<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: APRIL 28, 1997
UROHEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-11150 98-0122944
(State or other (Commission file (IRS employer
jurisdiction of number) identification
incorporation) number)
5 Civic Plaza, Suite 100
Newport Beach, CA 92660
(Address of principal executive offices) (zip code)
(714) 668-5858
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events.
On March 17, 1997, Urohealth Systems, Inc. (the "Company") announced
that it intended to offer $100 million aggregate principal amount of Senior
Subordinated Notes due 2004 in a private placement transaction under Rule 144A
of the Securities Act of 1933, as amended (the "Securities Act").
On April 10, 1997, the Company completed the transaction with the sale
of $110 million aggregate principal amount of its 12 -1/2% Senior Subordinated
Notes due 2004 (the "Notes") and Warrants to Purchase Common Stock ("Warrants"
and together with the Notes, the "Securities") in a private placement
transaction under Rule 144A of the Securities Act. The Company used a portion of
the net proceeds from the sale of the Securities to repay all amounts
outstanding under the Company's bank term and revolving credit facility, and at
the same time entered into an amended and restated $50 million revolving credit
facility.
The Securities were not registered under the Securities Act and may not
be offered or sold in the United States absent registration thereunder or an
applicable exemption from the registration requirements thereof.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibits are filed as a part of this report:
Exhibit No.
4.1 Indenture, dated April 10, 1997, among Urohealth Systems, Inc., the
Guarantors named therein and The Bank of New York, as trustee, relating to the
12 -1/2% Senior Subordinated Notes Due 2004 of Urohealth Systems, Inc.
4.2 Purchase Agreement, dated April 3, 1997, between Urohealth Systems,
Inc. and Bear Stearns & Co. Inc., as initial purchaser.
4.3 Registration Rights Agreement, dated April 10, 1997, among
Urohealth Systems, Inc., the Guarantors named therein and Bear Stearns & Co.
Inc., as initial purchaser.
4.4 Warrant Agreement, dated April 10, 1997, between Urohealth Systems,
Inc. and The Bank of New York, as warrant agent.
4.5 Warrant Registration Rights Agreement, dated April 10, 1997,
between Urohealth Systems, Inc. and Bear Stearns & Co. Inc., as initial
purchaser.
10.1 Amended and Restated Credit Agreement, dated April 10, 1997,
between Urohealth Systems, Inc., the guarantors thereunder and Banque Indosuez,
as agent for the banks named therein.
99.1 Press Release , dated March 17, 1997
SIGNATURES
<PAGE> 3
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.
UROHEALTH SYSTEMS, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------
James L. Johnson
Executive Vice President and
Chief Financial Officer
Date: April 28, 1997
<PAGE> 1
EXHIBIT 4.1
===============================================================================
UROHEALTH SYSTEMS, INC.,
THE COMPANY,
AND
THE GUARANTORS NAMED HEREIN
AND
THE BANK OF NEW YORK,
TRUSTEE
________________
INDENTURE
Dated as of April 10, 1997
________________
$110,000,000
12.5% Senior Subordinated Notes due 2004
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
</TABLE>
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<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- ---------
<S> <C>
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
</TABLE>
__________________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.2 Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.3 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.2 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.3 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.4 Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.5 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.8 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.13 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.2 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.3 Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.4 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.5 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.6 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.7 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Section 4.3 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.4 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.5 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.6 Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.8 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.9 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Section 4.10 Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock . . . . . . . . . . . .
Section 4.11 Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . .
Section 4.12 Limitation on Liens Securing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.13 Limitation on Sale of Assets and Subsidiary Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.14 Limitation on Layering Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.15 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.16 Limitation on Status as Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.17 Future Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.18 Limitation on Payment for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.19 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . . . .
Section 6.4 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.5 Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.6 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.7 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.8 Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . . . . . . . . . .
Section 6.9 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.10 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.11 Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.12 Waiver of Past Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.14 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.9 Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.11 Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.2 Legal Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.3 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.4 Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.5 Deposited Cash and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions . . . . .
Section 8.6 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.7 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.2 Amendments, Supplemental Indentures and Waivers with Consent of Holders. . . . . . . . . . . . . . . . . . .
Section 9.3 Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.4 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.5 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.6 Trustee to Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option of the Holder upon Change of Control . . . . . . . . . . . . . . . . . .
ARTICLE XI
GUARANTEES
Section 11.1 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.2 Execution and Delivery of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.3 Certain Bankruptcy Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.4 Limitation on Merger, Consolidation, Etc. of Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.5 Future Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XII
SUBORDINATION
Section 12.1 Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.2 No Payment on Securities in Certain Circumstances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.3 Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.4 Securityholders to Be Subrogated to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . . . . .
Section 12.5 Obligations of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice. . . . . . . . . . . . . . . . . . .
Section 12.7 Application by Trustee of Assets Deposited with It . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.8 Subordination Rights Not Impaired by Acts or Omissions of the Company, Guarantors or Holders of
Senior Indebtedness, Etc.; Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.9 Securityholders Authorize Trustee to Effectuate Subordination of Securities. . . . . . . . . . . . . . . . .
Section 12.10 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12.11 Article XII Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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Section 12.12 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE XIII
MISCELLANEOUS
Section 13.1 TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.3 Communications by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.5 Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.6 Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.9 No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.12 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 13.14 Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
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<PAGE> 10
INDENTURE, dated as of April 10, 1997, among UROHEALTH
Systems, Inc., a Delaware corporation (the "Company"), the Guarantors referred
to below and The Bank of New York, a New York banking corporation, as Trustee.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Company's 12.5% Senior Subordinated Notes due 2004:
ARTICLE ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1 Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 6.2.
"Acquired Indebtedness" means Indebtedness or Disqualified
Capital Stock of any Person existing at the time such Person (i) becomes a
Restricted Subsidiary of the Company including by designation, or (ii) is
merged or consolidated into or with the Company or one of its Restricted
Subsidiaries.
"Acquisition" means the purchase or other acquisition of any
Person or all or substantially all the assets of any Person by any other
Person, whether by purchase, merger, consolidation, or other transfer, and
whether or not for consideration.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company. For purposes of this definition, the term "control" means the
power to direct the management and policies of a Person, directly or through
one or more intermediaries, whether through the ownership of voting securities,
by contract, or otherwise. Notwithstanding the foregoing, an ownership
interest in the Company and its Subsidiaries by a Beneficial Owner of 10% or
more of the total voting power normally entitled to vote in the election of
directors, managers or trustees, as applicable, shall for such purposes be
deemed to constitute control.
<PAGE> 11
"Affiliate Transaction" shall have the meaning specified in
Section 4.9.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" shall have the meaning specified in Section 4.13.
"Asset Sale Offer" shall have the meaning specified in Section
4.13.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 4.13.
"Asset Sale Offer Price" shall have the meaning specified in
Section 4.13.
"Average Life" means, as of the date of determination, with
respect to any security or instrument, the quotient obtained by dividing (i)
the sum of the products (a) the number of years from the date of determination
to the date or dates of each successive scheduled principal (or redemption)
payment of such security or instrument and (b) the amount of each such
respective principal (or redemption) payment by (ii) the sum of all such
principal (or redemption) payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for purposes of the
definition of Change of Control has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "Person" shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any
2
<PAGE> 12
particular matter, to exercise the power of the Board of Directors of such
Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than convertible or
exchangeable Indebtedness that is not itself otherwise capital stock),
warrants, options, participations or other equivalents of or interests (however
designated) in stock issued by that corporation.
"Capitalized Lease Obligation" means rental obligations under
a lease that are required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations, as determined
in accordance with GAAP.
"Cash" or "cash" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public or private debts.
"Cash Equivalent" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits, bankers
acceptances, money market deposit accounts and certificates of deposit and
commercial paper issued by the parent corporation of any domestic commercial
bank of recognized standing having capital and surplus in excess of $500
million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc., and in the case of each
of (i), (ii) and (iii) maturing within one year after the
3
<PAGE> 13
date of acquisition and (iv) any fund investing exclusively in investments of
the types described in clauses (i) or (ii) above.
"Change of Control" means (i) any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets, on a consolidated basis, of the Company, in one transaction or a series
of related transactions (in each case other than to a Restricted Subsidiary who
is a Guarantor); (ii) any merger or consolidation of the Company with or into
any Person (other than a Guarantor) if, immediately after giving effect to such
transaction, any "Person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) (other
than a Guarantor) is or becomes the "beneficial owner," directly or indirectly,
of more than 50% of the total voting power in the aggregate normally entitled
to vote in the election of directors, managers, or trustees, as applicable, of
the surviving entity or entities; (iii) any "Person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable) (other than a Guarantor) is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total voting power in
the aggregate of all classes of Capital Stock of the Company then outstanding
normally entitled to vote in elections of directors; (iv) during any period of
12 consecutive months after the Issue Date, individuals who at the beginning of
any such 12-month period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (v) the
adoption of a plan relating to the liquidation or dissolution of the Company.
"Change of Control Offer" shall have the meaning specified in
Section 10.1.
"Change of Control Offer Period" shall have the meaning
specified in Section 10.1.
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<PAGE> 14
"Change of Control Purchase Date" shall have the meaning
specified in Section 10.1.
"Change of Control Purchase Price" shall have the meaning
specified in Section 10.1.
"Common Stock" means Common Stock of the Company, par value
$.001 per share.
"Consolidated Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis,
of (i) the aggregate amount of Consolidated EBITDA of such Person for the
Reference Period to (ii) the aggregate Consolidated Fixed Charges of such
Person during the Reference Period; provided that for purposes of such
calculation, (a) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date
shall be assumed to have occurred on the first day of the Reference Period, (b)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (c) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall
be assumed to have occurred on the first day of such Reference Period, and (d)
the Consolidated Fixed Charges of such Person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) average rate shall be computed on a pro forma basis as
if the average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless
such Person or any of its Subsidiaries is a party to an Interest Swap or
Hedging Obligation (which shall remain in effect for the 12-month period
immediately following the Transaction Date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the Consolidated Net Income of such Person for such period adjusted
to add thereto (to the extent
5
<PAGE> 15
deducted from net revenues in determining Consolidated Net Income), without
duplication, the sum of (i) consolidated income tax expense, (ii) consolidated
depreciation and amortization expense, provided that consolidated depreciation
and amortization of a Consolidated Subsidiary that is a less than wholly owned
Consolidated Subsidiary shall only be added to the extent of the equity
interest of the Company in such Consolidated Subsidiary, (iii) Consolidated
Fixed Charges, and (iv) non-recurring restructuring charges, write-off of
purchased research and development, and direct acquisition costs, less the
amount of all cash payments made by such Person or any of its Consolidated
Subsidiaries during such period to the extent such payments relate to non-cash
charges that were added back in determining Consolidated EBITDA for such period
or any prior period.
"Consolidated Fixed Charges" of any Person means, for any
period, the aggregate amount (without duplication and determined in each case
in accordance with GAAP) of (i) interest expensed or capitalized, paid,
accrued, or scheduled to be paid or accrued (including, in accordance with the
following sentence, interest attributable to Capitalized Lease Obligations) of
such Person and its Consolidated Subsidiaries during such period, including (a)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (b) the interest portion of all deferred payment obligations and
(c) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period and (ii) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Subsidiary) on any series of preferred stock of
such Person. For purposes of this definition, (1) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined in good faith by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (2) interest
expense attributable to any Indebtedness represented by the guaranty by such
Person or a Subsidiary of such Person of an obligation of another Person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"Consolidated Net Income" means, with respect to any Person
for any period, the net income (or loss) of such Person
6
<PAGE> 16
and its Consolidated Subsidiaries (determined on a consolidated basis in
accordance with GAAP) for such period, adjusted to exclude (only to the extent
included in computing such net income (or loss) and without duplication): (i)
all gains (but not losses) which are either extraordinary (as determined in
accordance with GAAP) or are either one-time nonrecurring (including any gain
from the sale or other disposition of assets outside the ordinary course of
business or from the issuance or sale of any capital stock), (ii) the net
income, if positive, of any Person, other than a Restricted Subsidiary, in
which such Person or any of its Consolidated Subsidiaries has an interest,
except to the extent of the amount of any dividends or distributions actually
paid in cash to such Person or a wholly owned Consolidated Subsidiary of such
Person during such period, but in any case not in excess of such Person's pro
rata share of such Person's net income for such period, (iii) the net income or
loss of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition, and (iv) the net income, if
positive, of any of such Person's Consolidated Subsidiaries to the extent that
the declaration or payment of dividends or similar distributions is not at the
time permitted by operation of the terms of its charter or bylaws or any other
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary and (v) all gains (but
not losses) attributable to operations and businesses permanently discontinued
or disposed of.
"Consolidated Net Worth" of any Person at any date means the
aggregate consolidated stockholders' equity of such Person (plus amounts of
equity attributable to preferred stock) and its Consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such Person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (i) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock or treasury stock of such Person and
its Consolidated Subsidiaries, (ii) all upward revaluations and other write-ups
in the book value of any asset of such Person or a Consolidated Subsidiary of
such Person subsequent to the Issue Date, and (iii) all investments in
Subsidiaries that are not Consolidated Subsidiaries and in Persons that are not
Subsidiaries.
7
<PAGE> 17
"Consolidated Subsidiary" means, for any Person, each
Restricted Subsidiary of such Person (whether now existing or hereafter created
or acquired) the financial statements of which are consolidated for financial
statement reporting purposes with the financial statements of such Person in
accordance with GAAP.
"Consolidation," or "consolidation" means, with respect to the
Company, the consolidation of the accounts of the Subsidiaries with those of
the Company, all in accordance with GAAP; provided that "consolidation" will
not include consolidation of the accounts of any Unrestricted Subsidiary with
the accounts of the Company. The term "Consolidated" or "consolidated" has a
correlative meaning to the foregoing.
"Credit Agreement" means (i) the Amended and Restated
Revolving Credit Agreement to be dated as of April 10, 1997 by and among the
Company, certain of its subsidiaries, certain financial institutions and Banque
Indosuez, New York Branch, as agent, providing for an aggregate $50 million
revolving credit facility, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, as such
credit agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time to time whether
or not with the same agent, trustee, representative lenders or holders, and,
subject to the proviso to the next succeeding sentence, irrespective of any
changes in the terms and conditions thereof or (ii) any substantially
equivalent senior credit facility in lieu of the credit facility described in
clause (i). Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include agreements in respect of Interest Swap and Hedging
Obligations with lenders party to the Credit Agreement and shall also include
any amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Credit Agreement and all refundings,
refinancings and replacements of any Credit Agreement, including any agreement
(i) extending or shortening the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and issuers include one or more of
the Company and its Subsidiaries and their respective successors and assigns,
(iii) increasing the amount of Indebtedness incurred thereunder or available to
be borrowed thereunder, provided that on the date such Indebtedness
8
<PAGE> 18
is incurred it would not exceed the amount permitted to be incurred by clause
(ii) of the definition of Permitted Indebtedness or (iv) otherwise altering the
terms and conditions thereof in a manner not prohibited by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in
Section 4.10.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form
of the Note attached hereto as Exhibit A that do not include the information
called for by footnotes 1 and 3 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.3
as the Depository with respect to the Securities, 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.
"Disqualified Capital Stock" means with respect to any Person
other than any Restricted Subsidiary of such Person, Equity Interests of such
Person that, by their terms or by the terms of any security into which they are
convertible or exercisable (in either case solely at the option of the holder
thereof), are, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Restricted Subsidiaries, in whole
or in part, on or prior to the Stated Maturity of the Securities and, with
respect to any Restricted Subsidiary of such Person (including with respect to
any Restricted Subsidiary of the Company), any Equity Interests other than any
common equity with no preference, privileges, or redemption or repayment
provisions.
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<PAGE> 19
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership or membership interests in, such Person.
"Event of Default" shall have the meaning specified in Section
6.1.
"Event of Loss" means, with respect to any property or asset,
any (i) loss, destruction or damage of such property or asset or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Exchange Offer" means the offer by the Company and the
Guarantors to exchange the Series B Notes and Guarantees thereof for the
Original Notes and Guarantees thereof made pursuant to the Registration Rights
Agreement.
"Exempt Affiliate Transactions" means (a) transactions between
or among the Company and/or the Guarantors, (b) reimbursement of or advances to
officers of the Company or any Subsidiary of the Company in the ordinary course
of business to provide for the payment of reasonable expenses incurred by such
persons in the performance of their responsibilities to the Company or such
Subsidiary or in connection with any relocation, (c) fees, compensation, and
employee benefits, including bonuses, retirement plans and stock options, paid
to and indemnity provided on behalf of directors, officers or employees of the
Company or any Subsidiary of the Company in the ordinary course of business,
provided that any such transaction in this clause (c) is approved by a majority
of the independent directors on the board of directors, (d) any employment or
consulting agreement that is in effect on the date of the Indenture and any
such agreement entered into by the Company or a Subsidiary of the Company after
the date of the Indenture in the ordinary course of business of the Company or
such Subsidiary, provided that any
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<PAGE> 20
such agreement is approved by a majority of the independent directors on the
board of directors, (e) any Restricted Payment constituting a dividend or
distribution pro rata to all holders of the Company's Common Stock permitted by
the Indenture, and (f) repayment of Indebtedness owing to any Affiliate, if
such Indebtedness is permitted by the Indenture and such Indebtedness was
issued to an Affiliate by the Company or a Guarantor in compliance with Section
4.9 and Section 4.10.
"Existing Assets" means assets of the Company and its
Restricted Subsidiaries existing at the Issue Date (other than cash, Cash
Equivalents or inventory held for resale in the ordinary course of business)
and including proceeds of any sale of such assets and assets acquired in whole
or in part with proceeds from the sale from any such assets.
"Fair Market Value" or "fair market value" means, with respect
to any assets or properties, the amount at which such assets or properties
would be transferred between a willing buyer and a willing seller, within a
commercially reasonable time, each having reasonable knowledge of the relevant
facts, neither being under a compulsion to sell or buy, as such amount is
determined by (i) the Board of Directors of the Company acting reasonably and
in good faith or (ii) an appraisal or valuation firm of national or regional
standing selected by the Company, with experience in the appraisal or valuation
of properties or assets of the type for which value is being determined.
"GAAP" means United States 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 approved by a significant segment
of the accounting profession in the United States as in effect on the Issue
Date.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of Security attached hereto as Exhibit A.
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<PAGE> 21
"Government Securities" means direct obligations of, or
obligations fully guaranteed by, or participations in pools consisting solely
of obligations of or obligations guaranteed by, the United States of America
for the payment of which obligations or guarantee the full faith and credit of
the United States of America is pledged.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantor" means a Restricted Subsidiary that guarantees the
Notes in accordance with the terms of the Indenture.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning specified in Section 4.10.
"Incurrence Date" shall have the meaning specified in Section
4.10.
"Indebtedness" of any Person means, without duplication, if
and to the extent any of the following (except as set forth below) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, (a) all liabilities and obligations, contingent or otherwise, of such
Person, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), (ii) evidenced by bonds, notes, debentures or similar instruments,
(iii) representing the balance deferred and unpaid of the purchase price of any
property, except those that would constitute ordinarily an accrued expense or a
trade payable to trade creditors, (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks, (v) relating to any
Capitalized Lease Obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit
(regardless of whether they appear as a liability upon a balance sheet of such
Person); (b) all net obligations of such Person under Interest Swap and Hedging
Obligations (regardless of whether they appear as a liability upon a balance
sheet of such Person); (c) all liabilities and obligations of others of the
kind described in the
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preceding clause (a) or (b) that such Person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such Person and all obligations to purchase, redeem or acquire any Equity
Interests and (d) any and all deferrals, renewals, extensions, refinancing and
refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among
the same parties, and (e) all Disqualified Capital Stock of such Person
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends). For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Disqualified Capital Stock, such
Fair Market Value to be determined in good faith by the board of directors of
the issuer (or managing general partner of the issuer) of such Disqualified
Capital Stock.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Purchaser" means Bear, Stearns & Co. Inc.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of
any Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
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<PAGE> 23
applying either a fixed or floating rate of interest on a stated notional
amount in exchange for periodic payments made by such Person calculated by
applying a fixed or floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means (without
duplication) (i) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (ii) the
making by such Person of any deposit with, or advance, loan or other extension
of credit to, such other Person (including the purchase of property from
another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such other Person) or any commitment to
make any such advance, loan or extension (but excluding accounts receivable or
deposits arising in the ordinary course of business); (iii) the entering into
by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person, other than guarantees of Indebtedness of the Company or any Guarantor
to the extent permitted by Section 4.10; (iv) the making of any capital
contribution by such Person to such other Person; and (v) the designation by
the Board of Directors of the Company of any Person to be an Unrestricted
Subsidiary. The Company shall be deemed to make an Investment in an amount
equal to the Fair Market Value of the net assets of any subsidiary (or, if
neither the Company nor any of its Subsidiaries has theretofore made an
Investment in such subsidiary, in an amount equal to the Investments being
made), at the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted Subsidiary from the
Company or a Subsidiary shall be deemed an Investment valued at its Fair Market
Value at the time of such transfer.
"Issue Date" means the date of first issuance of the Notes
under the Indenture.
"Issuer" means each party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and thereafter means
such successor.
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"Junior Security" means any Qualified Capital Stock and any
Indebtedness of the Company or a Guarantor, as applicable, that is subordinated
in right of payment to Senior Indebtedness at least to the same extent as the
Notes or the Guarantee, as applicable, and has no scheduled installment of
principal due, by redemption, sinking fund payment or otherwise, on or prior to
the Stated Maturity of the Notes.
"Legal Holiday" shall have the meaning provided in Section
13.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement (as such term is therein
defined).
"Maturity Date," when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at Stated Maturity, a Change of Control
Purchase Date, a purchase date with respect to an Asset Sale Offer or by
declaration of acceleration, call for redemption or otherwise.
"Microsurge" means Microsurge, Inc., a Delaware corporation.
"Moody's" means Moody's Investor Services, Inc.
"Net Cash Proceeds" means the aggregate amount of Cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on
or after the Issue Date, the amount of cash originally received by the Company
upon the issuance of such securities (including options, warrants, rights and
convertible or exchange-
15
<PAGE> 25
able debt) less, in each case, the sum of all payments, fees, commissions and
(in the case of Asset Sales, reasonable and customary) expenses (including,
without limitation, the fees and expenses of legal counsel and investment
banking fees and expenses) incurred in connection with such Asset Sale or sale
of Qualified Capital Stock, and, in the case of an Asset Sale only, less the
amount (estimated reasonably and in good faith by the Company) of income,
franchise, sales and other applicable taxes required to be paid by the Company
or any of its respective Subsidiaries in connection with such Asset Sale.
"Notes" See "Securities."
"Offering Memorandum" means the Offering Memorandum of the
Company dated April 3, 1997 with respect to the Securities.
"Officer" means, with respect to the Company, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Controller, or the Secretary or
Assistant Secretary.
"Officers' Certificate" means, with respect to the Company or
any Guarantor, a certificate signed by two Officers of the Company or such
Guarantor and otherwise complying with the requirements of Sections 13.4 and
13.5.
"Opinion of Counsel" means a written opinion from legal
counsel to the Company complying with the requirements of Sections 13.4 and
13.5. Unless otherwise required by this Indenture, the counsel may be in-house
counsel to the Company.
"Original Notes" means the 12.5% Senior Subordinated Notes due
2004, as amended and supplemented from time to time in accordance with the
terms hereof, that are issued pursuant to this Indenture.
"Paying Agent" shall have the meaning specified in Section
2.3.
"Permitted Indebtedness" means any of the following: (i)
Indebtedness evidenced by the Notes and the Guarantees and represented by the
Indenture up to the amounts specified therein
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<PAGE> 26
as of the date hereof; (ii) Indebtedness incurred pursuant to the Credit
Agreement (with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company or the relevant Guarantor
thereunder) up to an aggregate amount outstanding (including any Indebtedness
issued to refinance, refund or replace such Indebtedness) at any time of $50
million, minus the amount of any such Indebtedness retired with Net Cash
Proceeds from any Asset Sale or assumed by a transferee in an Asset Sale; (iii)
Indebtedness by the Company to any Guarantor, and any Guarantor may incur
Indebtedness to any other Guarantor or to the Company; provided that, in the
case of Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Company's obligations pursuant to the
Notes; (iv) Refinancing Indebtedness with respect to any Indebtedness or
Disqualified Capital Stock, as applicable, described in clause (ii) of this
definition, incurred under the Debt Incurrence Ratio test set forth in Section
4.10, or which was outstanding on the Issue Date; (v) Indebtedness represented
by Capitalized Lease Obligations, mortgage financings or Purchase Money
Indebtedness, in each case incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Company or any Restricted
Subsidiary or any permitted Refinancing Indebtedness thereof (provided that the
requirements of clause (2)(A) of the definition of Refinancing Indebtedness
need not be met for the purposes of this clause (v)), in an aggregate principal
amount (including any Indebtedness issued to refinance, replace, or refund such
Indebtedness) not to exceed $10 million at any time outstanding; and (vi)
Indebtedness incurred in connection with the acquisition of assets or a new
Restricted Subsidiary; provided, that such Indebtedness was incurred by the
prior owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was not
incurred in connection with, or in contemplation of, such acquisition by the
Company or one of its Restricted Subsidiaries and all such Indebtedness
(including any Indebtedness issued to refinance, replace, or refund such
Indebtedness) does not exceed an aggregate principal amount of $10 million at
any time outstanding; (vii) Indebtedness of the Company, any Guarantor or any
Restricted Subsidiary outstanding on the date of this Indenture; (viii)
Indebtedness of Microsurge existing on the Issue Date and disclosed in the
financial statements of Microsurge included in
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<PAGE> 27
this Offering Memorandum incurred in connection with the acquisition of
Microsurge; (ix) Indebtedness which represents Interest Swap and Hedging
Obligations that are incurred for the purpose of fixing or hedging interest
rate risk with respect to any floating rate indebtedness that is permitted by
the terms of this Indenture to be outstanding and any currency exchange
agreement entered into to protect against fluctuations in currency values; and
(x) in addition to Indebtedness described in (i) through (ix) above,
Indebtedness in an aggregate amount outstanding at any time (including any
Indebtedness issued to refinance, replace, or refund such Indebtedness) of up
to $7.5 million.
"Permitted Investment" means (i) Investments in the Company or
in a Restricted Subsidiary of the Company (including, without limitation,
guarantees of the Indebtedness and/or other obligations of the Company and/or
any Restricted Subsidiary of the Company, so long as such Indebtedness and/or
other obligations are permitted under the Indenture), (ii) Investments in Cash
and Cash Equivalents, (iii) Investments by the Company or any Restricted
Subsidiary of the Company in, or the purchase of the securities of, a Person
if, as a result of such Investment, (a) such Person becomes a Restricted
Subsidiary of the Company or (b) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company, (iv) accounts receivable acquired in the ordinary course of business
and notes receivable acquired in consideration of the transfer to a third party
of capital equipment in the ordinary course of business, (v) any non-cash
consideration received (and any Investment made as a result of the receipt
thereof) in connection with an Asset Sale that complies with Section 4.13, (vi)
any Investment in an Unrestricted Subsidiary or in an entity in which the
Company or any Restricted Subsidiary has an Equity Interest together with one
or more other Persons, and which is formed after the date of the Indenture for
the purpose of engaging in a Related Business, provided that, at the date of
any such Investment is made and after giving effect thereto, such Investment,
together with all other such Investments by the Company and its Restricted
Subsidiaries since the Issue Date, does not exceed $10 million, (vii)
Investments in connection with Interest Swap and Hedging Obligations permitted
to be incurred under the definition "Permitted Indebtedness," and
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<PAGE> 28
(viii) loans to employees not to exceed $1 million at any time outstanding.
"Permitted Lien" means (i) Liens existing on the Issue Date
(including, without limitation, Liens under the Credit Agreement); (ii) Liens
securing the Notes; (iii) Liens securing Indebtedness of a Person existing at
the time such Person becomes a Subsidiary or is merged with or into the Company
or a Restricted Subsidiary or Liens securing Indebtedness incurred in
connection with an Acquisition, provided that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (iv)
Liens securing Refinancing Indebtedness incurred to refinance any Indebtedness
that was previously secured in a manner no more adverse to the Holders of the
Notes than the terms of the Liens securing such refinanced Indebtedness,
provided that the Indebtedness secured is not increased and the Lien is not
extended to any additional assets or property, (v) Liens securing Indebtedness
permitted by clause (v) of the definition of "Permitted Indebtedness" covering
only the assets acquired with such Indebtedness, (vi) Liens securing Interest
Swap and Hedging Obligations of the Company and its Restricted Subsidiaries
that were permitted pursuant to the Indenture, (vii) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business, (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, (ix)
Liens imposed by law, such as mechanics', carriers', warehousemen's,
materialmen's, and vendors' Liens, (x) judgment Liens to the extent that such
judgments do not cause of constitute a Default or an Event of Default, and (xi)
Liens in favor of the lessee on instruments which are the subject of leases
entered into in the ordinary course of business; provided that any such Lien
shall not extend to or cover any assets or property of the Company and its
Restricted Subsidiaries that is not the subject of any such lease.
"Person" means any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
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"principal" of any Indebtedness (including the Securities)
means the principal of such Indebtedness plus any applicable premium, if any,
on such Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, Personal or mixed and
whether tangible, intangible, contingent, indirect or direct.
"Public Equity Offering" means an underwritten offering of
Common Stock of the Company for cash pursuant to an effective registration
statement under the Securities Act as a consequence of which such Common Stock
of the Company is listed on a national securities exchange or quoted on the
national market system of the NASDAQ Stock Market.
"Purchase Money Indebtedness" means Indebtedness of the
Company or Guarantors to the extent that (i) such Indebtedness is incurred in
connection with the acquisition of specified assets and property (the "Subject
Assets") for the business of the Company or the Guarantors, including
Indebtedness which existed at the time of the acquisition of such Subject Asset
and was assumed in connection therewith; and (ii) Liens securing such
Indebtedness are limited to the Subject Asset.
"Qualified Capital Stock" means any Capital Stock of the
Company that is not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Capital Stock or Indebtedness of
the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Capital Stock or any exchange of Qualified Capital Stock for any Capital Stock
or Indebtedness of the Company issued on or after the Issue Date.
"Rating Agencies" means S&P and Moody's or any successor to
the respective rating agency businesses thereof.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
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"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to Article III
of this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption set forth in
Paragraph 5 in the form of Security, which shall include in each case accrued
and unpaid interest with respect to such Security to the applicable Redemption
Date.
"Reference Period" with regard to any Person means (i) for any
Incurrence Date from and including April 1, 1997 through and including June 30,
1997, the fiscal quarter ended March 31, 1997, (ii) for any Incurrence Date
from and including July 1, 1997 through and including September 30, 1997, the
two fiscal quarters ended June 30, 1997, (iii) for any Incurrence Date from and
including October 1, 1997 through and including December 31, 1997, the three
fiscal quarters ended September 30, 1997, and (iv) for any Incurrence Date
after December 31, 1997, the four full fiscal quarters for which financial
statements have been completed by the Company ended immediately preceding any
date upon which any determination is to be made pursuant to the terms of the
Notes or the Indenture (or, in each case such lesser period during which such
Person has been in existence).
"Refinancing Indebtedness" means Indebtedness or Disqualified
Capital Stock (i) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in
part, or (ii) constituting an amendment, modification or supplement to, or a
deferral or renewal of ((i) and (ii) above are, collectively, a "Refinancing"),
any Indebtedness or Disqualified Capital Stock in a principal amount or, in the
case of Disqualified Capital Stock, liquidation preference, not to exceed
(after deduction of reasonable and customary fees and expenses incurred in
connection with the Refinancing) the lesser of (a) the principal amount or, in
the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (b) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing;
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provided, that (1) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (2) such Refinancing
Indebtedness shall (A) not have an Average Life shorter than the Indebtedness
or Disqualified Capital Stock to be so refinanced at the time of such
Refinancing and (B) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the Notes than was the Indebtedness or
Disqualified Capital Stock to be refinanced and (3) such Refinancing
Indebtedness shall have a final stated maturity or redemption date, as
applicable, no earlier than the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company, the Guarantors and the Initial Purchaser,
dated as of the Issue Date.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of
Directors of the Company are materially complementary, incidental, ancillary or
related businesses.
"Representative" means Banque Indosuez or any successor or
successors thereto under the Credit Agreement.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents and
other Permitted Investments.
"Restricted Payment" means, with respect to any Person, (i)
the declaration or payment of any dividend or other distribution in respect of
Equity Interests of such Person or any parent or Restricted Subsidiary of such
Person, (ii) any payment on account of the purchase, redemption or other
acquisition or retirement for value of Equity Interests of such Person or any
Subsidiary or parent of such Person, (iii) any purchase, redemption, or other
acquisition or retirement for value of, any
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<PAGE> 32
payment in respect of any defeasance of, any Subordinated Indebtedness,
directly or indirectly, by such Person or a parent or Restricted Subsidiary of
such Person prior to the scheduled maturity, any scheduled repayment of
principal, or scheduled sinking fund payment, as the case may be, of such
Indebtedness, other than with the proceeds from the substantially concurrent
sale of, or in exchange for, Refinancing Indebtedness and (iv) any Restricted
Investment by such Person; provided, that the term "Restricted Payment" does
not include (i) any dividend, distribution or other payment on or with respect
to Equity Interests to the extent payable solely in shares of Qualified Capital
Stock of such issuer, (ii) any dividend, distribution or other payment to the
Company, or to any of its wholly owned Restricted Subsidiaries, by the Company
or any of its Subsidiaries or (iii) the purchase, redemption or retirement by
the Company of shares of its Common Stock held by an employee or former
employee of the Company or any of its Restricted Subsidiaries issued pursuant
to any employee benefit plan, approved by the applicable board of directors, of
the Company or any of its Restricted Subsidiaries, up to an aggregate of $1
million during any 12-month period.
"Restricted Subsidiary" means, with respect to any Person, any
Subsidiary that is not an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
the McGraw-Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission.
"Securities" or "Notes" means, prior to the Exchange Offer,
the Original Notes, and after the Exchange Offer, the Original Notes (if any)
and the Series B Notes, in each case as amended or modified from time to time
in accordance with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity thereto.
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<PAGE> 33
"Security Agreement" shall have the meaning set forth in
Section 4.19.
"Securityholder" See "Holder."
"Senior Indebtedness" of the Company or any Guarantor means
Indebtedness (including any monetary obligation in respect of the Credit
Agreement, and interest, whether or not allowable, accruing on Indebtedness
incurred pursuant to the Credit Agreement after the filing of a petition
initiating any proceeding under any bankruptcy, insolvency or similar law) of
the Company or such Guarantor arising under the Credit Agreement or that, by
the terms of the instrument creating or evidencing such Indebtedness, is
expressly designated Senior Indebtedness and made senior in right of payment to
the Notes or the applicable Guarantee; provided that in no event shall Senior
Indebtedness include (i) Indebtedness to any Subsidiary of the Company or any
officer, director or employee of the Company or any Subsidiary of the Company,
(ii) Indebtedness incurred in violation of the terms of the Indenture, (iii)
Indebtedness to trade creditors, (iv) Disqualified Capital Stock, (v)
Capitalized Lease Obligations, and (vi) any liability for taxes owed or owing
by the Company or such Guarantor.
"Series B Notes" means the Series B 12.5% Senior Subordinated
Notes due 2004, in substantially the form set forth on the Form of Note set
forth as Exhibit A hereto, to be issued pursuant to this Indenture in
connection with the Exchange Offer.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X under the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any Note, means
April 1, 2004.
"Subordinated Indebtedness" means Indebtedness of the Company,
or a Guarantor that is subordinated in right of payment to the Notes or such
Guarantee, as applicable, in any respect or, has a stated maturity on (except
for the Notes) or after the Stated Maturity.
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"Subsidiary," with respect to any Person, means (i) a
corporation a majority of whose Equity Interest with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by such Person and one or more Subsidiaries
of such Person or by one or more Subsidiaries of such Person, (ii) any other
Person (other than a corporation) in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has
at least majority ownership interest, or (iii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner and in
which such Person, directly or indirectly, at the date of determination thereof
has at least a majority ownership interest. Unless the context requires
otherwise, Subsidiary means each direct and indirect Subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture, except as permitted in Section 9.3.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice
president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at that time shall be such officers, and
also means, with respect to a particular corporate trust matter, any other
officer of the corporate trust department (or any successor group) of the
Trustee to whom such trust matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Unrestricted Subsidiary" means any Subsidiary of the Company
that does not own any Capital Stock of, or own or hold any Lien on any property
of, the Company or any other Restricted
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Subsidiary of the Company and that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors of the
Company); provided that (i) such subsidiary shall not engage, to any
substantial extent, in any line or lines of business activity other than a
Related Business, (ii) neither immediately prior thereto nor after giving pro
forma effect to such designation there would occur or continue to exist a
Default or Event of Default and (iii) immediately after giving pro forma effect
thereto, the Company could incur at least $1.00 of Indebtedness pursuant to the
Debt Incurrence Ratio in the first paragraph of Section 4.10. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary, provided that (i) no Default or Event of Default has
occurred and is continuing or will occur as a consequence thereof and (ii)
immediately after giving effect to such designation, on a pro forma basis, the
Company could incur at least $1.00 of Indebtedness pursuant to the Debt
Incurrence Ratio in the first paragraph of Section 4.10. Each such designation
shall be evidenced by filing with the Trustee a certified copy of the
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"U.S. Government Obligations" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"wholly owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Company or one or more wholly owned
Subsidiaries of the Company, except for directors' qualifying shares.
Section 2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
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:
"Commission" means the SEC.
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"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the Company
and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to
it;
(ii) an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the
plural, and words in the plural include the singular;
(v) provisions apply to successive
events and transactions;
(vi) "herein," "hereof" and other words
of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other
subdivision; and
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(vii) references to Sections or
Articles means reference to such Section or Article in this Indenture,
unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
The Securities and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the form of
Exhibit A hereto which Exhibit is part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the form of the Securities and any notation,
legend or endorsement on them. Any such notations, legends or endorsements not
contained in the form of Security attached as Exhibit A hereto shall be
delivered in writing to the Trustee. Each Security shall be dated the date of
its authentication.
The terms and provisions contained in the form of Securities
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.
Section 2.2 Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless and
the Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
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A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security,
but such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Original Notes for original
issue in the aggregate principal amount of up to $110,000,000 and shall
authenticate Series B Notes for original issue in the aggregate principal amount
of up to $110,000,000, in each case upon a written order of the Company in the
form of an Officers' Certificate; provided that such Series B Notes shall be
issuable only upon the valid surrender for cancellation of Original Notes of a
like aggregate principal amount in accordance with the Registration Rights
Agreement. The Officers' Certificate shall specify the amount of Securities to
be authenticated and the date on which the Securities are to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed $110,000,000, except as provided in Section 2.7. Upon the written order
of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities 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, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
Section 3 Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The
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City of New York where Securities may be presented for payment ("Paying Agent")
and an office or agency where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles III, VIII, X and Section
4.13 neither the Company nor any Affiliate thereof shall act as Paying Agent.
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional Paying Agents. The term "Paying Agent" includes any additional Paying
Agent. The Company hereby initially appoint the Trustee as Registrar and Paying
Agent, and the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fail to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoint The Depository Trust Company
("DTC") to act as Depository with respect to the Global Securities.
The Company initially appoint the Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 2.4 Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest (and Liquidated Damages, if any) on, the
Securities (whether such assets have been distributed to it by the Company or
any other obligor on the Securities), and shall notify the Trustee in writing of
any Default by the Company (or any other obligor on the Securities) in making
any such payment. If either the Company or any Subsidiary thereof acts as Paying
Agent, it shall segregate such assets and hold them as a separate trust fund for
the benefit of the Holders or the Trustee. The Company
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at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent (if other than the Company) shall have no further
liability for such assets.
Section 5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before the third Business Day preceding 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 reasonably may
require of the names and addresses of Holders.
Section 6 Transfer and Exchange.
(a) When Definitive Securities are presented to
the Registrar or a co-Registrar with a request
(x) to register the transfer of such Definitive
Securities or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of
other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accom-
panied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder
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thereof or his attorney duly authorized in
writing; and
(ii) in the case of Transfer Restricted
Securities that are Definitive Securities, shall be accompanied by the
following additional information and documents, as applicable:
(A) If such Transfer
Restricted Securities are being delivered to the Registrar by
a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the
Security); or
(B) if such Transfer
Restricted Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act, a certification to that effect (in the form
set forth on the reverse of the Security); or
(C) if such Transfer
Restricted Security is being transferred (i) pursuant to an
exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act, (ii) pursuant to an
effective registration statement under the Securities Act, or
(iii) in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (in the form set forth on the reverse of the Security)
and in the case of (iii) above a transferee letter of
representation in substantially the form set forth in the
Offering Memorandum and in the case of (i), and (iii) above,
an Opinion of Counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance with the
Securities Act.
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(b) Restrictions on Transfer of a Definitive
Security for a Beneficial Interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Registrar
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Registrar, together with:
(i) if such Definitive Security is a
Transfer Restricted Security, a certification, substantially in the
form set forth on the reverse of the Security, that such Definitive
Security is being transferred to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act; and
(ii) whether or not such Definitive
Security is a Transfer Restricted Security, written instructions
directing the Registrar to make, or to direct the Securities Custodian
to make, an endorsement on the Global Security to reflect an increase
in the aggregate principal amount of the Securities represented by the
Global Security,
then the Registrar shall cancel such Definitive Security and cause, or direct
the Securities Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
The transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository, in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depository therefor.
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(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive Security.
(i) Any Person having a beneficial
interest in a Global Security may upon request exchange such beneficial
interest for a Definitive Security. 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 Security and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information
and documents (all of which may be submitted by facsimile):
(A) if such beneficial
interest is being transferred to the Person designated by the
Depository as being the beneficial owner, a certification from
such Person to that effect (in substantially the form set
forth on the reverse of the Security); or
(B) if such beneficial
interest is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act, a
certification to that effect from the transferor (in the form
set forth on the reverse of the Security); or
(C) if such beneficial
interest is being transferred (i) pursuant to an exemption
from registration in accordance with Rule 144 or Regulation S
under the Securities Act, (ii) pursuant to an effective
registration statement under the Securities Act, or (iii) in
reliance on another exemption from the registration
requirements of
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the Securities Act, a certification to that effect from the
transferee or transferor (in the form set forth on the reverse
of the Security) and in the case of (iii) above a transferee
letter of representation in substantially the form set forth
in the Offering Memorandum and in the case of (i), and (iii)
above, an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act,
then the Registrar or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and the Trustee will authenticate and deliver to the
transferee a Definitive Security in the appropriate principal amount.
(ii) Definitive Securities issued in
exchange for a beneficial interest in a Global Security pursuant to
this Section 2.6(d) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee. The Registrar shall deliver such Definitive Securities to
the Persons in whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of
Global Securities. Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in subsection (f) of this Section 6), a Global
Security 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.
(f) Authentication of Definitive Securities in
Absence of Depository. If at any time:
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(i) the Depository for the Securities
notifies the Company that the Depository is unwilling or unable to
continue as Depository for the Global Securities and a successor
Depository for the Global Securities is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, in its sole discre-
tion, notifies the Trustee in writing that it elects to cause the
issuance of Definitive Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and make available for delivery Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Legends. Each Security certificate evidenc-
ing the Global Securities and the Definitive Securities (and all Securities
issued in exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
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A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, or (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED IN THE CASE OF (b), (c) AND (d) UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
(h) Cancellation and/or Adjustment of Global
Security. At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased or
cancelled, such Global Security shall be returned to or retained and cancelled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for Definitive Securities, redeemed,
repurchased or cancelled, the principal amount of Securities represented by such
Global Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) Obligations with respect to Transfers and
Exchanges of Definitive Securities.
(i) To permit registrations of trans-
fers and exchanges, the Company shall execute and the Trustee shall
authenticate Definitive Securities and Global Securities at the
Registrar's or co-Registrar's
request.
(ii) No service charge shall be made
for any registration of transfer or exchange, but the
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Company may require payment of a sum sufficient to cover any transfer
tax, assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes, assessments, or similar
governmental charge payable upon exchanges or transfers pursuant to
Section 2.2, 2.10, 3.6, 4.13, 9.5 or 10.1).
(iii) Except for a redemption of Secu-
rities pursuant to Section 3.2, the Registrar or co-Registrar shall not
be required to register the transfer of or exchange of (a) any
Definitive Security selected for redemption in whole or in part
pursuant to Article III, except the unredeemed portion of any
Definitive Security being redeemed in part, or (b) any Security for a
period beginning 15 days before the mailing of a notice of an offer to
repurchase pursuant to Article X or Section 13 hereof or a notice of
redemption of Securities pursuant to Article III hereof and ending at
the close of business on the day of such mailing.
(iv) The Trustee shall have no obliga-
tion or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in any
Security other than to require delivery of such certificates and other
documentation or evidence as expressly required
by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
(v) The Registrar or co-Registrar shall
not be required to register the transfer of or exchange of (a) any
Definitive Security selected for redemption in whole or in part
pursuant to Article III, except the unredeemed portion of any
Definitive Security being redeemed in part, or (b) any Security for a
period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase pursuant to Article X or Section 13 hereof or the
mailing of a notice of redemption of Securities pursuant to Article III
hereof
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and ending at the close of business on the day of such mailing.
Section 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced. The Company may
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Security.
Every replacement Security is an additional obligation of the
Company.
Section 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Security effected by the Trustee hereunder and those described in this Section
2.8 as not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as provided in
Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Company or an Affiliate of the Company)
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holds cash sufficient to pay all of the principal and interest (and Liquidated
Damages, if any) due on the Securities payable on that date and payment of the
Securities called for redemption is not otherwise prohibited, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
Section 9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company, any Guarantor and Affiliates
of the Company or of any Guarantor shall be disregarded, except that, for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, amendment, supplement, waiver or consent, only Securities that a
Trust Officer of the Trustee actually knows are so owned shall be disregarded.
Section 10 Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare, the Guarantors shall endorse and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
reasonably and in good faith consider appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare, the Guarantors shall
endorse and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as permanent
Securities authenticated and delivered hereunder.
Section 11 Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Company or an Affiliate of the Company), and no one else,
shall cancel and, at the written direction of the
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Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation in accordance with its customary procedures. Subject to
Section 7, the Company may not issue new Securities to replace Securities it has
paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section 11, except as expressly permitted in the form of Securities and
as permitted by this Indenture.
Section 12 Defaulted Interest.
If the Company defaults in a payment of interest (or
Liquidated Damages, if any) on the Securities, the Company shall pay the
defaulted interest (and Liquidated Damages, if any), plus (to the extent lawful)
interest on the defaulted interest (and Liquidated Damages, if any), to the
Persons who are Holders on a Record Date (or at the Company' option a subsequent
special record date) which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest, whether or not
such day is a Business Day, unless the Trustee fixes another record date. At
least 15 days before the subsequent special record date, the Company shall mail
to each Holder with a copy to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest (and
Liquidated Damages, if any), and interest payable on such defaulted interest
(and Liquidated Damages), if any, to be paid.
Section 13 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
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ARTICLE III
REDEMPTION
Section 1 Right of Redemption.
Redemption of Securities shall be made only in accordance with
this Article III. The Notes will be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after April 1, 2001, at the
Redemption Prices specified under the caption "Redemption," in the Form of Note
attached as Exhibit A hereto, plus accrued and unpaid interest and Liquidated
Damages, if any thereon to the Redemption Date. Except as provided in this
paragraph, the next following paragraph, Section 2 and paragraph 5 of the
Notes, the Notes may not otherwise be redeemed at the option of the Company.
Until April 1, 2000, upon a Public Equity Offering of common
stock resulting in Net Cash Proceeds to the Company of at least $40 million, up
to 35% of the original aggregate principal amount of the Notes may be redeemed
at the option of the Company within 120 days of such Public Equity Offering, on
not less than 30 days, but not more than 60 days, notice to each Holder of the
Notes to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering, at a redemption price equal to 112 1/2% of the principal amount
thereof (subject to the right of Holders of record on a Record Date to receive
interest due on an Interest Payment Date that is on or prior to such Redemption
Date), together with accrued and unpaid interest and Liquidated Damages, if any
to the date of redemption; provided, however, that immediately following each
such redemption, not less than 65% of the original aggregate principal amount of
the Notes remain outstanding.
Section 2 Notices to Trustee.
If the Company elect to redeem Securities pursuant to this
Article III, they shall notify the Trustee in writing of the date on which the
Notes are to be redeemed ("Redemption Date") and the principal amount of
Securities to be redeemed and whether they want the Trustee to give notice of
redemption to the Holders in the name of and at the expense of the Company.
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If the Company elect to reduce the principal amount of
Securities to be redeemed pursuant to Paragraph 5 of the Securities by crediting
against any such redemption Securities it has not previously delivered to the
Trustee for cancellation, it shall so notify the Trustee of the amount of the
reduction and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for
in this Section 2 at least 45 days (unless a shorter period is acceptable to
the Trustee) before the Redemption Date.
Section 3 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall select from among such Securities to
be redeemed pro rata or by lot or by such other method as the Trustee shall
determine to be fair and appropriate and in such manner as complies with any
applicable legal and stock exchange requirements.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
Section 4 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed. At the Company's
request, the Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
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(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued but
unpaid interest (and Liquidated Damages, if any) to be paid upon such
redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company default in its obligation to
deposit cash with the Paying Agent in accordance with Section 6 hereof, interest
on Securities called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, including accrued but unpaid interest
(and Liquidated Damages, if any), upon surrender to the Paying Agent of the
Securities called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion of
the principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be redeemed,
as well as the aggregate principal amount of such Securities to be redeemed and
the aggregate principal amount of Securities to be outstanding after such
partial redemption;
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(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section
4 and pursuant to the optional redemption provisions of Paragraph 5 of
the Securities.
Section 5 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.5, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued but unpaid interest (and
Liquidated Damages, if any). Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest (and Liquidated Damages, if any), if any, accrued to and
unpaid on the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the Interest Payment Date, the accrued
interest (and Liquidated Damages, if any) shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 6 Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
cash sufficient to pay the Redemption Price of, including accrued but unpaid
interest on (and Liquidated Damages, if any), all Securities to be redeemed on
such Redemption Date (other than Securities or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation). The Paying Agent shall promptly return to the Company any
cash so deposited which is not required for that purpose upon the written
request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article III and payment of the
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Securities called for redemption is not otherwise prohibited, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment. Notwithstanding
anything herein to the contrary, if any Security surrendered for redemption in
the manner provided in the Securities shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph and the other provisions of this Article III, interest shall continue
to accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
4.1 hereof and the Securities.
Section 7 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 1 Payment of Securities.
The Company shall pay the principal of and interest (and
Liquidated Damages, if any) on the Securities on the dates and in the manner
provided in the Securities and this Indenture. An installment of principal of or
interest (and Liquidated Damages, if any) on the Securities shall be considered
paid on the date it is due if the Trustee or Paying Agent (other than the
Company or an Affiliate of the Company) holds for the benefit of the Holders, on
or before 10:00 a.m. New York City time on that date, cash deposited and
designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on
overdue installments of interest (and Liquidated Damages, if
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any) at the rate specified in the Securities compounded semi-annually, to the
extent lawful.
Section 2 Maintenance of Office or Agency.
The Company and the Guarantors shall maintain in the Borough
of Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities and this Indenture
may be served. The Company and the Guarantors shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company and the Guarantors 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 address of the Trustee set forth in Section 13.2.
The Company and the Guarantors may also from time to time
designate one or more other offices or agencies where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company and the Guarantors of their
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes. The Company and the Guarantors shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. The Company and the
Guarantors hereby initially designate the principal corporate trust office of
the Trustee as such office.
Section 3 Limitation on Restricted Payments.
The Company and the Guarantors will not, and will not permit
any of their Subsidiaries to, directly or indirectly, make any Restricted
Payment if, after giving effect to such Restricted Payment on a pro forma basis,
(i) a Default or an Event of Default shall have occurred and be continuing, (ii)
the Company is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt Incurrence Ratio contained in Section
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4.10, or (iii) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including after giving effect to such
proposed Restricted Payment, from and after the Issue Date, would exceed the sum
of (a) 50% of the aggregate Consolidated Net Income of the Company for the
period (taken as one accounting period) commencing on the first day of the first
full fiscal quarter commencing after the Issue Date, to and including the last
day of the fiscal quarter ended immediately prior to the date of such Restricted
Payment (or, in the event Consolidated Net Income for such period is a deficit,
then minus 100% of such deficit), plus (b) the aggregate Net Cash Proceeds
received by the Company from the sale of its Qualified Capital (and Liquidated
Damages, if Stock (other than (1) to a Restricted Subsidiary of the Company and
(2) to the extent applied in connection with a Qualified Exchange), after the
Issue Date.
The immediately preceding paragraph, however, will not
prohibit (i) a Qualified Exchange, (ii) the payment of any dividend (a) on
Qualified Capital Stock within 60 days after the date of its declaration if such
dividend could have been made on the date of such declaration in compliance with
the foregoing provisions or (b) to minority shareholders of any Subsidiary on a
pro rata basis, (iii) the redemption of the Series A Preferred Stock of
Urohealth, Inc. (California), for total consideration of not more than $1.6
million on or before June 30, 1997 or (iv) the redemption of the Microsurge
convertible subordinated notes outstanding on the Issue Date prior to maturity
in an amount not to exceed $6.0 million. The full amount of any Restricted
Payment made pursuant to the foregoing clause (ii) of the immediately preceding
sentence, however, will be deducted (without duplication) in the calculation of
the aggregate amount of Restricted Payments available to be made referred to in
clause (iii) of the immediately preceding paragraph.
Section 4 Corporate Existence.
Subject to Article V, the Company and the Guarantors shall do
or cause to be done all things necessary to preserve and keep in full force and
effect their corporate existence and the corporate or other existence of each of
their Subsidiaries in accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and corporate franchises of
the Company and the Guarantors and each of their
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Subsidiaries; provided, however, that neither the Company nor any of the
Guarantors shall be required to preserve, with respect to itself, any right or
franchise, and with respect to any of their Subsidiaries, any such existence,
right or franchise, if (a) the Board of Directors of the Company shall determine
reasonably and in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Company and (b) the loss thereof
is not disadvantageous in any material respect to the Holders.
Section 5 Payment of Taxes and Other Claims.
The Company and the Guarantors shall, and shall cause each of
their Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company, any Guarantor or any
of their Subsidiaries or properties and assets of the Company, any Guarantor or
any of their Subsidiaries and (ii) all lawful claims, whether for labor,
materials, supplies, services or anything else, which have become due and
payable and which by law have or may become a Lien upon the property and assets
of the Company, any Guarantor or any of their Subsidiaries; provided, however,
that neither the Company nor any Guarantor shall be required to pay or discharge
or cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.
Section 6 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee
within 120 days after the end of its fiscal year an Officers' Certificate, one
of the signers of which shall be the principal executive, financial or
accounting officer of the Company, complying (whether or not required) with
Section 314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations (without
regard to notice requirements
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or grace periods) under this Indenture and further stating, as to each such
Officer signing such certificate, whether or not the signer knows of any failure
by the Company, any Guarantor or any Subsidiary of the Company or any Guarantor
to comply with any conditions or covenants in this Indenture and, if such signer
does know of such a failure to comply, the certificate shall describe such
failure with particularity. The Officers' Certificate shall also notify the
Trustee should the relevant fiscal year end on any date other than the current
fiscal year end date.
(b) So long as not contrary to the then current
recommendation of the American Institute of Certified Public Accountants, the
Company shall deliver to the Trustee within 120 days after the end of each of
its fiscal years a written report of a firm of independent certified public
accountants with an established national reputation stating that in conducting
their audit for such fiscal year, nothing has come to their attention that
caused them to believe that the Company or any Subsidiary of the Company were
not in compliance with the provisions set forth in Section 3, 4.10 or 4.13 or
Article X of this Indenture.
(c) The Company shall, so long as any of the
Securities are outstanding, deliver to the Trustee, immediately upon becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company are taking or propose to take with respect thereto. The Trustee shall
not be deemed to have knowledge of a Default or an Event of Default unless one
of its Trust Officers receives notice of the Default giving rise thereto from
the Company or any of the Holders.
Section 7 Reports.
Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee and to each Holder and to prospective purchasers of Notes
identified to the Company by the Initial Purchaser, within 15 days after it is
or would have been (if it were subject to such reporting obligations) required
to file such with the SEC, annual and quarterly financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the SEC, if the Company were subject to the requirements
of Section 13 or 15(d) of the Ex-
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change Act, including, with respect to annual information only, a report thereon
by the Company's certified independent public accountants as such would be
required in such reports to the SEC, and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required and, to the extent permitted by the
Exchange Act or the SEC (if it were subject to such reporting obligations), file
with the SEC the annual, quarterly and other reports which it is or would have
been required to file with the SEC. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
Section 8 Waiver of Stay, Extension or Usury Laws.
The Company and each Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Company or any Guarantor from paying all or any portion
of the principal of or interest (and Liquidated Damages, if any) on the
Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) the Company and each
Guarantor hereby expressly waives all benefit or advantage of any such law
insofar as such law applies to the Securities, and covenant that it shall not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 9 Limitation on Transactions with Affiliates.
Neither the Company nor any of its Subsidiaries will be
permitted on or after the Issue Date to enter into any contract, agreement,
arrangement or transaction with any Affiliate (an "Affiliate Transaction"), or
any series of related Affiliate Transactions, other than Exempt Affiliate
Transactions unless (i)
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it is determined that the terms of such Affiliate Transaction are fair and
reasonable to the Company, and no less favorable to the Company, than could have
been obtained in an arm's-length transaction with a non-Affiliate, (ii) if the
consideration to any party is in excess of $500,000, such Affiliate
Transaction(s) is evidenced by an Officers' Certificate addressed and delivered
to the Trustee certifying that such Affiliate Transaction (or Transactions) has
been approved by a majority of the members of the Board of Directors that are
disinterested in such transaction and (iii) if the consideration to any party is
in excess of $5 million, the Company shall have obtained, prior to the
consummation thereof, a written favorable opinion as to the fairness of such
transaction to the Company from a financial point of view from an independent
financial advisor of national standing.
Section 10 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.
Except as set forth below in this Section 10, the Company
and the Guarantors will not, and will not permit any of their Restricted
Subsidiaries to, directly or indirectly, issue, assume, guarantee, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Disqualified Capital Stock (including Acquired
Indebtedness), except Permitted Indebtedness. Notwithstanding the foregoing, the
Company and the Guarantors may incur Indebtedness or Disqualified Capital Stock
if (a) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a pro forma basis to, such
incurrence of Indebtedness or Disqualified Capital Stock and (b) on the date of
such incurrence (the "Incurrence Date"), the Consolidated Coverage Ratio of the
Company for the Reference Period after giving effect on a pro forma basis to
such incurrence of such Indebtedness or Disqualified Capital Stock and, to the
extent set forth in the definition of Consolidated Coverage Ratio, the use of
proceeds thereof, would be (1) for any Incurrence Date occurring prior to and
including December 31, 1998, at least 2.0 to l and (2) thereafter, at least 2.25
to 1 (any such ratio, as applicable, the "Debt Incurrence Ratio").
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Indebtedness or Disqualified Capital Stock of any
Person which is outstanding at the time such Person becomes a
Restricted Subsidiary of the Company (including upon designation of any
Unrestricted Subsidiary or other Person to be a Restricted Subsidiary) or is
merged with or into or consolidated with the Company or a Restricted Subsidiary
of the Company shall be deemed to have been Incurred at the time such Person
becomes such a Restricted Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Restricted Subsidiary of the Company, as
applicable.
Section 11 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company and the Guarantors will not, and will not permit
any of their Restricted Subsidiaries to, directly or indirectly, create, assume
or suffer to exist any consensual restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions to or on
behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer
assets or property to or on behalf of, or make or pay loans or advances to or on
behalf of, the Company, or any Restricted Subsidiary of the Company, except (i)
restrictions imposed by the Notes or herein, (ii) restrictions imposed by
applicable law, (iii) existing restrictions under Indebtedness outstanding on
the Issue Date, (iv) restrictions under any Acquired Indebtedness not incurred
in violation of the Indenture or any agreement relating to any property, asset,
or business acquired by the Company or any of its Restricted Subsidiaries, which
restrictions, in each case, existed at the time of acquisition, were not put in
place in connection with or in anticipation of such acquisition and are not
applicable to any Person, other than the Person acquired, or to any property,
asset or business, other than the property, assets and business so acquired, (v)
any such restriction or requirement imposed by Indebtedness incurred under
clause (ii) of the definition of "Permitted Indebtedness," provided such
restriction or requirement is no more restrictive than that imposed by the
Credit Agreement as of the Issue Date, (vi) restrictions with respect solely to
a Restricted Subsidiary of the Company imposed pursuant to a binding agreement
that has been entered into for the sale or disposition of all or substantially
all of the Equity Interests or assets of such Restricted Subsidiary, provided
such restrictions apply solely to the Equity
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Interests or assets of such Restricted Subsidiary that are being sold, and (vii)
in connection with and pursuant to Permitted Refinancings, replacements of
restrictions imposed pursuant to clauses (i), (iii) or (iv) of this paragraph
that are not more restrictive than those being replaced and do not apply to any
other Person or assets than those that would have been covered by the
restrictions in the Indebtedness so refinanced. Notwithstanding the foregoing,
neither (a) customary provisions restricting subletting or assignment of any
lease entered into in the ordinary course of business, consistent with industry
practice, nor (b) Liens permitted under the terms of the Indenture on assets
securing Senior Indebtedness or Purchase Money Indebtedness incurred in
accordance with the definition of "Permitted Indebtedness" or with Section 10
shall, in and of themselves, be considered a restriction on the ability of the
Company, the applicable Guarantor or the applicable Restricted Subsidiary to
transfer such agreement or assets, as the case may be.
