including, if required by the
Company, an opinion of counsel to the Holder requesting transfer that an
exemption from registration under the Securities Act of 1933, as amended,
is available for such transfer). To permit registrations of transfer and
exchanges, the Company shall issue and the Trustee shall authenticate Notes
at the Registrar's request. No service charge shall be made to the Holder
for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or similar
governmental charge payable upon exchanges pursuant to Section 2.5 or 6.5)
(b) The Company shall not be required to issue, register the
transfer of or exchange Notes following the redemption date, except the
unredeemed portion of any Note being redeemed in part.
SECTION 2.10 Replacement Notes.
-----------------
If the Holder of a Note claims that the Note has been
mutilated, destroyed, lost or stolen, then, in the absence of notice to the
Company or Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. In case any Note
which has matured or is about to mature, or has been called for redemption
pursuant to Section 8 shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such
payment shall furnish to the Company, to the Trustee and, if applicable, to
the Authenticating Agent such security or indemnity as may be required by
them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in case of destruction,
loss or theft, evidence satisfactory to the Company, the Trustee and, if
applicable, any Paying Agent of the destruction, loss or theft of such Note
and of the ownership thereof. If required by the Trustee or the Company, an
indemnity bond must be provided which is sufficient in the judgment of both
to protect the Company, the Trustee, any Agent or any Authenticating Agent
from any loss which any of them may suffer if a Note is replaced. Upon the
issuance of any new Note under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every replacement Note is an additional obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Note shall
be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.
SECTION 2.11 Treasury Notes.
--------------
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes
owned by the Company, the Guarantors or any other obligor or an Affiliate
of the Company, shall be considered as though they are not Outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes
which the Trustee knows are so owned shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor.
SECTION 2.12 Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Notes (or their
respective Predecessor Notes) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Note and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as
it appears in the Note Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names
the Notes (or their respective Predecessor Notes) are registered at
the close of business on such Special Record Date and shall no longer
be payable pursuant to the following Clause (2).
(2) The Company shall make payment of any Defaulted
Interest by wire transfer or other transfer of immediately available
funds.
Subject to the foregoing provisions of this Section, each
Note delivered under this Indenture upon registration of transfer of or in
exchange for in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13 Persons Deemed Owners.
---------------------
Prior to the presentment of a Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Note is registered as the
owner of such Note for the purpose of receiving payment of principal of and
(subject to Section 2.12) interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary.
SECTION 2.14 Cancellation.
------------
All Notes surrendered for payment, redemption, registration
of transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly canceled by the Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be disposed of as directed by a Company
Order. Subject to Section 8.6, the Trustee shall cancel and the Company
shall not reissue any Notes that have been surrendered for payment,
redemption or conversion.
SECTION 2.15 Computation of Interest.
-----------------------
Interest on the Notes shall be computed on the basis of a
year of twelve 30-day months.
SECTION 2.16 Extension of Maturity.
-----------------------
At the Company's option, at any time at least thirty days
prior to March 31, 1999, the Stated Maturity may be extended until
September 1, 2000 by the Company by delivery of a notice to the Holders
pursuant to the provisions of Section 11.6, which notice shall state that
the Stated Maturity of the Notes is being extended until September 1, 2000,
so long as no Event of Default shall have occurred and be continuing at the
time of delivery of such notice.
ARTICLE 3
SATISFACTION, DISCHARGE AND DEFEASANCE
SECTION 3.1 Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except
as to any surviving rights of registration of transfer or exchange of the
Notes herein expressly provided for and except as provided in Section 3.3),
and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when:
(1) either
(A) all Notes theretofore authenticated and
delivered (other than (i) Notes which have been mutilated,
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.10 and (ii) Notes for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust,
pursuant to the terms of this Indenture) have been delivered
to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year,
and the Company, in the case of (i) or (ii) above, has
deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to
pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the
case of Notes which have become due and payable) or to the
Stated Maturity;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.7, the
obligations of the Trustee to any Authenticating Agent under Section 5.12
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 3.2 and the last paragraph of Section 7.3 shall survive.
SECTION 3.2 Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section
7.3, all money deposited with the Trustee pursuant to Section 3.1 shall be
held in trust and applied by it, in accordance with the provisions of the
Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal
and interest for whose payment such money has been deposited with the
Trustee.
SECTION 3.3 Reinstatement.
-------------
If (i) the Trustee or Paying Agent is unable to apply any
money in accordance with Section 3.2 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application and (ii) the Holders of at least a majority in
principal amount of Outstanding Notes so request by written notice to the
Trustee, the Company's and the Guarantors' obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 3.1 until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 3.2.
ARTICLE 4
REMEDIES
SECTION 4.1 Events of Default.
------------------
Event of Default," wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 5
days; or
(b) default in the payment of any principal of any Note when it
becomes due and payable; or
(c) default in the performance of any agreement or covenant in,
or provision of, this Indenture, the Notes, or the other documents executed
and delivered in connection with this Indenture (including any Transaction
Document) and to which the Company or any of its Subsidiaries is a party
(other than a covenant or a default in whose performance is elsewhere in
this Section specifically dealt with), which default continues for 5 days
following the Company's receipt of notice (or, if the Company fails to
provide notice pursuant to Section 7.18(d), such default shall be
immediate), or any representation or warranty made in any document executed
and delivered in connection with this Indenture (including any Transaction
Document) was false in any material respect on the date as of which made or
deemed made; or
(d) a default under any mortgage, indenture, instrument or
agreement other than under clause (c) above under which there may be issued
or by which there may be secured or evidenced any Indebtedness of any
Credit Party, whether such Indebtedness now exists or shall be created
hereafter, if the holder or holders of at least $500,000 in principal
amount of such Indebtedness cause such $500,000 (or more) of principal
amount of Indebtedness to become due and payable prior to its stated
maturity; or
(e) other than the Class Action Settlement Agreement, a final
judgment or judgments for the payment of money are entered by a court or
courts of competent jurisdiction against any Credit Party and such remains
undischarged for a period (during which execution shall not effectively be
stayed) of 90 days, provided that the aggregate of all such judgments that
are not covered by insurance under which the Company is a beneficiary
exceeds $1,000,000, or the Required Holders shall determine that any
regulatory body having jurisdiction over any Credit Party including,
without limitation, the SEC, shall have taken or proposed to take any
action that such Required Holders believe would have a Material Adverse
Effect on the Company or the Holders' security interest in the Collateral,
and such Required Holders have notified the Trustee of such determination
by delivery of a certificate as to such determination; or
(f) any Credit Party (i) is not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by any Credit Party, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of any Credit Party, or
any such petition shall be filed against any Credit Party and such petition
shall not be dismissed within 60 days; or
(h) a court of competent jurisdiction enters a final judgment
holding any of the documents delivered in connection with this Indenture
(including any Transaction Document) to be invalid or unenforceable and
such judgment remains unstayed and in effect for a period of 20 consecutive
days; or any Credit Party shall assert, in any pleading filed in such a
court, that any of the documents delivered in connection with this
Indenture are invalid or unenforceable; or
(i) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with its
terms (or any Credit Party shall challenge the enforceability of any
Transaction Document or shall assert in writing, or engage in any action or
inaction based on any such assertion, that any provision of any of the
Transaction Documents has ceased to be or otherwise is not valid, binding
and enforceable in accordance with its terms), or any security interest
created under any Transaction Document shall cease to be a valid and
perfected security interest or Lien in any of the Collateral purported to
be covered thereby; or
(j) any Credit Party defaults in the payment of any amounts in
excess of $25,000 due pursuant to the terms of any document executed and
delivered by the Company or such Subsidiary in connection with this
Indenture (other than payments elsewhere in this Section specifically dealt
with).
SECTION 4.2 Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If any Event of Default shall have occurred and be
continuing, the Holders of at least a majority in principal amount of then
Outstanding Notes may, by notice to the Company, declare the entire unpaid
principal amount of the Notes, plus all accrued and unpaid interest thereon
to be immediately due and payable, and upon such declaration all of such
amount shall be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived, anything in the Notes or in this Indenture to the contrary
notwithstanding; provided that if an Event of Default under clause (f),
(g), (h) or (i) of Section 4.1 shall have occurred, the entire unpaid
principal amount of the Notes, plus all accrued and unpaid interest thereon
shall immediately become due and payable, without any declaration and
without presentment, demand, protest or further notice, all of which are
hereby waived, anything in the Notes or this Indenture to the contrary
notwithstanding.
SECTION 4.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal or
interest on the Notes or to enforce the performance of any provision of the
Notes, the Guarantee and Security Agreements, this Indenture or the other
Documents, or to realize upon any Collateral.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding.
SECTION 4.4 Waiver of Past Defaults.
-----------------------
The Holders of a majority in principal amount of Outstanding
Notes by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of
Default in the payment of the principal of or interest on any Note or in
respect of a covenant or provision of this Indenture that cannot be
modified or amended without the consent of all Holders. Upon such waiver,
such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 4.5 Control by Majority.
-------------------
The Holders of a majority in principal amount of Outstanding
Notes may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that is unduly prejudicial to
the rights of other Holders, or would involve the Trustee in personal
liability.
SECTION 4.6 Limitation on Suits.
-------------------
A Holder may pursue a remedy with respect to this Indenture
or the Notes only if:
(1) the Holder gives to the Trustee notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request
within 30 days after receipt of the request and the offer of
indemnity; and
(5) during such 30-day period the Holders of a
majority in principal amount of the then Outstanding Notes do not give
the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 4.7 Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal and interest
on the Note, on or after the respective due dates expressed in the Note, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 4.8 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 4.1(1) or (2)
occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company, the Guarantors or
any other obligor on the Notes for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the
costs and, to the extent lawful, expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 4.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims
of the Trustee and the Holders allowed in any judicial proceedings relative
to the Company, the Guarantors or any other obligor or their respective
creditors or property. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 4.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article
or by exercise of its remedies under the Documents, it shall pay out the
money in the following order and, in case of the distribution of such money
on account of principal or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
First: to the Trustee for amounts due under Section 5.7;
Second: to the Holders of Senior Indebtedness to the
extent required by Article 9; and
Third: to Holders for amounts due and unpaid on the Notes
for principal and interest ratably, without
preference or priority of any kind, according to
the amounts due and payable on the Notes for
principal and interest, respectively; and
Fourth: to the Company, the Guarantors or any other
obligors on the Notes, as their interests may
appear, or as a court of competent jurisdiction
may direct.
The Trustee may fix a record date and payment date for any
payment to Holders.
SECTION 4.11 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to any
suit instituted by the Company or by the Trustee, a suit by a Holder for
the enforcement of the payment of the principal of or interest on any Note
on or after the respective Stated Maturities expressed in such Note, or a
suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
SECTION 4.12 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in the last
paragraph of Section 2.10, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity
otherwise. The assertion or employment of any right or remedy hereunder or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 4.13 Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee
or by the Holders, as the case may be.
SECTION 4.14 Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee,
but will suffer and permit the execution of every such power as though no
such law has been enacted.
ARTICLE 5
THE TRUSTEE
SECTION 5.1 Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by Indenture, and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conducting its own affairs.
(c) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own 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.
If the Trustee appoints any such individual or
institution as a separate co-Trustee, then each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title,
interest and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with respect
thereto shall be exercisable by and vest in such separate or
co-Trustee but only to the extent necessary to enable such separate or
co-Trustee to exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by such
separate or co-Trustee shall run to and be enforceable by either of
them.
Upon request of the Trustee, the Company shall make,
execute, acknowledge and deliver such documents as may be necessary or
appropriate to perfect or clarify the authority of such separate or
co-Trustee and confirm to it such rights, powers, duties and
obligations as the Trustee determines to be appropriate and as are
consistent with the rights, powers, duties and obligations of the
Trustee under this Indenture.
SECTION 5.2 Rights of Trustee.
-----------------
(a) Except as otherwise provided herein, the Trustee
may rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel, or
both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) Subject to Section 5.1, the Trustee shall not be
liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers.
SECTION 5.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the
Company, the Guarantors or an Affiliate of any of them with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 5.10 and 5.11.
SECTION 5.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation or warranty concerning,
and shall have no liability with regard to (a) the accuracy or reliability
or completeness of any statement, representation or warranty, or of any
disclosures (whether oral or written) made by the Company or the Guarantors
in connection with the sale of the Notes, including in any offering
memorandum or circular distributed in connection with the sale of the
Notes, (b) the Company's compliance with applicable securities rules
governing the sale of the Notes, (c) the validity, adequacy or
enforceability of this Indenture, the Notes, the Subordinated Guarantee and
Security Agreements, (d) the Company's use of the proceeds from the sale of
the Notes, (e) the perfection or priority of any lien created or intended
to be created by the Subordinated Guarantee and Security Agreements, or (f)
any recitation of facts or alleged facts in this Indenture.
SECTION 5.5 Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall, as soon as
practicable thereafter and in any event within 10 days after it occurs,
mail to Holders a notice of the Default or Event of Default. For purposes
of this Indenture, the Trustee shall not be deemed to "know" or "have
knowledge" or "be aware" or otherwise be charged with knowing any fact or
circumstance unless either (i) a person who is an executive officer of the
Trustee (as determined by the Trustee's Board of Directors for the period
for which such determination is being made) has actual knowledge of such
fact or circumstance or (ii) written notice of such fact or circumstance is
sent to the Trustee in accordance with Section 11.5(1), below.
SECTION 5.6 Reports by Trustee to Holders.
-----------------------------
In the event and so long as this Indenture is qualified
under the Trust Indenture Act, within 60 days after each January 1
beginning on the January 1 following the date of this Indenture, the
Trustee shall mail to Holders a brief report dated as of such reporting
date that complies with Trust Indenture Act ' 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 ' 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
' 313(b)(1) and Trust Indenture Act ' 313(b)(2) and the Trustee shall
transmit by mail all reports as required by Trust Indenture Act ' 313(c).
Commencing at the time and so long as this Indenture is
qualified under the Trust Indenture Act, a copy of each report at the time
of its mailing to Holders shall be filed with the Commission and each stock
exchange on which the Notes are listed. The Company shall notify the
Trustee when the Notes are listed on any securities exchange.
SECTION 5.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee upon request
for all reasonable out-of-pocket expenses incurred by it. Such expenses
shall include the reasonable compensation and out-of-pocket expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or
liability incurred by it except as set forth in the next paragraph. The
Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel, and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence or
bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 4.1(6) or (7) occurs, the expenses
and the compensation for the services are intended to constitute expenses
of administration under any Bankruptcy Law.
SECTION 5.8 Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and the Company. The Company
may remove the Trustee if:
(1) the Trustee fails to comply with Section 5.10;
(2) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the Trustee under
any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company and any other obligor
shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal
amount of Outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee (at
the expense of the Company), the Company or the Holders of at least 10% in
principal amount of Outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 5.10, any Holder
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 5.7. Notwithstanding replacement of the
Trustee pursuant to this Section 5.8, the Company's obligations under
Section 5.7 hereof shall continue for the benefit of the retiring Trustee
with respect to expenses and liabilities incurred by it prior to such
replacement.
SECTION 5.9 Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act
shall be the successor Trustee.
SECTION 5.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of Trust Indenture Act ' 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 ' 310(b),
including the optional provision permitted by the second sentence of Trust
Indenture Act ' 310(b)(9).
SECTION 5.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall be subject to Trust Indenture Act '
311(a), excluding any creditor relationship listed in Trust Indenture Act '
311(b). A Trustee who has resigned or been removed shall be subject to
Trust Indenture Act ' 311(a) to the extent indicated therein.
SECTION 5.12 Appointment of Authenticating Agent.
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate
Notes issued upon original issue and upon exchange, registration of
transfer or pursuant to Section 2.10, and Notes so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication
and delivery on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus required of a
Trustee hereunder and subject to supervision or examination by Federal or
State authority. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any corporation succeeding
to the corporate agency or corporate trust business of an Authenticating
Agent, shall continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the Note
Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section,
and the Trustee shall be entitled to be reimbursed for such payments,
subject to the provisions of Section 5.7.
ARTICLE 6
AMENDMENTS
SECTION 6.1 Without Consent of Holders.
--------------------------
The Company, the Guarantors and the Trustee may amend this
Indenture, the Notes or the other Documents without the consent of any
Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to
certificated Notes;
(3) to make any change that would provide additional
rights to or benefits to the Holders or that does not adversely affect
the legal rights hereunder of any Holder; and
(4) to comply with any requirements of the Commission
in connection with the qualification or requalification of this
Indenture under the Trust Indenture Act.
SECTION 6.2 With Consent of Holders.
-----------------------
Subject to Section 4.7, the Company and the Trustee may
amend this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of Outstanding Notes. Subject to
Sections 4.4 and 4.7, the Holders of a majority in principal amount of the
Notes then outstanding may also waive compliance in a particular instance
by the Company or the Guarantors with any provision of this Indenture or
the Notes.
However, without the consent of each Holder affected, an
amendment or waiver under this Section may not:
(1) reduce the amount of Notes whose Holders must
consent to an amendment or waiver;
(2) reduce the rate of or change the time for payment
of interest on any Note;
(3) reduce the principal of or change the fixed
maturity of any Note or alter the redemption provisions with respect
thereto;
(4) make any Note payable in money other than that
stated in the Note;
(5) make any change in Section 4.4, 4.7 or 6.2 (this
sentence); or
(6) waive a default in the payment of the principal
of, or interest on, any Note.
The Holders of at least 66-2/3% in principal amount of
Outstanding Notes may release any portion of the Collateral, whether
constituting less than or all or substantially all of the Collateral, from
the Liens granted under the Collateral Documentation, without compliance
with the requirements of the last paragraph of Section 10.2 of this
Indenture, unless this Indenture previously has been qualified under the
Trust Indenture Act and the Trust Indenture Act prohibits such a release.
