- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-11397,
ICN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0628076
- -------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(714) 545-0100
------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of outstanding shares of the registrant's Common Stock,
$.01 par value, as of August 8, 1997 was 37,605,335.
- --------------------------------------------------------------------------------
<PAGE>
ICN PHARMACEUTICALS, INC.
INDEX
Page
Number
PART I - FINANCIAL INFORMATION (Unaudited):
Consolidated Condensed Balance Sheets -
June 30, 1997 and December 31, 1996 ................................... 3
Consolidated Condensed Statements of Income -
Three and six months ended June 30, 1997 and 1996 ................... 4
Consolidated Condensed Statements of Cash Flows -
Six months ended June 30, 1997 and 1996 ............................. 5
Management's Statement Regarding Unaudited Financial
Statements............................................................ 6
Notes to Consolidated Condensed Financial Statements ................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 15
PART II - OTHER INFORMATION
Item 1. Litigation....................................................... 21
Item 6. Exhibits and Reports on Form 8-K................................. 21
SIGNATURES................................................................ 22
ii
<PAGE>
3
ICN PHARMACEUTICALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited - 000's omitted, except per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------------- --------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 41,969 $ 39,366
Restricted cash 552 552
Receivables, net 223,076 258,531
Notes receivable 100,000 00
Inventories, net 122,670 120,973
Prepaid expenses and other current assets 21,371 24,979
---------------- --------------
Total current assets 509,638 444,401
Property, plant and equipment, net 233,559 234,209
Deferred taxes, net 55,850 34,334
Other assets 37,953 32,230
Goodwill and intangibles, net 34,978 33,477
---------------- --------------
Total assets $ 871,978 $ 778,651
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 71,382 $ 62,049
Accrued liabilities 65,952 55,383
Notes payable 16,704 13,231
Current portion of long-term debt 5,435 5,961
Income taxes payable 1,902 1,013
---------------- --------------
Total current liabilities 161,375 137,637
Long-term debt, less current portion:
Convertible into common stock 126,727 130,941
Other long-term debt 59,165 45,548
Deferred license and royalty income 13,312 13,850
Other liabilities 22,233 15,622
Minority interest 110,611 96,583
Common stock subject to Put Agreement,
710 shares 15,946 23,120
Commitments and contingencies (Note 6)
Stockholders' equity:
Preferred stock, $.01 par value; 10,000 shares authorized;
28 and 50 shares of Series B issued and outstanding
at June 30, 1997 and December 31, 1996, respectively
($28,000 liquidation preference) 1 1
Common stock, $.01 par value; 100,000 shares authorized;
35,448 and 33,422 shares outstanding at June 30, 1997
and December 31, 1996, respectively (including shares
subject to put agreement) 347 324
Additional capital 391,760 368,187
Retained earnings (deficit) 6,805 (25,915)
Foreign currency translation adjustments (36,304) (27,247)
---------------- --------------
Total stockholders' equity 362,609 315,350
---------------- --------------
Total liabilities and stockholders' equity $ 871,978 $ 778,651
================ ==============
The accompanying notes are an integral part of these consolidated
condensed financial statements.
</TABLE>
<PAGE>
4
ICN PHARMACEUTICALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
For the three and six months ended June 30, 1997 and 1996
(Unaudited - 000's omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- -------------------------
1997 1996 1997 1996
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net sales $ 160,229 $ 143,746 $ 319,197 $ 281,908
Cost of sales 75,957 72,307 150,761 140,335
-------------- ------------ ------------ -----------
Gross profit 84,272 71,439 168,436 141,573
Selling, general and administrative expenses 65,747 46,930 111,182 85,166
Research and development costs 4,610 3,379 8,920 6,910
-------------- ------------ ------------ -----------
Income from operations 13,915 21,130 48,334 49,497
Translation and exchange losses, net 1,715 206 5,710 688
Interest income (2,924) (549) (3,463) (1,519)
Interest expense 3,423 2,890 7,382 5,592
-------------- ------------ ------------ -----------
Income before provision for income taxes
and minority interest 11,701 18,583 38,705 44,736
Provision (benefit) for income taxes (11,594) (898) (11,790) 1,040
Minority interest 2,027 4,588 6,915 6,800
-------------- ------------ ------------ -----------
Net income $ 21,268 $ 14,893 $ 43,580 $ 36,896
============== ============ ============ ===========
Per Share Information:
Primary:
Net income per share $ .53 $ .42 $1.03 $ 1.07
============== ============ ============ ===========
Shares used in per share computation 37,637 34,370 37,059 33,800
============== ============ ============ ===========
Fully diluted:
Net income per share $ .50 $ .41 $.98 $ 1.02
============== ============ ============ ===========
Shares used in per share computation 43,405 39,586 42,735 39,105
============== ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
5
ICN PHARMACEUTICALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1997 and 1996
(Unaudited - 000's omitted)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 43,580 $ 36,896
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,765 6,484
Increase in allowance for losses
on accounts receivable 1,586 129
Translation and exchange losses, net 5,710 688
Legal settlement charge 12,000 00
Minority interest 6,915 6,800
Decrease (increase) in deferred taxes (21,515) 1,318
Increase in accounts and notes receivable (61,291) (88,560)
(Increase) decrease in inventories (1,224) 27,988
Decrease in prepaid expenses 3,936 11,349
Changes in other operating assets and liabilities, net 12,274 (7,580)
----------- -----------
Net cash provided by (used in) operating activities 12,736 (4,488)
----------- -----------
Cash flows from investing activities:
Capital expenditures (10,861) (7,939)
Proceeds from sale of fixed assets 1,821 3
Sale of marketable securities 00 27,667
Acquisitions and other (11,334) (11,581)
----------- -----------
Net cash (used in) provided by investing activities (20,374) 8,150
----------- -----------
Cash flows from financing activities:
Net (payments) borrowings of notes payable (1,988) 3,200
Net borrowings (payments) of long-term debt 13,288 (6,374)
Proceeds from exercise of stock options 4,930 9,500
Proceeds from issuance of stock 00 8,601
Dividends paid (5,615) (2,325)
Increase in loan to officer -- (3,500)
----------- -----------
Net cash provided by financing activities 10,615 9,102
----------- -----------
Effect of exchange rate changes on cash (374) 11
----------- -----------
Net increase in cash and cash equivalents 2,603 12,775
Cash and cash equivalents at beginning of period 39,366 24,094
----------- -----------
Cash and cash equivalents at end of period $ 41,969 $ 36,869
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
6
MANAGEMENT'S STATEMENT REGARDING UNAUDITED FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results of operations presented
herein are not necessarily indicative of the results to be expected for a full
year. Although the Company believes that all adjustments (consisting only of
normal, recurring adjustments) necessary for a fair presentation of the
interim period presented are included and that the disclosures are adequate to
make the information presented not misleading, these consolidated condensed
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 and Form 10-K/A filed on
July 24, 1997.
<PAGE>
7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Principles of Consolidation
The accompanying consolidated condensed financial statements include the
accounts of the Company and all of its subsidiaries. Investments in 20%
through 50% owned affiliated companies are included under the equity
method where the Company exercises significant influence over operating
and financial affairs. Investments in less than 20% owned companies are
recorded at cost. All significant intercompany account balances and
transactions have been eliminated.
Per Share Information
Net income per share is based on net income after preferred stock
dividend requirements, the weighted average number of common shares
outstanding, including shares issued subject to put option, and the
dilutive effect of common share equivalents. Common share equivalents
represent shares issuable for outstanding options, on the assumption that
the proceeds would be used to repurchase shares in the open market, and
the shares issuable related to certain of the Company's convertible
preferred stock and to certain of the Company's convertible debentures.
Such convertible preferred stock and convertible debentures are
considered common stock equivalents if they met certain criteria at the
time of issuance and have a dilutive effect, if converted.
On March 25, 1997, the Company's Board of Directors declared a first
quarter cash dividend ("distribution") of $.08 per share, payable on
April 23, 1997, to stockholders of record on April 9, 1997.
On June 26, 1997, the Company's Board of Directors declared a second
quarter cash dividend of $ .08 per share, payable July 23, 1997, to
shareholders of record on July 9, 1997.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128 on
the computation and presentation of earnings per share ("EPS"). SFAS No.
128 simplifies the computation for and replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income
statement. The statement is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods, and
requires restatement of all prior period earnings per share data
presented. Earlier application is not permitted. The Company will
implement the accounting standard beginning with its annual financial
statements for the year ended December 31, 1997. The Company expects that
basic EPS will be greater than the currently reported primary EPS.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income. SFAS No. 130 establishes requirements for disclosure of
comprehensive income and becomes effective for the Company for the year
ending December 31, 1998. Comprehensive income includes such items as
foreign currency translation adjustments and unrealized holding gains and
losses on available for sale securities that are currently being
presented by the Company as a component of stockholders' equity
(deficit). The impact of adopting SFAS No. 130 has not been determined by
the Company.
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. SFAS No. 131 establishes standards
for disclosure about operating segments in annual financial statements
and selected information in interim financial reports. It also
establishes standards for related disclosures about products and
services, geographic areas and major customers. This statement supersedes
SFAS No. 14, Financial Reporting for Segments of a Business Enterprise.
The new standard becomes effective for the Company for the year ending
December 31, 1998, and requires that comparative information from earlier
years
<PAGE>
8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued
June 30, 1997
(Unaudited)
be restated to conform to the requirements of this standard. The Company
does not expect this pronouncement to materially change the Company's
current reporting and disclosures.
2. RELATED PARTY TRANSACTIONS -
During the second quarter of 1997, the Company made a short-term advance
to the Chairman and CEO with an outstanding balance of approximately
$327,000 as of June 30, 1997. The advance along with accrued interest was
repaid in August 1997.
3. SUPPLEMENTAL CASH FLOW INFORMATION -
Cash paid for income taxes for the six months ended June 30, 1997 and
1996 was $1,045,000 and $1,932,000, respectively.
Cash paid for interest for the six months ended June 30, 1997 and
1996 was $5,483,000 and $5,765,000, respectively.
In January 1997, the Company issued approximately 541,000 shares of
common stock as payment of its $10,000,000 obligation under the 1987
class action settlement.
During the second quarter, the Company accrued a second quarter preferred
dividend of $434,000 and a second quarter common stock dividend of
$2,833,000.
During the six months ended June 30 1997, the Company issued
approximately 69,000 shares of common stock as payment of a fourth
quarter 1996 and first quarter 1997 preferred stock dividend of
$1,442,000.
<PAGE>
9
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued
June 30, 1997
(Unaudited)
4. GEOGRAPHIC DATA -
The following table sets forth the amount of net sales and operating
income of the Company by geographical areas (includes pharmaceuticals and
biomedical operations) for the three and six months ended June 30, 1997
and 1996 and the identifiable assets of the Company by geographical areas
as of June 30, 1997 and December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
1997 1996 1997 1996
-------------- ------------ ------------ -----------
Sales:
<S> <C> <C> <C> <C>
United States $ 30,755 $ 23,091 $ 59,239 $ 57,974
Canada 5,134 4,763 10,130 9,546
-------------- ------------ ------------ -----------
North America 35,889 27,854 69,369 67,520
Latin America (principally Mexico) 14,400 11,819 27,841 22,582
Western Europe 14,541 16,565 28,810 32,196
Yugoslavia 47,086 68,219 98,108 129,992
Russia 28,079 16,751 54,208 24,880
Hungary 14,520 00 29,649 00
-------------- ------------ ------------ -----------
Eastern Europe 89,685 84,970 181,965 154,872
Asia, Africa, and Australia 5,714 2,538 11,212 4,738
-------------- ------------ ------------ -----------
Total $ 160,229 $ 143,746 $ 319,197 $ 281,908
============== ============ ============ ===========
Operating Income:
United States $ 11,867 $ 8,595 $ 19,511 $ 24,775
Canada 1,546 (2,277)(2) 3,414 (770)(2)
-------------- ----------- ------------ -----------
North America 13,413 6,318 22,925 24,005
Latin America (principally Mexico) 3,378 2,772 6,089 5,197
Western Europe 1,011 1,518 2,195 3,056
Yugoslavia 13,275 16,584 32,582 27,092
Russia 5,659 5,083 12,370 8,138
Hungary 1,696 00 4,786 00
Eastern European Headquarters (1,405) 00 (1,678) 00
--------------- ------------ ------------ -----------
Eastern Europe 19,225 21,667 48,060 35,230
Asia, Africa, and Australia (29) 11 115 107
Corporate (23,083)(1) (11,156) (31,050)(1) (18,098)
-------------- ------------ ------------ -----------
Total $ 13,915 $ 21,130 $ 48,334 $ 49,497
============== ============ ============ ===========
(1) Includes $12,000,000 of expenses related to a charge in connection with the
settlement of the Company's class action lawsuit. (See Note 6.)
(2) Includes $3,500,000 of expenses related to one-time charge in connection
with a resolution of a commercial dispute and a penalty from the Canadian Patent
Price Review Board.
</TABLE>
<PAGE>
10
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
Identifiable assets:
June 30, December 31,
1997 1996
------------- ------------
United States $ 97,778 $ 105,670
Canada 9,129 7,433
------------- ------------
North America 106,907 113,103
Latin America (principally Mexico) 30,782 30,691
Western Europe 53,452 56,578
Yugoslavia 378,995 342,983
Russia 73,884 54,990
Hungary 75,213 77,245
Eastern European Headquarters 529 00
------------- ------------
Eastern Europe 528,621 475,218
Asia, Africa, and Australia 27,399 2,524
Corporate 124,817 100,537
------------- ------------
Total $ 871,978 $ 778,651
============= ============
5. ICN YUGOSLAVIA -
ICN Yugoslavia, a 75% owned subsidiary, operates in a business
environment that is subject to significant economic volatility and
political instability. The economic conditions in Yugoslavia include
continuing liquidity problems, a history of high inflation, unemployment,
a weakened banking system and a high trade deficit. The future of the
economic and political environment of Yugoslavia is uncertain and could
deteriorate to the point that a material adverse impact on the Company's
financial position and results of operations could occur.
ICN Yugoslavia began the year with a net asset monetary exposure of
$134,000,000 which was subject to foreign exchange loss if a devaluation
of the dinar were to occur. During the first six months of 1997, the
Company was successful in reducing its monetary exposure by converting
dinar denominated accounts receivable into notes receivable from the
Yugoslavian Government payable in dinars, but fixed in dollar amounts.
The first conversion was made early in the first quarter with $50,000,000
of accounts receivable converted into a one year note with interest at
the European LIBOR rate plus one percent. A second conversion was
arranged in the middle of the first quarter through an agreement with the
Yugoslavian government to purchase an additional $50,000,000 of drugs.
The accounts receivable under this agreement were converted into a
non-interest bearing short term note receivable that has special payment
guarantees from the Serbian Government with the payment fixed in dollar
amounts. Approximately $30,000,000 of accounts receivable were converted
to notes receivable in the first quarter under this arrangement and the
remainder was converted in the second quarter. The second agreement also
allows the Company to offset payroll tax obligations against outstanding
accounts receivable balances. As of June 30, 1997, ICN Yugoslavia had a
net monetary asset position of $49,000,000 which would be subject to
foreign exchange loss if a devaluation of the dinar were to occur.
The Company was able to reduce its overall accounts receivable balance
from the beginning of the year through collections and the conversion of
$100,000,000 of accounts receivable into notes receivable discussed
above. As of June 30, 1997, the accounts receivable balance was
$93,056,000. Based on current levels of collections, the Company will
impose even stricter credit terms on its customers which will likely
result in lower future domestic sales. The willingness of the government
to provide the Company protection against devaluation on its receivables
in exchange for longer payment terms is a reflection of the strict
adherence to government policy on controlling inflation by limiting the
amount of hard currency in circulation. This policy was initially
established
<PAGE>
12
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
with the start of the stabilization program in 1994. The Company is
currently negotiating an arrangement with the government of Yugoslavia
under which ICN Yugoslavia would commit to continue to provide products,
in dollar denominated sales, in an amount up to $50,000,000 per calendar
quarter for one year, and the government would pay a minimum of
$9,000,000 per month toward outstanding receivables. However, at no point
in time can the amount due to ICN Yugoslavia from the government exceed
$200,000,000, including both accounts and notes receivable.
6. COMMITMENTS AND CONTINGENCIES -
Litigation: In a Consolidated Amended Class Action Complaint for
Violations of Federal Securities Laws (the "Securities Complaint") (the
"1995 Actions"), plaintiffs allege that Defendants made various deceptive
and untrue statements of material fact and omitted material facts
regarding its hepatitis C NDA in connection with: (i) the Merger of the
Company, SPI, Viratek and Biomedicals in November 1994 and the issuance
of convertible debentures in connection therewith; and (ii) information
provided to the public. Plaintiffs also allege that the Chairman of the
Company traded on inside information relating to the hepatitis C NDA. The
Securities Complaint asserts claims for alleged violations of Sections 11
and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Plaintiffs motion seeking the certification of (i) a class of persons who
purchased ICN securities from November 10, 1994 through February 17,
1995; and (ii) a subclass consisting of persons who owned SPI and/or
Biomedicals common stock prior to the Merger was granted. Defendants
filed their answer to the Securities Complaint. On July 23, 1997,
plaintiffs and defendants entered into a Memorandum of Agreement to
Settle Action (the "Agreement"), whereby the parties agreed to settle the
1995 Actions for $15,000,000. This settlement, funded in part by the
Company's insurance policy, resulted in a $12,000,000 charge to the
Company which is included in the consolidated condensed statements of
income for the three and six months ended June 30, 1997. The full
settlement documentation is being prepared and a settlement hearing is
expected to be held in the fall of 1997. The settlement is subject to
final approval of the Court. The Company intends to urge the Court to
approve the settlement. If the settlement is not approved and the matter
proceeds to trial, the ultimate outcome of any such trial cannot be
predicted with certainty and an unfavorable outcome could have a material
adverse effect on the Company.
Four lawsuits have been filed with respect to the Merger in the Court of
Chancery in the State of Delaware (the "1994 Actions"). Three of these
lawsuits were filed by stockholders of SPI and, in one lawsuit, of
Viratek against ICN, SPI, Viratek (in the one lawsuit) and certain
directors and officers of ICN, SPI and/or Viratek (including the
Chairman) and purport to be class actions on behalf of all persons who
held shares of SPI and Viratek common stock. The fourth lawsuit was filed
by a stockholder of Viratek against ICN, Viratek and certain directors
and officers of ICN, SPI and Viratek (including the Chairman) and
purports to be a class action on behalf of all persons who held shares of
Viratek common stock. These suits allege that the consideration provided
to the public stockholders of SPI and/or Viratek in the Merger was unfair
and inadequate, and that the defendants breached their fiduciary duties
in approving the Merger and otherwise. The 1994 Actions have been
inactive. The Company believes that these suits are without merit and
intends to defend them vigorously.
Management believes that, having extensively reviewed the issues in the
above referenced matters, there are strong defenses and, if the matters
are not settled, the Company will continue to defend the litigations
vigorously. While the ultimate outcome of the 1995 Actions, should the
Court not approve the settlement, and 1994 Actions cannot be predicted
with certainty, and an unfavorable outcome could have a material adverse
effect on the Company, at this time management does not expect these
matters will have a material adverse effect on the financial position and
results of operations of the Company.
<PAGE>
12
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
Investigations: Pursuant to an Order Directing Private Investigation and
Designating Officers to Take Testimony, entitled In the Matter of ICN
Pharmaceuticals, Inc., (P-177) (the "Order"), a private investigation is
being conducted by the SEC with respect to certain matters pertaining to
the status and disposition of the hepatitis C NDA. As set forth in the
Order, the investigation concerns whether, during the period June 1994
through February 1995, the Company, persons or entities associated with
it and others, in the offer and sale or in connection with the purchase
and sale of ICN common stock, engaged in possible violations of Section
17(a) of the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder, by having possibly: (i)
made false or misleading statements or omitted material facts with
respect to the status and disposition of the hepatitis C NDA; or (ii)
purchased or sold ICN common stock while in possession of material,
non-public information concerning the status and disposition of the
hepatitis C NDA; or (iii) conveyed material, non-public information
concerning the status and disposition of the hepatitis C NDA, to other
persons who may have purchased or sold ICN stock. The Company is
cooperating with the SEC in its investigation. The Company has and
continues to produce documents to the SEC pursuant to its request and the
SEC has taken the depositions of certain current and former officers,
directors, and employees of the Company.
In addition, the Company has received Subpoenas from a Grand Jury of the
United States District Court, Central District of California, requesting
the production of documents covering a broad range of matters over
various time periods. The Company and Milan Panic are subjects of the
investigation. The Company has and continues to cooperate in the
production of documents pursuant to the Subpoenas. A number of current
and former employees of the Company have been interviewed by the
government in connection with the investigation.
The Company is a party to a number of other pending or threatened
lawsuits. In the opinion of management, the ultimate resolution of these
other matters will not have a material effect on the Company's
consolidated financial position or results of operations.
Commitments: In January 1997, ICN Yugoslavia entered into a forward
exchange contract with a Yugoslavian bank to purchase $18,700,000 in hard
currency at a fixed exchange rate of 5.25 dinars to one U.S. dollar.
Under the terms of the agreement, the bank is to provide $5,000,000,
$5,700,000 and $8,000,000 by August 10, 1997, September 30, 1997 and
November 3, 1997, respectively, to ICN Yugoslavia. The dinars shall be
paid to the bank two days after the receipt of the hard currency. Should
the bank fail to provide the hard currency, ICN Yugoslavia is under no
obligation to pay the dinars. Additionally, this contract is
automatically canceled should there be an official devaluation of the
dinar.