Section 12 Limitation on Liens.
The Company and the Guarantors will not, and will not permit
any of their Restricted Subsidiaries to, directly or indirectly, incur, or
suffer to exist any Lien on any of their respective assets, now owned or
hereinafter acquired, securing any Indebtedness that is pari passu with or
subordinated in right of payment to the Notes, except Permitted Liens, unless
the Notes or the Guarantees, as applicable, are secured on an equal and ratable
basis as such other Indebtedness; provided that, if such Indebtedness is by its
terms expressly subordinated or junior to the Notes and the Guarantees, as
applicable, the Lien securing such subordinated or junior Indebtedness shall be
subordinated and junior to the Lien securing the Notes and the Guarantees, as
applicable, with the same relative priority as such subordinated or junior
Indebtedness shall have with respect to the Notes and Guarantees, as applicable.
Section 13 Limitation on Sale of Assets and Subsidiary Stock.
The Company and the Guarantors will not, and will not permit
any of their Restricted Subsidiaries to, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its proper-
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ty, business or assets, including by merger or consolidation (in the case of a
Guarantor or a Restricted Subsidiary of the Company), and including any sale or
other transfer or issuance of any Equity Interests of any Restricted Subsidiary
of the Company, whether by the Company or a Restricted Subsidiary of the Company
and including any sale and leaseback transaction (any of the foregoing, an
"Asset Sale"), unless, (i) no Default or Event of Default shall have occurred
and be continuing at the time of, or would occur after giving effect, on a pro
forma basis, to, such Asset Sale, (ii) the Company determines in good faith (and
with respect to any Asset Sale or series of related Asset Sales in which the
aggregate Fair Market Value exceeds $5 million, as evidenced by a resolution of
the Board of Directors of the Company) that the Company or such Restricted
Subsidiary, as applicable, receives Fair Market Value for such Asset Sale, (iii)
at least 75% of the total consideration for such Asset Sale or series of related
Asset Sales consists of cash or Cash Equivalents, and (iv) (a) within 270 days
following such Asset Sale, the Net Cash Proceeds therefrom (the "Asset Sale
Offer Amount") is (1) used to retire Senior Indebtedness and permanently to
reduce the amount of such Indebtedness outstanding on the Issue Date or
permitted pursuant to clause (ii) of the definition of Permitted Indebtedness
(including that in the case of a revolver or similar arrangement that makes
credit available, the amount of total commitments is correspondingly permanently
reduced by such amount) or (2) (x) committed to be invested pursuant to one or
more definitive agreements subject only to customary closing conditions and (y)
within 365 days following such Asset Sale, invested, in assets and property
(other than notes, bonds, obligations and securities) which in the good faith
reasonable judgment of the Board will immediately constitute or be a part of a
Related Business of the Company or such Restricted Subsidiary (if it continues
to be a Restricted Subsidiary) immediately following such investment; provided,
however, that, if applicable, upon the earlier of any termination of such
agreement(s) or the failure to consummate such investment within such 365-day
period (any such event, an "Investment Default"), the Company shall immediately
make an Asset Sale Offer on the terms set forth in clause (b) below (except that
application of the Asset Sale Offer Amount shall be made within 30 days of such
Investment Default) or (b) within 270 days after the date of such Asset Sale,
the Asset Sale Offer Amount is applied to the optional redemption of the Notes
in accordance with the terms of the
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Indenture or to the repurchase of the Notes pursuant to an irrevocable,
unconditional cash offer (the "Asset Sale Offer") to repurchase Notes at a
purchase price or 100% of principal amount (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if any, to the
date of payment, made within 240 days of such Asset Sale. An acquisition of
Notes pursuant to an Asset Sale Offer may be deferred until the accumulated Net
Cash Proceeds from Asset Sales not applied to the uses (and within the times
provided) set forth in (iv) above (the "Excess Proceeds") exceeds $10 million
and that each Asset Sale Offer shall remain open for 20 Business Days following
its commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount, plus an
amount equal to accrued and unpaid interest and Liquidated Damages, if any, to
the purchase of all Notes properly tendered (on a pro rata basis if the Asset
Sale Offer Amount is insufficient to purchase all Notes so tendered) at the
Asset Sale Offer Price (together with accrued interest). To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Asset Sale Offer Amount, the Company may use any remaining Net Cash Proceeds
for general corporate purposes as otherwise permitted by the Indenture and
following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. For purposes of (iii) above, total consideration received means the total
consideration received for such Asset Sales minus the amount of (i) Senior
Indebtedness assumed by a transferee which assumption permanently reduces the
amount of Indebtedness outstanding on the Issue Date or permitted pursuant to
clause (ii) and (v) of the definition of Permitted Indebtedness (including that
in the case of a revolver or similar arrangement that makes credit available,
the amount of total commitments is correspondingly permanently reduced by such
amount), and (ii) Purchase Money Indebtedness secured solely by the assets sold
and assumed by a Transferee.
Notwithstanding the foregoing provisions of the prior
paragraph:
(i) the Company and its Restricted Subsidiaries may,
in the ordinary course of business, convey, sell, transfer, assign or
otherwise dispose of inventory acquired and held for resale in the
ordinary course of business;
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(ii) the Company and its Restricted Subsidiaries
may convey, sell, transfer, assign or otherwise dispose of
assets pursuant to and in accordance with Article V;
(iii) the Company and its Restricted Subsidiaries may
sell or dispose of property in the ordinary course of business, in the
aggregate amount not exceeding $3 million during any 12-month period,
so long as such property is no longer necessary for the proper conduct
of the business of the Company or such Restricted Subsidiary, as
applicable; and
(iv) the Company and the Guarantors may convey,
sell, transfer, assign or otherwise dispose of assets to the
Company or any of the Guarantors.
All Net Cash Proceeds from an Event of Loss shall be invested,
used for prepayment of Senior Indebtedness, or used to repurchase Notes, all
within the period and as otherwise provided above in clauses (iv)(a) or (iv)(b)
of the first paragraph of this Section 13.
In addition to the foregoing, the Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, make any Asset
Sale of any of the Equity Interests of any Restricted Subsidiary, except
pursuant to an Asset Sale of all the Equity Interests of such Restricted
Subsidiary.
Notice of an Asset Sale Offer shall be sent, on or prior to
the commencement of the Asset Sale Offer, by first-class mail, by the Company to
each Holder at its registered address, with a copy to the Trustee. The Asset
Sale Offer shall remain open for at least 20 Business Days following its
commencement. The notice to the Holders shall contain all information,
instructions and materials required by applicable law or otherwise material to
such Holders' decision to tender Securities pursuant to the Asset Sale Offer.
The notice, which (to the extent consis- tent with this Indenture) shall govern
the terms of an Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being
made pursuant to such notice and this Section 13;
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(ii) the Asset Sale Offer Amount, the
Asset Sale Offer Price (including the amount of accrued but unpaid
interest (and Liquidated Damages, if any)), and the date of purchase;
(iii) that any Security or portion
thereof not tendered or accepted for payment will continue to accrue
interest if interest is then accruing;
(iv) that, unless the Company defaults
in depositing cash with the Paying Agent (which may not for purposes of
this Section 13, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) in accordance
with the last paragraph of this Section 13, any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Asset Sale Purchase Date;
(v) that Holders electing to have a
Security, or portion thereof, purchased pursuant to an Asset Sale Offer
will be required to surrender their Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which for purposes of this Section
4.13, notwithstanding any other provision of this Indenture, may not be
the Company or any Affiliate of the Company) at the address specified
in the notice;
(vi) that Holders will be entitled to
withdraw their elections, in whole or in part, if the Paying Agent
receives, prior to the expiration of the Asset Sale Offer, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement containing a facsimile signature and stating that such Holder
is withdrawing his election to have such principal amount of Securities
purchased;
(vii) that if Securities in a principal
amount in excess of the principal amount of Securities
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to be acquired pursuant to the Asset Sale Offer are tendered and not
withdrawn, the Company shall purchase Securities on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so
that only Securities in denominations of $1,000 or integral multiples
of $1,000 shall be acquired);
(viii) that Holders whose Securities
were purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities
surrendered; and
(ix) the circumstances and relevant
facts regarding such Asset Sales.
The Company agrees that any Asset Sale Offer shall be made in
compliance with all applicable laws, rules, and regulations, including, if
applicable, Regulation 14E of the Exchange Act and the rules and regulations
thereunder and all other applicable Federal and state securities laws, and any
provisions of this Indenture which conflict with such laws shall be deemed to be
superseded by the provisions of such laws.
On or before the date of purchase, the Company shall (i)
accept for payment Securities or portions thereof properly tendered pursuant to
the Asset Sale Offer (on a pro rata basis if required pursuant to paragraph
(vii) above), (ii) deposit with the Paying Agent cash sufficient to pay the
Asset Sale Offer Price for all Securities or portions thereof so accepted and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate setting forth the Securities or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Asset Sale Offer Price
for such Securities, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
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Section 14 Limitation on Layering Indebtedness.
The Company and the Guarantors will not, and will not permit
any of their Restricted Subsidiaries to, directly or indirectly, incur, or
suffer to exist any Indebtedness that is subordinate in right of payment to any
other Indebtedness of the Company or a Guarantor unless, by its terms, such
Indebtedness is subordinate in right of payment to, or ranks pari passu with,
the Notes or the Guarantee, as applicable.
Section 15 Limitation on Lines of Business.
Neither the Company and its Restricted Subsidiaries shall
directly or indirectly engage to any substantial extent in any line or lines of
business activity other than that which, in the good faith judgment of the Board
of Directors of the Company, is a Related Business.
Section 16 Limitation on Status as Investment Company.
The Company and its Subsidiaries are prohibited from being
required to be registered as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act.
Section 17 Future Subsidiary Guarantors.
All present Subsidiaries and future Restricted Subsidiaries of
the Company, jointly and severally, will guarantee irrevocably and
unconditionally all principal, premium, if any, and interest on the Notes on a
senior subordinated basis.
Section 18 Limitation on Payments for Consent.
None of the Company or any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for, or as an inducement
to, any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes, unless such consideration is offered to be paid or is
irrevocably pledged to be paid to all Holders of the Notes who so consent,
waive, or agree to amend in the time
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frame set forth in the solicitation documents relating to such consent, waiver
or agreement, which solicitation documents must be mailed to all Holders of the
Notes prior to the expiration of the solicitation.
Section 19 Security.
As soon as practicable after the Issue Date, the Company shall
purchase and pledge to the securities intermediary and financial intermediary
under that certain Security Agreement, dated as of the Issue Date, by and
between the Company and The Bank of New York, as securities intermediary and
financial intermediary (the "Security Agreement"), for the benefit of the
Holders of the Notes, the Government Securities in such amount as will be
sufficient upon receipt of scheduled interest and principal payments of such
securities, in the opinion of a nationally recognized firm of independent public
accountants selected by the Company, to provide for payment in full when due the
amount of interest to be paid on the Notes on each of the first three scheduled
interest payment dates on the Notes. The Holders shall have the benefit of an
exclusive, first priority security interest in the account holding all such
Government Securities, and all other cash or property, pledged under the
Security Agreement.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 Limitation on Merger, Sale or Consolidation.
The Company will not consolidate with or merge with or into
another Person or, directly or indirectly, sell, lease, convey or transfer all
or substantially all of its assets (computed on a consolidated basis), whether
in a single transaction or a series of related transactions, to another Person
or group of affiliated Persons except for any consolidation or merger with or
into, or sale, lease or transfer solely to, a Guarantor, or adopt a plan of
liquidation, unless (i) either (a) the Company is the continuing entity or (b)
the resulting, surviving or transferee entity or, in the case of a plan of
liquidation, the entity which receives the greatest value from such plan of
liquidation is a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and expressly
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assumes by supplemental indenture all of the obligations of the Company in
connection with the Notes and the Indenture; (ii) immediately after giving
effect to such transaction on a pro forma basis no Default or Event of Default
shall exist or would occur, (iii) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth of the consolidated
surviving or transferee entity or, in the case of a plan of liquidation, the
entity which receives the greatest value from such plan of liquidation is at
least equal to the Consolidated Net Worth of the Company immediately prior to
such transaction; and (iv) immediately after giving effect to such transaction
on a pro forma basis, the consolidated resulting, surviving or transferee entity
or, in the case of a plan of liquidation, the entity which receives the greatest
value from such plan of liquidation would immediately thereafter be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence
Ratio set forth in Section 10.
On or prior to the consummation of the proposed transaction,
the Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture executed in connection therewith comply with this Indenture. The
Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the properties and
assets of one or more Subsidiaries, the Company's interest in which constitutes
all or substantially all of the properties and assets of the Company on a
consolidated basis, shall be deemed to be the transfer of all or substantially
all of the properties and assets of the Company.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a plan of
liquidation in accordance with the foregoing, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
transfer is made or, in the case of a plan of liquidation, the entity which
receives the
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greatest value from such plan of liquidation shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if such successor corporation had been
named therein as the Company, and the Company shall be released from the
obligations under the Notes and the Indenture except with respect to any
obligations that arise from, or are related to, such transaction.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the failure by the Company to pay
any installment of interest on the Notes as and when the same becomes
due and payable and the continuance of any such failure for 30 days;
provided, however, that any failure by the Company to pay in full any
interest on the Notes in a timely manner through October 1, 1998 or to
purchase and deposit the Government Securities as soon as practicable
after the Issue Date as required by the Security Agreement, will
constitute an immediate Event of Default;
(ii) the failure by the Company to pay
all or any part of the principal, or premium, if any, on the Notes when
and as the same becomes due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation, payment of
the Change of Control Purchase Price or the Asset Sale
Offer Amount, or otherwise;
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(iii) the failure by the Company or any
of its Restricted Subsidiaries otherwise to comply with
Section 4.13, or Articles V or X;
(iv) failure by the Company or any
Restricted Subsidiary to observe or perform any other covenant or
agreement contained in the Notes or the Indenture (except as provided
in clauses (i), (ii) and (iii) above) and the continuance of such
failure for a period of 60 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Notes outstanding;
(v) a decree, judgment, or order by a
court of competent jurisdiction shall have been entered adjudicating
either the Company or any of its Significant Subsidiaries as bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization of either the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or
order shall have continued undischarged and unstayed for a period of 60
consecutive days; or a decree or order of a court of competent
jurisdiction, judgment appointing a receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency for either the Company, any of its
Significant Subsidiaries, or any substantial part of the property of
any such Person, or for the winding up or liquidation of the affairs of
any such Person, shall have been entered, and such decree, judgment, or
order shall have remained in force undischarged and unstayed for a
period of 60 days;
(vi) the Company or any Significant
Subsidiary of the Company shall institute proceedings to be adjudicated
a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of it or any
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substantial part of its assets or property, or shall make a general
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts as they become due;
(vii) a default in Indebtedness for
borrowed money of the Company or any of its Restricted Subsidiaries
with an aggregate principal amount in excess of $5 million, which
default (A) is caused by the failure to pay principal on the maturity
date thereof or (B) results in the acceleration of such Indebtedness
prior to its express maturity; and
(viii) final unsatisfied judgments not
covered by insurance aggregating in excess of $5 million, at any one
time rendered against the Company or any of its Restricted Subsidiaries
and is not stayed, bonded or discharged within 60 days; and
(ix) the failure to comply with any of the
terms of the Security Agreement as in effect on the Issue Date.
If a Default occurs and is continuing, the Trustee must,
within 90 days after the occurrence of such Default, give to the Holders notice
of such Default, pursuant to Section 7.5.
Section 2 Acceleration of Maturity Date; Rescission
and Annulment.
If an Event of Default occurs and is continuing (other than an
Event of Default specified in clauses (v) or (vi), above, relating to the
Company or any Significant Subsidiary,) then in every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of 25% in aggregate principal amount of the Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) (an "Acceleration Notice"), may declare all principal
determined as set forth below, and accrued interest thereon to be due and
payable immediately; provided, however, that if any Senior Indebtedness is
outstanding pursuant to the Credit Agreement, upon a declaration of such
acceleration, such principal and interest shall be due and payable upon the
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earlier of (a) the fifth Business Day after the sending to the Company and the
Representative of such written notice, unless such Event of Default is cured or
waived prior to such date and (b) the date of acceleration of any Senior
Indebtedness under the Credit Agreement. If an Event of Default specified in
clauses (v) or (vi) above relating to the Company or any of its Significant
Subsidiaries occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Notes without any declaration or
other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration being
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter provided in this Article VI, the Holders
of a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest
(and Liquidated Damages, if any) on all Securities,
(B) the principal of
(and premium, if any, applicable to) any Securities which
would become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the
Securities,
(C) to the extent that
payment of such interest is lawful, interest upon overdue
interest (and Liquidated Damages, if any) at the rate borne by
the Securities,
(D) all sums paid or
advanced by the Trustee hereunder and the compensation,
expenses, disbursements and
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advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment
of amounts which have become due solely by such declaration of
acceleration and except a default with respect to any provision
requiring a supermajority approval to amend, which default may only
be waived by such a supermajority, and have been cured or waived as
provided in Section 12.
Notwithstanding the previous sentence of this Section 2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or other event. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Section 3 Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if an Event of Default in payment
of principal, premium, or interest (and Liquidated Damages, if any) specified in
Section 1(i) or (ii) occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for principal, premium (if
any) and interest (and Liquidated Damages, if any), and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest (and Liquidated
Damages, if any), at the rate borne by the Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust in favor
of the Holders, may institute a judicial
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proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon the Securities and collect the moneys adjudged
or decreed to be payable in the manner provided by law out of the property of
the Company or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
Section 4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or its
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the
whole amount of principal (and premium, if any) and interest (and
Liquidated Damages, if any) owing and unpaid in respect of the
Securities and to file such 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 agent and counsel) and
of the Holders allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys
or other property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee 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 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 7.7.
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 Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 6 Priorities.
Subject to Article XII, any money collected by the Trustee
pursuant to this Article VI shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium (if any) or interest (and Liquidated Damages, if
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any), upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due
pursuant to Section 7.7;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any) and interest (and Liquidated Damages,
if any) on, the Securities in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium (if any) and interest (and Liquidated Damages, if any), respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto,
the remainder, if any.
Section 7 Limitation on Suits.
No Holder of any Security shall have any right to order or
direct the Trustee to institute any proceeding, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(A) such Holder has
previously given written notice to the Trustee of a
continuing Event of Default;
(B) the Holders of not
less than 25% in principal amount of then outstanding
Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or
Holders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities to be
incurred or
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reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60
days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(E) no direction
inconsistent with such written request has been given to the
Trustee during such 60-day period by the Holders of a majority
in principal amount of the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 8 Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
interest (and Liquidated Damages, if any) on, such Security on each Maturity
Date or Interest Payment Date, as applicable, of such payments as expressed in
such Security (in the case of redemption, the Redemption Price on the Redemption
Date; in the case of a Change of Control, the Change of Control Purchase Price
on the Change of Control Purchase Date; and in the case of an Asset Sale, the
Asset Sale Offer Price on the relevant purchase date); and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
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Section 9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default shall
impair the exercise of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article VI or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 11 Control by Holders.
The Holder or Holders of a majority in aggregate principal
amount of then outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee, provided
that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudi-cial to the Holders not taking
part in such direction, and
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(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 12 Waiver of Past Default.
Subject to Section 8, the Holder or Holders of not less than
a majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the declaration
of the maturity of the Securities, waive any past default hereunder and its
consequences, except a default
(A) in the payment of
the principal of, premium, if any, or interest (and Liquidated
Damages, if any) on, any Security as specified in clauses (i)
and (ii) of Section 1, or
(B) in respect of a
covenant or provision hereof which, under Article IX, cannot
be modified or amended without the consent of the Holder of
each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
Section 13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, 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, suffered or omitted to be taken by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant
in such suit, having due regard to the merits
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and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 13 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in aggregate
principal amount of the outstanding Securities, or to any suit instituted by any
Holder for enforcement of the payment of principal of, or premium (if any) or
interest (and Liquidated Damages, if any) on, any Security on or after the
Maturity Date of such Security.
Section 14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to its former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 7.1 Duties of Trustee.
(a) If a Default or an Event of Default has
occurred and is continuing, 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 such person's own affairs.
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(b) Except during the continuance of a Default or
an Event of Default:
(i) The Trustee need perform only those
duties as are specifically set forth in this Indenture and no others,
and no covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(ii) 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. However, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability
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 subsection (b) of this Section 7.1.
(ii) The Trustee shall not be liable
for any error of judgment made in good faith by a Trust Officer, unless
it is proved that the Trustee was grossly negligent in ascertaining the
pertinent facts.
(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 12.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or at the request, order or direction of
the Holders or
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in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to subsections (a), (b), (c), (d) and (e)
of this Section 7.1.
(f) The Trustee shall not be liable for interest
on any assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from
acting, it may consult with counsel of its selection and may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to Sections
13.4 and 13.5. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such certificate or opinion.
(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.
(d) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order,
bond, debenture, or other paper or
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document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(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, order or direction of any of the Holders, pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
(g) Except with respect to Section 1, the
Trustee shall have no duty to inquire as to the performance of the Company's
covenants in Article IV hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.1(i), 6.1(ii) and 4.1, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
Section 3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of its respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
Section 4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities and it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities (other than the Trustee's
certificate of authentication) or for the use or application of any funds
received by a Paying Agent other than the Trustee.
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Section 5 Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal (or premium, if any) of, or
interest (and Liquidated Damages, if any) on, any Security (including the
payment of the Change of Control Purchase Price on the Change of Control
Purchase Date, the Redemption Price on the Redemption Date, and the Asset Sale
Offer Price on the relevant purchase date), the Trustee may withhold the notice
if and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
Section 6 Reports by Trustee to Holders.
If required by law, within 60 days after each January 31
beginning with the January 31 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such January 31
that complies with TIA ss. 313(a). If required by law, the Trustee also shall
comply with TIA ss.ss. 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic quotation
system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the
SEC and each stock exchange, if any, on which the Securities are listed.
Section 7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for its services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses shall include
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the reasonable compensation, disbursements, fees and expenses of the Trustee's
agents, accountants, experts and counsel.
The Company shall indemnify the Trustee (in its capacity as
Trustee, Registrar and Paying Agent) and each of its officers, directors,
attorneys-in-fact and agents for, and hold it harmless against, any claims,
loss, damage, demand, fee, expense (including but not limited to reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel),
loss or liability incurred by them without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust and their rights or duties hereunder including the reasonable costs and
expenses of defending themselves against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company will not
be required to pay such fees and expenses if they assume the Trustee's defense
and there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.7, the Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest (and Liquidated
Damages, if any) on particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 1(v) or (vi) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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The Company's obligations under this Section 7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
Section 8 Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer
takes charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holder or Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7,
the resignation or removal of the retiring Trustee shall become
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effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
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 Holder or Holders of at least 10% in principal amount of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 8, the Company's obligations under Section 7 shall continue for the
benefit of the retiring Trustee.
Section 9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
ss. 310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 11 Preferential Collection of Claims against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who
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has resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 1 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Company may, at its option at any time within one year of
the Stated Maturity of the Notes, elect to have its obligations and the
obligations of the Guarantors discharged with respect to the outstanding Notes
("Legal Defeasance") by having Section 2 or Section 3 applied to all
outstanding Securities upon compliance with the conditions set forth below in
this Article VIII.
Section 2 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 1 of the option
applicable to this Section 2, the Company and the Guarantors shall be deemed to
have been discharged from their respective obligations with respect to all
outstanding Securities on the date the conditions set forth below are satisfied.
Such Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented, and this Indenture shall cease
to be of further effect as to all outstanding Notes and Guarantees, except as to
(i) the rights of Holders to receive payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due from the
trust funds referred to below, and described more fully in Section 9.4, (ii) the
Company's obligations with respect to such Notes under Sections 2.4, 2.6, 2.7,
2.10 and 4.2, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and (iv)
this Article VIII. Subject to compliance with this Article VIII, the Company may
exercise its option under this Section 2 notwithstanding the prior exercise of
its option under Section 3 with respect to the Securities.
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Section 3 Covenant Defeasance.
Upon the Company's exercise under Section 1 of the option
applicable to this Section 3, the Company shall be released from its
obligations under the covenants contained in Sections 4.3, 4.6, 4.7, 4.9, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15 and 4.16, 4.17, 4.18, Article V and Article X with
respect to the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the
Securities shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities, the Company need not comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document, but, except as specified above,
the remainder of this Indenture and such Securities shall be unaffected thereby.
In addition, upon the Company's exercise under Section 1 of the option
applicable to this Section 3, Sections 6.1(3) through 6.1(8) shall not
constitute Events of Default.
Section 4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 2 or Section 3 to the outstanding Securities:
(i) the Company must irrevocably deposit
with the Trustee, in trust (or another trustee satisfying the
requirements of Section 10 who shall agree to comply with the
provisions of this Article VIII applicable to it), for the benefit of
the Holders of such Notes, U.S. legal tender, or U.S. Government
Obligations or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest on
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such Notes on the stated date for payment thereof or on the redemption
date of such principal or installment of principal, premium, if any, or
interest on such Notes and the Holders of the Notes must have a valid,
perfected, exclusive security interest in such trust; provided that the
Trustee shall have been irrevocably instructed to apply such cash and
the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities;
(ii) in the case of an election under
Section 2, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to Trustee
confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date hereof, there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of such Notes will
not recognize income, gain or loss for Federal income tax purposes as a
result of such Legal Defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of an election under
Section 3, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to such Trustee
confirming that the Holders of such Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax in the
same amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or in
so far as Section 1(v) or 6.1(vi) is concerned, at any time in the
period ending on the 91st day after the date of such deposit;
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(v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute
a default under, this Indenture or any other material agreement or
instrument to which the Company or any of its Subsidiaries is bound;
(vi) in the case of an election under
either Section 2 or 8.3, the Company shall have delivered to the
Trustee an Officers' Certificate stating that the deposit made by the
Company pursuant to its election under Section 2 or 8.3 was not made
by the Company with the intent of preferring the Holders of such Notes
over other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or
others; and
(vii) the Company shall have delivered
to the Trustee an Officers' Certificate and an opinion of counsel, each
stating that the conditions precedent provided for, in the case of the
Officers' Certificate, (i) through (vi) of this Section 4 and, in the
case of the Opinion of Counsel, clauses (i) (with respect to the
validity and perfection of the security interest), (ii), (iii) and (v)
of this Section 4 have been complied with as contemplated by this
Section 4.
If the funds deposited with the Trustee to effect Legal
Defeasance or Covenant Defeasance are insufficient to pay the principal of,
premium, if any, and interest on the Notes when due, then the obligations of the
Company under this Indenture will be revived and no such defeasance will be
deemed to have occurred.
Section 5 Deposited Cash and U.S. Government Obliga-
tions to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 6, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 5, the
"Trustee") pursuant to Section 4 in respect of the outstanding Securities
shall be held in trust and
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applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent as
the Trustee may determine, to the Holders of such Securities of all sums due and
to become due thereon in respect of principal, premium, if any, and interest
(and Liquidated Damages, if any), but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Securities.
Section 6 Repayment to Company.
Anything in this Article VIII to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any cash or U.S. Government Obligations held by it as
provided in Section 4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereto
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
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, premium,
if any, or interest (and Liquidated Damages, if any) on any Security and
remaining unclaimed for two years after such principal, and premium, if any, or
interest (and Liquidated Damages, if any) has become due and payable shall be
paid to the Company on its request; and the Holder of such Security shall
thereafter look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money 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 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
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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.
Section 7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash or
U.S. Government Obligations in accordance with Section 2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company' obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 2 or 8.3
until such time as the Trustee or Paying Agent is permitted to apply such money
in accordance with Section 2 and 8.3, as the case may be; provided, however,
that, if the Company make any payment of principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the Cash held by
the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 1 Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company or any
Guarantor, when authorized by Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect,
or inconsistency, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture, provided such
action pursuant to this clause (1) shall not adversely affect the
interests of any Holder in any respect;
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(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or to make any other change that does not
adversely affect the rights of any Holder; provided, that the Company
has delivered to the Trustee an Opinion of Counsel stating that such
change does not adversely affect the rights of any Holder;
(3) to provide for additional Guarantors of the
Securities;
(4) to evidence the succession of
another Person to the Company, and the assumption by any such successor
of the obligations of the Company, herein and in the Securities in
accordance with Article V or Article XI; or
(5) to comply with the TIA.
Section 2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 8 and the last sentence of this
paragraph, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, by written act
of said Holders delivered to the Company and the Trustee, the Company and any
Guarantor, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under the
this Indenture or the Securities. Subject to Section 8 and the last sentence of
this paragraph, the Holder or Holders of a majority, in principal amount of then
outstanding Securities may waive compliance by the Company or any Guarantor with
any provision of this Indenture or the Securities; provided that notwithstanding
the foregoing provisions of this Section 9.2, no such modification may, without
the consent of Holders of at least 66 2/3% in aggregate principal amount of
Notes at the time outstanding,
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modify the provisions (including the defined terms used therein) of Section 10.1
in a manner adverse to the Holders; and provided that, without the consent of
each Holder affected thereby, no such modification, amendment, supplemental
indenture or waiver shall:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an amendment, supplement or
waiver of any provision of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of
interest (and Liquidated Damages, if any) on any Security;
(3) reduce the principal amount of any Security, or
reduce the Change of Control Purchase Price or the Asset Sale Offer
Price;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III or
paragraph 5 of the Securities in a manner adverse to any Holder;
(6) make any changes in the provisions concerning
waivers of Defaults or Events of Default by Holders of the Securities
(except to increase any percentage of Securities required to consent to
a waiver or to provide that certain other provisions of the Indenture
cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby) or the rights of Holders to
recover the principal or premium of, interest (and Liquidated Damages,
if any) on, or redemption payment with respect to, any Security;
(7) make any changes in Section 6.8, 6.12 or this second
sentence of this Section 9.2;
(8) make the principal of, or the interest (and
Liquidated Damages, if any) on, any Secu-
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rity payable with anything or at anywhere other than as provided for
in this Indenture and the Securities as in effect on the date hereof;
(9) make the Securities or Guarantees further
subordinated in right of payment to any extent or under any
circumstances to any other indebtedness; or
(10) change any terms of the Security Agreement in a
manner adverse to the Holders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders 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 supplemental indenture.
After an amendment, supplement or waiver under this Section
9.2 or Section 9.4 becomes effective, it shall bind each Holder.
Subject to Section 18, in connection with any amendment,
supplement or waiver under this Article IX, the Company may, but shall not be
obligated to, offer to any Holder who consents to such amendment, supplement or
waiver, or to all Holders, consideration for such Holder's consent to such
amendment, supplement or waiver.
Section 3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
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Section 4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company or the Person designated by the Company as the Person to whom
consents should be sent if such revocation is received by the Company or such
Person before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed by
the Company notwithstanding the provisions of the TIA. If a record date is
fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date, and only those
Persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (10) of Section 9.2, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Security who has consented
to it and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security; provided, that any
such waiver shall not impair or affect the right of any Holder to receive
payment of principal and premium of and interest (and Liquidated Damages, if
any) on a Security, on or after the respective dates set for such amounts to
become due and payable expressed in such Security, or to bring suit for
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the enforcement of any such payment on or after such respective dates.
Section 5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue,
the Guarantors shall endorse and the Trustee shall authenticate a new Security
that reflects the changed terms. Any failure to make the appropriate notation or
to issue a new Security shall not affect the validity of such amendment,
supplement or waiver.
Section 6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX, provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
Section 10.1 Repurchase of Securities at Option of the Holder
upon Change of Control.
(a) In the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Company (the "Change
of Control Offer"), to require
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the Company to repurchase all or any part of such holder's Notes (provided, that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof) on a date (the "Change of Control Purchase Date") that is no later than
45 Business Days after the occurrence of such Change of Control, at a cash price
equal to 101% of the principal amount thereof (the "Change of Control Purchase
Price"), together with accrued and unpaid interest (and Liquidated Damages, if
any,) to the Change of Control Purchase Date.
(b) In the event that, pursuant to this Section
10.1, the Company shall be required to commence a Change of Control Offer, the
Company shall follow the procedures set forth in this Section 10.1 as follows:
(1) the Change of Control Offer
shall commence within 20 Business Days following the
Change of Control;
(2) the Change of Control Offer
shall remain open for at least 20 Business Days following its
commencement (unless a longer period shall be required by law)(the
"Change of Control Offer Period");
(3) upon expiration of the Change
of Control Offer Period, the Company promptly shall purchase all Notes
properly tendered in response to the Change of Control Offer at the
Change of Control Purchase Price, plus accrued interest (and Liquidated
Damages, if any);
(4) if the Change of Control Pur-
chase Date is on or after an interest payment record date and on or
before the related interest payment date, any accrued interest (and
Liquidated Damages, if any) will be paid to the Person in whose name a
Security is registered at the close of business on such record date,
and no additional interest will be payable to Securityholders who
tender Securities pursuant to the Change of Control Offer;
(5) the Company shall use its best
efforts to provide the Trustee with notice of the
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Change of Control Offer at least 5 Business Days before the
commencement of any Change of Control Offer; and
(6) at the commencement of any
Change of Control Offer, the Company or the Trustee (upon the request
and at the expense of the Company) shall send, by first-class mail, a
notice to each of the Securityholders, which (to the extent consistent
with this Indenture) shall govern the terms of the Change of Control
Offer and shall state:
(i) that the Change of Control
Offer is being made pursuant to this Section 10.1 and that all
Securities, or portions thereof, tendered will be accepted for
payment;
(ii) the Change of Control Purchase
Price (including the amount of accrued and unpaid
interest) and the Change of Control Purchase Date;
(iii) that any Security, or portion
thereof, not tendered or accepted for payment will
continue to accrue interest;
(iv) that, unless the Company de-
faults in depositing cash with the Paying Agent in accordance
with the last paragraph of this subsection (b), or such
payment is prevented for any reason, any Security, or portion
thereof, accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change
of Control Purchase Date;
(v) that Holders electing to have a
Security, or portion thereof, purchased pursuant to a Change
of Control Offer will be required to surrender the Security,
with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 10.1,
notwithstanding anything in this Indenture to the contrary, be
the Company or any Affiliate of the Company) at the address
specified in the
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notice prior to the expiration of the Change of Control Offer;
(vi) that Holders will be entitled
to withdraw their election, in whole or in part, if the Paying
Agent receives, prior to the expiration of the Change of
Control Offer, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement
containing a facsimile signature and stating that such Holder
is withdrawing his election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events resulting
in such Change of Control Triggering Event.
Any Change of Control Offer will be made in compliance with
all applicable laws, rules and regulations including, if applicable, Regulation
14E under the Exchange Act and the rules thereunder and all other applicable
Federal and state securities laws and any provisions of this Indenture which
conflict with such laws shall be deemed to be superseded by the provisions of
such laws.
On or before the Change of Control Purchase Date, the Company
will (i) accept for payment Notes or portions thereof properly tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent cash
sufficient to pay the Change of Control Purchase Price (together with accrued
and unpaid interest and Liquidated Damages, if any) of all Notes so tendered and
(iii) deliver to the Trustee Notes so accepted together with an Officers'
Certificate listing the Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly pay to the Holders of Notes so accepted
an amount equal to the Change of Control Purchase Price (together with accrued
and unpaid interest), and the Trustee will promptly authenticate and deliver to
such Holders a new Note equal in principal amount to any unpurchased portion of
the Security surrendered. Any Notes not so accepted will be delivered promptly
by the Company to the Holder thereof. The Company publicly will announce the
results
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of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date.
ARTICLE XI
GUARANTEES
Section 1 Guarantees.
(a) In consideration of good and valuable consid-
eration, the receipt and sufficiency of which is hereby acknowledged, each of
the Guarantors hereby irrevocably and unconditionally guarantees, jointly and
severally, on a senior subordinated basis (the "Guarantee") to each Holder of a
Security 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 Securities or the obligations of the Company under this Indenture
or the Securities, that: (w) the principal and premium (if any) of and interest
(and Liquidated Damages, if any) on the Securities will be paid in full when
due, whether at the maturity or interest payment date, by acceleration, call for
redemption, upon an Change of Control Offer, an Asset Sale Offer or otherwise;
(x) all other obligations of the Company to the Holders or the Trustee under
this Indenture or the Securities will be promptly paid in full or performed, all
in accordance with the terms of this Indenture and the Securities; and (y) in
case of any extension of time of payment or renewal of any Securities or any of
such other obligations, they will be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon an Offer to Purchase or otherwise.
Failing payment when due of any amount so guaranteed for whatever reason, each
Guarantor shall be obligated to pay the same before failure so to pay becomes an
Event of Default.
(b) Each Guarantor hereby agrees that its obliga-
tions with regard to this Guarantee shall be unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, the recovery of any judgment against
the Company, any action to enforce the same or any other circumstances that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby
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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 or right to require the prior disposition
of the assets of the Company to meet its obligations, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Securities
and this Indenture.
(c) If any Holder or the Trustee is required by
any court or otherwise to return to either the Company or any Guarantor, or any
Custodian, Trustee, or similar official acting in relation to either the Company
or such Guarantor, any amount paid by either the Company or such Guarantor to
the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor agrees
that it will not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in full of
all obligations guaranteed hereby. Each Guarantor further agrees that, as
between such 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 Section 2 for the purposes of this Guarantee,
notwithstanding any stay, injunction, or other prohibition preventing such
acceleration as to the Company of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of those obligations as provided in
Section 2, those obligations (whether or not due and payable) will forthwith
become due and payable by each of the Guarantors for the purpose of this
Guarantee.
(d) Each Guarantor and, by its acceptance of a
Security issued hereunder, each Holder hereby confirms that it is the intention
of all such parties that the guarantee by such Guarantor set forth in Section
11.1(a) not constitute a fraudulent transfer or conveyance for purpose of any
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To effectuate the foregoing
intention, the Holders and such Guarantor hereby irrevocably agree that the
obligations of such Guarantor under its guarantee set forth in Section 11.1(a)
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after
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giving effect to any collections from or payments made by or on behalf of
any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to the following paragraph of this
Section 11.1(d), result in the obligations of such Guarantor under such
guarantee not constituting such a fraudulent transfer or conveyance.
Each Guarantor that makes any payment or distribution under
Section 11.1(a) shall be entitled to a contribution from each other Guarantor
equal to its Pro Rata amount (as defined below) of such payment or distribution
so long as the exercise of such right does not impair the rights of the Holders
under the Guarantees. For purposes of the foregoing, the "Pro Rata amount" of
any Guarantor means the percentage of the total net assets of all Guarantors
held by such Guarantor, determined in accordance with GAAP.
Section 2 Execution and Delivery of Guarantee.
Each Guarantor shall, by virtue of such Guarantor's execution
and delivery of this Indenture or such Guarantor's execution and delivery of an
indenture supplement pursuant to Section 11.3 hereof, be deemed to have signed
on each Security issued hereunder the notation of guarantee set forth on the
form of the Securities attached hereto as Exhibit A to the same extent as if the
signature of such Guarantor appeared on such Security.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the guarantee
set forth in Section 11.1 on behalf of each Guarantor. The notation of a
guaranty set forth on any Security shall be null and void and of no further
effect with respect to the guaranty of any Guarantor which, pursuant to Section
11.4 or Section 11.5, is released from such guarantee.
Section 3 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees that in the event
of the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guarantee and hereby waives
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and agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
Section 4 Limitation on Merger, Consolidation, Etc.
of Guarantors.
No Guarantor shall consolidate or merge with or into (whether
or not such Guarantor is the surviving Person) another Person unless (i) subject
to the provisions of the following paragraph, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in
form reasonably satisfactory to the Trustee, pursuant to which such
Person shall unconditionally guarantee, on a senior subordinated basis, all of
such Guarantor's obligations under such Guarantor's guarantee and the Indenture
on the terms set forth in the Indenture; and (ii) in addition, no Guarantor
shall consolidate or merge with or into another Person who is not a Guarantor
unless, immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing.
Notwithstanding the foregoing, upon the sale or disposition
(whether by merger, stock purchase, asset sale or otherwise) of a Guarantor or
all or substantially all of its assets to an entity which is not a Guarantor
(and a Restricted Subsidiary) or the designation of a Restricted Subsidiary to
become an Unrestricted Subsidiary, which transaction is otherwise in compliance
with the Indenture (including, without limitation, the provisions of Section
4.13), such Guarantor will be deemed released from its obligations under its
Guarantee of the Notes; provided, however, that any such termination shall occur
only to the extent that all obligations of such Guarantor under all of its
Guarantees of, and under all of its pledges of assets or other security
interests which secure, any Indebtedness of the Company or any other Restricted
Subsidiary shall also terminate upon such release, sale or transfer.
Section 5 Future Guarantors.
Upon the acquisition by the Company or any Guarantor of the
Capital Stock of any Person, if, as a result of such acquisi-
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tion, such Person becomes a Restricted Subsidiary, such Restricted Subsidiary
shall fully and unconditionally guarantee on a senior subordinated basis the
obligations of the Company with respect to payment and performance of the
Securities and the other obligations of the Company under this Indenture to the
same extent that such obligations are guaranteed by the other Guarantors
pursuant to Section 11.1; and, within 60 days of the date of such occurrence,
such Restricted Subsidiary shall execute and deliver to the Trustee a
supplemental indenture making such Restricted Subsidiary a party to this
Indenture.
ARTICLE XII
SUBORDINATION
Section 1 Securities Subordinated to Senior Indebt-
edness.
The Company, the Guarantors and each Holder, by its acceptance
of Securities, agree that (a) the payment of the principal of and interest on
the Securities and (b) any other payment in respect of the Securities, including
on account of the acquisition or redemption of the Securities by the Company or
the Guarantors (including, without limitation, pursuant to Section 13 or 10.1)
is subordinated, to the extent and in the manner provided in this Article XII,
to the prior payment in full in Cash or Cash Equivalents of all Senior
Indebtedness of the Company and the Guarantors (and is senior to all junior
indebtedness, including without limitation the Company's 8.75% Convertible
Subordinated Debentures Due May 30, 2006), and that these subordination
provisions are for the benefit of the holders of Senior Indebtedness.
This Article XII shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or continue to
hold, Senior Indebtedness, and such provisions are made for the benefit of the
holders of Senior Indebtedness, and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
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Section 2 No Payment on Securities in Certain Cir-
cumstances.
(a) No payment (by set-off or otherwise) may be
made by or on behalf of the Company or a Guarantor, as applicable, on account of
the principal of, premium, if any, or interest or Liquidated Damages on the
Notes (including any repurchases of Notes), or on account of the redemption
provisions of the Notes, for cash or property (other than Junior Securities),
(i) upon the maturity of any Senior Indebtedness of the Company or such
Guarantor by lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of, premium, if any, the interest on such Senior
Indebtedness of the Company are first paid in full in cash or Cash Equivalents
(or such payment is duly provided for) or otherwise to the extent holders accept
satisfaction of amounts due by settlement in other than cash or Cash
Equivalents, or (ii) in the event of default in the payment of any principal of,
premium, if any, or interest on such Senior Indebtedness of the Company or such
Guarantor when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (a "Payment Default"),
unless and until such Payment Default has been cured or waived or otherwise has
ceased to exist.
(b) Upon (i) the happening of an event of default
(other than a Payment Default) that permits the holders of Senior Indebtedness
to declare such Senior Indebtedness to be due and payable and (ii) written
notice of such event of default given to the Company and the Trustee by the
Agent under the Credit Agreement or the representative of the holders of an
aggregate of at least $15 million principal amount outstanding of any other
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such event of default has been cured or waived or otherwise has ceased
to exist, no payment (by set-off or otherwise) may be made by or on behalf of
the Company or any Guarantor which is an obligor under such Senior Indebtedness
on account of the principal of, premium, if any, or interest or Liquidated
Damages on the Notes (including any repurchases of any of the Notes), or on
account of the redemption provisions of the Notes, other than payments with
Junior Securities. Notwithstanding the foregoing, unless the Senior Indebtedness
in respect of which such event of default exists has been declared due and
payable in its entirety within 179 days after the Payment Notice
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is delivered as set forth above (the "Payment Blockage Period") (and such
declaration has not been rescinded or waived), at the end of the Payment
Blockage Period, the Company and the Guarantors shall be required to pay, all
sums not paid to the Holders of the Notes during the Payment Period due to the
foregoing prohibitions and to resume all other payments as and when due on the
Notes. Any number of Payment Notices may be given; provided, however, that (i)
not more than one Payment Blockage Notice shall be given within a period of any
360 consecutive days, and (ii) no default that existed upon the date of such
Payment Notice or the commencement of such Payment Blockage Period (whether or
not such event of default is on the same issue of Senior Indebtedness) shall be
made the basis for the commencement of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section
12.1, in the event that, notwithstanding the foregoing provisions of this
Section 12.2 or the provisions of Section 12.3, any payment or distribution of
assets of the Company or any Guarantor (other than Junior Securities) shall be
received by the Trustee at a time when such payment or distribution is
prohibited by such provisions, such payment or distribution shall be held in
trust for the benefit of the holders of such Senior Indebtedness, and shall be
paid or delivered by the Trustee, to the holders of such Senior Indebtedness
remaining unpaid or unprovided for or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate principal amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, for application
to the payment of all such Senior Indebtedness remaining unpaid, to the extent
necessary to pay or to provide for the payment of all such Senior Indebtedness
in full in cash or Cash Equivalents or otherwise to the extent holders accept
satisfaction of amounts due by settlement in other than cash or Cash Equivalents
after giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness.
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Section 3 Securities Subordinated to Prior Payment
of All Senior Indebtedness on Dissolution, Liquidation or Reorga-
nization.
Upon any distribution of assets of the Company or any
Guarantor upon any dissolution, winding up, total or partial liquidation or
reorganization of the Company or a Guarantor, whether voluntary or involuntary,
in bankruptcy, insolvency, receivership or a similar proceeding or upon
assignment for the benefit of creditors or any marshalling of assets or
liabilities:
(i) the holders of all Senior Indebted-
ness of the Company or such Guarantor, as applicable, will first be
entitled to receive payment in full in cash or Cash Equivalents (or
have such payment duly provided for) or otherwise to the extent holders
accept satisfaction of amounts due by settlement in other than cash or
Cash Equivalents before the Holders are entitled to receive any payment
on account of principal of, premium, if any, and interest on the Notes
(other than Junior Securities); and
(ii) any payment or distribution of
assets of the Company or such Guarantor of any kind or character from
any source, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the
Holders would be entitled (by set-off or otherwise), except for the
provisions of Article VIII, will be paid by the liquidating trustee or
agent or other Person making such a payment or distribution directly to
the holders of such Senior Indebtedness or their representative to the
extent necessary to make payment in full in cash or Cash Equivalents
(or have such payment duly provided for) on all such Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Section 4 Securityholders to Be Subrogated to
Rights of Holders of Senior Indebtedness.
Subject to the payment in full in Cash or Cash Equivalents of
all Senior Indebtedness of the Company and the Guaran-
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tors as provided herein, the Holders of Securities shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company and the Guarantors applicable to the
Senior Indebtedness until all amounts owing on the Securities shall be paid in
full, and for the purpose of such subrogation no such payments or distributions
to the holders of such Senior Indebtedness by or on behalf of the Company or the
Guarantors, or by or on behalf of the Holders by virtue of this Article XII,
which otherwise would have been made to the Holders shall, as between the
Company and Guarantors and the Holders, be deemed to be payment by the Company
or Guarantors or on account of such Senior Indebtedness, it being understood
that the provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article XII shall
have been applied, pursuant to the provisions of this Article XII, to the
payment of amounts payable under Senior Indebtedness of the Company or the
Guarantors, then the Holders shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders
of Senior Indebtedness in excess of the amount sufficient to pay all amounts
payable under or in respect of such Senior Indebtedness in full in Cash or Cash
Equivalents.
Section 5 Obligations of the Company Unconditional.
Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company and Guarantors and the Holders, the obligation of each such Person,
which is absolute and unconditional, to pay to the Holders the principal of,
premium, if any, and interest and Liquidated Damages on the Securities as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company and the Guarantors other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the
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rights, if any, under this Article XII and under the proviso to Section 2, of
the holders of Senior Indebtedness in respect of cash, property or securities of
the Company or the Guarantors received upon the exercise of any such remedy or
otherwise. Notwithstanding anything to the contrary in this Article XII or
elsewhere in this Indenture or in the Securities, upon any distribution of
assets of the Company referred to in this Article XII, the Trustee, subject to
the provisions of Sections 7.1 and 7.2, and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the liquidating Trustee or agent or other
Person making any distribution to the Trustee or to the Holders for the purpose
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company and the
Guarantors, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article XII
so long as such court has been apprised of the provisions of, or the order,
decree or certificate makes reference to, the provisions of this Article XII.
Nothing in this Section 12.5 shall apply to the claims of, or payments to, the
Trustee under or pursuant to Section 7.
Section 6 Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice.
The Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee unless and until a Trust Officer of the Trustee or any Paying
Agent shall have received, no later than two Business Days prior to such
payment, written notice thereof from the Company or from one or more holders of
Senior Indebtedness or from any representative therefor and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, shall be entitled in all respects conclusively to assume
that no such fact exists. The Company shall give prompt written notice to the
Trustee of any fact actually known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
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Section 7 Application by Trustee of Assets
Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Securityholders
and, to the extent allocated for the payment of Securities, shall not be subject
to the subordination provisions of this Article XII. Otherwise, any deposit of
assets with the Trustee or any Paying Agent (whether or not in trust) for the
payment of principal of or interest on any Securities shall be subject to the
provisions of Sections 12.1, 12.2, 12.3 and 12.4; provided that, if prior to two
Business Days preceding the date on which by the terms of this Indenture any
such assets may become distributable for any purpose (including without
limitation, the payment of either principal of or interest on any Security) the
Trustee or such Paying Agent shall not have received with respect to such assets
the written notice provided for in Section 12.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such date.
Section 8 Subordination Rights Not Impaired by Acts or
Omissions of the Company, Guarantors or Holders of Senior Indebtedness, Etc.;
Modifications.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article XII
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company, the Guarantors or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Company or the
Guarantors with the terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with. The holders of
Senior Indebtedness may extend, renew, modify or amend the terms of the Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company and the Guarantors, all
without affecting the liabilities and obligations of the parties to this
Indenture or the Holders. The subordination provisions are solely for the
benefit of the holders from time to time of Senior Indebtedness and may not be
rescinded, cancelled,
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amended or modified in any way other than any amendment or modification that
would not adversely affect the rights of any holder of Senior Indebtedness or
any amendment or modification that is consented to by each holder of Senior
Indebtedness that would be affected thereby. The subordination provisions of
this Article XII shall continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Senior Indebtedness is,
pursuant to applicable law, avoided, recovered or rescinded or must otherwise be
restored or returned by any holder of Senior Indebtedness, whether as a
"voidable preference," "fraudulent conveyance," "fraudulent transfer," or
otherwise, all as though such payment or performance had not been made.
Section 9 Securityholders Authorize Trustee to
Effectuate Subordination of Securities.
Each Holder of the Securities by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provisions
contained in this Article XII and to protect the rights of the Holders pursuant
to this Indenture, and appoints the Trustee his attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company or any Guarantor (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company and
the Guarantors) the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of
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Senior Indebtedness or their representative to vote in respect of the claim of
any Securityholder in any such proceeding.
Section 10 Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth
in this Article XII in respect of any Senior Indebtedness at any time held by it
to the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
Section 11 Article XII Not to Prevent Events of Default.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Securities by reason of any provision of
this Article XII shall not be construed as preventing the occurrence of a
Default or an Event of Default under Section 1 or in any way limit the rights
of the Trustee or any Holder to pursue any other rights or remedies with respect
to the Securities.
Section 12 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
Notwithstanding anything to the contrary herein, the Trustee
shall not be deemed to owe any fiduciary duty to any present or future holders
of Senior Indebtedness, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or Guarantors
or any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise. The
Trustee undertakes to perform or to observe only such of the covenants and
obligations as are specifically set forth in this Article XII, and no implied
covenants or obligations with respect to such holders of Senior Indebtedness
shall be implied in this Indenture against the Trustee. Nothing in this Section
12.12 shall affect the obligation of any other such Person to hold such payment
for the benefit of, and to pay such payment over to, the holders of
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Senior Indebtedness or their representative. In the event of any conflict
between the fiduciary duty of the Trustee to the Holders of Securities and its
duty to the holders of Senior Indebtedness, the Trustee is expressly authorized
to resolve such conflict in favor of the Holders.
ARTICLE XIII
MISCELLANEOUS
Section 1 TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
upon qualification of this Indenture under the TIA, shall control.
Section 2 Notices.
Any notices or other communications to the Company, the
Guarantors or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telecopier or
registered or certified mail, postage prepaid, return receipt requested, or by
overnight courier addressed as follows:
if to the Company or any Guarantor:
UROHEALTH Systems, Inc.
5 Civic Plaza Blvd., Suite 100
Newport Beach, CA 92660
Attention: Kevin Higgins, Esq.
Telephone: (714) 668-5858
Telecopy: (714) 668-5824
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if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telephone: (212) 815-5084
Telecopy: (212) 815-5915
The Company, the Guarantors or the Trustee by notice to each
other party may designate additional or different addresses as shall be
furnished in writing by such party. Any notice or communication to the Company,
the Guarantors or the Trustee shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and 5 Business Days after mailing if sent by registered or certified
mail, postage prepaid (except that a notice of change of address shall not be
deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Guarantors, the Trustee, the Registrar and any
other Person shall have the protection of TIA Section 312(c).
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Section 4 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:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
Section 5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person
making such certificate or opinion has read such cove-
nant or condition;
(2) a brief statement as to the
nature and scope of the examination or investigation
upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opin-
ion of such Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether or
not, in the opinion of each such Person, such condition
111
<PAGE> 121
or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
Section 6 Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules for action by or
at a meeting of Securityholders. The Paying Agent or Registrar
may make reasonable rules for its functions.
Section 7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York are not required to be open. If a payment date is a Legal Holiday
in New York, New York, payment may be made at such place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL 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 CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH
GUARANTOR IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE
PROCESS IN ANY
112
<PAGE> 122
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY OTHER
JURISDICTION.
Section 9 No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of any of the Company, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 10 No Recourse Against Others.
No direct or indirect stockholder, employee, officer or
director, as such, past, present or future of the Company, the Guarantors or any
successor entity shall have any personal liability in respect of the obligations
of the Company or the Guarantors under this Indenture or the Notes by reason of
its status as such stockholder, employee, officer or director, except to the
extent such Person is the Company or a Guarantor. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
Section 11 Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Securities shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 12 Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
113
<PAGE> 123
Section 13 Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
Section 14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of
the Articles and the Sections of this Indenture 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.
114
<PAGE> 124
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
UROHEALTH SYSTEMS, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President
and Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
THE BANK OF NEW YORK
By: /s/ VIVIAN GEORGES
----------------------------------------
Name: Vivian Georges
Title: Assistant Vice President
<PAGE> 125
GATES PLASTICS
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
DACOMED CORPORATION
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President
and Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
DACOMED INTERNATIONAL, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
<PAGE> 126
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
ALLSTATE MEDICAL PRODUCTS, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
UROHEALTH OF KENTUCKY, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
<PAGE> 127
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
<PAGE> 128
MICROSURGE, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
OSBON MEDICAL SYSTEMS, LTD.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
NT REUDT CORPORATION
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
<PAGE> 129
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
INTERMED ASSOCIATES, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
LAPAROMED CORPORATION
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
<PAGE> 130
Title: Senior Vice President, Gen-
eral Counsel and Secretary
ADVANCED UROCARE, INC.
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
UROHEALTH, INC. (CALIFORNIA)
By: /s/ JAMES L. JOHNSON
----------------------------------------
Name: James L. Johnson
Title: Executive Vice President and
Chief Financial Officer
By: /s/ KEVIN M. HIGGINS
----------------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President, Gen-
eral Counsel and Secretary
<PAGE> 131
EXHIBIT A
[FORM OF NOTE]
UROHEALTH SYSTEMS, INC.
12.5% SENIOR SUBORDINATED NOTES
DUE 2004
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole 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. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or their 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 requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is 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 for so long as the
registered owner hereof, Cede & Co., has an interest herein.(1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
- ------------------------
(1) This paragraph should only be added if the Security is
issued in global form.
A-1
<PAGE> 132
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(A) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (D) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED IN THE CASE OF (B), (C) AND (D) UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
A-2
<PAGE> 133
CUSIP NO.______
No. $
UROHEALTH Systems, Inc., a Delaware corporation (the
"Company") which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promise, jointly and
severally, to pay to _____, or registered assigns, the principal sum of _____
Dollars, on April 1, 2004.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Reference is made to the further provisions of this Security
on the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
A-3
<PAGE> 134
IN WITNESS WHEREOF, the Company have caused this Instrument to
be duly executed under its corporate seal.
UROHEALTH SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
Attest: _______________
<PAGE> 135
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-
mentioned Indenture.
Dated:
THE BANK OF NEW YORK
As Trustee
By:
----------------------------------------
Authorized Signatory
A-5
<PAGE> 136
UROHEALTH SYSTEMS, INC.
12.5% SENIOR SUBORDINATED NOTES
DUE 2004
1. Interest.
UROHEALTH Systems, Inc., a Delaware corporation (the
"Company"), jointly and severally, promise to pay interest on the principal
amount of this Security at a rate of 12.5% per annum. To the extent it is
lawful, the Company promises to pay interest on any interest payment due but
unpaid on such principal amount at a rate of 12.5% per annum compounded
semiannually.
The Company will pay interest semiannually on April 1 and
October 1 of each year (each, an "Interest Payment Date"), commencing October 1,
1997. Interest on the Securities will accrue from the date of issuance or from
the most recent date to which interest has been paid on the Securities pursuant
to the Indenture. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest (and Liquidated Damages, if
any) on the Securities (except defaulted interest) to the Persons who are the
registered Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. Except as provided below, the
Company shall pay principal and interest (and Liquidated Damages, if any) in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for payment of public and private debts ("Cash"). The
Securities will be payable as to principal, premium and interest (and Liquidated
Damages, if any) at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the Company,
payment of principal, premium and interest (and Liquidated Damages, if any) may
be made by check mailed to the Holders at their addresses set forth in the
register of
A-6
<PAGE> 137
Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest (and
Liquidated Damages, if any) and premium on all Global Securities and all other
Securities the Holders of which shall have provided, prior to the relevant
Record Date, written wire transfer instructions to the Company and the Paying
Agent.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or Co-registrar without notice to the Holders. The Company or any of their
respective Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as
of April 10, 1997 (the "Indenture"), among the Company, the Guarantors named
therein and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act, as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders of Securities are referred
to the Indenture and said Act for a statement of them. The Securities are senior
subordinated obligations of the Company limited in aggregate principal amount to
$110,000,000.
5. Redemption.
Except as provided in this Paragraph 5 or as provided in
Article III of the Indenture, the Company shall not have the right to redeem any
Securities prior to April 1, 2001. The Notes will be redeemable for cash at the
option of the Company, in whole or in part at any time on or after April 1,
2001, upon not less than 30 days nor more than 60 days notice to each Holder of
Notes, at the following Redemption Price (expressed as a percentage of principal
amount),
A-7
<PAGE> 138
if redeemed during the 12-month period commencing April 1 of each of
the years indicated below, in each case (subject to the right of Holders of
record on the Record Date to receive interest due on an Interest Payment Date
that is on or prior to such Redemption Date), together with any accrued but
unpaid interest and Liquidated Damages, if any, to the Redemption Date:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 ................................ 106.250%
2002 ................................ 103.125%
2003 and thereafter.................. 100.000%
</TABLE>
Until April 1, 2000, upon a Public Equity Offering of Common
Stock resulting in net cash proceeds to the Company of at least $40 million, up
to 35% of the aggregate principal amount of the Notes may be redeemed at the
option of the Company within 120 days of such Public Equity Offering, on not
less than 30 days, but not more than 60 days notice to each Holder of the Notes
to be redeemed, with cash from the Net Cash Proceeds of such Public Equity
Offering, at a redemption price equal to 112 1/2% of the principal amount to be
redeemed (subject to the right of Holders of record on a Record Date to receive
interest due on an Interest Payment Date that is on or prior to such Redemption
Date), together with accrued and unpaid interest and Liquidated Damages, if any,
to the date of redemption; provided, however, that immediately following such
redemption not less than 65% of the aggregate principal amount of the Securities
remain outstanding.