It is the intent of the parties that any release of Collateral consented to
by the Holders of at least 66-2/3% in principal amount of Outstanding Notes
shall not be in contravention of the provisions of the Indenture within the
meaning of Section 314(d) of the Trust Indenture Act in the event it is
applicable to this Indenture.
To secure a consent of the Holders under this Section it
shall not be necessary for the Holders to approve the particular form of
any proposed amendment or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing
the amendment or waiver.
SECTION 6.3 Compliance with Trust Indenture Act.
-----------------------------------
This Indenture and every amendment, waiver or supplement
under this Indenture or the Notes shall comply with the Trust Indenture Act
as then in effect.
SECTION 6.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is
not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his Note or portion of a Note if the Trustee
receives notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented to the amendment or waiver (or
before such later date as may be required by law or securities exchange
rule).
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such amendment or waiver or
to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No consent shall be valid or
effective for more than 90 days after such record date unless consents from
Holders of the principal amount of Notes required hereunder for such
amendment or waiver to be effective shall have also been given and not
revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind
every Holder, unless it is of the type described in any of clauses (1)
through (4) of Section 6.2. In such case, the amendment or waiver shall
bind each Holder of a Note who has consented to it and every subsequent
Holder of a Note that evidences the same debt as the consenting Holder's
Note.
SECTION 6.5 Notation on or Exchange of Notes.
--------------------------------
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new
Notes that reflect the amendment or waiver.
SECTION 6.6 Trustee Protected.
-----------------
The Trustee shall sign all supplemental indentures, except
that the Trustee need not sign any supplemental indenture that adversely
affects its rights. The Trustee may request an Opinion of Counsel and an
Officers' Certificate stating that such supplemental indenture is permitted
hereunder and all conditions precedent have been complied with.
ARTICLE 7
COVENANTS
SECTION 7.1 Payment of Principal and Interest.
---------------------------------
The Company shall pay the principal of and interest on Notes
on the dates and in the manner provided in the Notes and in accordance with
the terms hereof. An installment of principal of or interest on the Notes
shall be considered paid on the date it is due if the Trustee or Paying
Agent (other than the Company or an Affiliate of the Company) holds in
trust on that date U.S. Legal Tender designated for and sufficient to pay
the installment; provided, however, that U.S. Legal Tender held by the
Trustee after receipt of notice provided for in Section 9.12 below and for
the benefit of holders of Senior Indebtedness pursuant to the provisions of
Article 10 hereof shall not be considered to be designated for the payment
of any installment of principal of or interest on the Notes within the
meaning of this Section 7.1.
SECTION 7.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in Las Vegas, Nevada an office or
agency where Notes may be presented or surrendered for payment, where Notes
may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. The
Company may also from time to time designate one or more other offices or
agencies (in or outside Nevada) where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations, provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in Las Vegas, Nevada for such purposes. The
Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such
other office or agency.
SECTION 7.3 Money for Note Payments to Be Held in Trust.
-------------------------------------------
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of or interest
on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents,
it will, prior to each due date of the principal of or interest on any
Notes, deposit with a Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided.
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Notes) in the making of any
payment of principal or interest; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trustee all
sums held in trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
interest on any Note and remaining unclaimed for two years after such
principal or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect
to such trust money, and all liability of the Company as trustee thereof,
shall thereupon cease, provided, however, that the Company shall attempt,
not less than twice prior to the termination of such two-year period, to
contact the Holder at its last known address in the Note Register or any
other address provided by such Holder to the Company or the Trustee for
such purpose and provided further that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed
and that after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 7.4 Existence.
---------
The Company will do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, Material
rights (charter and statutory) and Material franchises and the existence,
Material rights and Material franchises of all of its Subsidiaries. Neither
the Company nor any of its Subsidiaries shall enter into any transaction of
acquisition of, or merger or consolidation or amalgamation with, any other
Person (including any Subsidiary or Affiliate of the Company or any of its
Subsidiaries), or transfer all or substantially all of its assets to any
foreign Subsidiary, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or make any Material change in the present
method of conducting business or engage in any type of business other than
of the same general type now conducted by it. The Company shall not, and
shall not permit any of its Subsidiaries to, amend or otherwise modify (i)
the Company's Articles of Incorporation, (ii) the Company's By-Laws or
(iii) the charter, by-laws or other organizational documents of any of the
Company's Subsidiaries. Notwithstanding the foregoing, the Company shall be
permitted to (i) consummate the Reincorporation Merger to change the
Company's state of incorporation from Florida to Delaware (substantially
upon the terms described in the Notice of Special Meeting of Stockholders
and Proxy Statement filed by the Company with the SEC on September 18, 1998
(the "Proxy Statement")).
SECTION 7.5 Maintenance of Properties.
-------------------------
The Company shall cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such if
such discontinuance is, in the reasonable, good faith judgment of the
Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any Material respect to the Holders.
SECTION 7.6 Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all Taxes levied
or imposed upon any Credit Party or upon the income, profits or property of
any Credit Party, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by Law become a Lien upon the property of
any Credit Party; provided, however, that the Company shall not be required
to pay or discharge or cause to be paid or discharged any such Tax whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 7.7 Limitation on Indebtedness.
--------------------------
The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or directly or indirectly guarantee
or in any other manner become directly or indirectly liable for the payment
of any Indebtedness (excluding Permitted Indebtedness and Indebtedness
which is a Guaranty of an Indebtedness of a Credit Party that is otherwise
Permitted Indebtedness).
SECTION 7.8 Limitation on Encumbrances.
--------------------------
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
suffer to exist or cause or otherwise suffer to become effective any Lien
in or on any right, title or interest to any property (real or personal)
that constitutes all or any portion of the Collateral (a "Restricted
Encumbrance") which term excludes the Lien created in favor of the Holders)
unless such Restricted Encumbrance is a Permitted Lien.
SECTION 7.9 Limitation on Related Party Transactions.
----------------------------------------
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into or be a party to any transaction with any
Related Parties (other than the Collateral Agent or its Affiliates) except
in the ordinary course of, and pursuant to the reasonable requirements of,
such party's business and upon fair and reasonable terms that are at least
equivalent to an arms length transaction with a Person that is not a
Related Party.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of any Credit Party.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any employee
benefit plan (within the meaning of Section 3(3) of ERISA) or Employee
Agreement or (iv) grant any bonus, salary increase, severance or
termination pay to, any employee, officer, director or consultant other
than in the ordinary course of business consistent with past practice.
SECTION 7.10 Subsidiary Guarantees.
---------------------
The Company shall cause its existing and future wholly-owned
direct and indirect Material Subsidiaries organized under the laws of any
state of the United States (or the District of Columbia) to jointly and
severally guarantee the obligations of the Company under the Notes and this
Indenture pursuant to the Subordinated Guarantee and Security Agreement.
The Company shall cause such guarantees to be executed and delivered by all
of the domestic Material Subsidiaries in existence on the date hereof
concurrently with the execution and delivery of this Indenture. Without
limiting the generality of the foregoing, to the extent that the Company
establishes or acquires a direct or indirect Subsidiary that constitutes a
Material Subsidiary, or if an existing Non-Significant Subsidiary shall
become a Material Subsidiary, and such Subsidiary is organized under the
laws of a state of the United States and doing business in the United
States after the date hereof, the Company shall cause such Subsidiary to
jointly and severally guarantee the obligations of the Company under the
Notes and this Indenture pursuant to the Subordinated Guarantee and
Security Agreement. The Company shall cause its existing and future direct
and indirect Material Subsidiaries organized under the laws of any
jurisdiction other than any state of the United States or the District of
Columbia to jointly and severally guarantee the obligations of the Company
under the Notes and this Indenture pursuant to the Subordinated Guarantee
Agreement. The Company shall cause such guarantees to be executed,
delivered and approved by all of such foreign Material Subsidiaries in
existence on the date hereof concurrently with the execution and delivery
of this Indenture. Without limiting the generality of the foregoing, to the
extent that the Company establishes or acquires a direct or indirect
Subsidiary that constitutes a Material Subsidiary, or if an existing
Non-Significant Subsidiary shall become a Material Subsidiary, and such
Subsidiary is organized under the laws of any jurisdiction other than any
state of the United States or the District of Columbia, the Company shall
cause such Subsidiary to jointly and severally guarantee the obligations of
the Company under the Notes and this Indenture pursuant to the Subordinated
Guarantee Agreement.
SECTION 7.11 Restricted Investments.
----------------------
The Company shall not, directly or indirectly, make or cause
or permit, or permit any of its Subsidiaries to, make or cause or permit,
(i) any direct or indirect advance to, (ii) any loan or other extension of
credit to, (iii) any guarantee of any Indebtedness of, (iv) any capital
contribution to, (v) any purchase or other acquisition of any Equity
Interests in, (vi) any purchase or other acquisition of assets (other than
in the ordinary course of business) from or (vii) any merger with, any
Person, including, without limitation, any of the Company's Subsidiaries,
in each case other than Permitted Investments.
SECTION 7.12 Operating Profit.
-----------------
The Company's Operating Profit (as defined below) shall be
greater than the amounts listed in the following chart for the applicable
period. "Operating Profit" shall mean, for any given period, Net Income
(exclusive of (A) all amounts in respect of any extraordinary gains or
losses, (B) gains and losses arising from the sale or other disposition of
material assets not in the ordinary course of business and (C) earnings and
losses from discontinued operations) plus, to the extent reflected as a
charge in the statement of Consolidated Net Income for such period, the sum
of: (i) all taxes measured by income (whether paid or deferred), (ii)
interest expense (net of interest income), (iii) non-cash charges related
to the Class Action Settlement Agreement, (iv) restructuring charges
disclosed in the 1997 Annual Report on Form 10-K and the June 30, 1998
Quarterly Report on Form 10-Q and (v) charges and expenses (including legal
and accounting fees) incurred in connection with the transactions entered
into pursuant to the Exchange and as contemplated by the Note Purchase
Agreement.
- ---------------------------------------------------------------------------
MINIMUM OPERATING MINIMUM OPERATING
PROFIT FOR THREE-MONTH PROFIT FOR TWELVE-MONTH
DATE PERIOD ENDING ON DATE PERIOD ENDING ON DATE
INDICATED INDICATED
- ---------------------------------------------------------------------------
June 30, 1998 $2,500,000 n/a
- ---------------------------------------------------------------------------
September 30, 1998 $2,500,000 n/a
- ---------------------------------------------------------------------------
December 31, 1998 $2,500,000 n/a
- ---------------------------------------------------------------------------
March 30, 1999 $2,500,000 $10,000,000
- ---------------------------------------------------------------------------
June 30, 1999 $2,500,000 $10,000,000
- ---------------------------------------------------------------------------
September 30, 1999 $3,750,000 $11,250,000
- ---------------------------------------------------------------------------
December 31, 1999 $3,750,000 $12,500,000
- ---------------------------------------------------------------------------
March 31, 2000 $3,750,000 $13,750,000
- ---------------------------------------------------------------------------
June 30, 2000 and the $3,750,000 $15,000,000
last day of each
calendar quarter
thereafter
- ---------------------------------------------------------------------------
SECTION 7.13 Tangible Assets.
---------------
The Company's Consolidated Tangible Assets shall exceed $50
million on September 30, 1998 and each quarter thereafter.
SECTION 7.14 Statement by Officers as to Default.
-----------------------------------
The Company will deliver to the Trustee, within forty-five
days after the end of the four quarters of the Company's fiscal year and
within ninety days after the end of the Company's fiscal year, an Officers'
Certificate setting forth computations in reasonable detail showing, as at
the end of such quarter or fiscal year, as the case may be, the Company's
compliance with Sections 7.7, 7.8, 7.11, 7.12 and 7.13, and (ii) within 45
days after the end of each fiscal quarter, an Officers' Certificate in the
form of Exhibit 7.18 stating that as of the date of such certificate, based
upon such examination or investigation and review of this Indenture, as in
the opinion of such signer is necessary to enable the signer to express an
informed opinion with respect thereto, to the best Knowledge of such
signer, the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture, and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof, and to the best of such signer's Knowledge, no Default or Event of
Default exists or has existed during such period or, if a Default or Event
of Default shall exist or have existed, specifying all such defaults, and
the nature and period of existence thereof, and what action the Company has
taken, is taking or proposes to take with respect thereto.
SECTION 7.15 No Speculative Transactions.
---------------------------
The Company shall not, and shall not permit any of its
Subsidiaries to, engage in any transaction involving commodity options,
futures contracts or similar transactions, except solely to hedge against
fluctuations in the prices of commodities owned or purchased by it and
except for interest swaps, currency hedges, caps or collars.
SECTION 7.16 Line of Business.
----------------
The Company shall not, and shall not permit any of its
Subsidiaries to, engage in any business if, as a result, the general nature
of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the
general nature of the businesses in which the Company and its Subsidiaries,
taken as a whole, are engaged on the date of this Indenture.
SECTION 7.17 Sale of Assets.
--------------
The Company shall not, and shall not permit any of its
Subsidiaries to, sell, transfer or otherwise dispose of ("Transfer") any
property or assets, unless the property or asset that is the subject of
such Transfer constitutes (i) inventory held for sale, (ii) marketable
securities available for sale, or (iii) real estate, equipment, fixtures,
supplies or materials no longer required in the operation of the business
of the Company or such Subsidiary or that is obsolete, and, in the case of
any Transfer described in clause (i) or (iii), such Transfer is in the
ordinary course of business.
SECTION 7.18 Financial Statements and Information.
------------------------------------
The Company shall furnish to the Trustee: (a) as soon as
practicable and in any event within 45 days after the end of each of the
four quarters of each fiscal year and within 90 days of the end of each
fiscal year (i) copies of the quarterly and annual reports and of the other
information, documents, and other reports which the Company files or is
required to file with the SEC pursuant to the Exchange Act and of any other
reports or information which the Company delivers or makes available to any
of its security holders, at the time of filing such reports with the SEC or
of delivery to the Company's security holders, as the case may be (but in
no event later than the time such filing or delivery is required pursuant
to the Exchange Act) or (ii) as soon as practicable and in any event within
45 days after the end of each of the four quarters of each fiscal year and
within 90 days of the end of each fiscal year, quarterly reports for the
four quarters of each fiscal year of the Company and annual reports which
the Company would have been required to file under any provision of the
Exchange Act if it had a class of securities listed on a national
securities exchange or was otherwise required to file such reports under
the Exchange Act, within fifteen Business Days of when such report would
have been filed under Section 13 of the Exchange Act, together with copies
of a consolidating balance sheet of the Company and its Subsidiaries as of
the end of each such accounting period and of the related consolidating
statements of income and cash flow for the portion of the fiscal year then
ended, all in reasonable detail and all certified by the principal
financial officer of the Company to present fairly the information
contained therein in accordance with GAAP (and in the case of annual
reports, including financial statements, audited and certified by the
Company's independent public accountants as required under the Exchange
Act); (b) within ninety days after the end of each fiscal year, a written
statement by the Company's independent certified public accountants stating
as to the Company whether in connection with their audit examination, any
Default or Event of Default has come to their attention; (c)(i) within
forty-five days after the end of the four quarters of the Company's fiscal
year and within ninety days after the end of the Company's fiscal year, an
Officers' Certificate setting forth computations in reasonable detail
showing, as at the end of such quarter or fiscal year, as the case may be,
the Company's compliance with Sections 7.6, 7.8, 7.11, 7.12 and 7.13, and
(ii) within 45 days after the end of each fiscal quarter, an Officers'
Certificate in the form of Exhibit 7.18 stating that as of the date of such
certificate, based upon such examination or investigation and review of
this Indenture, as in the opinion of such signer is necessary to enable the
signer to express an informed opinion with respect thereto, to the best
Knowledge of such signer, the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture, and is not
in default in the performance or observance of any of the terms, provisions
and conditions hereof, and to the best of such signer's Knowledge, no
Default or Event of Default exists or has existed during such period or, if
a Default or Event of Default shall exist or have existed, specifying all
such defaults, and the nature and period of existence thereof, and what
action the Company has taken, is taking or proposes to take with respect
thereto; (d) promptly after becoming aware of (i) the existence of a
Default or Event of Default or any default in any of the Collateral
Documentation, (ii) any default or event of default under any Indebtedness
of the Company or any of its Subsidiaries, (iii) any litigation or
proceeding affecting any Credit Party in which the amount claimed is in
excess of $100,000 and not covered by insurance or in which injunctive
relief is sought which if obtained would have a Material Adverse Effect, or
(iv) any change that has or is reasonably likely to have a Material Adverse
Effect, an Officers' Certificate specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take
with respect thereto; and (e) such other information, including financial
statements and computations, relating to the performance of the provisions
of this Indenture and the affairs of the Company and any of its
Subsidiaries as each Holder may from time to time reasonably request. In
addition, the Company shall make available to securities analysts and
broker-dealers, upon their reasonable request, copies of all annual,
quarterly and interim reports filed by the Company with the SEC pursuant to
the Exchange Act (including, without limitation, copies of (i) each
financial statement, report, notice or proxy statement sent by any Credit
Party to public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
thereto filed by any Credit Party with the SEC and of all press releases
and other statements made available generally by any Credit Party to the
public concerning developments that are Material). The Company shall keep
at its principal executive office a true copy of this Indenture (as at the
time in effect), and cause the same to be available for inspection at said
office, during normal business hours and after reasonable notice to the
Company by any Holder.
SECTION 7.19 Sale and Leaseback Transactions.
-------------------------------
The Company shall not, and shall not permit any Subsidiary
to, enter into any Sale-and-Leaseback Transaction.
SECTION 7.20 Insurance; Damage to or Destruction of Collateral.