<PAGE>
13
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
7. DETAIL OF CERTAIN ACCOUNTS - (000's omitted)
Receivables, Net
June 30, December 31,
1997 1996
------------ ------------
Trade accounts receivable $ 213,076 $ 257,619
Other 20,653 9,782
------------ ------------
233,729 267,401
Allowance for doubtful accounts (10,653) (8,870)
------------ ------------
$ 223,076 $ 258,531
============ ============
Inventories, Net
June 30, December 31,
1997 1996
------------ ------------
Raw materials and supplies $ 55,625 $ 48,656
Work-in-process 13,155 14,625
Finished goods 64,863 67,845
------------ ------------
133,643 131,126
Allowance for inventory obsolescence (10,973) (10,153)
------------ ------------
$ 122,670 $ 120,973
============ ============
Property, Plant and Equipment, Net:
June 30, December 31,
1997 1996
------------ ------------
Property, plant and equipment, at cost $ 284,926 $ 280,629
Accumulated depreciation (51,367) (46,420)
------------ ------------
$ 233,559 $ 234,209
============ ============
8. SUBSEQUENT EVENTS
In August 1997, the Company completed its offering of $275,000,000
principal amount of 9.25% Senior Notes due 2005 (the "Notes"). Interest
on the Notes will be payable semi-annually on February 15 and August 15
of each year, commencing February 15, 1998. The Notes will mature on
August 15, 2005, unless previously redeemed. The Notes will be
redeemable in cash at the option of the Company, in whole or in part,
on or after August 15, 2001. The Notes will be general unsecured
obligations of the Company. The Notes will rank pari passu in right of
payment with all unsecured senior indebtedness and senior to all
subordinated indebtedness of the Company, including the Company's 8.5%
Convertible Subordinated Notes due 1999. The indenture governing the
Notes will permit the Company and its subsidiaries to incur additional
indebtedness, subject to certain limitations, and will contain certain
covenants with respect to payment of dividends, creation of liens,
sales of assets, and maintenance of financial ratios.
<PAGE>
14
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
June 30, 1997
(Unaudited)
In August 1997, the Company completed its purchase from F. Hoffmann-La
Roche Ltd. ("Roche") of worldwide rights to seven products, the
non-U.S. rights to two other products and the purchase of a
GMP-standard manufacturing plant in Humacao, Puerto Rico (the "Plant").
Under the agreement, effective July 1, 1997, the Company received the
product rights in exchange for $90,000,000 payable in a combination of
1,600,000 shares of the Company's common stock valued at $40,000,000
and 2,000 shares of the Company's convertible preferred stock valued at
$50,000,000. Each share of the Company's convertible preferred stock is
convertible into 1,000 shares of the Company's common stock at a
conversion price equivalent to $25 per share. The purchase price of the
Plant was $55,000,000 which was funded by the assumption of $40,000,000
in existing bonds and the payment of $15,000,000 in cash. Additionally,
the purchase of the Plant is under a sale/leaseback arrangement whereby
Roche will lease the Plant from the Company under a two year lease with
lease payments totaling $8,000,000 annually. The acquisition will be
accounted for using the purchase method of accounting. The purchase
price allocation is preliminary pending appraisals, evaluations and
other studies of fair value of the assets acquired. The acquisition did
not constitute the acquisition of a significant business as defined by
Regulation S-X promulgated by the Securities and Exchange Commission.
<PAGE>
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For financial reporting purposes the Company's operations are divided into two
industry segments, the Pharmaceutical segment and the Biomedical segment.
Certain financial information for these two segments is set forth below (in
thousands).
Net Sales
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ -------------------------
1997 1996 1997 1996
-------------- ------------- ----------- -----------
Pharmaceutical $ 141,928 $ 127,420 $ 282,144 $ 249,530
Biomedical 18,301 16,326 37,053 32,378
-------------- ------------- ----------- -----------
Total Company $ 160,229 $ 143,746 $ 319,197 $ 281,908
============== ============= =========== ===========
Pharmaceutical sales for the three and six months ended June 30, 1997 increased
due to continued growth in Eastern Europe reflecting internal growth in Russia
and additional sales from acquisitions. This region experienced growth despite
declining sales in Yugoslavia resulting from government controls on healthcare
spending.
Pharmaceutical net sales in Eastern Europe were $89,685,000 and $181,965,000 for
the three and six months ended June 30, 1997, respectively, compared to
$84,970,000 and $154,872,000 for the same periods in 1996. The Company's new
acquisitions of Alkaloida in Hungary and Polypharm in Russia contributed
$19,412,000 of sales to the Eastern European region during the second quarter of
1997 and $39,741,000 in additional sales during the six months ended June 30,
1997. Quarterly sales in Russia, excluding acquisitions increased $6,436,000 or
38% compared to the second quarter of 1997, primarily due to higher unit sales
and price increases. Sales in Yugoslavia were $47,806,000 and $98,108,000 for
the three and six months ended June 30, 1997, respectively, compared to
$68,219,000 and 129,992,000 for the same periods in 1996. Sales in Yugoslavia
were lower due to decreased unit sales and unfavorable exchange rates and have
been adversely affected by liquidity problems in that country and by government
actions to reduce health care spending. The Company is currently negotiating an
arrangement with the government of Yugoslavia under which ICN Yugoslavia would
commit to continue to provide products, in dollar denominated sales, in an
amount up to $50,000,000 per calendar quarter for one year, and the government
would pay a minimum of $9,000,000 per month towards outstanding receivables.
However, at no point in time can the amount due to ICN Yugoslavia from the
government exceed $200,000,000, including both accounts and notes receivable.
Pharmaceutical net sales in North America were $25,811,000 and $48,087,000 for
the three and six months ended June 30, 1997, respectively, compared to
$20,629,000 and $51,739,000 for the same periods in 1996. Net sales in the
second quarter of 1997 increased $5,182,000 or 25% primarily due to increased
unit sales in the myasthenia gravis, medicinal and dermatological product lines.
Net sales for the six months ended June 30, 1997 decreased $3,652,000 or 8%
primarily due to a decrease in unit sales of Virazole(R) in the amount of
$8,208,000 partially offset by an increase in unit sales in the dermatological,
medicinal and myasthenia gravis product lines. Virazole(R) is used in the United
States to treat RSV, a seasonal illness which occurs primarily in late fall
through early spring. Sales of Virazole(R) during the first six months of 1997
have been adversely impacted by increased wholesale inventory levels that
developed early in the 1995/1996 season along with continuing trends in the
industry toward cost containment.
The Company has completed its purchase, effective July 1, 1997 from F.
Hoffmann-La Roche Ltd. of worldwide rights to seven products and non-U.S. rights
(with an option to purchase the U.S. rights) to two other products having
aggregate annual sales in 1996 of $53,800,000. The future sales from these
products will be included in the North American sales from the effective date of
the acquisition, July 1, 1997, and may be slightly lower than the annualized
1996 sales levels.
<PAGE>
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Pharmaceutical net sales in Latin America were $13,650,000 and $26,455,000 for
the three and six months ended June 30, 1997, respectively, compared to
$11,256,000 and $21,473,000 for the same periods in 1996. Net sales in the
second quarter and six months ended June 30, 1997 increased $2,394,000 or 21%
and $4,982,000 or 23%, respectively, compared to the same periods in 1996. Such
increases in net sales were primarily due to price increases, and, to a lesser
extent, volume increases.
Pharmaceutical net sales in Western Europe were $9,043,000 and $17,805,000 for
the three and six months ended June 30, 1997, respectively, compared to
$9,381,000 and $19,051,000 for the same periods in 1996. Net sales in the second
quarter of 1997 decreased $338,000 or 4%, primarily due to a decline in
Calcitonina(R) and antibiotic sales in Spain, and changes in translation rates,
partially offset by an increase in European Virazole(R) sales of $628,000. Net
sales for the six months ended June 30, 1997 decreased $1,246,000 or 7%
primarily due to a decrease in Calcitonina(R) and antibiotic unit sales in Spain
and changes in translation rates partially offset by an increase in European
Virazole(R) sales of $1,127,000. Since the beginning of the year the exchange
rate of the Spanish peseta has declined in value against the dollar by 14%.
Pharmaceutical net sales in Asia, Africa and Australia were $3,739,000 and
$7,832,000 for the three and six months ended June 30, 1997, respectively,
compared to $1,184,000 and $2,395,000 for the same periods in 1996. This
increase of $2,555,000 and $5,437,000 for the three and six months ended June
30, 1997 compared to the same periods in 1996 is primarily due to the additional
sales contributed by the Company's acquisition of Wuxi Pharmaceutical
Corporation ("Wuxi") in China, which the Company acquired in the first quarter
of 1997.
Biomedicals segment net sales for the three and six months ended June 30, 1997
were $18,301,000 and $37,053,000, respectively, compared to $16,326,000 and
$32,378,000 for the same periods of 1996. Net sales in the second quarter and
six months ended June 30, 1997 increased $1,975,000 or 12% and $4,675,000 or
14%, respectively. The increase in net sales for the three months ended June 30,
1997 is primarily due to the effect of the additional Dosimetry sales resulting
from the acquisition of the former Siemens Dosimetry Service in June of 1996 of
$2,809,000 partially offset by a decrease in research product sales. The
increase in net sales for the six months ended June 30, 1997 is primarily due to
the additional Dosimetry sales of $6,427,000 resulting from the acquisition
mentioned above, partially offset by a decrease in instrument sales of
$1,260,000 resulting from the sale of the Company's instrument business in March
1996 and a decrease in Diagnostic product sales.
Gross Profit
Gross profit as a percentage of sales was 53% for the three and six months ended
June 30, 1997, compared to 50% for the same periods in 1996. The increase in
gross profit margin is due to improvement in gross profit margins primarily at
ICN Yugoslavia where gross profit margins increased to 47% and 49% for the three
and six months ended June 30, 1997, respectively from 37% and 33% during the
same periods in 1996. ICN Yugoslavia margins were lower in the prior year due to
the impact of the devaluation of the dinar in November 1995 which carried over
into 1996 as the higher priced inventory was sold. The improvement at ICN
Yugoslavia was partially offset by the gross profit margins resulting from the
recent acquisitions in Eastern Europe of Alkaloida in Hungary and Leksredstva
and Polypharm in Russia. The sales contributed by these acquisitions carried
gross profit margins of approximately 35%.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $65,747,000 or 41% of sales
and $111,182,000 or 35% of sales for the three and six months ended June 30,
1997, respectively, compared to $46,930,000 or 33% of sales and $85,166,000 or
30% of sales for the three and six months ended June 30, 1996, respectively. The
dollar increase of $18,817,000 and $26,016,000 for the three and six months
ended June 30, 1997, respectively, compared to the same periods in 1996 is
primarily due to a legal settlement charge and additional expenses as a result
of the acquisitions of Alkaloida in Hungary, Leksredstva and Polypharm in
Russia, and the former Siemens Dosimetry Service in the United States. In the
second quarter of 1997, the Company recorded a non-recurring $12,000,000 charge
for the settlement of the 1995 class action suit related to the Company's filing
of its hepatitis C new drug application with the Food and Drug Administration.
<PAGE>
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Research and Development
Research and development expenditures increased $1,231,000 or 36% and $2,010,000
or 29% for the three and six months ended June 30, 1997, respectively compared
to the same periods in 1996. Such increases were primarily due to the
acquisition of personnel and modern research facilities at Alkaloida in Hungary,
and increased expenditures at ICN Yugoslavia and the United States.
Translation and Exchange Losses, Net
Translation and exchange losses, net, were $1,715,000 and $5,710,000 for the
three and six months ended June 30, 1997, respectively, compared to $206,000 and
$688,000 for the same periods in 1996. In the second quarter of 1997,
translation losses, net include $316,000 of translation gains related to the
Company`s foreign denominated debt offset by $2,009,000 of translation losses
related to ICN Yugoslavia's net monetary asset position. In the second quarter
of 1996, the Company's translation losses, net, include translation losses of
$1,019,000 related to ICN Yugoslavia's net monetary asset position, offset by
translation gains of $1,028,000 related to the Company's foreign denominated
debt. For the six months ended June 30, 1997, translation losses, net include
$1,743,000 of translation gains related to the Company's foreign denominated
debt offset by $6,644,000 of translation losses related to ICN Yugoslavia's net
monetary asset position. For the six months ended June 30, 1996, translation
losses, net include $2,264,000 of translation losses related to ICN Yugoslavia
net monetary asset position, partially offset by translation gains of $1,965,00
related to the Company's foreign denominated debt.
Interest Income
Interest income increased primarily due to interest income on notes receivable
from the Yugoslavian government.
Interest Expense
Interest expense during the three months and six months ended June 30, 1997
increased $533,000 and $1,790,000 compared to the same periods in 1996. This
increase resulted primarily from the increase in short and long term debt of the
Company, primarily due to the effect of the debt assumed with the acquisition of
Alkaloida in Hungary.
Taxes
Provision (benefit) for income taxes was ($11,594,000) and ($11,790,000) for the
three and six months ended June 30, 1997, respectively, compared to ($898,000)
and $1,040,000 for the same periods in 1996. As a result of the acquisition of
product rights from F. Hoffmann-La Roche Ltd., the Company revalued its deferred
tax assets resulting in an increase in its deferred tax asset and a
corresponding deferred tax benefit of $21,000,000. Offsetting this benefit were
increases in taxes at ICN Yugoslavia of $8,298,000 resulting from the expiration
of tax benefits which originated when ICN Yugoslavia was acquired in 1991.
However, future taxes may be partially offset by tax credits allowed in
Yugoslavia for plant construction. The current statutory tax rate in Yugoslavia
is 25%.
Computation of Per Share Earnings
In the Company's calculation of per share earnings, certain adjustments are made
to reported net income to arrive at an adjusted net income that is divided by
the number of shares for the period. Last year these adjustments related to the
impact of the Company's convertible debt, while in the three and six months
ended June 30, 1997 there are additional adjustments related to preferred
dividends. In October of 1996, the Company issued $50,000,000 of preferred stock
<PAGE>
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
having a 6% dividend and a convertibility feature that allows conversion into
common stock at a discount from the current market price at the time of the
exercise. This discount represents an embedded dividend and is treated similar
to the 6% stated preferred dividend in the calculation of earnings per share.
In the three and six months ended June 30, 1997, the preferred stock is not
assumed to be converted because to do so would be anti-dilutive. Accordingly,
the earnings per share calculation includes an adjustment to net income for the
three and six months ended June 30, 1997 of $1,117,000 and $4,426,000,
respectively, related to the stated preferred and embedded dividends compared to
no preferred dividend deduction last year. The embedded dividend is deducted
from earnings in the per share calculation based on when the convertible feature
of the preferred becomes exercisable, which occurs over a year with most of the
discount amortized in the first two quarters subsequent to the issuance. Since
March 31, 1997, approximately 18,000 shares of the initial 50,000 share
preferred stock offering have been converted into common stock.
ICN YUGOSLAVIA
ICN Yugoslavia, a 75% owned subsidiary, operates in a business environment that
is subject to significant economic volatility and political instability. The
economic conditions in Yugoslavia include continuing liquidity problems, a
history of high inflation, unemployment, a weakened banking system and a high
trade deficit. The future of the economic and political environment of
Yugoslavia is uncertain and could deteriorate to the point that a material
adverse impact on the Company's financial position and results of operations
could occur.
ICN Yugoslavia began the year with a net asset monetary exposure of $134,000,000
which was subject to foreign exchange loss if a devaluation of the dinar were to
occur. During the first six months of 1997, the Company was successful in
reducing its monetary exposure by converting dinar denominated accounts
receivable into notes receivable payable in dinars, but fixed in dollar amounts.
The first conversion was made early in the first quarter with $50,000,000
accounts receivable converted into a one year note with interest at the European
LIBOR rate plus one percent. A second conversion was arranged in the middle of
the first quarter through an agreement with the Yugoslavian government to
purchase $50,000,000 of drugs. The sales under this agreement were converted
into a non-interest bearing note receivable that has special payment guarantees
with the payment fixed in dollar amounts. Approximately $30,000,000 of accounts
receivable were converted to notes receivable in the first quarter under this
arrangement and the remainder was converted in the second quarter. The second
agreement also allows the Company to offset payroll tax obligations against
outstanding accounts receivable balances. As of June 30, 1997, ICN Yugoslavia
had a net monetary asset position of $49,000,000 which would be subject to
foreign exchange loss if a devaluation of the dinar were to occur.
The Company was able to reduce its overall accounts receivable balance from the
beginning of the year through collections and the conversion of $100,000,000 of
accounts receivable into notes receivable discussed above. As of June 30, 1997,
the accounts receivable balance was $93,056,000. Based on current levels of
collections, the Company will impose even stricter credit terms on its customers
which will likely result in lower future domestic sales. The willingness of the
government to provide the Company protection against devaluation on its
receivables in exchange for longer payment terms is a reflection of the strict
adherence to government policy on controlling inflation by limiting the amount
of hard currency in circulation. This policy was initially established with the
start of the stabilization program in 1994. The Company is currently negotiating
an arrangement with the government of Yugoslavia under which ICN Yugoslavia
would commit to continue to provide products, in dollar denominated sales, in an
amount up to $50,000,000 per calendar quarter for one year, and the government
would pay a minimum of $9,000,000 per month towards outstanding receivables.
However, at no point in time can the amount due to ICN Yugoslavia from the
government exceed $200,000,000, including both accounts and notes receivable.
In spite of a decrease in sales for the six months ended June 30, 1997 of
$31,884,000 compared to the same period last year, the operating income of ICN
Yugoslavia increased to $32,582,000 for the six months ended June 30, 1997 from
$27,092,000 the same period of last year, an increase of 20%. The increase is
primarily due to improved gross margins of 49% in the six months ended June 30,
1997 compared to 33% last year. Last year's quarterly margins reflected the
impact of the devaluation of the dinar in November of 1995. After deducting the
<PAGE>
19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (Continued)
impact of foreign translation losses, ICN Yugoslavia contributed $28,993,000 of
income before taxes and minority interest compared to $25,470,000 last year.
This improvement over last year should not be viewed as an indication of
improvement to be expected in future quarters. The Yugoslavian economy is weak
and liquidity continues to be a problem. The improvement in operating income
over last year is offset by increased levels of tax expense due to the
expiration of tax benefits in Yugoslavia. Net income from ICN Yugoslavia for the
six months ended June 30, 1997, was $15,523,000 compared to $19,964,000 last
year.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, cash provided by operating activities
totaled $12,736,000. The level of accounts and notes receivable increased
$61,291,000, primarily at ICN Yugoslavia resulting from the lengthening of the
collection period of receivables, the conversion of accounts receivables into
one-year notes receivables and general liquidity problems in Yugoslavia. Cash
from operating activities includes an adjustment to reverse the non-cash impact
of a $21,000,000 tax benefit from the revaluation of the Company's deferred tax
asset partially offset by the accrual of $12,000,000 for the pending settlement
of the 1995 class action.
Cash used in investing activities of $20,374,000 for the six months ended June
30, 1997 include $11,936,000 of cash paid for acquisitions that were initially
acquired in 1996 and $10,861,000 of capital expenditures primarily in the North
America and Eastern European regions, related to production facility
improvements.
Cash provided by financing activities of $10,615,000 for the six months ended
June 30, 1997 primarily includes $4,930,000 of proceeds from the exercise of
stock options and $13,288,000 of proceeds from long term borrowings partially
offset by net payments of short-term debt of $1,988,000 and $5,615,000 of
dividends paid. The increase in 1997 dividend payments is primarily due to the
timing of quarterly cash payments in 1997 compared to 1996.
On March 25, 1997, the Company's Board of Directors declared a first quarter
cash dividend ("distribution") of $.08 per share payable on April 23, 1997 to
shareholders of record on April 9, 1997.
On June 26, 1997, the Company's board of Directors declared a second quarter
cash dividend of $.08 per share, payable July 23, 1997 to shareholders of record
on July 9, 1997.
The Company is subject to foreign currency risk on its foreign denominated debt
of approximately $14,393,000 at June 30, 1997, which is primarily denominated in
Swiss francs.
In April 1997, the Company obtained and used a $15,000,000 revolving credit
facility. Funds borrowed under this facility will be used for general operating
requirements at a rate of LIBOR plus one percent. This credit facility contains
covenants that include restrictions on redemption or repurchase of stock,
limitation on dividend payments and on acquiring new debt and the maintenance of
certain financial ratios.
The Company and certain subsidiaries do not maintain product liability
insurance. While the Company has never experienced a material adverse claim for
personal injury resulting from allegedly defective products, a successful claim
could have a material adverse effect on the Company's liquidity and financial
performance.
DEMANDS ON LIQUIDITY
Management believes that funds generated from operations will be sufficient to
meet its normal operating requirements during the coming year. The Company's
recent acquisitions in Hungary, Russia and China will require $23,000,000 of
cash in 1997. Also, if the historic rate of growth in Eastern Europe continues,
these operations will require increasing levels of working capital and funds for
additional facilities or upgrading of existing facilities. Additionally, the
Company has several preliminary acquisition prospects that may require
significant funds in 1997. In August 1997, the Company completed its offering of
$275,000,000 principle amount of 9.25% Senior Notes due 2005 (the "Notes").