Any redemption of the Securities shall comply with Article III
of the Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail at least
30 days but not more than 60 days prior to the date fixed for redemption to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Note to
be redeemed in part only must state the portion of
A-8
<PAGE> 139
the principal amount equal to the redeemed portion thereof and must state that
on and after the date of redemption, upon surrender of such Note, a new Note or
Notes in a principal amount equal to the unredeemed portion thereof will be
issued. On and after the date of redemption, interest will cease to accrue on
the Notes or portions thereof called for redemption, unless the Company defaults
in the payment thereof.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except the unredeemed
portion of Securities being redeemed in parts) or any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer to
purchase.
A-9
<PAGE> 140
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will pay the money
back to the Company at its written request. After that, all liability of the
Trustee and such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposit into an irrevocable trust
with the Trustee Cash or U.S. Government Obligations sufficient to pay the
principal of and interest (and Liquidated Damages, if any) on the Securities to
redemption or maturity and comply with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Securities (including the financial covenants, but excluding
its obligation to pay the principal of and interest (and Liquidated Damages, if
any) on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
comply with the TIA or make any other change that does not adversely affect the
rights of any Holder of a Security.
A-10
<PAGE> 141
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and their respective Subsidiaries to, among other things, incur
additional Indebtedness and Disqualified Capital Stock, make payments in respect
of its Capital Stock, enter into transactions with Affiliates, incur Liens,
merge or consolidate with any other Person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each
Holder of Securities shall have the right, at such Holder's option but subject
to the limitations and conditions set forth in the Indenture, to require the
Company to purchase on the Change of Control Purchase Date in the manner
specified in the Indenture, all or any part (in integral multiples of $1,000) of
such Holder's Securities at a cash price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest (and Liquidated Damages, if
any) to and including the Change of Control Purchase Date.
14. Certain Asset Sales.
The Indenture imposes certain limitations on the ability of
the Company to sell assets. In the event the proceeds from a permitted Asset
Sale exceed certain amounts, as specified in the Indenture, the Company
generally will be required either to reinvest the proceeds of such Asset Sale in
its business, use such proceeds to retire debt, or to make an asset sale offer
to purchase a certain amount of each Holder's Securities at 100% of the
principal amount thereof, plus accrued interest, if any, to the purchase date,
as more fully set forth in the Indenture
15. Ranking.
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<PAGE> 142
Payment of principal, premium, if any, and interest on the
Securities is subordinated, in the manner and to the extent set forth in the
Indenture, to the prior payment in full of all Senior Indebtedness.
16. Security.
The Holders shall have the benefit of an exclusive first
priority security interest in the account holding all Government Securities, and
all other cash or property, pledged pursuant to the Security Agreement.
17. Successors.
When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power.
19. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its respective Affiliates, and may otherwise deal with the
Company or its Affiliates as if it were not the Trustee.
A-12
<PAGE> 143
20. No Personal Liability of Partners, Stockholders,
Officers and Directors.
No direct or indirect stockholder, employee, officer or
director, as such, past, present or future of the Company, the Guarantors or any
successor entity shall have any personal liability in respect of the obligations
of the Company or the Guarantors under or the Indenture or the Notes by reason
of its status as such stockholder, employee, officer or director, except to the
extent such Person is the Company or a Guarantor. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company will cause CUSIP numbers
to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
A-13
<PAGE> 144
24. Governing Law.
The Indenture and the Securities shall be governed by and
construed in accordance with the internal laws of the State of New York.
A-14
<PAGE> 145
[FORM OF ASSIGNMENT]
I or we assign this Security to
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying
number of assignee _________________
and irrevocably appoint ___________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Dated: __________ Signed:_____________________________________________________
___________________________________________________________________
(Sign exactly as your name appears on the other side of
this Security)
Signature guarantee:________________________________
A-15
<PAGE> 146
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 13 or Article X of the Indenture, check the
appropriate box:
[ ] Section 13
[ ] Article X
If you want to elect to have only part of this Security
purchased by the Company pursuant to the Indenture, state the principal amount
you want to have purchased:
$______
Date: ________________ Signature:_____________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature guarantee:_______________________
A-16
<PAGE> 147
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(2)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<S> <C> <C> <C> <C>
Signature
Amount of Amount of Principal Amount authorized
decrease in increase in of this Global signatory of
Principal Amount Principal Amount Security following Trustee or
of this Global of this Global such decrease (or Securities
Date of Exchange Security Security increase) Custodian
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-------------------------
(2) This schedule should only be added if the Security is issued
in global form.
A-17
<PAGE> 148
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF SECURITIES(3)
Re: 12.5% SENIOR SUBORDINATED NOTES DUE 2004 OF UROHEALTH
SYSTEMS, INC.
This Certificate relates to $______ principal amount of Securities held
in (4) [_] book-entry or [_] definitive form by _______ (the "Transferor").
The Transferor:
[_] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a Security or
Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[_] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:(5)
_____________________________
(3) The following should be included only for Original Notes.
(4) Check applicable box.
A-18
<PAGE> 149
[_] Such Security is being acquired for the Transferor's own account, without
transfer (in accordance with Section 6(a)(ii)(A) or Section 6(d)(i)(A) of
the Indenture).
[_] Such Security is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in accordance with Section
6(a)(ii)(B) or Section 6(d)(i)(B) of the Indenture).
[_] Such Security is being transferred in accordance with (i) Rule 144 or
Regulation S under the Securities Act, (ii) pursuant to an effective
registration statement under the Securities Act, or (iii) in reliance on another
exemption from registration under the Securities Act (in satisfaction of Section
2.6(a)(ii)(C) or Section 6(d)(i)(C) of the Indenture). To effect such
transfer, delivery of an Opinion of Counsel is required.
______________________________________
[INSERT NAME OF TRANSFEROR]
______________________________________
By:
Dated:____________________
A-19
<PAGE> 150
EXHIBIT B
FORM OF GUARANTEE
For value received, __________________, a _______________ corporation,
hereby irrevocably, unconditionally guarantees on a senior subordinated basis to
the Holder of the Security upon which this Guarantee is endorsed the due and
punctual payment, as set forth in the Indenture pursuant to which such Security
and this Guarantee were issued, of the principal of, premium (if any) and
interest (and Liquidated Damages, if any) on such Security when and as the same
shall become due and payable for any reason according to the terms of such
Security and Article XI of the Indenture. The Guarantee of the Security upon
which this Guarantee is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
______________________________
By:___________________________
______________________________
Attest:
B-1
<PAGE> 1
EXHIBIT 4.2
$110,000,000
UROHEALTH Systems, Inc.
12.5% Senior Subordinated Notes due 2004
PURCHASE AGREEMENT
April 3, 1997
<PAGE> 2
PURCHASE AGREEMENT
April 3, 1997
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
UROHEALTH Systems, Inc., a corporation organized and existing
under the laws of Delaware (the "Company") proposes, subject to the terms and
conditions stated herein, to issue and sell to you (the "Initial Purchaser")
110,000 units (the "Securities") consisting of (i) $110,000,000 aggregate
principal amount of its 12.5% Senior Subordinated Notes due 2004 (the "Notes"),
to be issued pursuant to an indenture dated as of April 10, 1997 (the
"Indenture") among the Company, the Guarantors signatory hereto (the
"Guarantors") and The Bank of New York, as trustee (the "Trustee") and (ii)
warrants (the "Warrants") to purchase an aggregate (subject to certain
contingencies) of 996,451 shares of the common stock, par value $.001 per share
of the Company (the "Common Stock"). The Securities are to be guaranteed (the
"Guarantees") by the Guarantors. The Guarantees shall be in the form contained
in the Indenture. Unless the context requires otherwise, all references herein
to the Notes shall be deemed to include the Guarantees. The shares of Common
Stock issuable upon exercise of the Warrants are collectively referred to
herein as the "Warrant Shares." The Warrants are to be issued pursuant to the
provisions of a warrant agreement to be dated as of April 10, 1997 (the
"Warrant Agreement"), by and between the Company and The Bank of New York, as
warrant agent (the "Warrant Agent").
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Act"), in reliance on an exemption therefrom. The Company has prepared a
preliminary offering memorandum, dated March 14, 1997 (such preliminary
offering memorandum being hereinafter referred to as the "Preliminary Offering
Memorandum"),
<PAGE> 3
and an offering memorandum, dated April 3, 1997 (such offering memorandum, in
the form first furnished to the Initial Purchaser for use in connection with
the offering of Securities, being hereinafter referred to as the "Offering
Memorandum"), setting forth information regarding the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Securities. All capitalized terms used and not
defined herein shall have the meaning set forth in the Offering Memorandum.
The Securities shall be immediately separable into Notes and
Warrants. Unless the context requires otherwise, references herein to
"Securities" shall be deemed to include the Notes and Warrants following any
such separation.
The Company understands that you propose to make an offering
of the Securities on the terms set forth in the Offering Memorandum, as soon as
you deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom you reasonably believe to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
promulgated by the Securities and Exchange Commission (the "Commission") under
the Act, as such rule may be amended from time to time ("Rule 144A"), in a
transaction under Rule 144A and (ii) to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Act).
1. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the
basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, (i) the
Company hereby agrees to issue and sell the Securities to the Initial
Purchaser, and (ii) the Initial Purchaser hereby agrees to purchase from the
Company, at a purchase price of $ 106.7 million (the "Purchase Price"), $110
million aggregate principal amount of Securities.
Delivery of and payment of the Purchase Price for the
Securities shall be made in your offices at 245 Park Avenue, New York, New York
10167, or at such other place as the Initial Purchaser shall reasonably
designate. Such delivery and payment shall be made at 9:00 a.m., local time,
on April 10, 1997, or at such other time as shall be agreed upon by you and the
Company. The time and date of such delivery and payment are herein called the
"Closing Date." Delivery of the Securities shall be made to you for your
account against payment of the purchase price for the Securities by wire
transfer of immediately available funds to
2
<PAGE> 4
an account or accounts to be designated by the Company at least one business
day prior to the Closing Date.
The Securities shall be registered in such name or names and
in such authorized denominations as you may request in writing at least two
full business days prior to the Closing Date. The Company will permit you to
examine and package such Securities for delivery at least one full business day
prior to the Closing Date.
The Initial Purchaser has advised the Company that the Initial
Purchaser proposes to offer the Securities for resale upon the terms and
conditions set forth in this Agreement and in the Offering Memorandum. The
Initial Purchaser hereby represents and warrants to, and agrees with, the
Company that it (i) has not and will not solicit offers for, or offer or sell,
such Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act, (ii) will solicit offers for such Securities pursuant to Rule 144A or
resales not involving a public offering, as applicable, only from, and will
offer, sell or deliver such Securities, as part of its distribution thereof,
only to, respectively, (A) persons in the United States whom it reasonably
believes to be Qualified Institutional Buyers and (B) institutional "accredited
investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the Act,
provided, however, that each such "accredited investor" must complete and
deliver to such Initial Purchaser an investment letter substantially in the
form of Appendix A to the Offering Memorandum prior to acceptance of any order,
(iii) is a Qualified Institutional Buyer, with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Securities and (iv) will, during its initial
distribution of the Securities, unless prohibited by applicable law, furnish to
each person to whom it offers any Securities a copy of the Preliminary Offering
Memorandum and will, during its initial distribution of the Securities, furnish
to each person to whom it sells any Securities a copy of the Offering
Memorandum.
2. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the
Company and the Guarantors hereby agrees with each of you that:
(a) The Company and each Guarantor will cooperate
with the Initial Purchaser in endeavoring to qualify the Securities for sale
under the securities laws of such jurisdictions as the Initial Purchaser may
reasonably have
3
<PAGE> 5
designated in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose;
provided that neither the Company nor any Guarantor shall be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction where it is not now so qualified or required to
file such a consent. The Company and the Guarantors will, from time to time,
prepare and file such statements, reports, and other documents, as are or may
be required to continue such qualifications in effect for so long a period as
the Initial Purchaser may reasonably request for distribution of the
Securities.
(b) At any time prior to the completion of the
distribution of the Securities by the Initial Purchaser, the Company will give
the Initial Purchaser notice of its intention to prepare any supplement or
amendment to the Offering Memorandum, will furnish the Initial Purchaser with
copies of any such amendment, supplement or other document a reasonable amount
of time prior to such proposed use, and will not use any such amendment or
supplement to which the Initial Purchaser or counsel for the Initial Purchaser
shall reasonably object within five days of being furnished a copy thereof.
(c) The Company has furnished or will furnish to the
Initial Purchaser such number of copies of the Offering Memorandum (as amended
or supplemented) as the Initial Purchaser may reasonably request.
(d) At any time prior to the completion of the
distribution of the Securities by the Initial Purchaser, the Company will
advise you promptly and, if requested by you, confirm such advice in writing,
of the happening of any event that makes any statement of a material fact made
in the Offering Memorandum (as amended or supplemented from time to time)
untrue or which requires the making of any additions to or changes in the
Offering Memorandum (as amended or supplemented from time to time) in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. If, during the period specified in the first
sentence of this paragraph, any event shall occur as a result of which it is
necessary, in the reasonable judgment of the Initial Purchaser, to amend or
supplement the Offering Memorandum in order to make the Offering Memorandum not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company will forthwith amend or supplement the
Offering Memorandum (in form and substance reasonably satisfactory to the
Initial Purchaser) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of material fact or omit to
state a material fact
4
<PAGE> 6
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to the purchaser, not
misleading, and the Company will furnish to the Initial Purchaser of copies of
such amendment or supplement in an amount reasonably requested by the Initial
Purchaser.
(e) At any time prior to completion of the
distribution of the Securities by the Initial Purchaser, the Company and each
of its direct and indirect subsidiaries (including without limitation
Microsurge, Inc., but excluding all inactive subsidiaries incorporated outside
of the United States, the "Subsidiaries") will, as required, file promptly all
documents required to be filed with the Commission pursuant to Section 13, 14,
or 15(d) of the Exchange Act.
(f) Neither the Company nor the Guarantors will
solicit any offer to buy or offer or sell the Securities by means of any form
of general solicitation or general advertising.
(g) Neither the Company nor the Guarantors nor any
affiliate of any of them (as defined in Rule 501(b) of the Act) will offer,
sell or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Act) which will be integrated with the sale of the
Securities in a manner that would require the registration of the Securities
under the Act.
(h) During the period from the Closing Date to three
years after the Closing Date, neither the Company, the Guarantors nor their
respective subsidiaries will, and will not permit any "affiliate" (as defined
in Rule 144 under the Act) of any of them to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the Company,
the Guarantors, or any of their respective affiliates and resold in a
transaction registered under the Act.
(i) The Company will, so long as the Securities are
outstanding and any Securities are "restricted securities" within the meaning
of Rule 144(a)(3) under the Act, either (i) timely file reports and other
information with the Commission under Section 13 or 15(d) of the Exchange Act,
or (ii) in the event it is not subject to Section 13 or 15(d) of the Exchange
Act, make available to holders of the Securities and prospective purchasers of
the Securities designated by such holders, upon request of such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Act to permit compliance with Rule 144A in connection with
resales of the Securities.
5
<PAGE> 7
(j) The Company will, if requested by the Initial
Purchaser, use its best efforts in cooperation with the Initial Purchaser to
permit the Securities to be eligible for clearance and settlement through The
Depository Trust Company.
(k) Each of the Securities will bear the legend
contained in "Notice to Investors" in the Offering Memorandum and upon the
other terms stated therein, except after such Securities are resold or
exchanged pursuant to a registration statement effective under the Act.
(l) The Company will, for the shorter of the period
the Securities remain outstanding and five years from the Closing Date, deliver
to the Initial Purchaser copies of annual reports and copies of all other
documents, reports and information furnished by the Company or any of the
Guarantors to their securityholders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant
to the Act or the Exchange Act.
(m) The Company and the Guarantors shall apply the
net proceeds of their sale of the Securities as set forth in the Offering
Memorandum including, without limitation, depositing funds into escrow in an
amount sufficient to satisfy the payment of interest on the Notes on each of
the first three Interest Payment Dates pursuant to the terms of an escrow
agreement (the "Escrow Agreement") to be dated as of April 10, 1997, by and
between the Company and The Bank of New York, as escrow agent (the "Escrow
Agent").
(n) The Company and the Guarantors shall not invest,
or otherwise use the proceeds received by them from their sale of the
Securities in such a manner as would require the Company or any of the
Subsidiaries to register as an investment company under the 1940 Act or the
rules and regulations thereunder.
(o) The Company and the Guarantors will not claim
the benefit of any usury laws against any holders of Securities or Guarantees,
respectively.
(p) The Company will use its reasonable best efforts
to do and perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Date and to satisfy all
conditions precedent on its part to the delivery of the Securities.
6
<PAGE> 8
(q) During the period beginning on the date of this
Agreement and continuing to and including the Closing Date, except as described
in the Offering Memorandum, there will be no transactions entered into by the
Company or any of the Guarantors which are material with respect to the Company
and the Subsidiaries taken as a whole, and during such period there will be no
dividend or distribution of any kind declared, paid or made by the Company on
any class of capital stock or other equity interests.
(r) Whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, the Company and the
Guarantors agree with you, jointly and severally, that they will pay and be
responsible for all costs, charges, liabilities, expenses, fees and taxes
incurred in connection with or incident to (i) the preparation, printing
(including word processing), distribution and delivery of the Offering
Memorandum (including financial statements and exhibits), each preliminary
offering memorandum, and all amendments and supplements to any of them, (ii)
the preparation, printing (including word processing), execution, distribution
and delivery of this Agreement, the Indenture, the Registration Rights
Agreement, the registration rights agreement relating to the Warrant Shares
(the "Warrant Shares Registration Rights Agreement") the Escrow Agreement, the
Warrant Agreement, the certificates representing the Securities, the
preliminary and final Blue Sky memoranda and all other agreements, memoranda,
correspondence and other documents printed, distributed and delivered in
connection with the offering and sale of the Securities (excluding in each case
any fees and disbursements of counsel for the Initial Purchaser, other than
such fees and disbursements relating to the printing and delivery of the
preliminary and final Blue Sky Memoranda specified in clause (iii) below),
(iii) the qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the jurisdictions referred to in paragraph 2(a)
(including in each case the reasonable fees and disbursements of counsel for
the Initial Purchaser relating to such qualification and any memoranda relating
thereto and any filing fees in connection therewith), (iv) furnishing such
copies of the Offering Memorandum, the Preliminary Offering Memorandum and all
amendments and supplements thereto as may be reasonably requested for use in
connection with the offering or sale of the Securities by the Initial Purchaser
or by dealers to whom Securities may be sold, (v) the rating of the Securities
by one or more rating agencies, (vi) the fees and expenses of the Trustee, the
Warrant Agent, the Escrow Agent and any of their agents and the fees and
disbursements of counsel for the Trustee, the Warrant Agent and the Escrow
Agent in connection with the Indenture, the Warrant Agreement, the Escrow
7
<PAGE> 9
Agreement and the Securities and (vii) the performance by the Company and the
Guarantors of their other obligations under this Agreement, including (without
limitation) the cost of printing and engraving the certificates representing
the Securities and all expenses and taxes incident to the sale and delivery of
the Securities to you. The Company hereby agrees and acknowledges that the
Initial Purchaser shall not be responsible for any fees or expenses of the
Company or the Guarantors in connection with the performance by any of them of
their obligations under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
GUARANTORS. Each of the Company and Guarantors, jointly and severally,
represents and warrants to, and agrees with, you that:
(a) As of their respective dates, the Preliminary
Offering Memorandum and the Offering Memorandum do not, and at the Closing Date
(as defined herein) the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or amendment to them) made in reliance upon and in conformity with
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein.
The Company acknowledges for all purposes under this Agreement that the last
paragraph on the cover page, and the fifth paragraph and the last sentence of
the seventh paragraph under the caption "Plan of Distribution" in the Offering
Memorandum constitute the only written information (the "Initial Purchaser
Information") furnished to the Company by the Initial Purchaser expressly for
use in the Preliminary Offering Memorandum (or the Offering Memorandum) and
that the Initial Purchaser shall not be deemed to have provided any other
information (and therefore is not responsible for any such statement or
omission) pertaining to any arrangement or agreement with respect to any party
other than the Initial Purchaser.
(b) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any governmental
body, agency or official which prevents the issuance of the Securities,
prevents or suspends the use of the Offering Memorandum or the Preliminary
Offering Memorandum or suspends the sale of the Securities in any jurisdiction
referred to in Section 2(a)
8
<PAGE> 10
hereof; no injunction, restraining order or order of any nature by any foreign,
Federal or state court of competent jurisdiction has been issued with respect
to the Company or any of the Subsidiaries which would prevent or suspend the
issuance or sale of the Securities or the use of the Offering Memorandum or the
Preliminary Offering Memorandum in any jurisdiction referred to in Section 2(a)
hereof; and no action, suit or proceeding before any court or arbitrator or any
governmental body, agency or official, domestic or foreign, is pending against
or, to the best of the Company's and the Guarantors' knowledge, threatened
against, the Company or any of the Subsidiaries which, if adversely determined,
could interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity of this Agreement, the Securities,
the Indenture, the Registration Rights Agreement, the Warrant Shares
Registration Rights Agreement, the Warrant Agreement or the Escrow Agreement.
(c) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum under the
caption, "Capitalization"; all of the shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid, nonassessable and not subject to any preemptive or similar rights; the
capital stock of the Company conforms in all material respects to all
statements relating thereto in the Preliminary Offering Memorandum and the
Offering Memorandum; and neither the issuance of the Securities nor the
issuance of the Warrant Shares by the Company will be subject to preemptive or
other similar rights.
(d) This Agreement has been duly authorized and
validly executed and delivered by the Company and the Guarantors, and
constitutes a valid and binding agreement of each of them, enforceable against
each of them in accordance with its terms (assuming due authorization,
execution and delivery by all other parties hereto), subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that indemnification
from liability in connection with the Federal securities laws may be
unenforceable.
(e) The execution and delivery of this Agreement,
the issuance and sale, as applicable, of the Securities, the performance of
this Agreement, the Indenture, the Registration Rights Agreement, the Warrant
Shares Registration Rights Agreement, the Warrant Agreement, the Escrow
Agreement and the con-
9
<PAGE> 11
summation of the transactions contemplated hereby and thereby will not conflict
with or constitute or result in a breach or violation of (or an event which,
with notice or lapse of time, or both, would constitute a breach or violation
of) the charters or bylaws of the Company or any of the Guarantors or any of
the terms or provisions of, or constitute a default or cause an acceleration of
any obligation under or result in the imposition or creation of (or the
obligation to create or impose) any security interest, mortgage, pledge, claim,
lien, encumbrance or adverse interest of any nature (each, a "Lien") with
respect to, any material obligation, bond, agreement, note, debenture, or other
evidence of indebtedness, or any indenture, mortgage, deed of trust or other
agreement, lease, license or instrument to which the Company, or any of the
Subsidiaries, is a party or by which it or any of them is bound, or to which
any properties of the Company or any of the Subsidiaries is or may be subject,
or any order of any court or governmental agency, body or official having
jurisdiction over the Company or any of the Subsidiaries or any of their
properties, or violate or conflict with any statute, judgment, decree, order,
rule or regulation of any court, governmental agency or other body or
self-regulatory organization applicable to the Company or any of the
Subsidiaries, or any of their respective assets or properties.
(f) Assuming the accuracy of the representations of
the Initial Purchaser in Section 1 hereof, no authorization, approval or
consent or order of, or filing with, any court or governmental body, agency or
official is necessary in connection with the transactions contemplated by this
Agreement, the Indenture, the Registration Rights Agreement, the Warrant Shares
Registration Rights Agreement, the Warrant Agreement or the Escrow Agreement,
except such as will be obtained and made under the Federal and state securities
or Blue Sky laws or regulations and, with respect to the Registration Rights
Agreement and the Warrant Shares Registration Rights Agreement, the Act and, if
applicable, the regulations of the National Association of Securities Dealers,
Inc. (the "NASD").
(g) Each Subsidiary is a Guarantor signatory hereto.
All of the inactive subsidiaries (the "Inactive Subsidiaries") of the Company
excluded from the definition of the term "Subsidiaries" are, taken as a whole,
immaterial to the business and operations of the Company and its subsidiaries
taken as a whole and such Inactive Subsidiaries, taken as a whole, account for
less than 1% of the income and less than 1% of the assets of the Company and
its subsidiaries taken as a whole. The Company and each of the Subsidiaries
has been duly organized, is validly existing as a corporation in good standing
under the laws of its respective
10
<PAGE> 12
jurisdiction of incorporation and has the requisite power and authority to
carry on its business as it is currently being conducted, to own, lease and
operate its properties and, as applicable, to authorize the offering of the
Securities, to execute, deliver and perform its respective obligations under
this Agreement, the Indenture, the Registration Rights Agreement the Warrant
Shares Registration Rights Agreement, the Warrant Agreement, and the Escrow
Agreement, as applicable, and to issue, sell and deliver the Securities, as
applicable, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction where the operation,
ownership or leasing of property or the conduct of its business requires such
qualification, except for those cases in which failure to be so qualified or in
good standing would not have a Material Adverse Effect (as defined below).
Neither the Company nor any of the Subsidiaries is in violation of any statute,
judgment, decree, order, rule or regulation applicable to any of them or any of
their respective properties or assets, which violation could have a material
adverse effect on the properties, facilities, business, results of operations,
general affairs, management, condition (financial or otherwise), prospects, or
business affairs of the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
(h) All of the issued and outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary have been
duly authorized and validly issued, and all of the shares of capital stock of,
or other ownership interests in, each Subsidiary are owned, directly or through
Subsidiaries, by the Company, except as disclosed in the Offering Memorandum.
All such shares of capital stock are fully paid and nonassessable, are not
subject to any preemptive or similar rights, and are owned free and clear of
any Lien. There are no outstanding subscriptions, rights, warrants, options,
calls, convertible or exchangeable securities, commitments of sale, or Liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, any Subsidiary.
(i) Neither the Company nor any of the Subsidiaries
is in violation of its respective charter or bylaws or in default in the
performance of any obligation, bond, agreement, debenture, note or any other
evidence of indebtedness, or any indenture, mortgage, deed of trust or other
contract, lease, license, permit, certificate or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them is bound,
or to which any of the property or assets of the Company or of any of the
Subsidiaries is subject, which could result in a Material Adverse Effect.
11
<PAGE> 13
(j) There is no action, suit, or proceeding before
or by any court or governmental agency or body, or arbitration board or
tribunal, domestic or foreign, pending against or affecting the Company or any
of the Subsidiaries, or any of their respective assets or properties
(including, without limitation, patents, trademarks and other intellectual
property), which could have, singly or in the aggregate, a Material Adverse
Effect, or which could materially and adversely affect the Company's
performance of its obligations pursuant to this Agreement or the transactions
contemplated hereby, and to the best of the Company's and the Guarantors'
knowledge, no such action, suit, or proceeding is contemplated or threatened.
Neither the Company nor any of the Subsidiaries is subject to any judgment,
order, decree, rule or regulation of any court, governmental authority or
arbitration board or tribunal which could have a Material Adverse Effect.
(k) Neither the Company nor any of the Subsidiaries
is in violation of any Federal, state or local laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of toxic or
hazardous substances, materials or wastes, or petroleum and petroleum products
("Materials of Environmental Concern"), or otherwise relating to the protection
of human health and safety, or the storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, "Environmental Laws"),
including without limitation any violation or noncompliance with any permits or
other governmental authorizations held by the Company or any Subsidiary, in
each case which could have a Material Adverse Effect. Neither the Company nor
any Subsidiary has received any communication (written or oral), whether from a
governmental authority or otherwise, alleging any such violation or
noncompliance and, to the best knowledge of the Company after due inquiry,
there are no circumstances, either past, present or that are reasonably
foreseeable, that are likely to lead to such violation in the future; there is
no pending or threatened claim, action, investigation or notice (written or
oral) by any person or entity alleging potential liability for investigatory,
cleanup, or governmental responses costs, or natural resources or property
damages, or personal injuries, attorney's fees or penalties relating to (x) the
presence, or release into the environment, of any Materials of Environmental
Concern at any location owned or operated by the Company or any Subsidiary,
now or in the past, or (y) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law (collectively, "Environmental
Claims"); and there are
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<PAGE> 14
no past or present actions, activities, circumstances, conditions, events or
incidents, that are likely to form the basis of any Environmental Claim against
the Company or any Subsidiary or against any person or entity whose liability
for any Environmental Claim the Company or any Subsidiary has retained or
assumed either contractually or by operation of law, in each case which could
have a Material Adverse Effect. In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and the Subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties); on the basis of
such review, the Company has reasonably concluded that such associated costs
and liabilities could not, singly or in the aggregate, have a Material Adverse
Effect.
(l) Neither the Company nor any Subsidiary is in
violation of any Federal, state or local law relating to discrimination in the
hiring, promotion or pay of employees nor any applicable wage or hour laws,
which such violation would have a Material Adverse Effect. There is (A) no
unfair labor practice complaint pending against the Company or any Subsidiary
or, to the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board or any state or local labor relations
board, and no grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company or
any Subsidiary or, to the best knowledge of the Company and the Guarantors,
threatened against any of them, and (B) no labor dispute in which the Company
or any Subsidiary is involved nor, to the best knowledge of the Company and the
Guarantors, is any labor dispute imminent, other than routine disciplinary and
grievance matters, in each case which, if determined adversely to the Company,
could have a Material Adverse Effect. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations and published interpretations thereunder; no "reportable event" (as
defined in ERISA and the regulations and published interpretations thereunder)
has occurred with respect to any "pension plan" (as defined in ERISA and the
regulations and published interpretations thereunder) established or maintained
by the Company or any of the Subsidiaries; the amount of "unfunded benefit
liabilities" (as defined in ERISA and the regulations and published
interpretations thereunder) under all "pension plans" does not exceed
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<PAGE> 15
$100,000; neither the Company nor any of the Subsidiaries has incurred or
expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 4971,
4975 or 4980B of the Code; and each "pension plan" established or maintained by
the Company that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(m) Except as disclosed in the Offering Memorandum,
or as could not have, singly or in the aggregate, a Material Adverse Effect,
the Company and each Subsidiary has good and marketable title, free and clear
of all Liens, to all property and assets (including, without limitation,
patents, trademarks and other intellectual property) described in the Offering
Memorandum as being owned by it and such property and assets are in good repair
and suitable for use as so described. All leases to which the Company or any
Subsidiary is a party are valid and binding and no default has occurred or is
continuing thereunder which could result, singly or in the aggregate, in a
Material Adverse Effect, and the Company and the Subsidiaries enjoy peaceful
and undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not interfere materially with the
use made by the Company or such Subsidiary.
(n) The Company and the Subsidiaries maintain
insurance at least in such amounts and covering at least such risks as is
adequate for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(o) The firms of accountants that have certified or
shall certify the applicable consolidated financial statements and supporting
schedules and the notes thereto of the Company included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company and the Subsidiaries, as required by
the Act and the Exchange Act. The consolidated financial statements, together
with related schedules and notes, set forth in the Preliminary Offering
Memorandum and the Offering Memorandum (and any amendments or supplements
thereto), comply as to form in all material respects with the requirements of
the Act and the Exchange Act and fairly present the consolidated financial
position of the Company and the Subsidiaries at the respective dates indicated
and the results of their operations and their cash flows for the respective
periods indicated, in accordance with generally
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<PAGE> 16
accepted accounting principles in the United States of America ("GAAP")
consistently applied throughout such periods and in accordance with the
requirements of the Commission's Regulation S-X; and the other financial and
statistical information and data of the Company and the Subsidiaries included
in the Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto), historical and pro forma, are accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Company.
(p) Subsequent to the respective dates as of which
information is presented in the Offering Memorandum, (i) except as disclosed in
the Offering Memorandum, neither the Company nor any of the Subsidiaries has
incurred any liabilities or obligations, direct or contingent, which are
material to the Company and the Subsidiaries taken as a whole, nor entered into
any transaction not in the ordinary course of business, (ii) there has been no
decision or judgment in the nature of litigation, settlement or arbitration to
which the Company or any Subsidiary is a party that could have, singly or in
the aggregate, a Material Adverse Effect, and (iii) there has not been any
material adverse change, or any development which would reasonably be expected
to involve, singly or in the aggregate, a material adverse change, in the
properties, facilities, business, results of operations, general affairs,
management, condition (financial or otherwise), prospects or business affairs
of the Company and the Subsidiaries taken as a whole (any of the items set
forth in clause (i), (ii) or (iii), above, a "Material Adverse Change").
(q) All Tax Returns (as hereinafter defined)
required to be filed by the Company or any of the Subsidiaries in any
jurisdiction have been filed and all material amount of Taxes (as hereinafter
defined), including withholding Taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities have been
paid, other than those being contested in good faith and for which adequate
reserves have been provided in accordance with GAAP or those currently payable
without penalty or interest. All Tax Returns filed by the Company and the
Subsidiaries prior to the date hereof were complete and accurate in all
material respects. No material claim for assessment or collection of Taxes is
presently being asserted against the Company or the Subsidiaries. Furthermore,
the Company and the Subsidiaries are not parties to any pending action,
proceeding or investi-
15
<PAGE> 17
gation by any governmental authority for the assessment or collection of a
material amount of Taxes, nor does the Company or any Guarantor have knowledge
of any such threatened action, proceeding or investigation. No material claim
by any authority in a jurisdiction where the Company or any of the Subsidiaries
does not currently file a Tax Return to the effect that the Company or any of
the Subsidiaries is or may be subject to taxation by that jurisdiction is
pending. No Liens are presently imposed upon or asserted against any of the
Company's or any of the Subsidiaries' assets as a result of or in connection
with any failure, or alleged failure, to pay any material amount of Tax. As of
the Closing Date, the Company and the Subsidiaries will not have any agreement,
whether or not written, providing for the payment of Tax liabilities or
entitlement to refunds with any other party. The Company and the Subsidiaries
have withheld and paid all material amount of Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party with respect to the business of the
Company or the Subsidiaries. The unpaid Taxes of the Company and the
Subsidiaries do not exceed, in any material respect, the reserve for Tax
liability (as opposed to any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth on the most recent
balance sheet of the Company, as adjusted for the passage of time through the
date hereof in accordance with the past custom and practice of the Company in
filing its Tax Returns. For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean all Federal, state, local or foreign income, payroll,
employee withholding, unemployment insurance, social security, sales, use,
service use, leasing use, excise, franchise, gross receipts, value added,
alternative or add-on minimum, estimated, occupation, real and personal
property, stamp, transfer, workers' compensation, severance, windfall profits,
environmental (including taxes under Section 59A of the Internal Revenue Code
of 1986, as amended), or other tax of the same or of a similar nature,
including any interest, penalty, or addition thereto, whether disputed or not.
The term "Tax Return" means any return, declaration, report, form, claim for
refund, or information return or statement relating to Taxes or income subject
to taxation, or any amendment thereto, and including any schedule or attachment
thereto.
(r) (i) Each of the Company and the Subsidiaries
has all material certificates, consents, exemptions, orders, permits, licenses,
authorizations, or other approvals or rights (each, an "Authorization") of and
from, and has made all material declarations and filings with, all Federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, necessary or required to own,
lease, license and use its properties and assets and to conduct its business in
the manner it does as described in the Offering Memorandum in the jurisdictions
wherein presently operated, and such other certifications, accreditations and
eligibility to participate in specified programs as and
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<PAGE> 18
to the extent described in the Offering Memorandum, including, without
limitation, to the extent so described, eligibility to participate in Medicare,
Medicaid and Medi-Cal programs and accreditation by the Joint Commission on
Accreditation of Healthcare Organizations, (ii) each of the Company and the
Subsidiaries has all such Authorizations, certifications, accreditations and
determinations of eligibility and such are valid and in full force and effect,
except as could not have, singly or in the aggregate, a Material Adverse
Effect, (iii) the Company and the Subsidiaries are in compliance in all
material respects with the terms and conditions of all such Authorizations,
certifications, accreditations and determinations of eligibility and with the
rules and regulations of the regulatory authorities and governing bodies having
jurisdiction with respect thereto, except for such non-compliance as could not
have a Material Adverse Effect and (iv) neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such Authorization, certification, accreditation or
determination of eligibility (except in the ordinary course of business in
connection with the receipt of a routine survey that outlines immaterial areas
which require Company or Subsidiary action to maintain compliance or to
preclude such revocation or modification) and no such Authorization contains
any restrictions that are materially burdensome to any of them in a manner
different than applied to other companies engaged in similar businesses. The
Company and the Subsidiaries possess the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property") necessary to conduct its business as described in the
Offering Memorandum, and neither the Company nor any of the Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to the foregoing. To the best knowledge of the Company
after due inquiry, the use of such Intellectual Property in connection with the
business and operations of the Company and the Subsidiaries does not infringe
on the rights of any person.
(s) The Company and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv) the recorded accountabil-
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<PAGE> 19
ity for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(t) Neither the Company nor any of the Subsidiaries
is (i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act") or (ii) a "holding company" or a "subsidiary company" of a
holding company, or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(u) Each certificate signed by any officer of the
Company or any of the Guarantors and delivered to the Initial Purchaser or
counsel for the Initial Purchaser in connection herewith shall be deemed to be
a representation and warranty by the Company or such Guarantor to the Initial
Purchaser as to the matters covered thereby.
(v) None of the Company, any Subsidiary, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of the Subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment; or is in violation of any Federal "fraud and abuse
legislation" or Federal "anti-kickback law."
(w) All facilities owned or operated as continuing
operations by the Company or the Subsidiaries (the "Company Facilities") (i)
are certified for participation or enrollment in the Medicare, Medicaid and
Medi-Cal programs, (ii) have a current and valid provider contract with the
Medicare, Medicaid and Medi-Cal programs, and (iii) are in substantial
compliance with the terms and conditions of participation of such programs and
have received all approvals or qualifications necessary for capital
reimbursement of the Company's assets except, in each case, where such failure
would not have a Material Adverse Effect. To the best knowledge of the Company
and the Guarantors, the amounts established as provisions for Medicare,
Medicaid and Medi-Cal adjustments and adjustments by any other third party
payors on the financial statements of the Company and the Subsidiaries are
sufficient in all material respects to pay any amounts for which the Company or
18
<PAGE> 20
any of the Subsidiaries may be liable. Neither the Company nor any of the
Guarantors has received notice from the regulatory authorities which enforce
the statutory or regulatory provisions in respect of the Medicare, Medicaid or
Medi-Cal programs of any pending or threatened investigations, surveys (other
than routine surveys) or decertification proceedings, and neither the Company
nor any of the Subsidiaries has any reason to believe that any such
investigations, surveys or proceedings are pending, threatened or imminent
which individually or in the aggregate could have a Material Adverse Effect.
(x) Each Company Facility is licensed by the proper
state department of health to conduct its business in substantially the manner
conducted by such Company Facility. The Company Facilities are presently in
substantial compliance with all of the material terms, conditions and
provisions of such licenses. The facilities, equipment, staffing and
operations of the Company Facilities satisfy the applicable state licensing
requirements in all material respects.
(y) No funds were received on behalf of the Company
or any of the Subsidiaries to construct, improve or acquire any of its
facilities under the "Hill-Burton" Act as a result of which the Company or any
of the Subsidiaries are currently or will in the future be required to pay any
amounts for which there shall be any "recapture" as a result of the
consummation of the transactions contemplated by this Agreement.
(z) The Securities, the Registration Rights
Agreement, the Indenture, the Warrant Shares Registration Rights Agreement, the
Warrant Agreement and the Escrow Agreement, when executed, will conform in all
material respects to the descriptions thereof contained in the Offering
Memorandum.
(aa) Neither the Company nor any agent acting on
their behalf has taken or will take any action that is reasonably likely to
cause the issuance or sale of the Securities to violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, in each case as in
effect on the Closing Date.
(ab) The Notes and the Guarantees to be issued and
sold hereunder have been duly and validly authorized by the Company and the
Guarantors, respectively, and the Notes and the Guarantees, when they are
authenticated by the Trustee and issued, sold and delivered in accordance with
this Agreement
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<PAGE> 21
and the Indenture against payment therefor as provided by this Agreement, will
have been duly and validly executed, authenticated, issued and delivered and
will constitute valid and binding obligations of the Company and the
Guarantors, respectively, enforceable against the Company and the Guarantors,
respectively, in accordance with their terms and entitled to the benefits
provided by the Indenture, except to the extent that enforcement thereof may be
limited by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (B) general principles of equity.
(cc) The Warrants have been duly authorized by the
Company and, when duly executed and delivered in accordance with the Warrant
Agreement and delivered to the Initial Purchaser against payment therefore as
provided by this Agreement, the Warrants will be entitled to the benefits of
the Warrant Agreement and will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms (assuming due
authorization, execution and delivery by any other party thereto), subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies generally
and to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). The Warrant Shares have been duly
authorized for issuance by the Company, have been reserved for issuance upon
the exercise of the Warrants and, when issued upon exercise of the Warrants in
accordance with the terms thereof, will be validly issued, fully paid and
nonassessable. All Warrant Shares, upon issuance, will be free of preemptive
or similar rights.
(dd) Each of the Indenture, the Registration Rights
Agreement, the Warrant Shares Registration Rights Agreement, the Warrant
Agreement and the Escrow Agreement has been duly and validly authorized by the
Company and the Guarantors, as applicable, and, when executed and delivered by
the Company and the Guarantors, as applicable, will constitute a valid and
binding obligation of the Company and the Guarantors, as applicable,
enforceable against each of them, as applicable, in accordance with its terms,
except to the extent that enforcement thereof may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally, (B) general principles of
equity and (C) with respect to rights to indemnification, public policy.
(ee) When the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the same class
(within the
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meaning of Rule 144A) as securities of the Company or any of the Subsidiaries
which are listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(ff) Neither the Company nor any of the Subsidiaries
nor any affiliate of any of them (as defined in Rule 501(b) under the Act) has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the Act)
which is or will be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Act; provided,
however, that the Company and Guarantors make no representations or warranties
as to the activities of the Initial Purchaser.
(gg) Neither the Company nor any of the Subsidiaries
nor any person acting on their behalf has (i) engaged, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising (as those terms are used within the meaning of Regulation D under
the Act) or (ii) solicited offers for, or offered or sold, such Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; provided,
however, that the Company and Guarantors make no representations or warranties
as to the activities of the Initial Purchaser.
4. INDEMNIFICATION.
(a) The Company and each of the Guarantors agrees to
indemnify and hold harmless (i) the Initial Purchaser, (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) the Initial Purchaser (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person") and (iii)
each officer, director, employee, agent and representative of the Initial
Purchaser (any person referred to in clause (i), (ii) or (iii) may hereinafter
be referred to as an "Indemnified Person") to the fullest extent lawful, from
and against any and all losses, claims, damages, liabilities, actions and
expenses (including without limitation and as incurred, reimbursement of all
reasonable costs of investigating, preparing, pursuing, or defending any claim
or action, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, including the reasonable fees and expenses of
counsel to any Indemnified Person in accordance with the provisions of this
Section 4) directly or indirectly caused by, related to,
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<PAGE> 23
based upon or arising out of, or in connection with any untrue statement or
alleged untrue statement of a material fact contained in the Offering
Memorandum (including, in each case, any amendment or supplement thereto) or
any preliminary Offering Memorandum, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as any such loss,
liability, claim, damage or expense is caused solely by an untrue statement or
omission or alleged untrue statement or omission that is (x) made in reliance
upon and in conformity with any Initial Purchaser Information or (y) with
respect to the Initial Purchaser from whom the person asserting such loss,
liability, claim, damage or expense purchased Securities, made in the
Preliminary Offering Memorandum if a copy of the Offering Memorandum (as
amended or supplemented, if the Company shall have furnished the Initial
Purchaser with such amendments or supplements thereto on a timely basis and in
reasonable numbers) was not delivered by or on behalf of such Initial Purchaser
to the person asserting such loss, liability, claim, damage or expense, if
required by law to have been so delivered by the Initial Purchaser, at or prior
to the written confirmation of the sale of the Securities, and it shall be
finally determined by a court of competent jurisdiction, in a judgment not
subject to appeal or review, that the Offering Memorandum (as so amended or
supplemented) would have completely corrected such untrue statement or
omission. The Company shall notify you promptly of the institution, threat or
assertion of any claim, action, proceeding (including any governmental
investigation) or litigation in connection with the matters addressed by this
Agreement which involves the Company, any Guarantor or any Indemnified Person.
(b) In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against any of the
Indemnified Persons with respect to which indemnity may be sought against the
Company or any Guarantor, such Indemnified Person shall promptly notify the
parties against whom indemnification is being sought (the "Indemnifying
Persons") in writing (provided that the failure to give such notice shall not
relieve any of the Indemnifying Persons of its obligations or liabilities
pursuant to this Agreement, except to the extent that the Indemnifying Person
has been materially prejudiced by such failure as determined by a court of
competent jurisdiction in a judgment no longer subject to appeal or review).
Upon receiving such notice, the Company shall be entitled to participate in any
such action or proceeding and to assume, at its sole expense, the defense
thereof, with counsel reasonably satisfactory to such Indemnified Person (who
shall not, except with the consent of the Indemnified Person, be counsel to any
Indemnifying Person) and, after written notice from the Company to
22
<PAGE> 24
such Indemnified Person of its election so to assume the defense thereof
promptly after receipt of the notice from the Indemnified Person of such action
or proceeding, the Company and the Guarantors shall not be liable to such
Indemnified Person hereunder for legal expenses of other counsel subsequently
incurred by such Indemnified Person in connection with the defense thereof,
other than reasonable costs of investigation, unless (i) the Company or a
Guarantor agrees in writing to pay such fees and expenses, (ii) the Company
shall have failed promptly to assume such defense or to employ counsel
reasonably satisfactory to such Indemnified Person, or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Person and an Indemnifying Person or an affiliate of an
Indemnifying Person, and such Indemnified Person shall have been advised by
counsel either (x) that there may be one or more legal defenses available to
such Indemnified Person that are different from or additional to those
available to such Indemnifying Person or such affiliate or (y) a conflict may
exist between such Indemnified Person and such Indemnifying Person or such
affiliate (in which case, if such Indemnified Person notifies the Company in
writing, the Company shall not have the right to assume the defense thereof),
it being understood, however, that the Indemnifying Persons shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such Indemnified Persons. An Indemnifying Person shall not be liable
for any settlement of any such action or proceeding effected without the prior
written consent of such Indemnifying Person, but if settled with the prior
written consent of such Indemnifying Person, such Indemnifying Person agrees to
indemnify and hold harmless any Indemnified Person from and against any loss,
claim, damage, liability or expense by reason of any such settlement. The
Indemnifying Persons shall not, without your prior written consent, settle or
compromise or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, claim, litigation or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Person from all liability arising out of such
action, claim, litigation or proceeding.
(c) The Initial Purchaser agrees to indemnify and
hold harmless the Company, the Guarantors, the officers, directors, agents,
representatives and employees of the Company and the Guarantors, and any person
con-
23
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trolling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or any Guarantor, to the same extent as the foregoing
indemnity from the Company and the Guarantors to each of the Indemnified
Persons, but only with respect to claims and actions solely based on any
Initial Purchaser Information. In case any action or proceeding (including any
governmental investigation) shall be brought or asserted against the Company,
the Guarantors, or any such person in respect of which indemnity may be sought
against the Initial Purchaser pursuant to the foregoing sentence, the Initial
Purchaser shall have the rights and duties given to the Company and the
Guarantors (except that if the Company or any Guarantor shall have assumed the
defense thereof, the Initial Purchaser shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such Initial
Purchaser), and the Company, the Guarantors and any such person shall have the
rights and duties given to the Indemnified Person by Section 4(b) above.
(d) If the indemnification provided for in this
Section 4 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party(ies), on the one hand, and the indemnified party(ies), on
the other hand, from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying
party(ies) and the indemnified party, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the
one hand, and the Initial Purchaser, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact related
to information supplied by the Company and the Guarantors, on the one hand, or
by the Initial Purchaser, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The indemnity and contribution obligations of any party
set forth herein shall be in addition to any liability or obligation such party
may otherwise have to any other party.
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The Company, the Guarantors and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to this
Section 4(d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4, the Initial Purchaser (and its related
Indemnified Persons) shall not be required to contribute, in the aggregate, any
amount in excess of the amount by which the total discount applicable to the
Securities purchased by the Initial Purchaser exceeds the amount of any damages
which the Initial Purchaser (and its related Indemnified Persons) have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATION. The
obligation of the Initial Purchaser to purchase the Securities under this
Agreement is subject to the satisfaction of each of the following conditions on
the Closing Date:
(a) All the representations and warranties of the
Company and the Guarantors contained in this Agreement shall be true and
correct when made and on the Closing Date with the same force and effect as if
made on and as of the Closing Date. The Company and the Guarantors shall have
performed or complied with all of their respective obligations and agreements
herein contained and required to be performed or complied with by each of them
at or prior to the Closing Date.
(b) (i) Since the date as of which information is
given in the Offering Memorandum, there shall not have been any Material
Adverse Change, (ii) since the date of the latest balance sheet included in the
Offering Memorandum there shall not have been any material adverse change, or
development involving a prospective material adverse change, in the debt of the
Company or the Subsidiaries and (iii) the Company and the Subsidiaries shall
have no liability or obligation, direct or contingent, that is material to the
Company and the Subsidiaries,
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individually or in the aggregate, and which is not disclosed in the Offering
Memorandum.
(c) On the Closing Date you shall have received
certificates of the Company and the Guarantors, dated the Closing Date, signed
by the Chief Executive Officer and the Chief Financial Officer of the Company
and the Guarantors, in their capacities as officers of the Company and the
Guarantors, confirming the matters set forth in paragraphs (a), (b) and (l) of
this Section 5.
(d) You shall have received on the Closing Date an
opinion (reasonably satisfactory to you and counsel for the Initial Purchaser),
dated the Closing Date, of Morrison & Foerster LLP, counsel for the Company,
(and, as applicable, local counsel for the Company and the Guarantors solely as
relates to matters of local law) to the effect that:
(i) the Company and each active Guarantor is
duly incorporated and validly existing corporation in good standing
under the laws of its jurisdiction of organization and the Company and
each Guarantor has the requisite corporate power and corporate
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified
as a foreign corporation and in good standing in each jurisdiction
where the ownership, leasing or operation of property or the conduct
of the business requires such qualification, except where the failure
to be so qualified will not have a material adverse effect on the
financial condition of the Company and its Subsidiaries taken as a
whole;
(ii) the Company and each Guarantor, as
applicable, has full corporate power and authority to execute, deliver
and perform this Agreement, the Indenture, the Registration Rights
Agreement, the Warrant Shares Registration Rights Agreement, the
Warrant Agreement and the Escrow Agreement, and has full corporate
power and authority to authorize, issue and sell the Securities as
contemplated thereby; each of this Agreement, the Indenture, the
Registration Rights Agreement, the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement, has been
duly authorized, executed and delivered by the Company and each
Guarantor, as applicable, and each
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<PAGE> 28
of the Indenture, the Registration Rights Agreement, the Warrant
Shares Registration Rights Agreement, the Warrant Agreement and the
Escrow Agreement, constitutes a legal, valid and binding obligation of
the Company and each Guarantor, as applicable, and is enforceable
against the Company and each Guarantor, as applicable, in accordance
with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and
to general principles of equity, including without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether in a proceeding at equity or at law);
(iii) each of the Securities, the Notes, the
Guarantees, the Warrants, the Common Stock, the Indenture, the
Registration Rights Agreement, the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement, conforms in
all material respects to the descriptions thereof contained in the
Offering Memorandum;
(iv) neither the Company nor any of the
Subsidiaries is (a) an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company
Act of 1940, as amended, or (b) a "holding company" or a "subsidiary
company" of a holding company, or an "affiliate" thereof within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
(v) assuming the accuracy of the
representations of the Initial Purchaser and of the Company and the
Guarantors contained herein, together with the other assumptions set
forth in paragraph (vii) below, no authorization, approval, consent or
order of, or filing with, any court or governmental body or agency is
required for the consummation by the Company and the Guarantors of the
transactions contemplated by this Agreement, except such as are
required to be obtained and made under the 1933 Act, or state
securities or Blue Sky laws or regulations, or with respect to the
Registration Rights Agreement and the Warrant Shares Registration
Rights Agreement, the Act and the regulations of the NASD;
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<PAGE> 29
(vi) the execution and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, the
Warrant Shares Registration Rights Agreement, the Warrant Agreement
and the Escrow Agreement, the issuance and sale of the Securities, the
issuance of the Warrant Shares, the payment of the Securities in
accordance with their terms and the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement the
Warrant Shares Registration Rights Agreement, the Warrant Agreement
and the Escrow Agreement, will not conflict with or result in a breach
or violation of the charter or bylaws of the Company or any Guarantor
or the terms or provisions of, or constitute a default under, any
statute, rule or regulation or to the best of such counsel's knowledge
any material agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which any of them is bound and which
has been identified to such counsel, or to which any of the assets or
properties of the Company or any of the Subsidiaries is subject, or to
the best of such counsel's knowledge any order of any court or
governmental agency, body or official having jurisdiction over the
Company or any of the Subsidiaries or any of their properties;
(vii) assuming (A) the accuracy of, and
compliance with, the representations, warranties and covenants of the
Company and the Guarantors in Section 2 and Section 3 of the Purchase
Agreement, (B) the accuracy of, and compliance with, the
representations, warranties and covenants of the Initial Purchaser in
Section 1 of the Purchase Agreement, (C) the accuracy of the
representations and warranties of each of the purchasers to whom the
Initial Purchaser initially resell the Securities as specified in
Section 1 of the Purchase Agreement, (D) the compliance by the Initial
Purchaser with the offering and transfer procedures and restrictions
described in the Offering Memorandum and (E) receipt by the purchasers
to whom the Initial Purchaser initially resells the Securities of a
copy of the Offering Memorandum prior to such sale, it is not
necessary in connection with the offer, sale and delivery of the
Securities or in connection with the initial resale of such Securities
in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Securities under the Act, it
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<PAGE> 30
being understood that no opinion is expressed as to any subsequent
resale of any Securities;
(viii) to such counsel's knowledge, there
are no governmental or legal proceedings pending or threatened to
which the Company or any Guarantor is a party or to which any of their
respective property is subject which, if determined adversely, would
reasonably be expected to have a Material Adverse Effect or adversely
affect the performance by either the Company or any Guarantor of its
obligations pursuant to this Agreement;
(ix) the Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture (as applicable) and delivered to and paid
for by the Initial Purchaser pursuant to the Purchase Agreement, will
constitute legal, valid and binding obligations of the Company and the
Guarantors, as applicable, entitled to the benefits of the Indenture
and the Warrant Agreement, as applicable, and enforceable against the
Company and the Guarantors, as applicable, in accordance with their
terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law and that rights to
indemnification may be unenforceable by public policy); and to such
counsel's knowledge, except as otherwise set forth in the Offering
Memorandum, the issuance of such Warrants is not subject to any
preemptive or similar purchase rights in favor of any other person;
and
(x) the Warrant Shares have been duly
authorized and reserved for issuance upon exercise of the Warrants,
and, when issued upon exercise of the Warrants in accordance with the
terms of the Warrant Agreement, will be validly issued, fully paid and
nonassessable and to such counsel's knowledge, except as otherwise set
forth in the Offering Memorandum, the issuance of such Warrant Shares
is not subject to any preemptive or similar purchase rights in favor
of any other person.
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In giving their opinion required by subsection (d) of this
Section 5, such counsel (i) may state that such opinions are limited to matters
governed by the Federal laws of the United States of America, the laws of the
State of California, the laws of the State of New York, and the general
corporation laws of the State of Delaware, and (ii) shall state that (a) such
counsel has acted as counsel to the Company on a regular basis and has acted as
counsel to the Company in connection with the preparation of the Offering
Memorandum and (b) such counsel has participated in conferences with officers
and other representatives of the Company and the Subsidiaries, representatives
of the independent public accountants for the Company and the Subsidiaries,
your representatives and your counsel in connection with the preparation of the
Offering Memorandum and has considered the matters required to be stated
therein and the statements contained therein; and such counsel shall advise you
that, on the basis of the foregoing, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements (except as indicated above in paragraph (iii)) no facts came to such
counsel's attention that caused such counsel to believe that the Offering
Memorandum as of the date thereof and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Without limiting the foregoing, such counsel may further state
that it assumes no responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements, notes and
schedules and other financial and statistical data included in the Offering
Memorandum.
(e) You shall have received an opinion dated the
Closing Date, from Kevin Higgins, Esq., general counsel of the Company, in form
and substance reasonably satisfactory to you (which may state that such opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the general corporation laws of
the State of Delaware), to the effect that:
(i) the execution and delivery of this
Agreement, the Indenture, the Registration Rights Agreement, the
Warrant Shares Registration Rights Agreement, the Warrant Agreement,
the Escrow Agreement, and the issuance and sale of the Securities, the
issuance of the Warrant Shares, the performance by the Company and the
Guarantors of their obligations pursuant thereto, as applicable, and
the consummation of the transactions contemplated
30
<PAGE> 32
thereby will not conflict with or result in a breach or violation of
any of the respective charters or bylaws of the Company or any of the
Guarantors or the terms or provisions of, or constitute a default by
the Company or any Subsidiary under any statute, rule or regulation or
to the best of such counsel's knowledge any material agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them is bound, or to which any of the assets or
properties of the Company or any of the Subsidiaries is subject, or to
the best of such counsel's knowledge any order of any court or
governmental agency, body or official having jurisdiction over the
Company or any of the Subsidiaries or any of their properties;
(ii) to the best of such counsel's
knowledge, there is no current, pending or threatened action, suit or
proceeding before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary or to which
any of their respective property is subject, which is of a material
nature and which is not adequately disclosed in the Offering
Memorandum;
(iii) each of the Company and the
Subsidiaries has such Authorizations from all regulatory or
governmental officials, bodies and tribunals as are necessary to own,
lease and operate its respective properties and to conduct its
business in the manner described in the Offering Memorandum and such
certifications, accreditations and eligibility to participate in
specified programs as and to the extent described in the Offering
Memorandum, including, without limitation, eligibility to participate
in Medicare, Medicaid and Medi-Cal programs;
(iv) all of the issued and outstanding
shares of capital stock of, or other ownership interests in, each
Subsidiary are owned directly or through Subsidiaries, by the Company,
are fully paid and nonassessable, and to the best of such counsel's
knowledge are owned free and clear of any Lien, in each case except as
disclosed in the Offering Memorandum;
(v) the descriptions in the Offering
Memorandum of statutes, legal and governmental proceedings, contracts
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<PAGE> 33
and other documents and regulatory matters including, without
limitation, the matters described in the Offering Memorandum, under
the caption "Business-Government Regulation" insofar as such
statements constitute summaries of legal matters, documents or
proceedings referred to therein are accurate in all material respects
and fairly present the information required to be shown;
(vi) to the best of such counsel's
knowledge, neither the Company nor any of the Subsidiaries has
violated any Environmental Laws, nor any Federal or state law relating
to discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of ERISA or the rules and regulations promulgated thereunder, which in
each case might result in any Material Adverse Change in the business,
prospects, financial condition or results of operation of the Company
and the Subsidiaries, taken as a whole; and
(vii) to the best of such counsel's
knowledge, except as disclosed in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or Liens related to or
entitling any person to purchase or otherwise to acquire any shares of
the capital stock of, or other ownership interest in, the Company or
any Subsidiary.
In giving the opinion required by subsection (e) of this
Section 5, such counsel shall state that (a) such counsel has acted as counsel
to the Company on a regular basis and has acted as counsel to the Company in
connection with the preparation of the Offering Memorandum and (b) such counsel
has participated in conferences with officers and other representatives of the
Company and its Subsidiaries, representatives of the independent public
accountants for the Company and the Subsidiaries, your representatives and your
counsel in connection with the preparation of the Offering Memorandum and has
considered the matters required to be stated therein and the statements
contained therein; and such counsel shall advise you that, on the basis of the
foregoing, although such counsel has not independently verified the accuracy,
completeness or fairness of such statements (except as indicated above) no
facts came to such counsel's attention that caused such counsel to believe that
the Offering Memorandum as of the date thereof and as of the Closing Date,
contained an untrue statement of a material fact or omitted
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<PAGE> 34
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Without limiting the foregoing, such
counsel may further state that it assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial and statistical data
included in the Offering Memorandum.