-------------------------------------------------
The Company shall, and shall cause each of its Subsidiaries
to, at its sole cost and expense, maintain the policies of insurance
described on Schedule 7.20 in form and with insurers reasonably acceptable
to the Holders of at least a majority in principal amount of Outstanding
Notes. If the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, the Trustee may (at
the direction of the Holders of at least a majority in principal amount of
Outstanding Notes) at any time or times after ten days written notice to
the Company obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the Holders
of at least a majority in principal amount of Outstanding Notes deem
advisable. Neither the Trustee nor the Holders of at least a majority in
principal amount of Outstanding Notes shall have any obligation to obtain
insurance for the Company or any of its Subsidiaries or pay any premiums
therefor. By doing so, the Trustee and the Holders shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums
so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by the Company to the
Trustee and shall be secured by the Collateral. Following the Closing, the
Company shall use its reasonable best efforts to obtain directors' and
officers' insurance in amounts, scope and coverage customarily obtained by
comparable businesses.
SECTION 7.21 Compliance with Laws.
--------------------
The Company shall, and shall cause each of its Subsidiaries
to, comply with all Laws, ordinances or governmental rules or regulations
to which each of them is subject, and shall obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or
to the conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such Laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in
effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company shall
timely file all proxy statements, reports and other documents required to
be filed by it under the Exchange Act and such statements, reports and
other documents shall be in compliance in all material respects with the
requirements of its respective report form and shall not on the date of
filing contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 7.22 Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply
with any covenant or condition set forth in Sections 7.4 to 7.21,
inclusive, if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend
to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such covenant
or condition shall remain in full force and effect.
ARTICLE 8
REDEMPTION OF NOTES
SECTION 8.1 Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 8.7 hereof, it shall furnish to
the Trustee, at least 60 days but not more than 90 days before a redemption
date, an officer's certificate setting forth (i) the redemption date, (ii)
the principal amount of Notes to be redeemed and (iii) the redemption
price.
SECTION 8.2 Selection of Notes to be Redeemed.
---------------------------------
If less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes to be redeemed among the Holders
of the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes
are not so listed, on a pro rata basis.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples
of $1,000. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 8.3 Notice of Redemption.
--------------------
At last 30 days but not more than 90 days before a
redemption date, the Company shall mail or cause to be mailed, by first
class mail, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in a
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) that Notes called for redemption must be surrendered to
the Trustee to collect the redemption price; and
(e) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however,
that the Company shall have delivered to the Trustee, at least 5 days prior
to the Company's proposed date of mailing of the notice, an officer's
certificate requesting that the Trustee give such notice and setting forth
the information to be stated in such notice as provided in the preceding
paragraph (unless a shorter notice shall have been agreed to by the Trustee
in writing).
SECTION 8.4 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with
Section 8.3 hereof, Notes called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of
redemption may not be conditional.
SECTION 8.5 Deposit of Redemption Price.
---------------------------
Three Business Days prior to the redemption date, the
Company shall deposit with the Trustee money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on
that date. The Trustee shall promptly return to the Company any money
deposited with the Trustee by the Company in excess of the amounts
necessary to pay the redemption price of and accrued interest on all Notes
to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue
on the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid
to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not
be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes.
SECTION 8.6 Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is redeemed in part, the
Company shall issue and, upon the written order of the Company signed by
two Officers of the Company, the Trustee shall authenticate for the Holder
at the expense of the Company a new Note equal in principal amount to be
unredeemed portion of the Note surrendered.
SECTION 8.7 Optional Redemption.
-------------------
(a) The Company shall have the option to redeem the Notes,
in whole or in part, at a redemption price of 100% of the principal amount
thereof, plus accrued and unpaid interest thereon, to the applicable
redemption date.
(b) Any redemption pursuant to this Section 8.7 shall be
made pursuant to the provisions of Section 8.1 through Section 8.6 hereof.
SECTION 8.8 Mandatory Redemption.
--------------------
The Company shall not be required to make mandatory
redemption payments with respect to the Notes.
ARTICLE 9
SUBORDINATION
SECTION 9.1 Agreement to Subordinate.
------------------------
The Company agrees, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by and the obligations relating to
the Note are subordinated and subject in right of payment, to the extent
and in the manner provided in this Article, to the prior payment in full of
all Senior Indebtedness, and that the subordination is for the benefit of
the holders of Senior Indebtedness. Simultaneously herewith, the Trustee is
entering into an Intercreditor Agreement with the Collateral Agent. The
Trustee acknowledges and agrees that the indebtedness evidenced by and
obligations relating to the Notes are subordinated in right of payment to
the prior payment in full of all Senior Indebtedness and the Trustee
further acknowledges and agrees that the Collateral Agent's liens on the
Collateral are first priority liens.
SECTION 9.2 Certain Definitions.
-------------------
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 9.3 Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
the Company or its property, in an assignment for the benefit of creditors
or any marshalling of the Company's assets and liabilities:
(1) holders of Senior Indebtedness shall receive payment in
full of all Senior Indebtedness before Holders shall be entitled to
receive any payment in respect to the Indebtedness and obligations
with respect to the Notes; and
(2) until all Senior Indebtedness (as provided in clause
(1) above) are paid in full, any distribution to which Holders would
be entitled but for this Article shall be made to holders of Senior
Indebtedness, as their interests may appear.
SECTION 9.4 Default on Senior Indebtedness
-----------------------------
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Indebtedness or obligations with
respect to the Notes and may not acquire from the Trustee or any Holder any
Notes for cash or property until all principal and other obligations with
respect to the Senior Indebtedness have been paid in full if:
(i) a default in the payment of any Senior Indebtedness
occurs and is continuing beyond any applicable grace period in the
agreement, indenture or other document governing such Senior
Indebtedness; or
(ii) a default, other than a payment default, on Senior
Indebtedness occurs and is continuing that then permits holders of the
Senior Indebtedness to accelerate its maturity, and the Trustee
receives a notice of the default from a person who may give it
pursuant to Section 9.12 hereof. If the Trustee receives any such
notice, a subsequent notice received within 360 days thereafter shall
not be effective for purposes of this section. No nonpayment default
that existed or was continuing on the date of delivery of any such
notice to the Trustee shall be, or be made, the basis for a subsequent
notice unless such default shall have been waived for a period of not
less than 180 days.
The Company may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon the earlier
of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 9.4(ii)
hereof, 180 days pass after notice is received if the maturity of such
Senior Indebtedness has not been accelerated and such default has not
become the subject of judicial proceedings,
if this Article otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
SECTION 9.5 Acceleration of Notes.
---------------------
If payment of the Notes is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration and neither the Company nor the Trustee
shall make any payment to the Holders of the Notes for 120 days after such
default.
SECTION 9.6 When Distribution Must Be Paid Over.
-----------------------------------
If a payment or distribution is made to the Trustee or any
Holder that because of this Article 9 should not have been made to it, the
Trustee or such Holder who receives the distribution shall hold it in trust
for the benefit of, and, upon written request, pay it over to, the holders
of Senior Indebtedness as their interests may appear, or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all Indebtedness
and obligations with respect to Senior Indebtedness remaining unpaid to the
extent necessary to pay such Indebtedness and obligations in full in
accordance with their terms, after giving effect to any concurrent payment
or distribution or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 9, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee.
SECTION 9.7 Notice by Company.
-----------------
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
obligations with respect to the Notes to violate this Article, but failure
to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article.
SECTION 9.8 Subrogation.
-----------
After all Senior Indebtedness is indefeasibly paid in full
and until the Notes are paid in full, Holders shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Notes) to the
rights of holders of Senior Indebtedness to receive distributions
applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Holders have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness that otherwise would have been made to Holders is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 9.9 Relative Rights.
---------------
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 9.10 Subordination May Not be Impaired by Company.
--------------------------------------------
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired
by any act or failure to act by the Company or any holder of Senior
Indebtedness or by the failure of the Company or any holder of Senior
Indebtedness to comply with this Indenture. The holders of Senior
Indebtedness may extend, renew, modify or amend the terms of Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company, all without affecting
the liabilities and obligations of the parties to the Indenture or the
Holders of the Notes or the rights of such Senior Indebtedness hereunder.
SECTION 9.11 Distribution or Notice to Representative.
----------------------------------------
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 9, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 9.
SECTION 9.12 Rights of Trustee and Paying Agent.
----------------------------------
Notwithstanding the provisions of this Article 9, or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of
any payment or distribution by the Trustee, and the Trustee and the Paying
Agent may continue to make payments on the Notes, unless the Trustee shall
have received at its Corporate Trust Office at least five Business Days
prior to the date of such payment written notice of facts that causes the
payment of any obligations with respect to the Notes to violate this
Article. Only the Company or the Trustee may give the notice. Nothing in
this Article 9 shall impair the claims of, or payments to, the Trustee
under or pursuant to Section 5.7 hereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 9.13 Authorization to Effect Subordination.
-------------------------------------
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
as provided in this Article 9 or as provided in the Intercreditor
Agreement, and appoints the Trustee the Holder's attorney-in-fact for any
and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in
Article 4 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives of the Senior Indebtedness are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
the Notes.
SECTION 9.14 Trustee Not Fiduciary for Holders of Senior Indebtedness.
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute to
Holders of Notes or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
SECTION 9.15 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
----------------------------------------------------------
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
SECTION 9.16 Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the
term "Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article in addition to or in place of
the Trustee; provided, however, that Section 11.3 shall not apply to the
Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
SECTION 9.17 Amendment.
---------
The provisions of this Article 9 shall not be amended or
modified without the written consent of the number of holders of all Senior
Indebtedness that would be entitled to amend such subordination provisions
pursuant to the agreements governing the Senior Indebtedness.
ARTICLE 10
SECURITY
SECTION 10.1 Security.
--------
(a) In order to secure the obligations of the Company and
the Guarantors under the Indenture, the Notes and the Collateral
Documentation, the Company, the Guarantors and the Trustee, as applicable,
have entered into the Collateral Documentation in order to create the
security interests contemplated thereby. Each Holder, by accepting a Note,
agrees to all of the terms and provisions of the Collateral Documentation
and the Trustee agrees to all of the terms and provisions of the Collateral
Documentation signed by it.
(b) The Trustee and each Holder, by accepting a Note,
acknowledge that the holders of any Senior Indebtedness have or may in the
future obtain certain rights in and to the Collateral that are senior in
right to the interest of the Trustee (for the benefit of the Holders) in
the Collateral under this Indenture and the Collateral Documentation and
the Trustee agrees to be bound by such intercreditor or subordination
agreements consistent with Article 9 as shall be requested by the holders
of the Senior Indebtedness as such agreements may be in effect from time to
time.
(c) As amongst the Holders, the Collateral as now or
hereafter constituted shall be held for the equal and ratable benefit of
the Holders without preference, priority or distinction of any thereof over
any other by reason of difference in series or in time of issuance, sale or
otherwise, as security for the obligations of the Company and the
Guarantors under the Indenture, the Notes and the Collateral Documentation.
SECTION 10.2 Recording, etc.
---------------
The Company will have caused or will cause this Indenture,
the Collateral Documentation and the other Documents and all amendments or
supplements to each of the foregoing to be registered, recorded and filed
and/or 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 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) he Company represents in the Company Request that
the Collateral to be released is to be released in connection with
repayment of all Outstanding Notes or defeasance of this Indenture
pursuant to the provisions of this Indenture.
(b) In the event and so long as this Indenture is qualified
under the Trust Indenture Act, as a condition to any release of Collateral
under this Section 10.3, the Company shall deliver to the Trustee any
certificate or opinion required by Trust Indenture Act Sections 314(c)(3)
or 314(d) dated as of a date not more than 60 days prior to the date of
substitution or release. In the case of the repayment of all Outstanding
Notes or defeasance of this Indenture pursuant to the provisions of this
Indenture, such certificate or opinion shall state that all of the Notes
then Outstanding are to be repaid and that all of the Collateral is to be
released on or after the date of payment or the deposit of funds or other
property in accordance with the defeasance provisions of Article 3.
(c) Any release of Collateral made in compliance with the
provisions of this Section 11.4 shall be deemed not to impair the Lien of
this Indenture and the Collateral Documentation in contravention of the
provisions of this Indenture. SECTION 10.4 Reliance on Opinion of Counsel.
The Trustee shall, before taking any action under this
Article 10, be entitled to receive an Opinion of Counsel, stating the legal
effect of such action, and that such action will not be in contravention of
the provisions hereof, and such opinion shall be full protection to the
Trustee for any action taken or omitted to be taken in reliance thereon;
provided that, in the event and so long as this Indenture is qualified
under the Trust Indenture Act, the Trustee's action under this Article 10
shall at all times be and remain subject to its duties under Section 315 of
the Trust Indenture Act.
SECTION 10.5 Purchaser May Rely.
------------------
A purchaser in good faith of the Collateral or any part
thereof or interest therein which is purported to be transferred, granted
or released by the Trustee as provided in this Article 10 shall not be
bound (i) to ascertain, and may rely on the authority of the Trustee to
execute, such transfer, grant or release, or (ii) to inquire as to the
satisfaction of any conditions precedent to the exercise of such authority,
or (iii) to determine whether the application of the purchase price
therefor complies with the terms hereof.
SECTION 10.6 Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the
Trustee under this Article 10, and all such sums shall be a Lien upon the
Collateral and shall be secured thereby.
SECTION 10.7 Suits to Protect the Collateral.
-------------------------------
To the extent permitted thereunder, the Trustee shall have
power to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any acts
which may be unlawful or in violation of the Collateral Documentation or
this Indenture, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interests of the
Holders in the Collateral and the Collateral Documentation or this
Indenture, and in the profits, rents, revenues and other income arising
therefrom, including power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such
enactment, rule or order would impair the Collateral or be prejudicial to
the interests of the Holders or the Trustee.
SECTION 10.8 Trustee's Duties.
----------------
The powers conferred upon the Trustee by this Article 10 are
solely to protect the Lien of this Indenture and the Collateral
Documentation and shall not impose any duty upon the Trustee to exercise
any such powers except as expressly provided in this Indenture. The Trustee
shall be under no duty whatsoever to make or give any presentment, demand
for performance, notice of nonperformance, protest, notice of protest,
notice of dishonor, or other notice or demand in connection with any
Collateral, or to take any steps necessary to preserve any rights against
prior parties except as expressly provided in this Indenture. The Trustee
shall not be liable for failure to collect or realize upon any or all of
the Collateral, or for any delay in so doing, nor shall the Trustee be
under any duty to take any action whatsoever with regard thereto. The
Trustee shall have no duty to comply with any recording, filing or other
legal requirements necessary to establish or maintain the validity,
priority or enforceability of the Lien of this Indenture and the Collateral
Documentation in, or the Trustee's rights in or to, any of the Collateral.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act.
-------------------
In the event and so long as this Indenture is qualified
under the Trust Indenture Act, if any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in
this Indenture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
SECTION 11.2 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
SECTION 11.3 Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other
matters, and any such Person may certify or given an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should now, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it related to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions
or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 11.4 Acts of Holders.
---------------
(a) 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) 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) ownership of Notes shall be proved by the Note Register.
(d) request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Note.
SECTION 11.5 Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with.
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administrator or
(2) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 11.6 Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to each Holder affected by such event, at its address as it appears in the
Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval
of the Trustee shall constitute a sufficient notification for every purpose
hereunder.
SECTION 11.7 Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.8 Communications by Holders With Other Holders.
--------------------------------------------
Noteholders may communicate pursuant to Section 312(b) of
the Trust Indenture Act with other Noteholders with respect to their rights
under this Indenture or the Notes. The Company, the Trustee, the Registrar
and any other Person shall have the protection of Section 312(c) of the
Trust Indenture Act.
SECTION 11.9 Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
SECTION 11.10 No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder, as such, of
the Company shall have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Notes.
SECTION 11.11 Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.
SECTION 11.12 Separability Clause.
-------------------
In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.13 Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness and the Holders of
Notes, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 11.14 Governing Law.
-------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
SECTION 11.15 Legal Holidays.
--------------
In any case where any Interest Payment Date or Stated
Maturity of any Note shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Notes) payment of interest or
principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, or at the Stated Maturity, provided that no interest
shall accrue for the period from and after such Interest Payment Date or
Stated Maturity, as the case may be.
SECTION 11.16 Counterparts.
------------
This Indenture may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 11.17 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.18 Consent to Jurisdiction and Service of Process.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR ANY
GUARANTOR WITH RESPECT TO THIS INDENTURE, THE GUARANTIES, ANY NOTE OR ANY
OTHER DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN NEW YORK, NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
INDENTURE, EACH OF THE COMPANY AND EACH GUARANTOR ACCEPTS, FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES
TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
INDENTURE, THE GUARANTIES, ANY NOTE OR ANY OTHER DOCUMENT FROM WHICH NO
APPEAL HAS BEEN TAKEN OR IS AVAILABLE. EACH OF THE COMPANY AND EACH
GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
NOTICE ADDRESS OF THE COMPANY SPECIFIED HEREIN SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE COMPANY AND EACH
GUARANTOR AND THE TRUSTEE IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH JURISDICTION. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE TRUSTEE OR ANY HOLDER TO
BRING PROCEEDINGS AGAINST THE COMPANY OR ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 11.19 Waiver of Jury Trial.
