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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 7, 1999
AVATEX CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-8549 25-1425889
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(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
5910 N. CENTRAL EXPRESSWAY, SUITE #1780 75206
DALLAS, TEXAS
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
214-365-7450
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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NY:2\857954\04
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ITEM 5. OTHER EVENTS
Avatex Corporation ("Avatex") announced on December 6, 1999 that the
previously announced merger of its wholly-owned subsidiary, Xetava Corporation
("Xetava"), with and into Avatex, was approved by the holders of at least a
majority of the outstanding shares of existing Avatex common stock and at least
two-thirds of each series of existing Avatex preferred stock, voting separately
as a class. Avatex also announced on December 6, 1999 that, in connection with
the merger, the Delaware Court of Chancery approved the settlement of certain
litigation that had been brought on behalf of holders of Avatex preferred stock
in 1998.
Avatex announced on December 7, 1999 that the merger with Xetava was
consummated on December 7, 1999 and that its $5.00 cumulative convertible
preferred stock and $4.20 cumulative exchangeable series A preferred stock will
cease to be outstanding. Avatex also announced that its new Class A common stock
(the "New Avatex Common Stock") will be quoted for trading on the OTC Bulletin
Board System under the symbol "AVAT", that warrants to purchase its Class A
common stock (the "Warrants") will be quoted for trading on the OTC Bulletin
Board System under the symbol "AVATW", and that Avatex Funding, Inc.'s 6.75%
notes due 2002 (the "6.75% Notes") will be quoted for trading on the National
Quotation Bureau "yellow sheets(TM)".
Under the merger, Avatex's former preferred stockholders were
entitled to exchange their shares of preferred stock for shares of New Avatex
Common Stock, or, at their election, a combination of cash, 6.75% Notes,
Warrants and a deferred contingent right. The total amount of cash distributed
to electing preferred stockholders was $12,861,670, the total principal amount
of 6.75% Notes issued by Avatex Funding, Inc., a newly-formed, wholly-owned
subsidiary of Avatex, to electing preferred stockholders was approximately
$28,676,028, and the total number of Warrants issued to electing preferred
stockholders was approximately 2,319,334. The former shares of Avatex preferred
stock held by former preferred stockholders that did not elect to receive the
combination of cash, 6.75% Notes, Warrants and deferred contingent rights were
converted in the merger into a total of approximately 5,831,216 shares of New
Avatex Common Stock. The common stock held by Avatex's existing common
stockholders was converted into New Avatex Common Stock. As a result, there are
now approximately 19,637,703 shares of New Avatex Common Stock outstanding.
In connection with the consummation of the merger, Avatex filed a
Certificate of Merger of Xetava Corporation with and into Avatex Corporation
with the Secretary of State of Delaware on December 7, 1999. The Certificate of
Merger included the Restated Certificate of Incorporation of Avatex.
Reference is hereby made to the Amended and Restated Agreement and
Plan of Merger dated June 18, 1999, and the Press Release, issued June 18, 1999
by Avatex, which are attached as Exhibits 2 and 99, respectively, to the Current
Report on Form 8-K filed by
<PAGE>
Avatex on June 24, 1999. Reference is also made to Amendment No. 1 to the
Amended and Restated Agreement and Plan of Merger dated as of October 19, 1999,
which is attached as Exhibit 2-B to Amendment No. 2 to Avatex's Registration
Statement on Form S-4 (No. 333-84849), and the Press Releases issued December 6,
1999 and December 7, 1999 by Avatex, which are attached hereto as Exhibits 99-A
and 99-B, respectively, and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
3-A Certificate of Merger of Xetava Corporation with and into
Avatex Corporation dated December 7, 1999, with the
Restated Certificate of Incorporation of Avatex
Corporation annexed thereto.
3-B Restated Certificate of Incorporation of Avatex Funding,
Inc.
4-A Indenture, dated as of December 7, 1999, among Avatex
Funding, Inc., Avatex Corporation and Norwest Bank
Minnesota, National Association, as indenture trustee.
4-B Pledge and Security Agreement, dated as of December 7,
1999, among Avatex Funding, Inc., Avatex Corporation and
Norwest Bank Minnesota, National Association, as
collateral agent.
4-C Subrogation Agreement, dated as of December 7, 1999,
between Bart A. Brown, Jr., as Chapter 7 Trustee of
FoxMeyer Corporation, et al., and Norwest Bank Minnesota,
National Association, as indenture trustee, and
acknowledged by Avatex Corporation.
10-A Warrant Agreement, dated as of December 7, 1999, among
Avatex Corporation and American Stock Transfer and Trust
Company, as warrant agent.
10-B Second Amendment to Employment Agreement, dated December
6, 1999, between Avatex Corporation and Abbey J. Butler.
10-C Second Amendment to Employment Agreement, dated December
6, 1999, between Avatex Corporation and Melvyn J. Estrin.
99-A Press Release dated December 6, 1999, issued by Avatex
Corporation.
99-B Press Release dated December 7, 1999, issued by Avatex
Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 16, 1999. AVATEX CORPORATION
(Registrant)
By: /s/ Robert H. Stone
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Robert H. Stone
Vice President and
General Counsel
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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3-A Certificate of Merger of Xetava Corporation with and into
Avatex Corporation dated December 7, 1999, with the
Restated Certificate of Incorporation of Avatex
Corporation annexed thereto.
3-B Restated Certificate of Incorporation of Avatex Funding,
Inc.
4-A Indenture, dated as of December 7, 1999, among Avatex
Funding, Inc., Avatex Corporation and Norwest Bank
Minnesota, National Association, as indenture trustee.
4-B Pledge and Security Agreement, dated as of December 7,
1999, among Avatex Funding, Inc., Avatex Corporation and
Norwest Bank Minnesota, National Association, as
collateral agent.
4-C Subrogation Agreement, dated as of December 7, 1999,
between Bart A. Brown, Jr., as Chapter 7 Trustee of
FoxMeyer Corporation, et al., and Norwest Bank Minnesota,
National Association, as indenture trustee, and
acknowledged by Avatex Corporation.
10-A Warrant Agreement, dated as of December 7, 1999, among
Avatex Corporation and American Stock Transfer and Trust
Company, as warrant agent.
10-B Second Amendment to Employment Agreement, dated December
6, 1999, between Avatex Corporation and Abbey J. Butler.
10-C Second Amendment to Employment Agreement, dated December
6, 1999, between Avatex Corporation and Melvyn J. Estrin.
99-A Press Release dated December 6, 1999, issued by Avatex
Corporation.
99-B Press Release dated December 7, 1999, issued by Avatex
Corporation.
CERTIFICATE OF MERGER
OF
XETAVA CORPORATION
WITH AND INTO
AVATEX CORPORATION
Under Section 251
of
the Delaware General Corporation Law
AVATEX CORPORATION, a Delaware corporation, hereby certifies that:
FIRST: The name and the state of incorporation of each of the
constituent corporations is as follows:
Name State of Incorporation
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Avatex Corporation ("Avatex") Delaware
Xetava Corporation ("Xetava") Delaware
SECOND: An Agreement and Plan of Merger, dated as of June 18, 1999
(as amended, the "Agreement of Merger"), by and between Avatex and Xetava has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations named above in accordance with Section 251 (and, with
respect to Xetava, by the written consent of its sole stockholder in accordance
with Section 228) of the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is Avatex Corporation
(the "Surviving Corporation").
FOURTH: The Certificate of Incorporation of Avatex shall be amended
in its entirety to read as set forth in the Restated Certificate of
Incorporation of Avatex attached hereto as Annex A, and as so amended, shall be
the Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with applicable law and the terms thereof.
FIFTH: The executed Agreement of Merger is on file at the principal
place of business of the Surviving Corporation at 5190 N. Central Expressway,
Suite 1780, Dallas, Texas 75206.
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SIXTH: A copy of the Agreement of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of any
constituent corporation.
IN WITNESS WHEREOF, Avatex has caused this certificate to be executed
as of the 7th day of December, 1999.
AVATEX FUNDING, INC.
By: /s/ Melvyn J. Estrin
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Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
2
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Annex A
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Restated Certificate of Incorporation of Avatex Corporation
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(see attached)
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RESTATED CERTIFICATE OF INCORPORATION
OF
AVATEX CORPORATION
FIRST: The name of the Corporation is AVATEX CORPORATION.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, 19801. The name of its registered agent at
that address in the State of Delaware is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware (the
"DGCL").
FOURTH: Section 1. The total number of shares of capital stock that the
Corporation shall have authority to issue is 60,000,000, of which 50,000,000
shares shall be class A common stock, par value $0.01 per share (the "Class A
Common Stock"), and 10,000,000 shares shall be preferred stock, par value $0.01
per share (the "Preferred Stock").
SECTION 2 . The Preferred Stock may be issued from time to time in
one or more series, and there is hereby expressly granted to and vested in the
Board of Directors the authority, by resolution or resolutions providing for the
issue thereof, to fix in respect of each series:
(a) the designation of such series, and the number
of shares (which number may be decreased before
the issuance thereof or may be increased) that
shall be included in such series;
(b) the dividend rate, the dividend dates (which
shall be no more frequent than quarterly) upon
which dividends shall be payable, and the date
from which dividends shall be cumulative on
shares issued prior to the record date for the
determination of shareholders entitled to
receive payment of the first dividend on any
shares of such series, together with the
limitations, if any, on dividends or other
distributions on common stock which are to
obtain so long as any shares of such series
shall be outstanding;
(c) the price at which shares of such series are
redeemable, otherwise than for the purpose of a
sinking fund applicable thereto, and any
limitations and restrictions with respect to
such redemption;
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(d) the obligation, if any, of the Corporation to
purchase and retire or redeem shares of such
series for the purpose of a sinking fund, and
the price at which, and the terms and
conditions on which, shares will be purchased
or redeemed for such sinking fund;
(e) the amount payable to the holder of each share
of such series in the event of a voluntary
liquidation, dissolution or winding up of the
Corporation before any payment shall be made to
the holders of shares of Class A Common Stock;
(f) the right, if any, of the holders of shares of
such series to convert the same into shares of
any other class or series within a class, and
the conversion price or rate and the method, if
any, of adjusting the same; and
(g) the voting rights, if any, of the holders of
shares of such series in addition to those
given in this Article to all holders of
Preferred Stock.
All shares of any one series of Preferred Stock shall be identical in
every particular, except that shares thereof issued at different times may
differ as to the dates from which dividends thereon shall be cumulative; and all
shares of Preferred Stock of whatever series shall rank equally and be identical
in all respects, except to the extent that variation is permitted as provided in
this Article.
SECTION 3 . The holders of record of the Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of any
funds legally available for the purpose, cumulative cash dividends in the case
of each series at the annual rate for such series fixed by the Board of
Directors as hereinbefore provided, and no more, payable on such dates as shall
have been fixed by the Board of Directors as hereinbefore provided.
No dividend shall be declared upon or set apart for any shares of
Preferred Stock of any series for a dividend period ending on any date unless a
like proportionate dividend shall have been or then be declared upon or set
apart for all other outstanding shares of Preferred Stock of whatever series for
all dividend periods ending on or before such date. Accumulations of dividends
shall not bear interest.
SECTION 4 . So long as any shares of Preferred Stock shall be
outstanding, the Corporation shall not declare any dividend or make any other
distribution (other than dividends or distributions payable in Class A Common
Stock) on, or purchase (directly or indirectly) or redeem, any shares of Class A
Common Stock, or pay any money into or set apart or make available any money for
a sinking or retirement fund for the purchase or redemption of shares of Class A
Common Stock, unless (a) all dividends on all shares of Preferred Stock at the
time outstanding for all past dividend periods and for the then current dividend
period shall have been paid or shall have been declared and a sum
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sufficient for the payment thereof shall have been set apart, and (b) the
Corporation shall have complied with all its obligations theretofore to be
performed for the purpose of each sinking fund applicable to the Preferred Stock
of any series.
Subject to the foregoing provisions of this Section 4 and to any
limitations on the payment of dividends on Class A Common Stock which may be
fixed by the Board of Directors as hereinbefore provided, such dividends or
other distributions as may be determined by the Board of Directors may be
declared and paid or made upon Class A Common Stock, from time to time, out of
any funds legally available therefor, and the Preferred Stock shall not be
entitled to participate in any such dividend of distribution so declared and
paid or made on the Class A Common Stock.
SECTION 5 . So long as any of the Preferred Stock remains
outstanding, the consent of the holders of at least a majority of all
outstanding shares of Preferred Stock regardless of series, given in person or
by proxy by a vote at a meeting (which may be held coincident with or as a part
of an annual or other meeting of stockholders) called for that purpose, or in
writing with or without a meeting, shall be necessary for effecting or
validating any amendment, alteration or repeal of any of the provisions of this
Article (including any resolutions adopted by the Board of Directors pursuant to
the authority granted by Section 2 of this Article FOURTH) which increase or
decrease the par value of the Preferred Stock or would adversely affect the
rights or preferences of the Preferred Stock, or of the holders thereof;
provided, however, that if any such amendment, alteration or repeal would
adversely affect the rights or preferences of outstanding shares of Preferred
Stock of any particular series without adversely affecting the rights or
preferences of the outstanding shares of all series, then only the consent by
the holders of at least a majority of the Preferred Stock of that particular
series at the time outstanding shall be necessary for effecting or validating
such amendment, alteration or repeal. Notwithstanding the foregoing, the number
of authorized shares of Preferred Stock may be increased or decreased by the
consent of the holders of at least two-thirds of the stock of the Corporation of
all classes entitled to vote.
SECTION 6 . Subject to any limitations or restrictions on redemption
of shares of any series that shall have been fixed by the Board of Directors as
hereinbefore provided, the Corporation at its option may redeem all or any part
of the Preferred Stock of any series, at any time or from time to time, when or
as the Board of Directors may authorize or direct, at the redemption price that
shall have been fixed by the Board of Directors as hereinbefore provided plus
accrued dividends thereon, upon notice duly given as hereinafter provided. In
case of the redemption of a part only of any series of the Preferred Stock at
the time outstanding, the shares to be redeemed shall be selected pro rata or by
lot, or in such other equitable manner as the Board of Directors may determine.
At least 30 days' prior notice of each redemption of Preferred Stock shall be
mailed to the holders of record of the Preferred Stock to be redeemed at their
respective addresses as shown by the books of the Corporation. If notice of
redemption shall have been duly given and if, on or before the redemption date
designated in such notice, the funds necessary for such redemption shall have
been set aside, so as to be and continue to be available therefor, then, from
and after such redemption date, all rights of the holders of Preferred Stock
with respect to the shares so called for redemption shall cease and
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terminate, except only the right, upon surrender of certificates therefor, to
receive the redemption price thereof plus accrued dividends thereon, but without
interest. If notice of redemption shall have been duly given, and if, on or
before the redemption date designated in such notice, the funds necessary for
such redemption shall have been deposited in trust for such purpose with a bank
or trust company having a capital and surplus aggregating at least $5,000,000,
then, forthwith upon the making of such deposit, all rights of the holders of
Preferred Stock with respect to the shares so called for redemption shall cease
and terminate, except only the right, upon surrender of certificates therefor
after the making of such deposit, to receive the redemption price thereof and
accrued dividends thereon to such redemption date, but without interest or, if
the right of conversion shall have been conferred upon such shares and shall not
by the terms thereof previously have expired, to exercise the right of
conversion thereof on or before such redemption date, unless an earlier time for
the expiration of such right of conversion shall have been determined or
provided by resolution of the Board of Directors fixing such right of
conversion, and then only on or before such earlier time for the expiration of
such right of conversion. Any funds so set aside or deposited which, because of
the exercise of any right of conversion of shares called for redemption, shall
not be required for such redemption, shall be released and repaid forthwith to
the Corporation. Any interest on funds so deposited which may be allowed by any
bank or trust company with which such deposit was made shall belong to the
Corporation. Shares of Preferred Stock that shall have been redeemed shall not
be reissued or otherwise disposed of and shall be cancelled.
The provisions of this Section 6 shall apply to the redemption of
Preferred Stock for the purpose of any sinking fund applicable thereto, in which
case the amount payable upon redemption for such purpose shall be that which
shall have been fixed by the Board of Directors as hereinbefore provided.
SECTION 7 . In the event of any liquidation, dissolution or winding
up of the Corporation, the holders of each share of Preferred Stock shall be
entitled to receive, before any payment shall be made to the holders of shares
of the Class A Common Stock, the amount that shall have been fixed by the Board
of Directors in respect of such event as hereinbefore provided plus accrued
dividends thereon. After payment to the holders of the Preferred Stock of the
full amounts aforesaid, the holders of Preferred Stock as such shall have no
right or claim to any of the remaining assets of the Corporation. If, upon any
such liquidation, dissolution or winding up, the assets available therefor are
not sufficient to permit the payment to the holders of the Preferred Stock the
full amounts aforesaid, then the holders of Preferred Stock shall share ratably
in the distribution of assets in accordance with the sums which would be payable
if such holders were to receive the full amounts aforesaid.
SECTION 8 . Except as otherwise specifically provided in this Article
or as may be fixed by the Board of Directors as hereinbefore provided, or as
otherwise expressly required by law, the holders of Preferred Stock shall not
have any right to vote for the election of directors or for any other purpose
nor be entitled to any notice of any meeting of stockholders. Except as
otherwise expressly provided in this Article or by law, or as may be fixed by
the Board of Directors in respect of any series of Preferred Stock as
hereinabove provided, the Class A Common Stock shall have the exclusive right
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to vote for the election of directors and for all other purposes. Each holder of
stock of the Corporation entitled to vote on any matter shall have one vote for
each share thereof held.
FIFTH: No holder of shares of capital stock of the Corporation of any
class, whether now or hereafter authorized, shall have any preemptive or
preferential right to purchase, subscribe for or otherwise acquire any shares of
capital stock of the Corporation of any class, now or hereafter authorized, or
any securities or obligations, now or hereafter authorized, convertible into or
exchangeable for any such shares.
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the by-laws of the Corporation.
EIGHTH: The number of directors of the Corporation shall be fixed by and
may from time to time be altered as provided in the by-laws of the Corporation,
but shall not be less than three. The directors shall be divided into three
classes with the total number of directors to be allocated among the three
classes as equally as possible. The term of office of the first class shall
expire at the annual meeting next ensuing; of the second class one year
thereafter; of the third class two years thereafter; and at each annual election
held after such classification and election, directors shall be chosen for a
full three-year term to succeed those whose terms expire. The election of
directors by classes as provided herein shall be irrespective of the directors
which any separate class of shareholders may elect pursuant to the provisions of
any resolution that may be adopted by the directors under Section 151 of the
DGCL and Article FOURTH of this Restated Certificate of Incorporation in regard
to the authorization of one or more series of Preferred Stock. Notwithstanding
any other provisions of this Restated Certificate of Incorporation or the
by-laws of the Corporation, the affirmative vote of the holders of 80% or more
of the voting power of the shares of the then outstanding voting stock, voting
together as a single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with this Article EIGHTH of this Restated Certificate of
Incorporation or any similar provision contained in the by-laws of the
Corporation.
NINTH: The Board of Directors shall have the power and authority at any
meeting to sell, lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate franchises, upon such
terms and conditions as a majority of the Board of Directors deems expedient and
for the best interests of the Corporation, provided such lease, sale or exchange
be authorized by the affirmative vote of the holders of record of at least
two-thirds of the total number of shares of the stock of the Corporation, at the
time issued and outstanding, having voting power, given at a stockholder's
meeting duly called for that purpose, or by the written consent of the holders
of record at least two-thirds of the total number of shares of the stock of the
Corporation having voting power, at the time issued and outstanding.
TENTH: Notwithstanding the laws of the State of Delaware and other
provisions of this Restated Certificate of Incorporation as to the affirmative
vote of the stockholders
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required to approve certain transactions, the transactions hereinafter described
shall under the circumstances hereinafter set forth require a higher vote of the
stockholders, all as hereinafter set forth:
SECTION 1 . In addition to any affirmative vote required by law or
this Restated Certificate of Incorporation, and except as otherwise expressly
provided in Section 2 of this Article TENTH or as otherwise prohibited by
applicable law:
(i) any merger or consolidation of the Corporation
or any Subsidiary (as hereinafter defined) with
(a) any Interested Stockholder (as hereinafter
defined) or (b) any other corporation (whether
or not itself an Interested Stockholder) which
is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one
transaction or series of transactions) to or
with any Interested Stockholder or any
Affiliate of the Interested Stockholder of any
assets of the Corporation or any Subsidiary
having an aggregate Fair Market Value of
$1,000,000 or more; or
(iii) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series
of transactions) of any securities of the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or
other property (or a combination thereof)
having an aggregate Fair Market Value of
$1,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested
Stockholder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization
of the Corporation, or any merger or
consolidation of the Corporation with any of
its Subsidiaries or any other transaction
(whether or not with or into or otherwise
involving an Interested Stockholder) which has
the effect, directly or indirectly, of
increasing the proportionate share of the
outstanding shares of any class of equity or
convertible securities of the Corporation or
any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any
Affiliate of any Interested Stockholder; or
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(vi) any agreement, contract or other arrangement
providing for any one or more of the actions
specified in the foregoing clauses (i) through
(v);
shall require the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise. The term "Business Combination" as hereinafter
used in the Article TENTH shall mean any transaction which is referred to in any
one or more of clauses (i) through (vi) of this Section 1.
SECTION 2 . The provisions of Section 1 of this Article TENTH shall
not be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law and
any other provision of this Restated Certificate of Incorporation, if the
conditions specified in either of the following paragraphs (a) or (b) are met:
(a) The Business Combination shall have been approved by a majority
of the Continuing Directors (as hereinafter defined).
(b) All of the following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market
Value (as hereinafter defined) as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Class A Common Stock in such
Business Combination shall be at least equal to the highest of the
following:
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder for any shares of Common Stock acquired by it
(1) within the two-year period immediately prior to the
first public announcement of the proposal of the Business
Combination (the "Announcement Date") or (2) in the
transaction in which it became an Interested Stockholder,
whichever is higher;
(B) the Fair Market Value per share of Class A
Common Stock on the Announcement Date or on the date on
which the Interested Stockholder became an Interested
Stockholder (such later date is referred to in this
Article TENTH as the "Determination Date"), whichever is
higher; and
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(C) (if applicable) the price per share equal
to the Fair Market Value per share of Class A Common Stock
determined pursuant to paragraph b(i)(B) above, multiplied
by the ratio of (1) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for any
shares of Class A Common Stock acquired by it within the
two-year period immediately prior to the Announcement Date
to (2) the Fair Market Value per share of Class A Common
Stock on the first day in such two-year period upon which
the Interested Stockholder acquired any shares of Class A
Common Stock.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any other class of outstanding Voting Stock (other than
Institutional Voting Stock, as hereinafter defined) shall be at least
equal to the highest of the following (it being intended that the
requirement of this paragraph b(ii) shall be required to be met with
respect to every class of outstanding Voting Stock (other than
Institutional Voting Stock), whether or not the Interested
Stockholder has previously acquired any shares of a particular class
of Voting Stock):
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of Voting Stock
acquired by it (1) within the two-year period immediately
prior to the Announcement Date or (2) in the transaction
in which it became an Interested Stockholder, whichever is
higher;
(B) (if applicable) the highest preferential
amount per share to which the holders of shares of such
class of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
the Fair Market Value per share of such class
of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(if applicable) the price per share equal to
the Fair Market Value per share of such class of Voting
Stock determined pursuant to paragraph b(ii)(C) above,
multiplied by the ratio of (1) the highest per share price
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(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of Voting Stock
acquired by it within the two-year period immediately
prior to the Announcement Date to (2) the Fair Market
Value per share of such class of Voting Stock on the first
date in such two-year period upon which the Interested
Stockholder acquired any shares of such class of Voting
Stock.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Class A
Common Stock) shall be in cash or in the same form as the Interested
Stockholder has previously paid for shares of such class of Voting
Stock. If the Interested Stockholder has paid for shares of any class
of Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or
the form used to acquire the largest number of shares of such class
of Voting Stock previously acquired by it.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (a) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred Stock; (b) there shall have
been (1) no reduction in the annual rate of dividends paid on the
Class A Common Stock (except as necessary to reflect any subdivision
of the Class A Common Stock), except as approved by a majority of the
Continuing Directors, and (2) an increase in such annual rate of
dividends as necessary to reflect any reclassification (including any
reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of
outstanding shares of the Class A Common Stock, unless the failure so
to increase such annual rate is approved by a majority of the
Continuing Directors; and (c) such Interested Stockholder shall have
not become the Beneficial Owner of any additional shares of Voting
Stock except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
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(vi) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to public stockholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information is
required to be mailed pursuant to such Act or subsequent provisions).
SECTION 3 . As used in this Article TENTH, the following terms have
the following respective meanings:
"Person" means an individual, corporation, estate, trust,
association, partnership, joint venture or other entity.
"Interested Stockholder" means any Person (other than the
Corporation, any Subsidiary, or any profit-sharing, employee stock ownership or
other employee benefit plan of the Corporation or any Subsidiary or any trustee
or fiduciary with respect to any such plan, or holding Voting Stock for the
purpose of funding any such plan or funding other employee benefits for
employees of the Corporation or any Subsidiary when acting in such capacity) who
or which:
(i) is the Beneficial Owner, directly or indirectly, of
more than 10% of the voting power of the outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the Beneficial Owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned
by any Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning of
the Securities Act of 1933.
For the purposes of determining whether a Person is an Interested
Stockholder, the number of shares of Voting Stock deeded to be outstanding shall
include shares deemed owned through application of the definition of Beneficial
Owner but shall not include any other shares of Voting Stock which may be
issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
"Beneficial Owner" of any Voting Stock means:
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(i) which such Person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly or
indirectly; or
(ii) which such Person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote pursuant to any agreement,
arrangement or understanding (but neither such Person nor any such
Affiliate or Associate shall be deemed to be the beneficial owner of
any shares of Voting Stock solely by reason of a revocable proxy
granted for a particular meeting of stockholders pursuant to a public
solicitation of proxies for such meeting, and with respect to which
shares neither such Person nor any such Affiliate or Associate is
otherwise deemed the beneficial owner); or
(iii)which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of its Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the parenthetical clause in (ii)(b) above) or
disposing of any shares of Voting Stock.
"Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on March 1, 1983.
"Subsidiary" means any corporation of which a majority of any class
of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in this Section 3, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by the Corporation.
"Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is unaffiliated with an Interested Stockholder
and was a member of the Board prior to the time that the Interested Stockholder
became an Interested Stockholder, and any successor of a Continuing Director who
is unaffiliated with the Interested Stockholder and is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the Board.
"Fair Market Value" means: (i) in the case of cash, the amount
thereof; (ii) in the case of stock, the highest closing sale price during the
30-day period immediately preceding the date in question of a share of such
stock on the Composite Tape for stocks listed on the New York Stock Exchange,
or, if such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed
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on such Exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the 30-day period preceding the
date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such quotations
are available, the fair market value on the date in question of a share of such
stock as determined by the Board in good faith; and (iii) in the case of
property other than cash or stock, the fair market value of such property on the
date in question as determined by the Board in good faith.
"Institutional Voting Stock" means any class of Voting Stock which
was issued to and continues to be held solely by one or more insurance
companies, pension funds, commercial banks, savings banks or similar financial
institutions or institutional investors.
SECTION 4 . In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received" as used in
paragraphs (b)(i) and (ii) of Section 2 of this Article TENTH shall include the
shares of Class A Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
SECTION 5 . A majority of the directors of the Corporation shall have
the power and duty to determine for the purposes of this Article TENTH, on the
basis of information known to them after reasonable inquiry, (A) whether a
Person is an Interested Stockholder, (B) the number of shares of Voting Stock
beneficially owned by any Person, (C) whether a Person is an Affiliate or
Associate of another, (D) whether a class of Voting Stock is Institutional
Voting Stock, (E) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more and (F)
whether the applicable conditions set forth in Section 2(b) of this Article
ELEVENTH have been met with respect to any Business Combination.
SECTION 6 . Nothing contained in this Article TENTH shall be
construed to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SECTION 7 . Notwithstanding any other provisions of this Restated
Certificate of Incorporation or the by-laws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the by-laws of the Corporation), the
affirmative vote of the holders of 80% or more of the voting power of the shares
of the then outstanding Voting Stock, voting together as a single class, shall
be required to amend or repeal, or adopt any provisions inconsistent with, this
Article TENTH of this Certificate of Incorporation.
ELEVENTH: The Corporation shall have the power to create and issue, whether
or not in connection with the issue and sale of any shares of stock or other
securities of the Corporation, rights or options entitling the holders thereof
to purchase from the
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Corporation any shares of its capital stock of any class or classes, such rights
or options to be evidenced by or in such instrument or instruments as shall be
approved by the Board of Directors, which instrument or instruments may contain
such provisions against dilution of the stock deliverable against said rights or
options as may, in the judgment of the Board of Directors, be deemed expedient
or necessary, and may contain a provision that if the Corporation shall offer to
its stockholders of any class or series as a class, rights to subscribe for
shares of stock or other securities, it shall offer to the holders of such
rights or options the right to subscribe for such stock or other securities on
the terms and to the extent on and to which the holders of such rights or
options would be entitled to subscribe were they the holders of record of the
number of shares of stock then deliverable against such rights or options. The
terms upon which, the time or times, which may be limited or unlimited in
duration, at or within which, and the price or prices at which any such shares
may be purchased from the Corporation upon the exercise of any such right or
option, shall be such as shall be fixed and stated in a resolution or
resolutions adopted by the Board of Directors providing for the creation and
issue of such rights or options, and, in every case, set forth or incorporated
by reference in the instrument or instruments evidencing such rights or options.