(f) You shall have received on the Closing Date
an opinion (reasonably satisfactory to you and counsel for the Initial
Purchasers), dated the Closing Date, of Burns, Doane, Swecker & Mathis, L.L.P.,
and certain other intellectual property counsel for the Company, collectively
to the effect that:
(i) the information in the Offering
Memorandum under "Risk Factors--Reliance on Patents and Proprietary
Rights," and "Business--Patents, Licenses and Trademarks" to the
extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been reviewed by
such counsel and, to the best of such counsel's knowledge, does not
contain any untrue statement of a material fact or omit to state any
material fact with respect to patents, trademarks or proprietary
rights required to be stated therein or necessary to make the
statements therein not misleading and is correct in all material
respects and fairly and completely and correctly presents the
information called for with respect thereto;
(ii) to the best of such counsel's
knowledge, there are no pending or threatened legal or governmental
proceedings, nor allegations on the part of any person, involving
intellectual property, including, but not limited to, claims for
misappropriation of proprietary information, infringement, ownership
dispute, validity or enforceability challenges, disputes under
licenses or other intellectual property-related agreements, unfair
competition, or unauthorized use or disclosure of confidential
information, and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated;
(iii) the Company is listed in the records
of the United States Patent and Trademark Office ("PTO") as the sole
assignee of record of each of the patents listed on a schedule to such
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<PAGE> 35
counsel's opinion as Schedule I thereto (the "Patents"), each of the
patent applications listed on a schedule to such counsel's opinion as
Schedule II thereto (the "Patent Applications"), each of the
trademarks listed on a schedule to such counsel's opinion as Schedule
III thereto (the "Trademarks"), and each of the trademark applications
listed on a schedule to such counsel's opinion as Schedule IV thereto
(the "Trademark Applications"), and in the records of the United
States Copyright Office as the sole assignee of record of each of the
copyright listed on a schedule to such counsel's opinion as Schedule V
thereto (the "Copyrights", collectively the "Intellectual Property").
To the best of such counsel's knowledge, there are no claims of any
persons relating to the scope or ownership of the Intellectual
Property, there are no liens which have been recorded against any of
the Intellectual Property, there are no material defects of form in
the preparation or filing of the Patent or Trademark Applications, the
Patent and Trademark Applications are being diligently prosecuted, and
none of the Patent and Trademark Applications has been finally
rejected with no rights to further prosecute or has been abandoned;
(iv) the Company is listed in the records of
the appropriate foreign patent offices as the sole assignee of record
of each of the foreign patents listed on a schedule to such counsel's
opinion as Schedule VI thereto (herein called the "Foreign Patents")
and each of the foreign applications listed on a schedule to such
counsel's opinion as Schedule VII thereto (herein called the "Foreign
Applications"). To the best of such counsel's knowledge, there are no
claims of any persons relating to the scope or ownership of the
Foreign Patents or the Foreign Applications, there are no liens which
have been recorded against any of the Foreign Patents or the Foreign
Applications, there are no material defects of form in the preparation
or filing of the Foreign Applications, the Foreign Applications are
being diligently prosecuted, and none of the Foreign Applications has
been finally rejected with no rights to further prosecute or has been
abandoned;
(v) nothing has come to the attention of
such counsel that leads such counsel to believe that the Applications
and the Foreign Applications will not eventuate in issued patents, or
that
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<PAGE> 36
any patents issued in respect of any such Applications or Foreign
Applications will not be valid or will not afford the Company
reasonable patent protection relative to the subject matter thereof;
(vi) the license agreements on a schedule to
such counsel's opinion as Schedule VIII thereto are duly executed,
validly binding and enforceable in accordance with their terms and, to
the best of such counsel's knowledge, the Company is not in material
breach or default of any such licenses;
(vii) to the best of such counsel's
knowledge, all pertinent prior art references known to the Company or
its counsel during the prosecution of the Patents and the Applications
were disclosed to the PTO and other relevant patent offices and, to
the best of such counsel's knowledge, all information submitted to the
PTO in connection with the prosecution of the applications was
accurate, neither such counsel nor the Company made any
misrepresentation to, or concealed any material fact from, the PTO
during such prosecution. The allowance of the associated patent
claims each of the Patents is entitled to a statutory presumption of
validity under 35 U.S.C. 282 and to the best of our knowledge there is
no legal basis to rebut the statutory presumption of validity of the
Patents;
(viii) to the best of such counsel's
knowledge, the Company takes security measures adequate to assert
trade secret protection in its non-patented technology;
(ix) the forms of agreement executed by the
Company's employees, consultants and other advisors respecting trade
secrets, confidentiality, or intellectual property rights are valid,
binding and enforceable in accordance with their express terms; and
(x) nothing has come to the attention of
such counsel that leads such counsel to believe that, with respect to
licenses, patents, trade secrets, copyrights or other proprietary
information or know-how owned or used by the Company, the Offering
Memorandum contains an untrue statement of a material
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<PAGE> 37
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading.
The opinions of Morrison & Foerster LLP, Kevin Higgins, Esq.
and Burns, Doane, Swecker & Mathis, L.L.P. described in paragraphs (d), (e) and
(f) above shall be rendered to you at the request of the Company and shall so
state therein.
(g) You shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Initial Purchaser, an opinion dated
the Closing Date as to such matters as the Initial Purchaser may reasonably
require.
(h) You shall have received letters on and as of the
date hereof as well as on and as of the Closing Date (in the latter case
constituting an affirmation of the statements set forth in the former), in
customary form and substance satisfactory to you, from Ernst & Young LLP,
Coopers & Lybrand and certain other independent public accountants, with
respect to the financial statements and certain financial and statistical
information contained in the Offering Memorandum as you shall require.
(i) The Securities, the Indenture, the Registration
Rights Agreement, the Warrant Shares Registration Rights Agreement, the Warrant
Agreement and the Escrow Agreement shall have been executed and delivered by
the Company and the Guarantors, as applicable.
(j) Prior to the Closing Date, the Company shall
have furnished to you such further information, certificates and documents as
you may reasonably request.
(k) The Initial Purchaser shall have been notified
by the Nasdaq Stock Market, Inc. that it had designated the Securities as
PORTAL eligible.
(l) No stop order suspending the sale of the
Securities in any jurisdiction has been issued and no proceeding for that
purpose has been commenced or is pending or threatened and every request for
additional information on the part of any state securities commission has been
complied with; no action shall have been taken and no statute, rule, regulation
or order shall have
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<PAGE> 38
been enacted, adopted or issued by any governmental agency, body or official
which would, as of the Closing Date, prevent the issuance of the Securities;
and no injunction, restraining order or order of any nature by any court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Securities. Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date, there shall not have
been any downgrading, nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded any of
the Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) of the
Act.
(m) The Company shall have entered into the New
Credit Facility (as defined in the Offering Memorandum) on the terms and
conditions, and providing for the availability of borrowings, as described in
the Offering Memorandum.
(n) The Company and the Guarantors shall not have
failed at or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by
them at or prior to the Closing Date.
(o) Each of the Warrant Shares Registration Rights
Agreement, the Warrant Agreement and the Escrow Agreement shall be in form and
substance satisfactory to the Initial Purchaser and counsel for the Initial
Purchaser.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects satisfactory to the Initial Purchaser and to Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchaser.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
counsel for the Initial Purchaser pursuant to this Section 5 shall not be in
all material respects reasonably satisfactory in form and substance to you and
such counsel, all your obligations hereunder may be cancelled by you at, or at
any time prior to, the Closing Date. Notice of such cancellation shall be
given to the Company in writing, or by telephone, telex or telegraph, confirmed
in writing.
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6. EFFECTIVE DATE OF AGREEMENT, DEFAULT AND TERMINATION.
This Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to
the Closing Date by the Initial Purchaser by notice to the Company if any of
the following has occurred: (i) subsequent to the date of this Agreement, any
Material Adverse Change or development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business, which, in
the judgment of the Initial Purchaser impairs the investment quality of the
Securities, (ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or material adverse change in the financial
markets of the United States or elsewhere, or any other substantial national or
international calamity or emergency if the effect of such outbreak, escalation,
calamity, crisis or emergency would, in the Initial Purchaser judgment, make it
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) any suspension or limitation of trading
generally in securities on the New York or American Stock Exchanges, the Nasdaq
Stock Market, or the over-the-counter markets or any setting of minimum prices
for trading on such exchanges or markets, (iv) any declaration of a general
banking moratorium by either Federal or New York authorities, (v) the taking of
any action by any Federal, state or local government or agency in respect of
its monetary or fiscal affairs that in the Initial Purchaser's judgment has a
material adverse effect on the financial markets in the United States, and
would, in the Initial Purchaser's judgment, make it impracticable or
inadvisable to market the Securities to enforce contracts for the sale of the
Securities, (vi) any securities of the Company or any of the Subsidiaries shall
have been downgraded or placed on any "watch list" for possible downgrading or
reviewed for a possible change that does not indicate the direction of the
possible change by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) of the Act, (vii) the
delisting of the common stock of the Company from the American Stock Exchange,
or (viii) the enactment, publication, decree or other promulgation of any
Federal or state statute, regulation, or rule or order of any court or other
governmental authority which in the judgment of the Initial Purchaser could
have a Material Adverse Effect.
If this Agreement shall be terminated by the Initial Purchaser
pursuant to clause (i), (vi) or (vii) of the second paragraph of this Section 6
or because of the failure or refusal on the part of the Company or the
Guarantors to comply with the terms or to fulfill any of the conditions of this
Agreement, the
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Company agrees to reimburse you for all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of counsel) incurred by you.
Notwithstanding any termination of this Agreement, the Company and the
Guarantors shall be liable for all expenses which they have agreed to pay
pursuant to Section 2 hereof. If this Agreement is terminated pursuant to this
Section 6, such termination shall be without any other liability of the Initial
Purchaser to the Company and the Guarantors.
7. NOTICES. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to it at Five
Civic Plaza, Suite 100, Newport Beach, California 92660, Attention: Chief
Financial Officer and, in each case, with a copy to Morrison & Foerster LLP,
19900 MacArthur Boulevard, Suite 1200, and Irvine, California 92612, Attention:
Robert M. Mattson, Esq., (b) if to any Initial Purchaser, to Bear, Stearns &
Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Syndicate
Department, and, in each case, with a copy to Skadden, Arps, Slate, Meagher &
Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071,
Attention: Nicholas P. Saggese, or in any case to such other address as the
person to be notified may have requested in writing.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK
STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS
CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL
JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH
39
<PAGE> 41
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
9. SEVERABILITY. Any determination that any provision of
this Agreement may be, or is, unenforceable shall not affect the enforceability
of the remainder of this Agreement.
10. SUCCESSORS. Except as otherwise provided, this Agreement
has been and is made solely for the benefit of and shall be binding upon the
Company, the Guarantors, the Initial Purchaser, any Indemnified Person referred
to herein and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successors and assigns" shall
not include a purchaser of any of the Securities from the Initial Purchaser
merely because of such purchase.
11. CERTAIN DEFINITIONS. For purposes of this Agreement,
"business day" means any day other than Saturday, Sunday or a Federal holiday.
12. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and, if executed in one or more counterpart, the executed
counterparts shall each be deemed to be an original, not all such counterparts
shall together constitute one and the same instrument.
13. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to effect
the meaning or interpretation of, this Agreement.
14. SURVIVAL. The indemnities and contribution provisions
and the other agreements, representations and warranties of the Company and the
Guarantors, their respective officers and directors, and of the Initial
Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and
payment for the Securities, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of the Initial Purchaser or by
or on behalf of the Company, the officers or directors of the Company, any
controlling person of the Company, or the Guarantors, (ii) acceptance of the
Securities and payment for them hereunder and (iii) termination of this
Agreement.
40
<PAGE> 42
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument. Please confirm that the
foregoing correctly sets forth the agreement among the Company, the Guarantors
and you.
Very truly yours,
UROHEALTH SYSTEMS, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
ALLSTATE MEDICAL PRODUCTS, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
DACOMED CORPORATION
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
GATES PLASTICS
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
<PAGE> 43
OSBON MEDICAL SYSTEMS, LTD.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
UROHEALTH OF KENTUCKY, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
MICROSURGE, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
UROHEALTH, INC. (CALIFORNIA)
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
<PAGE> 44
DACOMED INTERNATIONAL, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
N.T. REUDT CORPORATION
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
INTERMED ASSOCIATES, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
LAPAROMED CORPORATION
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
ADVANCED UROCARE, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
<PAGE> 45
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
BEAR, STEARNS & CO. INC.
By: /s/ PHILIP E. BERNEY
--------------------------------
Name: Philip E. Berney
Title: Senior Managing Director
<PAGE> 1
Exhibit 4.3
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 10, 1997
BY AND AMONG
UROHEALTH SYSTEMS, INC.
AS THE COMPANY,
THE GUARANTORS NAMED HEREIN
AND
BEAR, STEARNS & CO. INC.
AS PURCHASER
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of April 10, 1997, among UROHEALTH Systems, Inc., a Delaware
corporation (the "Company"), the Guarantors as defined herein (the "Guarantors")
and Bear, Stearns & Co. Inc. (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement,
dated April 3, 1997, among the Company, the Guarantors named therein and the
Purchaser (the "Purchase Agreement"), which provides for the sale by the Company
and the Guarantors to the Purchaser of units consisting of $110,000,000
aggregate principal amount of 12-1/2% Senior Subordinated Notes due 2004
(together with the related Guarantees (as defined therein), the "Securities")
and warrants to purchase common stock. In order to induce the Purchaser to enter
into the Purchase Agreement, the Company and the Guarantors have agreed to
provide to the Purchaser and its direct and indirect transferees, among other
things, the registration rights for the Securities set forth in this Agreement.
The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings (and, unless otherwise indicated, capitalized terms used
herein without definition shall have the meanings ascribed to them by the
Purchase Agreement):
Advice: See Section 5.
<PAGE> 3
Applicable Period: See Section 2.
Company: See the introductory paragraph of this Agreement.
Effectiveness Period: See Section 3.
Effectiveness Target Date: The 90th day following the Issue
Date.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Filing Date: The 30th day after the Issue Date.
Guarantors: The Guarantors (as defined in the Indenture).
Holder: Any holder of Transfer Restricted Securities.
Indenture: The Indenture, dated as of the date hereof, among
the Company, the Guarantors and The Bank of New York, as trustee, pursuant to
which the Securities are being issued, as amended or supplemented from time to
time in accordance with the terms thereof.
Issue Date: The date of first issuance of
2
<PAGE> 4
the Notes under the Indenture.
Liquidated Damages: See Section 4.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership,
joint stock company, trust, limited liability company, unincorporated
association, union, business association, firm or other legal entity.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Exchange Securities and/or the Transfer Restricted Securities (as
applicable) covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchasers: See the introductory paragraph to this Agreement.
Registration Default: See Section 4.
Registration Statement: Any registration statement of the
Company and the Guarantors, including, but not limited to, the Exchange
Registration Statement, the Shelf Registration or that otherwise covers any of
the Transfer Restricted Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement,
3
<PAGE> 5
including post-effective amendments, all exhibits, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated pursuant to the Securities Act,
as currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A promulgated pursuant to the Securities
Act, as currently in effect, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated pursuant to the Securities Act,
as currently in effect, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraphs to this Agreement.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: The Securities upon original
issuance thereof and at all times subsequent thereto, until in the case of any
such Securities (i) a Registration Statement covering such Securities has
4
<PAGE> 6
been declared effective by the SEC and such Securities have been disposed of in
accordance with such effective Registration Statement, (ii) such Securities are
sold in compliance with Rule 144 or (iii) such Securities cease to be
outstanding.
Trustee: The trustee under the Indenture and, where
applicable, the trustee under any indenture governing the Exchange Securities.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
5
<PAGE> 7
2. Exchange Offer
6
<PAGE> 8
(a) The Company and the Guarantors agree to file with the SEC
as soon as practicable after the Issue Date, but in no event later than the
Filing Date, an unconditional, irrevocable offer to exchange (the "Exchange
Offer") any and all of the Transfer Restricted Securities for a like aggregate
principal amount of debt securities of the Company and the Guarantors which are
substantially identical to the Securities, except that the identity of the
Guarantors may be different from the Guarantors that initially guaranteed the
Securities pursuant to the Indenture so long as the Securities are at all times
guaranteed in compliance with the Indenture (the "Exchange Securities") (and
which are entitled to the benefits of the Indenture or a trust indenture which
is identical to the Indenture (other than such changes to the Indenture or any
such identical trust indenture as are necessary to comply with any requirements
of the SEC to effect or maintain the qualification thereof under the TIA) and
which, in either case, has been qualified under the TIA), except that the
Exchange Securities shall have been registered pursuant to an effective
Registration Statement in compliance with the Securities Act. The Exchange Offer
will be registered pursuant to the Securities Act on an appropriate form (the
"Exchange Registration Statement") and will comply with all applicable tender
offer rules and regulations promulgated pursuant to the Exchange Act and shall
be duly registered or qualified pursuant to all applicable state securities or
Blue Sky laws. The Exchange Offer shall not be subject to any condition, other
than that the Exchange Offer does not violate any applicable law or
interpretation of the staff of the SEC. No securities shall be included in the
Registration Statement covering the Exchange Offer other than the Exchange
Securities. The Company and the Guarantors agree to use their best efforts to
(x) cause the Exchange Registration Statement to become effective pursuant to
the Securities Act on or before the Effectiveness Target Date; (y) keep the
Exchange Offer open for 20 business days (or such longer period required by
7
<PAGE> 9
applicable law) after the commencement of the Exchange Offer; and (z) consummate
the Exchange Offer no later than 30 days after the earlier of the effectiveness
thereof or the Effectiveness Target Date. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Securities
received by it will be acquired in the ordinary course of its business, that at
the time of the consummation of the Exchange Offer such Holder will have no
arrangement or understanding with any Person to participate in the distribution
of the Exchange Securities, and that such Holder is not an affiliate of the
Company within the meaning of Rule 405 of the Securities Act (or that if it is
such an affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable). Each Holder that
is not a Participating Broker-Dealer will be required to represent that it is
not engaged in, and does not intend to engage in, the distribution of the
Exchange Securities. Each Holder that is (i) a Participating Broker-Dealer and
(ii) will receive Exchange Notes for its own account in exchange for the
Transfer Restricted Securities that it acquired as the result of market making
or other trading activities will be required to acknowledge that it will deliver
a Prospectus as required by law in connection with any resale of such Exchange
Securities. Upon consummation of the Exchange Offer in accordance with this
Agreement, the Company and the Guarantors shall have no further obligation to
register Transfer Restricted Securities pursuant to Section 2(c) and Section 3
of this Agreement.
(b) The Company and the Guarantors shall include within the
Prospectus contained in the Exchange Registration Statement a section entitled
"Plan of Distribution," acceptable to the Purchasers, which shall contain a
summary statement of the positions taken or policies made by the Staff of the
SEC with respect to the potential "underwriter" status of any broker-dealer that
is the beneficial owner (as defined in Rule 13d-3 under
8
<PAGE> 10
the Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Securities.
The Company and the Guarantors shall use their best efforts to
keep the Exchange Registration Statement effective and to amend and supplement
the Prospectus contained therein, in order to permit such Prospectus to be
lawfully delivered by all persons subject to the prospectus delivery
requirements of the Securities Act, for a period of at least 120 days after
consummation of the Exchange Offer (or such longer period if extended pursuant
to the last paragraph of Section 5) (the "Applicable Period").
In connection with the Exchange Offer, the Company shall:
(a) mail as promptly as practicable to each Holder a copy of
the Prospectus forming part of the Exchange Registration Statement,
together with an appropriate letter of transmittal and related
documents;
(b) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(c) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open.
9
<PAGE> 11
As soon as practicable after the close of the Exchange Offer,
the Company and the Guarantors shall:
(i) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each tendering Holder of Securities, Exchange Securities equal in
principal amount to the Securities of such Holder so accepted for
exchange.
(c) If (1) prior to the consummation of the Exchange Offer,
applicable interpretations of the staff of the SEC do not permit the Company and
the Guarantors to effect the Exchange Offer as contemplated herein, or (2) the
Exchange Offer is not consummated within 120 days of the Issue Date for any
reason, then the Company shall promptly deliver to the Holders and the Trustee
written notice thereof (the "Shelf Notice") and the Company and the Guarantors
shall file a Registration Statement pursuant to Section 3. Following the
delivery of a Shelf Notice to the Holders of Transfer Restricted Securities, the
Company and the Guarantors shall not have any further obligation to conduct the
Exchange Offer pursuant to this Section 2, provided that the Company and the
Guarantors shall have the right, nonetheless, to proceed to consummate the
Exchange Offer notwithstanding their obligations pursuant to this Section 2(c)
(and, upon such consummation, their obligation to consummate a Shelf
Registration pursuant to clause (2) above shall terminate).
10
<PAGE> 12
3. Shelf Registration
If the Company is required to deliver a Shelf Notice as
contemplated by Section 2(c), then:
(a) Shelf Registration. The Company and the Guarantors shall
prepare and file with the SEC, as promptly as practicable following the delivery
of the Shelf Notice, a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Transfer Restricted
Securities (the "Shelf Registration"). The Shelf Registration shall be on Form
S-3 or another appropriate form permitting registration of such Transfer
Restricted Securities for resale by the Holders in the manner or manners
reasonably designated by them (including, without limitation, one or more
underwritten offerings). The Company and the Guarantors shall not permit any
securities other than the Transfer Restricted Securities to be included in the
Shelf Registration. The Company and the Guarantors shall use their best efforts,
as described in Section 5(b), to cause the Shelf Registration to be declared
effective pursuant to the Securities Act as promptly as practicable following
the filing thereof and to keep the Shelf Registration continuously effective
under the Securities Act until the earliest of (i) the date which is 36 months
after the Issue Date, (ii) the date that all Transfer Restricted Securities
covered by the Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration or (iii) there ceases to be outstanding
any Transfer Restricted Securities (the "Effectiveness Period").
(b) Supplements and Amendments. The Company and the Guarantors
shall use their best efforts to keep the Shelf Registration continuously
effective by supplementing and amending the Shelf Registration if required by
the rules, regulations or instructions applicable to
11
<PAGE> 13
the registration form used for such Shelf Registration, if required by the
Securities Act, or if reasonably requested by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities covered by such
Registration Statement and by any underwriter of such Transfer Restricted
Securities.
(c) Suspension of Use of Prospectus. The Company may suspend
the use of the Prospectus as required by law or, for a period not to exceed 60
days in the aggregate, for valid business reasons (not including avoidance of
the Company's and the Guarantors' obligations hereunder), including the material
acquisition or divestiture of assets, pending material corporate developments
and similar events; provided, however, that the Company shall pay Liquidated
Damages (as defined) during the period of any such suspension.
4. Liquidated Damages
(a) The Company, the Guarantors and the Purchasers agree that
the Holders of Transfer Restricted Securities will suffer damages if the Company
and the Guarantors fail to fulfill their obligations pursuant to Section 2 or
Section 3 hereof and that it would not be possible to ascertain accurately the
extent of such damages. Accordingly, in the event of such failure by the Company
or any Guarantor to fulfill such obligations, the Company and the Guarantors
hereby agree to pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if neither the Exchange Registration Statement nor the
Shelf Registration has been filed with the SEC on or prior to the
Filing Date; or
(ii) if neither the Exchange Registration
12
<PAGE> 14
Statement nor the Shelf Registration is declared effective by the SEC
on or prior to the Effectiveness Target Date; or
(iii) if (A) an Exchange Registration Statement is declared
effective by the SEC, and (B) the Company and the Guarantors have not
exchanged Exchange Securities for all Securities validly tendered in
accordance with the terms of the Exchange Offer on or prior to 30 days
following the earlier of (i) the effectiveness thereof or (ii) the
Effectiveness Target Date; or
(iv) the Shelf Registration has been declared effective by the
SEC and such Shelf Registration ceases to be effective or usable at any
time during the Effectiveness Period, without being succeeded on the
same day immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately
declared effective on the same day;
(any of the foregoing, a "Registration Default") then the Company shall pay to
each Holder of Transfer Restricted Securities Liquidated Damages in an amount
equal to 0.5% per annum of the principal amount of Transfer Restricted
Securities held by such Holder during the first 90-day period immediately
following the occurrence of such Registration Default. The amount of such
Liquidated Damages will increase by an additional 0.5% per annum of the
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period, until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed 2.0% per
annum of the principal amount of Transfer Restricted Securities. Following the
cure of all Registration Defaults relating to any Transfer Restricted
Securities, the accrual of Liquidated Damages with respect to such
13
<PAGE> 15
Transfer Restricted Securities will cease. A Registration Default under clause
(i) above shall be cured on the date that either the Exchange Registration
Statement or the Shelf Registration is filed with the SEC; a Registration
Default under clause (ii) above shall be cured on the date that either the
Exchange Registration Statement or the Shelf Registration is declared effective
by the SEC; a Registration Default under clause (iii) above shall be cured on
the earlier of the date (A) the Exchange Offer is consummated or (B) a Shelf
Registration Statement is declared effective; and a Registration Default under
clause (iv) above shall be cured on the date that the post-effective amendment
curing the deficiency in the Shelf Registration is declared effective.
Notwithstanding anything herein to the contrary, no Registration Default shall
be deemed to have occurred if the Company and the Guarantors fail to meet their
obligations hereunder solely due to the Initial Purchaser's failure to resolve
any issues raised by the NASD with respect to the Initial Purchaser's
relationship to the Company in the context of the Exchange Offer or the Shelf
Registration Statement.
(b) The Company shall notify the Trustee within two business
days after each and every date on which a Registration Default occurs (an "Event
Date"). Liquidated Damages shall be paid by the Company to the Holders by wire
transfer of immediately available funds to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified on or before the semi-annual interest payment date provided in the
Indenture. Each obligation to pay Liquidated Damages shall be deemed to commence
accruing on the applicable Event Date and to cease accruing when all
Registration Defaults have been cured. In no event shall the Company pay
Liquidated Damages in excess of the maximum applicable amount set forth above,
regardless of whether one or multiple Registration Defaults exist.
14
<PAGE> 16
5. Registration Procedures
In connection with the registration of any Exchange Securities
or Transfer Restricted Securities pursuant to Sections 2 or 3 hereof, the
Company and the Guarantors shall effect such registration to permit the sale of
such Exchange Securities or Transfer Restricted Securities (as applicable) in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company and the Guarantors shall:
(a) Prepare and file with the SEC, a Registration Statement or
Registration Statements as prescribed by Section 2 or 3, and to use their best
efforts to cause such Registration Statement(s) to become effective and remain
effective as provided herein; provided that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, before filing any Registration Statement or Prospectus or
any amendments or supplements thereto, the Company shall, if requested, furnish
to and afford you a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 3 business days
prior to such filing) and shall use their reasonable efforts to reflect in each
such document, when so filed with the SEC, such comments as you may reasonably
and timely propose.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the periods required
15
<PAGE> 17
by Section 2 or Section 3, as applicable; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
with respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Company and the Guarantors
shall be deemed not to have used their best efforts to keep a Registration
Statement effective during the Applicable Period if they voluntarily take any
action that would result in selling Holders of the Transfer Restricted
Securities covered thereby or Participating Broker-Dealers seeking to sell
Exchange Securities not being able to sell such Transfer Restricted Securities
or such Exchange Securities during that period, unless (i) such action is
required by applicable law, or (ii) such action is taken by them in good faith
and for valid business reasons (not including avoidance of their obligations
hereunder), including the acquisition or divestiture of assets.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Transfer Restricted Securities,
or each such Participating Broker-Dealer known to the Company, as the case may
be, their counsel and the managing underwriters, if any, as soon as practicable
and confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement
16
<PAGE> 18
or any post-effective amendment, when the same has become effective (including
in such notice a written statement that any Holder may, upon request, obtain,
without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated (excluding exhibits thereto) or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Transfer Restricted Securities the representations and warranties of the Company
or the Guarantors contained in any agreement (including any underwriting
agreement) contemplated by Section 5(l) below cease to be true and correct, (iv)
of the receipt by the Company or the Guarantors of any notification with respect
to the suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Transfer Restricted Securities or the
Exchange Securities to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation of any proceeding for such purpose,
(v) of the happening of any event or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
17
<PAGE> 19
to make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that no such notice shall be required if the
Company has elected to suspend the use of the Prospectus for valid business
purposes pursuant to Section 5(b) hereof, and (vi) of the Company's and the
Guarantors' reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
or the Exchange Securities (as applicable) to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued,
to use their reasonable best efforts to obtain the withdrawal of any such order
at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, and the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities being sold
in connection with an underwritten offering, (i) as soon as practicable
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, or such Holders or counsel
reasonably request to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or
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<PAGE> 20
post-effective amendment, and (iii) supplement or make amendments to such
Registration Statement with such information as the managing underwriter, if
any, and such Holders and counsel reasonably request to be included therein.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Transfer Restricted
Securities and to each such Participating Broker-Dealer who so requests, as the
case may be, their counsel and each managing underwriter, if any, without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated
(excluding exhibits thereto) or deemed to be incorporated therein by reference
and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, deliver to each selling Holder of Transfer Restricted
Securities pursuant to a Shelf Registration, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein (excluding exhibits thereto) as such
Persons may reasonably request; and, subject Section 5(b) and to the last
paragraph of this Section 5, the Company
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<PAGE> 21
and the Guarantors hereby consent to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities or each such Participating Broker-Dealer, as the case may
be, and the underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Transfer Restricted Securities covered by or
the sale by Participating Broker-Dealers of the Exchange Securities pursuant to
such Prospectus and any amendment or supplement thereto.
(h) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Transfer Restricted Securities and the
managing underwriters, if any, to (i) facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company, (ii) enable such
Transfer Restricted Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may reasonably
request and (iii) provide a CUSIP number for the Transfer Restricted Securities.
(i) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) above, as promptly as practicable prepare and (subject to
Sections 5(a) and 5(b) above) file with the SEC, at the expense of the Company
and the Guarantors, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, or file any other
20
<PAGE> 22
required document so that, as thereafter delivered to the purchasers of the
Transfer Restricted Securities being sold thereunder or to the purchasers of the
Exchange Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) In connection with an underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings and take all
such other actions as are reasonably requested by the managing underwriters in
order to expedite or facilitate the registration or the disposition of such
Transfer Restricted Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the business
of the Company, the Guarantors and their subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and the
Guarantors and updates thereof in form and substance reasonably satisfactory to
the managing underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters; (iii) obtain "cold
comfort" letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the independent certified public
accountants of the Company and the Guarantors (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or the
Guarantors or of any business acquired or to be acquired by any of them for
21
<PAGE> 23
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings and such other matters as are reasonably requested by underwriters as
permitted by Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or such
other provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Transfer Restricted Securities covered by such Registration
Statement and the managing underwriters or agents) with respect to all parties
to be indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, (i) make available for inspection by any selling Holder of
such Transfer Restricted Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept, during reasonable
business hours and upon at least __ business days' notice, all financial and
other records, pertinent corporate documents and properties of the Company, the
Guarantors and their subsidiaries (collectively, the
22
<PAGE> 24
"Records") as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and (ii) cause the officers,
directors and employees of the Company, the Guarantors and their subsidiaries to
supply all information in each case reasonably requested by any such Inspector
in connection with such Registration Statement.
(l) Provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Securities, as the case may be, and cause the
Indenture to be qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the holders of the Transfer Restricted Securities,
to effect such changes to such indenture as may be required for such indenture
to be so qualified in accordance with the terms of the TIA; and execute, and use
its best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.
(m) Comply with all applicable rules and regulations of the
SEC and, as soon as reasonably practicable, make generally available to its
securityholders consolidated earnings statements (which need not be audited) of
the Company that satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
(n) If an Exchange Offer is to be consummated, upon delivery
of the Transfer Restricted Securities by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange
Securities, the Company and the Guarantors shall mark, or cause to be marked, on
such Transfer Restricted Securi-
23
<PAGE> 25
ties that such Transfer Restricted Securities are being cancelled in exchange
for the Exchange Securities.
(o) Cooperate with each seller of Transfer Restricted
Securities covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(p) Use their best efforts to take all other steps necessary
to effect the registration of the Transfer Restricted Securities or Exchange
Securities, as applicable, covered by a Registration Statement contemplated
hereby.
The Company may require each seller of Transfer Restricted
Securities or Participating Broker-Dealer as to which any registration is being
effected to furnish to the Company such information regarding such seller or
Participating Broker-Dealer and the distribution of such Transfer Restricted
Securities or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, as the Company may, from time to time,
reasonably request. The Company may exclude from such registration the Transfer
Restricted Securities of any Holder or seller or Participating Broker-Dealer who
fails to furnish such information within a reasonable time after receiving such
request, until such time as such information is so provided.
Each Holder of Transfer Restricted Securities and each
Participating Broker-Dealer agrees by acquisition of such Transfer Restricted
Securities or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5(c)(ii),
5(c)(iv), 5(c)(v) or
24
<PAGE> 26
5(c)(vi), such Holder will forthwith discontinue disposition of such Transfer
Restricted Securities covered by such Registration Statement or Prospectus or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(i), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company gives any notice of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi), the time period
for the effectiveness of such Registration Statement set forth in Section 2 or
Section 3 hereof, as applicable, shall be extended by the number of days from
the date of such notice to the date when each selling Holder covered by such
Registration Statement shall have received copies of the supplemental or amended
Prospectus contemplated by Section 5(i) or shall have received the Advice that
the use of the applicable Prospectus may be resumed.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company or the Guarantors shall be borne
by the Company and the Guarantors, whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation, (i)
all registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Transfer Restricted Securities or Exchange Securities (x) where the Holders of
Transfer Restricted Securities are located, in the case of the
25
<PAGE> 27
Exchange Securities, or (y) as provided in Section 5(g), in the case of Transfer
Restricted Securities or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Transfer Restricted
Securities or Exchange Securities in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or, in respect
of Transfer Restricted Securities or Exchange Securities to be sold by any
Participating Broker-Dealer during the Applicable Period, by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement or of such Exchange Securities, as the
case may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and the Guarantors, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(k)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Company and the Guarantors desire such insurance, (viii) fees and expenses of
all other Persons retained by the Company or the Guarantors, (ix) internal
expenses of the Company and the Guarantors (including, without limitation, all
salaries and expenses of officers and employees of the Company and the
Guarantors performing legal or accounting duties), (x) the expense of any annual
audit, (xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange and (xii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, and
indentures. Nothing contained in this Section 6 shall create an obligation on
the part of the Company or any Guarantor to pay or reimburse any Holder for any
under-
26
<PAGE> 28
writing commission or discount attributable to any such Holder's Transfer
Restricted Securities included in an underwritten offering pursuant to a
Registration Statement filed in accordance with the terms of this Agreement, or
to guarantee such Holder any profit or proceeds from the sale of such
Securities.
(b) In connection with any Shelf Registration hereunder, the
Company and the Guarantors shall reimburse the Holders of the Transfer
Restricted Securities being registered in such registration for the reasonable
fees and disbursements of not more than one firm of attorneys (in addition to
one local firm of attorneys in each relevant jurisdiction) chosen by the Holders
of a majority in aggregate principal amount of the Transfer Restricted
Securities to be included in such Registration Statement.
7. Indemnification
The Company and each Guarantor agrees, jointly and severally,
to indemnify and hold harmless (i) each of the Purchasers, each Holder of
Transfer Restricted Securities, each Holder of Exchange Securities, each
Participating Broker-Dealer, (ii) each person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
any such Person (any of the persons referred to in this clause (ii) being
hereinafter referred to as a "controlling person"), and (iii) the respective
officers, directors, partners, employees, representatives and agents of any of
such Person or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person") to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including, without limitation, and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced
27
<PAGE> 29
or threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by (i) any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Indemnified Person furnished to the Company in writing by such Indemnified
Person expressly for use therein, or (ii) any untrue statement contained in or
omission from a preliminary prospectus if a copy of the Prospectus (as then
amended or supplemented, if the Company shall have furnished to or on behalf of
the Holder participating in the distribution relating to the relevant
Registration Statement any amendments or supplements thereto) was not sent or
given by or on behalf of such Holder to the person asserting any such losses,
liabilities, claims, damages or expenses who purchased Securities, if such is
required by law at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such preliminary prospectus was corrected in the Prospectus (or the Prospectus
as amended or supplemented). The Company and the Guarantors shall notify the
Trustee promptly of the institution, threat or assertion of any claim,
proceeding, action (including any governmental investigation) or litigation of
which it or they shall have become aware in connection with the matters
addressed by this Agreement which involves the Company, any
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<PAGE> 30
Guarantor or an Indemnified Person.
In connection with any Registration Statement in which a
Holder of Transfer Restricted Securities is participating, such Holder of
Transfer Restricted Securities agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Guarantors and their directors and officers
and each person who controls the Company or the Guarantors within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company and the Guarantors to each
Indemnified Person, but only with reference to information relating to such
Indemnified Person furnished to the Company in writing by such Indemnified
Person expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary prospectus. The liability of
any Indemnified Person pursuant to this paragraph shall in no event exceed the
net proceeds received by such Indemnified Person from sales of Transfer
Restricted Securities giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
person") in writing, and the indemnifying person shall have the right to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying person
may reasonably designate in such proceeding and shall pay the reasonable fees
and expenses actually incurred by such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the
29
<PAGE> 31
fees and expenses of such counsel shall be at the expense of such indemnified
party, unless (i) the indemnifying person and the indemnified party shall have
mutually agreed in writing to the contrary, (ii) the indemnifying person failed
to assume the defense within a reasonable time after the commencement of the
action and employ counsel reasonably satisfactory to the indemnified party or
(iii) the named parties to any such action (including any impleaded parties)
include both such indemnified party and the indemnifying person or any affiliate
of the indemnifying person and such indemnified party shall have been reasonably
advised by counsel that either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying person or such affiliate of the indemnifying person or (y) a
conflict may exist between such indemnified party and the indemnifying person or
such affiliate of the indemnifying person (in which case the indemnifying person
shall not have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying person
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local firm of
attorneys) for all such indemnified parties, which firm shall be designated in
writing by Indemnified Persons who sold a majority in aggregate principal amount
of Transfer Restricted Securities sold by all such Indemnified Persons and any
such separate firm for the Company and the Guarantors, their directors, their
officers and such controlling persons of the Company and the Guarantors shall be
designated in writing by the Company. The indemnifying person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying person agrees to
30
<PAGE> 32
indemnify any indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying person shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses referred to therein
(other than by reason of the exceptions provided therein), then each
indemnifying person under such paragraphs, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities,
or expenses (i) in such proportion as is appropriate to reflect the relative
benefits of the indemnified party, on the one hand, and the indemnifying
person(s), on the other, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities, or expenses or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the indemnifying
person(s) and the indemnified party, as well as any other relevant equitable
considerations. The relative fault of the indemnifying person(s), on the one
hand, and any indemnified parties, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by
31
<PAGE> 33
the indemnifying person(s), on the one hand, or by such indemnified parties, on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
indemnified party be required to contribute any amount in excess of the amount
by which proceeds received by such indemnified party from sales of Transfer
Restricted Securities exceeds the amount of any damages that such indemnified
party has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the indemnifying persons
may otherwise have to the indemnified parties referred to above. The indemnified
parties' obligations to contribute pursuant to Section 7 are several in
proportion to the respective principal amount of Securities sold by each of the
indem-
32
<PAGE> 34
nified parties hereunder and not joint.
8. Rules 144 and 144A
The Company and the Guarantors covenant that they will file
the reports required to be filed by them pursuant to the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner and, if at any time the Company and the Guarantors are not
required to file such reports, they will, upon the request of any Holder of
Transfer Restricted Securities, make available information required by Rules 144
and 144A under the Securities Act in order to permit sales pursuant to Rule 144
and Rule 144A.
9. Underwritten Registrations
(a) If any of the Transfer Restricted Securities covered by
any Shelf Registration are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering and reasonably acceptable to the Company.
No Holder of Transfer Restricted Securities may participate in
any underwritten registration hereunder, unless such Holder (i) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
customary underwriting arrangements entered into in connection therewith and
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if
requested (pursuant to a timely written notice) by the managing underwriters in
an underwritten
33
<PAGE> 35
offering or placement agent in a private offering of the Company's debt
securities, not to effect any private sale or distribution (including a sale
pursuant to Rule 144(k) and Rule 144A, but excluding non-public sales to any of
its affiliates, officers, directors, employees and controlling persons) of any
of the Securities except pursuant to an Exchange Offer, during the period
beginning 10 days prior to, and ending 90 days after, the closing date of the
underwritten offering.
The foregoing provisions shall not apply to any Holder of
Transfer Restricted Securities if such Holder is prevented by applicable statute
or regulation from entering into any such agreement.
The Company and the Guarantors agree that without the written
consent of the managing underwriters in an underwritten offering of Transfer
Restricted Securities covered by a Registration Statement filed pursuant to
Section 3 hereof, they will not effect any public or private sale or
distribution of their respective debt securities, including a sale pursuant to
Section 4(2) of the Securities Act, during the period beginning 10 days prior
to, and ending 90 days after, the closing date of each underwritten offering
made pursuant to such Registration Statement; provided, however, that such
period shall be extended by the number of days from and including the date of
the giving of any notice pursuant to Section 5(c)(v) or 5(c)(vi) hereof to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 5(i) hereof and provided, further,
that no such offering restriction shall apply to more than one such underwritten
offering per twelve-month period.
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<PAGE> 36
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any
of their obligations under this Agreement, each Holder of Transfer Restricted
Securities, in addition to being entitled to exercise all rights provided
herein, in the Indenture or, in the case of the Initial Purchaser, in the
Purchase Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Subject to
Section 4, the Company and the Guarantors agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by them of
any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, they
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any
Guarantor will enter into any agreement with respect to any of their respective
securities which will grant to any Person piggy-back registration rights with
respect to an Exchange Registration Statement or a Shelf Registration.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of holders
of at least a majority of the then outstanding aggregate principal amount of
Transfer Restricted Securities and Exchange Securities held by Participating
Broker-Dealers holding Exchange Securities. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders
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<PAGE> 37
and Participating Broker-Dealers holding Exchange Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise the rights of other Holders
and Participating Broker-Dealers holding Exchange Securities may be given by
holders of at least a majority in aggregate principal amount of the Transfer
Restricted Securities and Exchange Securities held by Participating
Broker-Dealers being sold by such holders pursuant to such Registration
Statement; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Transfer Restricted Securities, at the
most current address given by the Trustee to the Company; and
(ii) if to the Company or the Guarantors, Kevin Higgins,
UROHEALTH Systems,Inc., 5 Civic Plaza Blvd., Suite 100, Newport Beach,
California 92660, with a copy to Morrison & Foerster, 19900 Mac Arthur
Blvd., Irvine, California 92612-2443, Attention:
Robert M. Mattson, Jr. (Tel.: (714) 251-7500).
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; ten business
days after being deposited in the mail, postage prepaid, if mailed; three
business days after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if telecopied.
36
<PAGE> 38
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Indemnified Persons, as applicable, and the
successors and assigns of each of the parties, including without limitation and
without the need for an express assignment, subsequent Holders of Transfer
Restricted Securities. The Company and the Guarantors agree that the holders of
the Securities shall be third party beneficiaries to the agreements made
hereunder by the Company and the Guarantors and each Holder shall have the right
to enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL 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 CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
37
<PAGE> 39
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT TO
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement, together with the
Purchase Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
38
<PAGE> 40
(k) Securities Held by the Company, the Guarantors or Their
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Company, any Guarantor or any of their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
39
<PAGE> 41
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
Very truly yours,
UROHEALTH SYSTEMS, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
GATES PLASTICS
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
DACOMED CORPORATION
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
DACOMED INTERNATIONAL, INC.
<PAGE> 42
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
ALLSTATE MEDICAL PRODUCTS, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
UROHEALTH OF KENTUCKY, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
MICROSURGE, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
OSBON MEDICAL SYSTEMS, LTD.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
<PAGE> 43
Name: Kevin M. Higgins
Title: Senior Vice President
NT REUDT CORPORATION
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
INTERMED ASSOCIATES, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
LAPAROMED CORPORATION
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
ADVANCED UROCARE, INC.
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
<PAGE> 44
UROHEALTH, INC. (CALIFORNIA)
By: /s/ KEVIN M. HIGGINS
-----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
<PAGE> 45
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first
above written.
BEAR, STEARNS & CO. INC.
By: /s/ DONALD MULLEN
-------------------------------
Name: Donald Mullen
Title: Senior Managing Director
<PAGE> 1
Exhibit 4.4
WARRANT AGREEMENT
Dated as of
April 10, 1997
between
UROHEALTH SYSTEMS, INC.
and
THE BANK OF NEW YORK,
as Warrant Agent
Warrants for
Common Stock of
UROHEALTH Systems, Inc.
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.1 Definitions................................................... 1
SECTION 1.2 Other Definitions............................................. 4
ARTICLE II
Warrant Certificates
SECTION 2.1 Form of Warrant Certificates.................................. 5
SECTION 2.2 Legends....................................................... 6
SECTION 2.3 Execution and Delivery of Warrant Certificates ............... 7
SECTION 2.4 Loss or Mutilation............................................ 8
ARTICLE III
Exercise Terms
SECTION 3.1 Exercise Price................................................ 9
SECTION 3.2 Certification of Consolidated EBITDA.......................... 9
SECTION 3.3 Expiration.................................................... 9
SECTION 3.4 Manner of Exercise............................................ 10
SECTION 3.5 Issuance of Warrant Shares.................................... 10
SECTION 3.6 Fractional Warrant Shares..................................... 10
SECTION 3.7 Reservation of Warrant Shares................................. 11
SECTION 3.8 Compliance with Law.......................................... 11
i
<PAGE> 3
Page
----
ARTICLE IV
Antidilution Provisions
SECTION 4.1 Adjustment of Exercise Price and Warrant Number .............. 12
SECTION 4.2 Minimum Adjustment............................................ 23
SECTION 4.3 Notice of Adjustment.......................................... 24
SECTION 4.4 Notice of Certain Transactions................................ 25
SECTION 4.5 Adjustment to Warrant Certificate............................. 25
SECTION 4.6 Issuance of Due Bills......................................... 25
ARTICLE V
Transferability
SECTION 5.1 Transfer and Exchange......................................... 26
SECTION 5.2 Registration, Registration of Transfer and Exchange .......... 27
SECTION 5.3 Book-Entry Provisions for the Rule 144A
Global Warrant............................................. 27
SECTION 5.4 Special Transfer Provisions................................... 28
SECTION 5.5 Surrender of Warrant Certificates............................. 30
ARTICLE VI
Warrant Agent
SECTION 6.1 Appointment of Warrant Agreement.............................. 31
SECTION 6.2 Rights and Duties of Warrant Agent............................ 31
SECTION 6.3 Individual Rights of Warrant Agent............................ 32
SECTION 6.4 Warrant Agent's Disclaimer.................................... 32
SECTION 6.5 Compensation and Indemnity.................................... 32
SECTION 6.6 Successor Warrant Agent....................................... 33
ii
<PAGE> 4
Page
ARTICLE VII
Miscellaneous
SECTION 7.1 Company Resales............................................... 35
SECTION 7.2 SEC Reports and Other Information............................. 35
SECTION 7.3 Rule 144A..................................................... 35
SECTION 7.4 Persons Benefitting........................................... 35
SECTION 7.5 Rights of Holders............................................. 35
SECTION 7.6 Amendment..................................................... 36
SECTION 7.7 Notices....................................................... 36
SECTION 7.8 Governing Law................................................. 37
SECTION 7.9 Successors.................................................... 38
SECTION 7.10 Multiple Originals............................................ 38
SECTION 7.11 Table of Contents............................................. 38
SECTION 7.12 Severability.................................................. 38
SECTION 7.13 Further Assurances............................................ 38
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Certificate To Be Delivered upon
Exchange or Registration of
Transfer of Warrants
iii
<PAGE> 5
WARRANT AGREEMENT (this "Agreement") dated as of April 10, 1997,
between UROHEALTH SYSTEMS, INC., a Delaware corporation (together with its
permitted successors and assigns, the "Company"), and THE BANK OF NEW YORK, as
Warrant Agent (together with its permitted successors and assigns, the "Warrant
Agent").
WHEREAS, the Company has entered into a purchase agreement, dated April
3, 1997, with Bear, Stearns & Co. Inc. (the "Initial Purchaser"), in which the
Company has agreed to sell to the Initial Purchaser 110,000 Units consisting of
$110,000,000 aggregate principal amount of 12.5% Senior Subordinated Notes due
2004 (the "Notes") of the Company and Warrants, as hereinafter described (the
"Warrants"), to purchase shares of Common Stock, par value $.001 per share (the
"Common Stock"), of the Company.
WHEREAS, the Company desires that the Warrant Agent act on behalf of
the Company in connection with the issuances, division, transfer, exchange,
substitution and exercise of the Warrants, and the Warrant Agent is willing so
to act.
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of Warrants:
ARTICLE I
Definitions
SECTION 1 Definitions. "Affiliate" of any specified Person means (i)
any other Person which, directly or indirectly, is controlling or controlled by
or under direct or indirect common control with such specified Person, or (ii)
any other Person who is a director or executive officer (A) of such Person, (B)
of any subsidiary of such specified Person or (C) of any Person described in
clause (i) above. For purposes of this definition, "control," when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Affiliate shall also
mean any beneficial owner of shares representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company and any
Person who would be an Affiliate of any such beneficial owner.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
<PAGE> 6
"Business Day" means each day that is not a Saturday, a Sunday or a day
on which banking institutions are not required to be open in New York City or in
the city where the Warrant Agent's principal corporate trust office is located.
"Certificated Warrants" means certificated Warrants in fully registered
definitive form.
"Common Stock" has the meaning ascribed thereto in the preamble to this
Agreement.
"Consolidated EBITDA" shall have the meaning ascribed thereto in the
Indenture.
"DTC" means The Depository Trust Company.
"Exercise Price" shall have the meaning set forth in Section 3.1.
"Expiration Date" shall have the meaning set forth in Section 3.3.
"Extraordinary Cash Dividend" means that portion, if any, of the
aggregate amount of all dividends paid by the Company on its Common Stock in any
fiscal year in excess of $1.0 million.
"Fair Market Value" means, with respect to any asset or Property, the
price which could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value will
be determined, except as otherwise provided, (i) if such property or asset has a
Fair Market Value of less than $1 million, by any Officer of the Company or (ii)
if such property or asset has a Fair Market Value in excess of $1 million, by a
majority of the Board of Directors of the Company and evidenced by a Board
Resolution, dated within 30 days of the relevant transaction.
"Indenture" means that certain Indenture governing the terms of the
Company's 12.5% Senior Subordinated Notes due 2004, dated as of April 10, 1997,
by and between the Company and The Bank of New York, as trustee.
"Issue Date" means the date on which Warrants are initially issued.
2
<PAGE> 7
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Financial Officer or the Treasurer of the Company.
"Person" means any individual, corporation, company (including any
limited liability company), partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Stock" means, with respect to any Person, any capital stock
that by its terms (or by the terms of any security into which it is convertible
or exchangeable) or otherwise (i) matures or is mandatorily redeemable pursuant
to a sinking fund obligation or otherwise, (ii) is or may become redeemable or
repurchasable at the option of the holder thereof, in whole or in part, or (iii)
is convertible or exchangeable for indebtedness.
"Restricted Warrant" means a Rule 144A Global Warrant (as defined in
Section 2.3) or a Restricted Certificated Warrant (as defined in Section 2.3).
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Voting Stock" means all classes of capital stock of a corporation then
outstanding and normally entitled to vote in the election of directors.
"Warrant Registration Rights Agreement" means that certain Warrant
Registration Rights Agreement between the Company and the Purchaser named
therein, dated as of April 10, 1997, relating to the Warrants and the Warrant
Shares.
"Warrant Shares" means the Common Stock (and other securities) issuable
upon the exercise of the Warrants.
SECTION 1.2 Rules of Construction. Unless the text otherwise requires:
(i) a term has the meaning assigned to it;
3
<PAGE> 8
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the
plural include the singular.
ARTICLE II
Warrant Certificates
SECTION 1 Form of Warrant Certificates. Certificates representing the
Warrants (the "Warrant Certificates") shall be in registered form only and
substantially in the form attached hereto as Exhibit A. The Warrant Certificates
shall be dated the date on which countersigned by the Warrant Agent and shall
have such insertions as are appropriate or required or permitted by this
Agreement and may have such letters, numbers or other marks of identification
and such legends and endorsements typed, stamped, printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation pursuant thereto, or to conform to usage. The
Company shall approve the form of the Warrant Certificates and any notation,
legend or endorsement on them.
The terms and provisions contained in the forms of the Warrant
Certificates annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Agreement.
The definitive Warrant Certificates shall be typed, printed,
lithographed or engraved or produced by any combination of these methods, all as
determined by the officer of the Company executing such Warrant Certificates, as
evidenced by such officer's execution of such Warrant Certificates.
Pending the preparation of definitive Warrant Certificates, temporary
Warrant Certificates may be issued, which may be printed, lithographed,
typewritten,
4
<PAGE> 9
mimeographed or otherwise produced, and which will be substantially of the tenor
of the definitive Warrant Certificates in lieu of which they are issued.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates to the Warrant Agent, without
charge to the Holder. Until so exchanged the temporary Warrant Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Warrant Certificates.
SECTION 2 Legends. Unless and until a Warrant or Warrant Share is
sold under an effective registration statement, each Warrant Certificate
evidencing the Global Warrant and the Certificated Warrants (and all Warrant
Certificates issued in exchange therefor or substitution thereof) and each
certificate representing the Warrant Shares shall bear a legend in substantially
the following form (with any appropriate modification for the Warrant Shares):
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED
PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO RULE
144A, FOR SO LONG AS IT IS AVAILABLE, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
5
<PAGE> 10
IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR," WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO IT, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
SECTION 3 Execution and Delivery of Warrant Certificates. Warrant
Certificates evidencing 110,000 Warrants to purchase initially an aggregate
(subject to the contingency described in Section 3.1) of up to 996,600 Warrant
Shares shall be executed on or prior to the Issue Date, by the Company and
delivered to the Warrant Agent for countersignature, and the Warrant Agent shall
thereupon countersign and deliver such Warrant Certificates upon the order and
at the direction of the Company to the purchasers thereof on the date of
issuance. The Warrant Agent is hereby authorized to countersign and deliver
Warrant Certificates as required hereby.
The Warrant Certificates shall be executed on behalf of the Company by
its President or any Vice President, either manually or by facsimile signature
printed thereon. The Warrant Certificates shall be countersigned manually by the
Warrant Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company whose signature shall have been placed upon any
of the Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issuance and delivery thereof, such
Warrant Certificates may, nevertheless, 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.
Warrants offered and sold in reliance on Rule 144A shall be issued
initially in the form of a single, permanent global Warrant Certificate in
definitive, fully registered form, substantially in the form set forth in
Exhibit A (the "Rule 144A Global
6
<PAGE> 11
Warrant"), deposited with the Warrant Agent, as custodian for DTC, duly executed
by the Company and countersigned by the Warrant Agent. The aggregate number of
Warrants represented by the Rule 144A Global Warrant may from time to time be
increased or decreased by adjustments made on the records of the Warrant Agent,
as custodian for DTC, or its nominee, as hereinafter provided.
Warrants offered and sold in their initial distribution to a limited
number of institutions that are accredited investors (which are not QIBs) within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (and
institutions in which all the equity owners are such accredited investors)
(together referred to as "Institutional Accredited Investors") in transactions
exempt from registration under the Securities Act will be delivered in
certificated fully registered form (a "Restricted Certificated Warrant")
substantially in the form set forth in Exhibit A. Such Warrants shall be
delivered to such Institutional Accredited Investors only upon the execution and
delivery to the Company and the Initial Purchaser of an institutional accredited
investor transferee compliance letter (an "Investor Letter") substantially in
the form of Appendix A to the Company's Offering Memorandum, dated April 3, 1997
(the "Offering Memorandum"). Restricted Certificated Warrants may not be
transferred or exchanged for interests in the Rule 144A Global Warrant or
another Restricted Certificated Warrant except as provided herein.
SECTION 4 Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership and the loss,
theft, destruction or mutilation of any Warrant Certificate and of indemnity
satisfactory to them 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 the Warrant Agent shall
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 Section
2.4, 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 other
expenses (including the reasonable fees and expenses of the Warrant Agent and of
counsel to the Company) in connection therewith. Every new Warrant Certificate
executed and delivered pursuant to this Section 2.4 in lieu of any lost, stolen
or destroyed Warrant Certificate shall constitute a contractual obligation of
the Company, whether or not the allegedly lost, stolen or destroyed Warrant
Certificates shall be at any time enforceable under applicable law, and shall be
entitled to the benefits of this Agreement equally and proportionately with any
and all other Warrant Certificates duly executed and delivered hereunder. The
provisions of this Section
7
<PAGE> 12
2.4 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 III
Exercise Terms
SECTION 1 Exercise Price. The number of Warrant Shares into which
each Warrant will be exercisable (subject to adjustment as provided in this
Agreement) shall initially be (i) 4.44 or (ii) if the Company has Consolidated
EBITDA of less than $32.5 million for its fiscal year ended March 31, 1998,
9.06. Subject to Article IV, the Warrants will not be exercisable prior to June
30, 1998. The Warrants will be exercisable on or after June 30, 1998, initially
at a price per Warrant Share of $9.50 (the "Exercise Price").
SECTION 2 Certification of Consolidated EBITDA. On or prior to June
30, 1998, the Company must (i) issue a press release and (ii) deliver an
Officer's Certificate (as defined in the Indenture) to the Warrant Agent, in
each case setting forth in reasonable detail the calculation of the Company's
Consolidated EBITDA for its fiscal year ended March 31, 1998. Such calculation
shall be agreed to by the Company's independent public accountants, provided
that no such agreement shall be required in the event that the certified Company
reports Consolidated EBITDA for such period of less than $32.5 million.
SECTION 3 Expiration. A Warrant shall terminate and become void as of
the earlier of (i) the close of business on April 1, 2004 ( "the Expiration
Date") or (ii) the date such Warrant is exercised. The Company shall give notice
not less than 90, and not more than 120, days prior to the Expiration Date to
the registered holders ("Holders") of all then outstanding Warrants to the
effect that the Warrants will terminate and become void as of the close of
business on the Expiration Date.
SECTION 4 Manner of Exercise. Warrants (including the 144A Global
Warrant, if applicaple) may be exercised, subject to Section 3.8 upon surrender
to the Warrant Agent of the Warrant Certificates, together with the form of
election to purchase Common Stock on the reverse thereof duly filled in and
signed by the Holder thereof. The rights represented by the Warrants shall be
exercisable at the election of the Holders thereof either in full or from time
to time in part and in the event that a Warrant Certificate is surrendered for
exercise in respect of less than all the Warrant Shares purchasable on such
exercise at any time prior to the Expiration Date a new Warrant Certificate
exercisable for the remaining Warrant Shares will be issued. The Warrant Agent
shall countersign and deliver the required new
8
<PAGE> 13
Warrant Certificates, and the Company, at the Warrant Agent's request, shall
supply the Warrant Agent with Warrant Certificates duly signed on behalf of the
Company for such purpose.
SECTION 5 Issuance of Warrant Shares. Upon the surrender of Warrant
Certificates, as set forth in Section 3.4, the Company shall issue and cause the
Warrant Agent or, if appointed, a transfer agent for the Common Stock ("Stock
Transfer Agent") to countersign and deliver to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.6 in respect of any
fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price, as aforesaid;
provided, however, that if, at such date, the transfer books for the Warrant
Shares shall be closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided, further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 6 Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be exercised in full at the same time by the same Holder,
the number of full Warrant Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.6, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the market price for one Warrant Share on the trading day immediately
preceding the date the Warrant is exercised, multiplied by such fraction,
computed to the nearest whole cent.
SECTION 7 Reservation of Warrant Shares. The Company shall at all
times keep reserved out of its authorized shares of Common Stock, a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "Registrar") shall at all
times until the Expiration Date reserve such number of authorized shares as
shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Stock Transfer Agent. The Company will
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<PAGE> 14
supply such Stock Transfer Agent with duly executed stock certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.6. The Company will furnish to such Stock
Transfer Agent a copy of all notices of adjustments and certificates related
thereto transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article IV to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
The Company covenants that all shares of Common Stock which may be
issued upon exercise of Warrants will, upon issue, be fully paid, nonassessable,
free of preemptive rights, free from all taxes and free from all liens, charges
and security interests, created by or through the Company, with respect to the
issue thereof.
SECTION 8 Compliance with Law. (a) Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) in the
opinion of counsel to the Company addressed to the Warrant Agent an exemption
from the registration requirements is available under the Securities Act for the
issuance of the Warrant Shares (and the delivery of any other securities for
which the Warrants may at the time be exercisable) at the time of such exercise.
(b) If any shares of Common Stock required to be reserved for purposes
of exercise of Warrants require, under any other Federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such shares may be issued upon
exercise, the Company will in good faith and as expeditiously as possible
endeavor also to cause such shares to be duly registered or approved by such
governmental authority or listed on the relevant national securities exchange,
as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 1 Adjustment of Exercise Price and Warrant Number. The number
of Warrant Shares issuable upon the exercise of each Warrant (the "Warrant
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<PAGE> 15
Number") is subject to adjustment from time to time upon the occurrence of the
events enumerated in, or as otherwise provided in, this Section 4.1.
(a) Adjustment for Change in Capital Stock
If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of
Common Stock into a greater number of shares;
(3) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares
of its capital stock (other than reclassification arising solely as a result of
a change in the par value or no par value of the Common Stock);
then the Warrant Number in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which it would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under subsection (b) or (c) below, no further adjustment shall be
made under this subsection (a).