--------------------
EACH OF THE COMPANY, EACH GUARANTOR AND THE TRUSTEE AND EACH
HOLDER BY ACCEPTANCE OF A NOTE HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS INDENTURE, ANY GUARANTY OR ANY NOTE OR ANY OTHER DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the
subject matter of the transactions contemplated by this Indenture and the
other Documents, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory
claims. The Company, each Guarantor and the Trustee and each Holder by
acceptance of a Note each acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Indenture, the Guaranty and the
other Documents and in issuing and purchasing the Notes and that each will
continue to rely on the waiver in their related future dealings. The
Company, each Guarantor and the Trustee and each Holder by acceptance of a
Note further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS INDENTURE OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE NOTES. IN THE EVENT OF LITIGATION, THIS
INDENTURE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[signature page follows]
<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: /s/ Ilan K. Reich
-----------------
Attest:
/s/ Carol A. Brennan
- --------------------
SANTA BARBARA BANK & TRUST
By: /s/ Jay D. Smith
----------------
Attest:
/s/ Christine M. Sontag
- -----------------------
<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
<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]
<PAGE>
Exhibit A
Form of Senior Secured Note
<PAGE>
Exhibit B
Form of Subordinated Security Agreement
<PAGE>
Exhibit C
Form of Subordinated Guarantee and Security Agreement
<PAGE>
Exhibit D
Form of Subordinated Guarantee Agreement
<PAGE>
Exhibit E
Form of Intercompany Note
Exibit D
INTERCREDITOR AGREEMENT
dated as of November 5, 1998
Between
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
and
SANTA BARBARA BANK & TRUST
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions............................................................2
2. Priorities.............................................................6
3. Enforcement of Security................................................7
4. Representations and Warranties.........................................8
5. Waiver of Marshalling and Similar Rights...............................8
6. Security Notices, etc..................................................8
7. Reliance...............................................................8
8. Termination............................................................9
9. No Trust Relationship, etc.............................................9
10. Benefit of Agreement...................................................9
11. Amendment, Modification, Waiver of Documents...........................9
12. Notices, etc...........................................................9
13. GOVERNING LAW.........................................................10
14. Submission to Jurisdiction............................................10
15. Service of Process....................................................10
16. WAIVER OF JURY TRIAL..................................................10
17. Miscellaneous.........................................................10
<PAGE>
INTERCREDITOR AGREEMENT
-----------------------
This INTERCREDITOR AGREEMENT (this "Agreement"), dated as of
November 5, 1998, between APPALOOSA MANAGEMENT L.P., as Collateral Agent
("Appaloosa") and SANTA BARBARA BANK & TRUST (the "Trustee").
WHEREAS:
A. Pursuant to the Note Purchase Agreement, dated as of September
30, 1998 (the "Note Purchase Agreement"), among the purchasers listed
on Exhibit A thereto (the "Purchasers"), Appaloosa and Inamed
Corporation, a Florida corporation (the "Company"), the Purchasers
have purchased 10.00% Senior Secured Notes (the "Notes") from the
Company in the aggregate principal amount of $8,000,000 and Warrants
to acquire up to 590,000 shares of Common Stock with an exercise price
of $6.50 per share;
B. In connection with the purchase and sale of the Notes, the
Company is consummating an Exchange Offer for all of its issued and
outstanding 11.00% secured convertible notes due January, 1999 by
exchanging therefor (i) the Company=s 11.00% Senior Subordinated
Secured Notes due March 31, 1999 or, at the option of the Company as
provided therein, August 1, 2000 (the "Exchange Notes"), (ii) Warrants
to acquire up to 3,671,616 shares of Common Stock with an exercise
price of $5.50 per share and (iii) Warrants to acquire up to 500,000
shares of Common Stock with an exercise price of $7.50 per share; and
C. The Company and the Trustee are entering into a Subordinated
Indenture, dated as of the date hereof (the "Subordinated Indenture"),
providing for the issuance by the Company of the Exchange Notes; and
D. Pursuant to the Note Purchase Agreement, Appaloosa has been
appointed Collateral Agent to act on behalf of the Holders in
connection with administering the Collateral (as hereinafter defined);
and
E. Pursuant to the Subordinated Indenture, the Trustee will
obtain liens and security interests in the Collateral;
F. The Exchange Notes are subordinate in right of payment to the
Notes and the liens and security interests of the Trustee are subject
to the liens and security interests of Appaloosa; and
G. The parties hereto have agreed to allocate priorities and
share the proceeds of the Collateral on the terms and conditions
contained herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. Definitions. (a) As used herein, the following terms have the
following meanings:
"Accounts" shall have the meaning ascribed thereto in the
definition of Collateral.
"Affiliate" shall have the meanings ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of Appaloosa or any limited partners of a limited partner
of Appaloosa.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and any regulations promulgated or proposed thereunder.
"Collateral" shall mean all of each Obligor's real and personal
property and interests in real and personal property including, without
limitation, (i) all of the shares of capital stock of the Issuers now owned
as set forth in Schedule 2(a) or hereafter acquired by such Obligor
together with in each case the certificates representing the same
(collectively, the "Pledged Stock"); (ii) all shares, securities, moneys or
property representing a dividend on, or a distribution or return of capital
in respect of, any of the Pledged Stock, resulting from a split-up,
revision, reclassification or other like change of any of the Pledged Stock
or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of
the Pledged Stock; (iii) without affecting the obligations of any Obligor
under any provision prohibiting such action under the Note Purchase
Agreement, in the event of any consolidation or merger in which any Issuer
is not the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor corporation is
the Company itself) formed by or resulting from such consolidation or
merger (collectively, and together with the property described in clauses
(i) and (ii) above, the "Stock Collateral"); (iv) the Indebtedness
described in Annex I with respect to such Obligor and issued by the
obligors named therein (the "Pledged Debt"); (v) all additional
Indebtedness for money borrowed or for the deferred purchase price of
property from time to time owed to such Obligor by any obligor of the
Pledged Debt, and all additional Indebtedness in excess of $25,000 for
money borrowed or for the deferred purchase price of property from time to
time owed to such Obligor by any other Person who, after the date hereof,
becomes, as a result of any occurrence, a Subsidiary of such Obligor or an
Affiliate of such Obligor (any such Indebtedness being "Additional Debt");
(vi) all notes or other instruments evidencing the Indebtedness referred to
in clauses (iv) and (v) above; (vii) all accounts and general intangibles
(each as defined in the Uniform Commercial Code) of such Obligor
constituting a right to the payment of money, whether or not earned by
performance, including all moneys due and to become due to such Obligor in
repayment of any loans or advances, in payment for goods (including
Inventory and Equipment) sold or leased or for services rendered, in
payment of tax refunds and in payment of any guarantee of any of the
foregoing (collectively, the "Accounts"); (viii) all instruments, chattel
paper or letters of credit (each as defined in the Uniform Commercial Code)
of such Obligor evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of,
any of the Accounts; (ix) all inventory (as defined in the Uniform
Commercial Code) and all other goods (including Motor Vehicles) of such
Obligor that are held by such Obligor for sale, lease or furnishing under a
contract of service (including to its Subsidiaries or Affiliates), that are
so leased or furnished or that constitute raw materials, work in process or
material used or consumed in its business, including all spare parts and
related supplies, all goods obtained by such Obligor in exchange for any
such goods, all products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods
(collectively, the "Inventory"); (x) all equipment (as defined in the
Uniform Commercial Code) and all other goods (including Motor Vehicles) of
such Obligor that are used or bought for use primarily in its business,
including all spare parts and related supplies, all goods obtained by such
Obligor in exchange for any such goods, all substances, if any, commingled
with or added to such goods and all upgrades and other improvements to such
goods, in each case to the extent not constituting Inventory (collectively,
the "Equipment"); (xi) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of such Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents"); (xii)
all contracts and other agreements of such Obligor relating to the sale or
other disposition of all or any part of the Inventory, Equipment or
Documents and all rights, warranties, claims and benefits of such Obligor
against any Person arising out of, relating to or in connection with all or
any part of the Inventory, Equipment or Documents of such Obligor,
including any such rights, warranties, claims or benefits against any
Person storing or transporting any such Inventory or Equipment or issuing
any such Documents; (xiii) all other accounts or general intangibles of
such Obligor not constituting Accounts, including, to the extent related to
all or any part of the other Collateral, all books, correspondence, credit
files, records, invoices, tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Obligor or any
computer bureau or service company from time to time acting for such
Obligor; (xiv) the balances from time to time in the Collateral Accounts;
(xv) all other tangible and intangible property of such Obligor, including
all Intellectual Property; and (xvi) all proceeds and products in whatever
form of all or any part of the other Collateral, including all proceeds of
insurance and all condemnation awards and all other compensation for any
Casualty Event with respect to all or any part of the other Collateral
(together with all rights to recover and proceed with respect to the same),
and all accessories to, substitutions for and replacements of all or any
part of the other Collateral.
"Collateral Accounts" shall refer to the collateral accounts
maintained by Appaloosa pursuant to the Security Documents.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b)
all renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Documents" shall have the meaning ascribed thereto in the
definition of Collateral.
"Equipment" shall have the meaning ascribed thereto in the
definition of Collateral.
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive
rights or agreements of any kind (including any stockholders' or voting
trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital
stock of any class, or partnership or other ownership interests of any type
in, such Person. "Exchange Notes" shall have the meaning ascribed thereto
in the Recitals.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereon, and all Patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(b) all Trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and
all applications, registrations and renewals in connection therewith, (e)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Inventory" shall have the meaning ascribed thereto the
definition of Collateral.
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Company that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter
acquired by any Obligor.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Obligor" or "Obligors" shall mean each of the Company and each
the Company's Subsidiaries that, at any time, execute the Guaranty and
Security Agreement.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning ascribed thereto in the
definition of Collateral.
"Pledged Stock" shall have the meaning ascribed thereto in the
definition of Collateral.
"Security Documents" shall mean (i) the Guarantee and Security
Agreement, dated as of the date hereof, among Appaloosa and certain of the
Company's domestic Subsidiaries, providing for a first priority security
interest in such Subsidiaries' Collateral and guarantees from such
Subsidiaries, (ii) the Guarantee Agreement, dated as of the date hereof,
made by certain of the Company's foreign Subsidiaries in favor of Appaloosa
and (iii) the Security Agreement, dated as of the date hereof, between
Appaloosa and the Company, providing for a first priority security interest
in the Collateral.
"Subordinated Indenture" has the meaning ascribed thereto in the
Recitals.
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power or the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark
registrations and applications for trademark and service mark
registrations, (b) all renewals and extensions of any of the foregoing and
(c) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, together, in each case, with the product lines and
goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service mark.
(b) Terms defined in Article 9 of the Uniform Commercial Code
currently in effect in the State of New York and not otherwise defined
herein are used herein as therein defined.
2. Priorities. (a) Appaloosa and the Trustee hereby acknowledge
and agree that the liens and security interests of Appaloosa (for the
benefit of the holders of the Notes) in each Obligor's right, title and
interest in and to the Collateral, whether now owned or hereafter acquired
by such Obligor and whether now existing or hereafter coming into existence
shall be prior in right to the liens and security interests of the Trustee
(for the benefit of the holders of the Exchange Notes) in the Collateral.
Appaloosa and the Trustee further acknowledge and agree that the payment of
the principal of (and premium, if any) and interest on the Exchange Notes
are subordinated and subject in right of payment to the prior payment in
full of the principal of (and premium, if any) and interest on the Notes.
The Trustee is hereby delivering to Appaloosa all Collateral in its
possession.
(b) The priorities set forth in this Agreement are applicable
irrespective of the order of creation, attachment or perfection of any of
such liens or security interests or any priority that might otherwise be
available to any Person under applicable law and notwithstanding any
representation or warranty of the Company to the contrary in the Note
Purchase Agreement or the Subordinated Indenture.
(c) The Trustee agrees not to contest, or to bring (or
voluntarily join in) any action or proceeding for the purpose of
contesting, the validity, perfection or priority (as herein provided) of,
or seeking to avoid, Appaloosa's liens and security interests in the
Collateral, provided that nothing herein shall be deemed or construed to
prevent the Trustee from commencing an action or proceeding against each
other to assert any right or claim it may have arising under or in
connection with this Agreement.
(d) The Trustee and Appaloosa agree that they shall, at their own
expense and upon the reasonable request of the other party, duly execute
and deliver, or cause to be duly executed and delivered, to each other such
further instruments, agreements and documents (including, without
limitation, financing statements under the Code, security agreements in
respect of Intellectual Property, stock powers executed in blank and other
items necessary or desirable in connection with the perfection of liens in
the Collateral) and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of either party to carry out
more effectually the provisions and purposes of this Agreement. The Trustee
hereby agrees to cooperate with the Company in its efforts to file
amendments to amend all financing statements presently filed by the Trustee
in any location (including, without limitation, the U.S. Patent and
Trademark Office and the U.S. Copyright Office) with respect to the
Collateral to reflect Appaloosa's first priority security interest (for the
benefit of the holders of the Notes) on the Collateral.
3. Enforcement of Security. (a) Appaloosa and the Trustee may
from time to time in their sole discretion and in accordance with the terms
of their respective loan documents take or authorize the taking of such
action with regard to the protection, exercise and enforcement of their
rights in and to the Collateral as they may determine to be necessary or
appropriate; provided, however, that the Trustee will not (i) take any
action to enforce, collect on or exercise any of its rights in respect of
its liens and security interests in the Collateral or (ii) interfere with
any exercise by or on behalf of Appaloosa of its rights in respect of its
liens and security interests in the Collateral, in each case unless and
until Appaloosa has given written notice to the Trustee that the Company
has satisfied, in full, all amounts (whether representing principal,
interest, fees, expenses or otherwise) owing to the holders of the Notes in
respect of the Notes and otherwise pursuant to the Note Purchase Agreement
(and Appaloosa hereby agrees to promptly give such notification following
satisfaction of all such amounts).
(b) Except as otherwise provided in Section 3(a) of this
Agreement, Appaloosa may from time to time, at its discretion and in
accordance with its applicable loan documentation, enforce, collect on or
exercise any of its respective rights in respect of such liens and security
interests. Each right, power and remedy of any of Appaloosa or the Trustee
provided for in this Agreement, the Note Purchase Agreement, the
Subordinated Indenture or any other loan document relating to any of the
foregoing, whether now existing or hereafter available at law or in equity
or by statute or otherwise, shall be cumulative and concurrent (except to
the extent otherwise provided in any such document) and shall be in
addition to every other such right, power or remedy. Except to the extent
otherwise provided in this Agreement, the Note Purchase Agreement, the
Subordinated Indenture or any other loan document relating to any thereof,
the exercise or beginning of the exercise by Appaloosa or the Trustee of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise of all other such rights, powers or
remedies, and no course of dealing or failure or delay on the part of any
party hereto in exercising any such right, power or remedy shall operate as
a waiver thereof or otherwise prejudice its rights, powers or remedies.
(c) Each of Appaloosa and the Trustee agrees to hold any
Collateral received by it, in or against which a security interest or lien
may be perfected by possession, on behalf of the other as well as itself,
and upon satisfaction, in full, of its respective obligations, to turn over
to the other all such Collateral, provided that this subparagraph (c) is
intended solely to assure continuous perfection of the liens and security
interests granted under the Note Purchase Agreement and the Subordinated
Indenture, respectively, and nothing in this paragraph (c) shall be deemed
or construed as altering the priorities or obligations set forth elsewhere
in this Agreement.
(d) Upon the written request of Appaloosa, the Trustee agrees to
release any Collateral specified in such request provided that Appaloosa
has previously released such Collateral.
4. Representations and Warranties. Each of Appaloosa and the
Trustee represents and warrants to each other as follows:
(a) This Agreement has been duly executed and delivered by its
duly authorized officer and constitutes its legal, valid and binding
obligation enforceable against it in accordance with the terms hereof.
(b) The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action
and do not and will not (i) violate any provision of any law, rule or
regulation having applicability to it or of its charter or articles of
association or by-laws, (ii) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other
material agreement, lease or instrument to which it is a party, or
(iii) require the consent or approval of any governmental authority or
arbitrator.
5. Waiver of Marshalling and Similar Rights. Each of the parties
hereto, to the fullest extent permitted by applicable law, waives any
requirement regarding, and agrees not to demand, request, plead or
otherwise claim the benefit of, any marshalling, appraisement, valuation or
other similar right that may otherwise be available under applicable law.
6. Security Notices, etc. Appaloosa and the Trustee each agree to
give the other written notice of their intention to exercise any remedies
in respect of any Event of Default (as defined in the Note Purchase
Agreement or the Subordinated Indenture, as applicable) and copies of any
written notice of default sent to the Company and of the time and place of
any public sale or the time after which any private sale or other intended
disposition is to be made by either of them of the Collateral, and agree to
use reasonable efforts to make available to the other (but shall have no
liability to the other for failure to do so) information received by them
from the Company which the recipient considers to be of common interest
with respect to the payment of the Notes or the Collateral, provided that
the Trustee's rights to exercise any remedy is subject to Section 3(a)
hereof. This Agreement is intended, in part, to constitute a request for
notice and a written notice of a claim by each party hereto to the other of
an interest in the Collateral in accordance with the provisions of Sections
9-504 and 9-505 of the Uniform Commercial Code.
7. Reliance. In acting in respect of this Agreement, each of
Appaloosa and the Trustee will be entitled (a) to rely on any communication
believed by it to be genuine and to have been made, sent or signed by the
person by whom it purports to have been made, sent or signed, or (b) to
rely on the advice or services or opinions and statements of any
professional advisor whose advice or services to it seem necessary,
expedient or desirable and are given or made in connection with this
Agreement, including, without limitation, the opinion of counsel (including
counsel for the Company).
8. Termination. Upon receipt by the Trustee of the notices
referred to in Section 3, this Agreement shall terminate; provided,
however, that if after termination any payment received by any party hereto
is rescinded or must otherwise be returned or paid over to or for the
account of any Obligor by such party for any reason, this Agreement shall
forthwith be reinstated until the giving of a further notice by such party
of the type referred to in Section 3.