The Corporation shall reserve and have at all times available a sufficient
number of its shares of stock or securities or assets to satisfy the rights and
privileges contained in all its outstanding rights or options for the purpose of
stock or other securities.
TWELFTH: In addition to the powers and authorities herein or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, however, to the provisions of the laws of the State of
Delaware, of this Restated Certificate of Incorporation and of the by-laws of
the Corporation.
THIRTEENTH: Insofar as the same is not contrary to the laws of the State of
Delaware, no contract or other transaction between this Corporation and any
other corporation shall be affected or invalidated by reason of the fact that
any one or more of the directors of this Corporation is or are interested in, or
is a director or officer, or are directors or officers of such other
corporation, and any director or directors of this Corporation, individually or
jointly, may be a party or parties to, or may be interested in, any contract or
transaction of this Corporation or in which this Corporation is interested; and
no contract, act or transaction of this Corporation with any person or persons,
firm, association or corporation, shall be affected or invalidated by reason of
the fact that any director or directors of this Corporation is a party or are
parties to, or interested in such contract, act or transaction, or is, or are,
in any way connected with such person or persons, firm, association or
corporation, if such fact is known to the Board of Directors of this
Corporation, and each and every person who may become a director of this
Corporation is hereby relieved from any liability that might otherwise exist
from contracting with this Corporation for the benefit of himself, or any firm,
association or corporation in which he may be in anywise interested.
FOURTEENTH: A director of the Corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (A) for any breach of the director's
duty of loyalty to the
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Corporation or its stockholders, (B) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (C) under
Section 174 of the DGCL or (D) for any transaction from which the director
derives an improper personal benefit. If the DGCL is hereafter amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the DGCL as so
amended. Any repeal or modification of this article by the stockholders of the
Corporation shall not adversely affect any right or protections of a director of
the Corporation existing at the time of such repeal or modification.
FIFTEENTH: To the full extent permitted by Section 145 of the DGCL or any
successor provisions thereto, (A) the Corporation shall (1) indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director or officer of the Corporation, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding and (2) pay expenses incurred by such person in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding, and (B) the Corporation may (1) indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was an employee or agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding and (2) pay expenses incurred by such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding. The foregoing indemnification
and advancement of expenses provisions shall not be deemed exclusive of any
other rights to indemnification or advancement of expenses to which any such
person may be entitled under any statute, by-law, agreement, vote of
stockholders or disinterested directors or otherwise and are deemed to be
contract rights with respect to each person entitled to the benefits of such new
provisions. Any change in law that purports to restrict the ability of the
Corporation to indemnify or advance expenses to any such person shall not affect
the Corporation's obligation or right to indemnify and advance expenses to any
such person with respect to any action, claim, suit or proceeding that occurred
or arose or that is based on events or acts that occurred or arose, prior to
such change in law.
SIXTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by law, provided that, in addition to any
other vote of stockholders required elsewhere in this Restated Certificate of
Incorporation, such amendment, alteration, change or repeal is authorized by a
resolution adopted by the affirmative vote of the holders of record of at least
two-thirds of the total number of shares of capital stock of the Corporation at
the time issued and outstanding having voting powers given at a stockholders'
meeting duly called for that purpose, and all rights and powers conferred herein
upon stockholders, directors and officers are subject to this reserved power.
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RESTATED CERTIFICATE OF INCORPORATION
OF
AVATEX FUNDING, INC.
(a Delaware corporation)
*********
AVATEX FUNDING, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Avatex Funding, Inc. (the
"Corporation"). The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on August 3, 1999.
2. This Restated Certificate of Incorporation, which restates and
amends the provisions of the Certificate of Incorporation, was duly adopted by
the Board of Directors and the sole stockholder of the Corporation in accordance
with the provisions of Sections 242 and 245 of the General Corporation Law of
the State of Delaware.
3. The text of the Certificate of Incorporation, as currently in
effect, is hereby restated and amended to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is Avatex Funding, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the registered office of the Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, city of Wilmington,
county of New Castle, 19801. The name of its registered agent at that address is
The Corporation Trust Company.
<PAGE>
ARTICLE III
CORPORATE PURPOSES
The purposes of the Corporation are solely to engage in acts or
activities, directly or indirectly, arising from, provided or necessitated by,
resulting from, in connection with or otherwise incidental or related to the
following:
(a) subject to Section 3.10 of the Indenture (as defined below) and
paragraph (c) of Article VIII below, accepting, owning and holding the entire
beneficial interest in (i) certain shares of common stock, par value $0.01 per
share, of Phar-Mor, Inc., a Pennsylvania corporation (the "Phar-Mor Shares") or
(ii) any other contributions to the capital of the Corporation, contributed from
time to time by Avatex Corporation, a Delaware corporation ("Avatex"), or any
other person, as long as such contributions have no associated liabilities;
(b) entering into (i) that certain indenture, dated as of December 7,
1999 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Indenture"), by and among the Corporation, Avatex and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"), and (ii) that
certain Pledge and Security Agreement, dated as of December 7, 1999 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement"), among the Corporation, Avatex and the Trustee, as
collateral agent;
(c) complying with, and performing any and all of the Corporation's
obligations under, contemplated or necessitated by or in connection with, (i)
the Indenture, (ii) the Corporation's 6.75% Notes due 2002 issued pursuant to
the Indenture (the "Notes"), (iii) the Security Agreement, (iv) the Amended and
Restated Agreement and Plan of Merger, dated as of June 18, 1999, by and between
Avatex and Xetava Corporation, a Delaware corporation (as amended, the "Merger
Agreement"), (v) the merger of Xetava with and into Avatex contemplated by, and
pursuant to, the Merger Agreement, (the "Merger"), (vi) the issuance of the
Notes by the Corporation that are required to be issued in connection with the
Merger pursuant to the Merger Agreement, and (vii) the Subrogation Agreement (as
defined in the Indenture) and the Trustee Note (as defined in the Indenture);
(d) subject to Section 3.10 of the Indenture and paragraph (c) of
Article VIII below, investing the proceeds derived from the ownership of the
Pledged Collateral (as defined in the Security Agreement) or any other assets
contributed to the Corporation, but only in bank certificates of deposit, money
market instruments or securities issued by the United States government or its
agencies or instrumentalities (as long as such certificates of deposit, money
market instruments or securities mature prior to the date of maturity of the
Notes);
(e) executing, delivering and performing any agreement evidencing,
necessitated by or in connection with any and all of the foregoing or any and
all of the activities and powers referred to below in paragraph (f) of this
Article III , and
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(f) engaging in any lawful act or activity and to exercise any powers
permitted to a corporation organized under the General Corporation Law of the
State of Delaware that, in each case, are incidental to the foregoing or
necessary to accomplish the foregoing.
ARTICLE IV
CAPITAL STOCK
The total number of shares of all classes of capital stock that the
Corporation is authorized to issue is one thousand (1,000) shares, all of which
shares shall be common stock, par value $0.01 per share ("Common Stock").
ARTICLE V
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE VI
POWERS OF THE BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
act as set forth in paragraphs (a), (b) and (c) below:
(a) to make, alter, amend or repeal the By-Laws, except as otherwise
expressly provided in any By-Law made by the holders of the capital stock of the
Corporation entitled to vote thereon, subject to any limitation set forth
therein or in this Restated Certificate of Incorporation and subject to the
power of the stockholders to alter the By-Laws adopted by the Board of
Directors;
(b) to designate, by resolution passed by a majority of the whole
Board of Directors, one or more committees, each committee to consist of one or
more directors of the Corporation, which, to the extent provided in the
resolution designating the committee or in the By-Laws of the Corporation,
shall, subject to the limitations prescribed by law or otherwise in this
Restated Certificate of Incorporation, have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require such seal (such committee or committees
shall have such name or names as may be provided in the By-Laws of the
Corporation or as may be determined from time to time by resolution adopted by a
majority of the whole Board of Directors); and
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(c) to exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and authorities and do
all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Delaware
and of this Restated Certificate of Incorporation (and in particular Article
III) and of the By-Laws of the Corporation.
Notwithstanding anything to the contrary contained in this Article
VI, the Board of Directors of the Corporation shall not act, or propose to act,
in any manner contrary to the provisions of the Indenture.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS
(a) A director of the Corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
Delaware or (iv) for any transaction from which the director derives an improper
personal benefit. If the General Corporation Law of Delaware is hereafter
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of Delaware as so amended. Any repeal or
modification of this article shall not adversely affect any right or protections
of a director of the Corporation existing at the time of such repeal or
modification.
(b) To the fullest extent permitted by Section 145 of the General
Corporation Law of Delaware or any successor provisions thereto, (i) the
Corporation shall (A) indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding (a "proceeding"), whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Corporation, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding and (B) pay,
upon receipt of any undertaking to repay amounts advanced required by the
General Corporation Law of Delaware, expenses incurred by such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding, and (ii) the Corporation may (A)
indemnify any person who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was an employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
agent or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust
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or other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding and (B) pay expenses
incurred by such person in defending a civil or criminal action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding. Notwithstanding clause (i)(A) of the preceding sentence, the
Corporation shall be required to indemnify an indemnitee in connection with a
proceeding (or part thereof) commenced by such indemnitee only if the
commencement of such proceeding (or part thereof) by the indemnitee was
authorized by the Board of Directors of the Corporation. The foregoing
indemnification and advancement of expenses provisions shall not be deemed
exclusive of any other rights to indemnification or advancement of expenses to
which any such person may be entitled under any statute, by-law, agreement, vote
of stockholders or disinterested directors or otherwise and are deemed to be
contract rights with respect to each person entitled to the benefits of such new
provisions. Any change in law that purports to restrict the ability of the
Corporation to indemnify or advance expenses to any such person shall not affect
the Corporation's obligation or right to indemnify and advance expenses to any
such person with respect to any action, claim, suit or proceeding that occurred
or arose or that is based on events or acts that occurred or arose, prior to
such change in law.
ARTICLE VIII
RESTRICTIONS ON CORPORATE ACTION
(a) Notwithstanding any other provision of this Restated Certificate
of Incorporation (other than paragraph (c) of this Article VIII) and any
provision of law that otherwise so empowers the Corporation, as long as any of
the Notes remain outstanding, without the approval of the holders of at least
66-2/3% in principal amount of the Notes then outstanding, the Corporation shall
not do any of the following:
(i) engage in any business or activity other than as described in
this Restated Certificate of Incorporation and matters necessarily incident
thereto;
(ii) increase or reclassify the capital stock of the Corporation
or issue any additional shares of capital stock of the Corporation;
(iii) delete, amend, supplement or otherwise modify any provision
of this Restated Certificate of Incorporation;
(iv) create, incur, issue, assume, guarantee or otherwise become,
directly or indirectly, liable, contingently or otherwise, with respect to any
indebtedness or liability, other than (A) indebtedness or liabilities of the
Corporation under, arising from or otherwise with respect to or in connection
with, or otherwise incurred by the Corporation in connection with the
consummation of any of the transactions contemplated by, or otherwise to comply
with, the Notes, the Indenture, the Officer's Certificate required to be
delivered by Section 1.05(b) of the Indenture, the Security Agreement and the
Trustee Note (as contemplated by the Subrogation
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Agreement), in each case, after the original date of the Indenture, (B)
indebtedness or liabilities arising after the original date of the Indenture
from the fees and expenses of, or payable or paid to, (I) the Trustee under the
Indenture or the collateral agent under the Security Agreement, and (II) the
Corporation's outside counsel or accountants or other outside agents or
representatives, to the extent it is necessary or reasonably advisable to engage
any such person in connection with the Corporation's interpreting, complying
with (including, but not limited to, complying with any applicable law, rule or
regulation), or otherwise consummating any of the transactions contemplated by,
the Indenture, the Officer's Certificate required to be delivered by Section
1.05(b) of the Indenture, the Notes, the Security Agreement, the Subrogation
Agreement or the Trustee Note, and (C) indebtedness or liabilities on account of
incidentals or administrative services supplied or furnished to the Corporation
(including, but not limited to, bank or brokerage fees), in an aggregate amount
per calendar year not to exceed $7,500;
(v) directly or indirectly, create, incur, assume or suffer to
exist any lien on any asset or property now owned or hereafter acquired by the
Corporation, except for Permitted Liens (as defined in the Indenture);
(vi) declare or pay any dividend or make any other payment or
distribution on account or in respect of the Corporation's capital stock; or
(vii) in one or more related transactions, consolidate or merge
with or into (whether or not the Corporation is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets to, or sell, transfer or dispose
of any of its capital stock to, another person or entity.
(b) As long as any of the Notes remain outstanding, or otherwise with
the approval of the holders of at least 66-2/3% in principal amount of the Notes
then outstanding, the Corporation shall at all times:
(i) not become involved in the day-to-day management of any other
person or entity; (ii) maintain corporate records, books of account and payroll
(if any) separate from any other person or entity:
(iii) maintain financial statements, books and records separate
from any other person or entity and insure that any consolidated financial
statements that include the Corporation have notes clearly stating that the
Corporation is a separate corporate entity;
(iv) maintain its assets separately from the assets of any other
person or entity (including through the maintenance of a separate bank account);
(v) conduct all business correspondence of the Corporation and
other communications in the Corporation's own name;
6
<PAGE>
(vi) not act as an agent of any other person or entity in any
capacity; and
(vii) separately manage the Corporation's liabilities from those
of any other person or entity.
(c) Notwithstanding anything to the contrary in this Certificate of
Incorporation, the Corporation shall be able to use the proceeds derived from
its ownership of the Pledged Collateral, including, but not limited to, the
proceeds of any Regular Dividend (as defined in the Indenture) or Extraordinary
Dividend (as defined in the Indenture) made on account or in respect of the
Pledged Collateral, and the proceeds of any contributions to the capital of the
Company, to pay or cause to be paid the principal of and interest on the Notes
in the manner provided for in the Indenture and the Notes or to purchase, redeem
or otherwise acquire or retire the Notes; provided, however, that, in the event
that the proceeds of any Extraordinary Dividend exceed $2.3 million, the Company
may not use more than the greater of $2.3 million and 50% of such Extraordinary
Dividend to pay or cause to be paid interest on the Notes.
(d) Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, as long as any of the Notes remain outstanding, neither the
Corporation nor the Board of Directors of the Corporation nor any committee
appointed or designated thereby shall without the unanimous vote of the Board of
Directors of the Corporation take any corporate action.
ARTICLE IX
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal
any provisions contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by law and all the provisions of this
Restated Certificate of Incorporation, and as otherwise permitted by the
Indenture, and all rights and powers conferred in this Restated Certificate of
Incorporation on stockholders, directors and officers are subject to this
reserved power; provided, however, that, as long as any of the Notes remain
outstanding, without the approval of the holders of at least 66-2/3% in
principal amount of the Notes then outstanding, the Corporation shall not
delete, amend, supplement or otherwise modify any provision of this Restated
Certificate of Incorporation.
7
<PAGE>
ARTICLE X
INDEPENDENT DIRECTOR
As long as any of the Notes remain outstanding, without the approval
of the holders of at least 66-2/3% in principal amount of the Notes then
outstanding to the contrary, the Corporation shall at all times have at least
one (1) director (the "Independent Director") who is also an independent,
non-management director of Avatex. The initial Independent Director shall be
John L. Wineapple.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The number of directors constituting the board of directors as of the
date hereof shall be three, and the name of each person who is to serve as
director until the next annual meeting of stockholders or until his successor is
elected and qualified are:
Name
----
John L. Wineapple, Independent Director
Abbey J. Butler
Melvyn J. Estrin
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by Melvyn J. Estrin, a Co-Chief
Executive Officer of the Corporation, this 6th day of December, 1999.
AVATEX FUNDING, INC.
By: /s/ Melvyn J. Estrin
-------------------------------------
Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
================================================================================
AVATEX FUNDING, INC.
AND
AVATEX CORPORATION
---------------------
6.75% Notes due 2002
---------------------
Indenture
---------------------
Dated as of December 7, 1999
---------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
================================================================================
NY2:\394032\09
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE........................................................1
Section 1.01. Definitions.............................................................................1
Section 1.02. Other Definitions.......................................................................6
Section 1.03. Incorporation by Reference of Trust Indenture Act.......................................7
Section 1.04. Rules of Construction...................................................................7
Section 1.05. Compliance Certificates and Opinions....................................................8
Section 1.06. Form of Documents Delivered to Trustee..................................................8
Section 1.07. Acts of Holders.........................................................................9
ARTICLE 2 THE NOTES........................................................................................10
Section 2.01. Form and Dating........................................................................10
Section 2.02. Execution and Authentication...........................................................11
Section 2.03. Registrar and Paying Agent.............................................................12
Section 2.04. Paying Agent to Hold Money in Trust....................................................13
Section 2.05. Lists of Holders of the Notes..........................................................13
Section 2.06. Transfer and Exchange..................................................................13
Section 2.07. Replacement Notes......................................................................16
Section 2.08. Outstanding Notes......................................................................16
Section 2.09. Treasury Notes.........................................................................17
Section 2.10. Temporary Notes........................................................................17
Section 2.11. Cancellation...........................................................................17
Section 2.12. Record Date............................................................................18
Section 2.13. CUSIP Number...........................................................................18
Section 2.14. Computation of Interest................................................................18
ARTICLE 3 REDEMPTION AND PREPAYMENT........................................................................18
Section 3.01. Election to Redeem; Notice to Trustee..................................................18
Section 3.02. Selection by Trustee of Notes to be Redeemed...........................................18
Section 3.03. Notice of Redemption...................................................................19
Section 3.04. Effect of Notice of Redemption.........................................................20
Section 3.05. Deposit of Redemption Price............................................................20
Section 3.06. Notes Payable on Redemption Date.......................................................20
Section 3.07. Notes Redeemed in Part.................................................................21
Section 3.08. Optional Redemption....................................................................21
Section 3.09. Mandatory Redemption...................................................................21
Section 3.10. Option to Purchase Upon Extraordinary Dividend.........................................21
ARTICLE 4 COVENANTS........................................................................................24
Section 4.01. Payment of Principal and Interest......................................................24
Section 4.02. Maintenance of Office or Agency........................................................24
Section 4.03. Money for Payments to Be Held in Trust.................................................24
Section 4.04. Reports................................................................................26
Section 4.05. Statement as to Compliance; Notice of Default..........................................26
Section 4.06. Payment of Taxes and Other Claims......................................................27
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
<S> <C> <C> <C>
Section 4.07. Stay, Extension, Usury Laws............................................................27
Section 4.08. Corporate Existence; Corporate Actions.................................................27
Section 4.09. Limitation on Incurrence of Indebtedness...............................................29
Section 4.10. Limitations on Liens...................................................................30
ARTICLE 5 SUCCESSORS.......................................................................................30
Section 5.01. Merger, Consolidation, or Sale of Assets...............................................30
Section 5.02. Successor Corporation Substituted......................................................30
ARTICLE 6 DEFAULTS AND REMEDIES............................................................................31
Section 6.01. Events of Default and Notice Thereof...................................................31
Section 6.02. Acceleration...........................................................................32
Section 6.03. Other Remedies.........................................................................32
Section 6.04. Waiver of Past Defaults................................................................32
Section 6.05. Control by Majority....................................................................33
Section 6.06. Limitation on Suits....................................................................33
Section 6.07. Rights of Holders of Notes to Receive Payment..........................................33
Section 6.08. Collection Suit by Trustee.............................................................34
Section 6.09. Trustee May File Proofs of Claim.......................................................34
Section 6.10. Priorities.............................................................................34
Section 6.11. Undertaking for Costs..................................................................35
ARTICLE 7 TRUSTEE..........................................................................................35
Section 7.01. Duties of Trustee......................................................................35
Section 7.02. Rights of Trustee......................................................................36
Section 7.03. Individual Rights of Trustee...........................................................37
Section 7.04. Trustee's Disclaimer...................................................................37
Section 7.05. Notice of Defaults.....................................................................37
Section 7.06. Reports by Trustee to Holders of the Notes.............................................38
Section 7.07. Compensation and Indemnity.............................................................38
Section 7.08. Replacement of Trustee.................................................................39
Section 7.09. Successor Trustee by Merger, Etc.......................................................40
Section 7.10. Eligibility; Disqualification..........................................................40
Section 7.11. Preferential Collection of Claims Against the Company..................................40
Section 7.12. Rights of Holders with Respect to Time, Method and Place...............................41
ARTICLE 8 AMENDMENT, SUPPLEMENT AND WAIVER.................................................................41
Section 8.01. Without Consent of Holders of Notes....................................................41
Section 8.02. With Consent of Holders of Notes.......................................................41
Section 8.03. Compliance With TIA....................................................................43
Section 8.04. Revocation and Effect of Consents......................................................43
Section 8.05. Notation on or Exchange of Notes.......................................................44
Section 8.06. Trustee to Sign Amendments, Etc........................................................44
ii
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
<S> <C> <C> <C>
ARTICLE 9 COLLATERAL AND SECURITY..........................................................................44
Section 9.01. Security Agreement.....................................................................44
Section 9.02. Recording and Opinions.................................................................45
Section 9.03. Release of Collateral..................................................................46
Section 9.04. Certificates of the Company............................................................46
Section 9.05. Certificates of the Trustee............................................................46
Section 9.06. Authorization of Actions to be Taken by the Trustee under the Security Agreement.......46
Section 9.07. Authorization of Receipt of Funds by the Trustee Under the Security Agreement..........47
Section 9.08. Termination of Security Interest.......................................................47
ARTICLE 10 GUARANTEE OF NOTES...............................................................................47
Section 10.01. Parent Guarantee.......................................................................47
Section 10.02. Execution and Delivery of Parent Guarantee.............................................48
Section 10.03. Guarantor May Consolidate, Etc., on Certain Terms......................................49
Section 10.04. Limitation on Guarantor Liability......................................................50
Section 10.05. "Trustee" to Include Paying Agent......................................................50
ARTICLE 11 SATISFACTION AND DISCHARGE.......................................................................50
Section 11.01. Satisfaction and Discharge of Indenture................................................50
Section 11.02. Application of Trust Money.............................................................51
ARTICLE 12 MISCELLANEOUS....................................................................................52
Section 12.01. Conflict of any Provision of Indenture with TIA........................................52
Section 12.02. Notices................................................................................52
Section 12.03. Communication by Holders of Notes with Other Holders of Notes..........................54
Section 12.04. Certificate and Opinion as to Conditions Precedent.....................................54
Section 12.05. Legal Holidays.........................................................................54
Section 12.06. No Personal Liability of Directors, Officers, Employees and Stockholders...............54
Section 12.07. Governing Law..........................................................................55
Section 12.08. No Adverse Interpretation of Other Agreements..........................................55
Section 12.09. Successors and Assigns.................................................................55
Section 12.10. Severability...........................................................................55
Section 12.11. Counterpart Originals..................................................................55
Section 12.12. Table of Contents, Headings, Etc.......................................................55
EXHIBITS
A - Form of Note
B - Form of Special Compliance Certificate
C - Form of Notation of Parent Guarantee on Note
D - Form of Supplemental Indenture to be Delivered by New Guarantor
E - Form of Security Agreement
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
<S> <C> <C>
310(a)(1)............................................................................................. 7.10
(a)(2)........................................................................................... 7.10
(a)(3)........................................................................................... N.A.
(a)(4)........................................................................................... N.A.
(a)(5)........................................................................................... 7.10
(b).............................................................................................. 7.10
(c).............................................................................................. N.A.
311(a)................................................................................................ 7.11
(b).............................................................................................. 7.11
(c).............................................................................................. N.A.
312(a)................................................................................................ 2.05
(b).............................................................................................. 12.03
(c).............................................................................................. 12.03
313(a)................................................................................................ 7.06
(b)(1)........................................................................................... 7.06; 9.03
(b)(2)........................................................................................... 7.06; 7.07; 9.03
(c).............................................................................................. 7.06; 12.02
(d).............................................................................................. 7.06
314(a)................................................................................................ 4.04; 12.02
(b).............................................................................................. 9.02
(c)(1)........................................................................................... 12.04
(c)(2)........................................................................................... 12.04
(c)(3)........................................................................................... N.A.
(d).............................................................................................. 9.03; 9.04
(e).............................................................................................. 1.05
(f).............................................................................................. N.A.
315(a)................................................................................................ 7.01
(b).............................................................................................. 7.05; 12.02
(c).............................................................................................. 7.01
(d).............................................................................................. 7.01
(e).............................................................................................. 6.11
316(a)(last sentence)................................................................................. 2.09
(a)(1)(A)........................................................................................ 6.05
(a)(1)(B)........................................................................................ 6.04
(a)(2)........................................................................................... N.A.
(b).............................................................................................. 6.07
(c).............................................................................................. 2.12
317(a)(1)............................................................................................. 6.08
(a)(2)........................................................................................... 6.09
(b).............................................................................................. 2.04
318(a)................................................................................................ 12.01
(b).............................................................................................. N.A.
(c).............................................................................................. 12.01
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
</TABLE>
iv
<PAGE>
INDENTURE dated as of December 7, 1999 among AVATEX FUNDING, INC., a
Delaware corporation (the "Company"), AVATEX CORPORATION, a Delaware corporation
and the surviving corporation in the Merger (as defined below) ("Avatex"), as
guarantor, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee (the
"Trustee"). The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 6.75% Notes
due 2002.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
Set forth below are certain defined terms used in this Indenture.
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For 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;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Bankruptcy Law" means Title 11, U.S. Code or any similar foreign,
federal or state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of such board of directors.
"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" means any day other than a Legal Holiday.
"Capital Stock" means, (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that
<PAGE>
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock that by its terms is not entitled to
the payment of dividends unless such dividends may be declared and paid only out
of net earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock, and, in any event with respect to this clause (ii), to the
extent that any such series of preferred stock is not treated or classified as a
liability on such Person's balance sheet in accordance with GAAP, less (x) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of this Indenture
in the book value of any asset owed by such Person or a consolidated Subsidiary
of such Person, and (y) all unamortized debt discount and expenses and
unamortized deferred charges as of such date, all of the foregoing determined in
accordance with GAAP.
"Closing Date" means December 7, 1999.
"Collateral Agent" means Norwest Bank Minnesota, National
Association, in its capacity as collateral agent under the Security Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" means Avatex Funding, Inc., a Delaware corporation.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
2
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Extraordinary Dividend" means any dividend or other payment or
distribution declared by Phar-Mor to all holders of Phar-Mor Common Stock other
than a Regular Dividend.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A, and that is
deposited with the Note Custodian and registered in the name of the Depository.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.
"Guarantor" means Avatex, as guarantor of the Company's payment of
all principal of and interest on the Notes, and all other amounts payable under
the Notes or this Indenture, pursuant to the Parent Guarantee.
"Holder" means a Person in whose name a Note is registered.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Interest Payment Date" has the meaning assigned to such term in
paragraph 1 of the form of the Note attached hereto as Exhibit A.
"Issuance" means the issuance of the Notes by the Company that are
required to be issued in connection with the Merger pursuant to the Merger
Agreement and a registration statement on Form S-4 (Registration No. 333-84849,
as amended) and the prospectus included therein.
"Legal Holiday" means a Saturday, Sunday or a day on which banking
institutions in the City of New York, the city where the principal office of the
Trustee is located, or at a place of payment are authorized by law, regulation
or executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday.
3
<PAGE>
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Merger" means the merger of Xetava with and into Avatex contemplated
by, and pursuant to, the Merger Agreement.
"Merger Agreement" means that certain Amended and Restated Agreement
and Plan of Merger, dated as of June 18, 1999, by and between Avatex and Xetava,
as the same shall be amended, amended and restated, supplemented or modified
from time to time.
"Notes" means the Company's 6.75% Notes due 2002 issued in compliance
with this Indenture.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any indebtedness, including the Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, Chief Executive Officer, the President, any Senior Vice President, the
Chief Financial Officer or any Vice President of such Person.
"Officer's Certificate" means a certificate signed on behalf of the
Company by an Officer of the Company that meets the requirements set forth in
Section 1.05 hereof.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be reasonably acceptable to the Trustee,
in form and substance satisfactory to the Trustee. Each such opinion shall
include the statements provided for in TIA Section 314(e) to the extent
applicable.
"Parent Guarantee" means the guarantee of the Guarantor of the
Company's payment obligations under the Notes.
"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens
with respect to or contemplated by the Security Agreement and the Subrogation
Agreement; (iii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith and
diligently by appropriate
4
<PAGE>
proceedings and which are not being foreclosed; (iv) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's, or other like Liens with respect to amounts not yet delinquent or
being contested in good faith and diligently by appropriate proceedings; and (v)
any other Liens that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit by the Company and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company, and, in each
case under this clause (v), are being contested in good faith and diligently by
appropriate proceedings; provided, however, that, with respect to clauses (iv)
and (v), to the extent any such Liens are on the Pledged Collateral, such Liens
are removed or released within 60 days after the Company is notified of the
existence thereof, or to the extent any such Liens are not on the Pledged
Collateral, such Liens are removed or released within 120 days after the Company
is notified of the existence thereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Phar-Mor" means Phar-Mor, Inc., a Pennsylvania corporation,
including its successors.
"Phar-Mor Common Stock" means common stock, par value $0.01 per
shares, of Phar-Mor, including any subdivision, combination or reclassification
thereof.
"Pledged Collateral" has the meaning assigned to such term in the
Security Agreement.
"Regular Dividend" means any regular quarterly cash dividend declared
by Phar-Mor to all holders of Phar-Mor Common Stock, other than a quarterly cash
dividend that exceeds the immediately preceding quarterly cash dividend by 10%.