The Company shall not issue shares of Common Stock as a dividend or
distribution on any class of capital stock other than Common Stock with the
intention of
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<PAGE> 16
denying the Warrant Holders the benefit of the foregoing provisions unless
the Warrant Holders also receive such dividend or distribution on a ratable
basis or the appropriate adjustment to the Warrant Number is made under this
Section 4.1.
(b) Adjustment for Rights Issue
If the Company distributes (and receives no consideration therefor) any
rights, options or warrants (whether or not immediately exercisable) to all
holders of any class of its Common Stock entitling them to purchase shares of
Common Stock at a price per share less than the Specified Value (as defined in
Section 4.1(g) hereof) per share on the record date relating to such
distribution, the Warrant Number shall be adjusted in accordance with the
formula:
W' = W x O + N
--------
O + N x P
-------
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record
date for any such distribution.
O = the number of shares of Common Stock outstanding on
the record date for any such distribution.
N = the number of additional shares of Common Stock
issuable upon exercise of such rights, options or
warrants.
P = the exercise price per share of such rights,
options or warrants.
M = the Specified Value per share of Common Stock on
the record date for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the adjusted Warrant Number shall be
12
<PAGE> 17
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distributions
If the Company distributes to all holders of any class of its Common
Stock (i) any evidences of indebtedness of the Company or any of its
subsidiaries, (ii) any assets of the Company or any of its subsidiaries, or
(iii) any rights, options or warrants to acquire any of the foregoing or to
acquire any other securities of the Company, the Warrant Number shall be
adjusted in accordance with the formula:
W' = W x M
------
M - F
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record
date mentioned below.
M = the Specified Value per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date mentioned
below of the shares, the indebtedness, assets,
rights, options or warrants distributable to the
holder of one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to this subsection (c) as a result of the
issuance of rights, options or warrants and at the end of the period during
which any such rights, options or warrants are exercisable, not all such rights,
options or warrants shall have been exercised, the adjusted Warrant Number shall
be immediately readjusted as if "F" in the above formula was the fair market
value on the record date of the indebtedness or assets actually distributed upon
exercise of such rights, options or warrants divided by the number of shares of
Common Stock outstanding on the record date.
13
<PAGE> 18
This subsection does not apply to any transaction described in
subsection (a) of this Section 4.1 or to rights, options or warrants referred to
in subsection (b) of this Section 4.1.
(d) Adjustment for Common Stock Issue
If the Company issues shares of Common Stock for a consideration per
share less than the Specified Value per share on the date the Company fixes the
offering price of such additional shares, the Warrant Number shall be adjusted
in accordance with the formula:
W' = W x A
---
O + P
---
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such
issuance.
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such
additional shares of Common Stock.
P = the aggregate consideration received for the
issuance of such additional shares of Common Stock.
M = the Specified Value per share of Common Stock on
the date of issuance of such additional shares.
A = the number of shares of Common Stock outstanding
immediately after the issuance of such additional
shares of Common Stock.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to any of the transactions described
in subsection (a) of this Section 4.1 or the issuances described below:
14
<PAGE> 19
(aa) The issuance of Common Stock upon the conversion,
exercise or exchange of any Convertible Securities (as defined below),
including the Warrants, outstanding on the date hereof or for which an
adjustment has been made pursuant to Section 4.1; or
(bb) (a) The grant of rights to purchase shares of Common
Stock representing, in the aggregate, up to 5% of the outstanding
shares of Common Stock, and the issuance of such shares of Common Stock
upon exercise of such rights, to directors or members of management of
the Company and its Subsidiaries pursuant to management incentive
plans, stock option and stock purchase plans or agreements adopted by
the Board of Directors of the Company and (b) following the acquisition
by the Company of any of the rights or shares referred to in clause (a)
the reissuance of any such acquired rights and the issuance of shares
of Common Stock upon exercise thereof.
(e) Adjustment for Convertible Securities Issue
If the Company issues any options, warrants or other securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsection (b) or (c) of this
Section 4.1) for a consideration per share of Common Stock initially deliverable
upon conversion, exchange or exercise of such securities less than the Specified
Value per share on the date of issuance of such securities, the Warrant Number
shall be adjusted in accordance with this formula:
W' = W x O + D
-------
O + P
---
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such
issuance.
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such
securities.
P = the sum of the aggregate consideration received for
the issuance of such securities and the aggregate
minimum consideration receivable by the
15
<PAGE> 20
Company for issuance of Common Stock upon
conversion or in exchange for, or upon exercise of,
such securities.
M = the Specified Value per share of Common Stock on
the date of issuance of such securities.
D = the maximum number of shares of Common Stock
deliverable upon conversion or in exchange for or
upon exercise of such securities at the initial
conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion,
exchange or exercise of such securities has not been issued when the conversion,
exchange or exercise rights of such securities have expired or been terminated,
then the adjusted Warrant Number shall promptly be readjusted to the adjusted
Warrant Number which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities. If the aggregate minimum consideration receivable by the Company for
issuance of Common Stock upon conversion or in exchange for, or upon exercise
of, such securities shall be increased by virtue of provisions therein contained
or upon the arrival of a specified date or the happening of a specified event,
then the Warrant Number shall promptly be readjusted to the Warrant Number which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of such increased minimum consideration.
This subsection (e) does not apply to the issuance of the
Warrants or to any of the transactions described in paragraph (b) of this
Section 4.1 or excluded from the provisions of paragraph (d) of this Section
4.1.
(f) Adjustment for Tender Offer.
If the Company or any Subsidiary of the Company consummates a
tender offer for any Common Stock and purchases shares pursuant to such tender
offer for an aggregate consideration having a fair market value (as determined
reasonably and in good faith by the Board of Directors and described in a board
resolution) as of the last time (the "Expiration Time") that tenders may be made
pursuant to such tender offer (as it shall have been amended) that, together
with (i) the aggregate of the cash plus the fair market value (as determined
reasonably and in good faith by the Board of Directors and described in a board
resolution) of
16
<PAGE> 21
the consideration paid in respect of any other tender offer by the Company or
any Subsidiaries of the Company for any Common Stock consummated within the 12
months preceding the Expiration Time and in respect of which no adjustment
pursuant to this subsection (f) has been made previously and (ii) the aggregate
amount of any distributions to all holders of Common Stock made exclusively in
cash within 12 months preceding the Expiration Time exceeds 7.5% of the product
of the Specified Value per share immediately prior to the Expiration Time times
the number of shares of Common Stock outstanding (including any tendered shares)
at the Expiration Time, the Warrant Number shall be adjusted in accordance with
this formula:
W' = W x M x (O - N)
-----------
(M x O) - F
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the
Expiration Time.
M = the Specified Value per share of Common Stock
immediately prior to the Expiration Time.
O = the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration
Time.
F = the fair market value of the aggregate
consideration paid for all shares of Common Stock
purchased pursuant to the tender offer.
N = the number of shares of Common Stock accepted for
payment in such tender offer.
If the number of shares accepted for payment in such tender
offer or the aggregate consideration payable therefor have not been finally
determined by the opening of business on the day following the Expiration Time,
the adjustment required by this subsection (f) shall, pending such final
determination, be made based upon the preliminary announced results of such
tender offer, and, after such final determination shall have been made, the
adjustment required by this subsection (f) shall be based upon the number of
shares accepted for payment in such tender offer and the aggregate consideration
payable therefor as so finally determined.
17
<PAGE> 22
(g) "Specified Value" per share of Common Stock or of
any other security (herein collectively referred to as a "Security") at
any date shall be:
(i) if the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i)
the value of the Security determined in good faith by a majority of the
independent members of the Board of Directors of the Company and
certified in a board resolution, or
(ii) if the Security is registered under the Exchange
Act, the average of the daily market prices for each business day
during the period commencing 10 business days before such date and
ending on the date one day prior to such date or, if the Security has
been registered under the Exchange Act for less than 30 consecutive
business days before such date, then the average of the daily market
prices (as hereinafter defined) for all of the business days before
such date for which daily market prices are available. If the market
price is not determinable for at least 15 business days in such period,
the Specified Value of the Security shall be determined as if the
Security was not registered under the Exchange Act.
The "market price" for any Security on each business day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day or (B) if such Security
is not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company. If there are
no such prices on a business day, then the market price shall not be
determinable for such business day.
In the case of Common Stock, if more than one class of Common
Stock is outstanding, the "Specified Value" shall be the highest of the
Specified Values per share of such classes of Common Stock.
"Convertible Securities" means any security convertible into
or exercisable or exchangeable for shares of Common Stock and any right, option
or warrant to purchase shares of Common Stock.
(h) Consideration Received
18
<PAGE> 23
For purposes of any computation respecting consideration
received pursuant to subsections (d) and (e) of this Section 4.1, the following
shall apply:
(1) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash (without any
deduction being made for any commissions, discounts or other expenses incurred
by the Company for any underwriting of the issue or otherwise in connection
therewith);
(2) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof
(irrespective of the accounting treatment thereof) as determined in good faith
by the Board of Directors; and
(3) in the case of the issuance of options, warrants
or other securities convertible into or exchangeable or exercisable for shares
of Common Stock, the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be received by
the Company upon the conversion, exchange or exercise thereof (the consideration
in each case to be determined in the same manner as provided in clauses (l) and
(2) of this subsection).
(i) Adjustment to Exercise Price
Upon each adjustment to the Warrant Number pursuant to this
Section 4.1, the Exercise Price shall be adjusted so that it is equal to the
Exercise Price in effect immediately prior to such adjustment multiplied by a
quotient, the numerator of which is the Warrant Number in effect immediately
prior to such adjustment, and the denominator of which is the Warrant Number in
effect immediately after such adjustment.
(j) When No Adjustment Required
If an adjustment is made upon the establishment of a record
date for a distribution subject to subsection (a), (b) or (c) hereof and such
distribution is subsequently cancelled, the Warrant Number and Exercise Price
then in effect shall be readjusted, effective as of the date when the Board of
Directors determines to cancel such distribution, to that which would have been
in effect if such record date had not been fixed.
19
<PAGE> 24
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(k) Voluntary Reduction
The Company from time to time may reduce the Exercise Price by
any amount for any period of time (including, without limitation, permanently)
if the period is at least 20 days and if the reduction is irrevocable during the
period.
Whenever the Exercise Price is reduced, the Company shall mail
to the Holders a notice of the reduction. the Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price under this Subsection (k)
(other than a permanent reduction) does not change or adjust the Exercise Price
otherwise in effect for purposes of subsections (a), (b), (c), (d), (e), or (f)
of this Section 4.1.
(l) Reorganizations
If the Company, in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other person
or sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another Person or group of
affiliated Persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock (any such transaction, an
"Extraordinary Transaction"), as a condition to consummating any such
Extraordinary Transaction, the Person formed by or surviving any such
consolidation or merger, if other than the Company, or the Person to whom such
transfer has been made (the "Surviving Person") shall enter into a supplemental
warrant agreement pursuant to which it agrees to assume all of the obligations
of the Company under the Warrants and the Warrant Registration Rights Agreement.
If such Extraordinary Transaction occurs prior to June 30, 1998, then (i) the
Warrants shall become exercisable immediately upon the consummation of such
Extraordinary Transaction for the kind and amount of consideration that the
Holder thereof would have received as a result of the Extraordinary Transaction
if such Holder had exercised the Warrant for 4.44 shares of Common Stock,
subject to prior adjustment, immediately prior to the consummation of the
Extraordinary Transaction, and (ii) in addition, the Surviving Person shall,
upon consummation of the Extraordinary Transaction, issue to each Holder of
Warrants on that date, a new Warrant Certificate having the same terms as the
Warrants but representing
20
<PAGE> 25
the right to receive, on and after June 30, 1998 if the Surviving Person's
Consolidated EBITDA, on a pro forma basis after giving effect to the
Extraordinary Transaction, for the twelve-month period ending March 31, 1998 is
less than $32.5 million, the kind and amount of consideration that such Holder
would have received as a result of the Extraordinary Transaction if such Holder
had exercised the Warrant for 4.62 shares of Common Stock, subject to
adjustment, immediately prior to the consummation of the Extraordinary
Transaction.
(m) Form of Warrants
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(n) Other Dilutive Events
In case any event shall occur as to which the provisions of
this Section 4.1 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by the
Warrants in accordance with the essential intent and principles of such
sections, then, in each such case, the Company shall make a good faith
adjustment to the Exercise Price and Warrant Number into which each Warrant is
exercisable in accordance with the intent of this Section 4.1 and, upon the
written request of the holders of a majority of the Warrants, shall appoint a
firm of independent certified public accountants of recognized national standing
(which may be the regular auditors of the Company), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 4.1, necessary to preserve,
without dilution, the purchase rights represented by these Warrants. Upon
receipt of such opinion, the Company shall promptly mail a copy thereof to the
Holder of each Warrant and to the Warrant Agent and shall make the adjustments
described therein.
(o) Miscellaneous
For purpose of this Section 4.1, the term "shares of Common
Stock" shall mean (i) shares of any class of stock designated as Common Stock of
the Company as of the date of this Agreement, (ii) shares of any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value and (iii) shares of Common Stock of the Company
or options, warrants or rights to purchase Common Stock of the Company or
securities convertible into or exchangeable for shares of Common Stock of the
Company outstanding
21
<PAGE> 26
on the date hereof and shares of Common Stock of the Company issued upon
exercise, conversion or exchange of such securities. In the event that at any
time, as a result of an adjustment made pursuant to this Section 4.1, the
holders of Warrants shall become entitled to purchase any securities of the
Company other than, or in addition to, shares of Common Stock, thereafter the
number or amount of such other securities so purchasable upon exercise of each
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in subsections (a) through (n) of this Section 4.1,
inclusive, and the other provisions hereof with respect to the Warrant Shares or
the Common Stock shall apply on like terms to any such other securities.
SECTION 2 Minimum Adjustment. The adjustments
required by the preceding Section of this Article IV shall be made whenever and
as often as any specified event requiring an adjustment shall occur, except that
no adjustment of the Exercise Price or the number of shares of Common Stock
purchasable upon exercise of Warrants that would otherwise be required shall be
made (except in the case of a subdivision or combination of shares of Common
Stock, as provided for in Section 4.1) unless and until such adjustment either
by itself or with other adjustments not previously made increases or decreases
by at least 1% of the number of shares of Common Stock purchasable upon exercise
of Warrants immediately prior to the making of such adjustment; provided,
however, that any adjustment pursuant to this Article IV (including those that
require an increase or decrease in the Exercise Price or the number of shares of
Common Stock purchasable upon exercise of Warrants of less than 1%) shall be
made no later than the earlier of three years from the date of the transaction
that mandates such adjustment and the Expiration Date. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required by
this Article IV and not previously made, would result in a minimum adjustment.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 3 Notice of Adjustment. Whenever the
Exercise Price or the number of shares of Common Stock and other property, if
any, purchasable upon exercise of Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of Directors
of the Company determined the fair market value of any evidences of
indebtedness, other securities or property or warrants or
22
<PAGE> 27
other subscription or purchase rights), and specifying the Exercise Price and
the number of shares of Common Stock purchasable upon exercise of Warrants after
giving effect to such adjustment. The Company shall promptly cause the Warrant
Agent to mail a copy of such certificate to each Holder in accordance with
Section 7.7. The Warrant Agent shall be entitled to rely on such certificate and
shall be under no duty or responsibility with respect to any such certificate,
except to exhibit the same from time to time, to any Holder desiring an
inspection thereof during reasonable business hours. The Warrant Agent shall not
at any time be under any duty or responsibility to any Holder to determine
whether any facts exist which may require any adjustment of the Exercise Price
or the number of shares of Common Stock or other stock or property, purchasable
on exercise of the Warrants, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed in making such
adjustment or the validity or value of any shares of Common Stock.
SECTION 4 Notice of Certain Transactions. In the
event that the Company shall propose (a) to pay any dividend payable in
securities of any class to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, (b) to offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) to effect any Extraordinary Transaction or
(d) to effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, the Company shall within 5 days send to the Warrant
Agent and the Warrant Agent shall within 5 days send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer, such notice to be mailed by the Warrant Agent to the
Holders at their addresses as they appear in the Certificate register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
purchasable upon exercise of each Warrant and the Exercise Price after giving
effect to any adjustment which will be required as a result of such action. Such
notice shall be given by the Company as promptly as possible and, in the case of
any action covered by clause (a) or (b) above, at least 10 days prior to the
record date for determining holders of the Common Stock for purposes of such
action and, in the case of any other such action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of Common Stock, whichever shall be the earlier.
SECTION 4.5 Adjustment to Warrant Certificate. The
form of Warrant Certificate need not be changed because of any adjustment made
pursuant to this Article IV,
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<PAGE> 28
and Warrant Certificates issued after such adjustment may state the same
Exercise Price and the same number of shares of Common Stock as are stated in
the Warrant Certificates initially issued pursuant to this Agreement. The
Company, however, may at any time in its sole discretion make any change in the
form of Warrant Certificate that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of the Warrant Certificate,
and any Warrant Certificate thereafter issued or countersigned, whether in
exchange or substitution for an outstanding Warrant Certificate or otherwise,
may be in the form as so changed.
SECTION 6 Issuance of Due Bills. In any case in
which this Article IV shall require that adjustment in the Exercise Price be
made as of the record date for a specified event, (x) the Company may elect to
defer until the occurrence of such event the issuance to the holder of any
Warrant exercised after such record date the shares of Common Stock and other
capital stock of the Company, if any, issuable upon such exercise over and above
the shares of Common Stock and other capital stock of the Company, if any,
issuable upon such exercise upon the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the effectiveness of the event requiring
such adjustment and (y) the Common Stock transfer books of the Company shall be
deemed to have been opened immediately prior to such record date, whether or not
such transfer books were in fact open.
ARTICLE V
Transferability
SECTION 1 Transfer and Exchange. The Warrant
Certificates shall be issued in registered form only. The Company shall cause to
be kept at the office of the Warrant Agent a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Warrant Certificates and transfers or exchanges of Warrant
Certificates as herein provided. 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 benefit under this Agreement, as the Warrant Certificates surrendered for
such registration of transfer or exchange.
A Holder may transfer its Warrants only by complying
with the terms of this Agreement. No such transfer shall be effected until, and
such transferee shall succeed to
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the rights of a Holder only upon, final acceptance and registration of the
transfer by the Warrant Agent in the register. Prior to the registration of any
transfer of Warrants by a Holder as provided herein, the Company, the Warrant
Agent, any agent of the Company or the Warrant Agent may treat the Person in
whose name the Warrants are registered as the owner thereof for all purposes and
as the Person entitled to exercise the rights represented thereby, any notice to
the contrary notwithstanding. Furthermore, any Holder of the Rule 144A Global
Warrant shall, by acceptance of such Global Warrant, agree that transfers of
beneficial interests in such Global Warrant may be effected only through a
book-entry system maintained by the Holder of such Global Warrant (or its
agent), and that ownership of a beneficial interest in the Warrants represented
thereby shall be required to be reflected in a book entry. When Warrant
Certificates are presented to the Warrant Agent with a request to register the
transfer or to exchange them for an equal amount of Warrants of other authorized
denominations, the Warrant Agent shall register the transfer or make the
exchange in accordance with the provisions hereof.
SECTION 5.2 Registration, Registration of Transfer
and Exchange.
When Certificated Warrants are presented to the
Warrant Agent with a request from the Holder of such Warrants to register the
transfer or to exchange them for an equal number of Warrants of other authorized
denominations, the Warrant Agent shall register the transfer or make the
exchange as requested; provided, however, that every Warrant presented and
surrendered for registration of transfer or exchange shall be duly endorsed and
be accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or the Holder's attorneys duly
authorized in writing.
To permit registrations of transfer and exchanges,
the Company shall make available to the Warrant Agent a sufficient number of
executed Warrant Certificates to effect such registrations of transfers and
exchanges. No service charge shall be made to the Holder for any registration of
transfer or exchange of Warrants, but the Company may require from the
transferring or exchanging Holder payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable upon exchanges pursuant to
Section 2.4 and exchanges in respect of portions of Warrants not exercised and
the Company may deduct such taxes from any payment of money to be made and such
transfer or exchange shall not be consummated (if such taxes are not deducted in
full) unless or until the Holder shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company and the
Warrant Agent that such tax has been paid.
SECTION 5.3 Book-Entry Provisions for the Rule 144A
Global Warrant. (a) The Rule 144A Global Warrant initially shall (i) be
registered in the name of DTC or the
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nominee of DTC, (ii) be delivered to the Warrant Agent as custodian for DTC and
(iii) bear legends as set forth in Section 2.2 hereof. Members of, or
participants in, DTC ("Agent Members") shall have no rights under this Agreement
with respect to the Rule 144A Global Warrant held on their behalf by DTC or the
Warrant Agent as its custodian, and DTC may be treated by the Company, the
Warrant Agent and any agent of the Company or the Warrant Agent as the absolute
owner of such Rule 144A Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
DTC or impair, as between DTC and its Agent Members, the operation of customary
practices governing the exercise of the right of a beneficial owner of any
Warrants.
(b) Transfers of the Rule 144A Global Warrant shall
be limited to transfers of such Rule 144A Global Warrant in whole, but not in
part, to DTC, its successors or their respective nominees. Interests of
beneficial owners in the Rule 144A Global Warrant may be transferred in
accordance with the rules and procedures of DTC and the provisions of Section
5.4 hereof. Restricted Certificated Warrants shall be transferred to all
beneficial owners in exchange for their beneficial interests in the Rule 144A
Global Warrant if DTC notifies the Company that it is unwilling or unable to
continue as Depositary for the Rule 144A Global Warrant and the Company is
unable to locate a qualified successor within 90 days or the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
the Units, Notes and Warrants in definitive form under the Indenture.
(c) In connection with any transfer pursuant to
paragraph (b) of this Section of a portion of the beneficial interests in the
Rule 144A Global Warrant to beneficial owners who are required to hold
Restricted Certificated Warrants, the Warrant Agent shall reflect on its books
and records the date and a decrease in the number of Warrants represented by the
Rule 144A Global Warrant in an amount equal to the number of Warrants
represented by the beneficial interest in the Rule 144A Global Warrant to be
transferred, and the Company shall execute, and the Warrant Agent shall
countersign and deliver, one or more Restricted Certificated Warrants of like
tenor and amount.
(d) In connection with the transfer of the entire
Rule 144A Global Warrant to beneficial owners pursuant to paragraph (b) of this
Section , the Rule 144A Global Warrant shall be deemed to be surrendered to the
Warrant Agent for cancellation, and the Company shall execute, and the Warrant
Agent shall countersign and deliver, to each beneficial owner identified by DTC
in exchange for its beneficial interest in the Rule 144A Global Warrant,
Restricted Certificated Warrants of authorized denominations representing, in
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the aggregate, the number of Warrants theretofore represented by the Rule 144A
Global Warrant.
(e) Any Restricted Certificated Warrant delivered in
exchange for an interest in a Global Warrant pursuant to paragraph (b) or (d) of
this Section shall bear the legend regarding transfer restrictions set forth in
Section 2.2.
(f) The registered holder of the Rule 144A Global
Warrant may grant proxies and otherwise authorize any Person, including Agents,
Members and persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Agreement or the Warrants.
SECTION 5.4 Special Transfer Provisions. The
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the registration
of any proposed transfer of Warrants to any Institutional Accredited Investor
which is not a QIB (excluding Non-U.S. Persons):
(i) The Warrant Agent shall register the transfer of
any Warrant Certificate, if (x)(A) the requested transfer is at least
two years after the Issue Date or (B) the proposed transferee has
delivered to the Warrant Agent certificates substantially in the forms
of Exhibits B hereto and (y) if requested by the Warrant Agent or the
Company, the proposed transferee has delivered to the Warrant Agent or
the Company, an opinion of counsel acceptable to the Warrant Agent or
the Company that such transfer is in compliance with the Securities
Act.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the Rule 144A Global Warrant, upon
receipt by the Warrant Agent of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with DTC's and
the Warrant Agent's procedures, the Warrant Agent shall reflect on its
books and records the date and a decrease in the number of Warrants
represented by the Rule 144A Global Warrant in an amount equal to the
number of Warrants represented by the Rule 144A Global Warrant to be
transferred, and the Company shall execute, and the Warrant Agent shall
countersign and deliver, one or more Restricted Certificated Warrants
of like tenor and amount.
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(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of Warrants to a
QIB:
(i) If the Warrants to be transferred are represented
by (x) Restricted Certificated Warrants, the Warrant Agent shall
register the transfer if it has received from such transferor a
certificate substantially in the form of Exhibit B that the sale has
been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of
Warrant Certificate stating, or has otherwise advised the Company and
the Warrant Agent in writing, that it is purchasing the Warrants for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within
the meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it
is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A or (y) an interest in the Rule 144A Global
Warrant, the transfer of such interest may be effected only through the
book-entry system maintained by DTC.
(ii) If the proposed transferee is an Agent Member,
and the Warrants to be transferred are represented by Restricted
Certificated Warrants, upon receipt by the Warrant Agent of the
documents referred to in clause (i) above and instructions given in
accordance with DTC's and the Warrant Agent's procedures, the Warrant
Agent shall reflect on its books and records the date and an increase
in the number of Warrants represented by the Rule 144A Global Warrant
in an amount equal to the number of Warrants represented by the
Restricted Certificated Warrants, and the Warrant Agent shall cancel
the Restricted Certificated Warrant.
(c) General. By its acceptance of any Warrants
represented by a Warrant Certificate bearing the legend in Section 2.2, each
Holder of such Warrants acknowledges the restrictions on transfer of such
Warrants set forth in this Agreement and in the legend and agrees that it will
transfer such Warrants only as provided in this Agreement. The Warrant Agent
shall not register a transfer of any Warrants unless such transfer complies with
the requirements of this Section 5.4. In connection with any transfer of
Warrants, each Holder agrees by its acceptance of Warrants to furnish the
Warrant Agent or the Company such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided,
however, that the Warrant Agent shall not be required to determine (but may rely
on a
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determination made by the Company with respect to) the sufficiency of any
such certifications, legal opinions or other information. The Warrant Agent's
only obligation to enforce the transfer restrictions of this Agreement shall be
to require the certifications and opinions specifically required by this Section
5.4 as a condition to a transfer.
(d) Records. The Warrant Agent shall retain copies of
all letters, notices and other written communications received pursuant to
Section 5.3 hereof or this Section 5.4. The Company shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Warrant Agent.
SECTION 5.5 Surrender of Warrant Certificates. Any
Warrant Certificate surrendered for registration of transfer, exchange, exercise
or repurchase 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 canceled by
the Warrant Agent and shall not be reissued by the Company and, except as
provided in this Article V in case of an exchange or in Article III hereof in
case of the exercise or repurchase of less than all the Warrants represented
thereby or in case of a mutilated Warrant Certificate, no Warrant Certificate
shall be issued hereunder in lieu thereof. The Warrant Agent shall deliver to
the Company from time to time such canceled Warrant Certificates.
ARTICLE VI
Warrant Agent
SECTION 6.1 Appointment of Warrant Agent. The Company
hereby appoints the Warrant Agent to act as agent for the Company in accordance
with provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.2 Rights and Duties of Warrant Agent. (a)
Agent for the Company. In acting under this Warrant Agreement and in connection
with the Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship or agency or
trust for or with any of the holders of Warrant Certificates or beneficial
owners of Warrants.
(b) Counsel. The Warrant Agent may consult with
counsel satisfactory to it, and the advice of such counsel shall be full and
complete authorization and protection in
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respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected
and shall incur no liability for or in respect of any action taken or thing
suffered by it in reliance upon any Warrant Certificate, notice, direction,
consent, certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the proper
parties.
(d) No Implied Obligations. The Warrant Agent shall
be obligated to perform only such duties as are herein and in the Warrant
Certificates specifically set forth and no implied duties or obligations shall
be read into this Agreement or the Warrant Certificates against the Warrant
Agent. The Warrant Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or liability for which it
does not receive indemnity if such indemnity is reasonably requested. The
Warrant Agent shall not be accountable or under any duty or responsibility for
use by the Company of any of the Warrant Certificates countersigned by the
Warrant Agent and delivered by it to the Holders or on behalf of the Holders
pursuant to this Agreement or for the application by the Company of the proceeds
of the Warrants. The Warrant Agent shall have no duty or responsibility in case
of any default by the Company in the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in the case of the receipt of
any written demand from a Holder with respect to such default, including any
duty or responsibility to initiate or attempt to initiate any proceedings at law
or otherwise.
(e) Not Responsible for Adjustments or Validity of
Stock. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require an adjustment of the number of shares of Common Stock purchasable upon
exercise of each Warrant or the Exercise Price, or with respect to the nature or
extent of any adjustment when made, or with respect to the method employed, or
herein or in any supplemental agreement provided to be employed, in making the
same. The Warrant Agent shall not be accountable with respect to the validity or
value of any shares of Common Stock or of any securities or property which may
at any time be issued or delivered upon the exercise of any Warrant or upon any
adjustment pursuant to Article IV, and it makes no representation with respect
thereto. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates upon the surrender of any Warrant Certificate
for the purpose of exercise or upon any adjustment pursuant to Article IV, or to
comply with any of the covenants of the Company contained in Article IV.
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SECTION 6.3 Individual Rights of Warrant Agent. 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 its affiliates or become pecuniarily interested in transactions in
which the Company or its affiliates may be interested, or contract with or lend
money to the Company or its affiliates or otherwise act as fully and freely as
though it were not the 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.
SECTION 6.4 Warrant Agent's Disclaimer. The Warrant
Agent shall not be responsible for and makes no representation as to the
validity or adequacy of this Agreement or the Warrant Certificates and it shall
not be responsible for any statement in this Agreement or the Warrant
Certificates other than its countersignature thereon.
SECTION 6.5 Compensation and Indemnity. The Company
agrees to pay the Warrant Agent from time to time such compensation for its
services as the Company and the Warrant Agent shall agree from time to time and
to reimburse the Warrant Agent upon request for all reasonable out-of-pocket
expenses incurred by it, including the reason- able compensation and expenses of
the Warrant Agent's agents and counsel. The Company shall indemnify the Warrant
Agent against any loss, liability or expense (including reasonable agents' and
attorneys' fees and expenses) incurred by it without negligence or bad faith on
its part arising out of or in connection with the acceptance or performance of
its duties under this Agreement. The Warrant Agent shall notify the Company
promptly of any claim for which it may seek indemnity. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by the
Warrant Agent through willful misconduct, negligence or bad faith. The Company's
payment obligations pursuant to this Section 6.5 shall survive the termination
of this Agreement.
To secure the Company's payment obligations under
this Agreement, the Warrant Agent shall have a lien prior to the Warrant Holders
on all money or property held or collected by the Warrant Agent.
SECTION 6.6 Successor Warrant Agent. (a) The Company
To Provide Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at
any time resign by giving written notice to the Company of such intention on its
part, specifying the
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date on which its desired resignation shall become effective; provided, however,
that such date shall not be less than 60 days after the date on which such
notice is given unless the Company otherwise agrees. The Warrant Agent hereunder
may be removed at any time by the filing with it of an instrument in writing
signed by or on behalf of the Company and specifying such removal and the date
when it shall become effective, which date shall not be less than 60 days after
such notice is given unless the Warrant Agent otherwise agrees. Any removal
under this Section 6.6 shall take effect upon the appointment by the Company as
hereinafter provided of a successor Warrant Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such appointment by
such successor Warrant Agent.
(c) The Company To Appoint Successor. In case at any
time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall
commence a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or State
bankruptcy, insolvency or similar law; or a decree order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up of or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent (or, in the absence of such appointment within 60 days after the
notice of resignation or removal, either party hereto may petition the
appointment of a successor by a court of competent jurisdiction). Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to be
Warrant Agent hereunder; provided, however, that in the event of the resignation
of the Warrant Agent under this subsection (c), such resignation shall be
effective on the earlier of (i) the date specified in the Warrant Agent's notice
of resignation and (ii) the appointment and acceptance of a successor Warrant
Agent hereunder.
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(d) Successor To Expressly Assume Duties. Any
successor Warrant Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to the Company an instrument accepting such
appointment hereunder, and thereupon such successor Warrant Agent, without any
further act, deed or conveyance, shall become vested with all the rights and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which
the Warrant Agent hereunder may be merged or consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, or any corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all of its corporate trust business; provided that
it shall be qualified as aforesaid, shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
ARTICLE VII
Miscellaneous
SECTION 7.1 Company Resales. The Company hereby
agrees with each Holder, that the Company shall not resell any Warrants or
Warrant Shares it acquires, by purchase or otherwise, except pursuant to an
effective registration statement.
SECTION 7.2 SEC Reports and Other Information.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall, for
all periods ending after the date of this Warrant Agreement, file with the SEC
and thereupon provide the Warrant Agent and Holders with such annual reports and
such information, documents and other reports are as specified in Sections 13
and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
SECTION 7.3 Rule 144A. The Company hereby agrees with
each Holder, for so long as any Warrants or Warrant Shares remain outstanding
and during any period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act, to
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make available, upon request of any Holder, to any Holder or beneficial owner of
Warrants or Warrant Shares in connection with any sale thereof and any
prospective purchaser of such Warrants or Warrant Shares from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Warrants or Warrant Shares
pursuant to Rule 144A.
SECTION 7.4 Persons Benefitting. Nothing in this
Agreement is intended or shall be construed to confer upon any Person other than
the Company, the Warrant Agent and the Holders any right, remedy or claim under
or by reason of this agreement or any part hereof.
SECTION 7.5 Rights of Holders. Except as expressly
contemplated herein, holders of unexercised Warrants are not entitled (i) to
receive dividends or other distributions, (ii) to receive notice of or vote at
any meeting of the stockholders, (iii) to consent to any action of the
stockholders, (iv) to exercise any preemptive right or to receive notice of any
other proceedings of the Company or (v) to exercise any other rights whatsoever
as stockholders of the Company.
SECTION 7.6 Amendment. This Agreement may be amended
by the parties hereto without the consent of any Holder for the purpose of
curing any ambiguity, 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, however, that the Company
determines, and the Warrant Agent may rely on such determination, that such
action shall not affect adversely the rights of the Holders. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of the Holders shall require the written consent of the Holders of a majority of
the then outstanding Warrants. The consent of each Holder affected shall be
required for any amendment pursuant to which the Exercise Price would be
increased or the number of Warrant Shares purchasable upon exercise of Warrants
would be decreased (other than pursuant to adjustments provided in Article IV).
In determining whether the Holders of the required number of Warrants have
concurred in any direction, waiver or consent, Warrants owned by the Company or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Warrant Agent shall be protected in relying on any such direction,
waiver or consent, only Warrants which the Warrant Agent knows are so owned
shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
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SECTION 7.7 Notices. Any notice or communication
shall be in writing and delivered in Person or mailed by first-class mail
addressed as follows:
if to the Company:
UROHEALTH Systems, Inc.
5 Civic Plaza
Suite 100
Newport Beach, California 92660
Attention: General Counsel
with a copy to:
Morrison & Foerster LLP
199900 MacArthur Blvd.
Irvine, California 92612
Attention: Robert M. Mattson
if to the Warrant Agent:
The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company or the Warrant Agent by notice to the
other may designate additional or different addresses for subsequent notices
or communications.
Any notice or communication mailed to a Holder shall
be mailed to the Holder at the Holder's address as it appears on the register in
which the Company shall provide for the registration of Warrants and Warrant
Shares and of transfers and exchanges of Warrants and Warrant Shares and shall
be sufficiently given if so mailed within the time prescribed.
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, it
is duly given, whether or not the addressee receives it.
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SECTION 7.8 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK
STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION
OR PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED
HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
SECTION 7.9 Successors. All agreements of the Company
in this Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.10 Multiple Originals. The parties may sign
any number of copies of this Agreement. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is enough
to prove this Agreement.
SECTION 7.11 Table of Contents. The table of contents
and headings of the Articles and Sections of this Agreement have been inserted
for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 7.12 Severability. The provisions of this
Agreement are severable, and if any clause or provision shall be held invalid,
illegal 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.
36
<PAGE> 41
SECTION 7.13 Further Assurances. From time to time on
and after the date hereof, the Company shall deliver or cause to be delivered to
the Warrant Agent such further documents and instruments and shall do and cause
to be done such further acts as the Warrant Agent shall reasonably request (it
being understood that the Warrant Agent shall have no obligation to make such
request) to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected hereunder.
37
<PAGE> 42
IN WITNESS WHEREOF, the parties have caused this
Warrant Agreement to be duly executed as of the date first written above.
UROHEALTH SYSTEMS, INC.
By: /s/ KEVIN M. HIGGINS
----------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
THE BANK OF NEW YORK,
as Warrant Agent,
By: /s/ VIVIAN GEORGES
----------------------------------
Name: Vivian Georges
Title: Assistant Vice President
<PAGE> 43
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) PURSUANT TO RULE 144A, FOR SO LONG AS IT IS AVAILABLE, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR," WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND
39
<PAGE> 44
IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
[Unless and until it is exchanged in whole or in part
for Warrants in definitive form, this Warrant may not be transferred except as a
whole 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. The Depository Trust Company ("DTC") (55 Water Street, New
York, New York) shall act as the depository until a successor shall be appointed
by the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer 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 requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is 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 so long as the registered owner hereof, Cede & Co., has an interest
herein.] (1)
No. [ ] Certificate for ______ Warrants
CUSIP No. ______________
- --------
(1) To be included only if the Warrant is in global form.
40
<PAGE> 45
WARRANTS TO PURCHASE COMMON STOCK OF
UROHEALTH SYSTEMS, INC.
THIS CERTIFIES THAT ___________, or its registered assigns, is
the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from UROHEALTH Systems, Inc., a
Delaware corporation ("the Company"), shares of Common Stock, $0.001 par value,
of the Company (the "Common Stock") at the per share exercise price of $9.50
(the "Exercise Price"). The number of shares of Common Stock into which each
Warrant will be exercisable (subject to adjustment as provided in the Warrant
Agreement) shall be (i) 4.44 or (ii) 9.06 if the Company has Consolidated EBITDA
of less than $32.5 million for its fiscal year ended March 31, 1998. The
Warrants will be exercisable, at a price per share of $9.50, on or after June
30, 1998. This Warrant Certificate shall terminate and become void as of the
close of business on April 1, 2004 (the "Expiration Date") or upon the exercise
hereof as to all the shares of Common Stock subject hereto. The number of shares
purchasable upon exercise of the Warrants and the Exercise Price per share shall
be subject to adjustment from time to time as set forth in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of April 10, 1997 (the "Warrant Agreement"),
between the Company and The Bank of New York (the "Warrant Agent," which term
includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement.
As provided in the Warrant Agreement and subject to the terms
and conditions therein set forth, the Warrants shall be exercisable at any time
or from time to time on any Business Day on or after June 30, 1998; provided,
however, that no Warrant shall be exercisable after April 1, 2004. Subject to
the terms of the Warrant Agreement, the Warrants may be exercised in whole or in
part by presentation of this Warrant Certificate.
41
<PAGE> 46
If the Company, in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other person
or sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another Person or group of
affiliated persons or is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Common Stock (any such transaction, an
"Extraordinary Transaction"), as a condition to consummating any such
Extraordinary Transaction, the person formed by or surviving any such
consolidation or merger if other than the Company, or the person to whom such
transfer has been made (the "Surviving Person") shall enter into a supplemental
warrant agreement pursuant to which it agrees to assume all of the obligations
of the Company under the Warrants and the Warrant Registration Rights Agreement.
If such Extraordinary Transaction occurs prior to June 30, 1998, then (i) the
Warrants shall become exercisable immediately upon the consummation of such
Extraordinary Transaction for the kind and amount of consideration that the
holder thereof would have received as a result of the Extraordinary Transaction
if such holder had exercised the Warrant for 4.44 shares of Common Stock,
subject to adjustment, immediately prior to the consummation of the
Extraordinary Transaction, and (ii) in addition, the Surviving Person shall,
upon consummation of the Extraordinary Transaction, issue to each holder of
Warrants on that date, a new Warrant Certificate having the same terms as the
Warrants but representing the right to receive, on and after June 30, 1998 if
the Surviving Person's Consolidated EBITDA for its fiscal year ended March 31,
1998 is less than $32.5 million, the kind and amount of consideration that such
holder would have received as a result of the Extraordinary Transaction if such
holder had exercised the Warrant for 4.62 shares of Common Stock, subject to
adjustment, immediately prior to the consummation of the Extraordinary
Transaction.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 5.2 of the Warrant
Agreement but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate in
respect of the shares of Common Stock as to which the Warrants shall not have
been exercised. This Warrant Certificate may be exchanged at the office of the
Warrant Agent by presenting this Warrant Certificate properly endorsed with a
request to exchange this Warrant Certificate for other Warrant Certificates
evidencing an equal number of Warrants. No fractional Warrant Shares will be
issued upon the exercise of the Warrants, but the Company shall pay an amount in
cash equal to the market price for one Warrant Share on the trading day
immediately preceding the date
42
<PAGE> 47
the Warrant is exercised, multiplied by the fraction of a Warrant Share that
would be issuable on the exercise of any Warrant.
All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and nonassessable.
The Holder in whose name the Warrant Certificate is registered
may be deemed and treated by the Company and the Warrant Agent as the absolute
owner of the Warrant Certificate for all purposes whatsoever and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
The Warrants do not entitle any holder hereof to any of the
rights of a stockholder of the Company.
43
<PAGE> 48
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
UROHEALTH SYSTEMS, INC.
By:
--------------------------------
Title:
Attest:
- ---------------------------------
Secretary
DATED:
Countersigned:
THE BANK OF NEW YORK,
as Warrant Agent,
By:------------------------------
Authorized Signatory
44
<PAGE> 49
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS (2)
The following exchanges of a part of this Global Warrant for definitive
Certificated Warrants have been made:
<TABLE>
<CAPTION>
Amount of Number of
increase/decrease in Warrants in
Number of this Global Signature of
Warrants in Warrant authorized
Date of this Global following Signatory of
Exchange Warrant such increase/decrease Warrant Agent
<S> <C> <C> <C>
</TABLE>
- --------
(2) To be included only if the Warrant is in global form.
45
<PAGE> 50
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of
UROHEALTH Systems, Inc. (the "Company")
This Certificate relates to Warrants held in
definitive form by _______________ (the "Transferor").
The Transferor has requested the Warrant Agent by
written order to exchange or register the transfer of a Warrant or Warrants. In
connection with such request and in respect of each such Warrant, the Transferor
does hereby certify that the Transferor is familiar with the Warrant Agreement
relating to the above captioned Warrants and that */:
[_] Such Warrant is being acquired for the Transferor's
own account without transfer.
[_] Such Warrant is being transferred to the Company.
[_] Such Warrant is being transferred pursuant to an
effective registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act").
[_] Such Warrant is being transferred to a qualified
institutional buyer (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A.
[_] Such Warrant is being transferred in a transaction
meeting the requirements of Rule 144 under the Securities Act.
- --------
*/ Please check applicable box.
46
<PAGE> 51
The Warrant Agent and the Company are entitled to rely upon
this Certificate and are irrevocably authorized to produce this Certificate or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
-------------------------------,
[INSERT NAME OF TRANSFEROR]
Date: By:
------------------------- ---------------------------
Confirmed: [Insert name of Transferee]
By:
----------------------------------
47
<PAGE> 1
Exhibit 4.5
UROHEALTH SYSTEMS, INC.
Warrants to Purchase Common Stock
WARRANT REGISTRATION RIGHTS AGREEMENT
April 10, 1997
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
UROHEALTH Systems, Inc. (the "Company"), a Delaware
corporation, proposes to issue and sell to Bear, Stearns & Co. Inc. (the
"Purchaser"), upon the terms set forth in a purchase agreement, dated April 3,
1997 (the "Purchase Agreement"), among the Purchaser and the Company and the
Guarantors named therein, 110,000 units (the "Units") consisting of the
Company's 12.5% Subordinated Notes due 2004 and warrants to purchase common
stock, $.001 par value per share, of the Company (such warrants, the
"Warrants"). As an inducement to the Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Purchaser
thereunder, the Company agrees with the Purchaser, (i) for the benefit of the
Purchaser and (ii) for the benefit of the Holders (as defined below) from time
to time of the Warrants and the common shares (the "Warrant Shares") of the
Company initially issuable upon conversion of the Warrants (the Warrants,
together with the Warrant Shares, the "Registrable Securities"), as follows:
<PAGE> 2
1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement, in respect of the Units. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the United States Securities and Exchange
Commission.
"DTC" means The Depository Trust Company.
"Effectiveness Period" (i) with respect to the Warrant Shelf
Registration Statement (as defined), has the meaning set forth in Section 2(b)
hereof and (ii) with respect to the Common Shelf Registration Statement (as
defined), means the period from the effectiveness thereof through and including
the earlier of (a) April 1, 2004 and (b) the date when, in the written opinion
of counsel to the Company, all outstanding Warrant Shares held by Persons that
are not affiliates of the Company may be resold without registration under the
Securities Act pursuant to Rule 144(k) thereunder or any successor provision
thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2
<PAGE> 3
"Holders" means the Persons with a beneficial interest in the
Warrants or Warrant Shares, as applicable.
"Majority Holders" means, with respect to the Warrants and the
Warrant Shares, respectively, the Holders of a majority of the aggregate amount
of outstanding Warrants or Warrant Shares, respectively.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering, if any, as set forth in Section 6 hereof.
"Officer's Certificate" means a certificate signed by any one
of the Chairman, any Vice Chairman, any Chief Executive Officer, any Senior Vice
President or the Chief Financial Officer.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
3
<PAGE> 4
"Shelf Registration Statement" means a shelf registration
statement of the Company pursuant to the provisions of Section 2 hereof filed
with the Commission which covers some or all of the Registrable Securities, as
applicable, on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Underwriter" means any underwriter of Registrable Securities
in connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION. (a) The Company shall (i) within 60
days following the date of original issuance (the "Issue Date") of the Warrants,
file with the Commission a Shelf Registration Statement (the "Warrant Shelf
Registration Statement") relating to the offer and sale of the Warrants by the
Holders from time to time in accordance with the methods of distribution elected
by the Majority Holders and set forth in the Warrant Shelf Registration
Statement and, thereafter, (ii) use its best efforts to cause the Warrant Shelf
Registration Statement to be declared effective under the Securities Act within
150 days following the Issue Date; provided, however, that no Holder shall be
entitled to have the Warrants held by it covered by the Warrant Shelf
Registration unless such Holder is in compliance with Section 3(l) hereof. The
Company shall be deemed not to have used its best efforts to cause the Warrant
Shelf Registration Statement to be declared effective unless the Company
determines in good faith that any actions taken to do so (i) would violate any
applicable law to which it was then subject or (ii) would require the Company to
disclose an otherwise confidential, material financing, acquisition, disposition
or other corporate transaction and management
4
<PAGE> 5
shall have determined in good faith as evidenced by an Officers' Certificate
that such disclosure is not in the best interest of the Company and its
shareholders; provided, however, that no delay in such effectiveness pursuant to
clause (i) or (ii) above may exceed 45 days.
(b) The Company shall use its best efforts (i) to keep the
Warrant Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a period of
three years from the date the Warrant Shelf Registration Statement is declared
effective or such shorter period that will terminate upon the earlier of (A)
when all the Warrants covered by the Warrant Shelf Registration Statement have
been sold pursuant to the Warrant Shelf Registration Statement or (B) when, in
the written opinion of counsel to the Company, all outstanding Warrants held by
persons that are not affiliates of the Company may be resold without
registration under the Securities Act pursuant to Rule 144(k) under the
Securities Act or any successor provision thereto (in any such case, such period
being called the "Effectiveness Period") and (ii) after the effectiveness of the
Warrant Shelf Registration Statement, promptly upon the request of any Holder to
take any action reasonably necessary to register the sale of any Warrants of
such Holder and to identify such Holder as a selling securityholder.
(c) The Company shall (i) within 270 days following the Issue
Date, file with the Commission a Shelf Registration Statement (the "Common Shelf
Registration Statement") relating to the offer and sale of the Warrant Shares
(including securities deemed registered pursuant to Rule 416 under the
Securities Act) by the Holders from time to time in accordance with the methods
of distribution elected by the Majority Holders and set forth in the Common
Shelf Registration Statement and, thereafter, (ii) use its best efforts to cause
the Common Shelf Registration Statement to be declared effective under the
Securi-
5
<PAGE> 6
ties Act within 365 days following the Issue Date; provided, however, that no
Holder shall be entitled to have the Warrant Shares held by it covered by the
Common Shelf Registration unless such Holder is in compliance with Section 3(l)
hereof. The Company shall be deemed not to have used its best efforts to cause
the Common Shelf Registration Statement to be declared effective unless the
Company determines in good faith that any actions taken to do so (i) would
violate any applicable law to which it was then subject or (ii) would require
the Company to disclose an otherwise confidential, material financing,
acquisition or other corporate transaction and management shall have determined
in good faith as evidenced by an Officers' Certificate that such disclosure is
not in the best interest of the Company and its shareholders; provided, however,
that no delay in effectiveness pursuant to clause (i) or (ii) above may exceed
45 days. The Common Shelf Registration Statement and the Warrant Shelf
Registration Statement may be one and the same registration statement to the
extent allowed by law.
(d) The Company shall use its best efforts (i) to keep the
Common Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders during the
Effectiveness Period and (ii) after the effectiveness of the Common Shelf
Registration Statement, promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of any Warrant Shares of such
Holder and to identify such Holder as a selling securityholder.
(e) During any consecutive 365-day period, the Company may
suspend the effectiveness of each of the Warrant Shelf Registration Statement
and the Common Shelf Registration Statement for up to two 45 consecutive-day
periods (except for the period immediately prior to April 1, 2004) if the Board
of Directors of the Company determines in the exercise of its reasonable
judgment that
6
<PAGE> 7
there is a valid business purpose for such suspension and provides notice that
such determination was made to the holders of the applicable Registrable
Securities; provided, however, that in no event shall the Company be required to
disclose the business purpose for such suspension if the Company determines in
good faith that such business purpose must remain confidential.
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to the Purchaser, at least 3
business days' prior to the filing thereof with the Commission, a copy of any
Shelf Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall each use
reasonable efforts to reflect in each such document, when so filed with the
Commission, such comments as the Purchaser reasonably may propose.
(b) The Company shall take such action as may be necessary so
that (i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by reference in each case)
complies in all material respects with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Shelf Registration Statement, and
any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the
7
<PAGE> 8
statements, in the light of the circumstances under which they were made, not
misleading.
(c) (1) The Company shall advise the Holders and, if
requested by any Holder, confirm such advice in writing:
i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective; and
ii) of any request by the Commission for
amendments or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise the Purchaser and the Holders
and, if requested by the Purchaser or any such Holder, confirm such advice in
writing of:
i) the issuance by the Commission of any stop
order suspending effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
ii) the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
iii) the happening of any event that requires the
making of any changes in any Shelf Registration Statement or Prospectus
so that, as of such date, such Shelf Registration Statement and such
Prospectus do not contain an untrue statement of a material fact and do
not omit to state a material
8
<PAGE> 9
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading (which advice shall be
accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made).
(d) The Company shall use its best efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Shelf Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Registrable
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all reports, other documents and
exhibits (including those incorporated by reference).
(f) The Company shall, during any Effectiveness Period,
deliver to each Holder of applicable Registrable Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents (except during the continuance
of any event described in Section 3(c)(2)) to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of applicable
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto during the applicable Effectiveness Period.
9
<PAGE> 10
(g) Prior to any offering of Registrable Securities pursuant
to any Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Registrable Securities included therein and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such Holders reasonably request in writing and do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the Company be
obligated to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to so qualify but
for this Section 3(g), (ii) file any general consent to service of process in
any jurisdiction where it is not as of the date hereof then so subject or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in book-entry
only form, the Company shall cooperate with the Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such permitted
denominations and registered in such names as Holders may request in connection
with the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(i) Subject to Section 2(e), upon the occurrence of any event
contemplated by paragraph 3(c)(2)(iii) above, the Company shall promptly prepare
a post-effective amendment to any Shelf Registration Statement or an amendment
or supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included
10
<PAGE> 11
therein, the Prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders of the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above, the Holders shall suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made.
(j) If required, not later than the effective date of any
Shelf Registration Statement hereunder, the Company shall provide a CUSIP number
for the Securities registered under such Shelf Registration Statement.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to their security holders or otherwise provide in accordance with
Section 11(a) of the Securities Act as soon as practicable after the effective
date of the applicable Shelf Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Company may require each Holder of Registrable
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably require
for inclusion in such Shelf Registration Statement and the Company may exclude
from such registration the Registrable Securities of any Holder that fails to
furnish such information within a reasonable time after receiving such request.
(m) The Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters
11
<PAGE> 12
reasonably agree, should be included therein and to which the Company does not
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after they are
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment.
(n) The Company shall enter into such customary agreements
(including underwriting agreements in customary form) to take all other
appropriate actions in order to expedite or facilitate the registration or the
disposition of the Registrable Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures substantially identical to those set
forth in Section 5 (or such other provisions and procedures reasonably
acceptable to the Managing Underwriters, if any) with respect to all parties to
be indemnified pursuant to Section 5.
(o) The Company shall (i) make reasonably available for
inspection upon two business days' notice by the Holders of Registrable
Securities to be registered thereunder, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Holders or any such underwriter all
relevant non-privileged financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; (ii) cause the
Company's officers, directors and employees to make reasonably available for
inspection all relevant non-privileged information reasonably requested by such
Holders or any such underwriter, attorney, accountant or agent in connection
with any such Shelf Registration Statement, in each case, as is customary for
similar due diligence examinations; provided, however, that any information that
is designated in writing by the Company, in good faith, as confidential at the
time of delivery of such information shall be kept confidential
12
<PAGE> 13
by such Holders or any such underwriter, attorney, accountant or agent, unless
such disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality; and provided,
further that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of the Holders and the other
parties entitled thereto by one counsel designated by and on behalf of such
Holders and other parties; (iii) make such representations and warranties to the
Holders of Registrable Securities registered thereunder and the underwriters, if
any, in form, substance and scope as are customarily made by the Company to
underwriters in primary underwritten offerings and covering matters including,
but not limited to, those set forth in the Underwriting Agreement; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
Managing Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by Majority Holders and underwriters (it being agreed that
the matters to be covered by such opinion or written statement by such counsel
delivered in connection with such opinions shall include in customary form,
without limitation, as of the date of the opinion and as of the effective date
of the applicable Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf Registration
Statement and the prospectus included therein, as then amended or supplemented,
including the documents incorporated by reference therein, of an untrue
statement of a material fact or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (v) obtain "cold comfort" letters and updates
13
<PAGE> 14
thereof from the independent public accountants of the Company (and, if
necessary, any other independent public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in such Shelf
Registration Statement or incorporated by reference), addressed to each such
Holder of Registrable Securities registered thereunder and the underwriters, if
any, in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings; (vi)
deliver such documents and certificates as may be reasonably requested by the
Majority Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 3(h) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 3(o) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
(p) The Company will use its best efforts to cause the Warrant
Shares issuable upon conversion of the Warrants to be quoted on the Nasdaq
National Market, or any exchange upon which the Company's common stock is then
listed, on or prior to effectiveness of any Shelf Registration Statement
hereunder.
(q) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-Laws
of the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Registrable Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
assist such broker-dealer
14
<PAGE> 15
in complying with the requirements of such Rules and By-Laws, including, without
limitation, by (A) such Rules or By-Laws, including Schedule E thereto, shall so
require, engaging a "qualified independent underwriter" (as defined in Schedule
E) to participate in the preparation of the Shelf Registration Statement
relating to such Registrable Securities and to exercise usual standards of due
diligence in respect thereto, (E) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof and (C) providing such information to such broker-dealer as may
be required in order for such broker-dealer to comply with the requirements of
the Rules of Fair Practice of the NASD.
(r) The Company will use its best efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registration Statements contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise provided in
Section 6, the Company shall bear all fees and expenses incurred in connection
with the performance of its obligations under Sections 2 and 3 hereof and shall
bear or reimburse the Holders for the reasonable fees and disbursements of one
firm of counsel designated by the Company and reasonably acceptable to the
Holders of a majority of the applicable Registrable Securities covered by the
applicable Shelf Registration Statement to act as counsel therefor in connection
therewith.
5. INDEMNIFICATION AND CONTRIBUTION. The Company agrees to
indemnify and hold harmless (i) the Purchaser, each Holder, each underwriter who
participates in an underwritten offering at Registrable Securities, (ii) each
person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of
15
<PAGE> 16
the Exchange Act) any such Person (any of the persons referred to in this
clause (ii) being hereinafter referred to as a "controlling person"), and (iii)
the respective officers, directors, partners, employees, representatives and
agents of any of such Person or any controlling person (any person referred to
in clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person") to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgments, actions and expenses (including,
without limitation, and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Person) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused
by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such losses, claims, damages or liabilities
are caused primarily by (i) any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Indemnified Person furnished to the Company in writing by such
Indemnified Person expressly for use therein, or (ii) any untrue statement
contained in or omission from a preliminary prospectus if a copy of the
Prospectus (as then amended or supplemented, if the Company shall have furnished
to or on behalf of the Holder participating in the distribution relating to the
relevant Shelf Registration Statement any amendments or supplements thereto) was
not
16
<PAGE> 17
sent or given by or on behalf of such Holder to the person asserting any such
losses, liabilities, claims, damages or expenses who purchased Securities, if
such is required by law at or prior to the written confirmation of the sale of
such Securities to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented). The Company shall notify the Warrant
Agent promptly of the institution, threat or assertion of any claim, proceeding,
action (including any governmental investigation) or litigation of which it or
they shall have become aware in connection with the matters addressed by this
Agreement which involves the Company or an Indemnified Person.
In connection with any Shelf Registration Statement in which a
Holder is participating, such Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and its directors and officers and each
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Indemnified Person, but only with
reference to information relating to such Indemnified Person furnished to the
Company in writing by such Indemnified Person expressly for use in any shelf
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus. The liability of any Indemnified Person pursuant to
this paragraph shall in no event exceed the net proceeds received by such
Indemnified Person from sales of Registrable Securities giving rise to such
obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person
17
<PAGE> 18
against whom such indemnity may be sought (the "indemnifying person") in
writing, and the indemnifying person shall have the right to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying person may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred by such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party, unless (i) the indemnifying person and the indemnified
party shall have mutually agreed in writing to the contrary, (ii) the
indemnifying person failed to assume the defense within a reasonable time after
the commencement of the action and employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both such indemnified party and the indemnifying
person or any affiliate of the indemnifying person and such indemnified party
shall have been reasonably advised by counsel that either (x) there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying person or such affiliate of the indemnifying
person or (y) a conflict may exist between such indemnified party and the
indemnifying person or such affiliate of the indemnifying person (in which case
the indemnifying person shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying person shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local firm of attorneys) for all such indemnified parties, which firm shall
be designated in writing by Indemnified Persons who sold a
18
<PAGE> 19
majority in aggregate principal amount of Registrable Securities sold by all
such Indemnified Persons and any such separate firm for the Company its
directors, its officers and such controlling persons of the Company shall be
designated in writing by the Company. The indemnifying person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying person agrees to indemnify any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying person shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 5 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses referred to therein
(other than by reason of the exceptions provided therein), then each
indemnifying person under such paragraphs, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities,
or expenses (i) in such proportion as is appropriate to reflect the relative
benefits of the indemnified party, on the one hand, and the indemnifying
person(s), on the other, in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities, or expenses or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
re-
19
<PAGE> 20
ferred to in clause (i) above but also the relative fault of the indemnifying
person(s) and the indemnified party, as well as any other relevant equitable
considerations. The relative fault of the indemnifying person(s), on the one
hand, and any indemnified parties, on the other, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying person(s), on the one hand,
or by such indemnified parties, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if such indemnified parties were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, in no event shall any Holder
be required to contribute any amount in excess of the amount by which proceeds
received by such Holder from sales of Registrable Securities exceeds the amount
of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
20
<PAGE> 21
The indemnity and contribution agreements contained in this
Section 5 will be in addition to any liability which the indemnifying persons
may otherwise have to the indemnified parties referred to above. The indemnified
parties' obligations to contribute pursuant to Section 5 are several in
proportion to the respective principal amount of Registrable Securities sold by
each of the indemnified parties hereunder and not joint.
6. UNDERWRITTEN OFFERING. The Majority Holders of
Registrable Securities covered by any Shelf Registration Statement who desire
to do so may sell such Registrable Securities in an underwritten offering. In
any such underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering will be selected by, and the
underwriting arrangements with respect thereto will be approved by, the
Holders of a majority of the Registrable Securities to be included in such
offering; provided, however, that such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company. No
Holder may participate in any underwritten offering contemplated hereby unless
such Holder (a) agrees to sell such Holder's Registrable Securities in
accordance with any approved underwriting arrangements and (b) completes and
executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such approved underwriting arrangements. The Holders participating in
any underwritten offering shall be responsible for any expenses customarily
borne by selling securityholders, including underwriting discounts and
commissions and fees and expenses of counsel to the selling securityholders and
shall reimburse the Company for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such underwritten offerings. Notwithstanding the foregoing or
the provisions of Section 3(l) hereof, upon receipt of a request from the
21
<PAGE> 22
Managing Underwriter or a representative of Holders of a majority of the
Registrable Securities outstanding to prepare and file an amendment or
supplement to any Shelf Registration Statement and Prospectus in connection with
an underwritten offering, the Company may delay the filing of any such amendment
or supplement for up to 90 days if the Company in good faith has a valid
business reason for such delay.
7. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may grant
registration rights that would permit any Person that is a third party the right
to piggyback on any Shelf Registration Statement, provided that if the Managing
Underwriter, if any, of such offering delivers an opinion to the selling Holders
that the total amount of securities which they and the holders of such piggyback
rights intend to include in any Shelf Registration Statement is so large as to
materially adversely affect the success of such offering (including the price at
which such securities can be sold), then only the amount, the number or kind of
securities to be offered for the account of holders of such piggyback rights
will be reduced to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount, number or kind recommended by the
Managing Underwriter prior to any reduction in the amount of Registrable
Securities to be included.
(b) HOLDBACK AGREEMENT. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Shelf Registration
Statement agrees, if requested by the Company or the managing underwriter or
underwriters in an underwritten offering, not to effect any private or public
sale or distribution (including a sale pursuant to Rule 144) of any of the
Registrable Securities (or any securities convertible into or ex-
22
<PAGE> 23
changeable or exercisable for such securities) during the period beginning 10
days prior to, and ending 90 days after, the closing date of each such
underwritten offering made pursuant to a registration statement covering the
Company's convertible debentures outstanding on the date hereof and the shares
of Common Stock issuable by the Company upon conversion thereof or pursuant to
an underwritten offering in which the Company is selling shares of its Common
Stock.
(c) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the written consent of each of
the other parties hereto is obtained.
(d) NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
1. if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this Section
7(d);
2. if to the Purchaser:
Bear, Stearns & Co., Inc.
245 Park Avenue
New York, New York 10167
Attention: Legal Department
Fax: (212) 272-3613
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
23
<PAGE> 24
Los Angeles, California 90071
Attention: Nick Saggese
Fax: (213) 687-5600
3. if to the Company:
UROHEALTH Systems, Inc.
5 Civic Plaza
Suite 100
Newport Beach, California 92660
Attention: Kevin Higgins
Fax: (714) 668-5824
with a copy to:
Morrison & Foerster LLP
199900 MacArthur Blvd.
Irvine, California 92612
Attention: Robert Mattson
Fax: (714) 251-0900
All such notices and communications shall be deemed to have been duly given when
received.
The Purchaser or the Company by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties and the Holders, including, without the need for an express assignment
or any consent by the Company thereto, subsequent Holders of Registrable
Securities. The Company hereby agrees to extend the benefits of this Agreement
to any Holder of Registrable Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
24
<PAGE> 25
(e) COUNTERPARTS. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) SUBMISSION TO JURISDICTION. The Company agrees that any
legal suit, action or proceeding brought by any party to enforce any rights
under or with respect to this Agreement may be instituted in any state or
federal court in The City of New York, State of New York, and waives to the
fullest extent permitted by law any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and irrevocably
submits it to the non-exclusive jurisdiction of any such court in any such suit,
action or proceeding. Nothing in this Section 7(i) shall affect the right of any
party hereto or any Holder to serve process
25
<PAGE> 26
in any manner permitted by law or limit the right of any party hereto to bring
proceedings against the Company in the courts of any jurisdiction or
jurisdictions.
(j) SECURITIES HELD BY THE COMPANY. Whenever the consent or
approval of Holders of a specified amount of any Registrable Securities is
required hereunder, Registrable Securities held by the Company or any of its
Affiliates shall not be counted in determining whether consent or approval was
given by the Holders of such required percentage.
(k) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof, entered into any agreement with respect to the Registrable
Securities that is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
26
<PAGE> 27
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
UROHEALTH SYSTEMS, INC.
By: /s/ KEVIN M. HIGGINS
-------------------------------
Name: Kevin M. Higgins
Title: Senior Vice President
The foregoing Warrant Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
BEAR, STEARNS & CO., INC.
By: /s/ DONALD MULLEN
-------------------------------
Name: Donald Mullen
Title: Senior Managing Director
<PAGE> 1
Exhibit 10.1
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
among
UROHEALTH SYSTEMS, INC.,
BANQUE INDOSUEZ, NEW YORK BRANCH, AS AGENT,
and
THE LENDING INSTITUTIONS LISTED HEREIN
--------------------
Dated as of April 10, 1997
--------------------
$50,000,000
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit............................ 1
1.01 Commitments........................................... 1
1.02 Minimum Amount of Each Borrowing...................... 2
1.03 Notice of Borrowings.................................. 2
1.04 Disbursement of Funds................................. 3
1.05 Notes................................................. 4
1.06 Conversions........................................... 4
1.07 Pro Rata Borrowings................................... 5
1.08 Interest.............................................. 6
1.09 Interest Periods...................................... 7
1.10 Special Provisions Governing LIBOR
Loans............................................... 7
1.11 Capital Requirements.................................. 12
1.12 Total Loan Revolving Loan Commitment;
Limitations on Outstanding Loan Amounts............. 12
SECTION 2. Commitments........................................... 13
2.01 Voluntary Reduction of Commitments.................... 13
2.02 Mandatory Adjustments of
Commitments, etc.................................... 13
2.03 Commitment Commission................................. 13
SECTION 3. Payments.............................................. 13
3.01 Voluntary Prepayments................................. 13
3.02 Mandatory Prepayments................................. 14
3.03 Method and Place of Payment........................... 15
3.04 Net Payments.......................................... 16
SECTION 4. Conditions Precedent.................................. 18
4.01 Conditions Precedent to Effectiveness
of Amendment........................................ 18
4.02 Conditions Precedent to All Loans..................... 26
SECTION 5. Representations, Warranties and
Agreements.......................................... 27
5.01 Corporate Status...................................... 28
5.02 Corporate Power and Authority......................... 28
5.03 No Violation.......................................... 29
5.04 Litigation............................................ 29
5.05 Use of Proceeds....................................... 29
-i-
<PAGE> 3
Page
5.06 Governmental Approvals, etc........................... 29
5.07 Investment Company Act................................ 30
5.08 Public Utility Holding Company Act.................... 30
5.09 True and Complete Disclosure.......................... 30
5.10 Financial Condition; Financial
Statements; Projections............................. 31
5.11 Security Interests.................................... 32
5.12 Tax Returns and Payments.............................. 33
5.13 ERISA................................................. 33
5.14 Borrower's Subsidiaries............................... 35
5.15 Patents, etc.......................................... 35
5.16 Compliance with Laws, etc............................. 35
5.17 Properties............................................ 36
5.18 Securities............................................ 36
5.19 Collective Bargaining Agreements...................... 36
5.20 Environmental Protection.............................. 36
5.21 Environmental Investigations.......................... 38
5.22 Labor Matters......................................... 39
5.23 Indebtedness, etc..................................... 39
SECTION 6. Affirmative Covenants................................. 39
6.01 Information Covenants................................. 39
6.02 Books, Records and Inspections........................ 44
6.03 Maintenance of Property; Insurance.................... 45
6.04 Payment of Taxes...................................... 45
6.05 Corporate Franchises.................................. 46
6.06 Compliance with Statutes, etc......................... 46
6.07 ERISA................................................. 46
6.08 Performance of Obligations............................ 47
6.09 Fiscal Quarters; Fiscal Year.......................... 47
6.10 Use of Proceeds....................................... 47
6.11 No Further Negative Pledges........................... 47
6.12 Environmental Events.................................. 47
6.13 Pledge of Additional Collateral....................... 48
6.14 Security Interests.................................... 49
6.15 Inactive Subsidiaries................................. 49
SECTION 7. Negative Covenants.................................... 50
7.01 Changes in Business................................... 50
7.02 Amendments or Waivers of Certain
Documents........................................... 50
7.03 Liens................................................. 50
7.04 Indebtedness.......................................... 52
7.05 Capital Expenditures.................................. 53
7.06 Advances, Investments and Loans....................... 53
7.07 Prepayments of Securities, Amendments,
etc................................................. 54
-ii-
<PAGE> 4
Page
7.08 Dividends, etc........................................ 55
7.09 Transactions with Affiliates.......................... 55
7.10 Total Interest Coverage Ratio......................... 56
7.11 Fixed Charge Coverage Ratio........................... 55
7.12 Leverage Ratio........................................ 57
7.13 Issuance of Subsidiary Stock.......................... 57
7.14 Disposition of Assets................................. 58
7.15 Contingent Obligations................................ 60
7.16 ERISA................................................. 61
7.17 Merger and Consolidations............................. 62
7.18 Sale and Lease-Backs.................................. 62
7.19 Sale or Discount of Receivables....................... 62
SECTION 8. Events of Default..................................... 62
8.01 Payments.............................................. 62
8.02 Representations, etc.................................. 62
8.03 Covenants............................................. 63
8.04 Default Under Other Agreements........................ 63
8.05 Bankruptcy, etc....................................... 63
8.06 ERISA................................................. 64
8.07 Security Documents.................................... 65
8.08 Guarantees............................................ 65
8.09 Judgments............................................. 65
8.10 Ownership............................................. 65
SECTION 9. Definitions........................................... 66
SECTION 10. The Agent and the Collateral Agent.................... 92
10.01 Appointment........................................... 92
10.02 Delegation of Duties.................................. 92
10.03 Exculpatory Provisions................................ 92
10.04 Reliance by the Agent or the
Collateral Agent.................................... 93
10.05 Notice of Default..................................... 94
10.06 Non-Reliance on Agent, Collateral
Agent and Other Banks............................... 94
10.07 Indemnification....................................... 95
10.08 The Agent in Its Individual Capacity.................. 95
10.09 Successor Agents...................................... 96
10.10 Resignation, Transfer by Agent........................ 96
SECTION 11. Miscellaneous......................................... 97
11.01 Payment of Expenses, etc.............................. 97
11.02 Right of Setoff....................................... 98
11.03 Notices............................................... 98
11.04 Benefit of Agreement.................................. 99
-iii-
<PAGE> 5
Page
11.05 No Waiver; Remedies Cumulative........................ 101
11.06 Payments Pro Rata..................................... 101
11.07 Calculations; Computations............................ 102
11.08 Governing Law; Submission to
Jurisdiction; Venue................................. 102
11.09 Counterparts.......................................... 103
11.10 Effectiveness......................................... 103
11.11 Headings Descriptive.................................. 103
11.12 Amendment or Waiver................................... 103
11.13 Survival.............................................. 104
11.14 Domicile of Loans..................................... 104
11.15 Waiver of Jury Trial.................................. 104
11.16 Independence of Covenants............................. 104
ANNEX I - List of Banks
ANNEX II - Bank Addresses
Schedule 4.01I - Schedule of Corporate Insurance Policies
Schedule 4.01J - Schedule of Surviving Indebtedness and Liens
Schedule 5.01 - Schedule of Non-Compliance
Schedule 5.04 - Schedule of Litigation
Schedule 5.10 - Financial Statements
Schedule 5.14 - Schedule of Subsidiaries
Schedule 5.16 - Schedule of Violations
Schedule 5.18 - Schedule of Securities
Schedule 5.19 - Schedule of Collective Bargaining Agreements
Schedule 5.20 - Environmental Matters
EXHIBIT A - Form of Revolving Note
EXHIBIT C-1 - Form of Opinion of Morrison & Foerster
EXHIBIT C-2 - Form of Opinion of General Counsel
EXHIBIT D - Form of Guarantee
EXHIBIT E-1 - Form of Borrower Securities Pledge Agreement
EXHIBIT E-2 - Form of Subsidiary Securities Pledge Agreement
EXHIBIT F - Form of Mortgage
EXHIBIT G - Form of Subsidiary Intellectual Property
Security Agreement
EXHIBIT H-1 - Form of Borrower General Security Agreement
EXHIBIT H-2 - Form of Subsidiary General Security Agreement
EXHIBIT I-1 - Form of Notice of Assignment
EXHIBIT I-2 - Form of Assignment and Assumption Agreement
EXHIBIT J - Form of Notice of Borrowing
EXHIBIT K - Form of Borrowing Base Certificate
EXHIBIT L-1 - Form of Officers' Certificate Regarding
Conditions Precedent
EXHIBIT L-2 - Form of Officers' Certificate Regarding
Environmental Review
EXHIBIT L-3 - Form of Officers' Certificate Regarding
Compliance with Covenants
-iv-
<PAGE> 6
EXHIBIT L-4 - Form of Officers' Certificate Regarding
Solvency
EXHIBIT M - Form of Subordinated Note Indenture
EXHIBIT N - Form of Supplemental Indenture to Subordinated
Debenture Indenture
-v-
<PAGE> 7
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of April
10, 1997, among UROHEALTH SYSTEMS, INC., a Delaware corporation (the
"Borrower"), the lending institutions listed in Annex I (each a "Bank" and,
collectively, the "Banks") and BANQUE INDOSUEZ, NEW YORK BRANCH ("Indosuez"), as
agent for the Banks (the "Agent") and as collateral agent for the Banks (in such
capacity, the "Collateral Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 9 are used herein as so
defined.
WITNESSETH:
WHEREAS, the Borrower and the Banks have entered into a Credit
Agreement dated as of August 14, 1996 and as amended to date (the "Old Credit
Agreement");
WHEREAS, the Borrower has issued $110 million of its 12 1/2%
Senior Subordinated Notes due 2004 (the "Subordinated Notes");
WHEREAS, the Borrower has applied a portion of the net proceeds of
the Subordinated Notes (i) to repay all Term Loans under the Old Credit
Agreement and permanently terminate all Term Loan Commitments under the Old
Credit Agreement and (ii) to repay all Revolving Loans then outstanding under
the Old Credit Agreement; and
WHEREAS, the Borrower and the Banks desire to amend and restate
the Old Credit Agreement (the "Amendment") and provide for the continuation of
and increase in the amount of available Revolving Loan Commitments thereunder as
described herein;
NOW, THEREFORE, IT IS AGREED:
<PAGE> 8
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SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and conditions herein
set forth, each Bank severally agrees, at any time and from time to time on and
after the Amendment Date and prior to the Final Maturity Date, to make a Loan or
Loans to the Borrower, under the Loan Facility (each a "Revolving Loan" and,
collectively, the "Revolving Loans") which (i) shall be made to the Borrower at
any time and from time to time on and after the Amendment Date and prior to the
Final Maturity Date, (ii) shall initially be made as Base Rate Loans and, 60
days after the Amendment Date or such earlier time as the Agent may agree, shall
be made at the option of the Borrower either as Base Rate Loans or as LIBOR
Loans; provided that all Revolving Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist entirely
of Loans of the same Type, (iii) may be repaid and reborrowed in accordance with
the provisions hereof, (iv) shall not exceed for any Bank at any time
outstanding the Revolving Loan Commitment of such Bank at such time and (v)
shall not be made if the aggregate principal amount of Revolving Loans then
outstanding, after giving effect to the Revolving Loan requested by the relevant
Notice of Borrowing, would exceed the lesser of the Borrowing Base as shown in
the Borrowing Base Certificate that was last required to be delivered pursuant
to Section 6.01 or the Total Revolving Loan Commitment.
1.02 Minimum Amount of Each Borrowing. The minimum aggregate principal
amount of a Borrowing of Loans shall be the Minimum Borrowing Amount and
Borrowings in excess thereof shall be in integral multiples of $100,000. More
than one Borrowing may be incurred on any date; provided that at no time shall
there be outstanding more than six Borrowings of LIBOR Loans.
1.03 Notice of Borrowings. Whenever the Borrower desires that the Banks
make Loans under the Loan Facility, it shall give the Agent at the Agent's
Office prior to 12:00 Noon (New York time) (i) at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing of LIBOR Loans and (ii) at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Base Rate Loans; provided that if written notice (or telephonic notice promptly
confirmed in writing) of Base Rate Loans is given prior to 10:00 a.m. (New York
time) on the day of a requested Borrowing, Borrowings shall be made available on
a same-day basis. Each such notice (each a "Notice of Borrowing"), which shall
be
<PAGE> 9
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substantially in the form of Exhibit J, shall be irrevocable, shall be deemed a
representation by the Borrower that all conditions precedent to such Borrowing
have been satisfied and shall specify (a) the aggregate principal amount in U.S.
dollars of the Loans to be made pursuant to such Borrowing, all of which shall
be specified in such manner as is necessary to comply with all limitations on
Revolving Loans outstanding hereunder, including without limitation,
availability under the Borrowing Base, (b) the requested date of such Borrowing
(which shall be a Business Day) and (c) whether the respective Borrowing shall
consist of Base Rate Loans or LIBOR Loans and, if LIBOR Loans, the requested
Interest Period to be initially applicable thereto. The Agent shall as promptly
as practicable give each Bank written notice (or telephonic notice promptly
confirmed in writing) of each proposed Borrowing, of such Bank's proportionate
share thereof and of the other matters covered by the Notice of Borrowing.
1.04 Disbursement of Funds. (a) No later than 12:00 noon (New York
time) on the date specified in each Notice of Borrowing, each Bank will make
available to the Agent in New York its pro rata portion of each Borrowing
requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund under any
Borrowing on or after the Closing Date in immediately available funds to the
Agent to the account specified therefor by the Agent or if no account is so
specified at the Agent's Office and the Agent will make such funds available to
the Borrower by depositing to the account specified therefor by the Borrower or
if no account is so specified to its account at the Agent's Office the aggregate
of the amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Bank prior to the date of any such Borrowing
that such Bank does not intend to make available to the Agent its portion of the
Borrowing or Borrowings to be made on such date, the Agent may assume that such
Bank has made such amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole discretion and
without any obligation to do so) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank and the Agent has made available same to the Borrower, the Agent
shall be entitled to recover such corresponding amount from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrower, and the Borrower shall
immediately pay such
<PAGE> 10
-4-
corresponding amount to the Agent. The Agent shall also be entitled to recover
from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to (x)
if paid by such Bank, the Federal Funds Rate or (y) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section 1.08,
for the respective Loans. The Agent shall also be entitled to recover from any
Bank an amount equal to any other losses incurred by the Agent as a result of
the failure of such Bank to provide such amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitment hereunder or to prejudice any rights which
the Borrower or any other Credit Party may have against any Bank as a result of
any default by such Bank hereunder.
1.05 Notes. (a) The Borrower's obligations to pay the principal of and
interest on all the Loans made to it by each Bank shall be evidenced by a
promissory note (each, a "Revolving Note" and, collectively, the "Revolving
Notes") duly executed and delivered by the Borrower substantially in the form of
Exhibit A hereto, with blanks appropriately completed in conformity herewith.
The Obligations (including, but not limited to, each Loan) shall (i) be senior
in right of payment to the Subordinated Debentures and shall constitute Senior
Debt (as defined in the Subordinated Debenture Indenture) under the Subordinated
Debenture Indenture and (ii) be senior in right of payment to the Subordinated
Notes and shall constitute Senior Indebtedness (as defined in the Subordinated
Note Indenture) under the Subordinated Note Indenture.
(b) The Revolving Note of the Borrower issued to each Bank shall (i)
be executed by the Borrower, (ii) be payable to the order of such Bank and be
dated the Amendment Date, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Bank and be payable in the aggregate principal
amount of the Revolving Loans evidenced thereby, (iv) mature, with respect to
each Loan evidenced thereby, on the Final Maturity Date, (v) be subject to
mandatory prepayment as provided in Section 3.02, (vi) bear interest as provided
in the appropriate clause of Section 1.08 in respect of the Base Rate Loans and
LIBOR Loans, as the case may be, and (vii) be entitled to the benefits of this
Agreement and the other applicable Credit
<PAGE> 11
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Documents.
(c) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby; provided, however, that
failure to make any such notation shall not affect the Borrower's or any other
Credit Party's obligations hereunder or under the other applicable Credit
Documents in respect of such Loans.
1.06 Conversions. Subject to the provisions of Section 1.10 hereof, the
Borrower shall have the option to convert (or, in the case of LIBOR Loans,
continue) on any Business Day all or a portion (which portion shall not be less
than the Minimum Borrowing Amount and in integral multiples of $100,000) of the
outstanding principal amount of the Loans owing by the Borrower into a Borrowing
or Borrowings of another Type of Loan; provided that (i) except as otherwise
provided in Section 1.10(b), LIBOR Loans may be converted into Base Rate Loans
only on the last day of an Interest Period applicable thereto, (ii) no such
partial conversion of LIBOR Loans shall reduce the outstanding principal amount
of LIBOR Loans under the Loan Facility made pursuant to a single Borrowing to
less than the Minimum Borrowing Amount, (iii) one Type of Loan may only be
continued as or converted into LIBOR Loans if no Default or Event of Default is
in existence on the date of the conversion and (iv) Borrowings resulting from
conversions pursuant to this Section 1.06 shall be limited in amount and number
as provided in Section 1.02. Each such conversion (or continuation) shall be
effected by the Borrower by giving the Agent at the Agent's Office prior to
10:00 A.M. (New York time) at least three Business Days' (or one Business Day's
in the case of a conversion into Base Rate Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each a "Notice of Conversion")
specifying the Loans to be so converted, the proposed conversion/continuation
date, the Type of Loans to be converted into and, if to be converted into LIBOR
Loans, the requested Interest Period to be initially applicable thereto. The
Agent shall give each Bank notice as promptly as practicable of any such
proposed conversion affecting any of its Loans. Notwithstanding the foregoing or
the provisions of Section 1.09, if a Default or Event of Default is in existence
at the time any Interest Period in respect of any Borrowing of LIBOR Loans is to
expire, such Loans may not be continued as LIBOR Loans but instead shall be
automatically converted on the last day of such Interest Period into Base Rate
Loans. If no Notice of Conversion has been duly
<PAGE> 12
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delivered with respect to a LIBOR Loan on or before the third Business Day prior
to the last day of the Interest Period applicable thereto, such LIBOR Loan shall
be automatically converted into a Base Rate Loan.
Except as provided in Section 1.10 hereof, a Notice of Conversion for
conversion to or continuation of LIBOR Loans or for conversion to Base Rate
Loans shall be irrevocable.
The giving to the Agent of a Notice of Conversion with respect to Loans
which are to be converted to or continued as LIBOR Loans shall be deemed to be a
representation by the Borrower on the date of such Notice of Conversion that no
Default or Event of Default has occurred and is continuing under this Agreement.
1.07 Pro Rata Borrowings. All Borrowings under this Agreement shall be
loaned by the Banks pro rata on the basis of their Revolving Loan Commitments.
No Bank shall be responsible for any default by any other Bank in its obligation
to make Loans hereunder and each Bank shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other Bank
to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) (or unless sooner converted into a LIBOR
Loan) at a rate per annum equal to the sum of the Base Rate in effect from time
to time plus 1.25% (the "Base Rate Margin").
(b) The unpaid principal amount of each LIBOR Loan shall bear interest
from the date of the Borrowing thereof until maturity (whether by acceleration
or otherwise) (or unless sooner converted to a Base Rate Loan) at a rate per
annum equal to Adjusted LIBOR.
(c) Principal and, to the extent permitted by law, interest in respect
of each Loan following a payment default or any other Event of Default shall
bear interest at a rate per annum equal to the sum of (i) 2% plus (ii) the rate
otherwise applicable, payable on demand.
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day of
each
<PAGE> 13
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March, June, September and December, beginning June 30, 1997; (ii) in respect of
each LIBOR Loan, in arrears on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months, on
each date occurring at three-month intervals after the first date of such
Interest Period; and (iii) in respect of each Loan, on any prepayment (on the
amount prepaid), at maturity (whether by acceleration or otherwise) and, after
such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance
with Section 11.07(b).
(f) The Agent, upon determining the interest rate for any Borrowing of
LIBOR Loans for any Interest Period, shall promptly notify the Borrower and the
Banks thereof. Such determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto.
1.09 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of LIBOR Loans, it shall have the right to elect, by giving
the Agent written notice (or telephonic notice promptly confirmed in writing),
the Interest Period applicable to the Borrowing, which Interest Period shall, at
the option of such Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(a) the initial Interest Period for any Borrowing of LIBOR Loans shall
commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter (including continuation thereof) in respect of such
Borrowing shall commence on the date on which the next preceding Interest
Period expires;
(b) if any Interest Period relating to a Borrowing of LIBOR Loans
begins on a date for which there is no numerically corresponding date in
the calendar month in which such Interest Period ends, such Interest Period
shall end on the last Business Day of such calendar month;
(c) if any Interest Period would otherwise expire on a day which is not
a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that if any Interest Period in respect of a LIBOR
Loan would otherwise expire on a day which is not a Business Day but is
<PAGE> 14
-8-
a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding Business
Day; and
(d) no Interest Period shall extend beyond the Final Maturity Date.
1.10 Special Provisions Governing LIBOR Loans. Notwithstanding other
provisions of this Agreement, the following provisions shall govern with respect
to LIBOR Loans as to the matters covered:
(a) On an Interest Rate Determination Date, the Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties hereto) the interest rate which shall apply to the
LIBOR Loans for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the Borrower and to each
Bank.
(b) In the event that (x) in the case of clause (i) below, the Agent
or (y) in the case of clause (ii) or (iii) below, any Bank shall have
determined (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties hereto):
(i) on any Interest Rate Determination Date that, by reason of
any changes arising on or after the Closing Date affecting the LIBOR
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
LIBOR;
(ii) at any time that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any LIBOR Loans or its obligation to make LIBOR Loans because of (x)
any change since the Closing Date (including changes proposed or
published prior to the Closing Date) in any applicable law,
governmental rule, regulation, guideline, request or order, whether or
not having the force of law (or in the interpretation or administration
thereof and including the introduction of any new law or governmental
rule, regulation, guideline, request or order) (such as, for example,
but not limited to, (A) a change in the basis of taxation
<PAGE> 15
-9-
of payments to any Bank of the principal of or interest on the Notes or
any other amounts payable hereunder (except for changes in the rate of
tax on, or determined by reference to, the net income or profits of
such Bank pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending office
is located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of Adjusted LIBOR) and/or (y) other circumstances affecting such Bank,
the LIBOR market or the position of such Bank in such market; or
(iii) at any time that the making or continuance of any LIBOR
Loan has become unlawful by compliance by such Bank in good faith with
any law, governmental rule, regulation, guideline or order (or would
conflict with any such governmental rule, regulation, guideline or
order not having the force of law even though the failure to comply
therewith would not be unlawful), or has become impracticable as a
result of a contingency occurring after the Closing Date which
materially and adversely affects the LIBOR market;
then, and in any such event, the Agent in the case of clause (i) above or
such Bank in the case of clause (ii) or (iii) above shall on such date give
notice (by telephone confirmed in writing) to the Borrower of the Loan
affected and, in the case of clause (ii) or (iii) to the Agent, of such
determination (which notice the Agent shall promptly transmit to each of
the other Banks). Thereafter (x) in the case of clause (i) above, LIBOR
Loans shall no longer be available until such time as the Agent notifies
the Borrower and the Banks that the circumstances giving rise to such
notice by the Agent no longer exist, and any Notice of Borrowing or Notice
of Conversion given by the Borrower with respect to the borrowing of or
conversion into (including continuance of) LIBOR Loans which have not yet
been incurred shall be deemed rescinded by the Borrower, (y) in the case of
clause (ii) above, the Borrower shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or
a different method of calculating, interest or otherwise as such Bank in
its reasonable discretion shall determine) as shall be required to
compensate such Bank for such increased costs or
<PAGE> 16
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reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to the Borrower by such Bank shall, absent manifest
error, be final, conclusive and binding upon all parties hereto) and (z) in
the case of clause (iii) above, the Borrower shall take one of the actions
specified in Section 1.10(c) as promptly as possible and, in any event,
within the time period required by law.
(c) At any time that any LIBOR Loan is affected by the circumstances
described in Section 1.10(b)(ii) or (iii), the Borrower may (and in the
case of a LIBOR Loan affected pursuant to Section 1.10(b)(iii) shall)
either (i) if a Notice of Borrowing or Notice of Conversion has been given
with respect to the affected LIBOR Loan, cancel said Notice of Borrowing or
Notice of Conversion by giving the Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was
notified by a Bank pursuant to Section 1.10(b)(ii) or (iii), or (ii) if the
affected LIBOR Loan is then outstanding, upon at least three Business Days'
notice to the Agent, require the affected Bank to convert each such LIBOR
Loan into a Base Rate Loan, or prepay such LIBOR Loan; provided that if
more than one Bank is affected at any time, then all affected Banks must be
treated the same pursuant to this Section 1.10(c); and provided, further,
that the Borrower shall compensate any such affected Banks as set forth in
Section 1.10(f).
(d) Anything herein to the contrary notwithstanding, if on any Interest
Rate Determination Date no LIBOR is available by reason of the inability of
the Agent to determine such interest rate in accordance with the definition
thereof, the Agent shall give the Borrower and each Bank prompt notice
thereof and the Loans requested to be made as LIBOR Loans shall, subject to
the applicable notice requirements, be made as Base Rate Loans.
(e) Each Bank agrees that, as promptly as practicable after it becomes
aware of the occurrence of any event or the existence of a condition that
would cause it to be an affected Bank under Section 1.10(b)(ii) or (iii),
it will, to the extent not inconsistent with such Bank's internal policies,
use reasonable efforts to make, fund or maintain the affected LIBOR Loans
of such Bank through another lending office of such Bank if as a result
thereof the additional moneys which would otherwise be required to be
<PAGE> 17
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paid in respect of such Loans pursuant to Section 1.10(b)(ii) would be
materially reduced or the illegality or other adverse circumstances which
would otherwise require prepayment of such Loans pursuant to Section
1.10(b)(iii) would cease to exist, and if, as determined by such Bank, in
its reasonable discretion, the making, funding or maintaining of such Loans
through such other lending office would not otherwise materially adversely
affect such Loans or such Bank. The Borrower hereby agrees to pay all
reasonable expenses incurred by any Bank in utilizing another lending
office of such Bank pursuant to this Section 1.10(e).
(f) The Borrower shall compensate each Bank, upon written request by
that Bank, for all reasonable losses, expenses and liabilities (including,
without limitation, such factors as any interest paid by that Bank to
lenders of funds borrowed by it to make or carry its LIBOR Loans and any
loss sustained by that Bank in connection with re-employment of such funds
(based upon the difference between the amount earned in connection with
re-employment of such funds and the amount payable by the Borrower if such
funds had been borrowed or remained outstanding)) which that Bank may
sustain with respect to the Borrower's LIBOR Loans: (i) if for any reason
(other than a default or error by that Bank) a Borrowing of any such LIBOR
Loan does not occur on a date specified therefor in a Notice of Borrowing
or a Notice of Conversion or in a telephonic request for borrowing or
conversion, or a successive Interest Period in respect of any such LIBOR
Loan does not commence after notice therefor is given pursuant to Section
1.06 (whether or not withdrawn by the Borrower or deemed withdrawn pursuant
to Section 1.10(b)(i)), (ii) if any prepayment or conversion (as required
by Sections 3.01 and 3.02, by acceleration or otherwise) of any of such
Bank's LIBOR Loans to the Borrower occurs on a date which is not the last
day of the Interest Period applicable to that Loan, (iii) if any prepayment
or repayment of any such Bank's LIBOR Loans to the Borrower is not made on
any date specified in a notice of prepayment or repayment given by the
Borrower, or (iv) as a consequence of (x) any other failure by the Borrower
to repay such Bank's LIBOR Loans to the Borrower when required by the terms
of this Agreement or (y) any election made pursuant to Section 1.10(b)(ii).
Compensation owing under this Section 1.10(f) shall be equal to the
amount of interest which would have accrued on
<PAGE> 18
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the amount of principal prepaid or repaid or converted or not borrowed for
the period from the date of such prepayment or repayment or conversion or
failure to borrow or prepay or repay to the last day of the then current
Interest Period for the relevant LIBOR Loan (or, in the case of a failure
to borrow, the Interest Period for such LIBOR Loan which would have
commenced on the date of such failure to borrow) at the applicable rate of
interest for such LIBOR Loan provided for herein minus any amount such
Bank, in good faith and in its sole discretion, determines is realizable
upon the re-employment of such funds. A certificate as to the amount of
such losses, expenses and liabilities submitted to the Borrower by such
Bank shall, absent manifest error, be final, conclusive and binding for all
purposes.
(g) During the continuance of a Default or an Event of Default, the
Borrower may not elect to have a Loan made or maintained as, or converted
into, a LIBOR Loan after the expiration of any Interest Period then in
effect for that Loan.
1.11 Capital Requirements. If any Bank shall have determined that
the adoption or effectiveness after the Closing Date of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or such Bank's parent with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency
(including in each case any such change proposed or published prior to the date
hereof), has or would have the effect of reducing the rate of return on such
Bank's or such Bank's parent's capital or assets as a consequence of such Bank's
obligations hereunder to a level below that which such Bank or such Bank's
parent could have achieved but for such adoption, effectiveness or change or as
a consequence of an increase in the amount of capital required to be maintained
by such Bank (including in each case, without limitation, with respect to any
Bank's Commitment or any Loan), then from time to time, within 15 days after
written demand by such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will compensate such Bank or
such Bank's parent, as the case may be, for such reduction. Each Bank, upon
determining in good faith that any additional amounts will be payable pursuant
to this Section 1.11, will give prompt written
<PAGE> 19
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notice thereof to the Borrower, which notice shall set forth in reasonable
detail the basis of the calculation of such additional amounts, although any
delay in giving any notice shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 1.11.
1.12 Total Revolving Loan Commitments; Limitations on Outstanding
Loan Amounts. The original amount of the Total Revolving Loan Commitment is
$50,000,000, including $9,250,000 in Revolving Loan Commitments that continue
from the Old Credit Agreement and $40,750,000 in new Revolving Loan Commitments.
Anything contained in this Agreement to the contrary notwithstanding, (a) in no
event shall the sum of the aggregate principal amount of all Revolving Loans of
any Bank at any time exceed such Bank's portion of the Total Revolving Loan
Commitment, (b) in no event shall the sum of the aggregate principal amount of
all Revolving Loans of all Banks at any time exceed the Total Revolving Loan
Commitment and (c) in no event shall the aggregate principal amount of
outstanding Revolving Loans exceed the lesser of the Total Revolving Loan
Commitment or the Borrowing Base.
SECTION 2. Commitments.
2.01 Voluntary Reduction of Commitments. Upon at least one Business
Day's prior written notice (or telephonic notice promptly confirmed in writing)
to the Agent at the Agent's Office (which notice the Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, without
premium or penalty, to terminate the unutilized portion of the Total Revolving
Loan Commitment, in part or in whole; provided that (x) any such termination
shall apply to proportionately and permanently reduce the Revolving Loan
Commitment of each of the Banks and (y) any partial reduction pursuant to this
Section 2.01 shall be in the amount of at least $100,000 and integral multiples
of $100,000 in excess of that amount.
2.02 Mandatory Adjustments of Commitments, etc. The Total Revolving
Loan Commitment shall terminate on the Final Maturity Date.
2.03 Commitment Commission. The Borrower agrees to pay the Agent a
commitment commission ("Commitment Commission") for the account of each Bank for
the period from and including the Closing Date to, but not including, the date
the Total Revolving Loan Commitment has been terminated, computed at a rate
equal to 1/2% per annum on the daily average unutilized Revolving
<PAGE> 20
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Loan Commitment of such Bank. Accrued Commitment Commissions shall be due and
payable in arrears on the last Business Day of each March, June, September and
December, commencing June 30, 1997 and on the Final Maturity Date.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Borrower shall have the right to prepay
Revolving Loans in whole or in part from time to time, without premium or
penalty, on the following terms and conditions: (i) the Borrower shall give the
Agent at the Agent's Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans, the amount of such
prepayment and, in the case of LIBOR Loans, the specific Borrowing or Borrowings
pursuant to which made, which notice shall be given by the Borrower at least one
Business Day prior to the date of such prepayment and which notice shall
promptly be transmitted by the Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $100,000 and integral multiples of $100,000 in excess of such amount;
provided that no partial prepayment of LIBOR Loans made pursuant to a single
Borrowing under the Loan Facility shall reduce the outstanding Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount;
and (iii) LIBOR Loans may only be prepaid pursuant to this Section 3.01 on the
last day of an Interest Period applicable thereto.
3.02 Mandatory Prepayments.
(A) Requirements:
(a) The Borrower shall prepay the outstanding principal amount of
Revolving Loans on any date on which the aggregate outstanding principal amount
of such Loans (after giving effect to any other repayments or prepayments on
such day) exceeds the Total Revolving Loan Commitment in the amount of such
excess.
(b) If the aggregate principal amount of outstanding Revolving Loans
exceeds the Borrowing Base as set forth in the Borrowing Base Certificate
required to be delivered pursuant to Section 6.01 of this Agreement (such amount
is hereinafter referred to as the "Excess"), then the Borrower shall prepay its
Revolving Loans in a principal amount equal to such Excess no later than one (1)
Business Day after the Borrower has delivered, or was required to deliver, such
Borrowing Base Certificate to
<PAGE> 21
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the Agent and the Banks.
(c) On the date of receipt by the Borrower and/or any of the Borrower's
Subsidiaries, as the case may be, of Net Cash Proceeds or Net Financing
Proceeds, an amount equal to 100% of such Net Cash Proceeds or Net Financing
Proceeds shall be applied as provided in Section 3.02(B)(a).
(d) At the Agent's discretion, on the date of receipt thereof by the
Borrower, an amount equal to 100% of any insurance proceeds received less any
portion of such proceeds not in excess of $100,000 that is promptly applied to
repair or replace the damaged property which is the subject of such proceeds
shall be applied as provided in Section 3.02(B)(a).
(e) On the date of the receipt thereof by the Borrower, an amount equal
to 100% of (i) any surplus assets of any Pension Plan returned to the Borrower
or any Subsidiary and (ii) any tax refund in excess of $100,000 per year made to
the Borrower shall be applied as provided in Section 3.02(B)(a).
(B) Application:
(a) Prepayments by the Borrower to be applied pursuant to this Section
3.02(B)(a) shall be applied, without penalty or premium except for LIBOR
breakage costs, if any to prepay Revolving Loans.
(b) With respect to each prepayment of Loans required by Section
3.02(A), the Borrower shall give the Agent two Business Days notice and may
designate the specific Borrowing or Borrowings which are to be prepaid; provided
that (i)(x) LIBOR Loans may be designated for prepayment pursuant to this
Section 3.02 only on the last day of an Interest Period applicable thereto
unless all LIBOR Loans with Interest Periods ending on such date of required
prepayment and all Base Rate Loans have been or are concurrently being paid in
full and (y) if any prepayment of LIBOR Loans made pursuant to a single
Borrowing shall reduce the outstanding Loans made pursuant to such Borrowing to
an amount less than $100,000, such Borrowing shall immediately be converted into
Base Rate Loans; and (ii) each prepayment of any Loans made pursuant to a single
Borrowing shall be applied pro rata among such Loans. In the absence of a
designation by the Borrower, the Agent shall, subject to the above, made such
designation in its sole discretion. All prepayments shall include payment of
accrued interest on the
<PAGE> 22
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principal amount so prepaid, shall be applied to the payment of interest before
application to principal and shall include amounts payable, if any, under
Section 1.10(f).
3.03 Method and Place of Payment. (a) Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Agent,
for the ratable account of the Banks entitled thereto, not later than 1:00 p.m.
(New York time) on the date when due and shall be made in immediately available
funds in lawful money of the United States of America to the account specified
therefor by the Agent or if no account has been so specified at the Agent's
Office, it being understood that written notice by the Borrower to the Agent to
make a payment from the funds in the Borrower's account at the Agent's Office
shall constitute the making of such payment to the extent of such funds held in
such account. The Agent will thereafter cause to be distributed on the same day
(if payment is actually received by the Agent in New York prior to 1:00 p.m.
(New York time) on such day) funds relating to the payment of principal or
interest or fees ratably to the Banks entitled to receive any such payment in
accordance with the terms of this Agreement. If and to the extent that any such
distribution shall not be so made by the Agent in full on the same day (if
payment is actually received by the Agent prior to 1:00 p.m. (New York time) on
such day), the Agent shall pay to each Bank its ratable amount thereof and each
such Bank shall be entitled to receive from the Agent, upon demand, interest on
such amount at the Federal Funds Rate for each day from the date such amount is
paid to the Agent until the date the Agent pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 p.m. (New York time) shall be deemed to have been made on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
3.04 Net Payments. (a) All payments under this Agreement or under any
Credit Document shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments (after deduction or
withholding for or on account of any present or future taxes, levies, imposts,
duties or other charges of whatsoever nature imposed by any governmental
authority or any political subdivision or taking
<PAGE> 23
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authority thereof, other than any tax on or measured by the net income of a Bank
pursuant to the income tax laws of the jurisdictions where such Bank's principal
or lending office is located (collectively "Taxes")) shall not be less than the
amounts otherwise specified to be paid under this Agreement and/or any other
Credit Document. If the Borrower or the Company is required by law to make any
deduction or withholding on account of Taxes from any payment due hereunder or
under the other Credit Documents, then (i) the Borrower shall timely remit such
Taxes to the governmental authority imposing the same and (ii) the amount
payable hereunder or under the applicable Credit Documents will be increased to
such amount which, after deduction from such increased amount of all amounts
required to be deducted or withheld therefrom, will not be less than the amount
otherwise due and payable.
(b) Without prejudice to the provisions of clause (a) of this Section
3.04, if any Bank or the Agent is required to make any payment on account of
Taxes, the Borrower will, promptly indemnify such person against such Taxes,
together with any interest, penalties and expenses payable or incurred in
connection therewith. The Borrower shall also reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net income
of such Bank pursuant to the laws of the jurisdiction in which the principal
office or lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction as such Bank
shall determine are payable by such Bank in respect of Taxes paid to or on
behalf of such Bank pursuant to this Section 3.04. For purposes of this Section
3.04, the term "Taxes" includes interest, penalties and expenses payable or
incurred in connection therewith. A certificate as to any additional amounts
payable to a Bank under this Section 3.04 submitted to the Borrower by such Bank
shall, absent manifest error, be final, conclusive and binding for all purposes
upon all parties hereto. With respect to each deduction or withholding for or on
account of any Taxes, the Borrower shall promptly furnish to each Bank such
certificates, receipts and other documents as may be required (in the judgment
of such Bank) to establish any tax credit to which such Bank may be entitled.
(c) (i) Each Bank that is organized under the laws of any
jurisdiction other than the United States or any State thereof (including the
District of Columbia) (a "Foreign Bank") agrees to furnish to the Borrower and
the Agent, prior to the date it receives any payment under this Agreement or
other Credit Documents, two signed copies of either U.S. Internal Revenue
<PAGE> 24
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Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any successor
form thereto (wherein such Bank claims entitlement to a complete exemption from
U.S. federal withholding tax on interest paid by the Borrower hereunder).
(ii) In addition, each Foreign Bank agrees to provide subsequently
to the Borrower and the Agent additional signed copies of Form 4224 or Form 1001
or any successor forms thereto (wherein such Bank claims entitlement to a
complete exemption from or reduced rate of U.S. federal withholding tax on
interest paid by the Borrower hereunder) as may be reasonably requested in
writing by the Borrower or the Agent. A Foreign Bank shall be required to
furnish a form under this Section 3.04(c)(ii) only if it is entitled to claim an
exemption from or a reduced rate of withholding tax under applicable law. A Bank
that is not entitled to claim an exemption from or a reduced rate of withholding
under applicable law at the time that a request to provide forms is received
from the Borrower or the Agent, shall so inform the Borrower and the Agent in
writing. In such event the Borrower shall be entitled to designate a replacement
bank that is reasonably acceptable to the Agent; provided that the Borrower
shall not be entitled to replace the Agent.
SECTION 4. Conditions Precedent.
4.01 Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to the satisfaction of the following
conditions, unless otherwise waived:
(A) Officers' Certificate. The Agent shall have received a certificate
dated the Amendment Date and signed by James L. Johnson, the Executive Vice
President and Chief Financial Officer of the Borrower, substantially in the form
of Exhibit L-1 annexed hereto, stating that all of the applicable conditions set
forth in Sections 4.01(K), (L), (N), (O), (Q), (R), (S) and (U) (in each case
disregarding any reference therein that such condition be deemed satisfactory by
the Agent and/or the Required Banks) have been satisfied or waived as of such
date.
(B) Opinions of Counsel. The Agent shall have received an opinion or
opinions addressed to each of the Banks and dated the Amendment Date, each in
form and substance satisfactory to the Required Banks, from (i) Morrison &
Foerster, counsel to the Borrower, in the form of Exhibit C-1 hereto and (ii)
Kevin Higgins, general counsel to the Borrower, in the form
<PAGE> 25
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of Exhibit C-2 hereto.
(C) Corporate Proceedings. (i) All corporate and legal proceedings and
all instruments and agreements in connection with the transactions contemplated
by the Documents shall be reasonably satisfactory in form and substance to the
Required Banks, and the Agent shall have received all information and copies of
all certificates, documents and papers, including records of corporate
proceedings and governmental approvals, if any, which the Agent may have
reasonably requested from the Borrower or any other Credit Party or in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities. Without limiting the
foregoing, the Agent shall have received:
(a) resolutions of the Board of Directors of the Borrower and the other
Credit Parties which shall include, without limitation, resolutions
approving such documents and actions as are contemplated hereby,
resolutions as to the due authorization, execution and delivery of this
Agreement, and resolutions stating that each such document has been
certified by the Borrower's or such other Credit Party's, as appropriate,
corporate secretary or an assistant secretary and is or will be on the
Amendment Date in full force and effect, without modification or amendment.
Such resolutions shall be in form and substance satisfactory to the Agent;
and
(b) signature and incumbency certificates of each officer of the
Borrower and each other Credit Party executing instruments, documents or
agreements required to be executed in connection with the transactions
contemplated by this Agreement.
(ii) Prior to the Amendment Date, the Agent shall have received
evidence, satisfactory to the Required Banks, as to the due incorporation of the
Borrower in the State of Delaware, including, without limitation, the Borrower's
certificate of incorporation as set forth in paragraph (E)(1) of this Section
4.01.
(D) Credit Documents. Each of this Agreement and the other Credit
Documents shall (i) be in form and substance reasonably satisfactory to the
Required Banks and (ii) have been, on or prior to the Amendment Date, duly
authorized, executed and delivered by each of the parties signatory thereto.
<PAGE> 26
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(E) Organizational Documentation, etc. The Banks shall have received a
true and complete certified copy of the following documents of each of the
Borrower and the other Credit Parties, the provisions of which shall be
reasonably satisfactory to the Required Banks:
(1) Its respective Certificate of Incorporation, which shall be
certified and be accompanied by a good standing or other comparable
certificate from the Secretary of State, each to be dated a recent date
prior to the Amendment Date;
(2) Its respective By-laws certified as of a recent date prior to the
Amendment Date by its corporate secretary.
(F) Notes. There shall have been delivered to the Agent for the
account of each of the Banks the Revolving Notes executed by the Borrower in the
amount and maturity and as otherwise provided herein.
(G) Certain Fees. All reasonable costs, fees and expenses (including,
without limitation, reasonable legal fees and expenses) payable to Indosuez by
Borrower shall have been paid in full, and the Borrower shall have paid or have
caused to be paid the commitment and other fees and expenses (including, without
limitation, reasonable legal fees and expenses) contemplated hereby and/or in
connection with the other Credit Documents, to the extent such fees and expenses
are due and payable at such time.
(H) Financial Statements, etc. The Agent shall have received audited
consolidated financial statements of the Borrower for the fiscal years ended
June 30, 1994, June 30, 1995 and the nine months ended March 31, 1996, and
unaudited financial statements for the nine months ended December 31, 1996. The
Borrower shall have delivered to the Agent financial projections with respect to
the Borrower on a consolidated basis and such projections are based on
assumptions believed by the Borrower in light of conditions which existed at the
time of their preparation in good faith to be reasonable as to the future
financial performance of the Borrower, which shall be satisfactory to the
Required Banks. Such financial projections shall reflect the forecasted
financial condition, income and expenses of the Borrower and its Subsidiaries,
the Borrowings under this Agreement and the other transactions contemplated
herein, shall cover the remainder of fiscal year 1998 (which shall be prepared
on a monthly basis) and shall cover through and including fiscal year 2001
(which shall be prepared on an annual
<PAGE> 27
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basis). Since the time of the preparation of such financial projections, no fact
or facts have come to the attention of the Borrower other than as disclosed to
Indosuez in writing to cause it to believe that any of the estimates and
assumptions on which such projections are based are not reasonable.
(I) Insurance. Set forth on Schedule 4.01I is a summary of all
insurance policies maintained by the Borrower and its Subsidiaries, and the
insurance coverage provided for the Borrower and its Subsidiaries by such
insurance policies shall be reasonably satisfactory to the Required Banks.
(J) Indebtedness, Liens, etc. (i) Schedule 4.01J, part I, sets forth a
true list of all Indebtedness of the Borrower and its Subsidiaries as of the
Amendment Date in excess of $250,000 in the aggregate and all Indebtedness in
excess of $50,000 individually.
(ii) Schedule 4.01J, part II, under the heading "Liens," sets forth a
true list of all Liens other than Permitted Encumbrances on the property of the
Borrower and its Subsidiaries as of the Amendment Date.
(K) Security Documents and Guarantees. Amendments to the Security
Documents and Guarantees, each in form and substance satisfactory to the
Required Banks, shall have been duly executed and delivered by the respective
parties thereto and there shall have been delivered to the Collateral Agent, to
the extent not previously delivered, (i) all Pledged Securities, together with
executed and undated stock powers and/or assignments in blank, (ii) evidence of
the filing of appropriate amendments to the filed financing statements and other
documents under the provisions of the UCC, applicable foreign, domestic or local
laws, rules or regulations in each of the offices where such filing is necessary
or appropriate to confirm the Lien in favor of the Collateral Agent, as security
for the payment and performance of the Obligations as amended and restated in
accordance with the terms hereof, in all Collateral superior to and prior to the
rights of all third persons and subject to no other Liens except Prior Liens,
(iii) certified copies of Requests for Information (Form UCC-11 or the
equivalent), or equivalent reports or lien search reports listing all effective
financing statements which name the Borrower or any other Credit Party as debtor
and which are filed in those jurisdictions in which any of the Collateral is
located and the jurisdiction in which the Borrower's and each other Credit
Party's principal place of business is located (none of which shall cover the
<PAGE> 28
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Collateral covered, or intended or purported to be covered, by the Security
Documents other than Prior Liens), (iv) to the extent inventory is maintained on
a leased premise, agreements from the respective landlords of such of the Real
Property which is being leased by the Borrower or its Subsidiaries (to the
extent such agreements can be obtained through commercially reasonable efforts
by the Borrower) confirming that such landlords have subordinated their landlord
liens in the Borrower's (or such Subsidiaries', as applicable) personal property
to the security interests held by Collateral Agent pursuant to applicable
Security Documents and that such landlords will provide Collateral Agent with
reasonable access to such facilities to exercise Collateral Agent's remedies
pursuant to such applicable Security Documents, (v) insurance certificates
naming Collateral Agent as loss payee or additional insured as required pursuant
to the Security Documents, and (vi) delivery of such other security and other
documents as may be reasonably necessary and as are reasonably requested by the
Collateral Agent to perfect the Liens created, or purported or intended to be
created, by the Security Documents.
(L) Consents, etc. All material governmental and third party approvals
and consents (including, without limitation, all material approvals and consents
required in connection with any environmental statutes, rules or regulations),
if any, in connection with the transactions contemplated by the Credit
Documents, and otherwise referred to herein or therein to be completed on or
before the Amendment Date shall have been obtained and remain in effect. There
shall not exist any judgment, order, injunction or other restraint issued or
filed with respect to the making of the Loans hereunder.
(M) Environmental Review. (i) The Agent shall have received a duly
executed questionnaire relating to (x) the Borrower's and its Subsidiaries'
compliance with or liability under any Environmental Law and (y) environmental
matters in respect of the Real Property or the business of the Borrower or its
Subsidiaries or any facility leased by the Borrower or its Subsidiaries.
(ii) The Agent shall have received environmental questionnaires with
respect to the Borrower's properties.
(iii) There shall have been delivered to the Agent an Officers'
Certificate of the Borrower in substantially the form of Exhibit L-2 annexed
hereto.
<PAGE> 29
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(N) Litigation. There shall be no litigation pending or threatened
involving the Borrower or any of its Subsidiaries or any of their respective
properties or assets or, to the best knowledge of the Borrower, that could
impair the consummation of the transactions contemplated by the Credit
Documents, or that in the good faith judgment of the Agent, could be reasonably
expected to have a Materially Adverse Effect.
(O) Capital Leases, etc. All Capital Leases of the Borrower and its
Subsidiaries outstanding immediately prior to the Amendment Date shall remain
outstanding after giving effect to the financings hereunder, on terms reasonably
satisfactory to the Required Banks.
(P) Solvency. The Agent shall have received an Officers' Certificate
as to the solvency of the Borrower after giving effect to the incurrence of the
Subordinated Notes and the Indebtedness contemplated hereunder, substantially in
the form of Exhibit L-4 hereto. Such Officers' Certificate shall be
satisfactory, in form and substance, to the Required Banks in their sole
discretion.
(Q) Labor Matters. There shall be no labor disputes, strikes or work
stoppages, pending or, to the best knowledge of the Borrower, threatened,
involving the Borrower or any of its Subsidiaries that could impair the
operations of the Borrower or any of its Subsidiaries or that could reasonably
be expected to have a Materially Adverse Effect.
(R) Performance Bonds. Prior to the Closing Date, the Agent shall have
received evidence, satisfactory to the Required Banks, that the Borrower will be
able to service and maintain performance bonds required in the ordinary course
of business on reasonable terms and conditions.
(S) Material Adverse Change; Business of Borrower. There shall be no
change in the business, assets, properties, condition (financial or otherwise)
or prospects of the Borrower or in the industries in which it competes that
could impair the operations of the Borrower or any of its Subsidiaries or that
could reasonably be expected to have a Materially Adverse Effect.
(T) Subordinated Notes. Substantially contemporaneously with the
closing of this transaction, the Company shall have issued and sold $110 million
of Subordinated Notes, and shall have applied a portion of the proceeds to the
repayment in full of all outstanding indebtedness under the Old
<PAGE> 30
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Credit Agreement.
(U) Conditions Relating to Mortgaged Real Property and Real Property.
On or prior to the Amendment Date, the Borrower shall have caused to be
delivered to the Agent, on behalf of the Banks, the following documents and
instruments to the extent not previously delivered:
(i) an amendment to each Mortgage encumbering each Mortgaged Real
Property in favor of the Agent, as Collateral Agent for the benefit of the
Banks, duly executed and acknowledged by the Credit Party that is the owner
of or holder of an interest in such Mortgaged Real Property, and otherwise
in form for recording in the recording office of each political subdivision
where each such Mortgaged Real Property is situated, together with such
certificates, affidavits, questionnaires or returns as shall be required in
connection with the recording or filing thereof to confirm the Lien in
favor of the Collateral Agent on such Mortgaged Real Property under
applicable law, and amendments to the filed such UCC-1 financing statements
and other similar statements as are contemplated by the counsel opinions
described in Section 4.01(B)(iii) in respect of such Mortgage, all of which
shall be in form and substance reasonably satisfactory to the Agent, and
any other instruments necessary to confirm a mortgage lien under the laws
of any applicable jurisdiction, which Mortgage and financing statements and
other instruments, as amended, shall be effective to create a Lien on such
Mortgaged Real Property to secure payment and performance of the
Obligations as amended and restated in accordance with the terms hereof,
subject to no Liens other than Prior Liens;
(ii) with respect to each Mortgaged Real Property, such consents,
approvals, amendments, supplements, estoppels, tenant subordination
agreements or other instruments as necessary or required to consummate the
transactions contemplated hereby or as shall reasonably be deemed necessary
by the Agent in order for the owner or holder of the fee or leasehold
interest constituting such Mortgaged Real Property to confirm the Lien
contemplated by the Mortgage, as amended pursuant to clause (i) above, with
respect to such Mortgaged Real Property;
(iii) with respect to each Mortgage, an endorsement to the policy (or
commitment to issue a policy) of title insurance insuring (or committing to
insure) the Lien of
<PAGE> 31
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such Mortgage as amended pursuant to clause (i) above, as a valid mortgage
Lien on the real property described therein in an amount not less than 115%
of the fair market value thereof, which policies (or commitment) shall (a)
be issued by the Title Company, (b) include such reinsurance arrangements
(with provisions for direct access) as shall be reasonably acceptable to
the Agent, (c) contain a "tie-in" or "cluster" endorsement (if applicable
and if available under applicable law) (i.e., policies which insure against
losses regardless of location or allocated value of the insured property up
to a stated maximum coverage amount) and have been supplemented by such
endorsements (or where such endorsements are not available, opinions of
special counsel reasonably acceptable to the Agent to the extent that such
opinions can be obtained at a cost which is reasonable with respect to the
value of the Real Property subject to such Mortgage) as shall be reasonably
requested by the Agent (including, without limitation, endorsements on
matters relating to usury, first loss, last dollar, contiguity (as
applicable), revolving credit, doing business, zoning, variable rate and
so-called comprehensive coverage over covenants and restrictions, in each
case to the extent that such endorsements can be obtained at a cost which
is reasonable with respect to the value of the Real Property subject to
such Mortgage) and (d) contain only such exceptions to title as shall be
Prior Liens or are otherwise agreed to by the Agent on or prior to the
Closing Date with respect to such Mortgaged Real Property;
(iv) with respect to each Mortgaged Real Property, a Survey;
(v) with respect to each Mortgaged Real Property, policies or
certificates of insurance as required by the Mortgage relating thereto,
which policies or certificates shall comply with the insurance requirements
contained in such Mortgage;
(vi) with respect to each Mortgaged Real Property, UCC, judgment and
tax lien searches confirming that the personal property comprising a part
of such Mortgaged Real Property is subject to no Liens other than Prior
Liens;
(vii) with respect to each Mortgaged Real Property, such affidavits,
certificates, information (including financial data) and instruments of
indemnification (including, without limitation, a so-called "gap"
indemnification) as shall be
<PAGE> 32
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reasonably required to induce the Title Company to issue the policy or
policies (or commitment) and endorsements contemplated in subparagraph
(iii) above;
(viii) evidence reasonably acceptable to the Agent of payment by the
Borrower of all title insurance premiums, search and examination charges,
survey costs and related charges, mortgage recording taxes, fees, charges,
costs and expenses required for the recording of the Mortgages and issuance
of the title insurance policies referred to in subparagraph (iii) above;
(ix) with respect to each Real Property or Mortgaged Real Property,
copies of all Leases in which a Credit Party holds the landlord's, tenant's
or other interest and any other agreements relating to possessory interests
in such Real Property or Mortgaged Real Property. To the extent any of the
foregoing affect any Mortgaged Real Property, such Leases shall be
reasonably acceptable to the Agent; and
(x) with respect to each Mortgaged Real Property, an Officers'
Certificate or other evidence reasonably satisfactory to the Agent that as
of the date thereof, to the best of such officer's knowledge, there (a)
have been issued and are in effect valid and proper certificates of
occupancy or other local equivalents for the use then being made of such
Mortgaged Real Property to the extent currently required by law in the
jurisdiction in which such Mortgaged Real Property is located which
certificates if not obtained or maintained would have a material adverse
effect upon the value of the Mortgaged Real Property and that there is not
outstanding any citation, violation or similar notice indicating that such
Mortgaged Real Property contains conditions which are not in compliance in
all material respects with local codes or ordinances relating to building
or fire safety or structural soundness, (b) has not occurred any Taking or
Destruction of any Mortgaged Real Property that has not been repaired or
restored except as set forth therein and (c) is no litigation regarding
boundary lines, encroachment or possession of any Mortgaged Real Property
and no state of facts known to any Credit Party which could give rise to
any such claim, except as set forth therein.
(V) Effectiveness. This Amendment shall have been executed by the
Company and the Required Banks.
(W) Borrowing Base Certificate. Prior to the
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Amendment Date, the Agent and the Banks shall have received and the Agent and
the Required Banks shall be satisfied (both as to form and substance) with a pro
forma Borrowing Base Certificate which shall be prepared as of a date prior to
the Amendment Date.
The effectiveness of this Amendment shall constitute a representation
and warranty by each Credit Party to each of the Banks that all of the
applicable conditions specified above have been satisfied or waived as of that
time. All of the certificates, legal opinions and other documents and papers
referred to in this Section 4.01, unless otherwise specified, shall be delivered
to the Agent at its Office (or such other location as may be specified by the
Agent) for the account of each of the Banks and in sufficient counterparts for
each of the Banks and shall be satisfactory in form and substance to the
Required Banks.
4.02 Conditions Precedent to All Loans. The obligation of the Banks to
make all Loans is subject, at the time of each such Loan, to the satisfaction of
the following conditions:
(A) Effectiveness. This Amendment shall have become effective.
(B) No Default; Representations and Warranties. At the time of the
making of each Loan and also after giving effect thereto (i) there shall exist
and be continuing no Default or Event of Default and (ii) all representations
and warranties contained herein and in each of the other Credit Documents in
effect at such time shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on and
as of the date of the making of such Loan, unless such representation and
warranty expressly indicates that it is being made as of any other specific date
in which case on and as of such other date.