9. No Trust Relationship, etc. This Agreement is intended to
create a relationship among independent contractors, and nothing in this
Agreement shall be deemed to create a fiduciary, agency or trust
relationship between or among any of the parties hereto.
10. Benefit of Agreement. Except as otherwise provided in Section
17 hereof, this Agreement is solely for the benefit of Appaloosa and the
Trustee, and no other person or entity shall be entitled to rely on, or is,
intended to receive any benefit under, this Agreement.
11. Amendment, Modification, Waiver of Documents. No provision of
the Agreement may be amended, modified or waived except by a writing signed
each of Appaloosa and the Trustee, provided that nothing in this Agreement
shall affect the right of either Appaloosa or the Trustee to amend, modify
or waive any provision of any other loan document related to this
transaction in accordance with the terms thereof. Each of Appaloosa and the
Trustee agrees to give the other written notice of any material amendment,
modification or waiver to the other loan documents related to this
transaction.
12. Notices, etc. All notices, consents, requests, instructions,
approvals, financial statements, proxy statements, reports and other
communications provided for herein shall be deemed given, if in writing and
delivered personally, by telecopy or sent by registered mail, postage
prepaid, if to:
Appaloosa, to:
Appaloosa Management L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. James Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
The Trustee, to:
Santa Barbara Bank & Trust
1021 Anacapa Street
Santa Barbara, California 93101
Attention: Corporate Trust Administration
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
14. Submission to Jurisdiction shall be brought by either party
hereto in order to enforce any right or remedy under this Agreement or any
of the Notes, both parties hereby consent and will submit to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. Both parties hereby irrevocably waive any
objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
15. Service of Process. Nothing herein shall affect the right of
either party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against each other in any
other jurisdiction.
16. WAIVER OF JURY TRIAL. BOTH PARTIES HEREBY WAIVE ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT.
17. Miscellaneous. This Agreement, until its termination, shall
be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. The headings in
this Agreement are for the purpose of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
APPALOOSA MANAGEMENT L.P.
By: Appaloosa Partners Inc., its general partner
By: /s/ James E. Bolin
------------------------------------------
Name: James E. Bolin
Title: Vice President
SANTA BARBARA BANK & TRUST,
By: /s/ Jay D. Smith
------------------------------------------
Name: Jay D. Smith
Title: Senior Vice President
Acknowledged as of the date first above written:
INAMED CORPORATION
By /s/ Ilan K. Reich
----------------------------
Name: Ilan K. Reich
Title: Executive Vice President
Exhibit E
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 5, 1998 (this
"Registration Rights Agreement"), between INAMED CORPORATION, a Florida
corporation (the "Company"), and Santa Barbara Bank & Trust, as trustee for
the benefit of the holders of the Company's 11% Senior Subordinated Secured
Notes due March 31, 1999, or at the option of the Company exercised as
provided therein, September 1, 2000 (in such capacity, the "Trustee").
1. Background. The Indenture dated as of November 5, 1998 (the
"Subordinated Indenture") between the Company and the Trustee provides,
subject to its terms and conditions, for the issuance by the Company of its
11% Senior Subordinated Secured Notes due March 31, 1999, or at the option
of the Company as provided therein, September 1, 2000 (the "Exchange
Notes") as well as certain warrants to purchase the Company's common stock,
$.01 per share, (the "Warrants") to be issued in exchange for the Company's
11% Secured Convertible Notes due 1999 (the "Old Notes") to the holders
thereof pursuant to the Securities Exchange Agreement dated as of October
7, 1998 (the "Exchange Agreement"). It is a condition to the exchange of
the Old Notes for the Exchange Notes and Warrants by the Purchasers that
the Company shall have executed and delivered this Agreement.
To induce the Trustee to enter into the Subordinated Indenture,
and to induce the Purchasers to exchange the Old Notes, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company has agreed to grant the registration rights
provided for hereunder. Accordingly, the Company agrees with the Trustee as
follows:
2. Definitions. Unless otherwise defined, all capitalized terms used
in this Agreement that are defined in the Subordinated Indenture or in the
Exchange Agreement (including those terms incorporated therein by
reference) shall have the respective meanings assigned to them in the
Subordinated Indenture or the Exchange Agreement, as applicable. In
addition, the following terms shall have the following meanings under this
Agreement:
"Exchange Notes" means the Company's 11.00% Senior Subordinated
Secured Notes due March 31, 1999 or at the option of the Company exercised
as provided therein, September 1, 2000 (the "Exchange Notes") issued
pursuant to the Subordinated Indenture dated as of November 5, 1998 between
the Company and Santa Barbara Bank & Trust, as trustee.
"Note Purchase Agreement" shall mean the agreement dated as of
September 30, 1998 between the Company, the parties listed on Exhibit A
thereto and Appaloosa Management L.P., as Collateral Agent.
"Incidental Registration" is defined in Section 3.2.
"Participating Holders" means the holders of Registrable
Securities participating in the particular registration.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including, without
limitation, all registration, filing and applicable fees of the Commission,
stock exchange or NASD registration and filing fees and all listing fees
and fees with respect to the inclusion of securities in NASDAQ (as defined
in Section 3.3(j)), all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to
the underwriters or the Participating Holders in connection with "blue sky"
qualification of the Registrable Securities and determination of their
eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants including the expenses of "cold
comfort" letters required by or incident to such registration, all fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, all transfer taxes, and the fees and expenses of one counsel to
the Participating Holders (to be selected by the Trustee on behalf of, and
upon notice from, the Requisite Percentage of Participating Holders);
provided, however, that Registration Expenses shall exclude and the
Participating Holders shall agree to pay underwriters' fees and
underwriting discounts and commissions in respect of the Registrable
Securities being registered in connection with their inclusion in any
registration under Sections 3.1 or 3.2 hereunder.
"Registrable Securities" means the Exchange Notes. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities (a) when a registration statement with respect to
the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) when such securities shall
have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer under the Securities Act shall have
been delivered by the Company and subsequent public distribution of them
shall not require registration of them under the Securities Act, (c) when
such securities are sold pursuant to Rule 144 (or similar rule adopted by
the Commission) under the Securities Act, or (d) when such securities cease
to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Outstanding Holders" means the holders
of Registrable Securities who hold 25% or more of the aggregate principal
amount of the Exchange Notes that are then outstanding.
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a majority of the
Exchange Notes that are then being held by all Participating Holders.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the limitations
imposed by Sections 3.1(c), at any time and from time to time, the Trustee,
on behalf of, and upon notice from, one or more holders of Registrable
Securities representing the Requisite Percentage of Outstanding Holders,
shall have the right to require the Company to file a registration
statement under the Securities Act covering all or any part of the
Registrable Securities of such Holders, by delivering a written request
therefor to the Company specifying the number and amount of Registrable
Securities and the intended method of distribution thereof. Any such
request pursuant to this Section 3.1(a) is referred to herein as a
"Requested Registration." The Company shall give prompt written notice of
each Requested Registration to all other holders of record of Registrable
Securities, and thereupon the Company shall use its best efforts to effect
the registration under the Securities Act so as to permit promptly the
sale, in accordance with the intended method of distribution, of the
Registrable Securities which the Company has been so requested to register
in the Requested Registration and all other Registrable Securities which
the Company has been requested to register by the Trustee, on behalf of,
and upon notice from, the holders thereof, by written request given to the
Company within 30 days after the giving of such written notice by the
Company.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 3.1 in connection with
an underwritten offering by one or more Participating Holders of
Registrable Securities, securities other than Registrable Securities shall
not be included among the securities covered by such registration to the
extent that the managing underwriter of such underwritten offering shall
inform the Company by letter of its belief that the inclusion of such other
securities would materially adversely affect such offering (including,
without limitation, on the pricing of the offering).
(c) Limitations on Requested Registrations; Expenses. The
rights of the Trustee, on behalf of the holders of Registrable Securities,
to request Requested Registrations pursuant to Section 3.1(a) are subject
to the following limitations: (i) the Company shall not be obligated to
effect a Requested Registration having an aggregate anticipated offering
price of less than U.S. $1,000,000 unless such offering shall cover all
remaining Registrable Securities; (ii) the Company shall not be obligated
to effect a Requested Registration within six months after the effective
date of any other registration of securities (other than pursuant to a
registration on Form S-8 or any successor or similar form which is then in
effect); and (iii) the Company will pay all Registration Expenses only in
connection with the first three Requested Registrations of Registrable
Securities pursuant to this Section 3.1 that have become effective under
the Securities Act.
(d) Registration Statement Form. Registrations under this
Section 3.1 shall be on Form S-1, Form S-3 or any successor forms, if
permitted, or such appropriate registration form of the Commission as shall
be selected by the Company and as shall be reasonably acceptable to the
Trustee, on behalf of, and upon notice from, the Requisite Percentage of
Participating Holders. The Company agrees to include in any such
registration statement all information which, in the opinion of counsel to
the Participating Holders and counsel to the Company, is required to be
included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been
effected (including for purposes of paragraph (c) of this Section 3.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 90 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other Governmental Authority or court for any reason
not attributable to the Participating Holders and has not thereafter become
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure
on the part of the Participating Holders.
(f) Selection of Underwriters. The managing underwriter or
underwriters of each underwritten offering of the Registrable Securities
registered under this Section 3.1 shall be selected by the Trustee, on
behalf of, and upon notice from, the Requisite Percentage of Participating
Holders (and shall be reasonably acceptable to the Company).
(g) Cutbacks in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in
writing (with a copy to the Trustee and each Participating Holder) that, in
its opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Requisite Percentage of Participating
Holders, the Company will include in such registration, to the extent of
the number which the Company is so advised can be sold in such offering,
Registrable Securities requested to be included in such registration, pro
rata among the Participating Holders requesting such registration in
accordance with the principal amount of Exchange Notes held by each such
Participating Holder so requested to be registered, and any securities of
the Company included in such registration pursuant to Section 3.1(b) shall
be reduced proportionately.
(h) Postponement. The Company shall be entitled once in any
six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Company
determines, in its reasonable judgment, that such registration and offering
would interfere with any financing, corporate reorganization or other
material transaction or development involving the Company or any subsidiary
or would require premature disclosure thereof, and promptly gives the
holders of Registrable Securities requesting registration thereof pursuant
to this Section 3.1 written notice of such determination, containing a
statement of the reasons for such postponement and an approximation of the
anticipated delay. If the Company shall so postpone the filing of a
registration statement, the Trustee, on behalf of, and upon notice from,
the Participating Holders representing the Requisite Percentage of
Participating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 20 days after
receipt of the notice of postponement and, in the event of such withdrawal,
such request shall not be counted toward the number of Requested
Registrations (including for purposes of paragraph (c) of this Section
3.1).
(i) Holder's Right to Withdraw. The Trustee, on behalf of,
and upon notice from, the Requisite Percentage of Participating Holders,
shall have the right to withdraw the request for registration pursuant to
Section 3.1 at any time by giving written notice to the Company of its
request to withdraw and such request (if made before the filing of the
registration statement with the Securities and Exchange Commission) shall
not be counted toward the number of Requested Registrations (including for
purposes of paragraph (c) of this Section 3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the Company
proposes or is required to register any of its securities under the
Securities Act (other than pursuant to registrations on such form or
similar form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan) (an "Incidental
Registration"), the Company will give prompt written notice to the Trustee
and all holders of record of Registrable Securities of its intention to so
register its securities and of such holders' rights under this Section 3.2.
Upon the written request of the Trustee, on behalf of, and upon notice
from, any holder of Registrable Securities, made within 20 days following
the receipt of any such written notice (which request shall specify the
maximum number of Registrable Securities intended to be disposed of by such
holder and the intended method of distribution thereof), the Company will
use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to
register by the Trustee, on behalf of, and upon notice from, the holders
thereof, together with any other securities the Company is obligated to
register pursuant to incidental registration rights of other security
holders of the Company. No registration effected under this Section 3.2
shall relieve the Company of its obligation to effect any Requested
Registration under Section 3.1.
(b) Abandonment or Delay. If, at any time after the Company
has giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination and its reasons
therefor to the Trustee and all holders of record of Registrable Securities
and (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of the Trustee, on behalf of, and upon notice from, any
holder or holders of Registrable Securities entitled to do so, to request
that such registration be effected as a registration under Section 3.1, and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities for the same
period as the delay in registering such other securities.
(c) Holder's Right to Withdraw. The Trustee, on behalf of,
and upon notice from, any holder of Registrable Securities, shall have the
right to withdraw its request for inclusion of the Registrable Securities
of such holder in any registration statement pursuant to this Section 3.2
at any time by giving written notice to the Company of its request to
withdraw.
(d) Unlimited Number of Registrations; Expenses. There is no
limitation on the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 3.2. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the
Company by letter of its belief that the number of Registrable Securities
requested to be included in such registration would materially adversely
affect such offering, then the Company will include in such registration,
first, the securities proposed by the Company to be sold for its own
account, second, if applicable, the securities proposed by the Company to
be sold for the account of a holder of securities who has made a demand for
registration pursuant to a section of a registration rights agreement
between such holder and the Company analogous to Section 3.1 hereof, and
third, the Registrable Securities and all other securities of the Company
to be included in such registration to the extent of the number and type
which the Company is so advised can be sold in (or during the time of) such
offering, pro rata among the Participating Holders and such other holders
requesting such registration in accordance with the principal amount of
Exchange Notes held by each Participating Holder and each such other holder
so requested to be registered.
3.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 3.1
or 3.2 hereof, the Company will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required
by the Commission to be filed therewith) and thereafter use its
best efforts to cause such registration statement to become
effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment
or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall furnish
such documents to the Trustee, the Participating Holders and
their counsel, and each underwriter, if any, participating in the
offering of the Registrable Securities and its counsel; and
provided, further, however, that the Company may discontinue any
registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify the Trustee and each Participating Holder of the
Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities
covered by such registration statement for such period as shall
be required for the disposition of all of such Registrable
Securities, provided, that such period need not exceed 90 days;
(c) furnish, without charge, to the Trustee and each
Participating Holder such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as the Trustee may
reasonably request on behalf of and upon notice from such
Participating Holders;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws of
such States of the United States of America where an exemption is
not available and as the Trustee shall reasonably request on
behalf of, and upon notice from, the Participating Holders, (ii)
to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and (iii) to
take any other action which may be reasonably necessary or
advisable to enable such Participating Holders to consummate the
disposition in such jurisdictions of the securities to be sold by
such Participating Holders, except that the Company shall not for
any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subsection (d) be obligated to
be so qualified or to consent to general service of process in
any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state or foreign governmental
agencies or authorities as may be necessary in the opinion of
counsel to the Company and counsel to the Participating Holders
to consummate the disposition of such Registrable Securities;
(f) furnish to the Trustee, each Participating Holder and
each underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of
(i) an opinion of outside counsel (or inside counsel if
satisfactory to each underwriter) for the Company, and
(ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's
financial statements included or incorporated by reference
in such registration statement, covering substantially the
same matters with respect to such registration statement
(and the prospectus included therein) and, in the case of
the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters
in underwritten public offerings of securities (and dated
the dates such opinions and comfort letters are customarily
dated) and, in the case of the legal opinion, such other
legal matters, and, in the case of the accountants' comfort
letter, such other financial matters, as the Trustee, on
behalf of, and upon notice from, the Requisite Percentage of
Participating Holders, or the underwriters, may reasonably
request;
(g) promptly notify the Trustee, each Participating Holder
and each managing underwriter, if any, participating in the
offering of the securities covered by such registration statement
(i) when such registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related
thereto or post-effective amendment to such registration
statement has been filed, and, with respect to such registration
statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the Commission for
amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii)
of the issuance by the Commission of any stop order suspending
the effectiveness of such registration statement or the
initiation of any proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such
purpose; (v) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the
light of the circumstances under which they were made, and in the
case of this clause (v), at the request of the Trustee, on behalf
of, and upon notice from, any Participating Holder, promptly
prepare and furnish to it and each managing underwriter, if any,
participating in the offering of the Registrable Securities a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and (vi)
at any time when the representations and warranties of the
Company contemplated by Section 3.4(a) hereof cease to be true
and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and promptly furnish to the Trustee
and each such Participating Holder a copy of any amendment or
supplement to such registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) use its best efforts to cause all Registrable Securities
covered by such registration statement to be listed on a national
securities exchange or to secure designation of all such
Registrable Securities as a National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") "national
market system security" within the meaning of Rule 11Aa2-1 of the
Commission;
(k) deliver promptly to the Trustee, counsel to the
Participating Holders and each underwriter, if any, participating
in the offering of the Registrable Securities, copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such
registration statement;
(l) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration
statement;
(m) provide a CUSIP number for all Registrable Securities,
no later than the effective date of the registration statement;
and
(n) make available its employees and personnel and otherwise
provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses) in their marketing
of Registrable Securities.
Prior to their inclusion in any registration under Sections 3.1 or 3.2
hereunder, the Company may require each Participating Holder as to the
Registrable Securities of whom any registration is being effected to
furnish the Company such information regarding such holder and the
distribution of such securities as the Company may from time to time
reasonably request in writing.