"Responsible Officer", when used with respect to the Trustee, means
any officer in the Corporate Trust Office of the Trustee and also means, with
respect to a particular corporate trust matter, any other officer or employee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Security Agreement" means that certain Pledge and Security
Agreement, dated as of the date hereof, among the Company, the Trustee, the
Collateral Agent and Avatex, substantially in the form of Exhibit E hereto, as
the same may be amended, amended and restated, supplemented or modified from
time to time.
5
<PAGE>
"Security Documents" means the Security Agreement and all related
agreements, instruments, financing statements or other documents that set forth
or limit the Lien of the Trustee in the Pledged Collateral.
"Subrogation Agreement" means that certain Subrogation Agreement,
dated as of December 7, 1999, by and between Bart A. Brown, Jr., as trustee
under Chapter 7 of Title 11 of the United States Code of FoxMeyer Corporation,
FoxMeyer Drug Company, Healthcare Transportation System, Inc., Merchandise
Coordinator Services Corporation, FoxMeyer Software, Inc. and Health Mart, Inc.
and their respective estates, as their interests may appear, and the Trustee, as
trustee under this Indenture and as Collateral Agent under the Security
Agreement, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trustee" means the party named as such above unless and until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means such successor.
"Trustee Note" has the meaning assigned to such term in the
Subrogation Agreement.
"Xetava" means Xetava Corporation, a Delaware corporation and
wholly-owned subsidiary of Avatex.
Section 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Act".................................... 1.07
"Definitive Note"........................ 2.01(d)
"DTC".................................... 2.03
"Event of Default"....................... 6.01
"Extraordinary Dividend Offer"........... 3.10
6
<PAGE>
"Extraordinary Dividend Proceeds"........ 3.10
"incur".................................. 4.12
"Offer Amount"........................... 3.10
"Offer Period"........................... 3.10
"Paying Agent"........................... 2.03
"Purchase Date".......................... 3.10
"Registrar".............................. 2.03
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligors
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
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Section 1.05. Compliance Certificates and Opinions.
(a) 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, upon request by the Trustee, an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Indenture (including
any covenant compliance with which constitutes a condition precedent) 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
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
(b) On each Interest Payment Date, the Company shall deliver to the
Trustee an Officer's Certificate substantially in the form attached hereto as
Exhibit B.
(c) Every certificate or opinion (other than the certificates
required by Section 4.05(a) hereof) with respect to compliance with a condition
or covenant provided for in this Indenture shall comply with the provisions of
TIA Section 314(e) and shall include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) 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;
(iii) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.06. 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 give an opinion as to such matters in one or several documents.
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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 know, that the certificate or opinion or representation
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 relates to factual matters, upon a certificate or opinion of, or
representations by, an Officer or Officers of the Company or the Guarantor
stating that the information with respect to such factual matters is in the
possession of the Company or the Guarantor, 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 1.07. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an 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 TIA Section 315) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by a register kept by the
Registrar.
(d) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of such Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), any such record date shall be the record date specified in or pursuant
to such Board Resolution, which shall be a date not more
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than 30 days prior to the first solicitation of Holders generally in connection
therewith and no later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Notes then outstanding have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for this purpose the Notes
then outstanding shall be computed as of such record date; provided that no such
request, demand, authorization, direction, notice, consent, waiver or other Act
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
(6) months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Note shall bind every future Holder of
the same Note or 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, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company in reliance thereon, whether or not notation of such action is
made upon such Note.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) Form. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Notes may have notations,
legends or endorsements approved as to form by the Company and required by law,
stock exchange rule, agreements to which the Company is subject, or usage. Each
Note shall be dated the date of its authentication. The Notes shall be issuable
in registered form, without coupons, and only in denominations of $1.00 and
integral multiples thereof.
(b) Global Notes. Notes may be issued in the form of one or more
Global Notes, which shall be deposited on behalf of the Holders of the Notes
represented thereby with the Trustee, as custodian of the Depository, and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depository or its nominee as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein, and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of
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outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions and transfers of
interests. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
Except as set forth in Section 2.06 hereof, any Global Note may be
transferred, in whole and not in part, only to another nominee of the Depository
or to a successor of the Depository or its nominee.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply only to
Global Notes deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(c), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depository or the nominee of the Depository and
(ii) shall be delivered by the Trustee to the Depository or pursuant to the
Depository's instructions or held by the Trustee as custodian for the
Depository.
Participants who hold Notes through the Depository shall have no
rights under this Indenture with respect to any Global Note held on their behalf
by the Depository or by the Note Custodian as custodian for the Depository or
under such Global Note, and the Depository may be treated by the Company, the
Trustee and any Agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any Agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and its participants, the operation of customary practices of such
Depository governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
(d) Definitive Notes. Notes to be issued in certificated form shall
be substantially in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto) (any of such Notes, a
"Definitive Note").
Section 2.02. Execution and Authentication.
One Officer of the Company shall sign the Notes for the Company by
manual or facsimile signature. If an Officer of the Company whose signature is
on a Note no longer holds that office at the time the Note is authenticated, the
Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual or
facsimile signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The form of Trustee's certificate of
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authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A hereto.
The Notes shall be designated as the Company's "6.75% Notes due 2002"
and are to be issued initially in connection with the Issuance upon the
execution of this Indenture or otherwise in connection with the Issuance from
time to time thereafter in an aggregate principal amount not to exceed
$34,000,000. The Trustee shall, upon a written order of the Company signed by an
Officer of the Company, authenticate Notes for original issue up to an aggregate
principal amount stated in the preceding sentence and paragraph 4 of the Notes.
The aggregate principal amount of Notes outstanding at any time shall not exceed
such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange (including any
co-registrar, the "Registrar") and (ii) an office or agency where Notes may be
presented for payment ("Paying Agent") or, at the option of the Company, payment
of interest may be made by check mailed to the Holders at their respective
addresses set forth in the register of Holders. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-Registrars and 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 to any Holder.
The Company shall notify the Trustee in writing and the Trustee shall notify the
Holders of the name and address of any Agent not a party to this Indenture. The
Company may act as Paying Agent, Registrar or co-Registrar. The Company shall
enter into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall be subject to any obligations imposed by the provisions
of the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation in accordance with
Section 7.07 hereof.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Notes.
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Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all money held by the Paying Agent for the payment of
principal of and interest on the Notes, and shall notify the Trustee of any
Default by the Company 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 and to account for any funds disbursed. 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) shall have no
further liability for the money delivered to the Trustee. If the Company 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 2.05. Lists of Holders of the Notes.
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 shall otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven (7)
Business Days before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, including
the aggregate principal amount of the Notes held by each thereof, and the
Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture, the procedures of the Depository
therefor and applicable securities laws. Beneficial interests in a Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Global Note. If any Holder of a beneficial
interest in a Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon receipt by the
Trustee of written instructions (or such other form of instructions as is
customary for the Depository) from the Depository or its nominee on behalf of
any Person having a beneficial interest in a Global Note, the Trustee shall
cause the aggregate principal amount of such Global Note to be reduced
accordingly pursuant to Section 2.06(e) hereof, and the Company shall execute
and the Trustee shall authenticate and deliver a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest pursuant to the preceding sentence shall be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depository.
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(b) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Definitive Notes of other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. A Holder of a Definitive Note
may exchange such Note for a beneficial interest in a Global Note or transfer
such Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in a Global Note at any time. Upon receipt of a written
request for such an exchange or transfer, the Trustee shall cancel the
applicable Definitive Note pursuant to Section 2.11 hereof and increase or cause
to be increased, in accordance with standing instructions and procedures
existing between Note Custodian and the Depository, the aggregate principal
amount of an outstanding Global Note pursuant to Section 2.06(e) hereof. If no
Global Note is then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount. Any
Definitive Note presented or surrendered for registration of transfer or
exchange whether for another Definitive Note or for a beneficial interest in a
Global Note pursuant to this Section 2.06(b) shall be duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar and the Trustee duly executed by the Holder thereof or by his attorney
duly authorized in writing. To permit registrations of transfer and exchanges,
the Company shall issue and the Trustee shall authenticate Notes at the
Registrar's request, subject to such rules as the Trustee may reasonably
require.
(c) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(d) Authentication of Definitive Notes in Absence of Depository. If
at any time:
(i) the Depository for the Notes notifies the Company that the
Depository is unwilling or unable to continue as Depository for the
Global Notes and a successor Depository for the Global Notes is not
appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, as directed by the
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Company, appropriate Definitive Notes in an aggregate principal amount equal to
the principal amount of the Global Notes in exchange for such Global Notes.
(e) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(f) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, subject
to this Section 2.06, the Company shall execute and, upon the written
order of the Company signed by an Officer of the Company, the Trustee
shall authenticate Definitive Notes and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to any 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 such transfer tax or
similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.07 or 8.05 hereof, which shall be paid by the
Company).
(iii) Neither the Company nor the Registrar shall be required to
register the transfer of or exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid Obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Definitive Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company and the Registrar shall not be required:
(A) to issue, to register the transfer of or to exchange
Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption
under
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Sections 3.01 and 3.02 hereof and ending at the close of business
on the day of selection;
(B) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest payment
date; or
(C) to register the transfer of a Note other than in
amounts of $1.00 or integral multiples thereof.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal
of and interest on such Notes, and neither the Trustee, any Agent nor
the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 2.02 hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note and the ownership thereof, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer of the
Company, shall authenticate a replacement Note if the Trustee's requirements for
replacements of Notes are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the
reasonable judgment of the Trustee and the Company to protect the Company, the
Trustee, each Agent and each authenticating agent from any loss which any of
them may suffer if a Note is replaced. The Company and the Trustee may charge
the Holder for their expenses in replacing a Note.
Every replacement Note is an additional Obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and ratably
with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.08 as not outstanding. If a Note is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding, subject to the provisions of applicable law
to the contrary. If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding, and interest on it
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ceases to accrue. Subject to Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.09. 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, a Subsidiary of the Company or any Affiliate of the Company or any
immediate family member of any such Affiliate shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
which a Responsible Officer of the Trustee knows to be so owned shall be so
considered. Notwithstanding the foregoing, Notes that are to be acquired by the
Company or an Affiliate of the Company pursuant to an exchange offer, tender
offer or other agreement shall not be deemed to be owned by such entity until
legal title to such Notes passes to such entity.
Section 2.10. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may
prepare, and upon the written order of the Company signed by an Officer of the
Company, the Trustee shall authenticate, temporary Notes. Temporary Notes shall
be substantially in the form of Definitive Notes but may have variations that
the Company and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare, and the Trustee, upon receipt of
the written order of the Company signed by an Officer of the Company, shall
authenticate, Definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as Definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation. Subject to Section 2.07 hereof,
the Company may not issue new Notes to replace Notes that it has redeemed or
paid or that have been delivered to the Trustee for cancellation. All cancelled
Notes held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company, unless by a written order, signed by an
Officer of the Company, the Company shall direct that cancelled Notes be
returned to it.
Section 2.12. Record Date.
The record date for purposes of determining the identity of Holders
entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).
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Section 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number and, if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company will
promptly notify the Trustee of any change in the CUSIP number.
Section 2.14. Computation of Interest.
Interest on the Notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes pursuant to Section
3.08 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 45 but not more than 60
days prior to the redemption date fixed by it (unless a shorter notice period
shall be satisfactory to the Trustee for its convenience), notify the Trustee
pursuant to an Officer's Certificate of (i) such redemption date, (ii) the
principal amount of Notes to be redeemed and (iii) the clause of this Indenture
pursuant to which the redemption shall occur.
If the Company elects to make an offer to purchase Notes pursuant to
Section 3.10 hereof, it shall furnish to the Trustee, at least 45 days before
the scheduled purchase date, an Officer's Certificate setting forth (i) the
terms of the offer, (ii) the principal amount of Notes to be purchased, (iii)
the purchase price, (iv) the purchase date and (v) further setting forth a
statement to the effect that the Company has received an Extraordinary Dividend
on the Pledged Collateral, including a brief description of such Extraordinary
Dividend.
Section 3.02. Selection by Trustee of Notes to be Redeemed.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee 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, by
lot or by such other method as the Trustee deems fair and appropriate.
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The Trustee shall promptly notify the Company and the Registrar in
writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
Section 3.03. Notice of Redemption.
Notice of redemption shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at its registered address or at the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed.
All notices of redemption shall state:
(a) the redemption date;
(b) the redemption price;
(c) if less than all Notes then outstanding are to be redeemed, the
identification (and, in the case of a Note to be redeemed in part, the principal
amount) of the particular Notes to be redeemed;
(d) that on the redemption date the redemption price will become due
and payable upon each such Note or portion thereof, and that (unless the Company
shall default in payment of the redemption price) interest thereon shall cease
to accrue on or after said date;
(e) the place or places where such Notes are to be surrendered for
payment of the redemption price;
(f) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(g) the CUSIP number, if any, relating to such Notes; and
(h) in the case of a Note to be redeemed in part, 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 the aggregate principal amount
equal to the unredeemed portion thereof will be issued.
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Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at its request, by the Trustee in the
name and at the expense of the Company.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is given in accordance herewith, 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 3.05. Deposit of Redemption Price.
On or before 12:00 p.m. (New York City time) on any redemption date
or the date on which Notes are to be accepted for purchase pursuant to Section
3.10 hereof, the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 4.03 hereof) an amount of money in same day funds
(or New York Clearing House funds if such deposit is made prior to the
applicable redemption date) sufficient to pay the redemption price of, and
accrued interest on, all the Notes or portions thereof which are to be redeemed
on that date.
If Notes called for redemption or tendered in an Extraordinary
Dividend Offer are paid or if the Company has deposited with the Trustee or
Paying Agent money sufficient to pay the redemption or purchase price of, and
unpaid and accrued interest on, all Notes to be redeemed or purchased, on and
after the redemption or purchase date interest shall cease to accrue on the
Notes or the portions of Notes called for redemption or tendered and not
withdrawn in an Extraordinary Dividend Offer (regardless of whether certificates
for such securities are actually surrendered). If a Note is redeemed or
purchased 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 or tendered in an Extraordinary
Dividend Offer shall not be so paid upon surrender because of the failure of the
Company to comply with the preceding paragraph, interest shall be paid on the
unpaid principal from the redemption or purchase date until such principal is
paid.
Section 3.06. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the redemption date, become due and payable at the
redemption price therein specified and from and after such date (unless the
Company shall default in the payment of the redemption price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with said notice, such Note shall be paid by
the Company at the redemption price together with accrued interest to the
redemption date.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal thereof shall, until paid, bear interest
from the redemption date at the rate borne by such Note.
Section 3.07. Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 4.02 hereof (with, if the Company, the Registrar or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Registrar or the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and a new Note in
principal amount equal to the unpurchased or unredeemed portion will be issued
in the name of the Holder thereof upon cancellation of the original Note. On and
after the purchase or redemption date, unless the Company defaults in payment of
the purchase or redemption price, interest shall cease to accrue on Notes or
portions thereof purchased or called for redemption.
Section 3.08. Optional Redemption.
(a) The Notes will be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' written notice, at a redemption price equal to 100% of principal amount of
the Notes to be redeemed, together with accrued and unpaid interest thereon to
the applicable redemption date.
(b) Any redemption pursuant to this Section 3.08 shall be made
pursuant to the provisions of Sections 3.01 through 3.07 hereof.
Section 3.09. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
Section 3.10. Option to Purchase Upon Extraordinary Dividend.
(a) In the event the Company receives an Extraordinary Dividend on
account or in respect of the Pledged Collateral, the Company may use all or part
of the proceeds of such Extraordinary Dividend (the "Extraordinary Dividend
Proceeds") to make an offer to all Holders of Notes (the "Extraordinary Dividend
Offer") to purchase Notes at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase, in accordance with the procedures set forth herein. If the
aggregate principal amount of Notes surrendered by Holders in an Extraordinary
Dividend Offer exceeds the amount of Extraordinary Dividends Proceeds being used
in such Extraordinary Dividend Offer, the Trustee shall select the Notes to be
purchased by the Company in such Extraordinary Dividend Offer on a pro rata
basis.
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(b) In the event that the Company elects to commence an Extraordinary
Dividend Offer, it shall follow the procedures specified below.
An Extraordinary Dividend Offer shall remain open for a period of at
least 20 Business Days following its commencement (the "Offer Period"). No later
than five (5) Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes that
the Company offered to purchase pursuant to an Extraordinary Dividend Offer (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to such Extraordinary Dividend Offer. Payment for any Notes
so purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Extraordinary Dividend Offer.
Upon the commencement of an Extraordinary Dividend Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Extraordinary Dividend Offer. The Extraordinary Dividend Offer shall be made to
all Holders. The notice, which shall govern the terms of an Extraordinary Offer,
shall state:
(i) that the Extraordinary Dividend Offer is being made pursuant to
this Section 3.10 and the length of time the Extraordinary Dividend Offer
shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(iv) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Extraordinary Dividend Offer
shall cease to accrue interest after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to any
Extraordinary Dividend Offer shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three (3) days before the Purchase Date;
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(vi) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives,
not later that the expiration of the Offer Period, a facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(vii) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1.00 or
integral multiples thereof, shall be purchased); and
(viii) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Extraordinary
Dividend Offer, or if less than the Offer Amount has tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.10. The Company, the Depository or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five (5) Business Days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Note to such Holder, in
a principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof.
Other than as specifically provided in this Section 3.10, any
purchase pursuant to this Section 3.10, shall be made pursuant to the provisions
of Sections 3.01 through 3.07 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Principal and Interest.
The Company shall pay or cause to be paid the principal of and
interest on the Notes on the dates and in the manner provided in the Notes.
Principal and interest shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 12:00 p.m.
(New York City time) on the due date
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money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal and interest then due.
Section 4.02. Maintenance of Office or Agency.
The Company will maintain 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 and this Indenture may be served. The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes, and may from time to time rescind such designation; provided, however,
that no such designation or recession shall in any manner relieve the Company of
its obligation to maintain an office or agency for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
recession and any change in the location of any such office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
Section 4.03. Money for 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 for the
Notes, it will, on or before each due date of the principal of or interest on
any Notes, deposit with a Paying Agent a sum in same day funds (or New York
Clearing House funds if such deposit is made prior to the date on which such
deposit is required to be made) sufficient to pay the principal or interest so
becoming due (or at the option of the Company, payment of interest may be mailed
by check to the Holders of the Notes at their respective addresses set forth in
the register of Holders of Notes; provided that all payments with respect to
Notes represented by one or more permanent Global Notes will be paid by wire
transfer of immediately available funds to the account of the Depository or any
successor thereto) such sum to be held in trust for the benefit of the Persons
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entitled to such principal or interest and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action or any
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:
(a) 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;
(b) 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;
(c) 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; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and obligations of
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
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 (2) years after such principal or
interest has become due and payable shall be paid to the Company at the request
of the Company 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 Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company (i) cause to be published once, in
The New York Times and The Wall Street Journal (national edition), 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 notification or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company, and (ii) cause notice to be promptly sent to each Holder that
such money remains unclaimed and that, after a date
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specified therein, which shall not be less than 30 days from the date of such
notification, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 4.04. Reports.
(a) As long as any Notes are outstanding, the Company shall furnish
to the Trustee copies of the annual reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Company is required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information documents
or reports pursuant to either of such sections, then to furnish to the Trustee
and file with the Commission, in accordance with rules and regulations
prescribed by the Commission, any such supplementary and periodic information,
documents, and reports which may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations.
(b) In addition to complying with Section 4.04(a), the Company shall
at all times comply with TIA Section 314(a), as applicable.
Section 4.05. Statement as to Compliance; Notice of Default.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year ending after the date of this Indenture, an
Officer's Certificate stating whether, to such Officer's knowledge, the Company
is in compliance with all covenants and conditions to be complied with by it
under this Indenture, and further stating, as to the Officer signing such
certificate, that to the best of his or her knowledge each entity is not in
default in the performance or observance of any terms, provisions and conditions
of this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto. For purposes of this Section 4.05, such compliance
shall be determined without regard to any period of grace or requirement of
notice under this Indenture.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officer's Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
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Section 4.06. Payment of Taxes and Other Claims.
The Company shall pay prior to delinquency, all material taxes,
assessments, and governmental levies, except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
Section 4.07. Stay, Extension, Usury Laws.
The Company and the Guarantor covenant (to the extent that they may
lawfully do so) that they shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law whatever enacted, now or at any time hereafter in force, that may
affect that covenants or the performance of this Indenture; and the Company and
the Guarantor (to the extent that they may lawfully do so) hereby waive all
benefit or advantage of any such law, and covenants that they shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
Section 4.08. Corporate Existence; Corporate Actions.
(a) Subject to Articles 5 and 10 hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company.
(b) The Company will engage only in acts or activities, directly or
indirectly, arising from, provided or necessitated by, resulting from, in
connection with or otherwise incidental or related to the following:
(i) subject to Section 3.10 hereof and paragraph (f) below,
accepting, owning and holding the entire beneficial interest in the
Pledged Collateral or any other contributions to the capital of the
Company as long as such contributions have no associated liabilities;
(ii) entering into this Indenture and the Security Agreement (or
any amendment hereto or thereto);
(iii) complying with, and performing any and all of the Company's
obligations under, contemplated or necessitated by or in connection
with, this Indenture, the Notes, the Issuance, the Security
Agreement, the Merger Agreement, the Merger, the Subrogation
Agreement or the Trustee Note;
(iv) subject to Section 3.10 hereof and paragraph (f) below,
investing the proceeds derived from the ownership of the Pledged
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Collateral or any other assets contributed to the Company, but only
in bank certificates of deposit, money market instruments or
securities issued by the United States government or its agencies or
instrumentalities (as long as such certificates of deposit, money
market instruments or securities mature prior to December 7, 2002);
(v) executing, delivering and performing any agreement
evidencing, necessitated by or in connection with any and all of the
foregoing or any and all of the activities and powers referred to in
clause (vi) below; and
(vi) engaging in any lawful act or activity and to exercise
powers permitted to a corporation organized under the General
Corporation Law of the State of Delaware that, in each case, are
incidental to the foregoing or necessary to accomplish the foregoing.
(c) Notwithstanding any provision of the Company's Certificate of
Incorporation and any provision of law that otherwise so empowers the Company,
the Company shall not (i) engage in any business or activity other than as
described in Section 4.08 or its Certificate of Incorporation and matters
necessarily incident thereto; (ii) increase or reclassify the Capital Stock of
the Company or issue any additional shares of Capital Stock of the Company; or
(iii) delete, amend, supplement or otherwise modify any provision of its
Certificate of Incorporation, or delete, amend, supplement or otherwise modify
any provision of its By-laws to frustrate the provisions of its Certificate of
Incorporation.
(d) The Company shall at all times:
(i) not become involved in the day-to-day management of any other
Person;
(ii) maintain corporate records, books of account and payroll (if
any) separate from any other Person;
(iii) maintain financial statements, books and records separate
from any other Person and insure that any consolidated financial
statements that include the Company have notes clearly stating that
the Company is a separate corporate entity;
(iv) maintain its assets separately from the assets of any other
Person (including through the maintenance of a separate bank
account);
(v) conduct all business correspondence of the Company and other
communications in the Company's own name;
(vi) not act as an agent of any other Person in any capacity; and
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(vii) separately manage the Company's liabilities from those of
any other Person.
(e) The Company shall not declare or pay any dividend or make any
other payment or distribution on account or in respect of the Company's Capital
Stock.
(f) Notwithstanding anything to the contrary in this Indenture, the
Security Agreement or the Company's Certificate of Incorporation, the Company
shall be able to use the proceeds derived from its ownership of the Pledged
Collateral, including, but not limited to, the proceeds of any Regular Dividend
or Extraordinary Dividend made on account or in respect of the Pledged
Collateral, and the proceeds of any contributions to the capital of the Company,
to pay or cause to be paid the principal of and interest on the Notes in the
manner provided herein and the Notes or to purchase, redeem or otherwise acquire
or retire the Notes; provided, however, that, in the event that the proceeds of
any Extraordinary Dividend exceed $2.3 million, the Company may not use more
than the greater of $2.3 million and 50% of such Extraordinary Dividend to pay
or cause to be paid interest on the Notes. Section 4.09. Limitation on
Incurrence of Indebtedness.
The Company shall not, create, incur, issue, assume, guarantee or
otherwise become, directly or indirectly, liable, contingently or otherwise,
with respect to (collectively, "incur") any indebtedness or liability.
Notwithstanding the foregoing, the Company may incur the following:
(a) indebtedness or liabilities of the Company under, arising from or
otherwise with respect to or in connection with, or otherwise incurred by the
Company in connection with the consummation of any of the transactions
contemplated by, or otherwise to comply with, the Notes, this Indenture, the
Officer's Certificate to be delivered pursuant to Section 1.05(b) hereof, the
Security Agreement and the Trustee Note (as contemplated by the Subrogation
Agreement), in each case, after December 7, 1999;
(b) indebtedness or liabilities arising after December 7, 1999 from
the fees and expenses of, or payable or paid to, (i) the Trustee or the
Collateral Agent, and (ii) the Company's outside counsel or accountants or other
outside agents or representatives, to the extent it is necessary or reasonably
advisable to engage any such person in connection with the Company's
interpreting, complying with (including, but not limited to, complying with any
applicable law, rule or regulation), or otherwise consummating any of the
transactions contemplated by, this Indenture, the Officer's Certificate to be
delivered pursuant to Section 1.05(b) hereof, the Notes, the Security Agreement,
the Subrogation Agreement or the Trustee Note; and
(c) indebtedness or liabilities on account of incidentals or
administrative services supplied or furnished to the Company (including, but not
limited
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to, bank and brokerage fees) in an aggregate amount per calendar year not to
exceed $7,500.
Section 4.10. Limitations on Liens.
The Company shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset or property now owned or hereafter
acquired by the Company, except Permitted Liens.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
Without the consent of the Holders of at least 66-2/3% in principal
amount of Notes then outstanding, the Company shall not, in one or more related
transactions, consolidate or merge with or into (whether or not the Company is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets to, or
sell, transfer or dispose of any of its Capital Stock to, another Person. In the
event the requisite approval for any transaction described in the foregoing
sentence is obtained, (a) upon consummation of any such transaction, the Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made, assumes all the Obligations of the
Company under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee, (b) immediately after any such
transaction no Default or Event of Default shall exist, and (c) upon
consummation of any such transaction, the Company delivers an Officer's
Certificate and an Opinion of Counsel to the Trustee, stating (A) that the
proposed transaction and the supplemental indenture comply with the Indenture
and (B) that the Trustee shall be entitled to conclusively rely upon such
Officer's Certificate and Opinion of Counsel.
Section 5.02. Successor Corporation Substituted.
Upon any permitted consolidation or merger, or any sale, assignment,
transfer, lease or conveyance or other disposition of all or substantially all
of the assets of, transfer or other disposition of any of the Capital Stock of,
the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
such successor) and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay the principal of and interest on the Notes,
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except in the case of a sale or other disposition of all or substantially all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default and Notice Thereof.
Each of the following constitutes an "Event of Default":
(a) default for 15 days in the payment when due of interest on the
Notes;
(b) default for 5 days in payment when due of the principal on the
Notes;
(c) failure by the Company or the Guarantor, as applicable, to comply
with the provisions of Section 4.09, 4.10, 5.01 or 10.03 hereof;
(d) failure by the Company for 21 days after written notice to comply
with any of its other covenants or agreements in this Indenture, the Notes or
the Security Agreement (including any failure to provide the Collateral Agent,
for the benefit of the Holders of the Notes, with a continuing first-priority
Lien on the Pledged Collateral), or the failure, after 21 days written notice
thereof, of any of the representations or warranties in the Security Agreement
to be true and correct in all material respects;
(e) failure by the Guarantor to perform any covenant set forth in the
Parent Guarantee, or the repudiation by the Guarantor of its obligations under
the Parent Guarantee or the unenforceability of the Parent Guarantee against the
Guarantor for any reason, unless, in each such case, the Guarantor has no
indebtedness for borrowed money outstanding at such time or at any time
thereafter;
(f) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; and
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(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company for all
or substantially all of the property of the Company; or
(C) orders the liquidation of the Company; and
the order or decree remains unstayed and in effect for 60
consecutive days.
Section 6.02. Acceleration.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default specified in clause (f) or (g) of
Section 6.01 hereof with respect to the Company, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce this Indenture or the Notes except as provided in this
Indenture.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may, or
may direct the Collateral Agent to, pursue any available remedy to collect the
payment of principal and interest on the Notes or to enforce the performance of
any provision of the Notes, this Indenture or the Security Agreement.
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. A delay or
omission by the Trustee, the Collateral Agent or any Holder of a Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding, by notice to the Trustee and the Collateral Agent, may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under this Indenture, except a continuing Default
or Event of Default in the payment of interest on, or principal of, the Notes,
and except in connection with a purchase of, or a tender offer or exchange offer
for, the Notes. Notwithstanding the foregoing, the consent of Holders of at
least 66-2/3% in principal amount of the Notes
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then outstanding (excluding, as part of such 66-2/3%, consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, the
Notes) shall be required for any waiver of any existing Default or Event of
Default with respect to the Company's non-compliance with Section 4.08, 4.09,
4.10 or 5.01 hereof. The Trustee may withhold from Holders of the Notes and from
the Collateral Agent notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in such Holders' interest.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or the Collateral Agent or
exercising any trust or power conferred on it, including the exercise of any
remedy under the Security Agreement. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture or that would be likely
to subject the Trustee to personal liability, as determined by the Trustee's
independent counsel in a written opinion. The Trustee may take any other action
which it deems proper which is not inconsistent with any such direction.
Section 6.06. Limitation on Suits.