Interest on the Notes will be payable semi-annually on February 15 and August 15
of each year, commencing February 15, 1998. The Notes will mature on August 15,
2005, unless previously redeemed. The Notes will be redeemable in cash at the
option of the Company, in whole or in part, on or after August 15, 2001. The
company intends to use the proceeds from this offering for expansion in Eastern
<PAGE>
20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (Continued)
Europe, product acquisitions in the North America, payment of the $15,000,000
related to the acquisition of the Plant from Roche, and for general purposes.
THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995
This Form 10-Q contains statements that constitute forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Those statements appear in a number of places in this Form 10-Q and include
statements regarding, among other matters, the factors affecting the Company's
financial condition or results of operations, liquidity in Yugoslavia,
management of monetary exposure, economic conditions in Yugoslavia, credit
policies in Yugoslavia, and trends in financial results. Stockholders are
cautioned that any such forward looking statements are not guarantees of future
performance and involve risks, uncertainties and other factors which may cause
actual results, performance or achievements to differ materially from the future
results, performance or achievements, expressed or implied in such forward
looking statements. Such factors are discussed in this Form 10-Q and also
include, without limitation, the Company's dependence on foreign operations
(which are subject to certain risks inherent in conducting business abroad,
including possible nationalization or expropriation, price and exchange control,
limitations on foreign participation in local enterprises, health-care
regulations and other restrictive governmental conditions); the risk of
operations in Yugoslavia; Eastern Europe, Russia and China in light of the
unstable economies, political and regulatory conditions in such countries; the
Company's ability to successfully develop and commercialize future products; the
limited protection afforded by the patents relating to Virazole(R), and possibly
on future drugs, techniques, processes or products the Company may develop or
acquire; the Company's ability to continue its expansion plan and to integrate
successfully any acquired companies; the results of lawsuits pending against the
Company; the Company's dependence on its management, including Milan Panic, its
Chairman and Chief Executive Officer; the Company's potential product liability
exposure and lack of any insurance coverage thereof; government regulation of
the pharmaceutical industry (including review and approval for new
pharmaceutical products by the FDA in the United States and comparable agencies
in other countries) and competition.
<PAGE>
21
PART II - OTHER INFORMATION
Item 1. LITIGATION
See Note 7 of Notes to Consolidated Condensed Financial Statements
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 10.1: Form of Purchase agreement for $275,000,000 Aggregate
Principal Amount of 9 1/4% Senior Notes due 2005,
between ICN Pharmaceuticals, Inc. and Schroder & Co,
Inc., dated August 7, 1997.
Exhibit 10.2: Form of Registration Rights agreement for $275,000,000
9 1/4% Senior Notes due 2005, by and between ICN
Pharmaceuticals, Inc. and Schroder & Co., Inc.
dated as of August 7, 1997.
Exhibit 10.3: Form of Indenture for $275,000,000, 9 1/4% Senior Notes
due 2005 between ICN Pharmaceuticals, Inc. and United
States Trust Company of New York, as Trustee,
dated August 14, 1997.
Exhibit 11: Computation of Per Share Earnings
Exhibit 15.1: Review Report of Independent Accountants
Exhibit 15.2: Awareness Letter of Independent Accountants
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30,
1997.
<PAGE>
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICN PHARMACEUTICALS, INC.
Registrant
Date: August 13, 1997 /s/ Milan Panic
-------------------------------------------
Milan Panic
Chairman of the Board and
Chief Executive Officer
Date: August 13, 1997 /s/ John E. Giordani
-------------------------------------------
John E. Giordani
Executive Vice President and
Chief Financial Officer
ICN PHARMACEUTICALS, INC.
$275,000,000 Aggregate Principal Amount of
9 1/4% Senior Notes due 2005
------------------------------------
PURCHASE AGREEMENT
New York, New York
August 7, 1997
SCHRODER & CO. INC.
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
Ladies and Gentlemen:
ICN Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you (the "Initial Purchaser") $275,000,000 aggregate principal amount of 9
1/4% Senior Notes due 2005 (the "Notes"), to be issued pursuant to the
provisions of an Indenture (the "Indenture") to be entered into between the
Company and United States Trust Company of New York, as trustee (the "Trustee").
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom provided by Section 4(2) of the Securities Act and Rule
144A promulgated thereunder.
In connection with the offering and sale of the Notes (the
"Offering"), the Company has prepared a preliminary offering memorandum
(including the documents incorporated by reference therein, the "Preliminary
Offering Memorandum") and will prepare a final offering memorandum (including
the documents incorporated by reference therein, the "Final Offering Memorandum"
and, together with the Preliminary Offering Memorandum, each a "Memorandum")
setting forth or including a description of the terms of the Notes, the terms of
the Offering, a description of the Company and any material developments
relating to the Company occurring after the date of the most recent financial
statements included therein.
You and your direct and indirect transferees will be entitled to the
benefits of a registration rights agreement to be entered into between the
Company and the Initial Purchaser substantially in the form attached hereto as
Exhibit A (the "Registration Rights Agreement"), pursuant to which the Company
will agree to use its best efforts to file and have declared effective a
registration statement (an "Exchange Offer Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering the offer and
sale of the Notes, the Private Exchange Notes or the Exchange Notes (each as
defined in the Registration Rights Agreement) under the Securities Act. This
Agreement, the Notes, the Indenture and the Registration Rights Agreement are
referred to herein as the "Offering Documents."
This is to confirm the agreement concerning the purchase by you of the
Notes from the Company.
<PAGE>
1. The Company represents and warrants to and agrees with you that:
(a) The Preliminary Offering Memorandum, as of its date, did not
contain any untrue statement of a material fact or omit to state a
material fact (except for pricing terms and other financial terms
intentionally left blank) necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and the Final Offering Memorandum, as of its date did not,
and as of the Delivery Date (as defined below) will not, contain any
untrue statement of a material fact or omit to state a material fact
necessary, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties
set forth in this Section 1(a) do not apply to statements or omissions
contained in any Memorandum made in reliance upon and in conformity
with information relating to the Initial Purchaser furnished by the
Initial Purchaser to the Company in writing expressly for use in
either Memorandum or any amendment or supplement thereto.
(b) Neither the Company nor any of the Subsidiaries (as defined
below) has sustained, since the date of the most recent financial
statements included in the Final Offering Memorandum, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which loss
or interference is material to the Company and the Subsidiaries, taken
as a whole. Since the respective dates as of which information is
given in the Final Offering Memorandum there has not been any change
in the capital stock or short-term debt (other than in the ordinary
course of business) or long-term debt of the Company or any of the
Subsidiaries, or any change or development which could reasonably be
expected to have a material adverse effect upon the business,
operations, assets, condition (financial or otherwise) or prospects of
the Company and the Subsidiaries, taken as a whole, or an adverse
effect on the ability of the Company to perform its obligations under
the Offering Documents (a "Material Adverse Effect"), otherwise than
as set forth or contemplated in the Final Offering Memorandum.
(c) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case, free and clear
of all liens, adverse claims, encumbrances, security interests
(collectively, "Liens") and defects except those that are described or
contemplated by the Final Offering Memorandum or those that do not
materially affect the value of such property and do not materially
interfere with the use made or proposed to be made (as described in
the Final Offering Memorandum) of such property by the Company and the
Subsidiaries. Any real property and buildings held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do
not materially interfere with the use made or proposed to be made (as
described in the Final Offering Memorandum) of such real property and
buildings by the Company and the Subsidiaries.
<PAGE>
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with all necessary corporate power and authority to own
its properties and to conduct its business as described in the Final
Offering Memorandum. The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
property, or conducts any business, so as to require such
qualification (except where the failure to so qualify, singly or in
the aggregate with all other such failures, would not have a Material
Adverse Effect) and each such jurisdiction is listed on Schedule II
hereto. Each of the Company's subsidiaries (the "Subsidiaries") is
listed on Schedule I hereto. Except as described in the Final Offering
Memorandum and on Schedule I hereto, each of the Subsidiaries is
wholly owned directly or indirectly by the Company. Each of the
Subsidiaries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with all necessary corporate power and authority to own
its properties and conduct its business as described in the Final
Offering Memorandum.
(e) The Company had at the date indicated in the Final Offering
Memorandum the capitalization set forth in the column entitled
"Actual" under the caption "Capitalization" as set forth in the Final
Offering Memorandum and, based on the assumptions stated in the Final
Offering Memorandum, the Company would have had on the date indicated
the adjusted capitalization as set forth in the column entitled "Pro
Forma" under the caption "Capitalization" as set forth in the Final
Offering Memorandum. Except as described in the Final Offering
Memorandum, all of the issued and outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned by the Company free
and clear of all Liens. There are no outstanding options, warrants or
other rights to acquire, or instruments convertible into or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock of any Subsidiary.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly authorized by the Company and,
when executed and delivered by the Company on the Delivery Date
(assuming due authorization, execution and delivery by the Trustee),
will be a legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting creditors'
rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability
(regardless of whether in a proceeding in equity or at law). The
Indenture will conform in all material respects to the description
thereof in the Final Offering Memorandum.
<PAGE>
(h) The Notes have been duly and validly authorized by the
Company, and, when executed and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will be
legally valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except that (i) the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
relating to or affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered
in a proceeding in equity or at law). The Notes will conform in all
material respects to the description thereof contained in the Final
Offering Memorandum.
(i) The Exchange Notes and the Private Exchange Notes have been
duly and validly authorized by the Company, and, when executed,
authenticated and delivered in accordance with the terms of the
Indenture and the Registration Rights Agreement, will be legally valid
and binding obligations of the Company, entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, except that (i) the enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting
creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability (regardless of whether considered in a proceeding in
equity or at law).
(j) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the
Company on the Delivery Date (assuming due authorization, execution
and delivery by, and enforceability against, the Initial Purchaser),
will be a legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting creditors'
rights generally, (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability (regardless
of whether considered in a proceeding in equity or at law) and (iii)
rights to indemnity may be limited by state or federal laws relating
to securities or by policies underlying such laws. The Registration
Rights Agreement will conform in all material respects to the
description thereof contained in the Final Offering Memorandum.
<PAGE>
(k) The execution, delivery and performance by the Company of the
Offering Documents and the consummation of the transactions
contemplated thereby will not (i) conflict with, or result in a breach
or violation of, any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, license,
permit, loan agreement, lease or other material agreement or
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties or
assets is bound or is subject, (ii) violate any provision of the
certificate of incorporation or the by-laws or similar organizational
documents of the Company or any of the Subsidiaries or any material
statute or any material order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries or any of their properties or assets, or (iii)
result in or require the creation or imposition of any Lien, upon or
with respect to any of the properties of the Company or any of the
Subsidiaries, except as permitted by the terms of the Indenture. No
consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body is required for
the issue and sale of the Notes, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the offer
and sale of the Notes.
(l) Except as described in the Final Offering Memorandum, there
are no legal or governmental proceedings pending to which the Company
or any of the Subsidiaries is a party or of which any of their
respective properties or assets is the subject which, if determined
adversely, would singly or in the aggregate have a Material Adverse
Effect. To the Company's best knowledge, except as described in the
Final Offering Memorandum, no such proceedings are threatened or
contemplated by any governmental agency or body or any other person.
(m) The Company and the Subsidiaries have all material licenses,
permits and other approvals or authorizations of and from governmental
agencies and bodies ("Permits") as are necessary under applicable law
to own their respective properties and to conduct their respective
businesses in the manner now being conducted as described in the Final
Offering Memorandum. The Company and the Subsidiaries have fulfilled
and performed in all material respects all of their respective
obligations with respect to such material Permits, and no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such material Permits.
(n) Coopers & Lybrand L.L.P., who have certified certain
financial statements of the Company, are independent public
accountants under rule 101 of AICPA's Code of Professional Conduct and
its interpretation and rulings.
<PAGE>
(o) The consolidated financial statements of the Company and the
Subsidiaries included or incorporated by reference in the Final
Offering Memorandum present fairly the financial condition, the
results of operations and the cash flows of the Company and the
Subsidiaries as of the dates and for the periods therein specified in
conformity with generally accepted accounting principles consistently
applied throughout the periods involved, except as otherwise stated
therein. The unaudited pro forma financial statements included in the
Final Offering Memorandum have been prepared in accordance with the
rules and guidelines of the Commission with respect to pro forma
financial statements and in the Company's opinion, the assumptions
used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(p) There is no presently existing dispute or controversy between
the Company or any of the Subsidiaries and any of their respective
employees which has had or is likely to have, and the Company has no
reason to believe that the relationship of the Company and the
Subsidiaries with their unions or employees is likely to have, a
Material Adverse Effect.
(q) The Company and the Subsidiaries own or possess adequate
patents, patent rights, inventions, trademarks, service marks, trade
names and copyrights necessary to conduct their business as presently
conducted as described in the Final Offering Memorandum. 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 any material patent, patent rights, inventions, trademarks,
service marks, trade names or copyrights which could reasonably be
expected to have a Material Adverse Effect.
(r) Neither the Company nor any of the Subsidiaries is in
violation of any provision of their respective certificate of
incorporation or by-laws. The Company and each of the Subsidiaries is
in compliance with all laws, rules, regulations, orders, judgments,
writs and decrees applicable to them other than those which, singly or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(s) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default in the
due performance and observance of any term, covenant or condition of
any indenture, mortgage, deed of trust, license, permit, loan
agreement, lease or other agreement or instrument to which the Company
or any of the Subsidiaries is a party or by which any of them or any
of their respective properties or assets is bound or is subject, which
default, singly or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
<PAGE>
(t) The Company and the Subsidiaries have timely filed all
federal income and other material tax returns and notices. The Company
has no knowledge of any tax deficiencies which would have a Material
Adverse Effect. The Company and its Subsidiaries have paid all
federal, state, local and foreign taxes of any nature which are shown
on its returns to be due, in each case except as may be set forth or
adequately reserved for in the financial statements included in the
Final Offering Memorandum in accordance with GAAP. The amounts
currently set up as provisions for taxes or otherwise by the Company
and the Subsidiaries on their books and records are sufficient for the
payment of all their unpaid federal, foreign, state, county and local
taxes accrued through the dates as of which they relate, and for which
the Company and the Subsidiaries may be liable in their own right, or
as a transferee of the assets of, or as successor to any other
corporation, association, partnership, joint venture or other entity.
(u) Since the date as of which information is given in the
Preliminary Offering Memorandum through the date hereof, and except as
may otherwise be disclosed in the Final Offering Memorandum, neither
the Company nor any of the Subsidiaries has sold or otherwise disposed
of any capital stock of the Company or the Subsidiaries, directly or
indirectly.
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) The Company, immediately before and after the consummation of
the Offering and the other transactions contemplated in the Final
Offering Memorandum, will be Solvent. As used herein, the term
"Solvent" means, with respect to any such entity on a particular date
(i) the fair market value of the assets of such entity is greater than
the total amount of liabilities (including contingent liabilities) of
such entity, (ii) the present fair saleable value of the assets of
such entity is greater than the amount that will be required to pay
the probable liabilities of such entity on its debts as they become
absolute and matured, (iii) such entity is able to realize upon its
assets and pay its debts and other liabilities, including contingent
obligations, as they mature and (iv) such entity does not have an
unreasonably small capital.
<PAGE>
(x) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Notes in a manner that would require
the registration under the Securities Act of the Notes or (ii) engaged
in any form of general solicitation or general advertising in
connection with the offering of the Notes (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(y) Neither the Company nor any of the Subsidiaries is, or will
be after giving effect to the Offering and the application of the
proceeds therefrom and the other transactions contemplated by the
Offering Documents, an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
(z) Assuming the representations and warranties of the Initial
Purchaser are true and correct, it is not necessary in connection with
the offer, sale and delivery of the Notes to the Initial Purchaser in
the manner contemplated by this Agreement to register the Notes under
the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
(aa) The Company and the Subsidiaries (i) are in compliance with
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not individually or in the aggregate result in a
Material Adverse Effect.
<PAGE>
(bb) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning
of Rule 144A under the Securities Act) as securities of the Company
which are listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder
(collectively, the "Exchange Act"), or quoted in a U.S. automated
interdealer quotation system.
(cc) The Company and each of the Subsidiaries maintains insurance
covering their properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and
the Subsidiaries and their businesses. All such insurance is
outstanding and in force on the date hereof and will be outstanding
and in force on the Delivery Date.
2. On the basis of the representations and warranties contained in
this Agreement, and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Company, $275,000,000 aggregate principal
amount of the Notes at a purchase price of 97% of the principal amount thereof.
3. Certificates in definitive form for the Notes to be purchased by
you hereunder shall be delivered by or on behalf of the Company to you for your
account against payment by you of the purchase price therefor by wire transfer
of immediately available funds to an account specified by the Company by written
notice to the Initial Purchaser (given at least two business days prior to the
Delivery Date), for the purchase price of the Notes being sold by the Company in
New York, New York, at 9:30 A.M., New York City time, on August 14, 1997, or at
such other time, date and place as you and the Company may agree upon in
writing, such time and date being herein called the "Delivery Date."
Certificates for the Notes so to be delivered will be in good delivery
form, and in such denominations and registered in such names as you may request
not less than 48 hours prior to the Delivery Date. Such certificates will be
made available for checking and packaging in New York, New York, at least 24
hours prior to the Delivery Date.
4. The Initial Purchaser proposes to offer the Notes for resale only
to certain investors (as further described in subparagraph (a) of this Paragraph
4) upon the terms and conditions set forth in this Agreement and the Final
Offering Memorandum initially at the purchase price set forth on the cover page
of the Final Offering Memorandum. The Initial Purchaser hereby represents and
warrants to, and agrees with, the Company that:
<PAGE>
(a) It is an institutional "accredited investor" (as defined in
501(a)(1), (2), (3) or (7) under the Securities Act) and will offer or
sell the Notes only (i) inside the United States, to persons who it
reasonably believes are "qualified institutional buyers" within the
meaning of Rule 144A in transactions meeting the requirements of Rule
144A and (ii) pursuant to offers and sales that occur outside the
United States within the meaning of Regulation S under the Securities
Act; and
(b) It has not and will not offer or sell the Notes by any form
of general solicitation or general advertising, including but not
limited to, the methods described in Rule 502(c) under the Securities
Act.
5. In consideration of the agreements of the Initial Purchaser
contained in this Agreement, the Company covenants and agrees as follows:
(a) The Company will furnish to you, without charge, as many
copies of the Final Offering Memorandum and any supplements and
amendments thereto as you may reasonably request.
(b) Before amending or supplementing the Final Offering
Memorandum subsequent to the execution of this Agreement, the Company
will furnish to you a copy of each such proposed amendment or
supplement and will not use any such proposed amendment or supplement
to which you reasonably object.
(c) If, at any time prior to the completion of the distribution
of the Notes to persons that are not your affiliates (as determined by
you), any event occurs as a result of which the Final Offering
Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement
the Final Offering Memorandum to comply with applicable law, the
Company will notify you thereof and will prepare, at the expense of
the Company, an amendment or supplement to the Final Offering
Memorandum that corrects such statement or omission or effects such
compliance.
<PAGE>
(d) The Company will endeavor to qualify the Notes for offer and
sale under the securities or Blue Sky laws of such jurisdictions in
the United States as you shall reasonably request; provided, however,
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
The Company will file such statements and reports as may be required
by the laws of each jurisdiction in which the Notes have been
qualified as above provided. The Company will also supply you with
such information as is necessary for the determination of the legality
of the Notes in such jurisdictions as you may request.
(e) The Company will not, and will not permit any of its
Affiliates to, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Notes
in a manner which would require the registration under the Securities
Act of the Notes.
(f) Except following the effectiveness of the Exchange Offer
Registration Statement, the Company will not solicit any offer to buy
or offer to sell the Notes by means of any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(g) While any of the Notes remain outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities
Act, the Company will make available, upon request, to any holder or
beneficial owner of outstanding Notes the information specified in
Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(h) The Company will use its best efforts to permit the Notes to
be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market and to permit the Notes
to be eligible for clearance and settlement through the Depository
Trust Company.
<PAGE>
(i) For a period of five years following the Delivery Date, the
Company will furnish to the Initial Purchaser copies of any annual
reports, quarterly reports and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Notes pursuant to the Indenture.
(j) The Company will not, and will not permit any of its
Affiliates to, resell any Notes that have been acquired by any of
them.
(k) The Company will use the proceeds from the sale of the Notes
in the manner set forth in the Final Offering Memorandum and in a
manner that will not result in the Company becoming an investment
company within the meaning of the Investment Company Act, and the
rules and regulations of the Commission thereunder.
(l) The Company will not, and will cause each of the Subsidiaries
incorporated in or principally conducting its business within the
United States of America not to, offer, sell, contract to sell or
grant any option to purchase or otherwise transfer or dispose of any
debt security, or any security convertible into or in exchange for,
any such debt security of the Company or any such Subsidiary (other
than (x) any private loan, credit or financing agreement with a bank
or similar institution and (y) the Notes, the Exchange Notes and the
Private Exchange Notes), for a period of 180 days after the date of
this Agreement, without your prior written consent.