Prior to their inclusion in any registration under Sections 3.1
or 3.2 hereunder, each holder of Registrable Securities shall agree that
upon receipt of any notice from the Company of the happening of any event
of the kind described in subsection (g) (iii) or (v) of this Section 3.3,
the Participating Holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until, in the case of
subsection (g)(iii) of this Section 3.3, such stop order is removed or
proceedings therefor terminated, and, in the case of subsection (g)(v) of
this Section 3.3, such holder's receipt of the copies of the supplemented
or amended prospectus contemplated by subsection (g)(v) of this Section 3.3
and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by Participating Holders
pursuant to a registration requested under Section 3.1, the Company will
use its best efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, each such holder and the
underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to
the extent provided in Section 3.6 hereof. Prior to their participation in
such underwritten offering, the Participating Holders will cooperate with
the Company in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the
form thereof and the Participating Holders shall be parties to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of the Participating Holders and that any or
all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of the Participating Holders. No Participating Holder shall be
required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's ownership of and title to
the Registrable Securities, such holder's intended method of distribution
and any other representations required by law, and any liability of the
Participating Holder to any underwriter or other person under such
underwriting agreement shall be limited to liability arising from
misstatements in or omissions from its representations and warranties and
shall be limited to an amount equal to the net proceeds that the
Participating Holder derives from such registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by the Trustee, on behalf of, and upon notice from, any
Participating Holder, use its best efforts to arrange for such underwriters
to include all the Registrable Securities to be offered and sold by such
Participating Holder among the securities of the Company to be distributed
by such underwriters. Prior to their participation in such underwritten
offering, the Participating Holders shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their
option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such
Participating Holders and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Participating Holders. No
Participating Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such
holder's ownership of and title to the Registrable Securities, such
holder's intended method of distribution and any other representations
required by law, and any liability of the Participating Holder to any
underwriter or other person under such underwriting agreement shall be
limited to liability arising from misstatements in or omissions from its
representations and warranties and shall be limited to an amount equal to
the net proceeds that the Participating Holder derives from such
registration.
3.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Trustee, the
Participating Holders and their underwriters, if any, and their respective
counsel and accountants the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed
with the Commission, and, to the extent practicable, each amendment thereof
or supplement thereto, and give each of them such access to its books and
records and such opportunities to discuss the business of the Company with
its officers and employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitting by law, each Participating Holder, its directors,
officers, partners, attorneys, agents and affiliates or general and limited
partners (and the directors, officers, employees, stockholders and
affiliates thereof), and each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such Participating Holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened) to which such Participating
Holder or any such director, officer, partner, agent or affiliate or
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities,
joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances in which they were made not misleading, and the Company
will reimburse such Participating Holder and each such director, officer,
partner, agent or affiliate, or general or limited partner, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on
behalf of such Participating Holder or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; and
provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or
give a copy of the final prospectus, as the same may be then supplemented
or amended, to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force regardless of any investigation made
by or on behalf of such Participating Holder or any such director, officer,
partner, attorney, agent or affiliate or controlling Person and shall
survive the transfer of such securities by such Participating Holder.
(b) Indemnification by the Participating Holders. As a
condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking satisfactory to
it from the Participating Holders to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subsection (a) of this
Section 3.6) the Company, each director and officer of the Company, and
each other Person, if any, who controls the Company within the meaning of
the Securities Act, with respect to any statement or alleged statement in
or omission or alleged omission from such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only if such statement
or alleged statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by such Participating Holder
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability
of such indemnifying party under this Section 3.6(b) shall be limited to
the amount of net proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling person and shall
survive the transfer of such securities by the Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section
3.6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action or proceeding; provided, however, that the
failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subsections of this Section 3.6, except to the extent that the indemnifying
party is materially prejudiced by such failure to give notice, and shall
not relieve the indemnifying party from any liability which it may have to
the indemnified party otherwise than under this Section 3.6. In case any
such action or proceeding is brought against an indemnified party, the
indemnifying party shall be entitled to participate therein and, unless in
the opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in
respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action or proceeding include
both the indemnified party and the indemnifying party and if in the opinion
of outside counsel to the indemnified party there may be legal defenses
available to such indemnified party and/or other indemnified parties which
are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to defend such action or proceeding on behalf of such
indemnified party or parties, provided, further, that the indemnifying
party shall be obligated to pay for only one counsel for all indemnified
parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation (unless the first proviso in the
preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in
this Section 3.6 shall for any reason be held by a court to be unavailable
to an indemnified party under subsection (a) or (b) hereof in respect of
any loss, claim, damage or liability, or any action in respect thereof,
then, in lieu of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party under subsection
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the
Participating Holders which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as shall be appropriate
to reflect not only the relative fault but also the relative benefits
received by the Company and the Participating Holders from the offering of
the securities covered by such registration statement as well as any other
relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 3.6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Participating Holders' obligations to contribute as
provided in this subsection (d) are several and not joint in proportion to
the relative value of their respective Registrable Securities covered by
such registration statement. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any
action or claim effected without such Person's consent, which consent shall
not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall
be required to contribute any amount in excess of the net proceeds received
by such party from the sale of the Registrable Securities in the offering
to which the losses, claims, damages or liabilities of the indemnified
parties relate.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 3.6
(with appropriate modifications) shall be given by the Company and each
Participating Holder with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 3.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by any of the Participating Holders.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
3.7 Certain Rights of the Holders If Named in a Registration
Statement. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to any Holder by name or otherwise as the holder of any
securities of the Company, then such Holder shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory
to such Holder, to the effect that the holding by such Holder of such
securities does not necessarily make such Holder a "controlling person" of
the Company within the meaning of the Securities Act and is not to be
construed as a recommendation by such Holder of the investment quality of
the Company's debt or equity securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company or (ii) in the event that such
reference to such Holder by name or otherwise is not, in the reasonable
judgment of such Holder as advised by its counsel, required by the
Securities Act or any of the rules and regulations promulgated thereunder,
or any state securities laws of any jurisdiction, the deletion of the
reference to such Holder.
3.8 Unlegended Exchange Notes. In connection with the offering of
any Registrable Securities registered pursuant to this Article 3, the
Company shall (i) facilitate the timely preparation and delivery to
Participating Holders and the underwriters, if any, participating in such
offering, of unlegended Exchange Notes representing ownership of such
Registrable Securities being sold in such denominations and registered in
such names as requested by such Participating Holders or such underwriters
and (ii) instruct any transfer agent and registrar of such Registrable
Securities to release any stop transfer orders with respect to any such
Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The
Company hereby agrees that, if it shall previously have received a request
for registration pursuant to Section 3.1 or 3.2 hereof, and if such
previous registration shall not have been withdrawn or abandoned, (i) the
Company shall not effect any public or private offer, sale or other
distribution of its securities or effect any registration of any of its
equity securities under the Securities Act (subject to the provisions of
Section 3.2 hereof) (other than a registration on Form S-8 or any successor
or similar form which is then in effect), whether or not for sale for its
own account, until a period of 90 days (or such shorter period as the
Trustee shall agree, on behalf of, and upon notice from, the Requisite
Majority of Participating Holders) shall have elapsed after the effective
date of such previous registration (and the Company shall so provide in any
registration rights agreements hereafter entered into with respect to any
of its securities); and (ii) the Company shall use its best efforts to
cause each holder of its equity securities purchased from the Company at
any time after the date of this Agreement other than in a public offering
to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 under
the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed
to create an independent obligation on the part of any Participating Holder
to sell any Registrable Securities pursuant to any effective registration
statement.
4. Rule 144. The Company shall take all actions reasonably necessary
to enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144, or (b) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the
generality of the foregoing, filing on a timely basis all reports required
to be filed by the Exchange Act. Upon the request of the Trustee, on behalf
of and upon notice from any holder of Registrable Securities, the Company
will deliver to the Trustee and to such holder a written statement as to
whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of (i) the Company and (ii) the Trustee, on behalf of, and upon
notice from, the holders of at least 51% in aggregate principal amount of
the outstanding Exchange Notes. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, in each case only if the Company shall have obtained the written
consent to such action or omission to act, of the Trustee, on behalf of,
and upon notice from, the holders of at least 51% in aggregate principal
amount of the outstanding Exchange Notes. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects to be treated as the holder of such Registrable
Securities, the Company may require assurances reasonably satisfactory to
it of such owner's beneficial ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or
by a reputable overnight courier, and shall be addressed as follows:
(a) if to the Trustee, addressed to it in the manner set forth in
the Exchange Agreement, or at such other address as it shall have furnished
to the Company in writing;
(b) if to any Holder, addressed to it in the manner set forth in
the Exchange Agreement, or at such other address as it shall have furnished
to the Company in writing;
(c) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address,
then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company; or
(d) if to the Company, addressed to it in the manner set forth in
the Exchange Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the Trustee,
on behalf of, and upon notice from, any Holder, to any one or more
transferees or distributees of all or part of such Holder's Registrable
Securities. A holder of Registrable Securities shall be permitted, in
connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a
holder of Registrable Securities, to request a registration pursuant to
Section 3.1 and shall provide the Company with copies of such conditions or
constraints and the identity of such transferees.
9. Remedies. The Trustee, on behalf of each holder of Registrable
Securities, in addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate. In any action or
proceeding brought to enforce any provision of this Agreement (including
the indemnification provisions thereof), the successful party shall be
entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Trustee on
behalf of the holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. Except as set forth on
Exhibit A hereto and except for the registration rights granted in
connection with the Note Purchase Agreement pursuant to the Registration
Rights Agreement dated as of September 30, 1998 by and between the
purchasers listed on Exhibit A thereto and the Company, the Company has not
previously entered into any agreement with respect to its securities
granting any registration rights to any Person other than the registration
rights granted pursuant to this Agreement. Except as set forth on Exhibit B
hereto, the rights granted to the Trustee on behalf of the holders of
Registrable Securities hereunder do not in any way conflict with and are
not inconsistent with any other agreements to which the Company is a party
or by which it is bound. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement
with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the
terms and conditions contained in this Agreement are (insofar as they are
applicable) to the holders of the Exchange Notes, then the terms and
conditions of this Agreement shall immediately be deemed to have been
amended without further action by the Company or any of the holders of
Registrable Securities so that such holders shall be entitled to the
benefit of any such more favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New
York, without regard to the conflicts of laws principles thereof. Each of
the parties hereto hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the courts of the State of New York
and the United States of America located in New York, New York for any
action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts). Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New
York or the United States of America located in New York, New York, and
hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum. The Company
hereby waives any right it may have to a trial by jury in respect of any
action, proceeding or litigation directly or indirectly arising out of,
under or in connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
INAMED CORPORATION
By: /s/ Richard G. Babbitt
-----------------------------------
Name: Richard G. Babbitt
Title: Chairman & CEO
SANTA BARBARA BANK & TRUST
By: /s/ Jay D. Smith
-----------------------------------
Name: Jay D. Smith
Title: Senior Vice President
<PAGE>
Exhibit A
Other Registration Rights Agreements
1. Registration Rights for Holders of New Notes
2. Registration Rights for Holders of Exchange Notes
3. Registration Rights for Holders of Old Notes
4. Registration Rights for Holders of New Warrants
5. Registration Rights for Holders of Additional Warrants
6. Registration Rights for Holders of Exchange Warrants
7. Registration Rights under the terms of the Employment Agreement of
Ilan K. Reich
8. Registration Rights under the terms of the Employment Agreement of
Richard J. Babbitt
9. Registration Rights Agreement in connection with 4% Convertible
Debentures
<PAGE>
Exhibit B
Conflicts
1. Registration Rights Agreement, dated as of ____________, 19__ between
the Company and the holders of the Company's 4.00% Convertible
Debentures due January 16, 2000.
Exhibit F
EXCHANGE 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 EXCHANGE WARRANT...........................................4
2.1. Manner of Exercise...............................................4
2.2. Payment of Taxes.................................................5
2.3. Fractional Shares................................................5
2.4 Mandatory Exercise...............................................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....................8
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...................................14
5.1. Notice of Adjustments...........................................14
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.............................16
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.........17
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
<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: _____
EXCHANGE WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
THIS IS TO CERTIFY THAT _____, or registered assigns, is
entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from INAMED CORPORATION, a Florida corporation (the
"Company"), _____ (subject to adjustment as provided herein) shares of
Common Stock (as hereinafter defined), in whole or in part, at a purchase
price of $5.50 per share (subject to adjustment as provided herein, the
"Warrant Price"), all on the terms and conditions and pursuant to the
provisions hereinafter set forth.
1. DEFINITIONS
As used in this Exchange Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than
Warrant Stock.
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Affiliate" shall also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of any Holder
or any limited partners of a limited partner of any Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Closing Date" shall mean November 5, 1998.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted
on the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily volume
weighted average sale price per share of Common Stock for the twenty
Business Days ending five days prior to such date. The "Closing Price" for
each day shall be the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc., Automated Quotation System or such other system then in use, or, if
on any such date the Common Stock or such other securities are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities exchange,
the Closing Price shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Exchange Warrant on such
date.
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this Exchange
Warrant is registered on the books of the Company maintained for such
purpose. "Holders" shall mean, collectively, each Holder of an Exchange
Warrant, in the event of any division of this Exchange Warrant.
"Loan Notes" shall mean the Company's 10% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, dated as of September 30,
1998.
"Majority Holders" shall mean the holders of Exchange Warrants
exercisable for in excess of 50% of the aggregate number of shares of
Warrant Stock then purchasable upon exercise of all Exchange Warrants.
"Notes" shall mean the Company's 11% Senior Subordinated Secured
Notes issued pursuant to the Subordinated Indenture between the Company and
Santa Barbara Bank & Trust, dated as of the date hereof.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock upon exercise of the warrants and options listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Exchange Warrant
would be, evidenced by a certificate bearing the restrictive legend set
forth in Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Exchange Warrant or
Warrant Stock or of any interest in either thereof, which would constitute
a sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Exchange Warrants" shall mean this Exchange Warrant and all
warrants issued upon transfer, division or combination of, or in
substitution for, any thereof. All Exchange Warrants shall at all times be
identical as to terms and conditions and date, except as to the number of
shares of Common Stock for which they may be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Exchange Warrants upon the exercise thereof.
2. EXERCISE OF EXCHANGE WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the
Expiration Date, Holder may exercise this Exchange Warrant, on any Business
Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Exchange Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at 3800 Howard
Hughes Parkway, Suite 900, Las Vegas, NV 89109 (i) a written notice of
Holder's election to exercise this Exchange Warrant, which notice shall
specify the number of shares of Common Stock to be purchased, (ii) payment
of the aggregate Current Warrant Price for such shares and (iii) this
Exchange Warrant. Such notice shall be substantially in the form appearing
at the end of this Exchange Warrant as Exhibit A, duly executed by Holder.
Upon receipt of the items specified in the second preceding sentence, the
Company shall execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered
shall be in such denomination or denominations as Holder shall request in
the notice and shall be registered in the name of Holder or, subject to
Section 9, such other name as shall be designated in the notice. This
Exchange Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder
or any other Person so designated shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the notice,
together with the Current Warrant Price and this Exchange Warrant, are
received by the Company as described above. If this Exchange Warrant shall
have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Exchange Warrant Stock,
deliver to Holder a new Exchange Warrant evidencing the right of Holder to
purchase the unpurchased shares of Common Stock called for by this Exchange
Warrant, which new Exchange Warrant shall in all other respects be
identical with this Exchange Warrant, or, at the request of Holder,
appropriate notation may be made on this Exchange Warrant and the same
returned to Holder.
Payment of the Warrant Price shall be made at the option of
Holder (i) by certified or official bank check or (ii) by tendering Notes
or Loan Notes having a principal face amount such that the amount of such
Notes or Loan Notes, together with accrued and unpaid interest thereon
shall be equal to the Warrant Price (the Company hereby agreeing to reissue
any Notes or Loan Notes of a Holder into one or more Notes or Loan Notes in
denominations requested by such Holder)
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Exchange Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with respect
to, the issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Exchange Warrant. As
to any fraction of a share which Holder would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock on the date of exercise.
2.4 MANDATORY EXERCISE. (a) Subject to the limitations set forth in
subsection 2.4(c)below, the Company may, at its sole option, require the
exercise (a "Mandatory Exercise") of the Permitted Portion (as defined
below) of the Exchange Warrants.
(b) Upon the election by the Company to require a Mandatory
Exercise, the Company shall deliver to each Holder at least ten
Business Days prior to the date of the Mandatory Exercise a notice
(the "Exercise Notice") which shall include (i) the date of Mandatory
Exercise, (ii) the Permitted Portion of the Exchange Warrants to be
exercised and (iii) a certification that the conditions to the
Mandatory Exercise set forth in subsection 2.4(c) have been satisfied.
Upon receipt of the Exercise Notice, each Holder shall be
required to exercise the Permitted Portion of such Holder's Exchange
Warrants on the date of the Mandatory Exercise pursuant to the
provisions of Section 2.1. Each Holder shall notify the Company prior
to the date of the Mandatory Exercise of its intended method of
payment of the Warrant Price, and satisfy all conditions set forth in
Section 2.1 with respect to such exercise, including without
limitation to deliver the Exchange Warrant to the principal office of
the Company as provided therein. Following the date of the Mandatory
Exercise, the Exchange Warrant as it relates to the Permitted Portion
shall be deemed to be cancelled with respect to such exercised
portion.
(c) Notwithstanding the foregoing, a Mandatory Exercise shall not
be permitted except as follows: (i) the date of Mandatory Exercise is
subsequent to September 1, 2000; (ii) the United States District
Court, Northern District of Alabama, Southern Division (or any
successor court with jurisdiction over the Silicone Gel Breast Implant
Products Liability Litigation (MDL 926)) has issued an order
certifying the Company's Mandatory (non "opt-out" Limited Fund) Class
under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure, and
such order has become a final (non-appealable) order, (iii) all
registration statements have been declared effective with respect to
the shares of Common Stock issued or issuable on exercise of the
Exchange Warrants and (iv) either clause (i) or clause (ii) of the
definition of Permitted Portion is applicable.