No Holder of a Note will have any right to institute any proceeding
with respect to this Indenture or for any remedy hereunder, unless (i) such
Holder shall have previously given to the Trustee written notice of a continuing
Event of Default with respect to the Notes, (ii) the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request to the Trustee to institute such proceeding, and (iii) the Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Notes then outstanding a direction inconsistent with such request and
shall have failed to institute (or commit to institute as soon as possible) such
proceeding within 15 days.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal of and interest on any
Note, on or after the respective due dates expressed in any 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 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of and interest remaining unpaid on the Notes and, to the
extent lawful, such further amount as
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shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company, the Guarantor or any other obligor upon the Notes, and their respective
creditors or property and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims, and any custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, as administrative expenses
associated with any such proceeding, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. 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, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money, subject to Article 9 hereof and Section 16 of the
Security Agreement, in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for interest and then principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for interest and
principal, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default shall occur (which shall not be cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture
and no others, 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, provided, that the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
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(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (e) and (f) of this Section 7.01 and Section 7.02 hereof.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request or direction of any of the Holders unless the Holders shall have
offered to the Trustee security and indemnity reasonably satisfactory to it
against any loss, liability or expense.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon 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 Officer's Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereof in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
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(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Notes unless such Holders of Notes shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against any
loss, liability or expense.
Section 7.03. 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 with the same
rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the Commission for permission to continue as trustee or
resign. Any Agent may do the same with like rights and duties. The Trustee is
also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Notes or the Security
Documents, it shall not be accountable for the Company's use of the proceeds
from the Notes or any money paid to the Company or upon the direction of the
Company under any provision of this Indenture or of the Security Agreement, it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
furnished or issued in connection with the sale of the Notes other than its
certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is actually known to the Trustee, the Trustee shall mail to the Collateral Agent
and to the Holders of Notes a notice of the Default or Event of Default within
30 days after it occurs. If a Default or Event of Default has occurred and is
cured and such cure is actually known to the Trustee, the Trustee shall mail to
the Collateral Agent and the Holders of Notes a notice of such cure within seven
(7) days after it occurs. Except in the case of a Default or Event of Default in
payment of principal of or interest on any Note, the Trustee may withhold the
notice if and so long as a committee of its Responsible
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Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the Closing Date, and for so long as Notes remain outstanding, the Trustee shall
mail to the Holders of the Notes a brief report dated as of such reporting date
that complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA Section
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee, from time to time as may be
agreed upon between them, reasonable compensation for its acceptance of this
Indenture and services hereof. 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 promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify and hold harmless the Trustee against any
and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture or the
Security Documents against the Company (including this Section 7.07) and
defending itself against any claim (whether asserted by the Company or any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder or under the Security
Documents, except to the extent any such loss, liability or expense may be
attributable to its negligence, willful misconduct or bad faith. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall reasonably cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section 7.07, 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. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in Section 6.01(f) or (g) hereof,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
Section 7.08. 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 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created 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 in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) 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;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) 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 shall promptly appoint a successor
Trustee that meets the eligibility requirements in Section 7.10 below. At any
time, within one (1) year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then 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, the Company, or
the Holders of at
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least 10% in principal amount of the then outstanding Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six (6) months (or such shorter period
during which the Notes have been outstanding), fails to comply with Section 7.10
hereof, such Holder of a Note 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, to the Company and to the Collateral Agent.
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 of the Notes and to the Collateral Agent.
The retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee, provided all sums owing to the retiring Trustee have
been paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereof and a Collateral Agent
under the Security Agreement that is a corporation organized and doing business
under the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has, or
is a wholly owned subsidiary of a bank holding company that has, a combined
capital and surplus of at least $500 million as set forth in its most recent
published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against the Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
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Section 7.12. Rights of Holders with Respect to Time, Method and
Place.
Subject to the limitations of Article 6 and 7 of this Indenture, a
majority in principal amount of the then outstanding Notes issued hereunder
shall have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee.
ARTICLE 8
AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01. Without Consent of Holders of Notes.
Notwithstanding Section 8.02 hereof, without the consent of any
Holder of Notes, the Company, the Guarantor (with respect to the Parent
Guarantee or this Indenture to which it is a party) and the Trustee may amend or
supplement this Indenture, the Notes, the Parent Guarantee or the Security
Documents:
(a) to cure any manifest error, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to comply with Article 10 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any such Holder;
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA; or
(f) to enter into additional or supplemental Security Documents.
Upon the written request of the Company accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
Indenture or Security Documents, and upon receipt by the Trustee of the
documents described in Section 8.06 hereof the Trustee shall join with the
Company and the Guarantor, if necessary, in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture or
the Security Documents and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 8.02. With Consent of Holders of Notes.
Except as provided in the proviso included in this paragraph and as
otherwise provided below in this Section 8.02, this Indenture, the Notes, the
Parent
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Guarantee issued hereunder and the Security Documents may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (excluding, as part of such majority,
consents obtained in connection with a purchase of, or a tender offer or
exchange offer for, the Notes), and, subject to Sections 6.02, 6.04 and 6.07
hereof, any existing default or compliance with any provision of this Indenture,
the Notes, the Parent Guarantee or the Security Documents may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes (excluding consents obtained in connection with a tender offer or exchange
offer for the Notes); provided, however, that the consent of the Holders of at
least 66-2/3% in principal amount of the Notes then outstanding (excluding, as
part of such 66-2/3%, consents obtained in connection with a purchase of, or a
tender offer or exchange offer for, the Notes) shall be required for any
amendment or supplement of, or waiver of any existing Default or compliance with
any provisions of, Section 4.08, 4.09, 4.10 or 5.01 hereof.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture or
Security Documents, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 8.06
hereof to the extent requested by the Trustee, the Trustee shall join with the
Company and the Guarantor in the execution of such amended or supplemental
Indenture or Security Document unless such amended or supplemental Indenture or
Security Document affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its discretion,
but shall not be obligated to, enter into such amended or supplemental Indenture
or Security Documents.
The consent of the Holders is not necessary under this Section 8.02
to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
Neither the Company nor any of its Affiliates shall, directly or
indirectly, pay or cause to be paid any consideration to any Holder of Notes for
or as an inducement to, or in connection with the solicitation of, any consent,
waiver or amendment of any terms of this Indenture, the Security Agreement or
the Notes, unless such consideration is required to be paid to all Holders bound
by such consent, waiver or amendment whether or not such Holders so consent,
waive or agree to amend or tender.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture, the Notes or the Parent Guarantee, or
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the Security Documents. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Note or the Parent Guarantee
held by a non-consenting Holder):
(i) reduce the principal amount of the Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the
Notes;
(iii) reduce the rate of or change the time for payment of
interest on any Note;
(iv) waive a Default or Event of Default in the payment of
principal of or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of such Notes and a waiver of the payment
default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in such
Notes;
(vi) make any change in Section 6.04 or Section 6.07 hereof;
(vii) except as provided under Article 10 or in accordance with
the terms of the Parent Guarantee, release the Guarantor from its
obligations under the Parent Guarantee, or make any change in the
Parent Guarantee that would adversely affect the Holders of the
Notes;
(viii) make any change in the amendment and waiver provisions of
this Article 8; or
(ix) release any portion of the Pledged Collateral from the Lien
of this Indenture or the Security Documents, except as contemplated
by this Indenture or the Security Documents.
Section 8.03. Compliance With TIA.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the
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consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 8.05. Notation on or Exchange of Notes.
The Trustee may, but shall not be required to, place an appropriate
notation about an amendment, supplement 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, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 8.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental Indenture or
Security Agreement authorized pursuant to this Article 8 if the amendment or
supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Company may not sign an amendment or supplemental
Indenture or Security Document until the Board of Directors approves it. In
signing or refusing to sign any amended or supplemental Indenture or Security
Document the Trustee shall be entitled to receive and (subject to Section 7.01
hereof) shall be fully protected in relying upon an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
Indenture or Security Document is authorized or permitted by this Indenture and
that it is not inconsistent herewith.
ARTICLE 9
COLLATERAL AND SECURITY
Section 9.01. Security Agreement.
The due and punctual payment of the principal of and interest on the
Notes when and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal of and interest on the Notes and performance
of all other obligations of the Company to the Holders of Notes or the Trustee
under this Indenture and the Notes, according to the terms hereunder or
thereunder, shall be secured to the extent provided in the Security Agreement.
Each Holder of Notes, by its acceptance thereof, consents and agrees to the
terms of the Security Agreement (including, without limitation, the provisions
providing for foreclosure and release of Pledged Collateral (as defined in the
Security Agreement)) as the same may be in effect or may be amended from time to
time in accordance with its terms and authorizes and directs the Collateral
Agent to enter into the Security Agreement and to perform its obligations and
exercise its rights thereunder in accordance
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therewith. The Company shall deliver or cause to be delivered to the Trustee
copies of all documents delivered to the Collateral Agent pursuant to the
Security Agreement, and shall do or cause to be done all such acts and things as
may be necessary or proper, or as may be required by the provisions of the
Security Agreement, to assure and confirm to the Trustee and the Collateral
Agent the security interest in the Pledged Collateral contemplated hereby, by
the Security Agreement or any part thereof, as from time to time constituted, so
as to render the same available for the security and benefit of this Indenture
and of the Notes secured hereby, according to the intent and purposes herein
expressed. The Company shall take upon request of the Trustee or the Collateral
Agent, any and all actions reasonably required to cause the Security Agreement
to create and maintain, as security for the Obligations of the Company
hereunder, a valid and enforceable perfected first priority Lien in and on all
the Pledged Collateral, in favor of the Collateral Agent for the benefit of the
Holders of Notes, superior to and prior to the rights of all third Persons and
subject to no Liens other than Permitted Liens.
Section 9.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee and the Collateral Agent
simultaneously with the execution and delivery of this Indenture an Opinion of
Counsel either (i) stating that in the opinion of such counsel all action has
been taken with respect to the recording, registering and filing of this
Indenture, financing statements or other instruments necessary to make effective
the Lien intended to be created by the Security Agreement, and reciting with
respect to the security interests in the Pledged Collateral, the details of such
action, or (ii) stating that, in the opinion of such counsel, no such action is
necessary to make such Lien effective.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on December 1, in each year beginning with December 1, 2000, an Opinion of
Counsel, dated as of such date, either (i)(A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and re-filing of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Security
Agreement and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, or (B) stating that, based on relevant laws as
in effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Notes and the Collateral Agent and the Trustee hereunder and
under the Security Agreement with respect to the security interests in the
Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA ss.
314(b).
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Section 9.03. Release of Collateral.
(a) Subject to subsection (b) of this Section 9.03, Pledged
Collateral may be released from the Lien and security interest created by the
Security Agreement at any time or from time to time in accordance with the
provisions of the Security Agreement or as provided hereby.
(b) The release of any Pledged Collateral from the terms of this
Indenture and the Security Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Security
Agreement. To the extent applicable, the Company shall cause TIA ss. 313(b),
relating to reports, and TIA ss. 314(d), relating to the release of property or
securities from the Lien and security interest of the Security Agreement and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Security Agreement, to be
complied with. The Trustee shall comply (to the extent required) with TIA ss.ss.
313(b)(1) and 313(d). Any certificate or opinion required by TIA ss. 314(d) may
be made by an Officer of the Company except in cases where TIA ss. 314(d)
requires that such certificate or opinion be made by an independent Person,
which Person shall be an independent engineer, appraiser or other expert
selected or approved by the Trustee and the Collateral Agent in the exercise of
reasonable care.
Section 9.04. Certificates of the Company.
(a) The Company shall furnish to the Trustee and the Collateral
Agent, prior to each proposed release of Pledged Collateral pursuant to the
Security Agreement, (i) all documents required by TIA ss. 314(d) and (ii) an
Opinion of Counsel, which shall be rendered by outside counsel to the Company,
to the effect that such accompanying documents constitute all documents required
by TIA ss. 314(d). The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
Section 9.05. Certificates of the Trustee.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Security Agreement and has delivered the certificates and
documents required by the Security Agreement and Section 9.04 hereof, the
Trustee, based on the Opinion of Counsel delivered pursuant to Section 9.04(b),
shall deliver a certificate to the Collateral Agent setting forth such
determination.
Section 9.06. Authorization of Actions to be Taken by the Trustee
under the Security Agreement.
Subject to the provisions of Section 7.01 and 7.02 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, direct, on behalf of
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the Holders of Notes, the Collateral Agent to take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Security Agreement and (b) collect and receive any and all amounts payable in
respect of the Obligations of the Company hereunder. The Trustee shall have the
power to, or direct the Collateral Agent to, institute and maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Pledged Collateral by any acts that may be unlawful or in violation of the
Security Agreement or this Indenture, and such suits and proceedings as the
Trustee or the Collateral Agent may deem expedient to preserve or protect its
interests and the interests of the Holders of Notes in the Pledged Collateral
(including the 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 security interest hereunder or be prejudicial to the interests of the
Holders of the Notes, the Trustee or the Collateral Agent).
Section 9.07. Authorization of Receipt of Funds by the Trustee Under
the Security Agreement.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Notes distributed under the Security Agreement, and to make further
distribution of such funds to the Holders of Notes according to the provisions
of this Indenture.
Section 9.08. Termination of Security Interest.
Upon the payment in full of (a) all Obligations of the Company under
this Indenture and the Notes and (b) all fees and expenses due to the Trustee
under this Indenture, the Trustee shall, at the request of the Company, deliver
a certificate to the Collateral Agent stating that such Obligations have been
paid in full, and instruct the Collateral Agent to release the Liens pursuant to
this Indenture and the Security Agreement.
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Parent Guarantee.
Subject to Section 10.04 hereof, the Guarantor hereby unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes held thereby and the Obligations
of the Company hereunder and thereunder, that: (a) the principal of and interest
on the Notes will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration, redemption or otherwise, and
interest on the overdue principal on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full and performed, all in accordance
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with the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantor will be obligated to pay the same immediately. An Event of Default
under this Indenture or the Notes shall constitute an event of default under the
Parent Guarantee, and shall entitle the Holders to accelerate the Obligations of
the Guarantor hereunder in the same manner and to the same extent as the
Obligations of the Company. The Guarantor hereby agrees that its Obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. The
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that this Parent Guarantee will not be
discharged except by complete performance of the Obligations contained in the
Notes and this Indenture. If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the Guarantor, or any Custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or
such Holder, the Parent Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect. The Guarantor agrees that it shall not
be entitled to, and hereby waives, any right of subrogation in relation to the
Holders in respect of any Obligations guaranteed hereby. The Guarantor further
agrees that, as between the Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 hereof for the purposes of
the Parent Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed thereby,
and (ii) in the event of any declaration of acceleration of such Obligations as
provided in Article 6 hereof, such Obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantor for the purpose of the
Parent Guarantee.
Section 10.02. Execution and Delivery of Parent Guarantee.
To evidence the Parent Guarantee set forth in Section 10.01 hereof,
the Guarantor hereby agrees that a notation of the Parent Guarantee
substantially in the form of Exhibit C hereto shall be endorsed by manual or
facsimile signature by an Officer of the Guarantor on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on behalf
of the Guarantor, by manual or facsimile signature, by an officer of the
Guarantor.
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The Guarantor hereby agrees that the Parent Guarantee shall remain in
full force and effect notwithstanding any failure to endorse on each Note a
notation of the Parent Guarantee.
If an Officer whose signature is on this Indenture or on the Parent
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which the Parent Guarantee is endorsed, the Parent Guarantee shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Parent Guarantee set
forth in this Indenture on behalf of the Guarantor.
Section 10.03. Guarantor May Consolidate, Etc., on Certain Terms.
(a) Except as set forth in this Section 10.03, nothing contained in
this Indenture shall prohibit a merger between the Guarantor and a Subsidiary of
the Guarantor, other than a merger between the Guarantor and the Company (which
shall only be permitted as set forth in Section 5.01).
(b) The Guarantor shall not consolidate with or merge with or into
(whether or not the Guarantor is the surviving Person), sell all or
substantially all of its assets to, or sell or dispose of more than 80% of its
Capital Stock to, another Person, whether or not affiliated with the Guarantor,
unless, other than with respect to a merger between the Guarantor and a
Subsidiary of the Guarantor (other than the Company), (i) the Person formed by
or surviving any such consolidation or merger (if other than the Guarantor), or
to which such sale shall have been made, assumes all the obligations of the
Guarantor pursuant to a supplemental indenture substantially in the form of
Exhibit D hereto, under the Parent Guarantee of the Guarantor and this
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; and (iii) except in the case of a merger of the
Guarantor with and into a Subsidiary of the Guarantor, the Guarantor or the
entity or Person formed by or surviving any such consolidation or merger, or to
which such sale shall have been made, shall have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Guarantor immediately preceding the transaction.
(c) In the case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and substantially in the form of Exhibit D
hereto, of the Parent Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as the Guarantor. Such successor Person thereupon may cause to be signed
the Parent Guarantee to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed and delivered to the Trustee. The
Parent Guarantee so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Parent Guarantee theretofore and thereafter
issued
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in accordance with the terms of this Indenture as though the Parent Guarantee
had been issued at the date of the execution hereof.
(d) In the event of a sale of all or substantially all of the assets
of the Guarantor in compliance with Section 10.03(b) above, then the Guarantor
shall be released and relieved of any Obligations under the Parent Guarantee.
Upon the delivery by the Guarantor or such other appropriate Person to the
Trustee of an Officer's Certificate to the effect of the foregoing, the Trustee
shall execute any document reasonably required in order to evidence the release
of the Guarantor from its Obligations under the Parent Guarantee.
Section 10.04. Limitation on Guarantor Liability.
For purposes hereof, the Guarantor's liability shall be limited to
the lesser of (a) the aggregate amount of the Obligations of the Company under
the Notes and this Indenture and (b) the amount, if any, which would not have
(i) rendered the Guarantor "insolvent" (as such term is defined in applicable
Bankruptcy Law) or (ii) left the Guarantor with unreasonably small capital at
the time the Parent Guarantee was entered into; provided, however, that, it will
be a presumption in any lawsuit or other proceeding in which the Guarantor is a
party that the amount guaranteed pursuant to the Parent Guarantee is the amount
set forth in clause (a) above unless any creditor, or representative of
creditors of the Guarantor, or debtor in possession or trustee in bankruptcy of
the Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of the Guarantor is the amount set forth in clause (b) above. In making any
determination as to solvency or sufficiency of capital of the Guarantor in
accordance with the previous sentence, any rights the Guarantor may have,
contractual or otherwise, shall be taken into account.
Section 10.05. "Trustee" to Include Paying Agent.
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 10 shall in each case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 11 in place of the Trustee.
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and will cease to be of further
effect as to all Notes issued hereunder, when either:
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(a) all such Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and Notes for
whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company) have been delivered to the Trustee for cancellation; or
(b) (i) all such Notes not theretofore delivered to such Trustee
for cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within one
(1) year and the Company or the Guarantor, has irrevocably deposited or
caused to be deposited with such Trustee as trust funds in trust an amount
of money sufficient to pay and discharge the entire Indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation for
principal and accrued interest to the date of maturity or redemption;
(ii) no Default or Event of Default with respect to this
Indenture or the Notes shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit
will not result in a breach or violation of, or constitute a default under,
any other instrument to which the Company or the Guarantor is a party or by
which the Company or the Guarantor, is bound;
(iii) the Company or the Guarantor has paid or caused to be paid
all sums payable by it under this Indenture; and
(iv) the Company has delivered irrevocable instructions to the
Trustee under this Indenture to apply the deposited money toward the
payment of such Notes at maturity or the redemption date, as the case may
be.
In addition, the Company must deliver an Officer's Certificate and an
Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
Section 11.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 4.03
hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof
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 Paying Agent) as the Trustee may
determine, to Persons entitled thereto, of the principal and interest for whose
payment such money has been deposited with the Trustee.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's Obligations under this Indenture and the Notes shall
be revived and reinstated as though
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such deposit had not occurred pursuant to Section 11.01 hereof; provided that if
the Company has made any payment of principal of or interest on any Notes
because of the reinstatement of its Obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Conflict of any Provision of Indenture with TIA.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 12.02. Notices.
Any notice or communication by the Company, the Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Avatex Funding, Inc.
5910 North Central Expressway
Suite 1780
Dallas, Texas 75206
Attention: General Counsel
Facsimile: (214) 365-7499
If to the Guarantor:
Avatex Corporation
5910 North Central Expressway
Suite 1780
Dallas, Texas 75206
Attention: General Counsel
Facsimile: (214) 365-7499
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If to the Trustee:
Norwest Bank Minnesota,
National Association
Sixth and Marquette; MAC N9303-120
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Services
Facsimile: (612) 667-9828
If to the Collateral Agent:
Norwest Bank Minnesota,
National Association
Sixth and Marquette; MAC N9303-120
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Services
Facsimile: (612) 667-9825
The Company, the Trustee or the Collateral Agent, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five (5) Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
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Section 12.03. Communication by Holders of Notes with Other Holders
of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Sections 1.05(a) and (c) hereof) stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Sections 1.05(a) and (c) hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
Section 12.05. Legal Holidays.
In any case where any interest payment date or any maturity date with
respect to any Note shall not be a Business Day, then (notwithstanding any other
provisions of this Indenture, the Notes or the Parent Guarantee) payment of
interest or principal need not be made on such date but may be made on the next
succeeding Business Day.
Section 12.06. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or the Guarantor, solely by virtue of being such,
shall have any liability for any obligations of the Company or the Guarantor
under the Notes, the Parent Guarantee, this Indenture or the Security Documents
(including the Security Agreement) or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes and the Parent
Guarantee. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
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Section 12.07. Governing Law.
THIS INDENTURE, THE NOTES AND THE PARENT GUARANTEE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF.
Section 12.08. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.09. Successors and Assigns.
All covenants and agreements in this Indenture and the Notes by the
Company shall bind its respective successors and assigns, whether so expressed
or not. All covenants and agreements in this Indenture and the Notes by the
Trustee shall bind its respective successors and assigns, whether so expressed
or not.
Section 12.10. Severability.
In case any provision in this Indenture or in the Notes or the Parent
Guarantee 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 12.11. Counterpart Originals.
The parties may sign any number of counterpart copies of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 12.12. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures appear on following page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and delivered in New York, New York as of the day and year
first above written.
Dated: December 7, 1999 AVATEX FUNDING, INC.
By: /s/ Melvyn J. Estrin
--------------------------------------
Melvyn J. Estrin
Co-Chief Executive Officer
Dated: December 7, 1999 AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
--------------------------------------
Melvyn J. Estrin
Co-Chief Executive Officer
Dated: December 7, 1999 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Timothy P. Mowdy
--------------------------------------
Name: Timothy P. Mowdy
Title:
56
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Exhibit A
---------
(Face of Note)
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depositary or by a nominee of the Depository to
the Depository or another nominee of the Depositary or by the Depository or any
such nominee to a successor Depositary or a nominee of such successor
Depository. The Depository Trust Company, 55 Water Street, New York, New York
("DTC"), shall act as the Depository until a successor shall be appointed by the
Company. Unless this certificate is presented by an authorized representative of
DTC to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as may be requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or such other entity as may be requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein].1
6.75% Notes due 2002
No. _____ Cusip No: 05349G AA 1
AVATEX FUNDING, INC.
promises to pay to [insert if a Global Note: Cede & Co.] [insert if a Definitive
Note: _____] or registered assigns, the principal sum of $___________
(_____________ Dollars) on December 7, 2002.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
AVATEX FUNDING, INC.
By:
---------------------------------
Name:
Title:
- --------
1. This paragraph should be included only if the Note is issued in global form.
<PAGE>
This is one of the 6.75% Notes due 2002 referred to in the
within-mentioned Indenture:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
---------------------------------
Authorized Signature
A-2
<PAGE>
(Back of Note)
6.75% Notes due 2002
Capitalized terms used herein (but not otherwise defined) shall have
the meanings assigned to them in the Indenture referred to below.
1. Interest. Avatex Funding, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the outstanding principal amount of this
Note at the rate of 6.75% per annum. The Company shall pay interest
semi-annually, in cash, in arrears on June 15 and December 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance; provided that if there is no existing
Default in the payment of interest, and if this Note is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be June 15,
2000. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on June 1 and December 1 next preceding the Interest
Payment Date, even if such Notes are cancelled after such record date and on or
before such Interest Payment Date. The Notes will be payable as to principal and
interest at the office or agency of the Company maintained for such purpose, or
at the option of the Company, payment of interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders.
3. Paying Agent and Registrar. Initially, Norwest Bank Minnesota,
National Association, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. Indenture. This Note is one of a duly authorized issue of Notes of
the Company, designated as its 6.75% Notes due 2002, issued by the Company
initially in connection with the Issuance in an aggregate principal amount not
to exceed $34,000,000. The Company issued the Notes under an Indenture dated as
of December 7, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Indenture") among the Company, the Guarantor party thereto and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms.
A-3
<PAGE>
5. Optional Redemption. The Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' written notice, at a redemption price equal to 100% of
principal amount of the Notes to be redeemed, together with accrued and unpaid
interest thereon to the applicable redemption date.
In the event the Company receives an Extraordinary Dividend on
account or in respect of the Pledged Collateral, the Company may use all or part
of the proceeds of such Extraordinary Dividend to make an offer to all Holders
of Notes (the "Extraordinary Dividend Offer") to purchase Notes at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the date of purchase. Any Extraordinary
Dividend Offer shall be consummated in accordance with the procedures set forth
in the Indenture.
6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes may be redeemed
in part, provided that no Notes shall be redeemed in a principal amount that is
less than $1.00. On and after the redemption date, interest ceases to accrue on
Notes or portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1.00 and integral multiples of $1.00.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee 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. The
Company need not exchange or register the transfer of any Note or portion of a
Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Security. The due and punctual payment of the principal of and
interest on the Notes when and as the same shall be due and payable, whether on
an Interest Payment Date, at maturity, by acceleration, repurchase, redemption
or otherwise, and interest on any overdue principal of and interest on the Notes
and performance of all other obligations of the Company to the Holders or the
Trustee under this Indenture and the Notes, according to the terms hereunder or
thereunder, shall be secured to the extent provided in the Security Agreement
which the Company has entered into simultaneously with the execution of this
Indenture. Each Holder of Notes, by its acceptance thereof,
A-4
<PAGE>
consents and agrees to the terms of the Security Agreement (including, without
limitation, the provisions providing for foreclosure) as the same may be in
effect or may be amended from time to time in accordance with their terms and
authorizes and directs the Trustee or the Collateral Agent, as the case may be,
to enter into the Security Agreement and to perform their respective obligations
and exercise their respective rights thereunder in accordance therewith.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes, the Parent Guarantee issued hereunder and the Security
Documents may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (excluding,
as part of such majority, consents obtained in connection with a purchase of, or
a tender offer or exchange offer for, the Notes), and, subject to the terms of
the Indenture, the Notes, the Parent Guarantee and the Security Documents, any
existing default or compliance with any provision of the Indenture, the Notes,
the Parent Guarantee or the Security Documents may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes
(excluding consents obtained in connection with a tender offer or exchange offer
for the Notes); provided, however, that the consent of the Holders of at least
66-2/3% in principal amount of the Notes then outstanding (excluding, as part of
such 66-2/3%, consents obtained in connection with a purchase of, or a tender
offer or exchange offer for, the Notes) shall be required for any amendment or
supplement of, or waiver of any existing Default or compliance with any
provisions of, Section 4.08, 4.09, 4.10 or 5.01 of the Indenture. Without the
consent of any Holder of Notes, the Company, the Guarantor and the Trustee may
amend or supplement the Indenture, the Notes, the Parent Guarantee or the
Security Documents to cure any manifest error, defect or inconsistency; to
provide for uncertificated Notes in addition to or in place of certificated
Notes; to comply with Article 10 of the Indenture; to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights hereunder of any such Holder; to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act; to enter into
additional or supplemental Security Documents; or to provide for the appointment
of a successor trustee in compliance with the requirements of Section 7.08 of
the Indenture.
12. Defaults and Remedies. Each of the following constitutes an
"Event of Default": (a) default for 15 days in the payment when due of interest
on the Notes; (b) default for 5 days in payment when due of the principal of the
Notes; (c) failure by the Company or the Guarantor, as applicable, to comply
with the provisions of Section 4.09, 4.10, 5.01 or 10.03 of the Indenture; (d)
failure by the Company for 21 days after written notice to comply with any of
its other covenants or agreements in the Indenture, the Notes or the Security
Agreement (including the failure to provide the Collateral Agent under the
Security Agreement, for the benefit of the Holders of the Notes, with a
continuing first-priority Lien on the Pledged Collateral), or the failure, after
21 days written notice thereof, of any of the representations or warranties in
the Security Agreement to be true and correct in all material respects; (e)
failure by the Guarantor to
A-5
<PAGE>
perform any covenant set forth in the Parent Guarantee, or the repudiation by
the Guarantor of its obligations under the Parent Guarantee or the
unenforceability of the Parent Guarantee against the Guarantor for any reason,
unless, in each such case, the Guarantor has no indebtedness for borrowed money
outstanding at such time or at any time thereafter; and (f) certain events of
bankruptcy with respect to the Company.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default specified in clause (f) or (g) of
Section 6.01 of the Indenture with respect to the Company, all outstanding Notes
will become due and payable without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in this
Indenture.
Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee or the Collateral
Agent in its exercise of any trust or power, including the exercise of any
remedy under the Security Agreement. The Holders of a majority in aggregate
principal amount of the Notes then outstanding, by notice to the Trustee and the
Collateral Agent, may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under this Indenture,
except a continuing Default or Event of Default in the payment of interest on or
principal of the Notes, and except in connection with a purchase of, or a tender
offer or exchange offer for, the Notes. Notwithstanding the foregoing, the
consent of Holders of at least 66-2/3% in principal amount of the Notes then
outstanding (excluding, as part of such 66-2/3%, consents obtained in connection
with a purchase of, or a tender offer or exchange offer for, the Notes) shall be
required for any waiver of any existing Default or Event of Default with respect
to the Company's non-compliance with Section 4.08, 4.09, 4.10 or 5.01 of the
Indenture.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company, and may otherwise deal with the Company, as if it were
not the Trustee.
14. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or the Guarantor,
solely by virtue of being such, shall have any liability for any obligations of
the Company or the Guarantor under the Notes, the Parent Guarantee, the
Indenture or the Security Documents (including the Security Agreement) or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
A-6
<PAGE>
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minor Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law. The internal law of the State of New York shall
govern and be used to construe the terms of this Note, without regard to the
choice of law rules thereof.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Avatex Funding, Inc.
5910 North Central Expressway
Suite 1780
Dallas, Texas 75206
Attention: General Counsel
A-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
----------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
-------------------
Your Signature:
-------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 3.10 of the Indenture, check the box below:
[ ] Section 3.10
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 3.10 of the Indenture, state the amount you elect to
have purchased: $
---------------
Date: Your Signature:
----------- ---------------------------------------------
(Sign exactly as your name appears on the Note)
Tax Indemnification No.:
-------------------------------------
Signature Guarantee.
Note: Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES2
The following exchanges of a part of this Global Note for an interest
in another Global Note or for Definitive Notes, or exchanges of a part of
another Global Note or Definitive Notes for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
of this Global Signature of
Amount of decrease Amount of increase Note following authorized
Date in Principal Amount in Principal Amount such decrease officer of Trustee
of Exchange of this Global Note of this Global Note (or increase) or Note Custodian
----------- ------------------- ------------------- ------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
2. This should be included only if the Note is issued in global form.
A-10
<PAGE>
Exhibit B
---------
FORM OF SPECIAL COMPLIANCE CERTIFICATE
--------------------------------------
(see attached)
<PAGE>
CERTIFICATE
OF
AVATEX FUNDING, INC.
The undersigned, Avatex Funding, Inc. (the "Borrower") does hereby
certify that:
1. This certificate is being provided to and may be relied upon by
the holders ("Noteholders") of 6.75% Notes due 2002 of Borrower (the "Notes").
Capitalized terms not defined herein shall have the meanings assigned to such
terms in the Indenture dated December 7, 1999 for the Notes.
2. The Borrower is a special purpose corporation organized in August,
1999, under the laws of the State of Delaware to issue the Notes and pledge the
Phar-Mor Stock.
3. The Borrower's certificate of incorporation and bylaws limit the
Borrower's activities to the items set forth in Article III of Borrower's
restated certificate of incorporation (as filed on December 7, 1999).
4. The Borrower has at all times maintained and will continue to
maintain in full effect its separate existence and good standing as a
corporation under the laws of the State of Delaware.
5. The Borrower has conducted at all times, and will conduct its
affairs strictly in accordance with, and has at all times observed and will
continue to observe all procedures required by, its restated certificate of
incorporation, bylaws and the laws of the State of Delaware. The Borrower has
observed at all times and will observe all necessary, appropriate and customary
corporate formalities, including taking all actions at meetings (or by written
consent) of its shareholder or shareholders appropriate to authorize all action,
keeping separate and accurate minutes of such meetings (and written consents)
and adopting all resolutions or consents necessary to authorize actions taken or
to be taken. The Borrower will also observe all of its covenants in the
Indenture, the Notes and the Pledge and Security Agreement dated December 7,
1999 and related documents (collectively, the "Transaction Documents"). The
Borrower will comply at all times with all of the terms of this Certificate.
6. The Borrower at all times has maintained and will maintain
accurate and complete books, records, accounts and financial statements, in each
case separate and distinct from the books, records, accounts and financial
statements of its Affiliates.
7. The Borrower at all times (a) will allocate expenses among the
Borrower and other entities with whom it shares office space as set forth below,
and (b) has and will continue to have stationery and other business forms
separate from its Affiliates.
B-1
<PAGE>
8. The funds and other assets of the Borrower at all times have been
and will be identifiable and at no time have been nor will be commingled with
those of its Affiliates, and neither the funds nor other assets of any Affiliate
have been or will be commingled with those of the Borrower. The Borrower at all
times has maintained and will continue to maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or otherwise
identify such assets from those of its Affiliates. No funds of the Borrower have
been or will be diverted to any other Person for any purpose other than the
business of the Borrower.
9. The transactions evidenced by the Transaction Documents (the
"Transactions") reflect bona fide transactions which have arm's-length terms and
which have been undertaken in good faith, and without an intent to evade any
applicable laws or public policy. None of the Transactions has been or will be
concealed from any interested party. The Borrower is not presently the subject
of a pending proceeding under the Bankruptcy Code. None of the Transactions was
entered into with the intent to hinder, defraud or delay any of the creditors of
the Borrower .
10. Except for the guaranty of the Notes by Avatex Corporation, and
except for the public assumption of Avatex's obligations under the Trustee Note
as contemplated by the Subrogation Agreement, none of the Borrower's Affiliates
are obligated to advance funds to the Borrower or otherwise supply funds to it,
or guaranty or become obligated for its debts.
11. The Borrower at all times has paid and will continue to pay, from
its own separate assets, all liabilities incurred by it, it being understood
that the Borrower has received and may receive capital contributions from Avatex
Corporation in order for it to make interest and principal payments and satisfy
any other obligations in the Notes. Any allocations of direct, indirect or
overhead expenses for items, employees or office space shared between the
Borrower and any Affiliate at all times have been made and will be made to the
extent practical on the basis of actual use or value of services rendered and
otherwise on a basis reasonably related to actual use or the value of services
rendered. The general overhead and administrative expenses of the Borrower will
not be charged or otherwise allocated to any Affiliate, and such expenses of any
Affiliate shall not be charged to the Borrower.
12. The Borrower at all times has conducted and will continue to
conduct its business solely in its own name so as not to mislead others as to
the identity of the Borrower. Without limiting the generality of the foregoing,
all oral and written communications of the Borrower have been made and will
continue to be made solely in the name of the Borrower.
13. The Borrower will incur no liabilities of any kind to any Person
except for those contemplated under the Transaction Documents. The Borrower has
not made and will not make any guarantees, and has not and will not otherwise
become liable, with respect to the obligations of any Affiliate or any other
Person except for the possible assumption of Avatex Corporation's obligations
under the Trustee Note as contemplated
B-2
<PAGE>
by the Subrogation Agreement. The Borrower also has not and will not acquire
obligations of, or make loans or advances to any Affiliate or any other Person
except for the possible assumption of Avatex Corporation's obligations under the
Trustee Note as contemplated by the Subrogation Agreement. If and to the extent
an Affiliate of the Borrower provides funds to Borrower, such funds will be
provided and properly recorded as a contribution to capital.
14. The Borrower at all times has acted and will continue to act
solely in its own name and through its own authorized officers and agents in the
conduct of its business. The Borrower at no time has or will (a) hold itself out
as having agreed to pay or become liable for the debts of any Affiliate or any
other Person, except for the possible assumption of Avatex Corporation's
obligations under the Trustee Note as contemplated by the Subrogation Agreement;
(b) fail to correct any known misrepresentation with respect to the foregoing;
or (c) operate or purport to operate as an integrated, single economic unit with
respect to any Affiliate.
15. The Borrower acknowledges that the Noteholders and the Indenture
Trustee have entered into the Transaction Documents in reliance on the identity
of the Borrower as a legal entity separate from its Affiliates. Subject to the
terms of the Indenture, the Notes, the Security Agreement and the Subrogation
Agreement, the isolation of the Borrower as an entity separate and distinct from
its Affiliates was a necessary precondition to the consummation of the
Transactions.
16. The Borrower at all times has maintained and will continue to
maintain an arm's-length relationship with its Affiliates, except that Avatex
Corporation has made and may make capital contributions to the Borrower from
time to time, including to enable Borrower to make interest and principal
payments and satisfy any other obligations on the Notes. Fees that may be paid
to Affiliates by the Borrower pursuant to any agreement that has been or that
will be entered into in accordance with the Transaction Documents are generally
comparable to the fees that would be payable to an unaffiliated third party
under an arm's-length agreement for such services.
17. The annual financial statements of the Borrower properly disclose
and will properly disclose the effects of the Transactions. The Borrower's
financial statements have clearly indicated and will clearly indicate the
separate existence of the Borrower and its separate assets and liabilities. None
of such financial statements, nor any consolidated financial statement, have
suggested or will suggest in any way that the Borrower's assets are available to
pay the claims of creditors of any Affiliate or any other Person.
B-3
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
_____ day of ____________, ________.
AVATEX FUNDING, INC.
By:
---------------------------------------
Name:
Title:
B-4
<PAGE>
Exhibit C
FORM OF NOTATION OF PARENT GUARANTEE ON NOTE
--------------------------------------------
Pursuant to the Indenture, the Guarantor has unconditionally
guaranteed (a) the due and punctual payment of the principal of and interest on
the Notes, whether at stated maturity, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue principal
of, and interest, to the extent lawful, on the Notes and (c) that in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension of renewal, whether at stated maturity, by
acceleration or otherwise.
Notwithstanding the foregoing, in the event that the Parent Guarantee
would constitute or result in a violation of any applicable fraudulent
conveyance or similar law of any relevant jurisdiction, the liability of the
Guarantor under the Parent Guarantee shall be limited to such amount as will
not, after giving effect thereto, and to all other liabilities of the Guarantor,
result in such amount constituting a fraudulent transfer or conveyance.
The Parent Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which the Parent
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual or facsimile signature of one of its authorized officers.
Dated: AVATEX CORPORATION
------------------
By:
---------------------------------------
Name:
Title:
<PAGE>
Exhibit D
---------
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
__________, _____ among Avatex Funding, Inc., a Delaware corporation (the
"Company"), [Guarantor], a ________________ corporation (the "New Guarantor"),
and Norwest Bank Minnesota, National Association, as trustee under the indenture
referred to below (the "Trustee"). Capitalized terms used herein and not defined
herein shall have the meaning ascribed to them in the Indenture (as defined
below).
W I T N E S S E T H:
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture, dated as of December 7, 1999 (the "Indenture"), providing
for the issuance by the Company of 6.75% Notes due 2002 in an aggregate
principal amount not to exceed $34,000,000 (the "Notes");
WHEREAS, [describe circumstances leading to New Guarantor assuming
obligations of Parent Guarantee]; and
WHEREAS, pursuant to Section 8.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company, the New Guarantor and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement To Guarantee. The New Guarantor hereby agrees to
guarantee the Company's Obligations under the Notes and the Indenture on the
terms and subject to the conditions set forth in Article 10 of the Indenture and
to be bound by all other applicable provisions of the Indenture.
3. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, shareholder or agent of the Guarantor, solely
by virtue of being such, shall have any liability for any obligations of the
Company or the Guarantor under the Notes, the Parent Guarantee, the Indenture or
this Supplemental 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 issuance of the Notes and the Parent Guarantee.
<PAGE>
4. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: AVATEX CORPORATION
------------------
By:
---------------------------------------
Name:
Title:
Dated: [Name of New Guarantor]
------------------
By:
---------------------------------------
Name:
Title:
Dated: NORWEST BANK MINNESOTA,
------------------ NATIONAL ASSOCIATION,
as Trustee
By:
---------------------------------------
Name:
Title:
D-2
<PAGE>
Exhibit E
---------
FORM OF SECURITY AGREEMENT
--------------------------
(see attached)
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made and
entered into as of December 7, 1999 by AVATEX FUNDING, INC., a Delaware
corporation (the "Company"), having its principal office at 5910 North Central
Expressway, Suite 1780, Dallas, Texas 75206, and AVATEX CORPORATION, a Delaware
corporation ("Avatex"), having its principal office at 5910 North Central
Expressway, Suite 1780, Dallas, Texas 75206, in favor of NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, having an office at Sixth and Marquette, MAC N9303-120,
Minneapolis, Minnesota 55479-0069, as collateral agent (the "Collateral Agent")
for the holders (the "Holders") of the Company's 6.75% Notes due 2002.
Capitalized terms used and not defined herein shall have the meanings given to
such terms in the Indenture referred to below.
W I T N E S S E T H :
WHEREAS, Avatex is the legal and beneficial owner of all of the
issued and outstanding shares of capital stock of the Company;
WHEREAS, the Company, Avatex, as guarantor, and Norwest Bank
Minnesota, National Association, as trustee, have entered into that certain
indenture, dated as of December 7, 1999 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Indenture"), a copy
of which is attached hereto as Exhibit A;
WHEREAS, pursuant to the Indenture, the Company will issue 6.75%
Notes due 2002 in an aggregate principal amount not to exceed $34,000,000
(together with any notes issued in replacement thereof or in exchange or
substitution therefor or in addition thereto, the "Notes");
WHEREAS, the Company is the legal and beneficial owner of all of the
issued and outstanding shares of capital stock set forth on Schedule I hereto
(the "Pledged Shares") of Phar-Mor, Inc. ("Phar-Mor"), a Pennsylvania
corporation;
WHEREAS, under the terms of a Settlement Agreement, dated October 9,
1997, between Avatex, as debtor, and Bart A. Brown, Jr., as trustee under
Chapter 7 of Title 11 of the United States code of FoxMeyer Corporation,
FoxMeyer Drug Company, Healthcare Transportation System, Inc., Merchandise
Coordinator Services Corporation, FoxMeyer Software, Inc. and Health Mart, Inc.
and their respective estates, as their interests may appear (the "FoxMeyer
Trustee"), (i) Avatex issued, executed and delivered to the FoxMeyer Trustee a
Promissory Note in the principal amount of $8,000,000 due October 9, 2000 (the
"FoxMeyer Trustee Note"), and (ii) to secure Avatex's obligations under the
FoxMeyer Trustee Note, Avatex executed and delivered to the FoxMeyer
NY2:394056 v.6
<PAGE>
Trustee a Pledge and Security Agreement dated October 9, 1997 (the "FoxMeyer
Trustee Security Agreement");
WHEREAS, under the FoxMeyer Trustee Security Agreement, Avatex
granted to the FoxMeyer Trustee a security interest in, among other things,
1,132,500 shares of common stock of Phar-Mor owned by Avatex, which shares are
represented by stock certificate number N-2832 (such shares, together with, to
the extent provided in the FoxMeyer Trustee Security Agreement, any securities
or instruments received on account of or as exchange for such shares, the
"Additional Shares");
WHEREAS, upon satisfaction of all of Avatex's obligations to the
FoxMeyer Trustee under the FoxMeyer Trustee Note and the full release by the
FoxMeyer Trustee of its lien on and security interest in the Additional Shares
as provided by and in accordance with the FoxMeyer Trustee Security Agreement
(the foregoing is hereinafter referred to as the "FoxMeyer Trustee Lien
Release"), Avatex wishes to transfer to the Company, in the form of a capital
contribution, the Additional Shares to enable the Additional Shares to
constitute and comprise a part of the Pledged Collateral (as defined below); and
WHEREAS, the terms of the Indenture require that the Company (i)
pledge to the Collateral Agent for the ratable benefit of the Holders, and grant
to the Collateral Agent for the ratable benefit of the Holders a security
interest in, the Pledged Collateral (as defined herein) and (ii) execute and
deliver this Agreement in order to secure the payment and performance by the
Company of all of the obligations of the Company under the Indenture and the
Notes (the "Obligations").
NOW, THEREFORE, in consideration of the premises, and in order to
induce the Holders to accept the Notes and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company hereby agrees with the Collateral Agent for its benefit and the ratable
benefit of the Holders as follows:
section 1. Pledge and Creation of Security Interest.
(a) The Company hereby pledges to the Collateral Agent for its
benefit and for the ratable benefit of the holders of Notes, and grants to the
Collateral Agent for the ratable benefit of the Holders, a continuing first
priority security interest in all of its right, title and interest in the
following (the "Pledged Collateral"):
(i) the Pledged Shares and the certificates representing the
Pledged Shares, and, subject to the provisions of Section 6, all products and
proceeds of any of the Pledged Shares, including, without limitation, all
dividends, cash, options, warrants, rights, instruments, subscriptions and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Shares or
any of the foregoing; and
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(ii) the Additional Shares, and the certificates representing the
Additional Shares (the Additional Shares and other items shall constitute part
of the Pledged Collateral under and as defined in this Agreement), and all
products and proceeds of any of the Additional Shares, including, without
limitation, subject to Section 6, all dividends, cash, options, warrants,
rights, instruments, subscriptions, and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Additional Shares; provided, however, that the Additional
Shares shall be and constitute part of the Pledged Collateral only after the
Company becomes the beneficial owner of such Additional Shares as provided in
paragraph (b) below.
(b) Promptly following the effectiveness of the FoxMeyer Trustee Lien
Release (as evidenced by written agreements and instruments satisfactory to
Avatex) and Avatex's receipt of the stock certificate representing the
Additional Shares, but in no event later than five (5) business days thereafter,
Avatex shall, in the form of a contribution to the capital of the Company,
assign, transfer, convey and deliver to the Company, and the Company shall
acquire and accept from Avatex, all of Avatex's right, title and interest in and
to the Additional Shares (the "Additional Shares Transfer"). Avatex shall use
its reasonable best efforts to obtain the stock certificate representing the
Additional Shares as promptly as practicable following the FoxMeyer Trustee Lien
Release. Immediately following the consummation of the Additional Shares
Transfer and the Company becoming the beneficial owner of the Additional Shares,
the Company shall pledge and deliver to the Collateral Agent for its benefit and
the ratable benefit of the Holders, a continuing first priority security
interest in the Additional Shares. The Company further agrees that (i) it will
promptly deliver to the Collateral Agent a certificate executed by an officer of
the Company describing the Additional Shares and certifying that the same have
been duly pledged and delivered to the Collateral Agent hereunder, and (ii)
immediately following the consummation of the Additional Share Transfer and the
Company becoming the beneficial owner of the Additional Shares, the Additional
Shares shall for all purposes hereunder constitute Pledged Collateral.
section 2. Security for Obligations. This Agreement secures the
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all Obligations of the Company under
the Indenture and the Notes.
section 3. Delivery of Pledged Collateral. The Company hereby agrees
that all certificates or instruments representing or evidencing the Pledged
Collateral shall be immediately delivered to and held at all times by the
Collateral Agent pursuant hereto in the State of Minnesota and shall be in
suitable form for transfer by delivery, or issued in the name of the Company and
accompanied by instruments of transfer or assignment duly executed in blank and
undated, and in either case having attached thereto all requisite federal or
state stock transfer tax stamps, all in form and substance satisfactory to
create a first priority security interest in the Pledged Collateral.
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section 4. Representations and Warranties. Each of the Company and
Avatex represents and warrants, jointly and severally, that as of the date
hereof:
(a) The execution, delivery and performance by each of the Company
and Avatex of this Agreement are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
its certificate of incorporation or bylaws or of any agreement, judgment,
injunction, order, decree or other instrument binding upon it, or result in the
creation or imposition of any Lien on any of its assets, other than the Lien
contemplated hereby.
(b) The Company is the legal, record and beneficial owner of the
Pledged Shares, free and clear of any Lien or claims of any Person, except for
the security interest created by this Agreement. Avatex is the legal, record and
beneficial owner of the Additional Shares, free and clear of any Lien or claims
by any Person, except for the security interest created by this Agreement and
the FoxMeyer Trustee's Lien thereon created by the FoxMeyer Trustee Security
Agreement.
(c) The Company has full power and authority to enter into this
Agreement and has the right to vote, pledge and grant a security interest in the
Pledged Shares as provided by this Agreement. Avatex has full power and
authority to enter into this Agreement and, subject to the FoxMeyer Trustee
Security Agreement, has the right to vote the Additional Shares, and, subject to
obtaining the FoxMeyer Trustee Lien Release, consummate the Additional Shares
Transfer.
(d) This Agreement has been duly executed and delivered by the
Company and Avatex and constitutes a legal, valid and binding obligation of the
Company and Avatex, enforceable against each of them in accordance with its
terms.
(e) Upon the delivery to the Collateral Agent of the Pledged Shares
and (as to certain proceeds therefrom, if any) the filing of the Uniform
Commercial Code (the "UCC") financing statements, the pledge of the Pledged
Shares pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Shares, securing the payment of the Obligations
for the benefit of the Collateral Agent and the Holders (subject as to
enforcement of remedies to any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally).
(f) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the pledge by the
Company of the Pledged Shares pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Company or (ii) for the
exercise by the Collateral Agent of the voting or other rights provided for in
this Agreement or the remedies in respect of the Pledged Shares pursuant to this
Agreement (except as may be required in connection with such disposition by laws
affecting the offering and sale of securities).
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(g) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the best knowledge of the
Company and Avatex, threatened by or against the Company or Avatex or against
any of their properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
Upon the pledge and delivery to the Collateral Agent of a security
interest in the Additional Shares as provided by and in accordance with this
Agreement, the Company shall be deemed to have made, as of the date of such
delivery, the representations and warranties set forth above with respect to
such Additional Shares.
section 5. Further Assurance. The Company will at all times cause the
security interests granted pursuant to this Agreement to constitute valid
perfected first priority security interests in the Pledged Collateral,
enforceable as such against any and all creditors of the Company, and (except as
otherwise specifically provided herein) any Persons purporting to purchase any
Pledged Collateral from the Company. The Company will, promptly upon request by
the Collateral Agent, execute and deliver or cause to be executed and delivered,
or use its best efforts to procure, all stock powers, proxies, tax stamps,
assignments, instruments and other documents, all in form and substance
reasonably satisfactory to the Collateral Agent, deliver any instruments to the
Collateral Agent and take any other actions that are necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect, continue the
perfection of, or protect the first priority of the Collateral Agent's security
interest in, the Pledged Collateral, to protect the Pledged Collateral against
the rights, claims, or interests of third persons, to enable the Collateral
Agent to exercise or enforce its rights and remedies hereunder, or otherwise to
effect the purposes of this Agreement. The Company also hereby authorizes the
Collateral Agent to file any financing or continuation statements with respect
to the Pledged Collateral without the signature of the Company to the extent
permitted by applicable law. The Company will pay all costs reasonably incurred
in connection with any of the foregoing.
section 6. Voting Rights; Dividends; Etc.
(a) So long as the Collateral Agent has not received notification
from the Trustee that an Event of Default has occurred and is continuing, the
Company shall be entitled to exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Agreement or the Indenture.
(b) So long as the Collateral Agent has not received notification
from the Trustee that an Event of Default has occurred and is continuing, the
Company shall be entitled to receive, and to utilize free and clear of the Lien
of this Agreement, all Regular Dividends and other distributions paid from time
to time in respect of the Pledged Collateral.
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(c) Except as permitted by Section 3.10 or 4.08 of the Indenture, any
and all (i) dividends, other distributions, interest and principal payments paid
or payable in the form of instruments and/or other property (other than Regular
Dividends permitted under Section 6(b) hereof) received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral, (ii)
dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and (iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, shall in each case be
forthwith delivered to the Collateral Agent to hold as Pledged Collateral and
shall, if received by the Company, be received in trust for the benefit of the
Collateral Agent and the Holders, be segregated from the other property and
funds of the Company and be forthwith delivered to the Collateral Agent as
Pledged Collateral in the same form as so received (with any appropriate
endorsements).
(d) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to the Company all such proxies and other instruments as
the Company may reasonably request in writing for the purpose of enabling the
Company to exercise the voting and other rights that it is entitled to exercise
pursuant to Sections 6(a) and 6(b) above.
(e) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Company to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 6(a) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which, to the extent permitted by law, shall thereupon
have the sole right to exercise such voting and other consensual rights as
directed by the Trustee or the Holders of a majority in principal amount of the
then outstanding Notes, and (ii) all dividends and other distributions payable
in respect of the Pledged Collateral shall be paid to the Collateral Agent and
the Company's right to receive such cash payments pursuant to Section 6(b)
hereof shall immediately cease.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Company shall execute and deliver (or cause to be executed and
delivered) to the Collateral Agent all such proxies, dividend and interest
payment orders and other instruments as are necessary or desirable to enable the
Collateral Agent to exercise the voting and other rights that it is entitled to
exercise pursuant to Section 6(e) above.
(g) All payments of interest or principal and all dividends and other
distributions that are received by the Company contrary to the provisions of
this Section 6 shall be received in trust for the benefit of the Collateral
Agent and the Holders, shall be segregated from the other property or funds of
the Company and shall be forthwith delivered to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary endorsements).
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section 7. Additional Covenants. The Company covenants and agrees,
from and after the date of this Agreement and until the Obligations have been
paid in full, that it shall not (i) sell, assign, transfer, convey or otherwise
dispose of, or grant any option or warrant with respect to, any of the Pledged
Collateral without the prior written consent of the Collateral Agent acting in
accordance with the directions of the Holders in accordance with the Indenture,
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest granted under this
Agreement, and at all times will be the sole owner of the Pledged Collateral,
(iii) enter into any agreement or understanding that purports to or that may
restrict or inhibit the Collateral Agent's rights or remedies hereunder,
including, without limitation, the Collateral Agent's right to sell or otherwise
dispose of the Pledged Collateral, or (iv) take any action with respect to the
Pledged Collateral the taking of which would result in a violation of the
Indenture or this Agreement.
section 8. Authorization of Actions to be Taken by Collateral Agent;
Power of Attorney.
(a) The Collateral Agent may, in its sole discretion and without the
consent of the Holders of Notes, on behalf of the Holders of Notes, take all
actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Security Agreement and (ii) upon instructions from the Trustee,
collect and receive any and all amounts payable in respect of the Obligations of
the Company under the Indenture. The Collateral Agent shall have the power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Pledged Collateral by any acts that may be
unlawful or in violation of this Agreement or the Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of Notes in the Pledged Collateral
(including the 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 security interest hereunder or be prejudicial to the interests of the
Holders of the Notes, of the Trustee or of the Collateral Agent).
(b) In addition to all of the powers granted to the Collateral Agent
pursuant to Section 8(a) above, the Company hereby appoints and constitutes the
Collateral Agent as the Company's attorney-in-fact to exercise all of the
following powers upon and at any time after the occurrence of an Event of
Default for so long as such Event of Default is continuing: (i) collection of
proceeds of any Pledged Collateral; (ii) conveyance of any item of Pledged
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
any Liens under Section 5 hereof; (iv) making of any payments (upon receipt of
funds thereof) or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon or threatened against the
Pledged Collateral, in the amounts necessary to discharge the same, and such
payments made by the Collateral Agent to become the obligations of the Company
to the Collateral Agent, due and payable immediately without demand; provided,
however, that nothing
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contained in this sentence shall be deemed to in any way limit the rights of the
Collateral Agent under Section 5 hereof. The Collateral Agent's authority
hereunder shall include, without limitation, the authority to endorse and
negotiate, for the Collateral Agent's own account, any checks or instruments in
the name of the Company, execute and give receipt for any certificate of
ownership or any document, transfer title to any item of Pledged Collateral,
sign the Company's name on all financing statements or any other documents
deemed necessary or appropriate to preserve, protect or perfect the security
interest in the Pledged Collateral and to file the same, prepare, file and sign
the Company's name on any notice of Lien, and prepare, file and sign the
Company's name on a proof of claim in bankruptcy at similar document against any
customer of the Company, and to take any other actions arising from or incident
to the powers granted to the Collateral Agent in this Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Company.
section 9. Collateral Agent May Perform. Subject to Section 7.01(e)
of the Indenture, if the Company fails to perform any agreement contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Collateral Agent incurred in
connection therewith shall be payable by the Company under Section 14 hereof.
section 10. No Assumption of Duties; Reasonable Care. The rights and
powers granted to the Collateral Agent hereunder are being granted in order to
preserve and protect the Collateral Agent's and the Holders' of Notes security
interest in and to the Pledged Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent in
connection therewith. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral accorded treatment substantially equal to
that which the Collateral Agent accords its own property; it being understood
that the Collateral Agent shall not have any responsibility for (i) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not the
Collateral Agent has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Pledged Collateral.
section 11. Subsequent Changes Affecting Collateral. The Company
represents to the Collateral Agent and the Holders that the Company has made its
own arrangements for keeping informed of changes or potential changes affecting
the Pledged Collateral (including, but not limited to, rights to convert, rights
to subscribe, payment of dividends, payments of interest and/or principal,
reorganization or other exchanges, tender offers and voting rights), and the
Company agrees that the Collateral Agent and the Holders shall have no
responsibility or liability for informing the Company of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. The Company shall defend the right, title and interest of the
Collateral Agent and the Holders in and to the Pledged Collateral against the
claims and demands of the Persons.
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section 12. Remedies Upon Event of Default.
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent and the Holders shall have, in addition to all other rights
given by law or by this Agreement, the Indenture or the Notes, all of the rights
and remedies with respect to the Pledged Collateral of a secured party under the
UCC as in effect in the State of Minnesota at that time. If any Event Default
shall have occurred and be continuing, the Collateral Agent may, without notice
and at its option, transfer or register, and the Company shall use its
reasonable best efforts to cause to be registered upon request therefor by the
Collateral Agent, the Pledged Collateral or any part thereof on the books of
Phar-Mor into the name of the Collateral Agent or the Collateral Agent's
nominee(s), with or without any indication that such Pledged Collateral is
subject to the security interest hereunder. In addition, with respect to any
Pledged Collateral that shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent, the Collateral Agent may sell or
cause the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price or prices as the Collateral Agent may
deem best, for cash or on credit for future delivery, without assumption of any
credit risk. The purchaser of any or all Pledged Collateral so sold shall
thereafter hold the same absolutely, free from any claim, encumbrance or right
of any kind whatsoever. Unless any of the Pledged Collateral threatens to
decline speedily in value or is or becomes of a type sold on a recognized
market, the Collateral Agent will give the Company reasonable notice of the time
and place of any public sale thereof, or of the time after which any private
sale or other intended disposition is to be made. Any sale of the Pledged
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Pledged Collateral shall be
deemed to be commercially reasonable. Any requirements of reasonable notice
shall be met if such notice is mailed to the Company as provided below in
Section 18.1, at least ten (10) days before the time of the sale or disposition.