6. The Company covenants and agrees that the Company will pay or cause
to be paid: (i) the fees, disbursements and expenses of counsel and accountants
for the Company and the Trustee and its counsel, and all other expenses, in
connection with the preparation and printing of each Memorandum and amendments
and supplements thereto and the furnishing of copies thereof, including charges
for mailing, air freight and delivery and counting and packaging thereof to the
Initial Purchaser and dealers; (ii) all expenses in connection with the
qualification of the Notes for offering and sale under state securities laws as
provided in Section 5(d) hereof, including disbursements and expenses for
counsel for the Initial Purchaser in connection with such qualification and in
connection with Blue Sky surveys; (iii) any fees charged by rating agencies for
the rating of the Notes; (iv) the costs and expenses in connection with the
preparation and delivery of the Notes; and (v) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 6, including the fees, if any,
incurred in connection with the admission of the Notes for trading in any
appropriate market systems, the cost of the Company's personnel and other
internal costs, the cost of printing and engraving the certificates representing
the Notes and all expenses and property, excise and similar taxes incident to
the sale and delivery of the Notes to be sold by the Company to the Initial
Purchaser hereunder.
<PAGE>
7. Your obligations hereunder shall be subject, in your discretion, to
the following additional conditions:
(a) The representations and warranties of the Company contained
in this Agreement shall be true and correct as of the date hereof and
as of the Delivery Date. The Company shall have performed in all
material respects all covenants and agreements and satisfied in all
material respects all conditions on its part to be performed or
satisfied hereunder at or prior to the Delivery Date.
(b) The sale of the Notes by the Company hereunder shall not be
enjoined (temporarily or permanently) on the Delivery Date.
(c) Subsequent to the date as of which information is given in
the Final Offering Memorandum, except in each case as described in or
as contemplated by the Final Offering Memorandum, the Company and the
Subsidiaries shall not have incurred any liabilities or obligations,
direct or contingent that are material to the Company and the
Subsidiaries taken as a whole or entered into any transactions that
are material to the business, condition (financial or other), results
of operations or prospects of the Company and the Subsidiaries taken
as a whole.
(d) Subsequent to the date of this Agreement and prior to the
Delivery Date, there shall not have occurred 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, including the Notes, by any
"nationally recognized statistical rating organization" as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act.
(e) You shall have received on the Delivery Date a certificate of
the Company dated the Delivery Date and signed by its Chief Executive
Officer, President or any Vice President and by the Chief Financial
Officer, to the effect set forth in clauses (a), (b), (c) and (d)
above.
(f) (i) Proskauer Rose LLP, special counsel to the Company, shall
have furnished to you their written opinion, dated the Delivery Date,
in substantially the form attached hereto as Exhibit B, and (ii) David
C. Watt, Esq., General Counsel of the Company, shall have furnished to
you his written opinion, dated the Delivery Date, in substantially the
form attached hereto as Exhibit C.
(g) Cahill Gordon & Reindel, counsel to the Initial Purchaser,
shall have furnished to the Initial Purchaser a written opinion, dated
the Delivery Date, in form and substance satisfactory to you, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon the matters covered by
such opinion.
<PAGE>
(h) You shall have received on each of the date hereof and the
Delivery Date a letter, dated the date hereof or the Delivery Date, as
the case may be, in form and substance reasonably satisfactory to you,
from Coopers & Lybrand L.L.P., the Company's independent public
accountants.
(i) (i) Since the date of this Agreement, neither the Company nor
any of the Subsidiaries shall have sustained any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree which could reasonably
be expected to have a Material Adverse Effect; and (ii) since the
respective dates as of which information is given in the Final
Offering Memorandum, there shall not have been any change in the
capital stock or short-term debt (other than in the ordinary course of
business) or long-term debt of the Company or any of the Subsidiaries
nor any change which could reasonably be expected to have a Material
Adverse Effect otherwise than as set forth or contemplated in the
Final Offering Memorandum, the effect of which, in any such case
described in clause (i) or (ii), is in your judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the
Offering or the delivery of the Notes on the terms and in the manner
contemplated in the Final Offering Memorandum.
(j) Subsequent to the execution and delivery of this Agreement,
(i) there shall have been no declaration of war by the Government of
the United States, (ii) there shall not have occurred any material
adverse change in the financial or securities markets in the United
States or in political, financial or economic conditions in the United
States or any outbreak or material escalation of hostilities or other
calamity or crisis, the effect of which is such as to make it, in the
judgment of the Initial Purchaser, impracticable to market the Notes
or to enforce contracts for the resale of Notes and (iii) no event
shall have occurred resulting in (A) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market being suspended or limited or minimum or
maximum prices being generally established on such exchange or market,
or (B) additional material governmental restrictions, not in force on
the date of this Agreement, being imposed upon trading in securities
generally by such exchange or by order of the Commission or any court
or other governmental authority or (C) a general banking moratorium
being declared by either Federal or New York authorities.
(k) The Company shall have furnished or caused to be furnished to
you at the Delivery Date any additional certificates signed by
officers of the Company, satisfactory to you as to such matters as you
may reasonably request.
<PAGE>
(l) The Company and the Initial Purchaser shall have entered into
the Registration Rights Agreement.
8. (a) The Company agrees to indemnify and hold harmless the Initial
Purchaser against any losses, claims, damages or liabilities ("Losses"), to
which the Initial Purchaser may become subject, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Memorandum, or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and will reimburse the Initial
Purchaser for any legal or other expenses reasonably incurred by the Initial
Purchaser in connection with investigating, preparing to defend, defending or
appearing as a third-party witness in connection with any such action or claim;
provided, however, that the Company shall not be liable to the Initial Purchaser
in any such case to the extent that any such Loss arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
relating to the Initial Purchaser made in any Memorandum, or such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Initial Purchaser expressly for use
therein; provided, however, that the foregoing indemnity with respect to the
Preliminary Offering Memorandum shall not inure to the benefit of the Initial
Purchaser if the person asserting such losses, claims, damages or liabilities
purchased Notes if (x) it is established in the related proceeding that such
Initial Purchaser failed to send or give a copy of the Final Offering Memorandum
to such person with or prior to the written confirmation of such sale (provided
that the Company has complied with its obligations uner Section 5(a) hereof) and
(y) the untrue statement or omission or alleged untrue statement or omission was
completely corrected in the Final Offering Memorandum and the Final Offering
Memorandum does not contain any other untrue statement or omission or alleged
untrue statement or omission that was the subject matter of the related
proceeding.
(b) In addition to any obligations of the Company under Section 8(a),
the Company agrees that it shall perform its indemnification obligations under
Section 8(a) (as modified by the last paragraph of this Section 8(b)), with
respect to counsel fees and expenses and other expenses reasonably incurred by
making payments within 60 days to the Initial Purchaser in the amount of the
statements of the Initial Purchaser's counsel or other statements which shall be
forwarded by the Initial Purchaser, and that it shall make such payments
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligation to reimburse the Initial Purchaser for such
expenses and the possibility that such payments might later be held to have been
improper by a court and a court orders return of such payments.
<PAGE>
The indemnity agreement in Section 8(a) shall be in addition to any
liability which the Company may otherwise have and shall extend upon the same
terms and conditions to each person, if any, who controls the Initial Purchaser
within the meaning of the Securities Act or the Exchange Act, and to the
officers, directors, partners, employees, representatives and agents of the
Initial Purchaser or any such control person.
(c) The Initial Purchaser will indemnify and hold harmless the Company
against any Losses to which the Company may become subject, under the Securities
Act, the Exchange Act, any federal or state statutory law or regulation, at
common law or otherwise, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Memorandum, or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Memorandum or such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Initial Purchaser relating to the Initial
Purchaser expressly for use therein, and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating, preparing to defend, defending or appearing as a third-party
witness in connection with any such action or claim.
The indemnity agreement in this Section 8(c) shall be in addition to
any liability which the Initial Purchaser may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, and to the
officers, directors, partners, employees, representatives and agents of the
Company or any such control person.
(d) Promptly after receipt by an indemnified party under Section 8(a)
or 8(c) of notice of the commencement of any action (including any governmental
investigation), such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party under Section 8(a) or 8(c) except to the
extent it was unaware of such action and has been prejudiced in any material
respect by such failure or from any liability which it may have to any
indemnified party otherwise than under such Section 8(a) or 8(c). In case any
<PAGE>
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. If, however, (i)
the indemnifying party has not authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party or (ii) an
indemnified party shall have reasonably concluded that representation of such
indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them and the indemnified party so
notifies the indemnifying party, then the indemnified party shall be entitled to
employ counsel different from counsel for the indemnifying party at the expense
of the indemnifying party and the indemnifying party shall not have the right to
assume the defense of such indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses or more than one counsel (in addition to
local counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same set of allegations or circumstances. The counsel with respect to which
fees and expenses shall be so reimbursed shall be designated in writing by the
Initial Purchaser in the case of parties indemnified pursuant to Section 8(a)
and by the Company in the case of parties indemnified pursuant to Section 8(c).
The Company shall not be liable for any settlement of any such action
or proceeding effected without its prior written consent (not to be unreasonably
withheld) and if settled with its written consent or if there is a final
judgment for the plaintiff, the Company agrees to indemnify and hold harmless
the Initial Purchaser and each other person referred to in Section 8(b) to the
extent provided herein. Without limiting the generality of the foregoing, no
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any such indemnified party is or has been threatened to be made a party
and to which the indemnity herein is applicable; provided, however, that an
indemnifying party may effect such a settlement without the consent of the
indemnified party if such settlement includes an unconditional release of such
indemnified party from all liability for claims that are the subject matter of
such proceeding or the indemnifying party indemnifies the indemnified party in
writing and posts a bond for an amount equal to the maximum liability for all
such claims as contemplated above.
(e) In the event that the indemnity provided by Section 8(a) or 8(c)
is unavailable or insufficient to hold harmless an indemnified party for any
reason, the Company and the Initial Purchaser shall contribute to the aggregate
Losses to which they may be subject as an indemnifying party hereunder (after
contribution from others) in such proportion so that the Initial Purchaser is
responsible for the portion represented by the percentage that the total
discounts and commissions paid to the Initial Purchaser appearing on the cover
page of the Final Offering Memorandum bears to the total proceeds to the Company
(net of discounts and commissions of the Initial Purchaser) appearing thereon
and the Company is responsible for the remaining portion; provided, however,
that, in any such case, (x) the Initial Purchaser shall not be required to
contribute any amount in excess of the Initial Purchaser's discount and
commission applicable to the Notes and (y) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to a contribution from any person who was not guilty of such
fraudulent misrepresentation. The amount paid or payable by the Initial
Purchaser as result of this Section 8(e) shall be deemed to include any legal or
other expenses reasonably incurred by the Initial Purchaser in connection with
investigating, preparing to defend or defending any such claim.
<PAGE>
9. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Initial Purchaser, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Initial Purchaser or any controlling person of the Initial Purchaser, the
Company or an officer or director or controlling person of the Company and shall
survive delivery of and payment for the Notes.
10. The obligations of the Initial Purchaser hereunder may be
terminated by the Initial Purchaser by notice given to and received by the
Company prior to delivery of and payment for the Notes, if, prior to that time,
any of the events described in Section 7(d), 7(i), or 7(j) shall have occurred
or if the Initial Purchaser shall decline to purchase the Notes for any other
reason permitted under this Agreement.
11. If (a) the Company shall fail to tender the Notes for delivery to
the Initial Purchaser (other than by reason of a default by the Initial
Purchaser) or (b) the Initial Purchaser shall decline to purchase the Notes for
any reason permitted under this Agreement (except the termination of this
Agreement pursuant to Section 10 due solely to the occurrence of an event
enumerated in Section 7(j)), the Company shall reimburse the Initial Purchaser
for the reasonable fees and expenses of their counsel and for such other
reasonable out-of-pocket expenses as shall have been incurred by it in
connection with this Agreement and the proposed purchase of the Notes, and upon
demand the Company shall pay the full amount thereof to the Initial Purchaser.
12. All statements, requests, notices and agreements hereunder shall
be in writing or by written telecommunication, and shall be sufficient in all
respects if delivered or sent by registered mail, if to the Initial Purchaser,
to Schroder & Co. Inc. at 787 Seventh Avenue, New York, New York 10019,
Attention: High Yield Department; and if to the Company to 3300 Hyland Avenue,
Costa Mesa, California 92626, Attention: Chief Executive Officer.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, you, the Company and, to the extent provided in Section 8 hereof,
controlling persons, officers, directors, partners, employees, representatives
and agents referred to in Section 8, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Notes from the Initial Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to principles of
conflicts of law).
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to us a counterpart hereof, and upon the acceptance
hereof by you, this letter and such acceptance hereof shall constitute a binding
agreement between you and the Company.
Very truly yours,
ICN PHARMACEUTICALS, INC.
By: /s/ David C. Watt
------------------------------
Name: David C. Watt
Title: Executive Vice President, General Counsel
and Corporate Secretary
Accepted as of the date hereof:
SCHRODER & CO. INC.
By: /s/ R. Douglas Carleton
----------------------------------
Name: R. Douglas Carleton
Title: Managing Director
<PAGE>
<TABLE>
SCHEDULE I
SUBSIDIARIES
<CAPTION>
Jurisdiction Percentage
Name of Incorporation Ownership
- ---- ---------------- ---------
<S> <C> <C>
ICN Canada, Limited Canada 100%
Alpha Pharmaceutical, Inc. Panama 100%
ICN Farmaceutica, S.A. Mexico 100%
Laboratorios Grossman, S.A. Mexico 100%
ICN Pharmaceuticals, Holland, B.V. Netherlands 100%
ICN Biomedicals, Inc. Delaware 100%
ICN Yugoslavia Yugoslavia 75%
ICN Biomedicals GmbH-Eschwege Germany 100%
ICN Pharmaceuticals Australasia Pty Ltd. Australia 100%
ICN Pharmaceuticals Japan K.K. Japan 100%
ICN Biomedicals B.V. Netherlands 100%
ICN Biomedicals California, Inc. California, U.S.A. 100%
ICN Iberica Spain 100%
Labsystems Benelux B.V. Netherlands 100%
Labsystems Benelux N.V. Belgium 100%
ICN Biomedicals, Ltd. Scotland 100%
ICN Biomedicals, GmbH Germany 100%
ICN France SARL France 100%
ICN Biomedicals S.R.L. Italy 95%
ICN Biomedicals N.V./S.A. Belgium 100%
ICN Oktyabr Russia 90%
ICN Polypharm Russia 89%
ICN Leksredstva Russia 95%
ICN Alkaloida Hungary 60%
Wuxi ICN Pharmaceuticals China 75%
</TABLE>
<PAGE>
SCHEDULE II
ICN Pharmaceuticals, Inc.
Delaware (jurisdiction of incorporation)
California
Indiana
Iowa
Massachusetts
Minnesota
Missouri
Nevada
New York
North Carolina
Ohio
Oregon
Pennsylvania
West Virginia
ICN Biomedicals, Inc.
Delaware (jurisdiction of incorporation)
Alabama
<PAGE>
Exhibit B to
Purchase Agreement
Opinion of Proskauer Rose LLP1
1. Assuming that the Indenture has been duly and validly authorized,
executed and delivered by each of the Company and the Trustee, the Indenture is
a legally valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that (i) the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability (regardless of whether in a proceeding in equity or at
law).
2. Assuming that the Notes have been duly and validly authorized and
executed by the Company and assuming due authentication of the Notes by the
Trustee, when the Notes are delivered to and paid for by the Initial Purchaser
in accordance with the terms of the Purchase Agreement, the Notes will be
legally valid and binding obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in accordance with their
terms, except that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability
(regardless of whether considered in a proceeding in equity or at law).
3. Assuming that the Exchange Notes and the Private Exchange Notes
have been duly and validly authorized by the Company, when the Exchange Notes
and the Private Exchange Notes, if applicable, are executed, authenticated and
delivered in accordance with the terms of the Indenture and the Registration
Rights Agreement, the Exchange Notes and the Private Exchange Notes, if
applicable, will be legally valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except that (i) the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability (regardless of whether considered in a proceeding in
equity or at law).
<PAGE>
4. Assuming that the Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the parties thereto, the
Registration Rights Agreement is a legally valid and binding agreement of the
Company, enforceable against it in accordance with its terms, except that (i)
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability (regardless of whether considered
in a proceeding in equity or at law) and (iii) rights to indemnity may be
limited by state or federal laws relating to securities or by policies
underlying such laws.
5. The Notes and the Registration Rights Agreement conform in all
material respects to the descriptions thereof in the Final Offering Memorandum
under the captions "Description of the Notes" and "Registration Rights,"
respectively.
6. No consent, approval, authorization, order, registration or
qualification of or with any Federal or New York court or Federal or New York
governmental agency or body is required for the issue and sale of the Notes,
except such consents, approvals, authorizations, registrations or qualifications
as may be required under New York state securities or Blue Sky laws in
connection with the offer and sale of the Notes.
7. Assuming that the proceeds of the Offering will be applied as
described in the Final Offering Memorandum under the caption "Use of Proceeds,"
consummation of the Offering will not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
8. Neither the Company nor any of the Subsidiaries is, or will be
after the Offering, an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
9. Assuming the representations and warranties of the Initial
Purchaser and the Company contained in the Purchase Agreement are true and
correct, and assuming compliance by the Initial Purchaser and the Company with
their covenants contained in the Purchase Agreement, it is not necessary in
connection with the offer, sale and delivery of the Notes to the Initial
Purchaser in the manner contemplated by the Purchase Agreement to register the
Notes under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended, it being understood that no opinion is
expressed as to any subsequent resale of any Notes.
<PAGE>
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Initial Purchaser and representatives of the independent
public accountants of the Company at which the contents of the Memorandum and
related matters were discussed. Such counsel may further state that, although
such counsel made certain inquiries and investigations in connection with the
preparation of the Memorandum such counsel did not independently verify the
accuracy or completeness of the statements made in the Memorandum and, as such,
cannot and does not assume responsibility for or pass on the accuracy or
completeness of such statements. Subject to the foregoing, such counsel shall
state that such counsel's work in connection with the Memorandum and the offer
and sale of Notes pursuant to the Purchase Agreement did not disclose any
information that would cause such counsel to believe that the Final Offering
Memorandum, as of its date or as of the Delivery Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not make any comment with respect to the financial statements and
the notes thereto and the other financial and statistical information or data
included in the Final Offering Memorandum).
<PAGE>
Exhibit C to
Purchase Agreement
Opinion of David C. Watt, Esq.1
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Delaware, with all necessary corporate power and
authority to own its properties and to conduct its business as described in the
Memorandum. Based solely upon the certificates of public officials the Company
has been duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each jurisdiction listed in Schedule
II to the Purchase Agreement.
2. All of the issued and outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued, are fully paid and
nonassessable and to such counsel's knowledge are owned by the Company free and
clear of all Liens.
3. The Company has the corporate power and authority to enter into,
and perform its obligations under, the Offering Documents.
4. The Purchase Agreement has been duly and validly authorized,
executed and delivered by the Company.
5. The Indenture has been duly and validly authorized, executed and
delivered by the Company.
6. The Notes have been duly and validly authorized and executed by the
Company.
7. The Exchange Notes and the Private Exchange Notes have been duly
and validly authorized by the Company.
8. The Registration Rights Agreement has been duly and validly
authorized, executed and delivered by the Company.
<PAGE>
9. The execution, delivery and performance by the Company of the
Offering Documents and the consummation of the transactions contemplated thereby
will not (i) violate any provision of the certificate of incorporation or the
by-laws of the Company or any of the Subsidiaries, (ii) conflict with, or result
in a breach or violation of, any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, license, permit, loan
agreement, lease or other agreement or instrument known to such counsel to which
the Company or any of the Subsidiaries is a party or by which any of them or any
of their respective properties or assets is bound or is subject, except to the
extent any such conflict, breach, violation or default, singly or in the
aggregate with all other such conflicts, breaches, violations and defaults,
would not have a Material Adverse Effect, (iii) violate any order known to such
counsel or any statute, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of the Subsidiaries or any
of their properties or assets or (iv) result in or require the creation or
imposition of any Lien, pursuant to any agreement or instrument known to such
counsel or pursuant to any statute, rule or regulation, upon or with respect to
any of the properties of the Company or any of the Subsidiaries, except pursuant
to the terms of the Indenture.
10. Other than as set forth in the Memorandum there are no pending
legal or governmental proceedings known to such counsel to which the Company or
any of the Subsidiaries is a party or of which any of their respective
properties or assets is the subject which, if determined adversely, would singly
or in the aggregate have a Material Adverse Effect. To such counsel's knowledge,
other than as set forth in the Memorandum no such proceedings are threatened or
contemplated by any governmental agency or body or any other person.
11. To such counsel's knowledge, 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 any material patent, patent rights,
inventions, trademarks, service marks, trade names or copyrights.
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the Initial Purchaser and representatives of the independent
public accountants of the Company at which the contents of the Memorandum and
related matters were discussed. Such counsel may further state that, although
such counsel made certain inquiries and investigations in connection with the
preparation of the Memorandum, such counsel did not independently verify the
accuracy or completeness of the statements made in the Memorandum and, as such,
cannot and does not assume responsibility for or pass on the accuracy or
completeness of such statements. Subject to the foregoing, such counsel shall
state that such counsel's work in connection with the Memorandum and the offer
and sale of Notes pursuant to the Purchase Agreement did not disclose any
information that would cause such counsel to believe that the Final Offering
Memorandum, as of its date or as of the Delivery Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not make any comment with respect to the financial statements and
the notes thereto and the other financial and statistical information or data
included in the Final Offering Memorandum).
1/ Capitalized terms not defined herein have the meanings given to them
in the Purchase Agreement.