As used herein, Permitted Portion shall mean (i) one-half of such
Holder's Exchange Warrants in the event the Closing Price of the
Common Stock for each of the 90 days (to the extent such day was a
Business Day) immediately prior to the date of the Exercise Notice is
greater than $11.00 or (ii) all of such Holder's Exchange Warrants in
the event the Closing Price of the Common Stock for each of the 180
days (to the extent such day was a Business Day) immediately prior to
the date of the Exercise Notice is greater than $11.00.
(d) If a Holder shall not exercise the portion of the Exchange
Warrant as required by the Exercise Notice and this Section 2.4, then
such portion of such Exchange Warrant shall be deemed forfeited and
such option shall be of no further force or effect.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Exchange Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose,
upon surrender of this Exchange Warrant at the principal office of the
Company referred to in Section 2.1, together with a written assignment of
this Exchange Warrant substantially in the form of Exhibit B hereto duly
executed by Holder and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall, subject to Section 9, execute and deliver
a new Exchange Warrant or Exchange Warrants in the name of the assignee or
assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Exchange Warrant
evidencing the portion of this Exchange Warrant not so assigned, and this
Exchange Warrant shall promptly be canceled. An Exchange Warrant, if
properly assigned in compliance with Section 9, may be exercised by a new
Holder for the purchase of shares of Common Stock without having a new
Exchange Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Exchange
Warrant may be divided into multiple Exchange Warrants or combined with
other Exchange Warrants upon presentation hereof at the aforesaid office or
agency of the Company, together with a written notice specifying the names
and denominations in which new Exchange Warrants are to be issued, signed
by Holder. Subject to compliance with Section 3.1 and with Section 9, as to
any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Exchange Warrant or Exchange
Warrants in exchange for the Exchange Warrant or Exchange Warrants to be
divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Exchange Warrant or Exchange
Warrants under this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Exchange Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Exchange
Warrant is exercisable and/or the price at which such shares may be
purchased upon exercise of this Exchange Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The Company
shall give each Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Exchange
Warrant is exercisable immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock which a
record holder of the same number of shares of Common Stock for which this
Exchange Warrant is exercisable immediately prior to the occurrence of such
event would own or be entitled to receive after the happening of such
event, and (ii) the Current Warrant Price per share shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Exchange Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for which this
Exchange Warrant is exercisable immediately after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Exchange
Warrant is exercisable shall be adjusted to equal the product of the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to such adjustment and a fraction (A) the numerator of which shall be
the Current Market Price per share of Common Stock at the date of taking
such record and (B) the denominator of which shall be such Current Market
Price per share of Common Stock minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Exchange Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for which this
Exchange Warrant is exercisable immediately after such adjustment. A
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of this Section
4.2 and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Share of Common
Stock less than the Current Warrant Price at the time the Additional Shares
of Common Stock are issued, then (i) the Current Warrant Price as to the
number of shares for which this Warrant is exercisable prior to such
adjustment shall be reduced to a price determined by dividing (A) an amount
equal to the sum of (x) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale multiplied by the then existing
Current Warrant Price, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of
Common Stock Outstanding immediately after such issue or sale; and (ii) the
number of shares of Common Stock for which this Warrant is exercisable
shall be adjusted to equal the product obtained by multiplying the Current
Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof by
the Current Warrant Price resulting from the adjustment made pursuant to
clause (i) above.
(b) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, for consideration in an amount per Additional Share of
Common Stock less than the Current Market Price, then (i) the number of
shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such issue or sale by a fraction (A) the numerator of which shall be the
number of shares of Common Stock Outstanding immediately after such issue
or sale, and (B) the denominator of which shall be the number of shares of
Common Stock Outstanding immediately prior to such issue or sale plus the
number of shares which the aggregate offering price of the total number of
such Additional Shares of Common Stock would purchase at the then Current
Market Price; and (ii) the Current Warrant Price as to the number of shares
for which this Warrant is exercisable prior to such adjustment shall be
adjusted by multiplying such Current Warrant Price by a fraction (X) the
numerator of which shall be the number of shares for which this Warrant is
exercisable immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of shares of Common Stock
purchasable immediately after such issue or sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per
Additional Shares of Common Stock which is less than the Current Warrant
Price and the Current Market Price at the time the Additional Shares of
Common Stock are issued, the adjustment required under Section 4.3 shall be
made in accordance with the formula in paragraph (a) or (b) above which
results in the lower Current Warrant Price following such adjustment. The
provisions of paragraphs (a) and (b) of Section 4.3 shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made
under paragraph (a) or (b) of Section 4.3 upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible
Securities, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.4 or Section 4.5 herein.
4.4. ISSUANCE OF EXCHANGE WARRANTS OR OTHER RIGHTS. If at any time the
Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which the Company
is the surviving corporation) issue or sell, any warrants or other rights
to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price or the
Current Market Price in effect immediately prior to the time of such issue
or sale, then the number of shares for which this Exchange Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of
Common Stock issuable pursuant to all such warrants or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the
Company shall have received all of the consideration payable therefor, if
any, as of the date of the actual issuance of the number such warrants or
other rights. No further adjustments of the Current Warrant Price shall be
made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the
actual issue of such Common Stock upon such conversion or exchange of such
Convertible Securities. Notwithstanding the foregoing, no adjustment shall
be required under this Section 4.4 solely by reason of the issuance or
distribution of stock purchase rights pursuant to the Rights Plan or any
other rights plan of the Company, provided that the adjustments required by
this Section 4.4 shall be made if any "flip-in" or "flip-over" event shall
occur under such stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Current Warrant
Price or Current Market Price in effect immediately prior to the time of
such issue or sale, then the number of shares for which this Exchange
Warrant is exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
shares of Common Stock necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration
payable therefor, if any, as of the date of actual issuance of such
Convertible Securities. No adjustment of the number of shares for which
this Exchange Warrant is exercisable and the Current Warrant Price shall be
made under this Section 4.5 upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other
rights pursuant to Section 4.4. No further adjustments of the number of
shares for which this Exchange Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities
for which adjustments of the number of shares for which this Exchange
Warrant is exercisable and the Current Warrant Price have been or are to be
made pursuant to other provisions of this Section 4, no further adjustments
of the number of shares for which this Exchange Warrant is exercisable and
the Current Warrant Price shall be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Exchange Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or
Section 4.5 as the result of any issuance of warrants, rights or
Convertible Securities, such warrants or rights, or the right of conversion
or exchange in such other Convertible Securities, shall expire, and all of
such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised and no outstanding Exchange
Warrant shall have been exercised (in whole or in part), then for each
outstanding Warrant such previous adjustment shall be rescinded and
annulled and the Additional Shares of Common Stock which were deemed to
have been issued by virtue of the computation made in connection with the
adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Exchange Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Exchange Warrant is
exercisable that would otherwise be required may be postponed (except in
the case of a subdivision or combination of shares of the Common Stock, as
provided for in Section 4.1) up to, but not beyond the date of exercise if
such adjustment either by itself or with other adjustments not previously
made results in an increase or decrease of less than 1% of the shares of
Common Stock for which this Exchange Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a
change of less than such minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4 and not
previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its
occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) Escrow of Exchange Warrant Stock. If after any property
becomes distributable pursuant to this Section 4 by reason of the taking of
any record of the holders of Common Stock, but prior to the occurrence of
the event for which such record is taken, Holder exercises this Exchange
Warrant, any Additional Shares of Common Stock issuable upon exercise by
reason of such adjustment shall be deemed the last shares of Common Stock
for which this Exchange Warrant is exercised (notwithstanding any other
provision to the contrary herein) and such shares or other property shall
be held in escrow for Holder by the Company to be issued to Holder when and
to the extent that the event actually takes place, upon payment of the then
Current Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be canceled by the Company and
escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Majority
Holders.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then Holder shall have the right thereafter to receive, upon
exercise of this Exchange Warrant and payment of the Current Warrant Price,
the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a
holder of the number of shares of Common Stock for which this Exchange
Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of
each and every covenant and condition of this Exchange Warrant to be
performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the Common Stock
for which this Exchange Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section
4. For purposes of this Section 4.8, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class of
stock of such corporation and which is not subject to redemption and shall
also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock,
either immediately or upon the arrival of a specified date or the happening
of a specified event and any warrants or other rights to subscribe for or
purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Exchange Warrant is exercisable and/or the purchase price thereof shall be
adjusted in such manner as may be equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
4.11 ADJUSTMENT. Notwithstanding the provisions otherwise set forth
herein, the Warrant Price shall be decreased by $.50, to $5.00 per share,
if (i) the Company shall fail to register with the Commission on an
appropriate form under the Securities Act, and to cause to become effective
a registration statement with respect to the Warrant Stock pursuant to the
provisions of Section 9.3 hereof, prior to September 1, 1999 or (ii) if the
Company shall register and cause to become effective such registration
statement prior to September 1, 1999, but shall not maintain such
effectiveness (after such date) as provided in Section 9.3(a). In addition,
the Warrant Price shall be decreased by an additional $.50, to $4.50 per
share, if (A) the Company shall fail to register with the Commission on an
appropriate form under the Securities Act, and to cause to become effective
a registration statement with respect to the Warrant Stock pursuant to the
provisions of Section 9.3 hereof, prior to March 1, 2000 or (B) if the
Company shall register and cause to become effective such registration
statement prior to March 1, 2000, but shall not maintain such effectiveness
(after such date) as provided in Section 9.3(a). All adjustments to the
Warrant Price made pursuant to this Section 4.11 shall be made prior to
giving effect to all other adjustments made pursuant to this Article 4.
5. NOTICES TO EXCHANGE WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Exchange Warrant is exercisable, or whenever the price
at which a share of such Common Stock may be purchased upon exercise of the
Exchange Warrants, shall be adjusted pursuant to Section 4, the Company
shall forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this
Exchange Warrant is exercisable and (if such adjustment was made pursuant
to Section 4.8 or 4.9) describing the number and kind of any other shares
of stock or Other Property for which this Exchange Warrant is exercisable,
and any change in the purchase price or prices thereof, after giving effect
to such adjustment or change. The Company shall promptly cause a signed
copy of such certificate to be delivered to each Holder in accordance with
Section 13.2. The Company shall keep at its principal office copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective
purchaser of an Exchange Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company (other than the
reincorporation merger described in the Proxy Statement filed with the
Securities and Exchange Commission by the Company on September 18,
1998) with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to,
another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with
Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Exchange Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect
the rights of Holder against impairment. Without limiting the generality of
the foregoing, the Company will (a) not increase the par value of any
shares of Common Stock receivable upon the exercise of this Exchange
Warrant above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Exchange Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Exchange Warrant.
Upon the request of Holder, the Company will at any time during
the period this Exchange Warrant is outstanding acknowledge in writing, in
form reasonably satisfactory to Holder, the continuing validity of this
Exchange Warrant and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Exchange Warrants
such number of its authorized but unissued shares of Common Stock as will
be sufficient to permit the exercise in full of all outstanding Exchange
Warrants. All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Exchange Warrant and payment therefor in
accordance with the terms of such Exchange Warrant, shall be duly and
validly issued and fully paid and nonassessable.
8. TAKING OF RECORD; STOCK AND EXCHANGE WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of
Section 4 refers to the taking of a record of such holders, the Company
will in each such case take such a record and will take such record as of
the close of business on a Business Day. The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close
its stock transfer books or Exchange Warrant transfer books so as to result
in preventing or delaying the exercise or transfer of any Exchange Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Exchange Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Exchange Warrant or any Warrant Stock. Holder, by acceptance of this
Exchange Warrant, agrees to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Exchange Warrant and each certificate for Warrant Stock initially
issued upon the exercise of an Exchange Warrant, and each certificate for
Warrant Stock issued to any subsequent transferee of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"[THIS EXCHANGE WARRANT AND THE SECURITIES
REPRESENTED HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Exchange Warrants or any shares
of Restricted Common Stock, the holder of such Exchange Warrants or
Restricted Common Stock shall give ten days' prior written notice (a
"Transfer Notice") to the Company of such holder's intention to effect such
Transfer, describing the manner and circumstances of the proposed Transfer,
and obtain from counsel to such holder who shall be reasonably satisfactory
to the Company, an opinion that the proposed Transfer of such Exchange
Warrants or such Restricted Common Stock may be effected without
registration under the Securities Act. After receipt of the Transfer Notice
and opinion, the Company shall, within five days thereof, notify the holder
of such Exchange Warrants or such Restricted Common Stock as to whether
such opinion is reasonably satisfactory and, if so, such holder shall
thereupon be entitled to Transfer such Exchange Warrants or such Restricted
Common Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Restricted Common Stock
issued upon such Transfer and each Exchange Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section 9.1, unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Exchange
Warrants or the Restricted Common Stock, as the case may be, giving the
Transfer Notice shall not be entitled to Transfer such Exchange Warrants or
such Restricted Common Stock until receipt of notice from the Company under
this Section 9.2 that such opinion is reasonably satisfactory.
9.3. REGISTRATION RIGHTS. (a) The Company has agreed to (i) use its
best efforts to register with the Commission on an appropriate form under
the Securities Act, as soon as practicable after issuance of the Exchange
Warrants (or cause an appropriate post-effective amendment to be made to
any existing registered registration statement on or prior to such date),
and to use its best efforts to cause to become effective as soon as
practicable thereafter and in any event within six months of the Closing
Date, such registration statement with respect to the Warrant Stock and
(ii) keep such registration statement effective for such period of time as
the Exchange Warrants or the Warrant Stock is held by the Holder. The
Company will pay all expenses, including legal and accounting fees and
expenses, in connection with registrations pursuant to this Section 9.3(a).
(b) To the extent that a registration statement is not effective
pursuant to Section 9.3(a), if, at any time, the Company proposes or is
required to register any of its equity securities or securities convertible
into or exchangeable for equity securities under the Securities Act (an
"Incidental Registration"), the Company will give prompt written notice to
all holders of record of the Exchange Warrants and the Warrant Stock of its
intention to so register its securities and of such holders' rights under
this Section 9.3(b). Upon the written request of any holder of the Exchange
Warrants or the Warrant Stock made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
Warrant Stock intended to be disposed of by such holder and the intended
method of distribution thereof), the Company will use its best efforts to
effect the registration under the Securities Act of all Warrant Stock which
the Company has been so requested to register by the holders thereof
together with any other securities the Company is obligated to register
pursuant to incidental registration rights of other security holders of the
Company. No registration effected under this Section 9.3(b) shall relieve
the Company of its obligation to effect any registration under Section
9.3(a). Each holder of Exchange Warrants or Warrant Stock shall have the
right to withdraw its request for inclusion of its Warrant Stock in any
registration statement pursuant to this Section 9.3(b) at any time by
giving written notice to the Company of its request to withdraw. There is
no limitation on the number of Incidental Registrations which the Company
is obligated to effect pursuant to this Section 9.3(b). The Company will
pay all expenses in connection with any registration of Warrant Stock
requested pursuant to this Section 9.3(b).
In addition to any other registration rights contained herein or
elsewhere, if, at any time, the Company proposes an Incidental
Registration, the Company will give prompt written notice to Appaloosa
Management, L.P. ("Appaloosa") of its intention to effect such Incidental
Registration and of Appaloosa's rights under this paragraph. Upon the
written request of Appaloosa made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
shares of Common Stock intended to be disposed of by Appaloosa), the
Company will use its best efforts to effect the registration under the
Securities Act of all shares of Common Stock which the Company has been so
requested to effect in such Incidental Registration. Appaloosa shall have
the right to withdraw its request for inclusion of its Common Stock in any
registration statement pursuant to this paragraph at any time by giving
written notice to the Company of its request to withdraw. The Company will
pay all expenses in connection with any registration pursuant to this
paragraph of Common Stock held by Appaloosa or its Affiliates.
(c) In connection with registration of the Warrant Stock under
the Securities Act pursuant to this Section 9.3, the Company shall
indemnify and hold harmless each Person who participated in the offering of
such Warrant Stock and each other Person, if any, who controls such holder
or such participating Person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or participating Person
or controlling Person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse such holder or such director, officer or participating
Person or controlling Person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating Person
or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any alleged
untrue statement or alleged omission made in such registration statement,
preliminary prospectus, prospectus or amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such holder specifically for use therein and provided further that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises from or is based upon the failure
by any holder of Exchange Warrants or Warrant Stock to deliver a required
prospectus or prospectus supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
such holder or such director, officer or participating Person or
controlling Person, and shall survive the transfer of such securities by
such holder.
(d) Each holder of Exchange Warrants or Warrant Stock registered
under the Securities Act in accordance with the provisions of this Section
9.3, severally and not jointly, agrees to indemnify and hold harmless the
Company, its directors and officers and each other Person, if any, who
controls the Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director or officer or any such Person may become
subject under the Securities Act or any other statue or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing
provided to the Company by such holder of Exchange Warrants or Warrant
Stock specifically for use in any registration statement under which
securities were registered under the Securities Act for resale by such
holder, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto or the failure of such holder to
deliver any required prospectus or prospectus supplement; provided,
however, that the indemnification obligations of such holder shall be
limited to the gross proceeds from the offering of the Warrant Stock
received by such holder.
(e) If the indemnification provided for in this Section 9.3 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding provided, however, that the
contribution obligation of any holder shall be limited to the gross
proceeds from the offering of the Warrant Stock received by such holder.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitle to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
9.4. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Exchange Warrants, the Warrant Stock and the
Restricted Common Stock and the legend requirements of Section 9.1 shall
terminate as to any particular Exchange Warrant or share of Warrant Stock
or Restricted Common Stock (i) when and so long as such security shall have
been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of an Exchange Warrant
and each holder of Restricted Common Stock in supplying such information as
may be reasonably necessary for such holder to complete and file any
reports or forms presently or hereafter required by the Commission as a
condition to the availability of an exemption from the Securities Act for
the sale of any Exchange Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Exchange Warrant and indemnity reasonably satisfactory
to it (it being understood that, in the case of the initial holder, the
written agreement of Appaloosa Management, L.P. shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation
hereof, the Company will execute and deliver in lieu hereof a new Exchange
Warrant of like tenor to such Holder; provided, in the case of mutilation,
no indemnity shall be required if this Exchange Warrant in identifiable
form is surrendered to the Company for cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by
creditors of the Company.