(C) Adverse Change, etc. (a) Since the Amendment Date nothing shall
have occurred or become known which the Required Banks or the Agent could
reasonably expect to have a Materially Adverse Effect; such determination shall
be made both before and after giving effect to the making of the Loans
hereunder.
(b) All material governmental and third party approvals and consents
(including, without limitation, all material approvals and consents required in
connection with any
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environmental statutes, rules or regulations), if any, in connection with the
conduct of the business of the Borrower and its Subsidiaries shall have been
obtained and remain in effect.
(c) There shall not exist any judgment, order, injunction or other
restraint issued or filed with respect to the making of any Loans hereunder the
effect of which judgment, order, injunction or restraint is adverse to the
performance hereunder by any Bank.
(D) Margin Rules. On the date of each Borrowing of Loans, neither the
making of any Loan nor the use of the proceeds thereof will violate the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
(E) Borrowing Base Certificate. The Agent shall have received and the
Required Banks shall be reasonably satisfied (both as to form and substance)
with the Borrowing Base Certificate last delivered to the Banks.
The acceptance of the proceeds of each Borrowing of Loans shall
constitute a representation and warranty by the Borrower and each other Credit
Party to each of the Banks that all of the applicable conditions specified in
Section 4.02 have been satisfied or waived.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 4.02, unless otherwise specified, shall be delivered
to the Agent at its Office (or such other location as may be specified by the
Agent) for the account of each of the Banks and in sufficient counterparts for
each of the Banks and shall be satisfactory in form and substance to the
Required Banks.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Amendment and to make the Loans provided for
herein, the Borrower on behalf of itself and its Subsidiaries makes the
following representations and warranties to, and agreements with, the Banks, all
of which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the execution and delivery of this Agreement and the
making of each Loan thereafter being deemed to constitute a representation and
warranty that the matters specified in this Section 5 are true and correct in
all material respects as of the date of each such Loan unless such
representation and warranty expressly indicates that it is being made as of any
specific date). It is understood by all parties
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to this Agreement that all Schedules referred to herein set forth information as
known to the Borrower and the Guarantors only as of the Amendment Date.
5.01 Corporate Status. Except as set forth on Schedule 5.01, each of
the Borrower and each of its Subsidiaries (i) is a duly organized and validly
existing corporation or limited liability company in good standing under the
laws of the jurisdiction of its incorporation or organization; (ii) has the
corporate or other organizational power and authority and has obtained all
requisite governmental licenses, authorizations, consents and approvals to own
and operate its property and assets and to transact the business in which it is
engaged and presently proposes to engage, including, without limitation, those
in compliance with or required by the Environmental Laws, except for those
governmental licenses, authorizations, consents or approvals the failure of
which to be so obtained could not reasonably be expected to have a Materially
Adverse Effect; and (iii) is duly qualified and authorized to do business and is
in good standing in all jurisdictions where it is required to be so qualified,
except where the failure to be so qualified could not reasonably be expected to
have a Materially Adverse Effect.
5.02 Corporate Power and Authority. The Borrower and each other Credit
Party has the corporate power and authority to execute, deliver and carry out
the terms and provisions of the Documents to which it is a party and has taken
all necessary corporate or other action to authorize the execution, delivery and
performance of the Documents to which it is a party. The Borrower and each other
Credit Party has duly executed and delivered each Document to which it is a
party and each such Document constitutes the legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally or by general
principles of equity or the discretion of the court before which any proceeding
therefor may be brought.
5.03 No Violation. Neither the execution, delivery or performance by
the Borrower or any other Credit Party of the Documents to which it is a party
nor compliance with the terms and provisions thereof nor the consummation of the
transactions contemplated therein (i) will violate any applicable provision of
any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental authority, (ii) conflicts or
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will conflict or be inconsistent with, results or will result in any breach or
violation of any of the terms, covenants, conditions or provisions of,
constitutes a default under, or (other than pursuant to the Security Documents)
results in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Borrower or any other Credit
Party pursuant to the terms of, any indenture, mortgage, deed of trust, material
agreement or other material instrument to which the Borrower or any other Credit
Party is a party or by which it or any of its property or assets is bound or to
which it may be subject, or (iii) will violate any provision of the charter or
by-laws of the Borrower or any other Credit Party, except with respect to
clauses (i), (ii) and (iii) where such contravention, conflict, inconsistency,
breach, default, creation, imposition, obligation or violation could not
reasonably be expected to have a Materially Adverse Effect.
5.04 Litigation. Except as set forth on Schedule 5.04, there are no
actions, judgments, suits, investigations or proceedings by any administrative,
governmental or other public authority or other Person pending or, to the
Borrower's knowledge, threatened against or with respect to the Borrower or any
of its Subsidiaries or any of their respective assets that (a) challenges the
validity of any of the Credit Documents or the transactions contemplated
thereby, including the making of any Loans, or (b) could reasonably be expected
to have a Materially Adverse Effect.
5.05 Use of Proceeds. The proceeds of all Revolving Loans to be made to
the Borrower hereunder shall be utilized for working capital and other general
corporate purposes.
Neither the making of any Loan hereunder, nor the use of the proceeds
therefrom, will violate or be inconsistent with the provisions of Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System.
5.06 Governmental Approvals, etc. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption or other action by or notice to, any third party or any foreign or
domestic, administrative, governmental or public body or authority, or by any
subdivision thereof (other than those orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, could not
reasonably be expected to have a Materially Adverse Effect or which have
previously been obtained or made, and except for filings to perfect security
interests
<PAGE> 37
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granted pursuant to the Security Documents, all of which will be accomplished on
or prior to the Amendment Date), is necessary or required to authorize or is
required in connection with (i) the execution, delivery and performance of any
Document or the transactions contemplated therein or (ii) the legality,
validity, binding effect or enforceability of any Document. At the time of the
making of the Initial Loans, there does not exist any judgment, order,
injunction or other restraint issued or filed against or with respect to the
making of Loans or the performance by the Borrower or any other Credit Party of
its respective obligations under the Documents.
5.07 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is, nor will be after giving effect to the transactions
contemplated hereby or by any of the other Documents, an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.08 Public Utility Holding Company Act. Neither the Borrower nor any
of its Subsidiaries is, nor will be after giving effect to the transactions
contemplated hereby or by any of the other Documents, a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.09 True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by the Borrower or any of its
Subsidiaries in writing to any Bank and all information furnished in writing by
the Borrower or any of its Subsidiaries in writing to the Agent and which is
furnished to any Bank by the Agent on behalf of the Borrower or any of its
Subsidiaries (including, without limitation, all information contained in the
Credit Documents) for purposes of or in connection with this Agreement or any
transaction contemplated herein is (or was, on the date of making the Initial
Loans), and all other such factual information (taken as a whole) hereafter
furnished by any such Person in writing to any Bank (or furnished by such Person
in writing to the Agent and which is furnished to any Bank by the Agent on
behalf of such Person) will be, true and accurate in all material respects on
the date as of which such information is dated or certified.
The projections and pro forma financial information contained in such
materials are based on good faith estimates and
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assumptions believed by such Persons to be reasonable at the time made, it being
recognized by the Agent and the Banks that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.
There is no fact known to the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Materially Adverse Effect which has not been
disclosed herein or in such other documents, certificates and written statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
5.10 Financial Condition; Financial Statements; Projections. (a)
Neither the Borrower nor any other Credit Party is entering into the
arrangements contemplated hereby or by the other Credit Documents, or intends to
make any transfer or incur any obligations hereunder or thereunder, with actual
intent to hinder, delay or defraud either present or future creditors. On and as
of the Amendment Date, on a pro forma basis after giving effect to all
Indebtedness incurred and Liens created, or to be created, by the Borrower and
each other Credit Party, (w) the Borrower does not expect that final judgments
against it or any of its Subsidiaries in actions for money damages with respect
to pending or threatened litigation will be rendered at a time when, or in an
amount such that, it will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered and the cash available to such Person, after
taking into account all other anticipated uses of the cash of such Person
(including the payments on or in respect of debts (including its Contingent
Obligations))); (x) neither the Borrower nor any of its Subsidiaries will have
incurred or intends to, or believes that it will, incur debts beyond its ability
to pay such debts as such debts mature (taking into account the timing and
amounts of cash to be received by such Person from any source, and of amounts to
be payable on or in respect of debts of such Person and the amounts referred to
in the preceding clause (w)); (y) each of the Borrower and each of its
Subsidiaries, after taking into account all other anticipated uses of the cash
of such Person, anticipates being able to pay all amounts on or in respect of
debts of such Person when such amounts are required to be paid; and (z) each of
the Borrower and each of its Subsidiaries will have sufficient capital with
which to conduct its present and proposed business and the property of such
Person does not constitute unreasonably small capital with which to conduct its
present or proposed business. For purposes of this Section 5.10, "debt" means
any liability on a claim, and
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"claim" means a (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. On the date of each Borrowing (and after giving effect to all
Borrowings as of such date), the representations set forth in this Section
5.10(a) shall be true and correct with respect to the Borrower and each of its
Subsidiaries on such date.
(b) The Borrower has heretofore delivered to the Banks the historical
financial statements described in Section 4.01(H). Except as set forth on
Schedule 5.10 hereto, all such historical financial statements referred to in
the preceding sentence were prepared in accordance with GAAP consistently
applied. Such historical financial statements present fairly the financial
position of the Borrower for each of the periods covered thereby.
(c) As of the Amendment Date, except as fully reflected or reserved
against in the financial statements and the notes thereto described in Section
5.10(b), there were no liabilities or obligations with respect to the Borrower
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower. As of the Amendment Date, the Borrower does not know
of any basis for the assertion against the Borrower of any liability or
obligation of any nature whatsoever that is not fully reflected in the financial
statements described in Section 5.10(b) or (c), which, either individually or in
the aggregate, could reasonably be expected to be material to Borrower.
5.11 Security Interests. The Security Documents, once executed,
delivered and properly recorded, will create, in favor of the Collateral Agent
for the benefit of the Banks, as security for the obligations purported to be
secured thereby, a valid and enforceable perfected first priority security
interest in and Lien upon all of the Collateral to the extent provided for in
the applicable Security Document, superior to and prior to the rights of all
third persons and subject to no Liens except the Prior Liens applicable to such
Collateral. Notwithstanding anything to the contrary contained herein or in the
Intellectual Property Security Agreements, neither the Borrower or any
Subsidiary makes any representation or warranty about perfecting a security
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interest in Copyrights (as defined in the Intellectual Property Security
Agreement) which are not registered with the U.S. Copyright Office or Licenses
(as defined in the Intellectual Property Security Agreement) or foreign patents
or trademarks. The mortgagor under each Mortgage, if any, has good and
marketable title to the Mortgaged Real Property free and clear of all Liens
other than Prior Liens. The respective pledgor or assignor, as the case may be,
has (or, on and after the time it executes the respective Security Document,
will have) good title to or the necessary right or licenses to use all items of
Collateral (other than real property subject to a Mortgage) covered by such
Security Document free and clear of all Liens other than Liens permitted under
the applicable Security Document. Other than as contemplated in Section 4.01(K),
no filings or recordings are required in order to perfect the security interests
created under any Security Document except for filings or recordings required in
connection with any such Security Document which shall have been made prior to
the Amendment Date.
5.12 Tax Returns and Payments. The Borrower and each of its
Subsidiaries has filed all tax returns required to be filed by it (which are
true and correct in all material respects) and has paid all taxes and
assessments shown to be due thereon, other than those not yet delinquent and
except for those contested in good faith and for which adequate reserves have
been established. Each of the Borrower and each of its Subsidiaries has paid, or
has provided adequate reserves (in accordance with GAAP) for the payment of, all
federal, state, local and foreign taxes applicable for all prior fiscal years
and for the current fiscal year to the date hereof. Neither the Borrower nor any
of its Subsidiaries knows of any proposed tax assessment against any such Person
that could reasonably be expected to have a Materially Adverse Effect which is
not being actively contested in good faith by such Person to the extent affected
thereby in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.13 ERISA. (A) Each of the Borrower and the ERISA Affiliates is in
compliance in all material respects with all applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder with
respect to all employee benefit plans, Pension Plans and Multiemployer Plans.
(B) No Termination Event has occurred or is reasonably
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expected to occur with respect to any Pension Plan which resulted or is
reasonably expected to result in a liability to the Borrower or any ERISA
Affiliate in excess of $100,000.
(C) The sum of the amount of unfunded benefit liabilities (determined
in accordance with Statement of Financial Accounting Standards No. 87) under all
Title IV Plans (excluding each Title IV Plan with an amount of unfunded benefit
liabilities of zero or less) is not more than $100,000. As of the Amendment
Date, the sum of the amount of unfunded benefit liabilities (within the meaning
of Section 4001(a)(18) of ERISA) under all Title IV Plans (excluding each Title
IV Plan with an amount of unfunded benefit liabilities of zero or less) is not
more than $100,000.
(D) Neither the Borrower nor any ERISA Affiliate has any obligation to
contribute to or any liability or potential liability (including, but not
limited to, actual or potential withdrawal liability) with respect to any
Multiemployer Plan or any employee benefit plan of the type described in
Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code. The Borrower
and each ERISA Affiliate has complied in all material respects with the
requirements of Section 515 of ERISA with respect to each Multiemployer Plan.
Neither the Borrower nor any ERISA Affiliate has incurred or reasonably expects
to incur any withdrawal liability under Section 4201 et seq. of ERISA to any
Multiemployer Plan or any employee benefit plan of the type described in
Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code.
(E) Neither the Borrower nor any ERISA Affiliate has incurred any
accumulated funding deficiency (whether or not waived) with respect to any
Pension Plan.
(F) Neither the Borrower nor any ERISA Affiliate has or reasonably
expects to become subject to a Lien in favor of any Pension Plan under Section
302(f) or 307 of ERISA or Section 401(a)(29) or 412(n) of the Code.
(G) Assuming that no portion of the Loans to be advanced hereunder is
attributable, directly or indirectly, to the assets of any employee benefit
plan, the execution, performance and delivery of the Credit Documents by any
party thereto will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code for which an exemption
therefrom is not available.
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(H) No unfunded liability has arisen with respect to any Foreign
Pension Plan (individually or in the aggregate) in excess of $500,000.
As used in this Section 5.13, the term "accumulated funding deficiency"
has the meaning specified in Section 302 of ERISA and Section 412 of the Code,
and the term "employee benefit plan" has the meaning specified in Section 3(3)
of ERISA.
5.14 Borrower's Subsidiaries. Each of the Borrower's Subsidiaries as of
the date hereof is listed on Schedule 5.14 hereto. As of the date hereof, each
such Subsidiary is a Wholly-Owned Subsidiary of the Borrower.
5.15 Patents, etc. The Borrower and each of its Subsidiaries owns or
possesses adequate licenses or other rights to use all material patents, patent
applications, trademarks, trademark applications, servicemarks, servicemark
applications, trade names, copyrights, trade secrets and know how (collectively,
the "Intellectual Property") necessary for the operation of their respective
businesses as presently conducted and as proposed to be conducted. No claim is
pending or, to the best of the Borrower's knowledge, threatened to the effect
that the actions of Borrower or any of its Subsidiaries infringe upon or
conflict with the asserted rights of any other Person under any Intellectual
Property, and, to the best of the Borrower's knowledge, there is no basis for
any such claim (whether or not pending or threatened). No claim is pending or,
to the best of the Borrower's knowledge, threatened to the effect that any such
Intellectual Property owned or licensed by the Borrower or any of its
Subsidiaries or which the Borrower or any of its Subsidiaries otherwise has the
right to use is invalid or unenforceable by the Borrower or such Subsidiary,
and, to the best of the Borrower's knowledge, there is no basis for any such
claim (whether or not pending or threatened).
5.16 Compliance with Laws, etc. Except as set forth in Schedule 5.16
hereto, each of the Borrower and each of its Subsidiaries is in material
compliance with all applicable laws and regulations, including without
limitation those relating to pollution and environmental control, equal
employment opportunity and employee safety, in all jurisdictions in which it is
presently doing business, and the Borrower will and the Borrower will cause each
of its Subsidiaries to comply with all such material laws and regulations which
may be imposed in the future in jurisdictions in which it or such Subsidiary may
then be doing business other than those the non-compliance with which could not
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reasonably be expected to have a Materially Adverse Effect.
5.17 Properties. Each of the Borrower and the other Credit Parties has
good and marketable title to and beneficial ownership of or the necessary
licenses to use all its respective properties owned by it, including after the
Amendment Date all property reflected in the most recent balance sheet referred
to in Section 5.10(b) and except as sold or otherwise disposed of since the date
of such balance sheet in the ordinary course of business. Title to each such
property or asset that is not Collateral is held by the Borrower or its
Subsidiaries free and clear of all Liens except Permitted Encumbrances. Title to
each such property or asset that constitutes Collateral is held by the Borrower
or its Subsidiaries free and clear of all Liens other than the Liens
contemplated by the applicable Security Documents. Each of the Borrower and each
of its Subsidiaries holds all licenses, certificates of occupancy or operation
and similar certificates and clearances of municipal and other authorities
necessary to own and operate its properties in the manner and for the purposes
currently operated by such party. Each Real Property and each Mortgaged Real
Property, if any, is suitable for its intended purposes and is served by such
utilities as are necessary for the operation thereof. There are no actual,
threatened or alleged defaults of a material nature with respect to any leases
of real property under which the Borrower, or any of its Subsidiaries, is lessor
or lessee.
5.18 Securities. The outstanding capital stock of the Borrower is duly
authorized, issued and delivered and is fully paid, nonassessable and free of
preemptive rights. Except as set forth on Schedule 5.18 there are not, as of the
Amendment Date, any existing options, warrants, calls, subscriptions,
convertible or exchangeable securities, rights, agreements, commitments or
arrangements for any person to acquire any capital stock of the Borrower or any
other securities convertible into, exchangeable for or evidencing the right to
subscribe for any such capital stock.
5.19 Collective Bargaining Agreements. Set forth on Schedule 5.19
hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to the
Borrower and its Subsidiaries as of the date hereof, and any union, labor
organization or other bargaining agent in respect of the employees of the
Borrower and its Subsidiaries as of the date hereof.
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5.20 Environmental Protection. Except as set forth on Schedule
5.20 hereto and except as could not reasonably be expected to have a
Materially Adverse Effect:
(A) Each of the Borrower and each other Credit Party has obtained
all permits, licenses and other authorizations which are required with respect
to the operation of the business and use, ownership and operation of Real
Property of the Borrower and each other Credit Party under any Environmental Law
and each such authorization is in full force and effect.
(B) Each of the Borrower and each other Credit Party is in
compliance with all terms and conditions of the permits, licenses and
authorizations specified in subsection 5.20(A) above, and is also in compliance
with, and not subject to liability under, any Environmental Law applicable to it
and its business, assets, operations and Real Property (including, without
limitation, compliance with standards, schedules and timetables therein),
including without limitation those arising under the Resource Conservation and
Recovery Act of 1976, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("CERCLA"), the Federal Water Pollution Control
Act, as amended, the Federal Clean Air Act, as amended, and the Toxic Substances
Control Act, as amended.
(C) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter or request for information pending or, to the knowledge of the
Borrower or any other Credit Party, threatened against the Borrower or any of
its Subsidiaries under any Environmental Law.
(D) Neither the Borrower nor any other Credit Party has received
notice that it has been identified as a potentially responsible party under
CERCLA or any comparable state law nor has the Borrower or any other Credit
Party received any notification that any Hazardous Materials that it or any of
their respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of or arranged for transport for disposal or
treatment of, or arranged for disposal or treatment of, has been found at any
site at which any governmental agency or private party is conducting or planning
to conduct a remedial investigation or other action pursuant to any
Environmental Law.
(E) There have been no releases (i.e., any past or
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present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of Hazardous
Materials by the Borrower or any other Credit Party or any of their respective
predecessors on, at, upon, into or from any of the Real Properties. To the best
knowledge of the Borrower and each other Credit Party after due inquiry there
have been no such releases on, at, upon, under, from or into any real property
in the vicinity of any of the Real Properties that, through air, soil, surface
water or groundwater migration or contamination, may be located on, in or under
such Real Properties.
(F) There is no asbestos in, on, or at any Real Properties or any
facility or equipment of the Borrower or any other Credit Party.
(G) No Real Properties currently or formerly owned or operated by the
Borrower or any other Credit Party or any of their respective predecessors in
interest of the Borrower or any other Credit Party are (i) listed or proposed
for listing on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
governmental authority.
(H) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance with any Environmental Law, or which may give rise to any
liability under any Environmental Law, including, without limitation, liability
under CERCLA or similar state, local or foreign laws, or which may otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing or notice
of violation, study or investigation, based on or related to the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport, shipping or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Material.
(I) No Lien has been recorded under any Environmental Law with respect
to any assets, facility or Real Property owned, operated, leased or controlled
by the Borrower or any of the Credit Parties or any of their respective
Subsidiaries.
5.21 Environmental Investigations. All environmental investigations,
assessments, studies, audits or reviews conducted of which the Borrower or any
other Credit Party has knowledge in
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relation to the current or prior business or assets of the Borrower or any of
its Subsidiaries or any Real Property, asset or facility now or previously
owned, operated or leased by the Borrower or any of its Subsidiaries have been
delivered to the Agent.
5.22 Labor Matters. Neither the Borrower nor any other Credit Party has
experienced within the last twelve months any strike, labor dispute, slowdown or
work stoppage due to labor disagreements which could reasonably be expected to
have a Materially Adverse Effect, and (ii) to the best knowledge of the Borrower
and each other Credit Party, there is no such strike, dispute, slowdown or work
stoppage threatened against any Credit Party which could reasonably be expected
to have a Materially Adverse Effect.
5.23 Indebtedness, etc. Each of the Borrower and each other Credit
Party has no Indebtedness in excess of $500,000 in the aggregate and $100,000
individually other than as set forth in Schedule 4.01J and the Indebtedness
hereunder.
SECTION 6. Affirmative Covenants. Borrower covenants and agrees that on
the Amendment Date and thereafter for so long as this Agreement is in effect and
until the Revolving Loan Commitments have terminated and the Loans together with
interest, fees and all other Obligations incurred hereunder are paid in full:
6.01 Information Covenants. The Borrower will furnish or cause to be
furnished to each Bank:
(a) As soon as available and in any event within 90 days after the
close of each fiscal year of the Borrower, the audited consolidated balance
sheets of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related consolidated statements of operations, of cash flows
and of stockholders' equity for such fiscal year, setting forth comparative
consolidated figures for the preceding fiscal year, and a report on such
consolidated balance sheets and financial statements by a "Big Six"
accounting firm or another firm of independent public accountants of
nationally recognized standing that is satisfactory to the Required Banks,
which report shall not be qualified as to the scope of audit or as to the
status of the Borrower and its Subsidiaries as a going concern and shall
state that such consolidated financial statements present fairly the
consolidated financial position of the Borrower and its
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Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except for such changes
with which the independent certified public accountants concur) and the
examination by such accountants was conducted in accordance with generally
accepted auditing standards.
(b) As soon as available and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each
fiscal year of the Borrower, commencing with the first fiscal quarter
following the Amendment Date, the unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such quarterly period
and the related unaudited consolidated statements of operations, of cash
flows and of stockholders' equity for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such
quarterly period, and in each case setting forth comparative consolidated
figures for the related periods in the prior fiscal year, subject to normal
year-end audit adjustments.
(c) As soon as practicable and in any event within 30 days after the
end of each month, commencing with the first full month ending after the
Amendment Date, (i) the unaudited consolidated balance sheet of the
Borrower as at the end of such period and (ii) the related unaudited
statements of income and cash flows of the Borrower, in each case for such
fiscal month and for the period from the beginning of the then current
fiscal year to the end of such fiscal month, setting forth in comparative
form the corresponding periods of the prior fiscal year.
(d) Within 30 days after the commencement of each fiscal year, budgets
of the Borrower and its Subsidiaries in reasonable detail for each month of
such fiscal year, as customarily prepared by management for its internal
use, setting forth, with appropriate discussion, the principal assumptions
upon which such budgets are based. Together with each delivery of financial
statements pursuant to Sections 6.01(a) and (b), a comparison of the
current year to date financial results against the budgets required to be
submitted pursuant to this subsection (d) shall be presented.
(e) At the time of the delivery of the financial statements provided
for in Sections 6.01(a), (b) and (c), an
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Officers' Certificate, signed by the chief financial officer, controller,
chief accounting officer or other Authorized Officer of the Borrower,
substantially in the form of Exhibit L-3 hereto, to the effect that, to the
best of such officer's knowledge after due inquiry, no Default or Event of
Default exists, or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate, when delivered
at the end of any fiscal quarter, shall be accompanied by a Compliance
Certificate in a form reasonably acceptable to the Required Banks setting
forth the calculations required to establish whether the Borrower and its
Subsidiaries were in compliance with the covenants in this Agreement
(including without limitation the covenants set forth in Sections 7.05 and
7.10 through 7.12 inclusive) as at the end of such fiscal period or year,
as the case may be.
(f) Promptly upon receipt thereof, a copy of each annual "management
letter" submitted to the Borrower by its independent accountants in
connection with any annual audit made by them of the books of the Borrower
or any of its Subsidiaries.
(g) Promptly upon their becoming available, copies of all consolidated
financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower or any Subsidiary of the Borrower to
its security holders, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Borrower or
any of its Subsidiaries with any securities exchange or with the SEC and of
all press releases and other statements made available generally by the
Borrower or any Subsidiary of the Borrower to the public concerning
material developments in the business of the Borrower and its Subsidiaries.
(h) Promptly upon any officer of the Borrower or any other Credit Party
obtaining knowledge (w) of any condition or event which constitutes a
Default or Event of Default, or becoming aware that any Bank has given any
notice or taken any other action with respect to the Borrower or any other
Credit Party with respect to a claimed Default or Event of Default under
this Agreement, (x) that any Person has given any notice to the Borrower or
any other Credit Party or taken any other action with respect to the
Borrower or any other Credit Party with respect to a claimed default or
event or condition of the type referred to in Section 8.04,
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or (y) of a material adverse change in the business, operations,
properties, assets, nature of assets, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, an
Officers' Certificate specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed Default, Event of
Default, event or condition, or material adverse change, and what action
the Borrower has taken, is taking and proposes to take with respect
thereto.
(i) (i) Promptly upon any officer of the Borrower or any other Credit
Party obtaining knowledge of the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration against
or directly affecting the Borrower or any of its Subsidiaries or any
property of the Borrower or any of its Subsidiaries not previously
disclosed to the Banks, which action, suit, proceeding, governmental
investigation or arbitration seeks (or in the case of multiple actions,
suits, proceedings, governmental investigations or arbitrations arising out
of the same general allegations or circumstances which seek) recovery from
the Borrower or any of its Subsidiaries aggregating $350,000 or more
(exclusive of claims covered by insurance policies of the Borrower or any
of its Subsidiaries unless the insurers of such claims have disclaimed
coverage or reserved the right to disclaim coverage on such claims), the
Borrower shall give notice thereof to the Banks and provide such other
information as may be reasonably available to enable the Banks and their
counsel to evaluate such matters; (ii) as soon as practicable and in any
event within 45 days after the end of each fiscal quarter, the Borrower
shall provide a quarterly report to the Banks covering the institution of,
or written threat of, any action, suit, proceeding, governmental
investigation or arbitration (not previously reported) against or directly
affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries not previously disclosed to the Banks,
which action, suit, proceedings, governmental investigation or arbitration
seeks (or in the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general allegations
or circumstances which seek) recovery from the Borrower or any of its
Subsidiaries aggregating $250,000 or more (exclusive of claims covered by
insurance policies of the Borrower or any of its Subsidiaries unless the
insurers of such claims
<PAGE> 50
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have disclaimed coverage or reserved the right to disclaim coverage on
such claims), and shall provide such other information at such time as
may be reasonably available to enable the Banks and their counsel to
evaluate such matters; (iii) in addition to the requirements set forth
in clauses (i) and (ii) of this Section 6.01(i), the Borrower upon
request shall promptly give notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a
report delivered to the Banks pursuant to clause (i) or (ii) above to
the Banks and provide such other information as may be reasonably
available to it to enable the Banks and their counsel to evaluate such
matters; and (iv) promptly upon any officer of the Borrower or any of
its Subsidiaries obtaining knowledge of any dispute in respect of or
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or directly affecting
any material contract of the Borrower or any of its Subsidiaries, the
Borrower shall give notice thereof to the Banks and shall provide such
other information as may be reasonably available and reasonably
requested by the Banks to enable the Banks and their counsel to
evaluate such matters.
(j) Within 30 days of the last day of each fiscal year of the
Borrower, a report in form and substance reasonably satisfactory to the
Required Banks outlining all material insurance coverage maintained as
of the date of such report by the Borrower and its Subsidiaries and
outlining all material insurance coverage planned to be maintained by
the Borrower and its Subsidiaries in the subsequent fiscal year.
(k) To the extent reasonably requested by the Agent, as soon
as practicable and in any event within ten days of the later of such
request and the making of any such amendment or waiver, copies of
amendments or waivers with respect to Indebtedness of the Borrower or
any of its Subsidiaries.
(l) At least 30 days prior to the commencement of each fiscal
year, the Borrower shall provide to the Agent its consolidated plan,
prepared on an annual basis, for the current year, the next succeeding
fiscal year and on or prior to the Closing Date, the Borrower's
consolidated plan, prepared on an annual basis, for the next succeeding
five fiscal years, in each case prepared in accordance with the
Borrower's normal accounting procedures (and which will
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represent management's reasonable estimate of the Borrower's projected
performance during such periods) applied on a consistent basis,
including, without limitation, (A) forecasted consolidated balance
sheets and consolidated statements of operations, of cash flows and of
stockholders' equity of the Borrower and its Subsidiaries on a
consolidated basis and consolidating profit and loss statements for
each Subsidiary of the Borrower for such periods, (B) the amount of
forecasted capital expenditures for such fiscal periods, and (C)
forecasted compliance with Sections 7.05 and 7.10-7.12; provided that
if any such forecast indicates that the Borrower may not be in
compliance with any provision of this Agreement at some future date,
such forecast shall not constitute a Default or an Event of Default or
anticipatory or other breach thereof.
(m) Within twenty-five (25) days after the last Business Day
of each month following the Amendment Date, the Agent shall have
received for distribution to each Bank a borrowing base certificate in
the form of Exhibit K hereto (the "Borrowing Base Certificate")
detailing the Borrower's Eligible Accounts Receivable and Eligible
Inventory as of the last day of such month, certified as complete and
correct on behalf of the Borrower by the Borrower's chief executive
officer, chief financial officer, controller or other Authorized
Officer. In addition, each Borrowing Base Certificate shall have
attached to it such additional schedules and/or other information as
the Agent may reasonably request. If the Borrower fails to deliver any
such Borrowing Base Certificate within thirty (30) days after the end
of any such month, then the Borrowing Base shall be deemed to be $0
until such time as the Agent shall have received such required
Borrowing Base Certificate.
(n) With reasonable promptness, such other information and
data with respect to the Borrower or any of its Affiliates or any other
similar entity in which the Borrower or any Subsidiary has an
investment, as from time to time may be reasonably requested by any
Bank if such information may materially affect the business, operations
or prospects of the Borrower or its Subsidiaries.
6.02 Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep true books of records and accounts
in which full and correct entries will be made of all its business transactions,
and will reflect in its financial statements adequate accruals and
appropriations to
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reserves, all in accordance with GAAP (or in accordance with generally accepted
accounting principles of the country in which such Subsidiary is located). The
Borrower will, and will cause each of its Subsidiaries to, permit, upon
reasonable prior notice to the chief financial officer, controller or any other
Authorized Officer of the Borrower, officers and designated representatives of
the Agent or any Bank to visit and inspect any of the properties or assets of
the Borrower and any of its Subsidiaries in whosesoever possession, and to
examine the books of account of the Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants (in the presence of such officers), all at such
reasonable times and intervals and to such reasonable extent as the Agent or any
Bank may reasonably request.
6.03 Maintenance of Property; Insurance. (a) The Borrower and
each Subsidiary will exercise commercially reasonable efforts to maintain or
cause to be maintained in good repair, working order and condition (subject to
normal wear and tear) all properties used in its businesses and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof and will maintain and renew as necessary all licenses,
permits and other clearances necessary to use and occupy such properties of the
Borrower and each Subsidiary, as the case may be.
(b) Subject to the provisions of subsection 6.03(c) below, the
Borrower and each Subsidiary will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations engaged in the same or similar businesses and similarly
situated, of such types and in such amounts as are customarily carried under
similar circumstances by such other corporations to the extent that such types
and such amounts of insurance are available at commercially reasonable rates.
The Borrower or each Subsidiary, as applicable, will furnish to each Bank, upon
reasonable request, information as to the insurance carried, and will not cancel
any such insurance without the consent of the Required Banks, which consent
shall not be unreasonably withheld.
(c) Without limiting subsection 6.03(b) above, the Borrower
and each Subsidiary, as applicable, shall maintain, or cause to be maintained,
in full force the insurance coverages
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specified in the Mortgages, if any, and the Security Documents.
6.04 Payment of Taxes. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries or cause a failure or forfeiture of title thereto; provided that
neither the Borrower nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim that is being contested in good faith and by
proper proceedings promptly instituted and diligently conducted if it has
maintained adequate reserves with respect thereto in accordance with GAAP (or in
accordance with generally accepted accounting principles of the country in which
such Subsidiary is located).
6.05 Corporate Franchises. The Borrower will do, and will
cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, rights and authority,
except where such failure to keep in full force and effect such rights and
authority could not reasonably be expected to have a Materially Adverse Effect.
6.06 Compliance with Statutes, etc. The Borrower will, and
will cause each Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
non-compliance which could not reasonably be expected to have a Materially
Adverse Effect.
6.07 ERISA. The Borrower will furnish to each of the Banks:
(a) promptly upon the Borrower knowing or having reason to
know of the occurrence of any (i) Termination Event, or (ii)
"prohibited transaction," within the meaning of Section 406 of ERISA or
Section 4975 of the Code, in connection with any Pension Plan or any
trust created thereunder, which in the case of all such events
described in clause (i) or (ii) results or could reasonably be expected
to result in a liability of the Borrower or its ERISA Affiliates in the
aggregate in excess of $50,000, or the imposition of a Lien on the
assets of the Borrower a written notice specifying the nature thereof,
what action the Borrower or its
<PAGE> 54
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ERISA Affiliates have taken, are taking or propose to take with respect
thereto, and, when known, any action taken or threatened by the
Internal Revenue Service, Department of Labor, PBGC or Multiemployer
Plan sponsor with respect thereto.
(b) with reasonable promptness copies of (i) all notices
received by the Borrower or any of its ERISA Affiliates of PBGC's
intent to terminate any Title IV Plan or to have a trustee appointed to
administer any Title IV Plan, the notice of which event is required
pursuant to the preceding paragraph (a); (ii) upon the request of the
Agent each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by the Borrower or any of its ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan;
(iii) upon the request of the Agent, the most recent actuarial
valuation report for each Title IV Plan; and (iv) all notices received
by the Borrower or any of its ERISA Affiliates from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA, the notice of which event
is required pursuant to the preceding paragraph (a).
6.08 Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform in all material respects all of its
obligations under the terms of each mortgage, indenture, security agreement,
other debt instrument and material contract by which it is bound or to which it
is a party, except where such nonperformance could not reasonably be expected to
have a Materially Adverse Effect.
6.09 Fiscal Quarters; Fiscal Year. The Borrower will, and
will cause each of its Subsidiaries to, have its fiscal quarters end on March
31, June 30, September 30 and December 31. The Borrower shall cause, and shall
cause each of its Subsidiaries' fiscal year to, commence on April 1.
6.10 Use of Proceeds. All proceeds of the Loans shall be used
as provided in Section 5.05.
6.11 No Further Negative Pledges. Except with respect to
prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness permitted hereunder (which
Indebtedness relates solely to the acquisition
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or improvement of such specific property), neither the Borrower nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.12 Environmental Events. (i) The Borrower and the other
Credit Parties will promptly give notice to the Agent upon becoming aware (a) of
any violation by Borrower or any other Credit Party of any Environmental Law,
(b) of any inquiry, proceeding, investigation or other action by or with respect
to Borrower or any other Credit Party under any Environmental Law, including,
without limitation, a request for information or a notice of potential
environmental liability from any foreign, federal, state or local environmental
agency or board or any other Person, or (c) of the discovery of the release of
any Hazardous Material at, on, under or from any of the Real Properties or any
facility or equipment thereat in excess of reportable quantities or allowable
standards or levels under any Environmental Law, or in a manner and/or amount
which could reasonably be expected to result in liability under any
Environmental Law, in each case which could reasonably be expected to have a
Materially Adverse Effect.
(ii) In the event of the presence of any Hazardous Material
on, at, upon or under any of the Real Properties which is in violation of, or
which could reasonably be expected to result in liability on the part of the
Borrower or its Subsidiaries under, any Environmental Law, in each case which
could reasonably be expected to have a Materially Adverse Effect, the Borrower
or any other Credit Party, upon discovery thereof, shall take all necessary
steps to initiate and expeditiously complete all response, corrective and other
action to mitigate and eliminate any such adverse effect, except to the extent
that such actions are taken by a third party to the satisfaction of the Agent,
and shall keep the Agent informed of their actions and the results.
(iii) The Borrower shall provide the Agent with copies of any
notice, submittal or documentation provided by the Borrower or any other Credit
Party to any governmental authority or third party under any Environmental Law
if the matter which is the subject of the notice, submittal or other
documentation could reasonably be expected to have a Materially Adverse Effect.
Such notice, submittal or documentation shall be provided to the Agent promptly
and, in any event, within 15 calendar days after such material is provided to
the governmental authority or third party.
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6.13 Pledge of Additional Collateral. Subject to Section 6.11,
promptly, and in any event within 45 days after the acquisition of assets of the
type that would have constituted Collateral (if the person acquiring such assets
had executed an appropriate Security Document on the Closing Date) at the
Closing Date (the "Additional Collateral"), the Borrower will, and will cause
each of its Subsidiaries to, take all necessary action, including the filing of
appropriate financing statements under the provisions of the UCC, applicable
foreign, domestic or local laws, rules or regulations in each of the offices
where such filing is necessary or appropriate to grant the Collateral Agent a
perfected Lien in such Additional Collateral (or comparable interest under
foreign law in the case of foreign Additional Collateral), unless the Agent
notifies the Borrower that such action shall not be required. In the event that
the Borrower or its Subsidiaries acquire a fee interest in real property, the
Borrower or its applicable Subsidiary, as the case may be, will take such
actions and execute such documents as the Collateral Agent shall require
pursuant to notification of the Borrower to confirm the Lien of a Mortgage on
such real property (including, without limitation, satisfaction of the
conditions set forth in Section 4.01(U) hereto). All actions taken by the
parties in connection with the pledge of Additional Collateral, including,
without limitation, reasonable costs of counsel for the Collateral Agent, shall
be for the account of the Borrower, which shall pay all sums due as promptly as
practicable and in any event within 15 days of receipt of a reasonably detailed
notice (consisting of aggregate attorney time, disbursements and costs) thereof.
6.14 Security Interests. The Borrower and each other Credit
Party shall perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement) to enable the Collateral
Agent to file such documents in any appropriate jurisdiction under the
provisions of the UCC, local law or any statute, rule or regulation of any
applicable jurisdiction which are necessary in order to maintain or confirm in
favor of the Collateral Agent for the ratable benefit of the Banks a valid and
perfected Lien on the Collateral, including, without limitation, patents and
trademarks owned by any Credit Party which are not used in any product line as
of the date hereof but which are subsequently so used or licensed for use, but
excluding Copyrights (as defined in the Intellectual Property Security
Agreement) which are not registered with the U.S. Copyright Office and License
(as defined
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in the Intellectual Property Security Agreement) and foreign patents and foreign
trademarks, subject to no Liens except for Prior Liens and Liens permitted by
the applicable Security Documents. The Borrower and each other Credit Party
shall, at the request of the Collateral Agent, as promptly as practicable after
the filing of any financing statements, deliver to the Collateral Agent
acknowledgment copies of, or copies of lien search reports confirming the filing
of, financing statements duly filed under the UCC of all jurisdictions as may be
necessary or, in the reasonable opinion of the Collateral Agent, desirable to
perfect the Lien created, or purported or intended to be created, by each
Security Document.
6.15 Inactive Subsidiaries. The Borrower shall prevent the
Inactive Subsidiaries from engaging in any business activity or other actions
other than those specifically required by law. The Borrower represents and
warrants that the Inactive Subsidiaries are inactive corporations and do not
have assets with an aggregate value in excess of $15,000.
SECTION 7. Negative Covenants. The Borrower hereby covenants
and agrees that as of the Amendment Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated and until the
Loans together with interest, fees and all other Obligations incurred hereunder
are paid in full:
7.01 Changes in Business. The Borrower will not, and will not
permit any of its Subsidiaries to, materially alter the character of its
businesses from that conducted by the Borrower or such Subsidiary, as the case
may be, at the Amendment Date.
7.02 Amendments or Waivers of Certain Documents. After the
Amendment Date, the Borrower will not, and will not permit any of its
Subsidiaries to, amend or otherwise change the terms of its Certificate of
Incorporation (including, without limitation, by the filing of a certificate of
designation) or By-laws or any agreement entered into the Borrower or any of its
Subsidiaries with respect to the capital stock of the Borrower or any of its
Subsidiaries in a manner that could reasonably be deemed to be adverse to the
Banks, without the prior written consent of the Required Banks.
7.03 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now
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owned or hereafter acquired, except for the Lien of the Security Document
relating thereto, Prior Liens applicable thereto and other Liens expressly
permitted by such Security Document. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of the Borrower or any Subsidiary
which does not constitute Collateral, whether now owned or hereafter acquired,
or sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets or assign any
right to receive income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute, except the following, which are herein collectively referred to
as "Permitted Encumbrances":
(a) Liens for taxes, assessments or governmental charges or
claims not yet delinquent or Liens for taxes, assessments or
governmental charges or claims being contested in good faith and by
appropriate proceedings for which adequate reserves, as may be required
by GAAP or the generally accepted accounting principles in the country
in which such property or assets are located, have been established;
(b) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course
of business, and (x) which do not in the aggregate materially detract
from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Borrower or any of its
Subsidiaries or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to
such Lien or (ii) which do not relate to material liabilities of the
Borrower and its Subsidiaries and do not in the aggregate materially
detract from the value of the property and assets of the Borrower and
its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment
(including judgment or appeal bonds) unless such Liens secure judgments
in excess of $150,000 in the aggregate (exclusive of any amount
adequately covered by
<PAGE> 59
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insurance as to which the insurance company has acknowledged coverage)
and such judgments that are so secured shall, within 60 days after the
entry thereof, not have been discharged or execution thereof not stayed
pending appeal, or shall not have been discharged within 30 days after
the expiration of any such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money or the
equivalent);
(e) subject to the provisions of Section 7.20 and, with
respect to any Mortgaged Real Property, to the provisions of any
applicable Mortgage, Leases with respect to the assets or properties of
the Borrower entered into in the ordinary course of the Borrower's
business and subordinate in all respects to the Liens granted and
evidenced by the Security Documents;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with
the business of the Borrower or any of its Subsidiaries, in each case
incurred in the ordinary course of business and which do not materially
impair for its intended purposes the Real Property to which it relates;
and
(g) Liens upon real or tangible personal property acquired by
the Borrower or its Subsidiaries after the date hereof; provided that
(i) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, the cost of the item
of property subject thereto, (ii) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of the fair
value (as determined in good faith by the board of directors of the
Borrower) of the respective property at the time it was so acquired,
(iii) such Lien does not extend to or cover any other property other
than such item of property and (iv) the incurrence of such Indebtedness
secured by such Lien is permitted by Section 7.04.
<PAGE> 60
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7.04 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume, become liable for
(contingently or otherwise) or suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Interest Rate Agreements;
(c) $250,000 of Indebtedness incurred to finance the cost of
the acquisition of real or personal tangible property (including
Capital Leases); provided that all such Indebtedness shall not exceed
100% of the fair value of such property; and provided, further, that
such Indebtedness is not secured by any Lien other than a Lien referred
to in clause (g) of Section 7.03;
(d) Indebtedness owing by the Borrower to a Wholly Owned
Subsidiary of the Borrower or Indebtedness owing by a Wholly Owned
Subsidiary of the Borrower to the Borrower; provided, however, that all
such Indebtedness in excess of an aggregate principal amount of
$100,000 outstanding at any one time shall be evidenced by Intercompany
Notes which shall be pledged to the Collateral Agent on behalf of the
Banks pursuant to a Pledge Agreement;
(e) the Subordinated Notes;
(f) other unsecured Indebtedness not exceeding $150,000 in the
aggregate at any time outstanding;
(g) Indebtedness listed as "Surviving Indebtedness" on
Schedule 4.01J, part I, attached hereto; and
(h) the Subordinated Debentures
7.05 Capital Expenditures. The Borrower will not, and will not
permit any of its Subsidiaries to, make Consolidated Capital Expenditures for
any purpose in excess of the amount set forth below for the year ended on the
date listed below:
<PAGE> 61
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<TABLE>
<CAPTION>
Amount in
Date Dollars
---- -------
<S> <C>
March 31, 1998................................ $10,000,000
March 31, 1999................................ 12,000,000
March 31, 2000................................ 14,000,000
March 31, 2001................................ 16,000,000
March 31, 2002................................ 16,000,000
</TABLE>
7.06 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and
suppliers, in each case if created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms;
(c) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(d) investments in capital stock of any Wholly Owned
Subsidiary of the Borrower existing on the Closing Date or thereafter
created with the prior written consent of the Required Banks, in each
case to the extent thereof as of the Closing Date or the date of such
creation, but excluding any additional Investments in the capital stock
thereof except to the extent arising from an increase in the retained
earnings of such Subsidiary; and
(e) additional loans, advances and/or investments of a nature
not contemplated by the foregoing clauses (a) through (d); provided
that all loans, advances and investments made pursuant to this clause
(e) shall not exceed $500,000 in the aggregate at any time outstanding;
and provided, further, that all Securities or other instruments
evidencing such loans, investments or advances shall be pledged
pursuant to an appropriate Security Document in the event that such
<PAGE> 62
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Securities or other instruments shall have been acquired for
aggregate consideration in excess of $50,000; and provided, further,
that no loans, advances or investments shall be made to any Subsidiary
of the Borrower pursuant to this clause (e).
To the extent any such receivables are not included in the
calculation of Eligible Accounts Receivable, the provisions of this Section 7.06
shall not preclude or restrict the Borrower's financings (by means of sales to
customers made with extended payment terms) of receivables for Borrower's
Endoview and RigiScan products, which financings are at commercially reasonable
rates and do not extend beyond three years from the Closing Date. The
outstanding balance of such financings shall not at any time exceed $6,000,000
of net accounts receivable.
7.07 Prepayments of Securities, Amendments, etc. The Borrower
will not, and will not permit any of its Subsidiaries to, (i) other than in
connection with this Agreement, make (or give any notice in respect of) any
voluntary or optional payment or prepayment or redemption or acquisition for
value of (including, without limitation, by way of depositing with any trustee
with respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of any Indebtedness
(other than upon conversion into capital stock pursuant to the terms of such
Indebtedness existing on the Closing Date) or any capital stock; or (ii) amend
or otherwise change the terms of any Indebtedness for borrowed money, or make
any payment consistent with an amendment or change thereto, if the effect of
such amendment or change is to increase the interest rate on such Indebtedness,
accelerate the dates upon which payments of principal or interest are due
thereon, make more restrictive on the Borrower or any Subsidiary any event of
default or condition to an event of default with respect to such Indebtedness,
grant any security interest to secure such Indebtedness, make more onerous on
the Borrower or any Subsidiary the redemption or prepayment provisions thereof,
change the subordination provisions thereof (if any), cause such Indebtedness to
be guaranteed by any Person or, together with all other amendments or changes
made, increase materially the obligations of the obligor or confer additional
rights on the holder of such Indebtedness which would be adverse to the
Borrower, any Subsidiary or the Banks.
7.08 Dividends, etc. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or pay any dividends or return any
capital to, its stockholders or authorize
<PAGE> 63
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or make any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for any consideration, any shares of any class of its capital
stock now or hereafter outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or make any loans or
advances to Affiliates (other than as permitted by Section 7.06), or set aside
any funds for any of the foregoing purposes, or permit any of its Subsidiaries
to purchase or otherwise acquire for consideration any shares of any class of
the capital stock of the Borrower or any other Subsidiary, as the case may be,
now or hereafter outstanding (or any options or warrants or stock appreciation
rights issued by such Person with respect to its capital stock) (all of the
foregoing, "Dividends"), except that any Subsidiary of the Borrower may pay
Dividends to its parent corporation if such parent corporation is the Borrower
or a Wholly-Owned Subsidiary of the Borrower; provided that Urohealth, Inc.
(California) may redeem its Series A Preferred Stock outstanding on the date
hereof pursuant to its terms at an aggregate price not in excess of $1,400,000.
7.09 Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of transactions, whether or not in the ordinary course of business, with any
holder of 5% or more of any class of equity securities of the Borrower or any
Affiliate of the Borrower other than on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a Person other than a holder of 5% or more of any class of equity
securities of the Borrower or an Affiliate of the Borrower; provided that the
foregoing restrictions shall not apply to (i) transactions between the Borrower
and any of its Wholly-Owned Subsidiaries and (ii) the payment of fees (including
any fees described in Section 11.04 hereof) to Indosuez and its Affiliates for
financial services, such fees not to exceed the usual and customary fees of
Indosuez for similar services.
7.10 Total Interest Coverage Ratio. The Borrower will not
permit the ratio of (i) Consolidated EBITDA of the Borrower to (ii) Consolidated
Interest Expense of the Borrower for any Test Period ending during any period
listed below to be less than the ratio set forth opposite such date below:
<PAGE> 64
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<TABLE>
<CAPTION>
Test Period Ending Ratio
- ------------------ -----
<S> <C>
June 30, 1997.................................................... 1.50 to 1.0
September 30, 1997............................................... 1.75 to 1.0
December 31, 1997................................................ 2.00 to 1.0
March 31, 1998................................................... 3.00 to 1.0
June 30, 1998.................................................... 3.00 to 1.0
September 30, 1998............................................... 3.00 to 1.0
December 31, 1998................................................ 3.00 to 1.0
March 31, 1999................................................... 4.00 to 1.0
June 30, 1999.................................................... 4.00 to 1.0
September 30, 1999............................................... 4.00 to 1.0
December 31, 1999................................................ 4.00 to 1.0
March 31, 2000................................................... 4.00 to 1.0
June 30, 2000.................................................... 4.00 to 1.0
September 30, 2000............................................... 4.00 to 1.0
December 31, 2000................................................ 4.00 to 1.0
March 31, 2001................................................... 4.00 to 1.0
June 30, 2001.................................................... 4.00 to 1.0
September 30, 2001............................................... 4.00 to 1.0
December 31, 2001................................................ 4.00 to 1.0
March 31, 2002................................................... 4.00 to 1.0
</TABLE>
7.11 Fixed Charge Coverage Ratio. The Borrower will not permit
the ratio of (i) Consolidated EBITDAC of the Borrower minus cash taxes paid by
the Borrower to (ii) the sum of (A) Consolidated Interest Expense of the
Borrower and (B) the amount of scheduled mandatory payments on account of
principal of Indebtedness made by the Borrower for any Test Period ending on or
after June 30, 1997 and on or before December 31, 1997 to be less than 1.00 to
1.00, for any Test Period ending on or after March 31, 1998 and on or before
December 31, 1999 to be less than 1.05 to 1.00 or less than 1.10 to 1.00 for any
Test Period ending on or after March 31, 2000.
7.12 Leverage Ratio. The Borrower will not permit the ratio of
(i)(A) Indebtedness of the Borrower and its Subsidiaries (other than
Indebtedness represented by the Subordinated Debentures) as of the last day of
the period set forth below less (B) the product of .25 multiplied by the total
amount of Cash and Cash Equivalents of the Borrower and its Subsidiaries as of
the last day of the period set forth below to (ii) Consolidated EBITDA of the
Borrower for the Test Period ending on each date listed below to be more than
the ratio set forth below as of the
<PAGE> 65
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last day of each of the Test Period set forth below; provided that for the first
three quarters of fiscal 1998 Consolidated EBITDA shall be annualized to an
amount equal to the product of Consolidated EBITDA for such Test Period and a
fraction, the numerator of which is 365 and the denominator of which is the
number of days elapsed during Test Period:
<TABLE>
<CAPTION>
Test Period Ratio
- ----------- -----
<S> <C>
June 30, 1997................................................... 5.00 to 1.00
September 30, 1997.............................................. 5.00 to 1.00
December 31, 1997............................................... 5.00 to 1.00
March 31, 1998.................................................. 3.50 to 1.00
June 30, 1998................................................... 3.50 to 1.00
September 30, 1998.............................................. 3.50 to 1.00
December 31, 1998............................................... 3.50 to 1.00
March 31, 1999.................................................. 3.00 to 1.00
June 30, 1999................................................... 3.00 to 1.00
September 30, 1999.............................................. 3.00 to 1.00
December 31, 1999............................................... 3.00 to 1.00
March 31, 2000.................................................. 2.50 to 1.00
June 30, 2000................................................... 2.50 to 1.00
September 30, 2000.............................................. 2.50 to 1.00
December 31, 2000............................................... 2.50 to 1.00
March 31, 2001.................................................. 2.50 to 1.00
June 30, 2001................................................... 2.50 to 1.00
September 30, 2001.............................................. 2.50 to 1.00
December 31, 2001............................................... 2.50 to 1.00
March 31, 2002.................................................. 2.50 to 1.00
</TABLE>
7.13 Issuance of Subsidiary Stock. The Borrower will not and
will not permit any of its Subsidiaries directly or indirectly to issue, sell,
assign, pledge or otherwise encumber or dispose of any shares of its capital
stock or other securities (or warrants, rights or options to acquire capital
stock or convertible securities or other equity securities) of such Subsidiary.
7.14 Disposition of Assets. A. The Borrower will not, and will
not permit any of its Subsidiaries to, dispose of all or any part of its
interest in any asset, except that the Borrower and its Subsidiaries may sell
assets so long as either (i) such sales are approved by the Required Banks and
the sales price thereof is, in the reasonable judgment of the Required Banks, at
least equal to the fair market value of such assets,
<PAGE> 66
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(ii) such sales are for at least the fair market value of such assets and the
aggregate amount of such asset sales does not exceed $250,000 in any year and,
in any such case, the Borrower or such Subsidiary complies with the mandatory
prepayment and Commitment reduction provisions and, in the case of Collateral,
so long as the conditions to the release of Collateral described herein and in
the applicable Security Documents are met, (iii) such sales are of inventory and
in the ordinary course of business, or (iv) such sales are (A) of obsolete
equipment, (B) for at least the fair market value of such equipment, (C) not in
excess of $75,000 individually or $250,000 per year in the aggregate and (D) the
proceeds of such sales are used within 30 days of such sales to (1) purchase
equipment used in substantially similar lines of business or (2) repay
Indebtedness under this Credit Agreement pursuant to Section 3.01.
The consideration received by the Borrower and its
Subsidiaries from each sale of assets permitted above shall be received in whole
at the time of sale and at least 85% of the consideration from each sale shall
consist of Cash or Cash Equivalents. Any non-cash proceeds received from the
sale of assets shall be pledged pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
B. Upon compliance with the conditions in subsection A of
this Section 7.14, the Release Conditions and the Partial Release Conditions
(each as hereinafter defined), the Borrower shall be entitled to receive from
the Collateral Agent an instrument in form and substance reasonably satisfactory
to the Borrower (each, a "Release"), releasing the Lien of the Mortgage with
respect to all or any portion of a Mortgaged Real Property (each, a "Released
Real Property"). The Borrower shall exercise its rights under this Section by
delivering to Collateral Agent a notice (each, a "Release Notice"), which shall
refer to this Section, describe with particularity the proposed Released
Property and be accompanied by (i) four counterparts of the Release fully
executed and acknowledged by all necessary parties other than Collateral Agent,
(ii) executed counterparts of UCC termination statements necessary to terminate
the Lien of the applicable Mortgage and (iii) an Officer's Certificate
certifying that no Default or Event of Default shall have occurred and the
parties executing any and all documents in connection with the Release (other
than Collateral Agent) were duly authorized to do so (collectively, the "Release
Conditions"). In the event the proposed Released Property consists of less than
all of the Mortgaged Real Property subject to a single Mortgage, the Partial
Release Conditions must be
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satisfied in order for the Borrower to receive the Release.
C. Collateral Agent's obligation to deliver a Release in
respect of less than all of the Mortgaged Real Property subject to a single
Mortgage shall be contingent upon the satisfaction of the conditions in
subsection A of this Section 7.16 and the Release Conditions as well as the
following conditions (collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and
release of the Lien of the applicable Mortgage with respect to the
proposed Released Real Property, the remaining Mortgaged Real Property
shall have access to such services and public roads as is necessary for
the continued use of such Mortgaged Real Property in the manner
utilized prior to the Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all material respects with applicable laws, rules,
regulations and ordinances relating to environmental protection,
zoning, land use, configuration and building and workplace safety;
(iii) following the sale, transfer or other disposition of the
proposed Released Real Property, the value of the remaining Mortgaged
Real Property shall not be less than the value of such remaining
Mortgaged Real Property prior to the Release;
(iv) the Title Company shall have issued an endorsement to the
Collateral Agent's title insurance policy relating to the Mortgaged
Real Property confirming that after the proposed release, the Lien of
the applicable Mortgage continues unimpaired as a first priority Lien
upon the remaining Mortgaged Real Property subject only to Prior Liens;
(v) the Borrower shall cause to have been delivered to the
Collateral Agent a Survey reasonably acceptable to the Collateral Agent
of the Mortgaged Real Property remaining after the Collateral proposed
Released Real Property has been released; and
(vi) the Borrower shall cause to have been delivered to the
Collateral Agent an Officer's Certificate certifying that the
conditions set forth in subsections (i) through (v)
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have been satisfied.
D. The Collateral Agent shall execute, acknowledge (if
applicable) and deliver to the Borrower counterparts of the documents described
in subsection B(i) and (ii) within 10 Business Days after receipt by the
Collateral Agent of a Release Notice provided that the Release Conditions and
the Partial Release Conditions (if applicable) have been satisfied. Borrower
shall (i) execute, deliver, obtain and record such instruments as the Collateral
Agent may require, including, without limitation, amendments to the Security
Documents or this Agreement and (ii) deliver to the Collateral Agent such
evidence of the satisfaction of the Release Conditions and the Partial Release
Conditions as the Collateral Agent may require. The Borrower shall reimburse the
Collateral Agent, the Agent and the Banks upon demand for all reasonable
out-of-pocket costs or expenses incurred in connection with any actions taken
pursuant to this Section 7.14.
7.15 Contingent Obligations. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation except:
(a) guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(b) Interest Rate Agreements;
(c) performance or similar bonds relating to the performance
or expected performance of operational obligations of the Borrower or
any of its Subsidiaries which arise in the ordinary course of business
consistent with past practice and which do not involve any direct or
indirect credit support, whether by guarantee by any other entity or by
the granting of any Lien or the provision of any security or otherwise;
(d) Guarantees made by the Borrower in the ordinary course of
business following the Closing Date in favor of any of its Subsidiaries
not to exceed a maximum aggregate amount of $250,000 at any one time;
and
(e) other Contingent Obligations not to exceed $100,000
outstanding at any one time.
<PAGE> 69
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7.16 ERISA. The Borrower will not, and will not permit any of
its ERISA Affiliates to:
(i) engage in any transaction in connection with which the
Borrower or any of its ERISA Affiliates could be subject to either a
tax imposed by Section 4975(a) of the Code or the corresponding civil
penalty assessed pursuant to Section 502(i) of ERISA, which penalties
and taxes for all such transactions could reasonably be expected to be
in an aggregate amount in excess of $50,000;
(ii) permit to exist any accumulated funding deficiency, for
which a waiver has not been obtained from the Internal Revenue Service,
with respect to any Pension Plan;
(iii) permit to exist any failure to make contributions or any
unfunded benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security under
ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(iv) permit the sum of the amount of unfunded benefit
liabilities (determined in accordance with Statement of Financial
Accounting Standards No. 87) under all Title IV Plans (excluding each
Title IV Plan with an amount of unfunded benefit liabilities of zero or
less) to exceed $50,000 for a period in excess of twelve months; or
(v) fail to make any payment to any Multiemployer Plan that it
or any of its ERISA Affiliates may be required to make under such
Multiemployer Plan, any agreement relating to such Multiemployer Plan,
or any law pertaining thereto.
As used in this Section 7.16, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded benefit liabilities" has the meaning
specified in Section 4001(a)(18) of ERISA.
7.17 Merger and Consolidations. The Borrower will not, and
will not permit any of its Subsidiaries to, merge or consolidate with or into
any other entity other than the merger of one or more Inactive Subsidiaries with
and into the Subsidiaries of the Borrower.