Exhibit A to
Purchase Agreement
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of August 7, 1997
By and Between
ICN PHARMACEUTICALS, INC.
and
SCHRODER & CO. INC.,
as Initial Purchaser
9 1/4% Senior Notes due 2005
================================================================================
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of August 7, 1997
By and Between
ICN PHARMACEUTICALS, INC.
and
SCHRODER & CO. INC.,
as Initial Purchaser
9 1/4% Senior Notes due 2005
================================================================================
<PAGE>
-i-
TABLE OF CONTENTS
Page
1. Definitions................................................................1
2. Exchange Offer.............................................................6
3. Shelf Registration........................................................13
4. Additional Interest.......................................................15
5. Registration Procedures...................................................18
6. Registration Expenses.....................................................31
7. Indemnification...........................................................32
8. Rules 144 and 144A........................................................37
9. Underwritten Registrations................................................38
10. Miscellaneous.............................................................38
(a) No Inconsistent Agreements.................................38
(b) Adjustments Affecting Registrable Notes....................39
(c) Amendments and Waivers.....................................39
(d) Notices....................................................40
(e) Successors and Assigns.....................................40
(f) Counterparts...............................................41
(g) Headings...................................................41
(h) Governing Law..............................................41
(i) Severability...............................................41
(j) Securities Held by the Company or their
Affiliates................................................41
(k) Third Party Beneficiaries..................................42
(l) Attorneys' Fees............................................42
(m) Entire Agreement...........................................42
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
August 7, 1997, by and between ICN PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), on the one hand, and SCHRODER & CO. INC. (the "Initial
Purchaser"), on the other hand.
This Agreement is entered into in connection with the Purchase
Agreement, dated as of August 7, 1997, between the Company and the Initial
Purchaser (the "Purchase Agreement"), which provides for the sale by the Company
to the Initial Purchaser of $275,000,000 aggregate principal amount of the
Company's 9 1/4% Senior Notes due 2005 (the "Notes"). In order to induce the
Initial Purchaser to enter into the Purchase Agreement, the Company has agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchaser and any subsequent holder or holders of the Notes. The
execution and delivery of this Agreement is a condition to the Initial
Purchaser's obligation to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Interest" shall have the meaning set forth in Section 4
hereof.
"Advice" shall have the meaning set forth in Section 5 hereof.
"Agreement" shall have the meaning set forth in the introductory
paragraphs hereto.
"Applicable Period" shall have the meaning set forth in Section 2
hereof.
"Board of Directors" shall have the meaning set forth in Section 2
hereof.
"Business Day" shall mean a day that is not a Legal Holiday.
"Company" shall have the meaning set forth in the preamble of this
Agreement and shall also include the Company's permitted successors and assigns.
"Commission" shall mean the Securities and Exchange Commission.
<PAGE>
"Delay Period" shall have the meaning set forth in Section 2 hereof.
"Effectiveness Date" shall mean, (i) with respect to the Exchange
Offer Registration Statement, the 150th day after the Issue Date and (ii) with
respect to any other Registration Statement, the 120th day after the Filing Date
with respect thereto.
"Effectiveness Period" shall have the meaning set forth in Section 3
hereof.
"Event Date" shall have the meaning set forth in Section 4 hereof.
"Exchange Act" shall mean Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" shall have the meaning set forth in Section 2 hereof.
"Exchange Offer" shall have the meaning set forth in Section 2 hereof.
"Exchange Offer Registration Statement" shall have the meaning set
forth in Section 2 hereof.
"Filing Date" shall mean, (A) if no Registration Statement has been
filed by the Company pursuant to this Agreement, the 30th day after the Issue
Date; provided, however, that if a Shelf Filing Event shall have occurred within
10 days of the Filing Date, then the Filing Date with respect to the Initial
Shelf Registration shall be the 15th calendar day after the occurrence of the
Shelf Filing Event; and (B) in each other case (which may be applicable
notwithstanding the consummation of the Exchange Offer), the 30th day after the
occurrence of the Shelf Filing Event.
"Holder" shall mean any holder of a Registrable Note or Registrable
Notes.
"Indemnified Person" shall have the meaning set forth in Section 7(c)
hereof.
"Indemnifying Person" shall have the meaning set forth in Section 7(c)
hereof.
"Indenture" shall mean the Indenture, dated as of August 14, 1997, by
and between the Company and United States Trust Company of New York, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble
hereof.
"Initial Shelf Registration" shall have the meaning set forth in
Section 3(a) hereof.
"Inspectors" shall have the meaning set forth in Section 5(n) hereof.
"Issue Date" shall mean August 14, 1997, the date of original issuance
of the Notes.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.
<PAGE>
"NASD" shall have the meaning set forth in Section 5(s) hereof.
"Participant" shall have the meaning set forth in Section 7(a) hereof.
"Participating Broker-Dealer" shall mean any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer or any other person
with similar prospectus delivery requirements for use in connection with any
resale of Exchange Notes.
"Person" shall mean an individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, firm, government or agency or political subdivision thereofor other
legal entity.
"Private Exchange" shall have the meaning set forth in Section 2
hereof.
"Private Exchange Notes" shall have the meaning set forth in Section 2
hereof.
"Prospectus" shall mean 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, 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.
"Purchase Agreement" shall have the meaning set forth in the
introductory paragraphs hereof.
"Records" shall have the meaning set forth in Section 5(n) hereof.
"Registrable Notes" shall mean each Note upon its original issuance
and at all times subsequent thereto, each Exchange Note as to which Section
2(c)(iv) hereof is applicable upon original issuance and at all times subsequent
thereto and each Private Exchange Note upon original issuance thereof and at all
times subsequent thereto, until (i) a Registration Statement (other than, with
respect to any Exchange Note as to which Section 2(c)(iv) hereof is applicable,
the Exchange Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note has been declared effective by the Commission and such
Note, Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement, (ii) such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes that may be resold without restriction under state and federal
securities laws, or (iii) such Note, Exchange Note or Private Exchange Note, as
the case may be, ceases to be outstanding for purposes of the Indenture.
"Registration Statement" shall mean any appropriate registration
statement of the Company covering any of the Registrable Notes pursuant to the
provisions of this Agreement, including, but not limited to, the Exchange Offer
Registration Statement, filed with the Commission under the Securities Act, and
all amendments and supplements to any 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.
<PAGE>
"Rule 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the Commission.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Shelf Filing Event" shall have the meaning set forth in Section 2
hereof.
"Shelf Registration" shall have the meaning set forth in Section 3(b)
hereof.
"Subsequent Shelf Registration" shall have the meaning set forth in
Section 3(b) hereof.
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
"Trustee" shall mean the trustee under the Indenture and the trustee
(if any) under any indenture governing the Exchange Notes and Private Exchange
Notes.
"Underwritten registration or underwritten offering" shall mean a
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
<PAGE>
2. Exchange Offer
(a)...... The Company shall file with the Commission, no later than
the Filing Date, a Registration Statement (the "Exchange Offer Registration
Statement") on an appropriate registration form with respect to a registered
offer (the "Exchange Offer") to exchange any and all of the Registrable Notes
for a like aggregate principal amount of notes (the "Exchange Notes") of the
Company that are identical in all material respects to the Notes except that the
Exchange Notes shall contain no restrictive legend thereon. The Exchange Offer
shall comply with all applicable tender offer rules and regulations under the
Exchange Act and other applicable law. The Company shall use its best efforts to
(x) cause the Exchange Offer Registration Statement to be declared effective
under the Securities Act on or before the Effectiveness Date; (y) keep the
Exchange Offer open for at least 20 Business Days (or longer if required by
applicable law) after the date on which the Exchange Offer Registration
Statement is declared effective; and (z) on or prior to the 45th day following
the date on which the Exchange Offer Registration Statement is declared
effective by the Commission, issue Exchange Notes for Notes tendered in the
Exchange Offer. For purposes of this Section 2(a) only, if after the Exchange
Offer Registration Statement is initially declared effective by the Commission,
the Exchange Offer or the issuance of the Exchange Notes thereunder is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental agency or court, the Exchange Offer
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement.
Each Holder that participates in the Exchange Offer will be required
to represent to the Company in writing that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii)
such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act, (iii) that such Holder is not an affiliate of
the Company within the meaning of the Securities Act or, if such Holder is such
an affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act applicable to it, (iv) if such Holder is not
a broker-dealer, that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and (v) if such Holder is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Notes that were
accquired as a result of market-making or other trading activities, that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Notes that are Private Exchange
Notes, Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange
Notes held by Participating Broker-Dealers (as defined), and the Company shall
have no further obligation to register Registrable Notes (other than Private
Exchange Notes and other than in respect of any Exchange Notes as to which
clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof.
<PAGE>
No securities other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement.
(b)...... The Company and the Initial Purchaser acknowledge that the
staff of the Commission has taken the position that any broker-dealer that
elects to exchange Notes that were acquired by such broker-dealer for its own
account as a result of market-making or other trading activities for Exchange
Notes in the Exchange Offer (a "Participating Broker-Dealer") may be deemed to
be an "underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
The Company and the Initial Purchaser also acknowledge that it is the
SEC staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Notes, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act in connection with resales of Exchange
Notes for their own accounts, so long as the Prospectus otherwise meets the
requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Company agrees
to use its best efforts to keep the Exchange Offer Registration Statement
continuously effective for a period of up to 180 days after the date on which
the Exchange Registration Statement is declared effective, or such longer period
if extended pursuant to the last paragraph of Section 5 hereof (such period, the
"Applicable Period"), or such earlier date as all Requesting Participating
Broker-Dealers shall have notified the Company in writing that such Requesting
Participating Broker-Dealers have resold all Exchange Notes acquired in the
Exchange Offer. The Company shall include a plan of distribution in such
Exchange Offer Registration Statement that meets the requirements set forth in
the preceding paragraph.
If, prior to consummation of the Exchange Offer, any Holder holds any
Notes acquired by it that have, or that are reasonably likely to be determined
to have, the status of an unsold allotment in an initial distribution, or if any
Holder is not entitled to participate in the Exchange Offer, the Company upon
the request of any such Holder shall simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to any such Holder, in
exchange (the "Private Exchange") for such Notes held by any such Holder, a like
principal amount of notes (the "Private Exchange Notes") of the Company that are
identical in all material respects to the Exchange Notes. The Private Exchange
Notes shall be issued pursuant to the same indenture as the Exchange Notes and
bear the same CUSIP number as the Exchange Notes.
<PAGE>
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder entitled to participate in the Exchange Offer
a copy of the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and related
documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes 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; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Company shall:
(1) accept for exchange all Notes validly tendered and not validly
withdrawn pursuant to the Exchange Offer and the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may be,
equal in principal amount to the Notes of such Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the Commission, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental
agency which might materially impair the ability of the Company to proceed with
the Exchange Offer or the Private Exchange, and no material adverse development
shall have occurred in any existing action or proceeding with respect to the
Company and (iii) all governmental approvals shall have been obtained, which
approvals the Company deems necessary for the consummation of the Exchange Offer
or Private Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture (in either case, with such changes as are necessary to comply
with any requirements of the Commission to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that the Exchange Notes shall not be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes shall vote and consent together on all matters as one class and that
none of the Exchange Notes, the Private Exchange Notes or the Notes will have
the right to vote or consent as a separate class on any matter.
<PAGE>
(c)...... If, (i) because of any applicable interpretations of the
staff of the Commission, the Company is not permitted to effect the Exchange
Offer, (ii) the Exchange Offer is not consummated within 180 days of the Issue
Date, (iii) the Initial Purchaser so requests with respect to Notes not eligible
to be exchanged for Exchange Notes in the Exchange Offer, or (iv) any Holder is
not eligible to participate in the Exchange Offer or does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
state and federal securities laws (other than due solely to the status of such
Holder as an affiliate of any of the Company within the meaning of the
Securities Act) (each such event referred to in clauses (i) through (iv) of this
sentence, a "Shelf Filing Event"), then the Company (x) shall promptly deliver
to the Holders and the Trustee written notice thereof in the case of clause (i)
or (ii) and (y) shall file a Shelf Registration pursuant to Section 3 hereof.
(d)...... Notwithstanding the foregoing, the time periods specified in
Sections 2(a), (b) and (c) shall be tolled during the pendency of any
circumstances beyond the Company's control that prevent performance by the
Company of its obligations hereunder despite the Company's best efforts. Such
matters include events affecting issuers generally, such as the temporary
closure of federal agencies, and events directly affecting the Company, such as
the Company's inability to obtain all information regarding an acquisition
entity constituting a Significant Subsidiary (as defined by Regulation S-X
promulgated by the Commission) within a time period that would permit
independent auditors to prepare any required audited financial information on a
timely basis.
(e)...... In addition, if at any time prior to the termination of the
Company's obligation under this Agreement, outside counsel to the Company (which
counsel shall be experienced in securities laws matters) shall determine in good
faith that it is reasonable to conclude that the filing of the Exchange Offer
Registration Statement or any Shelf Registration or the compliance by the
Company with its disclosure obligations in connection with the Exchange Offer
Registration Statement or any Shelf Registration may require the disclosure of
information which the Board of Directors of the Company (the "Board of
Directors") has identified as material and which the Board of Directors has
resolved that the Company has a bona fide business purpose for preserving as
confidential, then the Company may delay the filing or the effectiveness of the
Exchange Offer Registration Statement or any Shelf Registration (if not then
filed or effective, as applicable) and shall not be required to maintain the
effectiveness thereof or amend or supplement the Exchange Offer Registration
Statement or any Shelf Registration for a period (a "Delay Period") expiring
upon the earlier to occur of (A) the date on which such material information is
disclosed to the public or ceases to be material or the Company is able to so
comply with its disclosure obligations and Commission requirements or (B) 30
days after the Company notifies the Holders of such good faith determination.
There shall not be more than three Delay Periods, and there shall not be two
non-contiguous Delay Periods during any contiguous 90-day period.
<PAGE>
(f)...... The Company will give prompt written notice, in the manner
prescribed by Section 10(d) hereof, to each Holder of each Delay Period. Such
notice shall be given as soon as practicable after the Board of Directors makes
the determination referenced in Section 2(d). Such notice shall state to the
extent, if any, as is practicable, an estimate of the duration of such Delay
Period and shall advise the recipient thereof of the agreement of such Holder
provided in the next succeeding sentence. Each Holder, by his acceptance of any
Registrable Note, agrees that (i) upon receipt of such notice of a Delay Period
it will forthwith discontinue disposition of Registrable Notes pursuant to any
Shelf Registration and (ii) it will not deliver any prospectus forming a part of
any Shelf Registration in connection with any sale of Registrable Notes until
the expiration of such Delay Period.
3. Shelf Registration Shelf Registration
If at any time a Shelf Filing Event shall occur, then:
(a)...... Shelf Registration. The Company shall file with the
Commission a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Notes not exchanged
in the Exchange Offer, Private Exchange Notes and Exchange Notes as to which
Section 2(c)(iv) is applicable (the "Initial Shelf Registration"). The Company
shall use its best efforts to file with the Commission the Initial Shelf
Registration as promptly as practicable. The Initial Shelf Registration shall be
on Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall not permit any securities other than the Registrable Notes to be
included in the Initial Shelf Registration or any Subsequent Shelf Registration
(as defined below).
The Company shall use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act for the period ending on the date which is
two years from the Issue Date, subject to extension pursuant to the last
paragraph of Section 5 hereof (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration has been declared
effective under the Securities Act; provided, however, that the Effectiveness
Period in respect of the Initial Shelf Registration shall be extended to the
extent required to permit dealers to comply with the applicable prospectus
delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein; provided, further, that the Company may suspend the
effectiveness of a Shelf Registration Statement by written notice to the Holders
for a period not to exceed 30 days in any calendar year if, (i) an event occurs
and is continuing as a result of which the Shelf Registration Statement would,
in the Company's good faith judgment, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
<PAGE>
therein not misleading and (ii) (a) the Company determines in good faith that
the disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Company and its subsidiaries,
taken as a whole, or (b) the disclosure otherwise relates to a previously
undisclosed pending material business transaction, the disclosure of which would
impede the Company's ability to consummate such transaction.
(b)...... Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Company shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall as soon as practicable after such
cessation amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent
Shelf Registration"). If a Subsequent Shelf Registration is filed, the Company
shall use its best efforts to cause the Subsequent Shelf Registration to be
declared effective under the Securities Act as soon as practicable after such
filing and to keep such Registration Statement continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c)...... Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to 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
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes.
4. Additional Interest
(a)...... The Company and the Initial Purchaser agree that the Holders
will suffer damages if the Company fails to fulfill its obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Company agrees to pay,
as liquidated damages, additional interest on the Notes ("Additional Interest")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed on or prior to the
applicable Filing Date or (B) notwithstanding that the Company has
consummated or will consummate the Exchange Offer, the Company is
required to file a Shelf Registration and such Shelf Registration is
not filed on or prior to the Filing Date applicable thereto, then,
commencing on the day after any such Filing Date, Additional Interest
<PAGE>
shall accrue on the principal amount of the Notes at a rate of 0.50%
per annum for the first 90 days immediately following each such Filing
Date, and such Additional Interest rate shall increase by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the Commission
on or prior to the relevant Effectiveness Date or (B) notwithstanding
that the Company has consummated or will consummate the Exchange
Offer, the Company is required to file a Shelf Registration and such
Shelf Registration is not declared effective by the Commission on or
prior to the Effectiveness Date in respect of such Shelf Registration,
then, commencing on the day after such Effectiveness Date, Additional
Interest shall accrue on the principal amount of the Notes at a rate
of 0.50% per annum for the first 90 days immediately following the day
after such Effectiveness Date, and such Additional Interest rate shall
increase by an additional 0.25% per annum at the beginning of each
subsequent 90-day period; or
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to the 180th day following the Issue Date or (B) the
Exchange Offer Registration Statement or the Shelf Registration is
declared effective but thereafter ceases to be effective at any time
during the Effectiveness Period (except as permitted by Section 10(a)
hereof) for a period of 15 consecutive days without being succeeded
immediately by an additional Exchange Offer Registration Statement or
Shelf Registration Statement, as the case may be, filed and declared
effective, then Additional Interest shall accrue on the principal
amount of the Notes at a rate of 0.50% per annum for the first 90 days
commencing on the (x) 181st day after the Issue Date, in the case of
(A) above, or (y) the 16th day after such Shelf Registration ceases to
be effective in the case of (B) above, and such Additional Interest
rate shall increase by an additional 0.25% per annum at the beginning
of each such subsequent 90-day period;
provided, however, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.0% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration Statement
or the applicable Shelf Registration as required hereunder (in the case of
clause (i) above of this Section 4), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the applicable Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4), or (3) upon
the exchange of the applicable Exchange Notes for all Notes tendered (in the
case of clause (iii)(A) of this Section 4), or upon the effectiveness of the
applicable Exchange Offer Registration Statement or Shelf Registration Statement
which had ceased to remain effective (in the case of (iii)(B) of this Section
4), Additional Interest on the Notes in respect of which such events relate as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue.
<PAGE>
(b)...... The Company shall notify the Trustee within one Business Day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section
4 will be payable in cash semi-annually on the interest payment dates specified
in the Indenture (to the holders of record as specified in the Indenture),
commencing with the first such interest payment date occurring after any such
Additional Interest commences to accrue. The amount of Additional Interest will
be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Company hereunder the Company
shall:
(a) Prepare and file with the Commission prior to the applicable
Filing Date, a Registration Statement or Registration Statements as
prescribed by Sections 2 or 3 hereof, and use its best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that, if (1) such
filing is pursuant to Section 3 hereof, or (2) a Prospectus contained
in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the
Company shall furnish to and afford the Holders of the Registrable
Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, 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 (in each case at least five Business Days prior to such
filing). The Company shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto if the Holders of
a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to each Shelf Registration Statement or
Exchange Offer Registration Statement, as the case may be, as may be
necessary to keep such Registration Statement continuously effective
<PAGE>
for the Effectiveness Period or the Applicable Period, as the case may
be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions
of the Securities Act and the Exchange Act applicable to each of them
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, in each case, in accordance with the intended methods
of distribution set forth in such Registration Statement or
Prospectus, as so amended. The Company shall be deemed not to have
used its best efforts to keep a Registration Statement effective
during the Effective Period or the Applicable Period, as the case may
be, relating thereto if the Company voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes
not being able to sell such Registrable Notes or such Exchange Notes
during that period unless such action is required by applicable law.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period relating thereto, notify the selling Holders of Registrable
Notes, or each such Participating Broker-Dealer, as the case may be,
their counsel and the managing underwriters, if any, as promptly as
possible, and, if requested by any such Person, 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 or any post-effective amendment, when the same
has become effective under the Securities Act (including in such
notice a written statement that any Holder may, upon request, obtain,
at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the
Commission 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
Registrable Notes or resales of Exchange Notes by Participating
Broker-Dealers the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(m) hereof cease to be true and correct in
all material respects, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or
<PAGE>
the initiation or threatening of any proceeding for such purpose, (v)
of the happening of any event, the existence of any condition or any
information becoming known to the Company 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 or amendments or supplements to 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 to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's 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
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes 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
Registrable Notes or the Exchange Notes to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any
such order is issued, to use its best efforts to obtain the withdrawal
of any such order at the earliest practicable moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the
Holders of a majority in aggregate principal amount of the Registrable
Notes being sold in connection with an underwritten offering or any
Participating Broker-Dealer, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the
managing underwriter or underwriters (if any), such Holders or any
Participating Broker-Dealer (based upon advice of counsel) determine
is reasonably necessary 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
post-effective amendment; provided, however, that the Company shall
not be required to take any action hereunder that would, in the
written opinion of counsel to the Company, violate applicable laws,
and (iii) supplement or make amendments to such Registration Statement
(based upon advice of counsel).