Any other requirement of notice, demand or advertisement for sale is, to the
extent permitted by law, waived. The Collateral Agent or any of the Holders may,
in its own name or in the name of a designee or nominee, buy any of the Pledged
Collateral at any public sale and, if permitted by applicable law, at any
private sale. All expenses (including court costs and customary fees and
out-of-pocket disbursements of the Collateral Agent's counsel, and, to the
extent incurred in accordance with Section 14 hereof, investment banking firm or
other selling agent and any other expert or agent) of, or incident to, the
enforcement of any of the provisions hereof shall be recoverable from the
proceeds of the sale or other disposition of the Pledged Collateral.
(b) The Company further agrees, at its expense, to use its reasonable
best efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged Collateral
pursuant to this Section 12 valid and binding and in compliance with any and all
applicable federal and state securities laws. The Company further agrees that a
breach of any of the covenants contained in this Section 12 will cause
irreparable injury to the Collateral Agent and the
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Holders, that the Collateral Agent and the Holders have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 12 shall be specifically enforceable against
the Company, and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Default or Event of Default has occurred under the Indenture.
section 13. Irrevocable Authorization and Instruction to Phar-Mor.
The Company hereby authorizes and instructs Phar-Mor to comply with any
instruction received by the Issuer from the Collateral Agent that (i) states
that an Event of Default has occurred and (ii) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Company, and the Company agrees that Phar-Mor shall be fully protected in so
complying.
section 14. Fees and Expenses. The Company will upon demand pay to
the Collateral Agent such fees as may be agreed upon from time to time in
writing and the amount of any fees and out-of-pocket disbursements of its
counsel, of any investment banking firm or other selling agent and of any other
experts and agents retained by the Collateral Agent that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent and the Holders
hereunder or (iv) the failure by the Company to perform or observe any of the
provisions hereof, in each case other than any such expenses that arise from the
gross negligence or willful misconduct of the Collateral Agent.
section 15. Note Interest Absolute. All rights of the Collateral
Agent and the Holders and the security interests created hereunder, and all
obligations of the Company hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company in respect of the Obligations or of
this Agreement.
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section 16. Application of Proceeds. Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Pledged Collateral and any cash held
shall be applied by the Collateral Agent in the following order of priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Collateral
Agent, and all expenses, liabilities and advances incurred or made by the
Collateral Agent in connection therewith, and any other unreimbursed fees and
expenses for which the Collateral Agent is to be reimbursed pursuant to Section
14 hereof;
second, after receiving notice thereof from the Trustee, to the
Trustee for the payment of all sums due and owing to it pursuant to Section 7.07
of the Indenture;
third, after receiving notice thereof from the Trustee, to the
ratable payment (based on the principal amount of Notes deemed by the Indenture
to be outstanding at the time of distribution) of accrued and unpaid interest,
if any, on such outstanding Notes;
fourth, after receiving notice thereof from the Trustee, to the
ratable payment (based on the principal amount of Notes deemed by the Indenture
to be outstanding at the time of distribution) of unpaid principal of such
outstanding Notes;
fifth, after receiving notice thereof from the Trustee, to the
ratable payment (based on the principal amount of Notes deemed by the Indenture
to be outstanding at the time of distribution) of all other Obligations, until
all Obligations shall have been paid in full; and
sixth, to payment to the Company or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
section 17. Uncertificated Securities. Notwithstanding anything to
the contrary contained herein, if any Pledged Collateral is uncertificated, the
Company shall promptly notify the Collateral Agent, and shall promptly take all
actions required to perfect the security interest of the Collateral Agent under
applicable law (including, in any event, under provisions of the Uniform
Commercial Code in effect in the State of Minnesota that are similar to Sections
8-102, 8-106, 8-110, 8-301, 9-115, 9-116, 9-303, 9-304 and 9-306 of the Uniform
Commercial Code in effect in the State of New York, or that are otherwise
applicable to creating and perfecting a security interest in uncertificated
securities under the Uniform Commercial Code in effect in the State of
Minnesota). The Company further agrees to take such actions as the Collateral
Agent deems reasonably necessary or desirable to effect the foregoing and to
permit the Collateral Agent to exercise any of its rights and remedies
hereunder, and agrees to provide an Opinion of Counsel reasonably satisfactory
to the Collateral Agent with respect to any such pledge of uncertificated
Pledged Shares promptly upon request of the Collateral Agent.
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section 18. Miscellaneous Provisions.
Section 18.1 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner as set forth in Section 12.02 of the Indenture, and delivered to the
addresses set forth in such Section, or, in the case of the Collateral Agent,
to: Norwest Bank Minnesota, National Association, Sixth and Marquette, MAC
N9303-120, Minneapolis, Minnesota 55479-0069, Attention: Corporate Trust
Services.
Section 18.2 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Collateral Agent to take any
action or omit to take any action under this Agreement, to the extent required
by the TIA, the Company shall deliver to the Collateral Agent an Officer's
Certificate and/or an Opinion of Counsel in accordance with the requirements of
Sections 9.03, 9.04 and 9.05 of the Indenture.
Section 18.3 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret another pledge, security or debt
agreement of the Company. No such pledge, security or debt agreement may be used
to interpret this Agreement.
Section 18.4 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 18.5 No Recourse Against Others. No past, present or future
director, officer, employee, stockholder or affiliate, solely by virtue of being
such, of the Company or Avatex shall have any liability for any obligations of
the Company under this Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation. Each of the Holders, 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 18.6 Headings. The headings of the Articles and Sections of
this Agreement have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 18.7 Counterpart Originals. This Agreement may be signed in
two or more counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be executed
and delivered by telecopy, if such delivery is promptly followed by the original
manually signed copy sent by overnight courier.
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Section 18.8 Benefits of Agreement. Nothing in this Agreement,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 18.9 Amendments, Waivers and Consents. Any amendment or
waiver of any provision of this Agreement and any consent to any departure by
the Company from any provision of this Agreement shall be effective only if made
or given in compliance with all of the terms and provisions of Sections 8.01,
8.02, 8.03, 8.06, 9.03, 9.04, 9.05 and 9.08 of the Indenture necessary for
amendments or waivers of, or consents to any departure by the Company from any
provision of the Indenture, as applicable, and the Collateral Agent receives an
Opinion of Counsel and Officer's Certificate as to such compliance, and neither
the Collateral Agent or the Trustee nor any of the Holders shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default or in any breach
of any of the terms and conditions hereof. Failure of the Collateral Agent or
any of the Holders to exercise, or delay in exercising, any right, power or
privilege hereunder shall not operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Collateral Agent or any of the Holders of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy that the Collateral Agent or such Holder would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Section 18.10 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Indenture shall have the meaning set forth in the
applicable UCC, except where the context otherwise requires. Acceptance of or
acquiescence in a course of performance rendered under this Agreement shall not
be relevant to determine the meaning of this Agreement even though the accepting
or acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
Section 18.11 Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until the payment in full of all
the Obligations and all the fees and expenses owing to the Collateral Agent,
(ii) be binding upon the Company, its successors and assigns, and (iii) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Collateral Agent, the Holders and their respective successors,
transferees and assigns.
Section 18.12 Reinstatement. This Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Collateral
Agent or any of the Holders in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Collateral Agent or any of the Holders
upon the insolvency,
13
<PAGE>
bankruptcy, dissolution, liquidation or reorganization of the Company or upon
the appointment of any receiver, intervenor, conservator, trustee or similar
official for or any substantial part of its assets, or otherwise, all as though
such payments had not been made.
Section 18.13 Survival of Provisions. All representations, warranties
and covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by of the Obligations and of all fees and expenses due
to the Collateral Agent; except that the obligations of the Company pursuant to
Sections 14 and 18.15 of this Agreement shall survive the termination or
discharge of this Agreement (including any discharge pursuant to Bankruptcy Law)
or the resignation or removal of the Collateral Agent.
Section 18.14 Waivers. The Company waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Company might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 18.15 Authority of the Collateral Agent.
(a) The Collateral Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent by the
terms hereof, together with such powers as are reasonably incident thereto. The
Collateral Agent may perform any of its duties hereunder or in connection with
the Pledged Collateral by or through agents or employees and shall be entitled
to retain counsel of its choice and to act in reliance upon the advice of such
counsel concerning all such matters. Without limiting the generality of the
foregoing, the Collateral Agent shall take all actions as the Trustee or,
subject to paragraph (c) below, the Holders of a majority in principal amount of
the then outstanding Notes may direct it to perform in accordance with the
provisions of this Agreement. However, the Collateral Agent may refuse to follow
any direction that conflicts with law, the Indenture or this Agreement, or that
would be likely to subject the Collateral Agent to personal liability, as
determined by the Collateral Agent's counsel in a written opinion. Neither the
Collateral Agent nor any director, officer, employee, attorney or agent of the
Collateral Agent shall be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto. The
Collateral Agent and its directors, officers, employees, attorneys and agents
shall be entitled to rely on any communication, instrument or document believed
by it or them to be genuine and correct and to have been signed or sent by the
proper person or persons. The Company agrees to indemnify and hold harmless the
Collateral Agent, the Holders and any other Person from and against any and all
costs, expenses (including, the customary fees and out-of-pocket disbursements
of the Collateral Agent's counsel, and, to the extent incurred in accordance
with Section 14 hereof, investment banking firm or other selling agent and any
other expert or agent), claims and liabilities incurred by the Collateral Agent,
the Holders or such Person hereunder in connection with the subject matter of
this Agreement, unless such claim or
14
<PAGE>
liability shall be due to willful misconduct or gross negligence on the part of
the Collateral Agent, the Holders or each Person.
(b) The Company acknowledges that the rights and responsibilities of
the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Collateral Agent and the Holders, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Company, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders with full and valid
authority so to act or refrain from acting, and the Company shall not be
obligated or entitled to make any inquiry respecting such authority.
(c) No provision of this Agreement shall require the Collateral Agent
to expend or risk its own funds or incur any liability. The Collateral Agent
shall be under no obligation to exercise any of its rights and powers under this
Agreement at the request of any Holders, unless such Holder shall have offered
to the Collateral Agent security and indemnity reasonably satisfactory to it
against any loss, liability or expense.
Section 18.16 Resignation or Removal of the Collateral Agent. The
Collateral Agent may at any time, by giving written notice to the Company and
Holders, resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor
Collateral Agent and (ii) the acceptance of such appointment by such successor
Collateral Agent. The Holders of a majority in principal amount of the then
outstanding Notes may remove the Collateral Agent by so notifying the Collateral
Agent and the Company in writing. The Company may remove the Collateral Agent
if:
(i) the Collateral Agent fails to comply with the requirements set
forth in Section 7.10 of the Indenture;
(ii) the Collateral Agent is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Collateral Agent under
any Bankruptcy Law;
(iii) a Custodian or public officer takes charge of the Collateral
Agent or its property; or
(iv) the Collateral Agent becomes incapable of acting.
If the Collateral Agent resigns or is removed or if a vacancy exists
in the office of Collateral Agent for any reason, the Company shall promptly
appoint a successor Collateral Agent. At any time within one (1) year after the
successor Collateral Agent takes office, the Holders of a majority in principal
amount of the then outstanding
15
<PAGE>
Notes may appoint a successor Collateral Agent to replace the successor
Collateral Agent appointed by the Company.
If a successor Collateral Agent does not take office within 60 days
after the retiring Collateral Agent tenders its resignation or is removed, the
retiring Collateral Agent, the Company, or the Holders of at least 10% in
principal amount of the then outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Collateral Agent.
If the Collateral Agent, after written request by any Holder of a
Note who has been a Holder of a Note for at least six (6) months (or such
shorter period as the Notes shall have been outstanding), fails to comply with
the requirements set forth in Section 7.10 of the Indenture, such Holder of a
Note may petition any court of competent jurisdiction for the removal of the
Collateral Agent and the appointment of a successor Collateral Agent.
A successor Collateral Agent shall deliver a written acceptance of
its appointment to the retiring Collateral Agent and to the Company and the
Trustee. Thereupon, the resignation or removal of the retiring Collateral Agent
shall become effective, and the successor Collateral Agent shall have all the
rights, powers and duties of the Collateral Agent under this Agreement. The
successor Collateral Agent shall, mail a notice of its succession to Holders of
the Notes and to the Trustee. The retiring Collateral Agent shall, at the
Company's expense, promptly transfer all property held by it as Collateral Agent
to the successor Collateral Agent, including, without limitation, the
certificates and instruments evidencing the Pledged Collateral and all
instruments of transfer or assignment held by it pursuant to the terms hereof.
The retiring Collateral Agent shall be entitled to fees, costs and expenses to
the extent incurred or arising, or relating to events occurring, before its
resignation or removal.
Section 18.17 Release; Termination of Agreement.
(a) Subject to the provisions of Section 18.12 hereof, this Agreement
shall terminate (i) upon full and final payment and performance of the
Obligations (and upon receipt by the Collateral Agent of the Company's written
certification that all such Obligations have been satisfied) and payment in full
of all fees and expenses owing by the Company to the Collateral Agent, which
written certification shall be acknowledged by the Trustee, or (ii) upon the
satisfaction and discharge of the Indenture (and upon receipt by the Collateral
Agent of the Company's written certification as to such discharge) pursuant to
and in accordance with Section 11.01 of the Indenture, which written
certification shall be acknowledged by the Trustee. At such time, the Collateral
Agent shall, at the request of the Company, reassign and redeliver to the
Company all of the Pledged Collateral hereunder that has not been sold, disposed
of, retained or applied by the Collateral Agent in accordance with the terms
hereof. Such reassignment and redelivery shall be without warranty by or
recourse to the Collateral Agent, except as to the absence of any prior
assignments by the Collateral Agent of its interest in the Pledged Collateral,
and shall be at the expense of the Company.
16
<PAGE>
(b) The Company agrees that it will not, except as permitted by the
Indenture and this Agreement, sell or dispose of, or grant any option or warrant
with respect to, any of the Pledged Collateral.
Section 18.18 Final Expression. This Agreement, together with any
other agreement executed in connection herewith, is intended by the parties as a
final expression of their Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
Section 18.19 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE
LAWS OF THE STATE OF NEW YORK AND ANY DISPUTE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE COMPANY,
AVATEX, THE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS AGREEMENT,
AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS
PROVISIONS AND DECISIONS) OF THE STATE OF NEW YORK.
(b) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH, THE COMPANY, AVATEX,
THE COLLATERAL AGENT AND THE HOLDERS AGREE THAT ALL DISPUTES BETWEEN OR AMONG
THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, BUT THE COMPANY,
AVATEX, THE COLLATERAL AGENT AND THE HOLDERS ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW
YORK. THE COMPANY WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(c) THE COMPANY AGREES THAT THE COLLATERAL AGENT SHALL, IN ITS OWN
NAME OR IN THE NAME AND ON BEHALF OF ANY OF THE HOLDERS HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE COMPANY OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH TO ENABLE
THE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER
17
<PAGE>
ENTERED IN FAVOR OF THE COLLATERAL AGENT. THE COMPANY AGREES THAT IT SHALL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE COLLATERAL
AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
IN FAVOR OF THE COLLATERAL AGENT. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE COLLATERAL AGENT HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(d) THE COMPANY, AVATEX, THE COLLATERAL AGENT AND THE HOLDERS EACH
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
(e) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT OR
ANY OF THE HOLDERS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
Section 18.20 Acknowledgments. Each of the Company and Avatex hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) neither the Collateral Agent nor any of the Holders has any
fiduciary relationship to the Company or Avatex (except that certain
affiliates of certain Holders were immediately prior to the effectiveness
of the Merger directors of Avatex), and the relationship between the
Collateral Agent and the Holders, on the one hand, and the Company and
Avatex, on the other hand, is solely that of a secured party and a
creditor; and
(c) no joint venture exists among the Holders or among the Company,
Avatex and the Holders.
[Signatures appear on the following page]
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed and delivered as of the date first above written.
AVATEX FUNDING, INC.
By: /s/ Melvyn J. Estrin
----------------------------------------
Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
----------------------------------------
Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Timothy P. Mowdy
----------------------------------------
Name: Timothy P. Mowdy
Title:
19
<PAGE>
Schedule I
----------
Pledged Shares
--------------
1. 2,617,500 shares of common stock, par value $0.01 per share, of
Phar-Mor, Inc. (evidenced by stock certificate no. N-2853).
2. 954,033 shares of common stock, par value $0.01 per share, of
Phar-Mor, Inc. (evidenced by stock certificate no. N-3339).
20
<PAGE>
EXHIBIT A
---------
6.75% Notes Indenture
---------------------
(see attached)
21
SUBROGATION AGREEMENT
Subrogation Agreement dated as of December 7, 1999 by and between
Bart A. Brown, Jr., as trustee under Chapter 7 of Title 11 of the United States
Code of FoxMeyer Corporation, FoxMeyer Drug Company, Healthcare Transportation
System, Inc., Merchandise Coordinator Services Corporation, FoxMeyer Software,
Inc. and Health Mart, Inc. and their respective estates, as their interests may
appear ("Trustee"); and Norwest Bank Minnesota, National Association ("Agent"),
as trustee under the Indenture governing the 6.75% Notes (as defined below) and
as collateral agent under the related security agreement (the "Noteholders
Security Agreement").
WHEREAS, under the terms of a Settlement Agreement dated October 9,
1997, between Avatex Corporation (the "Debtor") and the Trustee, (i) the Debtor
executed and delivered to the Trustee a Promissory Note payable to the Trustee
in the original principal amount of $8,000,000 (the "Trustee Note") and (ii) to
secure payment of the Trustee Note, the Debtor executed and delivered to the
Trustee a Pledge and Security Agreement (the "Trustee Security Agreement");
WHEREAS, under the Trustee Security Agreement, the Debtor granted to
the Trustee a security interest in, among other things, 1,132,500 shares of
common stock of Phar-Mor, Inc. owned by the Debtor (together with, to the extent
provided in the Trustee Security Agreement, any securities or instruments
received on account of or in exchange for such common stock, the "FoxMeyer
Trustee Phar-Mor Collateral"), which shares are represented by certificate
number 2832 (the "Certificate"), and the Debtor has transferred physical
possession of the Certificate to the Trustee to enable the Trustee to perfect
its security interest in the FoxMeyer Trustee Phar-Mor Collateral;
WHEREAS, on or prior to December 15, 1999, Avatex Funding, Inc., a
wholly-owned subsidiary of the Debtor ("Subsidiary"), intends to issue 6.75%
Notes (the "6.75% Notes") due in 2002 to various persons (the "Noteholders");
WHEREAS, to secure payment of the 6.75% Notes, the Debtor will
transfer to Subsidiary 3,571,533 unpledged shares of common stock of Phar-Mor,
Inc. owned by the Debtor (the "6.75% Notes Phar-Mor Collateral"), and Subsidiary
will execute and deliver to Agent the Noteholders Security Agreement, under
which Subsidiary will grant a security interest in such shares to Agent; and
WHEREAS, to further secure the 6.75% Notes, the Debtor will transfer
the FoxMeyer Trustee Phar-Mor Collateral to Subsidiary and have Subsidiary grant
a security interest to the Agent in the FoxMeyer Trustee Phar-Mor Collateral as
soon as that is possible, subject to the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
EWAGNE\3686.18 - 11/19/99
<PAGE>
ARTICLE I
COVENANTS
1.1 Subject to Section 1.2 below, upon Debtor's payment in full of
all of the Obligations (as such term is defined in the Trustee Security
Agreement) to Trustee (or any successor-in-interest with respect to the Trustee
Note), Trustee (or such successor-in-interest) shall deliver to Agent the
Certificate representing the FoxMeyer Trustee Phar-Mor Collateral, together with
the accompanying stock power duly endorsed in blank by the Debtor. Pursuant to
the terms of the Noteholders Security Agreement, Debtor shall then cause the
FoxMeyer Trustee Phar-Mor Collateral to be registered in the name of the
Subsidiary and the Subsidiary shall execute and deliver to Agent a new stock
power duly executed in blank. It is expressly agreed that the terms "payment" or
"payment in full" when used herein in connection with the Trustee Note, the
Trustee Security Agreement, or the Obligations mean payment in United States
dollars of principal, interest, and interest on overdue principal and interest
to the date of payment, fees, and costs of collection, specifically including
all interest, fees, and costs that arise, accrue, or mature after the
commencement of any bankruptcy proceeding by or against the Debtor or any
similar type of proceeding notwithstanding (1) 11 U.S.C. ss.ss. 502(b)(2) or
506(b), (2) any general bankruptcy rule that post-bankruptcy interest, fees, or
costs cease to accrue, and (3) any general bankruptcy rule that post-bankruptcy
interest, fees, or costs are limited to the value of any collateral securing the
pre-bankruptcy claim.
1.2 (a) The Debtor and Trustee (on behalf of itself and any
successor-in-interest with respect to the Trustee Note) each agrees that
(subject to the last sentence of subsection 1.1) an "Eligible Group" of
Noteholders (as defined below) may elect at any time to make payment to Trustee
of an amount equal to all of the Obligations (as such term is defined in the
Trustee Security Agreement) on account thereof; provided that upon the
substitution of such an Eligible Group of Noteholders for Trustee under the
Trustee Security Agreement, the Eligible Group of Noteholders shall immediately
terminate the security interest previously granted by the Debtor to Trustee in
all collateral other than the FoxMeyer Trustee Phar-Mor Collateral. An "Eligible
Group" of Noteholders shall mean a group of Noteholder(s) consisting entirely of
original Noteholders each holding at least 5% of the aggregate principal amount
of 6.75% Notes originally issued.
(b) An Eligible Group may elect, at its option, to cause the Debtor
and/or the Agent to use their reasonable best efforts, effective upon the
payment in full of the Obligations to the Trustee, to appropriately amend,
supplement and waive the applicable provisions of the Noteholders Security
Agreement and the Indenture for the 6.75% Notes (the "Indenture") so as to cause
the FoxMeyer Trustee Phar-Mor Collateral to secure the 6.75% Notes as well as
the Obligations under the Trustee Note (which Obligations would thereafter run
either to the Eligible Group or Agent by virtue of subrogation) (a "Security
Restructuring"). It is contemplated, though not required, that following the
consummation of a Security Restructuring, the Trustee Note would be amended to
substitute the Subsidiary as the maker thereunder, and the Debtor would guaranty
the obligations of Subsidiary under the Trustee Note under substantially the
same terms and conditions as apply to the Debtor's guaranty of the 6.75% Notes
contained in the Indenture; provided, however, that the Debtor and Subsidiary
shall not be required to consent to such substitution and guaranty to the extent
that the same would, in the written opinion of independent counsel, necessitate
registration of any securities by Debtor and/or Subsidiary (including, perhaps,
2
<PAGE>
such guaranty) under the Securities Act of 1933, as amended. The Debtor shall
also not be required to consent to have a default under the Trustee Note in and
of itself constitute a default under the 6.75% Notes, or vice versa. Nothing
contained within Section 1.2 shall require the Debtor, Subsidiary, Trustee or
Agent to take any action that would result in a violation of any applicable law,
including, but not limited to, federal and state securities laws.
(c) Trustee agrees to confirm in writing the payment in full of the
Obligations by an Eligible Group of Noteholders and, upon payment in full of the
Obligations, consent in writing to any such Security Restructuring effected
pursuant to subsection 1.2(b) above and otherwise in compliance with the proviso
contained in subsection 1.2(a) above, provided that (i) the Obligations to the
Trustee have been (or will simultaneously be) satisfied through payment in full
and (ii) Trustee shall thereafter have no further obligations nor entitlements
in connection with the Trustee Note or the Trustee Security Agreement.
(d) If there is more than one Eligible Group of Noteholders who wish
to make a payment to Trustee on account of all of the Obligations pursuant to
subsection 1.2(b) above, Trustee may accept payment from any such group of
Noteholders, and not from other Noteholders, in Trustee's sole discretion.
Trustee shall be entitled to rely (without any duty of inquiry) upon any
representation made by a putative Eligible Group as to its status as an Eligible
Group. Nothing contained in this subsection 1.2(d) shall be construed to limit
the parties' obligations under subsection 1.2(b) above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Trustee hereby confirms to Agent as of the date hereof that
Trustee has no knowledge of any security interest in or lien against the
FoxMeyer Trustee Phar-Mor Collateral other than its own pursuant to the Trustee
Security Agreement. Trustee hereby represents to Agent that on May 19, 1997, the
U.S. Bankruptcy Court for the District of Delaware confirmed the election of and
appointed Bart A. Brown, Jr., as permanent trustee of the estates of the
FoxMeyer entities referenced in the preamble of this Agreement, and Trustee
still serves in such capacity as of the date hereof. Debtor hereby represents to
Agent as of the date hereof that Debtor has no knowledge of any security
interest in or lien against the FoxMeyer Trustee Phar-Mor Collateral other than
the Trustee's lien pursuant to the Trustee Security Agreement.
2.2 Agent hereby represents and warrants to Trustee that it has the
authority to execute, deliver and perform its obligations under this Agreement
and this Agreement constitutes the legal, valid and binding obligation of Agent,
enforceable in accordance with its terms and this Agreement is not in
contravention of any law, rule or regulation or any order, decree or agreement
in each case by which Agent is bound. The Debtor hereby consents to the
execution hereof and disclaims any claim against Trustee for its entry herein.
3
<PAGE>
ARTICLE III
MISCELLANEOUS
3.1 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAWS AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. AGENT SHALL NOT
ASSIGN ITS RIGHTS HEREUNDER WITHOUT THE CONSENT OF TRUSTEE. PROVIDED THAT AGENT
SHALL BE PERMITTED TO ASSIGN ITS RIGHTS TO A SUCCESSOR TRUSTEE DULY QUALIFIED AS
SUCH UNDER THE INDENTURE GOVERNING THE 6.75% NOTES.
Each party hereby agrees that any action or proceeding arising
hereunder and involving the Trustee shall be brought only in the United States
Bankruptcy Court for the District of Delaware. If such Court declines
jurisdiction, the parties hereto agree that such action or proceeding shall then
be brought only in the state and federal courts located in the State and County
of New York.
3.2 All communications provided for hereunder shall be given in
writing and delivered personally, via overnight mail, by a reputable carrier or
by facsimile (confirmed by telephone) to such address as is identified by a
party to the other party hereto from time to time in accordance with the terms
of this Section 3.2.
3.3 Each party agrees to execute and deliver any and all such further
instruments and assurances, and to take all such further actions, as may be
reasonably necessary or appropriate to effectuate the transactions contemplated
hereby. Any Trustee actions shall be at the expense of the Debtor and shall be
indemnified in advance by the Debtor.
3.4 This Agreement cannot be amended, modified or any of its terms
waived, except by a writing executed by each of the parties hereto.
3.5 This Agreement may be executed in two or more counterparts which
together shall constitute one and the same instrument. Facsimile signatures
shall be sufficient to bind the parties.
3.6 The Trustee's obligations hereunder are subject to the prior
approval of the United States Bankruptcy Court for the District of Delaware at
the expense of the Debtor. Neither the Trustee nor the Trustee's estate shall
have any liability for any breach of this Agreement. The other parties' sole
remedy for any breach of this Agreement by the Trustee shall be specific
performance. Nothing contained herein shall prevent the Trustee from agreeing
with Debtor to restructure the Obligations or the security arrangements
therefor.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
TRUSTEE:
/s/ Bart A. Brown, Jr.
---------------------------------------------
Bart A. Brown, Jr., as Trustee under
Chapter 7 of Title 11 of the U.S. Code of
FoxMeyer Corporation et al.