13. MISCELLANEOUS
13.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Exchange
Warrant, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings,
incurred by Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
13.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Exchange Warrant shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for
such purpose.
(b) If to the Company at
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Executive Vice President
Telecopy Number: (702) 791-3205
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
13.3. REMEDIES. Each holder of Exchange Warrant and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under of this Exchange Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Exchange Warrant and hereby agrees
to waive the defense in any action for specific performance that a remedy
at law would be adequate.
13.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Exchange Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of Holder. The provisions of this Exchange
Warrant are intended to be for the benefit of all Holders from time to time
of this Exchange Warrant and, with respect to Section 9 hereof, holders of
Exchange Warrant Stock, and shall be enforceable by any such Holder or
holder of Warrant Stock.
13.5. AMENDMENT. This Exchange Warrant and all other Exchange Warrants
may be modified or amended or the provisions hereof waived with the written
consent of the Company and the Majority Holders, provided that no such
Exchange Warrant may be modified or amended to reduce the number of shares
of Common Stock for which such Exchange Warrant is exercisable or to
increase the price at which such shares may be purchased upon exercise of
such Exchange Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof, provided
however, that the foregoing shall not limit the operation of Section 4.6.
13.6. SEVERABILITY. Wherever possible, each provision of this Exchange
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Exchange Warrant shall
be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Exchange Warrant.
13.7. HEADINGS. The headings used in this Exchange Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Exchange Warrant.
13.8. GOVERNING LAW. THIS EXCHANGE WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK,
FOR ANY ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY
GOVERNMENTAL AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS
Exchange Warrant AND THE TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT
TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN SUCH COURTS), AND
FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS Exchange
Warrant SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF THIS Exchange Warrant OR THE TRANSACTIONS
CONTEMPLATED HEREBY IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND
HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS EXCHANGE WARRANT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Exchange Warrant
to be duly executed and its corporate seal to be impressed hereon and
attested by its Secretary or an Assistant Secretary.
Dated: November 5, 1998
INAMED CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Exchange Warrant]
Net Issue Exercise _____No ______Yes
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ Shares of Common Stock of
Inamed Corporation and herewith makes payment therefor, all at the price
and on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the
name of and delivered to _____________ whose address is ________________
and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of
like tenor and date for the balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.
----------------------------------------
(Name of Registered Owner)
----------------------------------------
(Signature of Registered Owner)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below
all of the rights of the undersigned under this Warrant, with respect to
the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of INAMED
CORPORATION maintained for the purpose, with full power of substitution in
the premises.
Dated: Print Name:
---------------------- ------------------------------
Signature:
------------------------------
Witness:
------------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
Exhibit G
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.........................................6
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......................................7
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......................................13
6. RIGHTS OF HOLDERS.....................................................14
6.1 No Impairment...................................................14
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
9. RESTRICTIONS ON TRANSFERABILITY.......................................14
9.1. Restrictive Legend..............................................15
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...............................................19
13. MISCELLANEOUS.........................................................19
13.1. Nonwaiver and Expenses..........................................19
13.2. Notice Generally................................................19
13.3. Remedies........................................................20
13.4. Successors and Assigns..........................................20
13.5. Amendment.......................................................20
13.6. Severability....................................................20
13.7. Headings........................................................20
13.8. Governing Law...................................................20
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS
No. of Shares of Common Stock: _____
WARRANT
To Purchase Shares of Common Stock of
INAMED CORPORATION
THIS IS TO CERTIFY THAT _____, or registered assigns, is
entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from INAMED CORPORATION, a Florida corporation (the
"Company"), _____ (subject to adjustment as provided herein) shares of
Common Stock (as hereinafter defined), in whole or in part, at a purchase
price of $7.50 per share (subject to adjustment as provided herein the
"Warrant Price"), all on the terms and conditions and pursuant to the
provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than
Warrant Stock.
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Affiliate" shall also include partners of a Person. Notwithstanding the
foregoing, "Affiliate" shall not include the limited partners of any Holder
or any limited partners of a limited partner of any Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Closing Date" shall mean November 5, 1998.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted
on the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily volume
weighted average sale price per share of Common Stock for the twenty
Business Days ending five days prior to such date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date.
"Expiration Date" shall mean September 1, 2002.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of a Warrant, in the event
of any division of this Warrant.
"Loan Notes" shall mean the Company's 10% Senior Secured Notes
issued pursuant to the Note Purchase Agreement, dated as of September 30,
1998.
"Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock
then purchasable upon exercise of all Warrants.
"Notes" shall mean either (i) the Company's 11.00% Senior
Subordinated Secured Notes issued pursuant to the indenture between the
Company and Santa Barbara Bank & Trust, as Trustee, dated as of the date
hereof, or (ii) the 11% Senior Secured Convertible Notes due March 31, 1999
of the Company issued pursuant to the indenture between the Company and
Santa Barbara Bank & Trust, as Trustee, dated as of January 2, 1996.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock upon exercise of the warrants and options listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may
be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the
Expiration Date, Holder may exercise this Warrant, on any Business Day, for
all or any part of the number of shares of Common Stock purchasable
hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 3800 Howard Hughes
Parkway, Suite 900, Las Vegas, NV 89109 (i) a written notice of Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (ii) payment of the aggregate
Current Warrant Price for such shares and (iii) this Warrant. Such notice
shall be substantially in the form appearing at the end of this Warrant as
Exhibit A, duly executed by Holder. Upon receipt of the items specified in
the second preceding sentence, the Company shall execute or cause to be
executed and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common
Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be in such denomination or denominations as
Holder shall request in the notice and shall be registered in the name of
Holder or, subject to Section 9, such other name as shall be designated in
the notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder
or any other Person so designated shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the notice,
together with the Current Warrant Price and this Warrant, are received by
the Company as described above. If this Warrant shall have been exercised
in part, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the right of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder.
Payment of the Warrant Price shall be made at the option of
Holder (i) by certified or official bank check, (ii) by tendering Notes or
Loan Notes having a principal face amount such that the amount of such
Notes or Loan Notes, together with accrued and unpaid interest thereon
shall be equal to the Warrant Price (the Company hereby agreeing to reissue
any Notes or Loan Notes of a Holder into one or more Notes or Loan Notes in
denominations requested by such Holder) or (iii) by the surrender of this
Warrant to the Company, with a duly executed exercise notice marked to
reflect "Net Issue Exercise," and, in either case, specifying the number of
shares of Common Stock to be purchased, during normal business hours on any
Business Day. Upon a Net Issue Exercise, Holder shall be entitled to
receive shares of Common Stock equal to the value of this Warrant (or the
portion thereof being exercised by Net Issue Exercise) by surrender of this
Warrant to the Company together with notice of such election, in which
event the Company shall issue to Holder a number of shares of the Company's
Common Stock computed as of the date of surrender of this Warrant to the
Company using the following formula:
X = Y x (A-B)
-------------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y= the number of shares of Warrant Stock being exercised under this
Warrant;
A = the Current Market Price of one share of the Company's Common
Stock (at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of such
calculation).
2.2. Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with respect
to, the issue or delivery thereof.
2.3. Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred
to in Section 2.1, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by Holder and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination specified
in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by Holder. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. Maintenance of Books. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled to receive after the happening of such event, and (ii) the
Current Warrant Price per share shall be adjusted to equal (A) the Current
Warrant Price multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares for which this Warrant is exercisable immediately
after such adjustment.
4.2. Certain Other Distributions. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such adjustment and a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. Issuance of Additional Shares of Common Stock. If at any time the
Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock, other than Permitted Issuances, for consideration
in an amount per Additional Share of Common Stock less than the Current
Market Price at the time the Additional Shares of Common Stock are issued,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale by a fraction (A) the numerator of
which shall be the number of shares of Common Stock Outstanding immediately
after such issue or sale, and (B) the denominator of which shall be the
number of shares of Common Stock Outstanding immediately prior to such
issue or sale plus the number of shares which the aggregate offering price
of the total number of such Additional Shares of Common Stock would
purchase at the then Current Market Price; and (ii) the Current Warrant
Price as to the number of shares for which this Warrant is exercisable
prior to such adjustment shall be adjusted by multiplying such Current
Warrant Price by a fraction (X) the numerator of which shall be the number
of shares for which this Warrant is exercisable immediately prior to such
issue or sale; and (Y) the denominator of which shall be the number of
shares of Common Stock purchasable immediately after such issue or sale.
4.4. Issuance of Warrants or Other Rights. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Market Price in
effect immediately prior to the time of such issue or sale, then the number
of shares for which this Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further
adjustments of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
of such warrants or other rights or upon the actual issue of such Common
Stock upon such conversion or exchange of such Convertible Securities.
Notwithstanding the foregoing, no adjustment shall be required under this
Section 4.4 solely by reason of the issuance or distribution of stock
purchase rights pursuant to the Rights Plan or any other rights plan of the
Company, provided that the adjustments required by this Section 4.4 shall
be made if any "flip-in" or "flip-over" event shall occur under such
stockholder rights plan.
4.5. Issuance of Convertible Securities. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Current Market
Price in effect immediately prior to the time of such issue or sale, then
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and outstanding and the Company shall have
received all of the consideration payable therefor, if any, as of the date
of actual issuance of such Convertible Securities. No adjustment of the
number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made under this Section 4.5 upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. No further adjustments of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities
for which adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price have been or are to be made
pursuant to other provisions of this Section 4, no further adjustments of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.
4.6. Superseding Adjustment. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5
as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all of such
warrants or rights, or the right of conversion or exchange with respect to
all or a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding Warrant such
previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and
annulled shall no longer be deemed to have been issued by virtue of such
computation.
4.7. Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
results in an increase or decrease of less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately prior to the making
of such adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, Holder exercises this Warrant, any
Additional Shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that
the event actually takes place, upon payment of the then Current Warrant
Price. Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be canceled by the Company and escrowed property
returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Majority
Holders.
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant Price, the
number of shares of common stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and
all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4. For purposes of this Section 4.8, "common stock of
the successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject
to redemption and shall also include any evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable for
any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9. Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
4.10. Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section
4.8 or 4.9) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 13.2. The Company
shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. Notice of Corporate Action. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company (other than the
reincorporation merger described in the Proxy Statement filed with the
Securities and Exchange Commission by the Company on September 18,
1998) with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company to,
another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with
Section 13.2.
6. RIGHTS OF HOLDERS
6.1 No Impairment. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.
Upon the request of Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of such Warrant, shall be duly and validly issued and fully paid and
nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of
Section 4 refers to the taking of a record of such holders, the Company
will in each such case take such a record and will take such record as of
the close of business on a Business Day. The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close
its stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this Section 9.
9.1. Restrictive Legend. Except as otherwise provided in this Section
9, each Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. Notice of Proposed Transfers; Requests for Registration. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing
the manner and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to the Company,
an opinion that the proposed Transfer of such Warrants or such Restricted
Common Stock may be effected without registration under the Securities Act.
After receipt of the Transfer Notice and opinion, the Company shall, within
five days thereof, notify the holder of such Warrants or such Restricted
Common Stock as to whether such opinion is reasonably satisfactory and, if
so, such holder shall thereupon be entitled to Transfer such Warrants or
such Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer and each Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section 9.1, unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Warrants or
the Restricted Common Stock, as the case may be, giving the Transfer Notice
shall not be entitled to Transfer such Warrants or such Restricted Common
Stock until receipt of notice from the Company under this Section 9.2 that
such opinion is reasonably satisfactory.
9.3. Registration Rights. (a) The Company has agreed to (i) use its
best efforts to register with the Commission on an appropriate form under
the Securities Act, as soon as practicable after issuance of the Warrants
(or cause an appropriate post-effective amendment to be made to any
existing registered registration statement on or prior to such date), and
to use its best efforts to cause to become effective as soon as practicable
thereafter and in any event within six months of the Closing Date, such
registration statement with respect to the Warrant Stock and (ii) keep such
registration statement effective for such period of time as the Warrants or
the Warrant Stock is held by the Holder. The Company will pay all expenses,
including legal and accounting fees and expenses, in connection with
registrations pursuant to this Section 9.3(a).
(b) To the extent that a registration statement is not effective
pursuant to Section 9.3(a), if, at any time, the Company proposes or is
required to register any of its equity securities or securities convertible
into or exchangeable for equity securities under the Securities Act (an
"Incidental Registration"), the Company will give prompt written notice to
all holders of record of the Warrants and the Warrant Stock of its
intention to so register its securities and of such holders' rights under
this Section 9.3(b). Upon the written request of any holder of the Warrants
or the Warrant Stock made within 20 days following the receipt of any such
written notice (which request shall specify the maximum number of Warrant
Stock intended to be disposed of by such holder and the intended method of
distribution thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Warrant Stock which the
Company has been so requested to register by the holders thereof together
with any other securities the Company is obligated to register pursuant to
incidental registration rights of other security holders of the Company. No
registration effected under this Section 9.3(b) shall relieve the Company
of its obligation to effect any registration under Section 9.3(a). Each
holder of Warrants or Warrant Stock shall have the right to withdraw its
request for inclusion of its Warrant Stock in any registration statement
pursuant to this Section 9.3(b) at any time by giving written notice to the
Company of its request to withdraw. There is no limitation on the number of
Incidental Registrations which the Company is obligated to effect pursuant
to this Section 9.3(b). The Company will pay all expenses in connection
with any registration of Warrant Stock requested pursuant to this Section
9.3(b).
In addition to any other registration rights contained herein or
elsewhere, if, at any time, the Company proposes an Incidental
Registration, the Company will give prompt written notice to Appaloosa
Management, L.P. ("Appaloosa") of its intention to effect such Incidental
Registration and of Appaloosa's rights under this paragraph. Upon the
written request of Appaloosa made within 20 days following the receipt of
any such written notice (which request shall specify the maximum number of
shares of Common Stock intended to be disposed of by Appaloosa), the
Company will use its best efforts to effect the registration under the
Securities Act of all shares of Common Stock which the Company has been so
requested to effect in such Incidental Registration. Appaloosa shall have
the right to withdraw its request for inclusion of its Common Stock in any
registration statement pursuant to this paragraph at any time by giving
written notice to the Company of its request to withdraw. The Company will
pay all expenses in connection with any registration pursuant to this
paragraph of Common Stock held by Appaloosa or its Affiliates.
(c) In connection with registration of the Warrant Stock under
the Securities Act pursuant to this Section 9.3, the Company shall
indemnify and hold harmless each Person who participated in the offering of
such Warrant Stock and each other Person, if any, who controls such holder
or such participating Person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to
which such holder or any such director or officer or participating Person
or controlling Person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
shall reimburse such holder or such director, officer or participating
Person or controlling Person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating Person
or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any alleged
untrue statement or alleged omission made in such registration statement,
preliminary prospectus, prospectus or amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by
such holder specifically for use therein and provided further that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises from or is based upon the failure
by any holder of Warrants or Warrant Stock to deliver a required prospectus
or prospectus supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder
or such director, officer or participating Person or controlling Person,
and shall survive the transfer of such securities by such holder.
(d) Each holder of Warrants or Warrant Stock registered under the
Securities Act in accordance with the provisions of this Section 9.3,
severally and not jointly, agrees to indemnify and hold harmless the
Company, its directors and officers and each other Person, if any, who
controls the Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director or officer or any such Person may become
subject under the Securities Act or any other statue or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information in writing
provided to the Company by such holder of Warrants or Warrant Stock
specifically for use in any registration statement under which securities
were registered under the Securities Act for resale by such holder, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto or the failure of such holder to deliver
any required prospectus or prospectus supplement; provided, however, that
the indemnification obligations of such holder shall be limited to the
gross proceeds from the offering of the Warrant Stock received by such
holder.
(e) If the indemnification provided for in this Section 9.3 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding provided, however, that the
contribution obligation of any holder shall be limited to the gross
proceeds from the offering of the Warrant Stock received by such holder.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitle to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
9.4. Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Stock and the Restricted
Common Stock and the legend requirements of Section 9.1 shall terminate as
to any particular Warrant or share of Warrant Stock or Restricted Common
Stock (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto or
(ii) when the Company shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be transferred without registration
thereof under the Securities Act.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any reports or
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it
being understood that, in the case of the initial holder, the written
agreement of Appaloosa Management, L.P. shall be sufficient indemnity), and
in case of mutilation upon surrender and cancellation hereof, the Company
will execute and deliver in lieu hereof a new Warrant of like tenor to such
Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by
creditors of the Company.
13. MISCELLANEOUS
13.1. Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
13.2. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by telecopy and confirmed by telecopy answerback, addressed as
follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for
such purpose.
(b) If to the Company at
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, NV 89109
Attention: Executive Vice President
Telecopy Number: (702) 791-3205
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
13.3. Remedies. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under of
this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
13.4. Successors and Assigns. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant and, with respect to Section 9 hereof, holders of Warrant Stock,
and shall be enforceable by any such Holder or holder of Warrant Stock.
13.5. Amendment. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before giving effect
to any adjustment as provided therein) without the prior written consent of
the Holder thereof, provided however, that the foregoing shall not limit
the operation of Section 4.6.
13.6. Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Warrant.
13.7. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
13.8. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY
ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS
RESPECTIVE ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed hereon and attested by
its Secretary or an Assistant Secretary.
Dated: November 5, 1998
INAMED CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE>
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.
<PAGE>
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.