<PAGE>
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and to counsel
and each managing underwriter, if any, at the sole expense of the
Company, 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 or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, deliver to each selling Holder of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the
Company, 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 as such
Persons may reasonably request; and, subject to the last paragraph of
this Section 5, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the
selling Holders of Registrable Notes 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 Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use its best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification)
of, such Registrable Notes for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any
selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters reasonably request; provided, however,
that where Exchange Notes held by Participating Broker-Dealers or
<PAGE>
Registrable Notes are offered other than through an underwritten
offering, the Company agrees to cause the Company's counsel to perform
Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h); keep each such
registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept
effective and do any and all other acts or things reasonably necessary
or advisable to enable the disposition in such jurisdictions of the
Exchange Notes held by Participating Broker-Dealers or the Registrable
Notes covered by the applicable Registration Statement; provided,
however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and
the managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Notes 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; and enable such Registrable Notes to be
in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may request at least
two Business Days prior to any sale of such Registrable Notes.
(j) Use its best efforts to cause the Registrable Notes covered
by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be reasonably
necessary to enable the seller or sellers thereof or the underwriter
or underwriters, if any, to consummate the disposition of such
Registrable Notes, except as may be required solely as a consequence
of the nature of such selling Holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the Commission, at the sole
expense of the Company, 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 required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes 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 the light of the
circumstances under which they were made, not misleading.
<PAGE>
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
(m) In connection with any underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such
representations and warranties to, and covenants with, the
underwriters with respect to the business of the Company and its
subsidiaries (including any acquired business, properties or entity,
if applicable) 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 of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii)
use its best efforts to obtain the written opinions of counsel to the
Company and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or 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 the managing underwriter or
underwriters; (iii) use its best efforts to obtain "cold comfort"
letters and updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified 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 or incorporated by reference 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 (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 Registrable Notes covered by such Registration Statement and
the managing underwriter or 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.
(n) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, or each such Participating
<PAGE>
Broker-Dealer, as the case may be, any underwriter participating in
any such disposition of Registrable Notes, 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, all financial and other records,
pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Company and its subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement and Prospectus. Each Inspector shall agree in writing that
it will not disclose any records that the Company determines, in good
faith, to be confidential and that it notifies the Inspectors in
writing are confidential unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
Registration Statement or Prospectus, (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, (iii) disclosure of such information is
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving
such Inspector and arising out of, based upon, relating to, or
involving this Agreement or the Purchase Agreement, or any
transactions contemplated hereby or thereby or arising hereunder or
thereunder, or (iv) the information in such Records has been made
generally available to the public; provided, however, that such
Inspector shall take such actions as are reasonably necessary to
protect the confidentiality of such information (if practicable) to
the extent such action is otherwise not inconsistent with, an
impairment of or in derogation of the rights and interests of the
Holder or any Inspector.
(o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may
be, to be qualified under the TIA not later than the effective date of
the first Registration Statement relating to the Registrable Notes;
and in connection therewith, cooperate with the trustee under any such
indenture and the Holders of the Registrable Notes, 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 Commission to enable such
indenture to be so qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters
<PAGE>
in a firm commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
(q) Upon consummation of the Exchange Offer or a Private
Exchange, use its best efforts to obtain an opinion of counsel to the
Company, in a form customary for underwritten transactions, addressed
to the Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer or the Private Exchange, as the
case may be, that the Exchange Notes or Private Exchange Notes, as the
case may be, and the related indenture constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its respective terms, subject to customary exceptions
and qualifications.
(r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company (or to such other Person as directed by the Company) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, mark, or cause to be marked, on such Registrable Notes
that such Registrable Notes are being cancelled in exchange for the
Exchange Notes or the Private Exchange Notes, as the case may be; in
no event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(s) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(t) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Exchange Notes and/or
Registrable Notes covered by a Registration Statement contemplated
hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude from
such registration the Registrable Notes of any seller so long as such seller
fails to furnish such information within a reasonable time after receiving such
request. Each seller as to which any Shelf Registration is being effected agrees
to furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that
<PAGE>
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be required.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual 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 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, 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 that the Company shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company, whether or not
the Exchange Offer Registration Statement or any Shelf Registration is filed or
becomes effective or the Exchange Offer is consummated, 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
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the
case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes 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 underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or in respect of Registrable Notes or Exchange Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and reasonable fees and disbursements of one special
counsel for all of the sellers of Registrable Notes (exclusive of any counsel
<PAGE>
retained pursuant to Section 7 hereof), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(m)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) Securities
Act liability insurance, if the Company desires such insurance, (vii) fees and
expenses of all other Persons retained by the Company, (viii) internal expenses
of the Company (including, without limitation, all salaries and expenses of
officers and employees of the Company performing legal or accounting duties),
(ix) the expense of any annual audit, (x) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, and the obtaining of a rating of the securities, in each case, if
applicable, and (xi) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, indentures
and any other documents necessary in order to comply with this Agreement.
Notwithstanding the foregoing or anything to the contrary, each Holder shall pay
all underwriting discounts and commissions of any underwriters with respect to
any Registrable Notes sold by or on behalf of it.
7. Indemnification
(a)...... The Company agrees to indemnify and hold harmless each
Holder of Registrable Notes and each Participating Broker-Dealer selling
Exchange Notes during the Applicable Period, the officers and directors of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) 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 the case of
the Prospectus in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use therein; provided, however, that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Participant from whom the Person asserting such losses, claims,
damages or liabilities purchased Registrable Notes if (x) it is established in
the related proceeding that such Participant failed to send or give a copy of
the Prospectus (as amended or supplemented if such amendment or supplement was
furnished to such Participant prior to the written confirmation of such sale) to
such Person with or prior to the written confirmation of such sale, if required
by applicable law, and (y) the untrue statement or omission or alleged untrue
statement or omission was completely corrected in the Prospectus (as amended or
supplemented if amended or supplemented as aforesaid) and such Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission that was the subject matter of the related proceeding.
<PAGE>
(b)...... Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its 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 (but on a
several, and not joint, basis) as the foregoing indemnity from the Company to
each Participant, but only with reference to information relating to such
Participant furnished to the Company in writing by such Participant expressly
for use in any Registration Statement or Prospectus, any amendment or supplement
thereto, or any preliminary prospectus.
(c)...... 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 Person")
shall promptly notify the Persons against whom such indemnity may be sought (the
"Indemnifying Persons") in writing, and the Indemnifying Persons, upon request
of the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Persons may reasonably designate in such proceeding and shall pay
the fees and expenses actually incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Persons shall not relieve any of them of any obligation or liability which any
of them may have hereunder or otherwise. In any such proceeding, any Indemnified
Person 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 Person unless (i)
the Indemnifying Persons and the Indemnified Person shall have mutually agreed
to the contrary, (ii) the Indemnifying Persons shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both any Indemnifying Person and the Indemnified
Person or any affiliate thereof and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Persons shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed promptly as they are incurred. Any such separate firm for the
Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes and
Exchange Notes sold by all such Participants and shall be reasonably acceptable
to the Company and any such separate firm for the Company, their respective
directors, their respective officers and such control Persons of the Company
shall be designated in writing by the Company and shall be reasonably acceptable
to the Holders. The Indemnifying Persons shall not be liable for any settlement
of any proceeding effected without its prior written consent (which consent
shall not be unreasonably withheld or delayed), but if settled with such consent
or if there be a final judgment for the plaintiff for which the Indemnified
Person is entitled to indemnification pursuant to this Agreement, each of the
Indemnifying Persons agrees to indemnify and hold harmless each Indemnified
Person 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 Persons (which consent shall not be unreasonably withheld or
delayed), effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
<PAGE>
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (A) includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of such Indemnified Person.
(d)...... If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Participants on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of discounts
and commissions but before deducting expenses) of the Notes received by the
Company bears to the total proceeds received by such Participant from the sale
of Registrable Notes or Exchange Notes, as the case may be. The relative fault
of the parties 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
Company on the one hand or such Participant or such other Indemnified Person, as
the case may be, on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances.
(e)...... 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 the Participants 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 Person 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 Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid 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.
<PAGE>
(f)...... Any losses, claims, damages, liabilities or expenses for
which an Indemnified Person is entitled to indemnification or contribution under
this Section 7 shall be paid by the Indemnifying Person to the Indemnified
Person as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, the Company, their respective directors or officers or any person
controlling the Company, and (ii) any termination of this Agreement.
(g)...... 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 Persons referred to above.
8. Rules 144 and 144A Rules 144 and 144A
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act and,
if at any time the Company is not required to file such reports, it will, upon
the request of any Holder or beneficial owner of Registrable Notes, make
available such information necessary to permit sales pursuant to Rule 144A under
the Securities Act. The Company further covenants that it will take such further
action as any Holder of Registrable Notes may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Notes without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities Act,
as such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
10. Underwritten Registrations
If any of the Registrable Notes 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 Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
<PAGE>
11. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, and the Company shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not conflict with and are not inconsistent with, in any
material respect, the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements. The Company has not
entered and will not enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Company shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given except pursuant to a written agreement
duly signed and delivered by (I) the Company and (II)(A) the Holders of not less
than a majority in aggregate principal amount of the then outstanding
Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Notes held by all
Participating Broker-Dealers; provided, however, that Section 7 and this Section
10(c) may not be amended, modified or supplemented except pursuant to a written
agreement duly signed and delivered by each Holder and each Participating
Broker-Dealer (including any person who was a Holder or Participating
Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be,
disposed of pursuant to any Registration Statement) affected by any such
amendment, modification or supplement. 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 of Registrable Notes 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 of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.
(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 the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture.
<PAGE>
(ii) if to the Company, at the address as follows:
3300 Hyland Avenue
Costa Mesa, California 92626
Facsimile No.: (714) 641-7228
Attention: General Counsel
(iii) if to the Initial Purchaser, as provided in the Purchase
Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by the recipient's telecopier machine, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign holds
Registrable Notes.
(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 LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(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) Securities Held by the Company or their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or any of its
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.
<PAGE>
(k) Third Party Beneficiaries. Holders and beneficial owners of
Registrable Notes and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons.
(l) Attorneys' Fees. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
(m) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Holders on the one hand
and the Company on the other, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged herein
and replaced hereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ICN PHARMACEUTICALS, INC.
By: /s/ David C. Watt
---------------------------
Name: David C. Watt
Title: Executive Vice President, General Counsel
and Corporate Secretary
SCHRODER & CO. INC.
By: /s/ R. Douglas Carleton
---------------------------
Name: R. Douglas Carleton
Title: Managing Director
ICN PHARMACEUTICALS, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
INDENTURE
Dated as of August 14, 1997
$275,000,000
9 1/4% Senior Notes due 2005
Series B 9 1/4% Senior Notes due 2005
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C> <C>
310(a)(1)............................................. 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.08; 7.10
(b)............................................. 7.08; 7.10; 10.02
(c)............................................. N.A.
311(a)................................................ 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)................................................ 2.05
(b)............................................. 10.03
(c)............................................. 10.03
313(a)................................................ 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.06
(c)............................................. 7.06; 10.02
(d)............................................. 7.06
314(a)................................................ 4.06; 4.09; 10.02
(b)............................................. N.A.
(c)(1).......................................... 10.04
(c)(2).......................................... 10.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 10.05
(f)............................................. N.A.
315(a)................................................ 7.01(b)
(b)............................................. 7.05; 10.02
(c)............................................. 7.01(a)
(d)............................................. 7.01(c)
(e)............................................. 6.11
316(a)(last sentence)................................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. 9.04
317(a)(1)............................................. 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318(a)................................................ 10.01
(b)................................................ N.A.
(c)............................................. 10.01
</TABLE>
<PAGE>
-i-
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<CAPTION>
<S> <C> <C>
Page
SECTION 1.01.
Definitions............................................1
SECTION 1.02. Incorporation by Reference of
TIA...................................................21
SECTION 1.03. Rules of
Construction......................................21
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and
Dating............................................22
SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount......................23
SECTION 2.03. Registrar and Paying
Agent.............................................24
SECTION 2.04. Paying Agent To Hold Assets in
Trust.............................................25
SECTION 2.05. Noteholder
Lists.............................................26
SECTION 2.06. Transfer and
Exchange..........................................26
SECTION 2.07. Replacement
Notes.............................................27
SECTION 2.08. Outstanding
Notes.............................................27
SECTION 2.09. Treasury
Notes.............................................28
SECTION 2.10. Temporary
Notes.............................................28
SECTION 2.11.
Cancellation......................................29
SECTION 2.12. Defaulted
Interest..........................................29
SECTION 2.13. CUSIP
Number............................................30
SECTION 2.14. Deposit of
Monies............................................30
SECTION 2.15. Restrictive
Legends...........................................31
SECTION 2.16. Book-Entry Provisions for Global
Security..........................................33
SECTION 2.17. Special Transfer
Provisions........................................34
SECTION 2.18. Liquidated Damages Under Registration Rights
Agreement.........................................37
<PAGE>
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to
Trustee...........................................37
SECTION 3.02. Selection of Notes To Be
Redeemed..........................................38
SECTION 3.03. Notice of
Redemption........................................38
SECTION 3.04. Effect of Notice of
Redemption........................................39
SECTION 3.05. Deposit of Redemption
Price.............................................40
SECTION 3.06. Notes Redeemed in
Part..............................................40
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of
Notes.............................................40
SECTION 4.02. Maintenance of Office or
Agency............................................41
SECTION 4.03. Corporate
Existence.........................................41
SECTION 4.04. Payment of Taxes and Other
Claims............................................42
SECTION 4.05. Maintenance of Properties and
Insurance.........................................42
SECTION 4.06. Compliance Certificate; Notice of
Default...........................................43
SECTION 4.07. Compliance with
Laws..............................................44
SECTION 4.08. Waiver of Stay, Extension or Usury
Laws..............................................44
SECTION 4.09. Provision of Financial Statements and
Information.......................................44
SECTION 4.10. Limitation on Incurrence of
Indebtedness......................................45
SECTION 4.11. Limitation on Restricted
Payments..........................................49
SECTION 4.12. Limitation on
Liens.............................................51
SECTION 4.13. Limitation on Dividends and Other Payment Restrictions Affecting
Restricted
Subsidiaries......................................52
SECTION 4.14. Limitation on Transactions with
Affiliates........................................53
SECTION 4.15. Change of
Control...........................................54
SECTION 4.16. Limitation on Asset
Sales.............................................56
SECTION 4.17. Limitation on Designation of Unrestricted
Subsidiaries......................................60
<PAGE>
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of
Assets............................................61
SECTION 5.02. Successor Corporation
Substituted.......................................63
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of
Default...........................................63
SECTION 6.02.
Acceleration......................................65
SECTION 6.03. Other
Remedies..........................................66
SECTION 6.04. Waiver of Past
Defaults..........................................67
SECTION 6.05. Control by
Majority..........................................68
SECTION 6.06. Limitation on
Suits.............................................68
SECTION 6.07. Rights of Holders To Receive
Payment...........................................69
SECTION 6.08. Collection Suit by
Trustee...........................................69
SECTION 6.09. Trustee May File Proofs of
Claim.............................................69
SECTION 6.10.
Priorities........................................70
SECTION 6.11. Undertaking for
Costs.............................................71
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of
Trustee...........................................71
SECTION 7.02. Rights of
Trustee...........................................73
SECTION 7.03. Individual Rights of
Trustee...........................................74
SECTION 7.04. Trustee's
Disclaimer........................................75
SECTION 7.05. Notice of
Default...........................................75
SECTION 7.06. Reports by Trustee to
Holders...........................................75
SECTION 7.07. Compensation and
Indemnity.........................................76
SECTION 7.08. Replacement of
Trustee...........................................77
SECTION 7.09. Successor Trustee by Merger,
Etc...............................................78
SECTION 7.10. Eligibility;
Disqualification..................................79
SECTION 7.11. Preferential Collection of Claims Against
Company...........................................79
<PAGE>
ARTICLE EIGHT
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.01. Satisfaction and Discharge of
Indenture.........................................79
SECTION 8.02. Defeasance or Covenant
Defeasance........................................81
SECTION 8.03. Application of Trust
Money.............................................84
SECTION 8.04. Repayment to the
Company...........................................84
SECTION 8.05.
Reinstatement.....................................85
SECTION 8.06. Acknowledgment of Discharge by
Trustee...........................................85
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of
Holders...........................................86
SECTION 9.02. With Consent of
Holders...........................................87
SECTION 9.03. Compliance with
TIA...............................................88
SECTION 9.04. Revocation and Effect of
Consents..........................................89
SECTION 9.05. Notation on or Exchange of
Notes.............................................90
SECTION 9.06. Trustee To Sign Amendments,
Etc...............................................90
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA
Controls..........................................90
SECTION 10.02.
Notices...........................................91
SECTION 10.03. Communications by Holders with Other
Holders...........................................92
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent.........................................92
SECTION 10.05. Statements Required in Certificate or
Opinion...........................................92
SECTION 10.06. Rules by Trustee, Paying Agent,
Registrar.........................................93
SECTION 10.07. Legal
Holidays..........................................93
SECTION 10.08. Governing
Law...............................................93
<PAGE>
SECTION 10.09. No Adverse Interpretation of Other
Agreements........................................94
SECTION 10.10. No Recourse Against
Others............................................94
SECTION 10.11.
Successors........................................94
SECTION 10.12. Duplicate
Originals.........................................94
SECTION 10.13.
Severability......................................94
SECTION 10.14. Independence of
Covenants.........................................95
Signatures........................................................................ 87
Exhibit A - Form of Initial
Note..............................................A-1
Exhibit B - Form of Exchange
Note..............................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with Transfers
Pursuant to Regulation S..........................C-1
Note: This Table of Contents shall not, for any purpose, be deemed
to be part of this Indenture.
</TABLE>
<PAGE>
INDENTURE, dated as of August 14, 1997, between ICN Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), and United States Trust Company of
New York, a New York banking corporation, as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 9 1/4%
Senior Notes due 2005 (the "Initial Notes") and Series B 9 1/4% Senior Notes due
2005 to be issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement (the "Exchange Notes" and, together with the Initial Notes, the
"Notes") and, to provide therefor, the Company has duly authorized the execution
and delivery of this Indenture. All things necessary to make the Notes, when
duly issued and executed by the Company, and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this Indenture a
valid and binding agreement of the Company, have been done.
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person (the "Acquired Person") existing at the time
the Acquired Person merges with or into, or becomes a Restricted Subsidiary of,
such specified Person, including Indebtedness incurred in connection with, or in
contemplation of, the Acquired Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person; provided, however, that
Indebtedness of such Acquired Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Acquired Person merges with or into or becomes a
Restricted Subsidiary of such specified Person shall not be Acquired Debt.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with") of any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16(a).
<PAGE>
"Asset Sale" means (i) any sale, lease, conveyance or other
disposition by the Company or any Restricted Subsidiary of any assets (including
by way of a sale-and-leaseback) other than in the ordinary course of business,
or (ii) the issuance or sale of Capital Stock of any Restricted Subsidiary, in
the case of each of (i) and (ii), whether in a single transaction or a series of
related transactions, to any Person (other than to the Company or a Restricted
Subsidiary and other than directors' qualifying shares) for Net Proceeds in
excess of $1.0 million. Notwithstanding the foregoing, (a) the transfer of any
assets constituting an Investment by the Company or any Restricted Subsidiary
shall not be considered an Asset Sale if such Investment is permitted pursuant
to Section 4.11 and (b) exchanges of assets of the Company for assets of any
other Person in the ordinary course of business shall not constitute an Asset
Sale.
"Asset Sale Offer" has the meaning provided in Section 4.16(c).
"Asset Sale Offer Purchase Date" has the meaning provided in Section
4.16(d).
"Asset Sale Offer Trigger Date" has the meaning provided in Section
4.16(c).
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as to (a) any corporate Person, the board
of directors of such Person or any duly authorized committee thereof, (b) any
partnership, limited liability company or comparably organized Person which is
ultimately controlled by a corporate general partner, managing member or other
corporation, the "Board of Directors" of such corporation as specified in clause
(a) of this definition and (c) any partnership, limited liability company or
comparably organized Person which is ultimately controlled by individuals, such
controlling individuals.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors.
"Business Day" means a day that is not a Legal Holiday.
"Capital Lease Obligation" of any Person means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease for property leased by such Person that would at such time be
required to be capitalized on the balance sheet of such Person in accordance
with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, of
such Person, including any Preferred Stock.
<PAGE>
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Rating Services or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Rating Services or at least P-1 from Moody's
Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances
(or, with respect to foreign banks, similar instruments) maturing within one
year from the date of acquisition thereof issued by any bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia or any member of the European Union or any U.S. branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $200 million; (v) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Cash Flow" means, with respect to any period, Consolidated Net Income
for such period, plus, to the extent deducted in computing such Consolidated Net
Income: (i) extraordinary net losses, plus (ii) provision for taxes based on
income or profits and any provision for taxes utilized in computing the
extraordinary net losses under clause (i) hereof, plus (iii) Consolidated
Interest Expense, plus (iv) depreciation, amortization and all other non-cash
charges (including amortization of goodwill and other intangibles but excluding
any items that will require cash payments in the future for which an accrual or
reserve is made).