Address:
AGENT:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: /s/ Timothy P. Mowdy
-----------------------------------------
Name: Timothy P. Mowdy
Title:
Address:
The terms of this Agreement are hereby acknowledged, accepted and consented to:
AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
-----------------------------------
Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
5
================================================================================
WARRANT AGREEMENT
between
AVATEX CORPORATION
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent
Up to 2,750,000 Warrants
Dated as of December 7, 1999
================================================================================
#386152\64935\0001
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Article 1 DEFINITIONS.......................................................................................2
Article 2 ISSUANCE OF WARRANTS..............................................................................5
2.1 Issuance of Warrants.................................................................................5
2.2 Form of Warrant Certificates.........................................................................5
2.3 Execution of Warrant Certificates....................................................................5
2.4 Countersignature of Warrant Certificates.............................................................5
Article 3 EXERCISE PERIOD...................................................................................6
Article 4 EXERCISE OF WARRANTS..............................................................................6
4.1 Exercise Price.......................................................................................6
4.2 Manner of Exercise...................................................................................6
4.3 When Exercise Effective..............................................................................7
4.4 Delivery of Certificates, Etc........................................................................7
4.5 Fractional Shares....................................................................................8
Article 5 ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE EXERCISE PRICE UPON EXERCISE............8
5.1 Adjustment for Change in Capital Stock...............................................................8
5.2 Distributions........................................................................................9
5.3 Exercise Price Adjustment............................................................................9
5.4 Adjustments for Mergers and Consolidations...........................................................9
5.5 No De Minimis Adjustments; Calculation to Nearest Cent and One-hundredth of Share...................10
5.6 Notice of Adjustment in Exercise Price; Warrant Agent's Disclaimer..................................10
5.7 No Change in Warrant Terms on Adjustment............................................................11
5.8 Treasury Shares.....................................................................................11
Article 6 RESERVATION OF STOCK.............................................................................11
6.1 Reservation; Due Authorization, Etc.................................................................11
6.2 Delivery of Prospectus..............................................................................11
6.3 Compliance with Law.................................................................................11
Article 7 LOSS OR MUTILATION...............................................................................12
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Article 8 WARRANT REGISTRATION.............................................................................12
8.1 Registration........................................................................................12
8.2 Transfer or Exchange................................................................................12
8.3 Valid and Enforceable...............................................................................13
8.4 Endorsement.........................................................................................13
8.5 No Service Charge...................................................................................13
8.6 Treatment of Holders of Warrant Certificates........................................................13
8.7 Cancellation........................................................................................13
Article 9 WARRANT AGENT....................................................................................13
9.1 Obligations Binding.................................................................................13
9.2 No Liability........................................................................................13
9.3 Instructions........................................................................................14
9.4 Agents..............................................................................................14
9.5 Cooperation.........................................................................................14
9.6 Agent Only..........................................................................................14
9.7 Right to Counsel....................................................................................15
9.8 Compensation........................................................................................15
9.9 Accounting..........................................................................................15
9.10 No Conflict.........................................................................................15
9.11 Resignation; Termination............................................................................15
9.12 Change of Warrant Agent.............................................................................16
9.13 Successor Warrant Agent.............................................................................16
Article 10 REMEDIES, ETC....................................................................................17
10.1 Remedies............................................................................................17
10.2 Warrant Holder Not Deemed a Stockholder.............................................................17
10.3 Right of Action.....................................................................................17
Article 11 MISCELLANEOUS....................................................................................17
11.1 Notices.............................................................................................17
11.2 Governing Law and Consent to Forum..................................................................18
11.3 Benefits of This Agreement..........................................................................18
11.4 Agreement of Holders of Warrant Certificates........................................................19
11.5 Counterparts........................................................................................19
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11.6 Amendments..........................................................................................19
11.7 Headings............................................................................................19
</TABLE>
EXHIBIT
Exhibit A: Form of Warrant Certificate
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of December 7, 1999 (this
"Agreement"), by and between AVATEX CORPORATION, a Delaware corporation (the
"Company"), and AMERICAN STOCK TRANSFER AND TRUST COMPANY, as Warrant Agent (the
"Warrant Agent").
W I T N E S S E T H:
WHEREAS, the Company and Xetava Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Company ("Xetava"), have
entered into an Amended and Restated Agreement and Plan of Merger, dated as of
June 18, 1999 (as amended, the "Merger Agreement"), pursuant to which Xetava
will be merged with and into the Company (the "Merger"), with the Company being
the surviving corporation in the Merger;
WHEREAS, the Merger has occurred on the date hereof;
WHEREAS, pursuant to the Merger Agreement, each holder of
shares of $5 Cumulative Convertible Preferred Stock of the Company (the
"Convertible Preferred Stock") who has made properly a Convertible Stock
Alternate Consideration Election (as defined in the Merger Agreement) is
entitled to receive, as part of the Convertible Preferred Stock Alternate
Consideration (as defined in the Merger Agreement) to be received in connection
with the Merger for each Convertible Preferred Stock Electing Share (as defined
in the Merger Agreement), warrants to purchase 0.67456 shares of Class A Common
Stock, par value $0.01 per share (the "New Avatex Common Stock"), of the
Company, as the surviving corporation in the Merger;
WHEREAS, pursuant to the Merger Agreement, each holder of
$4.20 Cumulative Exchangeable Series A Preferred Stock of the Company (the
"Series A Preferred Stock", and together with the Convertible Preferred Stock,
the "Old Preferred Stock") who properly has made properly a Series A Preferred
Stock Alternate Consideration Election (as defined in the Merger Agreement) is
entitled to receive, as part of the Series A Preferred Stock Alternate
Consideration (as defined in the Merger Agreement) to be received in connection
with the Merger for each Series A Preferred Stock Electing Share (as defined in
the Merger Agreement), warrants to purchase 0.53567 shares of New Avatex Common
Stock;
WHEREAS, the Company desires to enter into this Agreement
to set forth the terms and conditions of the warrants to be issued in the Merger
as part of the Convertible Preferred Stock Alternate Consideration and the
Series A Preferred Stock Alternate Consideration and the rights of the holders
thereof;
WHEREAS, the Company will issue the warrants to be issued
in the Merger as part of the Convertible Preferred Stock Alternate Consideration
and the Series A Preferred Stock Alternate Consideration by delivery of warrant
certificates evidencing one or more of such warrants, such warrant certificates
<PAGE>
and other warrant certificates issued pursuant to this Agreement being herein
referred to as the "Warrant Certificates"; and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to act, in connection
with the issuance, transfer, exchange, replacement and exercise of the Warrant
Certificates and other matters as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises
and of the mutual agreements set forth herein, the Company and the Warrant Agent
hereby agree as follows:
Article 1
DEFINITIONS
As used herein, the following terms have the following
respective meanings:
"Affiliate" means with respect to any Person, any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For purposes of this definition, (a) "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 (or equivalent equity interests), by contract or
otherwise, and the terms "controlling" or "controlled" have meanings correlative
to the foregoing, and (b) a subsidiary of a Person is an Affiliate of such
Person and of each other subsidiary of that Person.
"Agreement" means this Warrant Agreement, as the same may
be amended or modified from time to time hereafter.
"Alternate Consideration" means the Convertible Preferred
Stock Alternate Consideration and/or the Series A Preferred Stock Alternate
Consideration (each as defined in the Merger Agreement) to be issued, in certain
circumstances, pursuant to the Merger Agreement.
"Business Day" means any day, other than a Saturday or a
Sunday, on which (i) commercial banking institutions in New York City, New York,
and (ii) the principal national securities exchange, market or trading facility
on which the New Avatex Common Stock or Warrants are listed or admitted for
trading, are open for business.
"Commission" means the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act or the
Exchange Act, whichever is the relevant statute for the particular purpose.
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"Company" has the meaning specified in the introductory
paragraph hereof.
"Convertible Preferred Stock" has the meaning specified in
the recitals hereof.
"Effective Time" has the meaning specified in the Merger
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934,
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be amended and in effect at the
time. Any reference herein to a particular section of the Securities Exchange
Act of 1934 shall include a reference to the comparable section, if any, of any
such successor Federal statute.
"Exercise Period" has the meaning specified in Article 3
hereof.
"Exercise Price" has the meaning specified in Section 4.1
hereof.
"Fair Value" means with respect to New Avatex Common Stock,
if such security is listed or admitted for trading on a national securities
exchange or other trading facility or market (in any such case, the "Trading
Market"), the average of the closing or last reported sales prices of a share of
New Avatex Common Stock on the primary Trading Market on which the New Avatex
Common Stock is listed or quoted for the 30 Business Days (or such lesser number
of Business Days as such New Avatex Common Stock shall have been so listed,
quoted or traded) next preceding the date of measurement; provided, however,
that if no such sales prices have been quoted during the preceding 30-day period
or there is otherwise no established trading market for such security, then
"Fair Value" means the value of such New Avatex Common Stock as determined
reasonably and in good faith by the Board of Directors of the Company and
supported by an opinion from an investment banking firm of recognized national
standing, whose determination shall be conclusive; and provided further,
however, that in the event the current market price of a share of such New
Avatex Common Stock is determined during a period following the announcement by
the Company of (i) a dividend or distribution on the New Avatex Common Stock
payable in shares of New Avatex Common Stock, or (ii) any subdivision,
combination or reclassification of the New Avatex Common Stock, and prior to the
expiration of 30 Business Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Fair Value" shall be
appropriately adjusted to take into account ex-dividend trading. Anything herein
to the contrary notwithstanding, in case the Company shall issue any shares of
New Avatex Common Stock, rights or options in connection with the acquisition by
the Company of the stock or assets of any other Person or the merger of any
other Person into the Company, the Fair Value of the New Avatex Common Stock so
issued shall be determined as of the date the number of shares of Common Stock,
rights or options was determined (as set forth in a written agreement between
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the Company and the other party to the transaction) rather than on the date of
issuance of such shares of New Avatex Common Stock, rights or options.
"Merger" has the meaning specified in the recitals hereof.
"Merger Agreement" has the meaning specified in the
recitals hereof.
"New Avatex Common Stock" has the meaning specified in the
recitals hereof.
"Old Preferred Stock" has the meaning specified in the
recitals hereof.
"Original Issue Date" has the meaning specified in
Section 2.2 hereof.
"Other Shares" has the meaning specified in Section 5.2
hereof.
"Person" means any individual, partnership, association,
joint venture, corporation, limited liability company, business trust,
unincorporated organization, government or department, agency or subdivision
thereof, or other person or entity.
"Securities Act" means the Securities Act of 1933, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be amended and in effect at the time. Any
reference herein to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such successor
Federal statute.
"Series A Preferred Stock" has the meaning specified in the
recitals hereof.
"Warrant Agent" has the meaning specified in the
introductory paragraph hereof.
"Warrant Certificates" has the meaning specified in the
recitals hereof.
"Warrants" means, collectively, the warrants issued by the
Company pursuant to this Agreement to purchase up to an aggregate of 2,750,000
shares of New Avatex Common Stock at the Exercise Price, subject to adjustment
as provided herein, which warrants are to be issued initially as part of the
Alternate Consideration to be received in connection with the Merger pursuant to
the Merger Agreement in exchange for each Convertible Preferred Stock Electing
Share and Series A Preferred Stock Electing Share.
4
<PAGE>
Article 2
ISSUANCE OF WARRANTS
2.1 Issuance of Warrants. Each Warrant Certificate shall evidence one
or more Warrants as specified therein. Each Warrant evidenced thereby shall
represent the right, subject to the provisions contained herein and therein, to
purchase from the Company one share of New Avatex Common Stock.
2.2 Form of Warrant Certificates. Each Warrant Certificate shall be
in registered form substantially in the form attached hereto as Exhibit A and
shall be dated as of the date on which it is countersigned by the Warrant Agent,
which shall be as of the Effective Time (as defined in the Merger Agreement) of
the Merger (the "Original Issue Date") or, in the event of a division, exchange,
substitution or transfer of any of the Warrants, on the date of such event. The
Warrant Certificate may have such further legends and endorsements stamped,
printed, lithographed or engraved thereon as may be required to comply with any
law or with any rule or regulation pursuant thereto or with any rule or
regulation of any securities exchange, market or trading facility on which the
Warrants may be listed or admitted for trading.
2.3 Execution of Warrant Certificates. Warrant Certificates shall be
executed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, President, any Senior Vice President, any Vice President, Treasurer or
Secretary, either manually or by facsimile signature printed thereon. In case
any such officer of the Company whose signature shall have been placed upon any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent or issuance and delivery thereof, such
Warrant Certificate nevertheless may be countersigned by the Warrant Agent and
issued and delivered with the same force and effect as though such person had
not ceased to be such officer of the Company.
The term "holder" or "holder of a Warrant Certificate" as used herein
shall mean any Person in whose name at the time any Warrant Certificate shall be
registered upon the books to be maintained by the Warrant Agent for that
purpose.
2.4 Countersignature of Warrant Certificates. Warrant Certificates
shall be manually countersigned by an authorized signatory of the Warrant Agent
and shall not be valid for any purpose unless so countersigned. Such manual
countersignature shall constitute conclusive evidence of such authorization. No
Warrant Certificate shall be valid for any purpose, and no Warrant evidenced
thereby shall be exercisable, until such Warrant Certificate has been
countersigned by the manual signature of the Warrant Agent. The Warrant Agent is
hereby authorized to countersign, in accordance with the provisions of this
Section 2.4, and deliver any new Warrant Certificates, as directed by the
Company as and when required pursuant to the provisions of Articles 7 and 8.
Each Warrant Certificate shall, when manually countersigned by an authorized
signatory of the Warrant Agent, entitle the registered holder thereof to
exercise the rights as the holder of the number of Warrants set forth thereon,
subject to the provisions of this Agreement.
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Article 3
EXERCISE PERIOD
Each Warrant shall entitle the holder thereof to purchase from the
Company one (1) share of Common Stock (subject to the adjustments provided
herein), at any time during the period that commences at 9:00 a.m., New York
City time, on March 7, 2000 and terminates at 5:00 p.m., New York City time, on
March 7, 2005 (the "Exercise Period"). The period of time between the date
hereof and March 7, 2000 shall hereinafter be referred to as the "Non-Exercise
Period"). Any Warrant not exercised prior to the expiration of the Exercise
Period shall become void, and all rights of the holder of the Warrant
Certificate evidencing such Warrant under the Warrant Certificate or this
Agreement shall cease.
Article 4
EXERCISE OF WARRANTS
4.1 Exercise Price. The exercise price of each Warrant is $2.25 per
share of New Avatex Common Stock (the "Exercise Price"). The Exercise Price is
subject to adjustment pursuant to Article 5 hereof.
4.2 Manner of Exercise. (a) During the Exercise Period (except as
otherwise set forth in Section 5.4 hereof), all or any whole number of Warrants
represented by a Warrant Certificate may be exercised by the registered holder
thereof during normal business hours on any Business Day, by surrendering such
Warrant Certificate, with the subscription form set forth therein duly completed
and executed by such holder, by hand, by overnight courier or by mail to the
Warrant Agent at its office addressed to American Stock Transfer and Trust
Company, 40 Wall Street, New York, New York 10005, Attention: Corporate Trust
Department. Such Warrant Certificate shall be accompanied by payment in full in
respect of each Warrant that is exercised, which shall be made by certified or
official bank or bank cashier's check payable to the order of the Company or by
wire transfer of immediately available funds to an account designated by the
Warrant Agent for the benefit of the Company, except as otherwise provided
herein. Such payment shall be in an amount equal to the product of the number of
shares of New Avatex Common Stock designated in such subscription form
multiplied by the Exercise Price for the Warrants being exercised (plus such
additional consideration as may be provided herein). Upon such surrender and
payment prior to the expiration of the Exercise Period, such holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
registered, fully paid and nonassessable shares of New Avatex Common Stock
determined as provided in Articles 2 and 3, and as and if adjusted pursuant to
Article 5.
(b) No registered holder may use its ability to acquire
shares of New Avatex Common Stock upon exercise of the Warrants if such exercise
would result in the total number of shares of New Avatex Common Stock deemed
beneficially owned by such holder (other than by virtue of the ownership of the
Warrants or ownership of other securities that have limitations on a holder's
right to convert or exercise similar to those limitations set forth herein),
6
<PAGE>
together with all shares of New Avatex Common Stock deemed beneficially owned by
such holder's Affiliates that would be aggregated for purposes of determining a
group under Section 13(d) of the Exchange Act, exceeding 9.9% of the total
issued and outstanding shares of New Avatex Common Stock (the "Restricted
Ownership Percentage"); provided that (w) each holder shall have the right, at
any time and from time to time, to reduce its Restricted Ownership Percentage
immediately upon written notice to the Company and the Warrant Agent, (x) each
holder shall have the right, at any time and from time to time, to increase its
Restricted Ownership Percentage and otherwise waive in whole or in part the
restrictions of this Section 4.2(b) upon 61 days' prior written notice to the
Company and the Warrant Agent, (y) each holder can make subsequent adjustments
pursuant to (w) or (x) any number of times from time to time (any such
adjustment being effective immediately if it results in a decrease in the
percentage, or upon 61 days' prior written notice if it results in an increase
in the percentage) and (z) each holder may eliminate or reinstate this
limitation at any time and from time to time (any such elimination being
effective upon 61 days' prior notice and any such reinstatement being effective
immediately).
4.3 When Exercise Effective. Each exercise of any Warrant pursuant to
Section 4.2 shall be deemed to have been effected immediately prior to the close
of business (i.e., 5:00 p.m., New York City time) on the Business Day on which
the Warrant Certificate representing such Warrant, duly executed, with
accompanying payment shall have been delivered as provided in Section 4.2, and
at such time the Person or Persons in whose name or names the certificate or
certificates for New Avatex Common Stock shall be issuable upon such exercise as
provided in Section 4.4 shall be deemed to have become the holder or holders of
record thereof.
4.4 Delivery of Certificates, Etc. (a) As promptly as practicable
after the exercise of any Warrant, and in any event within three (3) Business
Days thereafter, the Company at its expense (other than as to payment of
transfer taxes which will be paid by the holder) will cause to be issued and
delivered to such holder, or as such holder may otherwise direct in writing
(subject to Article 7),
(i) a certificate or certificates for the number of
shares of New Avatex Common Stock to which such
holder is entitled, and
(ii) if less than all the Warrants represented by a
Warrant Certificate are exercised, a new Warrant
Certificate or Certificates of the same tenor and for
the aggregate number of Warrants that were not
exercised, executed and countersigned in accordance
with Sections 2.3 and 2.4.
(b) The Warrant Agent shall countersign any new Warrant Certificate,
register it in such name or names as may be directed in writing by such holder,
and shall deliver it to the Person entitled to receive the same in accordance
with this Section 4.4. The Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant Certificates executed on behalf of the
Company for such purpose.
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(c) The Warrant Agent shall, from time to time, as promptly
as practicable, advise the Treasurer of the Company or his or her designee of
(i) the number of Warrants exercised, (ii) the instructions of each holder of
the Warrant Certificates evidencing such Warrants with respect to delivery of
the New Avatex Common Stock to which such holder is entitled upon such exercise,
(iii) delivery of Warrant Certificates evidencing the balance, if any, of the
Warrants remaining after such exercise, and (iv) such other information as the
Company shall reasonably require.
(d) The Company shall not be required to pay any stamp or
other tax or other governmental charge required to be paid in connection with
any transfer involved in the issue of the New Avatex Common Stock to a Person
other than a registered holder; and in the event that any such transfer is
involved, the Company shall not be required to issue or deliver any Warrant
Certificate or share of New Avatex Common Stock until such tax or other charge
shall have been paid or it has been established to the Company's reasonable
satisfaction that no such tax or other charge is due.
4.5 Fractional Shares. No fractional shares of New Avatex Common
Stock shall be issued upon the exercise of any Warrant. If more than one Warrant
Certificate shall be delivered for exercise at one time by the same holder, the
number of full shares or securities that shall be issuable upon exercise shall
be computed on the basis of the aggregate number of Warrants exercised. As to
any fraction of a share of New Avatex Common Stock, the Company shall pay by
company check an amount equal to such fraction multiplied by the closing sales
price of New Avatex Common Stock on the principal securities exchange, market or
trading facility on which the New Avatex Common Stock is listed or admitted for
trading (or if not so listed or admitted, by another equivalent means reasonably
determined in good faith by the Company) on the Business Day next preceding the
date such exercise becomes effective under Section 4.4 hereof.
Article 5
ADJUSTMENT OF THE AMOUNT OF COMMON STOCK ISSUABLE AND THE
EXERCISE PRICE UPON EXERCISE
5.1 Adjustment for Change in Capital Stock. If the Company shall (i)
declare or pay a dividend on its outstanding New Avatex Common Stock in shares
of New Avatex Common Stock or make a distribution to holders of its New Avatex
Common Stock in shares of New Avatex Common Stock, (ii) subdivide its
outstanding shares of New Avatex Common Stock into a greater number of shares of
New Avatex Common Stock, (iii) combine its outstanding shares of New Avatex
Common Stock into a smaller number of shares of New Avatex Common Stock, or (iv)
issue by reclassification of its shares of New Avatex Common Stock other
securities of the Company, then the Exercise Price in effect immediately prior
thereto shall be adjusted so that the holder of any Warrants thereafter
exercised shall be entitled to receive the number and kind of shares of New
Avatex Common Stock or other securities that the holder would have owned or been
entitled to receive after the happening of any of the events described above had
such Warrants been exercised immediately prior to the happening of such event or
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<PAGE>
any record date with respect thereto. An adjustment made pursuant to this
Section 5.1 shall become effective on the date of the dividend payment,
subdivision, combination or issuance retroactive to the record date with respect
thereto, if any, for such event. Such adjustment shall be made successively.
5.2 Distributions. If, after the date hereof, the Company shall
distribute to all holders of its shares of New Avatex Common Stock, evidences of
its indebtedness, shares of another class of capital stock ("Other Shares") or
assets (excluding cash distributions made as a dividend payable out of earnings
or out of surplus legally available for dividends under the laws of the
jurisdiction of incorporation of the Company) or rights to subscribe to shares
of New Avatex Common Stock, then in each such case, unless the Company elects to
reserve such indebtedness, assets, rights or shares for distribution to each
holder of a Warrant upon the exercise of the Warrants so that such holder will
receive upon such exercise, in addition to the shares of New Avatex Common Stock
to which such holder is entitled, the amount and kind of such indebtedness,
assets, rights or shares which such holder would have received if such holder
had, immediately prior to the record date for the distribution of such
indebtedness, assets, rights or shares, exercised the Warrants and received New
Avatex Common Stock, the Exercise Price in effect immediately prior to such
distribution shall be decreased to an amount determined by multiplying such
Exercise Price by a fraction, the numerator of which is the Fair Value of a
share of the New Avatex Common Stock at the date of such distribution less the
fair value of the assets, Other Shares or evidences of indebtedness, as the case
may be, so distributed or of such subscription rights (as determined in good
faith by the Board of Directors of the Company and supported by an opinion from
an investment banking firm of recognized national standing, whose determination
shall be conclusive, and described in a statement filed with the Warrant Agent)
and the denominator of which is the Fair Value of a share of New Avatex Common
Stock at such date. Such adjustment shall be made whenever any such distribution
is made, and shall become effective retroactively on the date immediately after
the record date for the determination of stockholders entitled to receive such
distribution.
5.3 Exercise Price Adjustment. Except in the case of increases of
shares covered by Section 5.1 (as to which the adjustment provisions of such
Section shall apply), whenever the number of shares of New Avatex Common Stock
into which a Warrant is exercisable is adjusted as provided in this Article 5,
then the Exercise Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of New Avatex Common Stock into which such Warrant was exercisable
immediately prior to such adjustment, and the denominator of which shall be the
number of shares of New Avatex Common Stock into which such Warrant was
exercisable immediately thereafter.
5.4 Adjustments for Mergers and Consolidations. In case the Company,
after the date hereof, shall merge or consolidate with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets to, another Person, then, in the case of any such
transaction, proper provision shall be made so that, upon the basis and terms
9
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and in the manner provided in this Warrant Agreement, the holders of the
Warrants, upon the exercise thereof at any time after the consummation of such
transaction (subject to the Exercise Period, except as provided in the proviso
to this Section 5.4 below), shall be entitled to receive (at the aggregate
Exercise Price in effect at the time of the transaction for all New Avatex
Common Stock issuable upon such exercise immediately prior to such
consummation), in lieu of the New Avatex Common Stock issuable upon such
exercise prior to such consummation, the greatest amount of securities, cash or
other property to which such holder would have been entitled as a holder of New
Avatex Common Stock upon such consummation if such holder had exercised the
rights represented by the Warrants held by such holder immediately prior
thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Sections 5.1 and 5.2
hereof; provided, however, that, if any such transaction described in this
Section 5.4 occurs, or the Company sells, transfers or disposes of at least 80%
of its capital stock to another Person, during the Non-Exercise Period,
notwithstanding anything to the contrary contained herein, the Warrants shall be
deemed exercisable during the Non-Exercise Period for the purposes of this
Section 5.4 and the holders shall be entitled to receive the securities, cash or
property referred to in this Section 5.4, or in such sale of capital stock of
the Corporation, to the extent they comply with the other provisions of this
Section 5.4.
5.5 No De Minimis Adjustments; Calculation to Nearest Cent and
One-hundredth of Share. No adjustment in the Exercise Price shall be required
under this Article 5 unless such adjustment would require an increase or
decrease of at least 1% of such price. All calculations under this Article 5
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
5.6 Notice of Adjustment in Exercise Price; Warrant Agent's
Disclaimer. (a) Whenever the Exercise Price and securities issuable shall be
adjusted as provided in this Article 5, the Company shall forthwith file with
the Warrant Agent a statement, signed by the Chairman of the Board, Chief
Executive Officer, President, any Senior Vice President, any Vice President or
the Treasurer of the Company, stating in detail the facts requiring such
adjustment, the Exercise Price that will be effective after such adjustment and
the impact of such adjustment on the number and kind of securities issuable upon
exercise of the Warrants. The Company shall also cause the Warrant Agent to mail
(first class, postage prepaid) a notice setting forth any such adjustments to
each registered holder of Warrants at its last address appearing on the Warrant
register.
(b) The Warrant Agent shall have no duty with respect to
any statement filed with it except to keep the same on file and available for
inspection by registered holders of Warrants during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility to
any holder of a Warrant to determine whether any facts exist which may require
any adjustment to the Exercise Price or securities issuable, or with respect to
the nature or extent of any adjustment of the Exercise Price or securities
issuable when made or with respect to the method employed in making such
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adjustment. The Warrant Agent shall not be responsible for the
Company's failure to comply with any provision of this Article 5.
5.7 No Change in Warrant Terms on Adjustment. Irrespective of any
adjustments in the Exercise Price or the number of shares of New Avatex Common
Stock issuable upon exercise, Warrants theretofore or thereafter issued may
continue to express the same prices and number of shares as are stated in the
similar Warrants issuable initially, or at some subsequent time, pursuant to
this Agreement, and the Exercise Price and such number of shares issuable upon
exercise specified thereon shall be deemed to have been so adjusted.
5.8 Treasury Shares. Shares of New Avatex Common Stock at any time
owned by the Company shall not be deemed to be outstanding for the purposes of
any computation under this Article 5.
Article 6
RESERVATION OF STOCK
6.1 Reservation; Due Authorization, Etc. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued New Avatex Common Stock, solely for issuance and
delivery upon exercise of Warrants, the full number of shares of New Avatex
Common Stock from time to time issuable upon the exercise of all Warrants and
any other outstanding warrants, options or similar rights, from time to time
outstanding. All shares of New Avatex Common Stock shall be duly authorized and,
when issued upon such exercise, shall be duly and validly issued, and (in the
case of shares) fully paid and nonassessable, and free from all taxes, liens,
charges, security interests, encumbrances and other restrictions created by or
through the Company.
6.2 Delivery of Prospectus. The Company will furnish to the Warrant
Agent sufficient copies of a Prospectus relating to the New Avatex Common Stock
deliverable upon exercise of Warrants (the "Prospectus"), and the Warrant Agent
agrees that upon the exercise of any Warrant, the Warrant Agent will deliver a
Prospectus to the holder of the Warrant Certificate evidencing such Warrant,
prior to or concurrently with, the delivery of the New Avatex Common Stock
issued upon such exercise.
6.3 Compliance with Law. The Company will from time to time take, at
its cost, all action which may be necessary to obtain and keep effective any and
all permits, consents and approvals of governmental agencies and authorities and
securities acts and "blue sky" filings under United States Federal and State
laws (including, without limitation, a registration statement in respect of the
Warrants and New Avatex Common Stock under the Securities Act), which may be or
become requisite in connection with the issuance, sale, transfer, and delivery
of the Warrant Certificates, the exercise of the Warrants, the issuance, sale,
transfer, and delivery of the New Avatex Common Stock issued upon exercise of
the Warrants or upon the expiration of the period during which the Warrants are
exercisable.
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Article 7
LOSS OR MUTILATION
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and of an indemnity bond
reasonably satisfactory to them in form or amount, and (in the case of
mutilation) upon surrender and cancellation thereof, then, in the absence of
notice to the Company or the Warrant Agent that the Warrants represented thereby
have been acquired by a bona fide purchaser, the Company shall execute and
deliver to the Warrant Agent and, upon the Company's request, an authorized
signatory of the Warrant Agent shall manually countersign and deliver, to the
registered holder of the lost, stolen, destroyed or mutilated Warrant
Certificate, in exchange for or in lieu thereof, a new Warrant Certificate of
the same tenor and for a like aggregate number of Warrants. Upon the issuance of
any new Warrant Certificate under this Article 7, 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
reasonable fees and expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this Article 7
in lieu of any lost, stolen or destroyed Warrant Certificate shall be entitled
to the same benefits of this Agreement equally and proportionately with any and
all other Warrant Certificates, whether or not the allegedly lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone. The
provisions of this Article 7 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates.
Article 8
WARRANT REGISTRATION
8.1 Registration. The Warrant Certificates shall be issued in
registered form only and shall be registered in the names of the record holders
of the Warrant Certificates to whom they are to be delivered. The Warrant Agent
shall maintain or cause to be maintained a register in which, subject to such
reasonable regulations as it may prescribe, the Warrant Agent shall provide for
the registration of Warrants and of transfers or exchanges of Warrant
Certificates as provided in this Agreement. Such register shall be maintained at
the office of the Warrant Agent located at the respective address therefor as
provided in Section 11.1. Such register shall be open for inspection upon notice
at all reasonable times by the Warrant Agent and each holder of a Warrant.
8.2 Transfer or Exchange. At the option of the holder, Warrant
Certificates may be exchanged or transferred for other Warrant Certificates for
a like aggregate number of Warrants, upon surrender of the Warrant Certificates
to be exchanged at the office of the Warrant Agent maintained for such purpose
at the respective address therefor as provided in Section 11.1, and upon payment
of the charges herein provided. Whenever any Warrant Certificates are so
surrendered for exchange or transfer, the Company shall execute, and an
authorized signatory of the Warrant Agent shall manually countersign and
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deliver, the Warrant Certificates that the holder making the exchange is
entitled to receive.