<PAGE> 70
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7.18 Sale and Lease-Backs. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, become or thereafter
remain liable as lessee or as guarantor or other surety with respect to the
lessee's obligations under any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired, (a) which the Borrower or any of its Subsidiaries has sold
or transferred or is to sell or transfer to any other Person or (b) which the
Borrower or any such Subsidiary intends to use for substantially the same
purpose as any other property which has been or is to be sold or transferred by
the Borrower or any such Subsidiary to any Person in connection with such lease,
if in the case of clause (a) or (b) above, such sale and such lease are part of
the same transaction or a series of related transactions or such sale and such
lease occur within one year of each other or are with the same other Person.
7.19 Sale or Discount of Receivables. The Borrower will not,
nor will it permit any of its Subsidiaries to, sell, with or without recourse,
or discount (other than in connection with trade discounts in the ordinary
course of business consistent with past practice) or otherwise sell for less
than the face value thereof, notes or accounts receivable.
SECTION 8. Events of Default. Upon the occurrence and during
the continuance of any of the following specified events (each an "Event of
Default"):
8.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of the Loans, (ii) default, and such default shall
continue for two or more Business Days, in the payment when due of any interest
on the Loans or under any other Credit Document or (iii) fail to pay any other
amounts owing hereunder for five days after receiving notice thereof; or
8.02 Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party herein or in any other Credit
Document or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
8.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.01, 6.10, 6.13, 6.14 or Section 7 hereof or Section 1.1 of any
Mortgage or (b) default in the due
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performance or observance by it of any other term, covenant or agreement
contained in this Agreement, any other Credit Documents or any Security Document
(other than those referred to in Section 8.01, 8.02 or clause (a) of this
Section 8.03) and such defaults under this clause (b) shall continue unremedied
for a period of at least ten days after the date of such default; or
8.04 Default Under Other Agreements. (a) Any Credit Party
shall (i) default in any payment with respect to any Indebtedness having a
principal amount in excess of $100,000 individually or $500,000 in the
aggregate, beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created, or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause any such Indebtedness to become due (whether by
acceleration, redemption, etc.) prior to its stated maturity; provided that for
purposes of this clause (a) such default shall be deemed to have occurred
whether or not any requisite notice has been given, grace period has expired or
time has lapsed in connection with such default or (b) any such Indebtedness of
any Credit Party shall be declared to be due and payable, required to be prepaid
or redeemed other than by a regularly scheduled required prepayment, prior to
the stated maturity thereof; provided that the Borrower shall not be in default
of this Section as a result of the non-payment of the $3.0 million note payable
to X-Med, Inc. so long as the Borrower is contesting in good faith the amount
owed to X-Med; or
8.05 Bankruptcy, etc. Any Credit Party shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case is commenced against any Credit
Party or any of its Subsidiaries and the petition is not controverted within 10
days, or is not dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Credit Party or any of its
Subsidiaries; or any Credit Party or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in
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effect relating to any Credit Party or any of its Subsidiaries; or there is
commenced against any Credit Party or any of its Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or any Credit
Party or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or any Credit Party or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Credit Party or any of
its Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Credit Party or any of its Subsidiaries for the
purpose of effecting any of the foregoing; or
8.06 ERISA. (i) Any "reportable event" as described in Section
4043 of ERISA or the regulations thereunder (excluding those events for which
the requirement for notice has been waived by regulation by the PBGC), or any
other event or condition, which the Required Banks determine constitutes
reasonable grounds under Section 4042 of ERISA for the termination of any Title
IV Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer or liquidate any Title IV Plan shall
have occurred; or
(ii) A trustee shall be appointed by a United States District
Court to administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any
Title IV Plan or to appoint a trustee to administer any Title IV Plan; or
(iv) The Borrower or any of its ERISA Affiliates shall become
liable to the PBGC or any other party under Section 4062, 4063, 4064 or 4069 of
ERISA with respect to any Title IV Plan; or
(v) The Borrower or any of its ERISA Affiliates shall become
liable to any Multiemployer Plan under Section 4201 et seq. of ERISA;
if the sum of each of the Borrower's and its ERISA Affiliates' various
liabilities (such liabilities to include, without limitation, any liability to
the PBGC or to any other party under Section 4062, 4063, 4064 or 4069 of ERISA
with respect to any Title IV Plan, or to any Multiemployer Plan under Section
4201 et seq. of ERISA which the Required Banks determine could reasonably be
expected to be incurred as a result of such events listed in
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subclauses (i) through (v) above exceeds $100,000 and is unpaid for a period of
45 days; or
8.07 Security Documents. Any Security Document shall cease to
be in full force and effect, or shall cease to give the Collateral Agent the
Liens, if any, rights, powers and privileges purported to be created thereby, in
favor of the Collateral Agent, superior to and prior to the rights of all third
Persons and subject to no Liens other than Prior Liens and Liens expressly
permitted by the applicable Security Document; or
8.08 Guarantees. Any Guarantee or any provision thereof shall
cease to be in full force or effect in any material respect, or any Guarantor or
any Person acting by or on behalf of any Guarantor shall deny or disaffirm such
Guarantor's obligations under such Guarantee or any Guarantor shall default in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any Guarantee; or
8.09 Judgments. One or more judgments or decrees shall be
entered against any Credit Party involving a liability of $50,000 or more in the
case of any one such judgment or decree and $300,000 or more in the aggregate
for all such judgments and decrees for all Credit Parties (in either case in
excess of the amount covered by insurance as to which the insurance company has
acknowledged coverage) and any such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within five days from the
entry thereof; or
8.10 Ownership. (i) Either or both of Mr. Charles Laverty or
Mr. James Johnson, the Chairman and Executive Vice President, respectively, of
the Borrower, (x) ceases to remain in the employ of the Borrower in his current
capacity or in some other executive capacity or (y) ceases to retain at least
his current stock ownership (including securities which may be exchanged for,
converted into or exercised for shares of stock) in the Borrower, provided that
Mr. James Johnson may sell up to 50,000 shares of such stock ownership and Mr.
Charles Laverty may sell, during each of the Borrower's fiscal quarters, up to
25,000 shares of such stock ownership; (ii) individuals who constituted the
Board of Directors of Borrower or any Guarantor on the Closing Date (together
with any new directors whose proposal for election by the shareholders of
Borrower or any Guarantor was approved by a vote of 51% of the directors of
Borrower or such Guarantor then still in office who either were directors on the
Closing Date or whose election or nomination for election was
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previously so approved) shall cease for any reason to constitute a majority of
the members of the Board of Directors of Borrower or such Guarantor still in
office; (iii) Borrower or any Guarantor conveys, transfers or leases all or
substantially all of its assets to any Person; or (iv) the approval by
stockholders of Borrower or any Guarantor of any plan or proposal for the
liquidation, dissolution or winding up of Borrower or any such Guarantor;
Then, and in any such event, and at any time thereafter, if
any Event of Default shall then be continuing, the Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Agent or
any Bank to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (provided that an Event of Default
specified in Section 8.05 shall occur automatically without the giving of any
notice): (i) declare the Total Revolving Loan Commitments terminated, whereupon
the Commitment of each Bank shall forthwith terminate immediately and any
accrued and unpaid Commitment Commission shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and accrued
interest in respect of all Loans and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and/or (iii) enforce, as Collateral Agent (or
direct the Collateral Agent to enforce), any or all of the remedies created
pursuant to the Security Documents. If an Event of Default is cured or waived in
accordance with the terms of the Agreement, it ceases (and, if waived, pursuant
to the terms, and to the extent, of such waiver).
SECTION 9. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Account" means all of the Borrower's "accounts" (as that term
is defined in Section 9-106 of the Uniform Commercial Code as in effect in the
State of New York) whether or not such Account has been earned by performance,
whether now existing or existing in the future, including, without limitation,
all (i) accounts receivable, including, without limitation, all accounts created
by or arising from all of the Borrower's sales
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of goods or rendition of services made under any of the Borrower's trademarks or
trade names; (ii) unpaid seller's rights (including rescission, replevin,
reclamation and stopping in transit) relating to the foregoing or arising
therefrom; (iii) rights to any goods represented by any of the foregoing,
including returned or repossessed goods; (iv) reserves and credit balances held
by the Borrower with respect to any such accounts receivable or any account
debtor; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
"Additional Collateral" shall have the meaning provided in
Section 6.14.
"Adjusted LIBOR" shall mean, with respect to any LIBOR
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (i) the sum of (a)
the LIBOR in effect for such Interest Period and (b) 2.75% and (ii) Statutory
Reserves, if any.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and executive officers of such Person), controlled by, or under direct
or indirect common control with such Person; provided that neither Indosuez nor
any Affiliate of Indosuez shall be deemed to be an Affiliate of any Credit
Party. A Person shall be deemed to control a corporation for the purposes of
this definition if such Person possesses, directly or indirectly, the power (i)
to vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" shall mean Indosuez, or any successor thereto
appointed in accordance herewith, in its capacity as agent for the Banks.
"Agreement" shall mean the Old Credit Agreement, as the same
may after its execution be amended, supplemented or otherwise modified from time
to time in accordance with the terms hereof, including the Amendment.
"Amendment Date" means the effective date of this Amended and
Restated Revolving Credit Agreement.
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"Asset Sale" shall mean the sale, transfer or other
disposition, to the extent consummated after the Closing Date, by the Borrower
or any Subsidiary of the Borrower to any Person other than the Borrower or any
Wholly-Owned Subsidiary of the Borrower of any asset of Borrower or such
Subsidiary (other than transactions included in the definition of Net Financing
Proceeds and sales, transfers or other dispositions of inventory in the ordinary
course of business and/or of obsolete equipment effected in compliance with
Section 7.14A(iv)).
"Authorized Officer" shall mean any senior officer of the
Borrower, designated as such in writing to the Agent by the Borrower, to the
extent acceptable to the Agent.
"Bank" shall have the meaning provided in the first paragraph
of this Agreement and in Section 11.04.
"Bankruptcy Code" shall have the meaning provided in Section
8.05.
"Base Rate" shall mean the higher of (x) 1/2% per annum in
excess of the Federal Funds Rate and (y) the rate which the Agent announces from
time to time as its prime commercial lending rate, as in effect from time to
time. The rate the Agent announces as its prime commercial lending rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Agent may make commercial loans or other
loans at rates of interest at, above or below the rate it announces as its prime
commercial lending rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rate provided in Section 1.08(a).
"Base Rate Margin" shall have the meaning set forth in Section
1.08(a).
"Borrower" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Borrower General Security Agreement" shall mean the Borrower
General Security Agreement substantially in the form of Exhibit H-1 hereto, and
any other general security agreement delivered by Borrower pursuant to Section
6.13 or 6.14.
"Borrower Securities Pledge Agreement" shall mean the Borrower
Securities Pledge Agreement substantially in the form of
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Exhibit E-1 hereto, and any other securities pledge agreement delivered by
Borrower pursuant to Section 6.13 or 6.14.
"Borrowing" shall mean the incurrence pursuant to a Notice of
Borrowing and to the Loan Facility of one Type of Loan by the Borrower from all
of the Banks on a pro rata basis on a given date (or resulting from conversions
on a given date) having, in the case of LIBOR Loans, the same Interest Periods.
"Borrowing Base" means an amount equal to the sum of (i) 80%
of the Eligible Accounts Receivable and (ii) 50% of Eligible Inventory.
"Borrowing Base Certificate" has the meaning assigned to that
term in Section 6.01(n).
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Lease" of any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person, together with any renewals of such leases
(or entry into new leases) on substantially similar terms.
"Capitalized Lease Obligations" of any Person shall mean all
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than
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three years from the date of acquisition, (ii) marketable direct obligations
issued by any State of the United States of America or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by Standard & Poor's Corporation ("S&P") or the equivalent
thereof by Moody's Investors Service, Inc. ("Moody's") having maturities of not
more than one year from the date of acquisition, (iii) U.S. dollar denominated
time deposits, certificates of deposit and bankers' acceptances of (x) any Bank,
(y) any domestic commercial bank of recognized standing having capital and
surplus in excess of $250,000,000 or (z) any bank whose short-term commercial
paper rating (at the time of acquisition of such security) by S&P is at least
A-1 or the equivalent thereof or by Moody's is at least P-1 or the equivalent
thereof (any such bank, an "Approved Bank"), in each case with maturities of not
more than six months from the date of acquisition, (iv) commercial paper and
variable or fixed rate notes issued by any Bank or Approved Bank or by the
parent company of any Bank or Approved Bank and commercial paper and variable
rate notes issued by, or guaranteed by, any industrial or financial company with
a short-term commercial paper rating (at the time of acquisition of such
security) of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's, or guaranteed by any industrial company with
a long-term unsecured debt rating (at the time of acquisition of such security)
of at least AA or the equivalent thereof by S&P or the equivalent thereof by
Moody's and in each case maturing within one year after the date of acquisition
and (v) repurchase agreements with any Bank or any primary dealer maturing
within one year from the date of acquisition that are fully collateralized by
investment instruments that would otherwise be Cash Equivalents; provided that
the terms of such repurchase agreements comply with the guidelines set forth in
the Federal Financial Institutions Examination Council Supervisory Policy --
Repurchase Agreements of Depository Institutions With Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985.
"Closing Date" shall mean August 14, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all of the Intellectual Property
Collateral, Pledged Collateral and Mortgaged Real Property.
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"Collateral Agent" shall mean Indosuez in its capacity as
collateral agent for the Banks.
"Collective Bargaining Agreement" shall mean each Collective
Bargaining Agreement set forth on Schedule 5.19.
"Commitment Commission" shall have the meaning provided in
Section 2.03.
"Compliance Certificate" shall mean a certificate issued
pursuant to Section 6.01(f) signed by a chief financial officer, controller,
chief accounting officer or other Authorized Officer of the Borrower.
"Consolidated Amortization Expense" for any Person shall mean,
for any period, the consolidated amortization expense of such Person for such
period, determined on a consolidated basis for such Person and its Subsidiaries
in conformity with GAAP.
"Consolidated Capital Expenditures" of any Person shall mean,
for any period, the aggregate gross increase during that period, in the
property, plant or equipment reflected in the consolidated balance sheet of such
Person and its consolidated Subsidiaries, in conformity with GAAP, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets (i) to the extent financed from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored, (ii)
with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced or (iii) with regard to equipment that
is purchased simultaneously with the trade-in of existing equipment, fixed
assets or improvements, the credit granted by the seller of such equipment for
the trade-in of such equipment, fixed assets or improvements; provided that
Consolidated Capital Expenditures shall in any event include the purchase price
paid in connection with the acquisition of any other Person (including through
the purchase of all of the capital stock or other ownership interests of such
Person or through merger or consolidation) to the extent allocable to property,
plant and equipment.
"Consolidated Depreciation Expense" for any Person shall mean,
for any period, the consolidated depreciation expense of such Person for such
period, determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
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"Consolidated EBITDA" for any Person shall mean, for any
period, the difference between (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense, (iii) Consolidated
Interest Expense, (iv) Consolidated Amortization Expense, (v) Consolidated
Depreciation Expense and (vi) all other non-cash charges deducted in computing
Consolidated Net Income (with respect to clauses (ii) through (v), to the extent
such amounts were deducted in computing Consolidated Net Income) less (B) the
sum of the amounts for such period of (i) interest income to the extent included
in Consolidated Net Income and (ii) net gains on sales of assets to the extent
included in Consolidated Net Income, whether or not extraordinary (excluding
sales in the ordinary course of business), and other extraordinary gains plus
(C) net losses on sales of assets to the extent included in Consolidated Net
Income, whether or not extraordinary (excluding sales in the ordinary course of
business), and other extraordinary losses, plus (D) without duplication,
Consolidated Restructuring Expense to the extent included in Consolidated Net
Income, all as determined on a consolidated basis for such Person and its
consolidated Subsidiaries in accordance with GAAP.
"Consolidated EBITDAC" for any Person shall mean, for any
period, Consolidated EBITDA minus Consolidated Capital Expenditures for such
period.
"Consolidated Interest Expense" for any Person shall mean, for
any period, the sum of (x) total interest expense (including that attributable
to Capital Leases in accordance with GAAP) and (y) total cash dividends paid on
any preferred stock, in each case of such Person and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness and preferred
stock of such Person and its Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, but excluding, however, any
amortization of deferred financing costs, all as determined on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP
minus any interest income. For purposes of clause (y) above, dividend
requirements shall be increased to an amount representing the pretax earnings
that would be required to cover such dividend requirements; accordingly, the
increased amount shall be equal to such dividend requirements multiplied by a
fraction, the numerator of which is such dividend requirement and the
denominator of which is 1 minus the applicable actual combined Federal, state,
local and foreign
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income tax rate of such Person and its subsidiaries (expressed as a decimal), on
a consolidated basis, for the fiscal year immediately preceding the date of the
transaction giving rise to the need to calculate Consolidated Interest Expense.
"Consolidated Net Income" for any Person shall mean, for any
period, the net income (or loss) of such Person and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any other Person (other than consolidated Subsidiaries
of such Person) in which any third Person (other than such Person or any of its
consolidated Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to such Person or any
of its Subsidiaries by such other Person during such period, (ii) the income (or
loss) of any other Person accrued prior to the date it becomes a consolidated
Subsidiary of such Person or is merged into or consolidated with such Person or
any of its consolidated Subsidiaries or such other Person's assets are acquired
by such Person or any of its consolidated Subsidiaries, and (iii) the income of
any consolidated Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by that consolidated Subsidiary of
that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that consolidated Subsidiary.
"Consolidated Restructuring Expense" shall mean the
consolidated one-time charge of the Borrower and its Subsidiaries of not more
than $30.00 million made not later than December 31, 1997 relating to the
restructuring of operations, incomplete research and development write-downs and
other items related to the acquisitions of certain product lines from companies
related to X-Cardia Corporation, Microsurge, Inc., Osbon Medical Systems Ltd.,
PEBB Biopsy Corporation and other potential acquisitions identified to the
Agent; provided that such charge (a detailed account of which shall be provided
to the Agent as soon as it is available) shall be reasonably acceptable to the
Agent and, if such charge is not reasonably acceptable to the Agent, shall mean
$0.
"Consolidated Tax Expense" for any Person shall mean, for any
period, the consolidated tax expense of such Person for such period, determined
on a consolidated basis for such Person
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and its consolidated Subsidiaries in conformity with GAAP.
"Contingent Obligations" shall mean, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the maximum amount that such Person may be obligated to expend
pursuant to the terms of such Contingent Obligation or, if such Contingent
Obligation is not so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Credit Documents" shall mean (i) this Agreement, (ii) each
Note, (iii) each Guarantee and (iv) each Security Document.
"Credit Party" shall mean the Borrower and each Person (other
than the Banks and their respective Affiliates) party to the Credit Documents or
the Security Documents.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an
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account evidenced by a negotiable certificate of deposit.
"Destruction" has the meaning assigned to that term in the
Mortgages.
"Dividends" shall have the meaning provided in Section 7.08.
"Documents" shall mean each Credit Document.
"Dollars" or "$" means United States Dollars.
"Eligible Accounts Receivable" shall mean, as at any
applicable date of determination, the aggregate face amount of Borrower's and
each of its Subsidiaries' Accounts included in clause (i) of the definition of
Account hereunder (excluding any Accounts set forth in clause (ii) through (vi)
of such definition), without duplication, in each case less (without
duplication) the aggregate amount of all reserves, limits and deductions with
respect to such Accounts set forth below or as otherwise provided in this
Agreement and less the aggregate amount of all returns, discounts, claims,
credits, charges (including warehouseman's charges) and allowances of any nature
with respect to such Accounts (whether issued, owing, granted or outstanding).
Unless otherwise approved in writing by the Agent in its sole discretion (or, if
the aggregate amount of approvals exceeds $250,000 at any one time, the approval
of the Required Banks), no individual Account shall be deemed to be an Eligible
Account Receivable if:
(a) the Borrower or one of its Subsidiaries does not have
legal and valid title to the Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) the Account arises out of a sale made by the Borrower or
one of its Subsidiaries to an Affiliate of the Borrower; or
(d) the Account or any portion thereof is unpaid more
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than 90 days after the original invoice date, with respect to Accounts
the invoice for which provides that payment is due in 30 days or less
from the date of such invoice; or
(e) the Account is unpaid more than 60 days after the original
payment due date, with respect to Accounts the invoice for which
provides that payment is due more than 30 days from the date of such
invoice; or
(f) the Account, when aggregated with all other Accounts of
the same account debtor (or any Affiliate thereof), exceeds thirty
percent in face value of all Accounts of the Borrower then outstanding,
to the extent of such excess; or
(g) (i) the Account is subject to any claim on the part of the
account debtor disputing liability under such Account in whole or in
part, to the extent of the amount of such dispute or (ii) except in
cases when the account debtor is the United States government or an
agency thereof, the Account otherwise is or is reasonably likely to
become subject to any right of setoff or any counterclaim, claim or
defense by the account debtor, to the extent of the amount of such
setoff or counterclaim, claim or defense; or
(h) the account debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors or if a decree or
order for relief has been entered by a court having jurisdiction in the
premises in respect of the account debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or if any other petition or other application for relief under the
federal bankruptcy laws has been filed by or against the account
debtor, or if the account debtor has failed, suspended business, ceased
to be solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs; provided, however, that
if the amount owed to the Borrower by such account debtor is entitled
to administrative expense status under Section 503 of Title 11, United
States Code, such account shall not be deemed ineligible pursuant to
this clause (h); or
(i) the Collateral Agent does not have a valid and perfected
first priority security interest in such Account (subject only to (i) a
tax lien being contested in good
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faith and by appropriate proceedings and permitted by Section 7.03(a)
and (ii) the rights of the United States government with respect to
receivables due from the United States government or any agency
thereof); or
(j) the sale to the account debtor is on a consignment,
bill-and-hold, sale on approval, guaranteed sale or sale-and-return
basis or pursuant to any written agreement providing for repurchase or
return rights not in the ordinary course of business; or
(k) it is from the same account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
Accounts from either such account debtor or any Affiliate thereof are
due or unpaid for more than 60 days after the payment due date; or
(l) the Account is an Account a security interest in which
would be subject to the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727 et seq.), unless the Borrower has
provided to the Agent notices in compliance with the provisions of such
Act; or
(m) the sale is to an account debtor outside the continental
United States or incorporated in or primarily conducting business in
any jurisdiction located outside the United States, unless the sale is
(i) on letter of credit, guaranty or acceptance terms, in each case
acceptable to the Agent, or (ii) otherwise approved by and acceptable
to the Agent, which approval and acceptance shall not, in either case,
be unreasonably withheld; or
(n) the Agent reasonably determines in good faith in
accordance with its internal credit policies that (i) collection of the
Account is insecure or (ii) the Account may not be paid by reason of
the account debtor's financial inability to pay; provided, however,
that any Account referred to in this clause (n) shall not become
ineligible until the Agent shall have given the Borrower five Business
Days' advance notice of such determination; or
(o) the Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
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"Eligible Assignee" means a commercial bank, financial
institution or other "accredited investor" (as defined in SEC Regulation D).
"Eligible Inventory" shall mean (A) the gross amount of the
Inventory of the Borrower and its Subsidiaries, valued at the lower of cost (on
a FIFO basis) or market, which (i) is owned solely by the Borrower or one of its
Subsidiaries and with respect to which the Borrower or one of its Subsidiaries
has good, valid and marketable title; (ii) is stored on property that is either
(a) owned or leased by the Borrower or one of its Subsidiaries or (b) owned or
leased by a warehouseman that has contracted with the Borrower or one of its
Subsidiaries to store Inventory on such warehouseman's property (provided that,
with respect to Inventory stored on property leased by the Borrower or one of
its Subsidiaries, the Borrower or one of its Subsidiaries shall have delivered
in favor of the Agent an acknowledgment agreement executed by the lessor of such
property, and, with respect to the Inventory stored on property owned or leased
by a warehouseman, the Borrower or one of its Subsidiaries shall have delivered
to the Agent acknowledgment agreements executed by such warehouseman); (iii) is
subject to a valid, enforceable and first priority Lien in favor of the
Collateral Agent subject to (a) a tax lien being contested in good faith and by
appropriate proceedings and permitted by Section 7.03(a), and (b) with respect
to Eligible Inventory stored at sites described in clause (ii)(b) above, Liens
for normal and customary warehouseman charges; and (iv) is located in the United
States; (B) less any goods returned or rejected by the Borrower's customers and
goods in transit to third parties (other than to the Borrower's agents or
warehousemen that comply with clause (A)(ii)(b) above); and (C) less any
reserves required by the Agent for special order goods and market value
declines. In addition to the foregoing, Eligible Inventory shall include such
items of the Borrower's Inventory as the Borrower shall request and that the
Agent approves in advance, in writing and in its sole discretion (or if the
aggregate amount of approvals exceeds $250,000 at any one time, the approval of
the Required Banks).
"Environmental Laws" means the common law and all federal,
state, local and foreign laws or regulations, codes, orders, decrees, judgments
or injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or
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threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous constituents, substances or wastes, including, without limitation,
petroleum, including crude oil or any fraction thereof, or any petroleum product
(collectively referred to as "Hazardous Materials"), into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground and aboveground storage tanks, and
related piping, and emissions, discharges, releases or threatened releases
therefrom.
"Equipment" shall mean all of the Equipment (as defined in the
Security Agreements) secured by the Security Agreements.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time. Section references to ERISA are to ERISA
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean any entity, whether or not
incorporated, which is under common control or would be considered a single
employer with the Borrower within the meaning of Section 414(b), (c), (m) or (o)
of the Code and regulations promulgated under those sections or within the
meaning of section 4001(b) of ERISA and regulations promulgated under that
section.
"Event of Default" shall have the meaning provided in Section
8.
"Excess" shall have the meaning set forth in Section
3.02(A)(b).
"Federal Funds Rate" means on any one day the weighted average
of the rate on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if not so published, the rate
then used by first-class banks in extending overnight loans to other first-class
banks.
"Final Maturity Date" shall mean the last Business Day of
March, 2002.
"Financing Proceeds" means the cash (other than Net
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Cash Proceeds) received by any Credit Party, directly or indirectly, from any
financing transaction of whatever kind or nature, including without limitation
from any incurrence of Indebtedness, any mortgage or pledge of an asset or
interest therein (including a transaction which is the substantial equivalent of
a mortgage or pledge), from the sale of tax benefits, from a lease to a third
party and a pledge of the lease payments due thereunder to secure Indebtedness,
from an exchange of assets and a sale of the assets received in such exchange,
or any other similar arrangement or technique whereby a Credit Party obtains
Cash in respect of an asset, net of direct costs associated therewith.
"FIRREA" means the Financial Institutions Reform, Recovery &
Enforcement Act of 1989, as amended from time to time, and any successor
statute.
"Foreign Pension Plan" shall mean any Pension Plan or other
deferred compensation plan, program or arrangement maintained by any Subsidiary
of the Borrower organized under the laws of a jurisdiction other than the United
States of America or any state thereof which, under applicable law, is required
to be funded through a trust or other funding vehicle.
"GAAP" shall mean generally accepted accounting principles in
the United States of America, it being understood and agreed that determinations
in accordance with GAAP for purposes of Section 7, including defined terms as
used therein, are subject (to the extent provided therein) to Section 11.07(a).
"General Security Agreements" shall mean and include, once
executed and delivered the Borrower General Security Agreement and the
Subsidiary General Security Agreement.
"Governmental Authority" means any federal, state, local,
foreign or other governmental or administrative (including self-regulatory)
body, instrumentality, department or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or other similar
dispute-resolving panel or body including, without limitation, those governing
the regulation and protection of the environment, whether now or hereafter in
existence, or any officer or official thereof.
"Guarantees" shall mean each guarantee of the Borrower's
Obligations hereunder made by the Guarantors in favor of the Banks, pursuant to
the Guarantee Agreements, substantially in the form of Exhibit D annexed hereto.
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"Guarantors" shall mean the parties guaranteeing the
Borrower's Obligations hereunder pursuant to the Guarantee Agreements.
"Inactive Subsidiaries" means NT Reudt Corporation, Advanced
Urocare, Inc., Intermed Associates, Inc. and Laparomed Corporation.
"Indebtedness" of any Person shall mean, without duplication,
(i) all indebtedness of such Person for borrowed money, (ii) the deferred
purchase price of assets or services which in accordance with GAAP would be
shown on the liability side of the balance sheet of such Person, (iii) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder, (iv) all Indebtedness of a
second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person (but the
amount of such Indebtedness, for all calculations hereunder, will not exceed the
lesser of (i) the amount of Indebtedness of such second Person so secured and
(ii) the fair market value of the property of such first Person securing such
Indebtedness), (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, and (vii) all obligations of such Person under Interest Rate
Agreements; provided that Indebtedness shall not include trade payables, accrued
expenses, accrued dividends, accrued income taxes and other similar current
liabilities, in each case arising in the ordinary course of business.
"Indosuez" shall mean Banque Indosuez, New York Branch.
"Intellectual Property Collateral" shall mean all the Pledged
Collateral as defined in the Intellectual Property Security Agreements.
"Intellectual Property Security Agreements" shall mean and
include, once executed and delivered, the Subsidiary Intellectual Property
Security Agreement.
"Intercompany Notes" shall mean demand promissory notes in
form, scope and substance satisfactory to the Agent evidencing intercompany
Indebtedness of any Wholly Owned Subsidiary of the Borrower to the Borrower or
of the Borrower to any Wholly Owned
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Subsidiary of the Borrower.
"Interest Period" shall mean, with respect to any LIBOR Loan,
the interest period applicable thereto, as determined pursuant to Section 1.08.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate futures contract, interest rate option contract or other similar agreement
or arrangement to which the Borrower is a party, designed to protect the
Borrower or any of its Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" shall mean each date for
calculating LIBOR for purposes of determining the interest rate in respect of
the Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a LIBOR
Loan.
"Inventory" shall mean all of the inventory of Borrower
including without limitation: (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in Borrower's
business; (ii) all goods, wares and merchandise, finished or unfinished, held
for sale or lease or leased or furnished or to be furnished under contracts of
service; and (iii) all goods returned or repossessed by Borrower.
"Lease" shall mean any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"LIBOR" means, with respect to any LIBOR Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the rate at which U.S. dollar deposits approximately equal
in principal amount to the applicable Loan of the Agent, in its capacity as a
Bank, included in such LIBOR Loan and for a maturity comparable to such Interest
Period are offered to the principal London office of the Agent in the London
interbank market at approximately 11:00 A.M., London time, on the Interest Rate
Determination Date for such LIBOR Loan.
"LIBOR Loan" shall mean each Loan bearing interest at a rate
determined by reference to Adjusted LIBOR in accordance with the provisions of
Section 1.08(b) hereof.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for
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security or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Loan" shall mean each and every Revolving Loan.
"Loan Facility" shall mean the credit facility evidenced by
the Total Revolving Loan Commitment.
"Materially Adverse Effect" means (i) with respect to the
Borrower, any materially adverse effect (both before and after giving effect to
the financing contemplated hereby and by the other Documents) with respect to
the operations, business, properties, assets, liabilities (contingent or
otherwise) or financial condition or prospects of the Borrower and its
Subsidiaries, taken as a whole, or (ii) any fact or circumstance (whether or not
the result thereof would be covered by insurance) as to which singly or in the
aggregate there is a reasonable likelihood of (w) a materially adverse change
described in clause (i) with respect to the Borrower and its Subsidiaries, taken
as a whole, or (x) the inability of the Borrower to perform in any material
respect its Obligations hereunder or under any of the other Documents or the
inability of the Banks to enforce in any material respect their rights purported
to be granted hereunder or under any of the other Documents or the Obligations
(including realizing on the Collateral), or (y) a materially adverse effect on
the ability to effect (including hindering or unduly delaying) the transactions
contemplated hereby and by the Documents on the terms contemplated hereby and
thereby.
"Minimum Borrowing Amount" shall mean $100,000.
"Mortgage" shall mean a term loan and revolving credit
mortgage (or deed of trust), assignment of rents, security agreement and fixture
filing creating and evidencing a Lien on a Mortgaged Real Property, which shall
be substantially in the form of Exhibit F hereto, containing such schedules and
including such additional provisions and other deviations from such Exhibit as
shall be necessary to conform such document to applicable or local law or as
shall be customary under local law and made and which shall be dated the date of
delivery thereof and made by the owner of the Mortgaged Real Property described
therein for the benefit of the Collateral Agent, as grantee or beneficiary,
assignee and secured party, as the same may at any time be amended, modified or
supplemented in accordance with the terms thereof and hereof.
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"Mortgaged Real Property" shall mean each Real Property which
shall become subject to a Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA with respect to which the Borrower or any of its
ERISA Affiliates is or has been required to contribute or otherwise may have
liability.
"Net Award" shall have the meaning assigned to that term in
each Mortgage.
"Net Cash Proceeds" shall mean:
(a) with respect to any Asset Sale, the aggregate cash
payments received by the Borrower or any of the Borrower's
Subsidiaries, as the case may be, from such Asset Sale, net of direct
expenses (including income taxes) of sale;
(b) with respect to any Taking or Destruction, the Net Award
or Net Proceeds, as applicable, resulting therefrom, to be applied as
Net Cash Proceeds under this Agreement pursuant to the applicable
provisions of any Mortgage; and
(c) with respect to any loss of title to all or any portion of
any Mortgaged Real Property, any title insurance proceeds resulting
therefrom, to be applied as Net Cash Proceeds under this Agreement
pursuant to the applicable provisions of any Mortgage;
provided, further, that Net Cash Proceeds shall not include any amounts or items
included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein or exclusion therefrom).
"Net Financing Proceeds" means Financing Proceeds, net of
direct expenses (including income taxes), of the transaction.
"Net Proceeds" shall have the meaning assigned to that term in
each Mortgage.
"Notes" shall mean any Revolving Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
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"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document or secured by any of the Security Documents.
"Office" shall mean the office of the Agent located at 1211
Avenue of the Americas, New York, New York 10036, or such other office as the
Agent may hereafter designate in writing as such to the other parties hereto.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its Chairman of the
Board (if an officer) or its President or one of its Vice Presidents and by its
Chief Financial Officer or its Treasurer or any Assistant Treasurer (in such
Person's capacity as an officer and not individually); provided that every
Officers' Certificate with respect to compliance with a condition precedent to
the making of any Loan hereunder shall include (i) a statement that the officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the opinion of the
signers based on the foregoing, such condition has been complied with.
"Old Credit Agreement" has the meaning set forth in the
recitals hereto.
"Operating Lease" of any Person shall mean any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) by such Person as
Lessee which is not a Capital Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Pension Plan" means any pension plan as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) which is or has been maintained
by or to which contributions are or have been made by the Borrower or any of its
ERISA Affiliates or as to which the Borrower or any of its ERISA Affiliates may
have
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liability.
"Permitted Encumbrances" shall have the meaning provided in
Section 7.03.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Pledge Agreements" shall mean and include, once executed and
delivered, the Borrower Securities Pledge Agreement and the Subsidiary
Securities Pledge Agreement.
"Pledged Collateral" shall mean all the Pledged Collateral as
defined in the General Security Agreements and in the Pledge Agreements.
"Pledged Securities" shall have the meaning assigned to that
term in the Pledge Agreements.
"Prior Liens" shall mean Liens which, pursuant to the
provisions of any Security Document, are or may be superior to the Lien of such
Security Document.
"Real Property" shall mean all right, title and interest of
Borrower or any of its Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property owned or operated by the
Borrower or any of its Subsidiaries together with, in each case, all
improvements and appurtenant fixtures, equipment, personal property, easements
and other property and rights incidental to the ownership, lease or operation
thereof.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing
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margin requirements.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Required Banks" shall mean at any time Banks holding at least
51% of the Total Revolving Loan Commitments held by the Banks; provided that for
the purposes of Section 4, the requirement that any document, agreement,
certificate or other writing is to be satisfactory to the Required Banks shall
be satisfied if (x) such document, agreement, certificate or other writing was
delivered in its final form to the Banks prior to the Amendment Date (or if
amended or modified thereafter, the Agent has reasonably determined such
amendment or modification not to be material), (y) such document, agreement,
certificate or other writing is satisfactory to the Agent and (z) Banks holding
more than 51% of the Total Revolving Loan Commitments held by Banks have not
objected in writing to such document, agreement, certificate or other writing to
the Agent and the Borrower prior to the Amendment Date.
"Restoration" shall have the meaning assigned to that term in
each Mortgage.
"Revolving Loan Commitment" shall mean, with respect to each
Bank, the amount set forth below such Bank's name on the signature pages hereto
directly below the column entitled "Revolving Loan Commitment," as same may be
reduced from time to time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
"Revolving Loans" shall have the meaning provided in Section
1.01(b).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"SEC Regulation D" shall mean Regulation D as
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promulgated under the Securities Act, as the same may be in effect from time to
time.
"Secured Parties" shall have the meaning specified in the
Security Documents.
"Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Documents" shall mean each of the Mortgages, the
Pledge Agreements, the General Security Agreements, the Intellectual Property
Security Agreements and any other documents utilized to pledge any other
property or assets of whatever kind or nature as Collateral for the Obligations,
as such documents may after their execution be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof.
"State and Local Real Property Disclosure Requirements" means
any state or local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"Statutory Reserves" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board of Governors of the Federal Reserve System
of the United States or by any other Governmental Authority, domestic or
foreign, with jurisdiction over the Agent or any Bank (including any branch,
Affiliate or other funding office thereof making or holding a Loan) with respect
to Adjusted
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LIBOR applicable to any Borrowing, for any category of liabilities which
includes deposits by reference to which Adjusted LIBOR in respect of such
Borrowing is determined. Such reserve percentages shall include those imposed
pursuant to Regulation D. For purposes of this definition, LIBOR Loans shall be
deemed to constitute "Eurocurrency Liabilities" within the meaning of Regulation
D and to be subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets which may be available from time to time to
any Bank under Regulation D. Statutory Reserves shall be adjusted automatically
on and as of the effective date of any change in any reserve percentage.
"Sublease" shall have the meaning provided in the Mortgages.
"Subordinated Debenture Indenture" means the Indenture related
to the Subordinated Debentures, as amended to date.
"Subordinated Debentures" means the Borrower's 8.75%
Convertible Subordinated Debentures due May 30, 2006.
"Subordinated Note Indenture" means the Indenture pursuant to
which the Company issued the Subordinated Notes, in the form of Exhibit M
hereto.
"Subordinated Notes" has the meaning set forth in the recitals
hereto.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time.
"Subsidiary General Security Agreement" shall mean the
Subsidiary General Security Agreement substantially in the form of Exhibit H-2
hereto, and any other general security agreement delivered by a Guarantor
pursuant to Section 6.13 or 6.14.
"Subsidiary Intellectual Property Security Agreement"
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shall mean the Subsidiary Intellectual Property Security Agreement substantially
in the form of Exhibit G hereto, and any other intellectual property security
agreement delivered by a Guarantor pursuant to Section 6.13 or 6.14.
"Subsidiary Securities Pledge Agreement" shall mean the
Subsidiary Securities Pledge Agreement substantially in the form of Exhibit E-2
hereto, and any other securities pledge agreement delivered by a Guarantor
pursuant to Section 6.13 or 6.14.
"Survey" means a survey of any Mortgaged Real Property (and
all improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state where such Mortgaged Real Property is located, (ii)
dated (or redated) not earlier than six months prior to the date of delivery
thereof unless there shall have occurred within six months prior to such date of
delivery any exterior construction on the site of such Mortgaged Real Property,
in which event such survey shall be dated (or redated) after the completion of
such construction or if such construction shall not have been completed as of
such date of delivery, not earlier than 20 days prior to such date of delivery,
(iii) certified by the surveyor (in a manner reasonably acceptable to the
Collateral Agent) to Collateral Agent and the Title Company and (iv) complying
in all respects with the minimum detail requirements of the American Land Title
Association as such requirements are in effect on the date of preparation of
such survey.
"Taking" has the meaning assigned to that term in each
Mortgage.
"Taxes" shall have the meaning provided in Section 3.04.
"Termination Event" means (i) a "reportable event" described
in Section 4043 of ERISA or in the regulations thereunder (excluding events for
which the requirement for notice of such reportable event has been waived by
regulation by the PBGC) with respect to a Title IV Plan, or (ii) the withdrawal
of the Borrower or any of its ERISA Affiliates from a Title IV Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a Title IV Plan amendment as a termination
under Section 4041 of ERISA, or (iv) the institution of proceedings by the PBGC
to terminate a Title IV Plan or to appoint a trustee to administer a Title IV
Plan, or (v) any other event or condition which might
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constitute reasonable grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan, or (vi)
the complete or partial withdrawal (within the meaning of Sections 4203 and
4205, respectively, of ERISA) of the Borrower or any of its ERISA Affiliates
from a Multiemployer Plan, or (vii) the insolvency or reorganization (within the
meaning of Sections 4245 and 4241, respectively, of ERISA) or termination of any
Multiemployer Plan, or (viii) the failure to make any payment or contribution to
any Pension Plan or Multiemployer Plan or the making of any amendment to any
Pension Plan which could result in the imposition of a lien or the posting of a
bond or other security.
"Test Period" means the shorter of (i) the four consecutive
complete fiscal quarters of the Borrower then last ended or (ii) the period of
all complete fiscal quarters of the Borrower since the Amendment Date; provided
that for purposes of this clause (ii), the first fiscal quarter of the Borrower
shall be deemed to be the period from April 1, 1997 to June 30, 1997.
"Title Company" shall mean First American Title Insurance
Company or such other title insurance or abstract company as shall be designated
by the Required Banks.
"Title IV Plan" means any Pension Plan (other than a
Multiemployer Plan) described in Section 4021(a) of ERISA, and not excluded
under Section 4021(b) of ERISA.
"Total Revolving Loan Commitment" shall mean the sum of the
Revolving Loan Commitment of each of the Banks.
"Type" shall mean a Base Rate Loan or LIBOR Loan.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.
"Voting Stock" means all classes of capital stock of a
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly-Owned Subsidiary" of any Person shall mean any
Subsidiary of such Person to the extent all of the capital stock or other
ownership interests in such Subsidiary, other than directors' or nominees'
qualifying shares, is owned directly or indirectly by such Person.
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"written" or "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
SECTION 10. The Agent and the Collateral Agent.
10.01 Appointment. Each Bank hereby irrevocably designates and
appoints Indosuez as Agent and Collateral Agent of such Bank to act as specified
herein and in the other Credit Documents and each such Bank hereby irrevocably
authorizes each such agent to take such action on its behalf under the
provisions of this Agreement and the other Credit Documents and to exercise such
powers and perform such duties as are expressly delegated to such agent by the
terms of this Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agent and the Collateral Agent
agree to act as such upon the express conditions contained in this Section 10.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent and the Collateral Agent shall not have any duties or responsibilities,
except those expressly set forth herein or in the other Credit Documents, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against such agent. The provisions of this Section
10 are solely for the benefit of such agent and the Banks, and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agent
and the Collateral Agent shall act solely as an agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency or trust with or for any Credit Party. The Borrower hereby agrees to pay
the Agent an annual agency fee of $50,000, payable quarterly in arrears.
10.02 Delegation of Duties. Each of the Agent and the
Collateral Agent may execute any of its duties under this Agreement or any other
Credit Document by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. No agent
shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 10.03.
10.03 Exculpatory Provisions. Neither the Agent, the
Collateral Agent nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i)
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liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement (except for its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Banks for any recitals, statements, representations or warranties by the
Borrower, any Subsidiary of the Borrower or any of their respective officers
contained in this Agreement, any other Document or in any certificate, report,
statement or other document referred to or provided for in, or received by such
agent under or in connection with, this Agreement or any other Document or for
any failure of the Borrower, any Subsidiary of the Borrower or any of their
respective officers to perform its obligations hereunder or thereunder. Neither
the Agent nor the Collateral Agent shall be under any obligation to any Bank to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any Subsidiary of the Borrower.
Neither the Agent nor the Collateral Agent shall be responsible to any Bank for
the effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Credit Document or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by such agent to the Banks or by or on behalf of the Borrower,
any of its Subsidiaries or any Guarantor to such agent or any Bank or be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained herein or
therein or as to the use of the proceeds of the Loans or of the existence or
possible existence of any Default or Event of Default.
10.04 Reliance by the Agent or the Collateral Agent. The Agent
and the Collateral Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by them to be
genuine and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Credit Parties), independent accountants and other experts
selected by such agent. The Agent and the Collateral Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Credit Document unless they shall first
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receive such advice or concurrence of the Required Banks as they deem
appropriate or they shall first be indemnified to their satisfaction by the
Banks against any and all liability and expense which may be incurred by them by
reason of taking or continuing to take any such action. The Agent and the
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Banks (or to the extent specifically
provided in Section 11.12, all the Banks), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Banks.
10.05 Notice of Default. Neither the Agent nor the Collateral
Agent shall be deemed to have knowledge of the occurrence of any Default or
Event of Default, other than a default in the payment of principal or interest
on the Loans hereunder unless it has received notice from a Bank or the Borrower
or any other Credit Party referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default". In
the event that an agent receives such a notice, such agent shall give prompt
notice thereof to the Banks. Such agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Banks; provided that, unless and until such agent shall have received such
directions, such agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
10.06 Non-Reliance on Agent, Collateral Agent and Other Banks.
Each Bank expressly acknowledges that neither the Agent, the Collateral Agent
nor officers, directors, employees, agents, attorneys-in-fact or affiliates of
any agent has made any representations or warranties to it and that no act by
any agent hereafter taken, including any review of the affairs of the Borrower
or any Subsidiary of the Borrower, shall be deemed to constitute any
representation or warranty by such agent to any Bank. Each Bank represents to
each agent that it has, independently and without reliance upon any such agent
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement and the other
agreements contemplated hereby. Each Bank also represents that it will,
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independently and without reliance upon any agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness of the
Borrower and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Banks by any agent hereunder, no agent
shall have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, operations, assets, property,
financial and other conditions, prospects or creditworthiness of the Borrower or
any of its Subsidiaries which may come into the possession of any such agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.07 Indemnification. The Banks agree to indemnify each of
the Agent and the Collateral Agent in its capacity as such or in any other
representative capacity under any other Credit Document, ratably according to
their aggregate Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against each such agent in
its capacity as such in any way relating to or arising out of this Agreement or
any other Credit Document, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted to
be taken by any such agent under or in connection with any of the foregoing, but
only to the extent that any of the foregoing is not paid by Borrower or any of
its Subsidiaries; provided that no Bank shall be liable to the Agent or the
Collateral Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from any such agent's gross
negligence or willful misconduct. If any indemnity furnished to an agent for any
purpose shall, in the opinion of such agent, be insufficient or become impaired,
the agent may call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is furnished. The
agreements in this Section 10.07 shall survive the payment of all Obligations.
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10.08 The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and other Affiliates of the Borrower as
though such agent were not an agent hereunder. With respect to the Loans made by
it and all Obligations owing to it, the Agent shall have the same rights and
powers under this Agreement as any Bank and may exercise the same as though it
were not an agent, and the terms "Bank" and "Banks" shall include such agent in
its individual capacity.
10.09 Successor Agents. Upon the acceptance of any appointment
as an Agent hereunder by a successor Agent or as a Collateral Agent by a
successor Collateral Agent, the term "Agent" or "Collateral Agent," as the case
may be, shall include such successor agent effective upon its appointment, and
the resigning Agent's or Collateral Agent's, as the case may be, rights, powers
and duties as Agent or Collateral Agent, as the case may be, shall be
terminated, without any other or further act or deed on the part of such former
agent or any of the parties to this Agreement. After the retiring Agent's or
Collateral Agent's, as the case may be, resignation hereunder as Agent or the
Collateral Agent, as the case may be, the provisions of this Section 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent or Collateral Agent, as the case may be, under this Agreement.
10.10 Resignation, Transfer by Agent. (A) An Agent or a
Collateral Agent may resign from the performance of all its functions and duties
hereunder at any time by giving 15 Business Days' prior written notice to the
Borrower and the Banks. Such resignation shall take effect upon the acceptance
by a successor Agent or Collateral Agent, as the case may be, of appointment
pursuant to subsections B and C below or as otherwise provided below.
(B) Upon any such notice of resignation of an agent, the
Required Banks shall appoint a successor agent acceptable to the Borrower and
which shall be an incorporated bank or trust company or other qualified
financial institution with operations in the United States and total assets of
at least $1 billion.
(C) If a successor agent shall not have been so appointed
within said 15 Business Day period, the resigning agent with the consent of the
Borrower shall then appoint a successor agent (which shall be an incorporated
bank or trust company or other qualified financial institution with operations
in the United States and total assets of at least $1 billion) who shall
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serve as a successor agent until such time, if any, as the Required Banks
appoint a successor agent as provided above.
(D) If no successor agent has been appointed pursuant to
subsection B or C by the 20th Business Day after the date such notice of
resignation was given by the resigning agent, such agent's resignation shall
become effective and the Required Banks shall thereafter perform all the duties
of agent hereunder until such time, if any, as the Required Banks appoint a
successor agent as provided above.
(E) Notwithstanding anything to the contrary contained in this
Section 10, Indosuez, as Agent and Collateral Agent, may transfer its rights and
obligations to perform all of its functions and duties hereunder to its parent
company or to any Affiliate of it or its parent company.
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SECTION 11. Miscellaneous.
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11.01 Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses (x) of the Agent and the Collateral
Agent in connection with the negotiation, preparation, execution and delivery of
the Credit Documents (including the Amendment) and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of Cahill
Gordon & Reindel and local counsel to the Agent and the Borrower) and (y) of the
Collateral Agent and each of the Banks in connection with the enforcement of the
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and disbursements of counsel
for the Collateral Agent and each of the Banks) and the reasonable fees and
expenses of any appraisers or any consultants or other advisors engaged with
prior notice to the Borrower of any such engagement; (ii) pay and hold the
Collateral Agent and each of the Banks harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save the Collateral Agent and each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to the Collateral Agent or such
Bank) to pay such taxes; (iii) indemnify the Collateral Agent and each Bank, its
officers, directors, employees, representatives and agents from and hold each of
them harmless against any and all losses, liabilities, claims, damages or
expenses (including, without limitation, any and all losses, liabilities,
claims,damages or expenses arising under Environmental Laws) incurred by any of
them as a result of, or arising out of, or in any way related to, or by reason
of, any investigation, litigation or other proceeding (whether or not the
Collateral Agent or any Bank is a party thereto) related to the entering into
and/or performance of any Document or the use of the proceeds of any Loans
hereunder or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified); and (iv) pay
all reasonable out-of-pocket costs and expenses of Indosuez in connection with
the assignment to any other Person of all or any portion of Indosuez's interest
under this Agreement pursuant to Section 11.04.
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11.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to any
Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Bank pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured; as a courtesy to the Borrower, the Borrower
shall receive notice of such set-off.
11.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower or any
of the Guarantors, to UroHealth Systems, Inc., 3050 Redhill Avenue, Costa Mesa,
California 92626, Attention: President and Chief Executive Officer, Facsimile
Number: (714) 668-5856, with a copy to: Morrison & Foerster, 19900 MacArthur
Blvd., Irvine, California 92715-2443, Attention: Robert M. Matson, Facsimile
Number: (714) 251-0900, or if to another Credit Party, to its address specified
in the other relevant Credit Documents, as the case may be; if to any Bank, at
its address specified for such Bank on Annex II hereto; or, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective two days after being deposited in the mails, when delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
when delivered by telex or telecopier, except that notices and communications to
the Agent, the Borrower or the Guarantors shall not be effective
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until received by such party.
11.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, all future holders of the Notes, and their respective successors and
assigns; provided that no Credit Party may assign or transfer any of its
interests hereunder without the prior written consent of the Banks; and
provided, further, that the rights of each Bank to transfer, assign or grant
participations in its rights and/or obligations hereunder shall be limited as
set forth below in this Section 11.04; provided that nothing in this Section
11.04 shall prevent or prohibit any Bank from (i) pledging its Loans hereunder
to a Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank and (ii) granting participations in or assignments of such
Bank's Loans, Notes and/or Revolving Loan Commitments hereunder to its parent
company and/or to any Affiliate of such Bank that is at least 50% owned by such
Bank or its parent company.
(b) Each Bank shall have the right to transfer, assign or
grant participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each Bank
may furnish any information concerning the Borrower in the possession of such
Bank from time to time to assignees and participants (including prospective
assignees and participants).
(A) Assignments. Each Bank, with the written consent of the
Agent, which shall not be unreasonably withheld, which shall be
evidenced on the notice in the form of Exhibit I-1 hereto, may assign
pursuant to an Assignment Agreement substantially in the form of
Exhibit I-2 hereto all or a portion of its Loans, Notes and/or
Revolving Loan Commitments hereunder pursuant to this clause (b)(A) to
(x) one or more Banks or (y) one or more Eligible Assignees; provided,
however, that any such assignment pursuant to this clause (y) shall not
be less than $500,000. Any assignment pursuant to this clause (b)(A)
will become effective after the Agent's receipt of (i) a written notice
in the form of Exhibit I-1 hereto from the assigning Bank and the
assignee Bank or Eligible Assignee, as the case may be, and (ii) a
processing and recordation fee of $2,000 from the assigning Bank in
connection with the Agent's recording of such sale, assignment,
transfer or negotiation; provided that such fee shall only be payable
if the assignment is between a Bank and a party that is not a Bank
prior to the assignment. The
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Borrower shall issue new Notes to the assignee Bank or Eligible
Assignee, as the case may be, in conformity with Section 1.05 and the
assignor shall return the old Notes to the Borrower. Upon the
effectiveness of any assignment in accordance with this clause (b)(A),
the assignee, if not a Bank, will become a "Bank" for all purposes of
this Agreement and the other Credit Documents and, to the extent of
such assignment, the assigning Bank shall be relieved of its
obligations hereunder with respect to the Commitments being assigned.
The Agent shall maintain at its address specified in Annex II hereto a
copy of each Assignment Agreement delivered to and accepted by it and a
register in which it shall record the names and addresses of the Banks
and the Commitment of, and principal amount of the Loans owing to, each
Bank from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent demonstrable
error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Agent or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(B) to any Person;
provided that (i) such Bank shall remain a "Bank" for all purposes of
this Agreement and the transferee of such participation shall not
constitute a Bank hereunder and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver
of this Agreement or any other Credit Document except to the extent
such amendment or waiver would (x) change the scheduled final maturity
date of any of the Loans, Notes or Commitments in which such
participant is participating or (y) reduce the principal amount,
interest rate or fees applicable to any of the Loans, Notes or
Commitments in which such participant is participating or postpone the
payment of any interest or fees or (z) release all or substantially all
of the Collateral. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of
the other Credit Documents (the participant's rights against the
granting Bank in respect of such participation to be those set forth in
the agreement with such Bank creating such participation) and all
amounts payable by the Borrower hereunder shall be
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determined as if such Bank had not sold such participation; provided
that such participant shall be considered to be a "Bank" for purposes
of Sections 11.02 and 11.06(b).
11.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Agent or any Bank shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power, or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which any Agent or any
Bank would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any Agent
or the Banks to any other or further action in any circumstances without notice
or demand.
11.06 Payments Pro Rata. (a) The Agent agrees that promptly
after its receipt of each payment from or on behalf of any Credit Party in
respect of any Obligations of such Credit Party, it shall distribute such
payment to the Banks pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligations
then owed and due to such Bank bears to the total of such Obligations then owed
and due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in the Obligations of the respective
Credit Party to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price
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restored to the extent of such recovery, but without interest.
11.07 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by Borrower to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Section 7 and all
definitions used herein for any purpose (including Section 1.08(d)) shall
utilize accounting principles and policies in effect at the time of the
preparation of, and in conformity with those used to prepare, the historical
financial statements delivered to the Banks pursuant to Section 4.01(H).
(b) All computations of interest and fees hereunder shall be
made on the actual number of days elapsed over a year of 365 days; provided that
all computations of Commitment Commission and interest on LIBOR Loans shall be
made on the actual number of days elapsed over a year of 360 days.
11.08 Governing Law; Submission to Jurisdiction; Venue. (a)
This Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts. Each Credit Party further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the respective Credit Party at
its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Each Credit Party hereby irrevocably
appoints the Borrower and such other persons as may hereafter be selected by
Borrower irrevocably agreeing in writing to serve as its agent for service of
process in respect of any such action or proceeding. Nothing herein shall affect
the right of the Agent or any Bank to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any Credit Party in any other jurisdiction.
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(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Agent.
11.10 Effectiveness. This Agreement shall become effective on
the date on which each of the Borrower and the Guarantors and each of the Banks
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to the Agent at its Office or, in the case of the Banks,
shall have given to the Agent telephonic (confirmed in writing), written, telex
or telecopy notice (actually received) at such office that the same has been
signed and mailed to it. The Agent will give the Borrower and each Bank prompt
written notice of the effectiveness of this Agreement.
11.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
11.12 Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Required Banks; provided that no such change, waiver,
discharge or termination shall, without the consent of each affected Bank and
the Agent, (i) extend the scheduled final maturity date of any Loan, or any
portion thereof, or reduce the rate or extend the time of payment of interest
thereon or fees or reduce the principal amount thereof, or increase the
Revolving Loan Commitments of any Bank over the amount thereof then in effect
(it being understood that a waiver of any Default or Event of
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Default or of a mandatory reduction in the Total Revolving Loan Commitment shall
not constitute a change in the terms of any Commitment of any Bank), (ii)
release all or substantially all of the Collateral (except as expressly
permitted by the Credit Documents), (iii) amend, modify or waive any provision
of this Section, or Section 1.10, 1.11, 3.04, 10.07, 11.01, 11.02, 11.04, 11.06
or 11.07(b), (iv) reduce any percentage specified in, or otherwise modify, the
definition of Required Banks or (v) consent to the assignment or transfer by any
Credit Party of any of its rights and obligations under this Agreement. No
provision of Section 10 may be amended without the consent of the Agent.
11.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.11, 3.04, 10.07 or 11.01, shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Revolving Loan
Commitments.
11.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or Affiliate of
such Bank; provided that in doing so such Bank will use its commercially
reasonable efforts to mitigate any resulting increase in withholding tax
obligations.
11.15 Waiver of Jury Trial. Each of the parties to this
agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement, the
Credit Documents or the transactions contemplated hereby or thereby.
11.16 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amended and Restated Revolving Credit Agreement to be duly
executed and delivered as of the date first above written.
UROHEALTH SYSTEMS, INC.
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
Guarantors: ALLSTATE MEDICAL PRODUCTS, INC.
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
DACOMED CORPORATION
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
DACOMED INTERNATIONAL, INC.
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
GATES PLASTIC
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
<PAGE> 116
-110-
UROHEALTH, INC. (CALIFORNIA)
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
UROHEALTH OF KENTUCKY, INC.
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
OSBON MEDICAL SYSTEMS LTD.
By: /s/ JAMES L. JOHNSON
------------------------------------
Name: James L. Johnson
Title: Executive Vice President
<PAGE> 117
Amended and Restated Revolving Credit Agreement among
UroHealth Systems, Inc., Banque Indosuez
and the Banks listed herein
BANQUE INDOSUEZ, NEW YORK BRANCH
as Agent and Collateral Agent
By: /s/ JOHN L. SABRE
--------------------------------
Name: John L. Sabre
Title: First Vice President
By: /s/ PATRICIA FRANTEEL
--------------------------------
Name: Patricia Franteel
Title: First Vice President
Revolving Loan Commitment: $50,000,000
<PAGE> 118
ANNEX I
List of Banks
Banque Indosuez, New York Branch
<PAGE> 119
ANNEX II
Bank Addresses
Banque Indosuez, New York Branch
1211 Avenue of the Americas - 7th Floor
New York, New York 10036
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
For: UROHEALTH Systems, Inc.
Contact: Charles A. Laverty
Chairman and CEO
James L. Johnson
Executive Vice President & CFO
UROHEALTH Systems, Inc.
(714) 668-5858
Investor Relations: Betsy Brod/Alex Gleeson
Morgen-Walke Associates
Media Contact: Miriam Adler/
Erika Brown
(212) 850-5600
FOR IMMEDIATE RELEASE
- ---------------------
UROHEALTH SYSTEMS, INC. ANNOUNCES THE OFFERING OF $100 MILLION OF
SENIOR SUBORDINATED NOTES
NEWPORT BEACH, CA, MARCH 17, 1997 -- UROHEALTH SYSTEMS, INC.
(NASDAQ:UROH), today announced that it plans to offer $100 million aggregate
principal amount of Senior Subordinated Notes due 2004 in a private
transaction under Rule 144A of the Securities Act of 1933, as amended (the
"Securities Act").
The net proceeds from the sale of the Notes are estimated to be
approximately $96 million after deducting the initial purchasers' discount and
estimated expenses related to the Offering. The Company intends to use the net
proceeds to repay amounts outstanding under a bank credit facility and for
general corporate purposes.
The Notes will not be registered under the Securities Act and may not
be offered or sold in the United States absent registration thereunder or an
applicable exemption from the registration requirements thereof.
UROHEALTH Systems, Inc. is a developer, manufacturer and distributor of
disposable and reusable products for minimally invasive and general surgery,
urology and gynecology.
###
[MORGEN WALKE ASSOCIATES, INC. LETTERHEAD]