"Change of Control" means the occurrence of any of the following
events after the Issue Date: (i) any "person" or "group" (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes (including by
merger, consolidation or otherwise) the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have beneficial ownership of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 50% or more of the voting power of the
total outstanding Voting Stock of the Company; (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
nomination for election by the stockholders of the Company was approved by a
vote of 66 2/3% 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 such
Board of Directors of the Company then in office; (iii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the terms of this Indenture); or (iv) the sale or other
<PAGE>
disposition (including by merger, consolidation or otherwise) of all or
substantially all of the Capital Stock or assets of the Company to any Person or
group (as defined in Rule 13d-5 of the Exchange Act) as an entirety or
substantially as an entirety in one transaction or a series of related
transactions.
"Change of Control Offer" has the meaning provided in Section 4.15(a).
"Change of Control Purchase Date" has the meaning provided in Section
4.15(b).
"Commission" means the Securities and Exchange Commission, as from
time to time constituted or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now assigned
to it under the TIA, then the body performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of such Person's
common stock whether now outstanding or issued after the Issue Date.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"Consolidated Cash Flow Coverage Ratio" means, for any period, the
ratio of (i) the aggregate amount of Cash Flow for such period, to (ii)
Consolidated Interest Expense for such period, each determined on a pro forma
basis after giving pro forma effect to (a) the incurrence of the Indebtedness
giving rise to the calculation of the Consolidated Cash Flow Coverage Ratio and
(if applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, at the beginning of such period; (b) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Restricted Subsidiaries since the first day of such period as if such
Indebtedness was incurred, repaid or retired at the beginning of such period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average balance of
such Indebtedness at the end of each month during such period); (c) in the case
of Acquired Debt, the related acquisition as if such acquisition had occurred at
the beginning of such period; and (d) any acquisition or disposition by the
Company and its Restricted Subsidiaries of any company or any business or any
assets out of the ordinary course of business, or any related repayment of
Indebtedness, in each case since the first day of such period, assuming such
acquisition or disposition had been consummated on the first day of such period.
"Consolidated Interest Expense" means, with respect to any period, the
sum of (i) the interest expense of the Company and its Restricted Subsidiaries
for such period, including, without limitation, (a) amortization of debt
discount, (b) the net payments, if any, under interest rate contracts (including
amortization of discounts), (c) the interest portion of any deferred payment
obligation and (d) accrued interest, plus (ii) the interest component of the
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Company and its Restricted Subsidiaries during such period, and all
capitalized interest of the Company and its Restricted Subsidiaries, plus (iii)
all dividends paid during such period by the Company and its Restricted
<PAGE>
Subsidiaries with respect to any Disqualified Stock (other than by any
Restricted Subsidiary to the Company or any other Restricted Subsidiary and
other than any dividend paid in Capital Stock (other than Disqualified Stock)),
in each case, as determined on a consolidated basis in accordance with GAAP
consistently applied.
"Consolidated Net Income" means, with respect to any period, the net
income (or loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied,
adjusted to the extent included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains and losses (less all
fees and expenses relating thereto), (ii) the portion of net income (or loss) of
the Company and its Restricted Subsidiaries allocable to interests in
unconsolidated Persons or Unrestricted Subsidiaries, except to the extent of the
amount of dividends or distributions actually paid to the Company or its
Restricted Subsidiaries by such other Person during such period, (iii) for
purposes of the covenant entitled "Limitation on Restricted Payments", net
income (or loss) of any Person combined with the Company or any of its
Restricted Subsidiaries on a "pooling-of-interests" basis attributable to any
period prior to the date of combination, (iv) net gains and losses (less all
fees and expenses relating thereto) in respect of disposition of assets
(including, without limitation, pursuant to sale and leaseback transactions)
other than in the ordinary course of business, or (v) the net income of any
Restricted Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income to the Company is not
at the time permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Net Worth" means, with respect to any Person at any
date, the sum of (i) the consolidated stockholders' equity of such Person less
the amount of such stockholders' equity attributable to Disqualified Stock of
such Person and its Subsidiaries (Restricted Subsidiaries, in the case of the
Company), as determined on a consolidated basis in accordance with GAAP
consistently applied and (ii) the amount of any Preferred Stock of such Person
not included in the stockholders' equity of such Person in accordance with GAAP,
which Preferred Stock does not constitute Disqualified Stock.
"covenant defeasance" has the meaning provided in Section 8.02(b).
"Currency Agreement Obligations" means the obligations of any person
under a foreign exchange contract, currency swap agreement or other similar
agreement or arrangement to protect such person against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after the giving of notice or
passage of time or both would be, an Event of Default.
"Default Interest Payment Date" has the meaning provided in Section
2.12.
"defeasance" has the meaning provided in Section 8.02(a).
<PAGE>
"Designation" has the meaning provided in Section 4.17(a).
"Designation Amount" has the meaning provided in Section 4.17(a).
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"Disqualified Stock" means (i) any Preferred Stock of any Restricted
Subsidiary and (ii) that portion of any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof (other than upon a Change of Control of the
Company in circumstances where the Holders of the Notes would have similar
rights), in whole or in part on or prior to the stated maturity of the Notes.
"Dollars" and "$" means lawful money of the United States of America.
"DTC" means The Depository Trust Company, its nominees and successors.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.16(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" has the meaning provided in the preamble to this
Indenture.
"Existing Indebtedness" has the meaning provided in Section
4.10(b)(iii).
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles in the United
States 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 may be approved by a significant segment of
the accounting profession in the United States of America, which are applicable
as of the Issue Date and consistently applied.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection or deposit in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
<PAGE>
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"incur" has the meaning provided in Section 4.10(a).
"Indebtedness" means, with respect to any Person, without duplication,
and whether or not contingent, (i) all indebtedness of such Person for borrowed
money or which is evidenced by a note, bond, debenture or similar instrument,
(ii) all obligations of such Person to pay the deferred or unpaid purchase price
of property or services, which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such service, (iii) all Capital Lease Obligations
of such Person, (iv) all obligations of such Person in respect of letters of
credit or bankers' acceptances issued or created for the account of such Person,
(v) to the extent not otherwise included in this definition, all net obligations
of such Person under Interest Rate Agreement Obligations or Currency Agreement
Obligations of such Person, (vi) all liabilities of others of the kind described
in the preceding clause (i), (ii) or (iii) secured by any Lien on any property
owned by such Person; provided, however, if the obligations secured by a Lien
(other than a Permitted Lien not securing any liability that would itself
constitute Indebtedness) on any assets or property have not been assumed by such
Person in full or are not such Person's legal liability in full, the amount of
such Indebtedness for purposes of this definition shall be limited to the lesser
of the amount of Indebtedness secured by such Lien and the Fair Market Value of
the property subject to such Lien, (vii) all Disqualified Stock issued by such
Person and all Preferred Stock issued by a Subsidiary of such Person, and (viii)
to the extent not otherwise included, any guarantee by such Person of any other
Person's indebtedness or other obligations described in clauses (i) through
(vii) above. "Indebtedness" of the Company and the Restricted Subsidiaries shall
not include current trade payables incurred in the ordinary course of business
and payable in accordance with customary practices, and non-interest bearing
installment obligations and accrued liabilities incurred in the ordinary course
of business which are not more than 90 days past due. The principal amount
outstanding of any Indebtedness issued with original issue discount is the
accreted value of such Indebtedness. Notwithstanding the foregoing, Indebtedness
shall not include Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within 3 Business Days of the incurrence
thereof.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Director" means a director of the Company other than a
director (i) who (apart from being a director of the Company or any Subsidiary
of the Company) is an employee, associate or Affiliate of the Company or a
Subsidiary of the Company, or (ii) who is a director, employee, associate or
Affiliate of another party (other than the Company or any of its Subsidiaries)
to the transaction in question.
"Initial Notes" has the meaning provided in the preamble to this
Indenture.
"Initial Purchaser" means Schroder & Co. Inc.
<PAGE>
"interest" on the Notes means interest (including Liquidated Damages)
on the Notes.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Rate Agreement Obligations" means, with respect to any
Person, the Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any other Person. "Investment" shall exclude travel and similar advances to
officers and employees of the Company in the ordinary course of business and
extensions of trade credit by the Company and its Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of the
Company or such Restricted Subsidiary, as the case may be. For the purposes of
Section 4.11, (i) "Investment" shall include and be valued at the Fair Market
Value of the net assets of any Restricted Subsidiary (to the extent of the
Company's equity interest in such Restricted Subsidiary) at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude
the Fair Market Value of the net assets of any Unrestricted Subsidiary at the
time that such Unrestricted Subsidiary is designated a Restricted Subsidiary and
(ii) the amount of any Investment shall be the original cost of such Investment
plus the cost of all additional Investments by the Company or any of its
Restricted Subsidiaries, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment,
reduced by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment;
provided, however, that no such payment of dividends or distributions or receipt
of any such other amounts shall reduce the amount of any Investment if such
payment of dividends or distributions or receipt of any such amounts would be
included in Consolidated Net Income. If the Company or any Restricted Subsidiary
of the Company sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such Restricted
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value of the Common
Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means August 14, 1997, the date the Notes are originally
issued under this Indenture.
<PAGE>
"Legal Holiday" has the meaning provided in Section 10.07.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in any asset and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Liquidated Damages" means all liquidated damages owing under the
Registration Rights Agreement.
"Maturity Date" means August 15, 2005.
"Net Proceeds" means, with respect to any Asset Sale by any Person,
the aggregate cash or Cash Equivalent proceeds received by such Person and/or
its Affiliates in respect of such Asset Sale, which amount is equal to the
excess, if any, of (i) the cash or Cash Equivalents received by such Person
and/or its Affiliates (including any cash payments received by way of deferred
payment pursuant to, or monetization of, a note or installment receivable or
otherwise, but only as and when received) in connection with such Asset Sale,
over (ii) the sum of (a) the amount of any Indebtedness that is secured by such
asset and which is required to be repaid by such Person in connection with such
Asset Sale, plus (b) all fees, commissions and other expenses incurred by such
Person in connection with such Asset Sale, plus (c) provision for taxes,
including income taxes, directly attributable to the Asset Sale or to required
prepayments or repayments of Indebtedness with the proceeds of such Asset Sale,
plus (d) if such Person is a Restricted Subsidiary, any dividends or
distributions payable to holders of minority interests in such Restricted
Subsidiary from the proceeds of such Asset Sale, plus (e) appropriate amounts to
be provided by the Company or any Restricted Subsidiary as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale; provided that upon the release of any such
reserves, such amounts shall constitute "Net Proceeds" hereunder.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated August 7,
1997 of the Company relating to the offering of the Notes.
<PAGE>
"Officer" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity. "Officers' Certificate" means, with respect to any
Person, a certificate signed by two Officers or by an Officer and either an
Assistant Treasurer or an Assistant Secretary of such Person and otherwise
complying with the requirements of Sections 10.04 and 10.05, as they relate to
the making of an Officers' Certificate.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
10.04 and 10.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Indebtedness" has the meaning provided in Section 4.10(b).
"Permitted Investments" means (i) any Investment in the Company or any
Restricted Subsidiary; provided, that the primary business of such Restricted
Subsidiary is a Related Business; (ii) any investment in cash or Cash
Equivalents; (iii) any Investment in a Person (an "Acquired Person") the primary
business of which is a Related Business if, as a result of such Investment, (a)
the Acquired Person becomes a Restricted Subsidiary, or (b) the Acquired Person
either (1) is merged, consolidated or amalgamated with or into the Company or
one of its Restricted Subsidiaries and the Company or such Restricted Subsidiary
is the Surviving Person, or (2) transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or one of its Restricted
Subsidiaries; (iv) Investments in accounts and notes receivable acquired in the
ordinary course of business; (v) any notes, obligations or other securities
received in connection with an Asset Sale that complies with Section 4.16 or any
other disposition not constituting an "Asset Sale"; (vi) Interest Rate Agreement
Obligations and Currency Agreement Obligations permitted pursuant to Section
4.10(b)(v); (vii) investments in or acquisitions of Capital Stock or similar
interests in Persons (other than Affiliates of the Company) received in the
bankruptcy or reorganization of or by such Person or any exchange of such
investment with the issuer thereof or taken in settlement of or other resolution
of claims or disputes and (viii) other Investments not to exceed $50 million
which, shall be reinstated to the extent of any net cash proceeds, dividends,
repayments of loans or other transfers of cash or assets received by the Company
or any Restricted Subsidiary as a return of or on such Investment.
"Permitted Liens" means (i) Liens on assets or property of the Company
that secure Senior Bank Debt of the Company and Liens on assets or property of a
Restricted Subsidiary that secure Indebtedness of a Restricted Subsidiary; (ii)
Liens securing Indebtedness of a Person existing at the time that such Person is
merged into or consolidated with the Company or a Restricted Subsidiary;
provided, however, that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of such Person; (iii) Liens on property acquired by the Company or a Restricted
Subsidiary; provided, however, that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any other property; (iv)
Liens in respect of Interest Rate Agreement Obligations and Currency Agreement
Obligations permitted under this Indenture; (v) Liens in favor of the Company or
any Restricted Subsidiary; (vi) Liens existing or created on the Issue Date; and
(vii) Liens securing the Notes.
<PAGE>
"Permitted Payments" has the meaning provided in Section 4.11(b).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over Capital Stock of any other class of such Person.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.15.
"Purchase Money Obligation" means any Indebtedness which is incurred
in connection with the purchase, construction or improvement of assets and is
secured by a Lien on such assets related to the business of the Company or the
Restricted Subsidiaries, and any additions and accessions thereto, which are
purchased, constructed or improved by the Company or any Restricted Subsidiary.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes; provided,
however, that if any such date is a Legal Holiday, the Record Date shall be the
first day immediately preceding such specified day that is not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
"Redesignation" has the meaning provided in Section 4.17(b).
"refinancing" has the meaning provided in Section 4.10(b)(vii).
"Refinancing Indebtedness" has the meaning provided in Section
4.10(b)(vii).
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated on or about the Issue Date between the Company and the Initial
Purchaser for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
<PAGE>
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means any business that is reasonably related to or
complementary to the businesses conducted by the Company and the Restricted
Subsidiaries on the Issue Date.
"Required Filing Dates" has the meaning provided in Section 4.09(a).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment" means (i) any dividend or other distribution
declared or paid on any Capital Stock of the Company (other than (A) dividends
or distributions payable solely in Capital Stock (other than Disqualified Stock)
of the Company, or (B) dividends or distributions payable to the Company or any
Restricted Subsidiary); (ii) any payment to purchase, redeem or otherwise
acquire or retire for value any Capital Stock of the Company; (iii) any payment
to purchase, redeem, defease or otherwise acquire or retire for value, prior to
any scheduled maturity, repayment or sinking fund payment, any subordinated
Indebtedness other than a purchase, redemption, defeasance or other acquisition
or retirement for value that is paid for with the proceeds of Refinancing
Indebtedness that is permitted under Section 4.10(b)(vii); or (iv) any
Restricted Investment.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means each direct or indirect Subsidiary of
the Company other than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Bank Debt" means Indebtedness incurred under any credit
facility entered into between the Company, any Restricted Subsidiary and bank
lenders at any time, as the same may be amended, modified, renewed, refunded,
replaced or refinanced from time to time, including (i) any related notes,
letters of credit, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees, collateral documents, instruments and agreements executed in
connection with any such amendment, modification, renewal, refunding,
replacement or refinancing.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding voting power of the Voting Stock of which is owned or
controlled, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries thereof, or (ii) any limited partnership of which such Person or
<PAGE>
any Subsidiary of such Person is a general partner, or (iii) any other Person
(other than a corporation or limited partnership) in which such Person or one or
more other Subsidiaries of such Person, or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has more than 50% of the
outstanding partnership or similar interests or has the power, by contract or
otherwise, to direct or cause the direction of the policies, management and
affairs thereof.
"Surviving Person" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture or any part thereof, or in
the case of a successor trustee, an officer assigned to the department, division
or group performing the corporation trust work of such successor and assigned to
administer this Indenture.
"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.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 4.17 and not
redesignated a Restricted Subsidiary in compliance with such covenant.
"U.S. Government Obligations" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Voting Stock" of a Person means Capital Stock of such Person of the
class or classes pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such Person (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment at final maturity, in respect thereof, with (b)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
aggregate principal amount of such Indebtedness.
<PAGE>
SECTION 1.02. 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:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
1. a term has the meaning assigned to it;
2. an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date
hereof;
3. "or" is not exclusive;
4. words in the singular include the plural, and words in the
plural include the singular;
5. a reference to a Section or Article shall be to a Section or
Article of this Indenture;
6. "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
7. any reference to a statute, law or regulation means that
statute, law or regulation as amended and in effect from time to time
and includes any successor statute, law or regulation; provided,
however, that any reference to the Bankruptcy Law shall mean the
Bankruptcy Law as applicable to the relevant case.
<PAGE>
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Company and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, 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.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "Global Note"), deposited
with the Trustee, as custodian for DTC, duly executed by the Company and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in Section 2.15(a) and (b). The aggregate principal amount of the
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes"), duly executed by the Company and authenticated by the Trustee
as hereinafter provided and shall bear the legend set forth in Section 2.15(a).
Notes offered and sold in reliance on Rule 144A may be issued, in the form of
permanent certificated Notes in registered form, in substantially the form set
forth in Exhibit A (the "U.S. Physical Notes"), duly executed by the Company and
authenticated by the Trustee as hereinafter provided and shall bear the legend
set forth in Section 2.15(a). The Offshore Physical Notes and the U.S. Physical
Notes are sometimes collectively herein referred to as the "Physical Notes."
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature.
If an Officer or Assistant Secretary whose signature is on a Note was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office or position at the time the Trustee authenticates the Note,
the Note shall nevertheless be valid.
<PAGE>
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $275,000,000 and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon a written order of the Company. Such order
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes or
Exchange Notes and whether the Notes are to be issued as Physical Notes or a
Global Note or such other information as the Trustee may reasonably request. The
aggregate principal amount of Notes outstanding at any time may not exceed
$275,000,000, except as provided in Section 2.07.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company or with any Affiliate of the Company.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Note is registered as the owner of such
Note for the purpose of receiving payment of principal of and (subject to the
provisions of this Indenture and the Notes with respect to record dates)
interest on such Note, whether or not such Note is overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice of the contrary.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in The City of New York, State of New York) where
(a) Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional Paying Agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Company may act as its
own Paying Agent, except that for the purposes of payments on the Notes pursuant
to Sections 4.15 and 4.16, neither the Company nor any Affiliate of the Company
may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
<PAGE>
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days'
notice to the Company.
SECTION 2.04. 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
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, or interest on, the Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Notes), and the
Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company 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 shall have no further liability for such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
SECTION 2.06. Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes of other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Company or the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit registrations of
transfer and exchanges, the Company shall execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchanges (without
transfer to another Person) pursuant to Sections 2.02, 2.10, 3.06, 4.15, 4.16 or
9.05, in which event the Company shall be responsible for the payment of such
taxes).
<PAGE>
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business on the day the Trustee receives notice of any redemption of Notes
and ending at the close of business on the day such notice of redemption is
mailed to the Holders, (ii) selected for redemption in whole or in part pursuant
to Article Three, except the unredeemed portion of any Note being redeemed in
part and (iii) during a Change of Control Offer or an Asset Sale Offer if such
Note is tendered pursuant to such Change of Control Offer or Asset Sale Offer
and not withdrawn.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Notes may be
effected only through a book-entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book-entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Note 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 of reasonable tenor,
sufficient in the reasonable 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 Note is replaced. Every replacement Note shall constitute an
additional obligation of the Company.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company) holds U.S. Legal Tender or U.S. Government Obligations
sufficient to pay all of the principal and interest due on the Notes payable on
that date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such Notes
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
<PAGE>
In determining (x) whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice or
(y) how much principal amount of Notes remains outstanding after a redemption
under Paragraph 6 of the Notes, Notes owned by the Company or an Affiliate shall
be considered as though they are not outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent under clause (x) above, only Notes which a Trust
Officer of the Trustee actually knows are so owned shall be so considered. The
Company shall notify the Trustee, in writing, when it or, to the Company's
knowledge, any of its Affiliates purchases or otherwise acquires Notes, of the
aggregate principal amount of such Notes so purchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and so indicates in
the Officers' Certificate. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate upon receipt of a written order of the
Company pursuant to Section 2.02 definitive Notes in exchange for temporary
Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose,
in its customary manner, of all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Notes to replace Notes that it has paid or delivered to the Trustee for
cancellation. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which special record date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest or
the next succeeding Business Day if such date is not a Business Day. The Company
shall notify the Trustee in writing of the amount of defaulted interest proposed
to be paid on each Note and the date of the proposed payment (a "Default
Interest Payment Date"), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
<PAGE>
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted interest as provided in this Section; provided, however, that
in no event shall the Company deposit monies proposed to be paid in respect of
defaulted interest later than 11:00 a.m. of the proposed Default Interest
Payment Date. At least 15 days before the subsequent special record date, the
Company shall mail (or cause to be mailed) to each Holder, as of a recent date
selected by the Company, 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 interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(i) shall be paid to
Holders as of the regular record date for the Interest Payment Date for which
interest has not been paid. Notwithstanding the foregoing, the Company may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and, if so,
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Purchase Date and Asset Sale
Offer Purchase Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Purchase Date and Asset Sale Offer Purchase Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Purchase Date and Asset Sale Offer Purchase Date, as the case may be.
SECTION 2.15. Restrictive Legends.