8.3 Valid and Enforceable. All Warrant Certificates issued upon any
registration of transfer or exchange of Warrant Certificates shall be the valid
obligations of the Company, evidencing the same obligations, and entitled to the
same benefits under this Agreement, as the Warrant Certificates surrendered for
such registration of transfer or exchange.
8.4 Endorsement. Every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Company or the
Warrant Agent) be duly endorsed, or be accompanied by an instrument of transfer
in form reasonably satisfactory to the Company and the Warrant Agent and duly
executed by the registered holder thereof or such holder's officer or
representative duly authorized in writing.
8.5 No Service Charge. No service charge shall be made for any
registration of transfer or exchange of Warrant Certificates.
8.6 Treatment of Holders of Warrant Certificates. The Company and the
Warrant Agent may treat the registered holder of a Warrant Certificate as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by the Warrants evidenced thereby, any notice to the
contrary notwithstanding.
8.7 Cancellation. Any Warrant Certificate surrendered for
registration of transfer, exchange or the exercise of the Warrants represented
thereby shall, if surrendered to the Company, be delivered to the Warrant Agent,
and all Warrant Certificates surrendered or so delivered to the Warrant Agent
shall be promptly cancelled by the Warrant Agent. Any such Warrant Certificate
shall not be reissued and, except as provided in this Article 8 in case of an
exchange or transfer, in Article 7 in case of a mutilated Warrant Certificate
and in Article 3 in case of the exercise of less than all the Warrants
represented thereby, no Warrant Certificate shall be issued hereunder in lieu
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of such cancelled Warrant Certificates in a manner reasonably
satisfactory to the Company.
Article 9
WARRANT AGENT
9.1 Obligations Binding. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the terms and conditions set forth in
this Article 9. The Company, and the holders of Warrants by their acceptance
thereof, shall be bound by all of such terms and conditions.
9.2 No Liability. The Warrant Agent shall not by counter-signing
Warrant Certificates or by any other act hereunder be accountable with respect
to or be deemed to make any representations as to the validity or authorization
of the Warrants or the Warrant Certificates (except as to its countersignature
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thereon), as to the validity, authorization or value (or kind or amount) of any
New Avatex Common Stock or other property delivered or deliverable upon exercise
of any Warrant, or as to the purchase price of such New Avatex Common Stock, or
other property. The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained herein or in the Warrant Certificates or for any
action taken, suffered or omitted by the Warrant Agent in good faith in the
belief that any Warrant Certificate or any other document or any signature is
genuine or properly authorized, (ii) be responsible for determining whether any
facts exist that may require any adjustment of the purchase price and the number
of shares of New Avatex Common Stock purchasable upon exercise of Warrants, or
with respect to the nature or extent of any such adjustments when made, or with
respect to the method of adjustment employed, (iii) be responsible for any
failure on the part of the Company to issue, transfer or deliver any New Avatex
Common Stock or property upon the surrender of any Warrant for the purpose of
exercise or to comply with any other of the Company's covenants and obligations
contained in this Agreement or in the Warrant Certificates or (iv) be liable for
any act or omission in connection with this Agreement except for its own bad
faith, negligence or willful misconduct.
9.3 Instructions. The Warrant Agent is hereby authorized to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Chief Executive Officer, President, any Senior Vice
President, any Vice President, Treasurer or any Assistant Treasurer of the
Company and to apply to any such officer for advice or instructions. The Warrant
Agent shall not be liable for any action taken, suffered or omitted by it in
good faith in accordance with the instructions of any such officer.
9.4 Agents. The Warrant Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, provided reasonable
care has been exercised in the selection and in the continued employment of any
such attorney, agent or employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in, or defend any action, suit or legal
proceeding in respect hereof, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider proper.
The Warrant Agent shall promptly notify the Company in writing of any claim made
or action, suit or proceeding instituted against the Warrant Agent arising out
of or in connection with this Agreement.
9.5 Cooperation. The Company will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by the
Warrant Agent in order to enable the Warrant Agent to carry out or perform its
duties under this Agreement.
9.6 Agent Only. The Warrant Agent shall act solely as agent. The
Warrant Agent shall not be liable except for the performance of such duties as
are specifically set forth herein, and no implied covenants or obligations shall
be read into this Agreement against the Warrant Agent, whose duties and
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obligations shall be determined solely by the express provisions hereof.
9.7 Right to Counsel. The Warrant Agent may at any time consult with
legal counsel satisfactory to it (who may be legal counsel for the Company, but,
in any case, shall be reasonably selected) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any Warrant holder for any
action taken, suffered or omitted by the Warrant Agent in good faith in
accordance with the opinion or advice of such counsel.
9.8 Compensation. The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder to be agreed upon and to
reimburse the Warrant Agent for its reasonable expenses hereunder; and further
agrees to indemnify the Warrant Agent and hold it harmless against any and all
liabilities, including, but not limited to, judgments, costs and reasonable
counsel fees, for anything done, suffered or omitted by the Warrant Agent in the
execution of its duties and powers hereunder, except for any such liabilities
that arise as a result of the Warrant Agent's bad faith, negligence or willful
misconduct.
9.9 Accounting. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all moneys received by the Warrant Agent on behalf of the Company on the
purchase of shares of New Avatex Common Stock through the exercise of Warrants.
The Warrant Agent shall advise the Company by telephone at the end of each day
on which a payment for the exercise of Warrants is received of the amount so
deposited to such account. The Warrant Agent shall promptly confirm such
telephone advice to the Company in writing.
9.10 No Conflict. The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
9.11 Resignation; Termination. The Warrant Agent may resign its
duties and be discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's bad faith,
negligence or willful misconduct), after giving thirty (30) days' prior written
notice to the Company. The Company may remove the Warrant Agent upon thirty (30)
days' written notice, and the Warrant Agent shall thereupon in like manner be
discharged from all further duties and liabilities hereunder, except as to
liabilities arising as a result of the Warrant Agent's bad faith, negligence or
willful misconduct. The Company shall cause to be mailed promptly (by first
class mail, postage prepaid) to each registered holder of a Warrant at such
holder's last address as shown on the register of the Company, at the Company's
expense, a copy of such notice of resignation or notice of removal, as the case
may be. Upon such resignation or removal the Company shall promptly appoint in
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writing a new warrant agent. Pending appointment of a successor to the Warrant
Agent, the duties of the Warrant Agent shall be carried out by the Company. Any
successor warrant agent shall be a corporation, incorporated under the laws of
the United States or of any state thereof and authorized under such laws to
exercise corporate trust powers, be subject to supervision and examination by
Federal or state authority, and have a combined capital and surplus of not less
than $100,000,000 as set forth in its most recent published annual report of
condition. After acceptance in writing of such appointment by the new warrant
agent it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such appointment
the Company shall file notice thereof with the resigning or removed Warrant
Agent and shall forthwith cause a copy of such notice to be mailed (by first
class, postage prepaid) to each registered holder of a Warrant at such holder's
last address as shown on the register of the Company. Failure to give any notice
provided for in this Section 9.11, or any defect in any such notice, shall not
affect the legality or validity of the resignation of the Warrant Agent or the
appointment of a new warrant agent, as the case may be.
9.12 Change of Warrant Agent. If at any time the name of the Warrant
Agent shall be changed and at such time any of the Warrant Certificates shall
have been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and if at that time any of the Warrant Certificates shall not
have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force and effect provided in
the Warrant Certificates and this Agreement.
9.13 Successor Warrant Agent. Any corporation or entity into which
the Warrant Agent or any new warrant agent may be merged or any corporation or
entity resulting from any consolidation to which the Warrant Agent or any new
warrant agent shall be a party or any corporation or entity succeeding to all or
substantially all the agency business of the Warrant Agent or any new warrant
agent shall be a successor Warrant Agent under this Agreement without any
further act, provided that such corporation would be eligible for appointment as
a new warrant agent under the provisions of Section 9.11 of this Article 9. The
Company shall promptly cause notice of the succession as Warrant Agent of any
such successor Warrant Agent to be mailed (by first class mail, postage prepaid)
to each registered holder of a Warrant at its last address as shown on the
register of the Company.
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Article 10
REMEDIES, ETC.
10.1 Remedies. The Company stipulates that the remedies at law of
each holder of a Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant Agreement are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a decree for
the specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
10.2 Warrant Holder Not Deemed a Stockholder. Prior to the exercise
of the Warrants represented thereby, no holder of a Warrant Certificate, as
such, shall be entitled to any rights of a stockholder of the Company,
including, but not limited to, the right to vote, to receive dividends or other
distributions, to exercise any preemptive right or to receive any notice of
meetings of stockholders, and no such holder shall be entitled to receive notice
of any proceedings of the Company except as provided in this Agreement. Nothing
contained in this Agreement shall be construed as imposing any liabilities on
such holder to purchase any securities or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors or
stockholders of the Company or otherwise.
10.3 Right of Action. All rights of action in respect of this
Agreement are vested in the registered holders of the Warrants. Any registered
holder of any Warrant, without the consent of the Warrant Agent or the
registered holder of any other Warrant, may in such holder's own behalf and for
such holder's own benefit enforce, and may institute and maintain any suit,
action or proceeding against the Company suitable to enforce, or otherwise in
respect of, such holder's right to exercise such holder's Warrants in the manner
provided in the Warrant Certificate representing such Warrants and the Company's
obligations under this Agreement and the Warrants.
Article 11
MISCELLANEOUS
11.1 Notices. Any notice, demand or delivery authorized by this
Agreement shall be sufficiently given or made if sent by first class mail,
postage prepaid, delivered by hand or delivered by overnight courier, in each
case addressed to any registered holder of a Warrant at such holder's last known
address appearing on the register of the Company or the Warrant Agent, and to
the Company or the Warrant Agent as follows, or delivered by facsimile (in the
case of notices to any registered holder, to the last known facsimile number of
such holder appearing on the register of the Company or the Warrant Agent):
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If to the Company:
Avatex Corporation
5910 N. Central Expressway
Suite 1780
Dallas, Texas 75206
Attn: General Counsel
Telephone: (214) 365-7450
Facsimile: (214) 365-7499
If to the Warrant Agent:
American Stock Transfer and Trust Company
40 Wall Street
New York, New York 10005
Attn: Corporate Trust Department
Telephone: (212) 936-5100
Facsimile: (718) 236-4588
or such other address as shall have been furnished in writing, in accordance
with this Section 11.1, to the party giving or making such notice, demand or
delivery.
11.2 Governing Law and Consent to Forum. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY AND THE WARRANT AGENT EACH
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE PROCESS IN
ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
11.3 Benefits of This Agreement. This Agreement shall be binding upon
and inure to the benefit of the Company and the Warrant Agent and their
respective successors and assigns, and the registered and beneficial holders
from time to time of the Warrants and of holders of the Common Stock, where
applicable. Nothing in this Agreement is intended or shall be construed to
confer upon any other Person, any right, remedy or claim under or by reason of
this Agreement or any part hereof.
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11.4 Agreement of Holders of Warrant Certificates. Every holder of a
Warrant Certificate, by accepting the same, covenants and agrees with the
Company, the Warrant Agent and with every other holder of a Warrant Certificate
that the Warrant Certificates are transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in this Agreement,
and the Company and the Warrant Agent may deem and treat the person in whose
name the Warrant Certificate is registered as the absolute owner for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
11.5 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
11.6 Amendments. This Agreement may be amended by the parties hereto,
without the consent of the holder of any Warrant Certificate, for the purpose of
curing any manifest error, or of curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable; provided, that such action
shall not adversely affect the interests of the holders of the Warrant
Certificates. Any other amendment shall require the consent of the holders of
Warrants representing a majority in number of the then outstanding Warrants.
Any such modification or amendment will be conclusive and
binding on all present and future holders of Warrant Certificates whether or not
they have consented to such modification or amendment or waiver and whether or
not notation of such modification or amendment is made upon such Warrant
Certificates. Any instrument given by or on behalf of any holder of a Warrant
Certificate in connection with any consent to any modification or amendment will
be conclusive and binding on all subsequent holders of such Warrant Certificate.
11.7 Headings. The contents hereto and the descriptive headings of
the several sections hereof are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
----------------------------------------
Melvyn J. Estrin
Co-Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
By: /s/ Herbert J. Lemmer
----------------------------------------
Name: Herbert J. Lemmer
Title: Vice-President
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EXHIBIT A
FORM OF WARRANT CERTIFICATE
(see attached)
<PAGE>
[FORM OF FACE OF WARRANT CERTIFICATE]
CUSIP No. ________
Warrant No. 05349F11 3 Number of Warrant(s): ______
Exercisable During the Period that Commences at 9:00 a.m., New York City time,
on March 7, 2000 and Terminates at 5:00 p.m., New York City time, on March 7,
2005 except as provided below
Void after 5:00 p.m., New York City time, on March 7, 2005.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF
AVATEX CORPORATION
This Warrant Certificate certifies that __________ or
registered assigns, is the registered owner of the number of warrants set forth
above (the "Warrants"), each of which represents the right, at any time after
9:00 a.m., New York City time, on March 7, 2000, and before 5:00 p.m., New York
City time, on March 7, 2005, to purchase from Avatex Corporation, a Delaware
corporation (the "Company"), at the price per share of $2.25 (the "Exercise
Price"), one share of Common Stock, $0.01 par value, of the Company as such
stock was constituted as of December 7, 1999, subject to adjustment as provided
in the Warrant Agreement hereinafter referred to, upon surrender hereof, with
the subscription form on the reverse hereof duly executed, by hand or by mail to
American Stock Transfer and Trust Company, 40 Wall Street, New York, New York
10005, Attention: Corporate Trust Department, or to any successor thereto, as
the warrant agent under the Warrant Agreement, at the office of such successor
maintained for such purpose (any such warrant agent being herein called the
"Warrant Agent"), and simultaneous payment in full (by certified or official
bank or bank cashier's check payable to the order of the Company, or by wire
transfer of immediately available funds to an account designated by the Warrant
Agent for the benefit of the Company) of the Exercise Price in respect of each
Warrant represented by this Warrant Certificate that is so exercised, all
subject to the terms and conditions hereof and of the Warrant Agreement.
Upon any partial exercise of the Warrants represented by
this Warrant Certificate, there shall be issued to the holder hereof a new
Warrant Certificate representing the Warrants that were not exercised.
No fractional shares may be issued upon the exercise of
rights to purchase hereunder, and as to any fraction of a share otherwise
issuable, the Company will make a cash payment in lieu of such issuance, as
provided in the Warrant Agreement.
A-1
<PAGE>
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement, dated as of December 7, 1999 (the "Warrant
Agreement"), between the Company and American Stock Transfer and Trust Company,
as Warrant Agent, and is subject to the terms and provisions contained therein.
The Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the registered holders of the Warrants. The
holder of this Warrant Certificate consents to all terms and provisions of the
Warrant Agreement by acceptance hereof. Copies of the Warrant Agreement are on
file at the above-mentioned office of the Warrant Agent and may be obtained by
writing to the Warrant Agent.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
WARRANT SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
Dated: ___________ __, _____
AVATEX CORPORATION
By:_____________________
Name:
Title:
Countersigned:
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
By:
----------------------------
Name:
Title:
2
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[FORM OF REVERSE OF WARRANT CERTIFICATE]
AVATEX CORPORATION
The transfer of this Warrant Certificate and all rights
hereunder is registrable by the registered holder hereof, in whole or in part,
on the register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at American Stock Transfer and Trust Company, 40 Wall Street,
New York, New York 10005 attention: Corporate Trust Department, duly endorsed or
accompanied by a written instrument of transfer duly executed and in form
satisfactory to the Company and the Warrant Agent, by the registered holder
hereof or his attorney duly authorized in writing and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer
or registration thereof. Upon any partial transfer the Company will cause to be
delivered to such holder a new Warrant Certificate or Certificates with respect
to any portion not so transferred.
This Warrant Certificate may be exchanged at the office of
the Warrant Agent maintained for such purpose at American Stock Transfer and
Trust Company, 40 Wall Street, New York, New York 10005 attention: Corporate
Trust Department, for Warrant Certificates representing the same aggregate
number of Warrants, each new Warrant Certificate to represent such number of
Warrants as the holder hereof shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby,
the holder of this Warrant Certificate, as such, shall not be entitled to any
rights of a stockholder of the Company, including, but not limited to, the right
to vote, to receive dividends or other distributions, to exercise any preemptive
right or to receive any notice of meetings of stockholders, and shall not be
entitled to receive notice of any proceedings of the Company except as provided
in the Warrant Agreement. Nothing contained herein shall be construed as
imposing any liabilities upon the holder of this Warrant Certificate to purchase
any securities or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors or stockholders of the Company or
otherwise.
This Warrant Certificate shall be void and all rights
represented hereby shall cease unless exercised before the close of business
(i.e., 5:00 p.m., New York City time) on March 7, 2005.
Witness the facsimile seal of the Company and the signature
of its duly authorized officer.
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SUBSCRIPTION FORM
(TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)
TO AVATEX CORPORATION
American Stock Transfer and Trust Company, as Warrant Agent
Attention: ____________
The undersigned (i) irrevocably exercises ___ Warrants
represented by the within Warrant Certificate, (ii) purchases [________ shares]
of common stock, par value $.01 per share, of Avatex Corporation (before giving
effect to the adjustments provided in the Warrant Agreement referred to in the
within Warrant Certificate) for each Warrant so exercised and herewith makes
payment in full of the purchase price of $2.25 in respect of each Warrant so
exercised as provided in the Warrant Agreement (such payment being by certified
or official bank or bank cashier's check payable to the order of Avatex
Corporation, or by wire transfer of immediately available funds to an account
designated by the Warrant Agent for the benefit of Avatex Corporation), all on
the terms and conditions specified in the within Warrant Certificate and the
Warrant Agreement, (iii) surrenders this Warrant Certificate and all right,
title and interest to the exercised Warrants to Avatex Corporation and (iv)
directs that the securities or other property deliverable upon the exercise of
such Warrants be registered or placed in the name and at the address specified
below and delivered thereto.
Dated: ____________, ____
-----------------------------------
(Owner)*
-----------------------------------
(Signature of Authorized
Representative)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
4
<PAGE>
Securities or property to be issued and delivered to:
-----------------------------------
Signature Guaranteed**
Please insert social
security or other
identifying number
-------------------------
Name *
---------------------------------------------------------------------
Street Address
-----------------------------------------------------------
City, State and Zip Code
-------------------------------------------------
- -------------------
* The signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever.
** The signature must be guaranteed by a securities transfer agents
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
5
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered holder of
the within Warrant Certificate hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant Certificate, with respect to the number of warrants set forth below:
Name of No. of
Assignee Address Warrants
- -------- ------- --------
Please insert social
security or other
identifying number
of Assignee
- ------------------
and does hereby irrevocably constitute and appoint __________ attorney to make
such transfer on the books of Avatex Corporation maintained for the purpose,
with full power of substitution in the premises.
Dated: ____________, ____
Name *
Signature of Authorized
Representative ______________________
Signature Guaranteed **
- -------------------
* The signature must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever.
** The signature must be guaranteed by a securities transfer agents
medallion program ("stamp") participant or an institution receiving prior
approval from the Warrant Agent.
6
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"),
effective as of December 6, 1999, is entered into by and between Avatex
Corporation (the "Company"), and Abbey J. Butler (the"Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated and effective as of February 27, 1995, as amended by the
amendment thereto dated as of February 1, 1998 (the "Agreement"); and
WHEREAS, in connection with the merger involving the Company and
Xetava Corporation and the related transactions that are being consummated on or
about December 6, 1999, Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
is providing certain opinions on which the Company's Board of Directors is
relying, including an opinion with respect to the solvency of the Company (the
"Opinion"); and
WHEREAS, the Opinion is conditioned on, among other things, the
Company and the Executive entering into this Amendment;
NOW, THEREFORE, the Company and the Executive hereby agree that the
Agreement shall be, and hereby is, amended by adding a new Section 5(e) to the
Agreement, immediately following the unnumbered paragraph beginning with the
words "Without in any way limiting ...," as follows:
Notwithstanding anything in this Agreement to the contrary,
the Executive hereby waives his right to immediate payment
of any severance or other benefits if his employment with
the Company is terminated by the Company for reasons other
than those set forth in Subsection 5(c) hereof or if there
is Termination Without Just Cause by the Executive under
Section 5(d) hereof, provided that (i) such waiver shall
not apply to any termination pursuant to the terms of the
paragraph immediately preceding this subsection (other than
as a result of the merger involving the Company and Xetava
Corporation and the related transactions that are being
consummated on or about December 6, 1999 (the "Merger"), or
actions involving Phar-Mor, Inc. or other entities
affiliated with the Executive, in which case the foregoing
waiver will apply), and (ii) notwithstanding such waiver,
severance and other benefits may be deferred and paid after
(x) the promissory note dated October 9, 1997 executed by
the Company in favor of Bart A. Brown, Jr., as Trustee, and
(y) the promissory notes issued in connection with the
Merger to certain electing preferred stock holders of the
Company, are paid or otherwise satisfied, at which time the
waiver will expire.
NY2:\857462\01\$DM#01!.DOC\64935.0001
<PAGE>
Except as expressly provided in this Amendment, all other terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective on the date and year first above written.
AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
-----------------------------
Melvyn J. Estrin
Co-Chief Executive Officer
/s/ Abbey J. Butler
---------------------------------
Abbey J. Butler
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"),
effective as of December 6, 1999, is entered into by and between Avatex
Corporation (the "Company"), and Melvyn J. Estrin (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated and effective as of February 27, 1995, as amended by the
amendment thereto dated as of February 1, 1998 (the "Agreement"); and
WHEREAS, in connection with the merger involving the Company and
Xetava Corporation and the related transactions that are being consummated on or
about December 6, 1999, Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
is providing certain opinions on which the Company's Board of Directors is
relying, including an opinion with respect to the solvency of the Company (the
"Opinion"); and
WHEREAS, the Opinion is conditioned on, among other things, the
Company and the Executive entering into this Amendment;
NOW, THEREFORE, the Company and the Executive hereby agree that the
Agreement shall be, and hereby is, amended by adding a new Section 5(e) to the
Agreement, immediately following the unnumbered paragraph beginning with the
words "Without in any way limiting ...," as follows:
Notwithstanding anything in this Agreement to the contrary,
the Executive hereby waives his right to immediate payment
of any severance or other benefits if his employment with
the Company is terminated by the Company for reasons other
than those set forth in Subsection 5(c) hereof or if there
is Termination Without Just Cause by the Executive under
Section 5(d) hereof, provided that (i) such waiver shall
not apply to any termination pursuant to the terms of the
paragraph immediately preceding this subsection (other than
as a result of the merger involving the Company and Xetava
Corporation and the related transactions that are being
consummated on or about December 6, 1999 (the "Merger"), or
actions involving Phar-Mor, Inc. or other entities
affiliated with the Executive, in which case the foregoing
waiver will apply), and (ii) notwithstanding such waiver,
severance and other benefits may be deferred and paid after
(x) the promissory note dated October 9, 1997 executed by
the Company in favor of Bart A. Brown, Jr., as Trustee, and
(y) the promissory notes issued in connection with the
Merger to certain electing preferred stock holders of the
Company, are paid or otherwise satisfied, at which time the
waiver will expire.
NY2:\857463\01\$DMF01!.DOC\64935.0001
<PAGE>
Except as expressly provided in this Amendment, all other terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective on the date and year first above written.
AVATEX CORPORATION
By: /s/ Abbey J. Butler
---------------------------
Abbey J. Butler
Co-Chief Executive Officer
/s/ Melvyn J. Estrin
-------------------------------
Melvyn J. Estrin
For: Avatex Corporation
Contact: Grady E. Schleier
Senior Vice President and Chief Financial Officer
(214) 365-7450
AVATEX CORPORATION ANNOUNCES
STOCKHOLDER APPROVAL OF PROPOSED
MERGER AND ELECTION OF DIRECTORS
--------------------------------
DALLAS, TX -- December 6, 1999-- Avatex Corporation (OTC Bulletin
Board: AVAX) announced that, at today's annual meeting of stockholders, its
common and preferred stockholders approved the previously announced proposed
merger of Avatex and Xetava Corporation. Approximately 76% of the holders of
Avatex's $5.00 cumulative convertible preferred stock, 76% of the holders of its
$4.20 cumulative exchangeable preferred stock, and 66% of the holders of its
common stock voted in favor of the merger. Avatex also announced that the
Delaware Court of Chancery approved the settlement of certain litigation that
had been brought on behalf of holders of Avatex preferred stock in 1998. The
litigation was settled in consideration for the terms of the merger agreement
approved by Avatex's stockholders and certain other consideration.
Under the merger, Xetava will merge with and into Avatex, and
Avatex's existing preferred stockholders will receive new common stock of Avatex
or a combination of cash, secured notes, warrants and other consideration.
Avatex's existing common stockholders will receive new common stock of Avatex.
Avatex expects the transaction to close on Tuesday, December 7, 1999, after
which its new common stock, notes and warrants may be available for trading, and
its existing $5.00 preferred stock and $4.20 preferred stock will cease to be
outstanding.
In addition, Avatex announced that holders of its common stock
re-elected four members of its Board of Directors at the annual meeting. William
A. Lemer and John L. Wineapple were re-elected to serve on the Board until
Avatex's annual meeting of stockholders in 2001, and Abbey J. Butler and Melvyn
J. Estrin were re-elected to serve on the Board until Avatex's annual meeting of
stockholders in 2002.
Avatex is a holding company that, along with its subsidiaries, owns
interests in other corporations and partnerships. Through Phar-Mor, Inc., its
38% owned subsidiary, Avatex is involved in operating a chain of retail discount
drug stores devoted to the sale of prescription and over-the-counter drugs,
health and beauty aids and other general merchandise.
For: Avatex Corporation
Contact: Grady E. Schleier
Senior Vice President and Chief Financial Officer
(214) 365-7450
AVATEX CORPORATION ANNOUNCES
CLOSING OF MERGER WITH XETAVA CORPORATION
RESULTING IN CANCELLATION OF PREFERRED STOCK OUTSTANDING
--------------------------------------------------------
DALLAS, TX -- December 7, 1999 -- Avatex Corporation (OTCBB: AVAT)
announced today that it has completed its previously announced merger with
Xetava Corporation, in which Xetava merged into Avatex. As previously announced,
at Avatex's meeting of stockholders on December 6, 1999, the merger was approved
by approximately 76% of the holders of its $5.00 cumulative convertible
preferred stock, 76% of the holders of its $4.20 cumulative exchangeable
preferred stock, and 66% of the holders of its common stock.
Under the merger, Avatex's existing preferred stockholders will
receive new common stock of Avatex or, at the election of the stockholder made
prior to the merger, a combination of cash, secured notes, warrants and other
consideration. Based on the fixed exchange ratios specified in the merger
agreement, the total amount of cash being distributed to electing preferred
stockholders under the merger is approximately $12,858,000, the total face
amount of 6.75% notes due 2002 being issued by Avatex's wholly-owned subsidiary,
Avatex Funding, Inc., to electing preferred stockholders is approximately
$28,668,000, and the total number of warrants to purchase new Avatex Class A
common stock being issued to electing preferred stockholders is approximately
2,319,000. In addition, electing preferred stockholders received a deferred
contingent right to receive a specified percentage of any net recovery that
Avatex may receive in certain litigation against McKesson Corporation and
various pharmaceutical manufacturers, subject to certain limits.
Based on the fixed exchange ratios specified in the merger agreement,
the preferred stockholders that did not elect to receive combination of cash,
secured notes, warrants and other consideration in the merger are being issued a
total of approximately 5,840,000 shares of new Avatex Class A common stock.
Avatex's existing common stock also converts into new Avatex Class A common
stock on a one-for-one basis for their existing common stock. As a result, there
are now approximately 19,647,000 shares of Class A common stock outstanding, and
Avatex's pre-existing $5.00 preferred stock and $4.20 preferred stock are no
longer outstanding.
<PAGE>
Beginning today, Avatex's Class A common stock will be quoted for
trading on the OTC Bulletin Board System under the symbol "AVAT", and warrants
to purchase its Class A common stock will also be quoted for trading on the OTC
Bulletin Board System under the symbol "AVATW". Avatex Funding's 6.75% notes due
2002 will be quoted for trading on the National Quotation Bureau "yellow
sheets(TM)".
Avatex also announced today that, as a result of the merger, all of
its preferred stock and the related cumulative unpaid dividends were canceled.
This results in a reduction of Avatex's entire $186.3 million redeemable
preferred stock liability and a corresponding reduction of $77.8 million in the
cumulative unpaid dividend liability. Subject to finalizing (i) the valuation of
Avatex's Class A common stock and warrants issued in the merger, (ii) the
discount rate to be used for the 6.75% notes due 2002 issued in the merger, and
(iii) the total amount of expenses related to the merger, Avatex believes that
it will recognize an increase in its stockholders' equity of approximately $214
to $218 million. In addition, as a result of the purchase by Phar-Mor, Inc. of
additional shares of Avatex's common stock simultaneously with the closing of
the merger, Phar-Mor now owns a total of approximately 25% of Avatex's new Class
A common stock. Phar-Mor's additional purchase of Avatex common stock will
result in an additional charge to Avatex's stockholders' equity of approximately
$2.2 million as of December 7, 1999.
Avatex is a holding company that, along with its subsidiaries, owns
interests in other corporations and partnerships. Through Phar-Mor, Inc., its
38% owned subsidiary, Avatex is involved in operating a chain of retail discount
drug stores devoted to the sale of prescription and over-the-counter drugs,
health and beauty aids and other general merchandise.
2