(a) Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
face thereof until after the second anniversary of the Issue Date, unless
otherwise agreed by the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION,
<PAGE>
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY,
EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE ACT, (C) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH REGULATION S UNDER THE ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
EACH PURCHASER BY ITS PURCHASE OF THIS SECURITY SHALL BE DEEMED TO HAVE
REPRESENTED AND COVENANTED THAT EITHER (I) IT IS NOT ACQUIRING THE
SECURITY FOR OR ON BEHALF OF ANY PENSION OR WELFARE PLAN (AS DEFINED IN
SECTION 3 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
("ERISA")) OR (II) IF IT IS ACQUIRING THE SECURITY FOR OR ON BEHALF OF
A PENSION OR WELFARE PLAN, THE APPLICABLE CONDITIONS OF PROHIBITED
TRANSACTION CLASS EXEMPTION 91-38, 90-1, 84-14 OR 95-60 ISSUED BY THE
DEPARTMENT OF LABOR HAVE BEEN SATISFIED OR THE PLAN IS A GOVERNMENTAL
PLAN THAT IS NOT SUBJECT TO TITLE I OF ERISA OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED.
(b) Each Global Note shall also bear the following legend on the face
thereof:
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 ANY SUCH
NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
SUCCESSOR 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, A NEW YORK CORPORATION ("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 IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO 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 INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Security.
(a) The Global Note initially shall (i) be registered in the name of
DTC or the nominee of such DTC, (ii) be delivered to the Trustee as custodian
for such DTC and (iii) bear legends as set forth in Section 2.15.
<PAGE>
Members of, or participants in, DTC ("Agent Members") shall have no
rights under this Indenture with respect to any Global Note held on their behalf
by DTC, or the Trustee as its custodian, or under the Global Note, and DTC may
be treated by the Company, the Trustee and any Agent as the absolute owner of
the Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any 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 rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to DTC, its successors or their respective nominees.
Interests of beneficial owners in the Global Note may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of DTC
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Note if (i) DTC notifies the Company that it is unwilling or
unable to continue as DTC for the Global Note and a successor depository is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a written
request from DTC to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by DTC in exchange for its beneficial interest in the Global Note, an
equal aggregate principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer of a Note
constituting a Restricted Security to any Non-U.S. Person:
<PAGE>
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither
the Company nor any Affiliate of the Company has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to
the second anniversary of the Issue Date) or (y) the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit C hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar
of the certificate, if any, required by paragraph (i) above and written
instructions given in accordance with the procedures of DTC and the
Registrar, then (x) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a transfer of
outstanding Physical Notes) a decrease in the principal amount of the
Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and (y) the
Company shall execute and the Trustee shall authenticate and deliver
one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, 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 Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note 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; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Global Note, upon receipt by
the Registrar of written instructions given in accordance with DTC's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Global Note in an amount equal to the principal amount of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
<PAGE>
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the second anniversary of the Issue
Date (provided, however, that neither the Company nor any Affiliate of the
Company has held any beneficial interest in such Note, or portion thereof, at
any time prior to or on the second anniversary of the Issue Date), or (ii) there
is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to
the Company and the Trustee to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(e) Transfers of Notes Held by Affiliates. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of the Company
within two years after the Issue Date, as evidenced by a notation on the
Assignment Form for such transfer or in the representation letter delivered in
respect thereof, for so long as such Note is held by such Affiliate, or (ii)
evidencing a Note that has been acquired from an Affiliate (other than by an
Affiliate) in a transaction or a chain of transactions not involving any public
offering, shall, until two years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, in each case, bear the
legend in substantially the form set forth in Section 2.15(a), unless otherwise
agreed by the Company (with written notice thereof to the Trustee).
SECTION 2.18. Liquidated Damages Under Registration Rights Agreement.
Under certain circumstances, the Company shall be obligated to pay
certain Liquidated Damages to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 5 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
<PAGE>
The Company shall give each notice provided for in this Section 3.01
at least 60 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not listed on a national securities
exchange, on a pro rata basis or by lot or by such method as the Trustee shall
deem fair and appropriate. If the Notes are listed on any national securities
exchange, the Company shall notify the Trustee of the requirements of such
exchange in respect of any redemption. The Trustee shall make the selection from
the Notes outstanding and not previously called for redemption and shall
promptly notify the Company in writing of the Notes selected for redemption and,
in the case of any Note selected for partial redemption, the principal amount
thereof to be redeemed. Notes 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 Notes that have denominations
larger than $1,000. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail to each Holder whose Notes are to be redeemed, with a copy to the
Trustee and any Paying Agent. At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at the Company's expense. The
Company shall provide such notices of redemption to the Trustee at least five
Business Days before the intended mailing date.
Each notice for redemption shall identify (including the CUSIP number)
the Notes to be redeemed and shall state:
1. the Redemption Date;
2. the Redemption Price and the amount of accrued interest, if
any, to be paid;
3. the name and address of the Paying Agent;
4. the subparagraph of the Notes pursuant to which such
redemption is being made;
5. that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
<PAGE>
6. that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the
Holders of such Notes is to receive payment of the Redemption Price
plus accrued interest, if any, upon surrender to the Paying Agent of
the Notes redeemed;
7. if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
8. if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price plus accrued interest thereon to the Redemption Date, but
installments of interest, the maturity of which is on or prior to the Redemption
Date, shall be payable to Holders of record at the close of business on the
relevant Record Dates referred to in the Notes.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date and in accordance with Section 2.14
hereof, the Company shall deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the Redemption Price plus accrued interest, if any, of all
Notes to be redeemed on that date. The Paying Agent shall promptly return to the
Company any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
<PAGE>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Company shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
the Company or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.
(c) The Company shall pay, to the extent such payments are lawful,
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate borne by the Notes. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
(d) Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior 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 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 10.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five or by Section 4.16, the
Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of the Subsidiaries in accordance with the
respective organizational documents of each such Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be required to
preserve, with respect to itself, any material right or franchise and, with
respect to any Subsidiary, any such existence, material right or franchise, if
the Board of Directors of the Company shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and the Subsidiaries, taken as a whole.
<PAGE>
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any Subsidiary or
properties of it or any Subsidiary and (ii) all material lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of it or any Subsidiary; provided, however, that the Company shall
not 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 negotiations or proceedings
properly instituted and diligently conducted for which adequate reserves, to the
extent required under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each Restricted Subsidiary to,
maintain all properties used or useful in the conduct of its business in good
working order and condition (subject to ordinary wear and tear) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto; provided, however, that nothing in this Section 4.05 shall
prevent the Company or any Restricted Subsidiary from discontinuing the
operation and maintenance of any of its properties, if such discontinuance is
(i) in the ordinary course of business pursuant to customary business terms or
(ii) in the good faith judgment of the Board of Directors or other governing
body of the Company or the Restricted Subsidiary, as the case may be, desirable
in the conduct of their respective businesses and is not disadvantageous in any
material respect to the Holders.
(b) The Company shall provide or cause to be provided, for itself and
each Restricted Subsidiary, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the good faith judgment of the
Company, are adequate and appropriate for the conduct of the business of the
Company and such Restricted Subsidiary in a prudent manner, with reputable
insurers or with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of the Company, for
companies similarly situated in the industry and owning like properties.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 105 days after
the end of the Company's fiscal year, a certificate signed by the Chairman of
the Board of Directors, the Chief Executive Officer, the President or any Vice
President and by the Chief Financial Officer, the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company (provided,
however, that one of such signatories shall be the Company's principal executive
officer, principal financial officer or principal accounting officer), as to
such Officers' knowledge of the Company's compliance with all conditions and
covenants under this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and in the event any Default exists,
such Officers shall specify the nature of such Default.
<PAGE>
(b) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 10.02, by
registered or certified mail or by facsimile transmission followed by hard copy
by registered or certified mail an Officers' Certificate specifying such event,
notice or other action within five Business Days of its becoming aware of such
occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall comply, and shall cause each Subsidiary to comply,
with all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as would not singly or in the aggregate have a material
adverse effect on the financial condition, business or results of operations of
the Company and the Subsidiaries, taken as a whole.
SECTION 4.08. Waiver of Stay, Extension
or Usury Laws.
The Company 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 that would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Notes 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 it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.09. Provision of Financial Statements
and Information.
(a) Whether or not the Company is subject to Section 13(a) or 15(d) of
the Exchange Act, the Company will file with the Commission, so long as any
Notes are outstanding, the annual reports, quarterly reports and other periodic
reports which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) if the Company were so subject, and such
documents shall be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required so
to file such documents if the Company were so subject. Upon qualification of
this Indenture under the TIA, the Company shall also comply with the provisions
of TIA ss. 314(a).
(b) The Company will also in any event (i) within 15 days of each
Required Filing Date, file with the Trustee, and supply the Trustee with copies
for delivery to the Holders of the Notes, the annual reports, quarterly reports
and other periodic reports which the Company would have been required to file
<PAGE>
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if
the Company were subject to such Sections and (ii) if the Commission will not
accept the filing of such documents promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder of the Notes.
(c) If the Company is not subject to Section 13(a) or 15(d) of the
Exchange Act, the Company shall provide to any Holder or any beneficial owner of
Notes any information reasonably requested by such Holder or such beneficial
owner concerning the Company and its Subsidiaries (including financial
statements) necessary in order to permit such Holder or such beneficial owner to
sell or transfer Notes in compliance with Rule 144A under the Securities Act.
SECTION 4.10. Limitation on Incurrence of
Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, create, incur, issue, assume or directly or indirectly guarantee
or in any other manner become directly or indirectly liable for ("incur") any
Indebtedness (including Acquired Debt), except that the Company may incur
Indebtedness (including Acquired Debt) if, at the time of, and immediately after
giving pro forma effect to, such incurrence of Indebtedness, the Consolidated
Cash Flow Coverage Ratio of the Company for the most recently ended four fiscal
quarters would be at least (i) prior to August 15, 1999, 2.5 to 1.0 and (ii) on
and after August 15, 1999, 3.0 to 1.0.
(b) The foregoing limitations will not apply to the incurrence of any
of the following (collectively, "Permitted Indebtedness"), each of which shall
be given independent effect:
(i) Senior Bank Debt of the Company or any of its Restricted
Subsidiaries, in an aggregate principal amount not to exceed at any time
outstanding the greater of (x) $50.0 million, and (y) the sum, at such time, of
(I) 85% of the consolidated book value of net accounts receivable and current
notes receivable of the Company and the Restricted Subsidiaries and (II) 60% of
the consolidated book value of inventory of the Company and the Restricted
Subsidiaries;
(ii) Indebtedness of the Company represented by the Notes
and the Exchange Notes;
(iii) Indebtedness of the Company or any Restricted Subsidiary
not covered by any other clause of this paragraph which is outstanding
on the Issue Date ("Existing Indebtedness");
(iv) Indebtedness owed by any Restricted Subsidiary to the
Company or to another Restricted Subsidiary, or owed by the Company to
any Restricted Subsidiary; provided, however, that any such
Indebtedness shall at all times be held by a Person which is either the
Company or a Restricted Subsidiary; provided, further, however, that
upon either (a) the transfer or other disposition of any such
Indebtedness to a Person other than the Company or another Restricted
Subsidiary or (b) the sale, lease, transfer or other disposition of
shares of Capital Stock (including by consolidation or merger) of any
such Restricted Subsidiary to a Person other than the Company or
another Restricted Subsidiary resulting in such Restricted Subsidiary
ceasing to be a Restricted Subsidiary, the incurrence of such
Indebtedness shall be deemed to be an incurrence that must be permitted
by this covenant other than by virtue of this clause (iv);
<PAGE>
(v) Indebtedness of the Company or any Restricted Subsidiary
arising with respect to Interest Rate Agreement Obligations and
Currency Agreement Obligations incurred for the purpose of fixing or
hedging interest rate risk or currency risk with respect to any fixed
or floating rate Indebtedness that is permitted by the terms hereof to
be outstanding or with respect to any receivable or liability the
payment of which is determined by reference to a foreign currency;
(vi) Indebtedness represented by performance, completion,
guarantee, surety and similar bonds provided by the Company or any
Restricted Subsidiary in the ordinary course of business consistent
with past practice;
(vii) Any Indebtedness incurred in connection with or given in
exchange for the renewal, extension, substitution, refunding,
defeasance, refinancing or replacement, in whole or in part (a
"refinancing"), of any Indebtedness incurred as permitted under the
first paragraph of this covenant or any Indebtedness described in
clauses (ii) or (iii) above and this clause (vii) ("Refinancing
Indebtedness"); provided, however, that (a) the principal amount of
such Refinancing Indebtedness shall not exceed the principal amount (or
accreted amount, if less) of the Indebtedness so refinanced (plus the
premiums and reasonable expenses to be paid in connection therewith);
(b) if the Weighted Average Life to Maturity of the Indebtedness being
refinanced is equal to or greater than the Weighted Average Life to
Maturity of the Notes, the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced; (c) with
respect to Refinancing Indebtedness that is subordinated to the Notes,
such Refinancing Indebtedness shall be at least as subordinated in
right of payment to the Notes as, the Indebtedness being refinanced;
and (d) the Company or the obligor on such Refinancing Indebtedness
shall be the obligor on the Indebtedness being refinanced;
(viii) Indebtedness incurred by the Company or any Restricted
Subsidiary constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including,
without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers'
compensation claims or self-insurance;
(ix) Indebtedness of the Company or any Restricted Subsidiary
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, in each case incurred or assumed
in connection with the disposition of any business, assets or a
Subsidiary, other than Guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or a
Subsidiary for the purpose of financing such acquisition; provided that
the maximum liability in respect of such Indebtedness shall not exceed
the gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition; and
<PAGE>
(x) Indebtedness of the Company or any Restricted Subsidiary
in addition to that described in clauses (i) through (ix) above, and
any renewals, extensions, substitutions, refinancings or replacements
of such Indebtedness, so long as the aggregate principal amount of all
such Indebtedness incurred pursuant to this clause (x) does not exceed
$20.0 million at any one time outstanding.
(c) For purposes of determining any particular amount of Indebtedness
under this Section 4.10, Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included.
(d) Indebtedness of any Person which is outstanding at the time such
Person becomes a Restricted Subsidiary or is merged with or into or consolidated
with the Company or a Restricted Subsidiary shall be deemed to have been
incurred at the time such Person becomes a Restricted Subsidiary or is merged
with or into or consolidated with the Company or a Restricted Subsidiary, and
Indebtedness which is assumed at the time of the acquisition of any asset shall
be deemed to have been incurred at the time of such acquisition.
SECTION 4.11. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Restricted Payment, unless at
the time of and immediately after giving effect to the proposed Restricted
Payment (with the value of any such Restricted Payment, if other than cash, to
be determined reasonably and in good faith by the Board of Directors of the
Company):
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Company could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.10(a); and
(iii) the aggregate amount of all Restricted Payments made
after the Issue Date shall not exceed the sum of:
(a) an amount equal to 50% of the Company's aggregate
cumulative Consolidated Net Income accrued on a cumulative
basis during the period (treated as one accounting period)
beginning on the Issue Date and ending on the date of such
proposed Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income for such period shall be a deficit,
minus 100% of such deficit); plus
(b) the aggregate amount of all net cash proceeds
received since the Issue Date by the Company from the issuance
and sale (other than to a Restricted Subsidiary) of, or equity
contribution with respect to, Capital Stock (other than
Disqualified Stock) and the principal amount of Indebtedness
of the Company or any Restricted Subsidiary issued or incurred
on or after the Issue Date that has been converted into or
<PAGE>
exchanged for Capital Stock (other than Disqualified Stock),
in any such case to the extent that such proceeds are not used
to redeem, repurchase, retire or otherwise acquire Capital
Stock or any Indebtedness of the Company or any Restricted
Subsidiary pursuant to clause (ii) of the next paragraph; plus
(c) the amount of the net reduction in Restricted
Investments resulting from (x) the payment of dividends or the
repayment in cash of the principal of loans or the cash return
on any Restricted Investment, in each case to the extent
received by the Company or any Restricted Subsidiary, (y) the
release or extinguishment of any guarantee of Indebtedness
which guarantee constituted a Restricted Investment, and (z)
in the case of Investments in Unrestricted Subsidiaries, the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued as provided in the definition of
"Investment"), such aggregate amount of the net reduction in
Restricted Investments not to exceed the amount of Restricted
Investments previously made by the Company or any Restricted
Subsidiary, which amount was included in the calculation of
the amount of Restricted Payments.
(b) Section 4.11(a) shall not prohibit so long as no Default or Event
of Default is continuing, the following actions (collectively, "Permitted
Payments"):
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at such declaration date such payment
would have been permitted under this Indenture (which payment shall be
deemed to have been paid on such date of declaration for purposes of
Section 4.11(a)(iii));
(ii) the redemption, repurchase, retirement or other
acquisition of any Capital Stock or any Indebtedness of the Company or
any Restricted Subsidiary in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Restricted
Subsidiary) of, or equity contribution with respect to, Capital Stock
of the Company (other than any Disqualified Stock);
(iii) cash dividends on the Common Stock of the Company paid
in the ordinary course consistent with past practice; provided that the
Company could incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.10(a);
(iv) the redemption, repurchase or other acquisition of
Capital Stock of the Company issued to F. Hoffmann-LaRoche Ltd in an
amount not to exceed $40.0 million out of net proceeds received by the
Company from the issuance and sale of the Notes; and
(v) other payments not otherwise permitted by the foregoing
clauses (i) through (iv) in an aggregate amount not to exceed $10
million.
(c) For purposes of Section 4.11(a)(iii), the Permitted Payments
referred to in clauses (i), (iv) and (v) of Section 4.11(b) shall be included in
the aggregate amount of Restricted Payments made since the Issue Date.
<PAGE>
(d) Not later than thirty (30) days after the end of any fiscal
quarter of the Company during which any Restricted Payment or Restricted
Investment has been made, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment or Restricted Investment
complies with this Indenture and setting forth in reasonable detail the basis
upon which the required calculations were computed, which calculations may be
based upon the Company's latest available internal quarterly financial
statements.
SECTION 4.12. Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness (other than Permitted Liens) on any asset now owned or
hereafter acquired, or any income or profits therefrom, or assign or convey any
right to receive income therefrom to secure any such Indebtedness, unless (i) if
such Lien secures Indebtedness which is pari passu with the Notes, then the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligation is no longer secured by a Lien or (ii) if
such Lien secures Indebtedness which is subordinated to the Notes, any such Lien
shall be subordinated to a Lien granted to the holders of the Notes in the same
collateral as that securing such Lien to the same extent as such subordinated
Indebtedness is subordinated to the Notes.
SECTION 4.13. Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary on its Capital Stock or with
respect to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any other Restricted Subsidiary,
(ii) make loans or advances to, or issue Guarantees for the benefit of, the
Company or any other Restricted Subsidiary or (iii) transfer any of its
properties or assets to the Company or any other Restricted Subsidiary, except
for such encumbrances or restrictions existing under or by reason of:
(a) applicable law;
(b) any instrument governing Indebtedness or Capital Stock of
an Acquired Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition); provided, however, that no such
encumbrance or restriction is applicable to any Person, or the
properties or assets of any Person, other than the Acquired Person;
(c) by reason of customary non-assignment, subletting or net
worth provisions in leases or other agreements entered into in the
ordinary course of business and consistent with past practices;
<PAGE>
(d) Purchase Money Obligations for property acquired in the
ordinary course of business that impose restrictions only on the
property so acquired;
(e) an agreement for the sale or disposition of assets or the
Capital Stock of a Restricted Subsidiary; provided, however, that such
restriction or encumbrance is only applicable to such Restricted
Subsidiary or assets, as applicable, and such sale or disposition
otherwise is permitted by Section 4.16; provided, further, however,
that such restriction or encumbrance shall be effective only for a
period from the execution and delivery of such agreement through a
termination date not later than 180 days after such execution and
delivery;
(f) this Indenture and the Notes; and
(g) Refinancing Indebtedness permitted to be incurred pursuant
to Section 4.10; provided, however, that any such encumbrances and
restrictions are, in the good faith judgment of the Company's Board of
Directors, no more restrictive, in any material respect, than those
contained in the Indebtedness being so refinanced.
SECTION 4.14. Limitation on Transactions with
Affiliates.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate of the Company unless (1) such transaction or series of transactions
is on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could reasonably be obtainable
at such time in a comparable transaction in arm's-length dealings with an
unrelated third party, and (2) the Company delivers to the Trustee (a) with
respect to any transaction or series of transactions involving aggregate
payments in excess of $1,000,000, an Officers' Certificate certifying that such
transaction or series of related transactions complies with clause (1) above and
(b) with respect to any transaction or series of transactions involving
aggregate payments in excess of $2.0 million, an Officers' Certificate
certifying that such transaction or series of related transactions has been
approved by a majority of the members of the Board of Directors of the Company
(and approved by a majority of the Independent Directors or, in the event there
is only one Independent Director, by such Independent Director), and (c) with
respect to any transaction or series of transactions involving aggregate
payments in excess of $10.0 million, an opinion as to the fairness to the
Company from a financial point of view issued by an investment banking firm of
national standing.
(b) Section 4.14(a) will not apply to (i) employment
agreements or compensation or employee benefit arrangements with any officer,
director or employee of the Company or any of its Restricted Subsidiaries
entered into in the ordinary course of business (including customary benefits
thereunder and including reimbursement or advancement of out-of-pocket expenses,
and director's and officer's liability insurance); (ii) any transaction entered
<PAGE>
into by or among the Company or one of its Restricted Subsidiaries with one or
more Restricted Subsidiaries of the Company; (iii) any transaction permitted by
Section 4.11(b); and (iv) transactions permitted by, and complying with, Article
Five.
SECTION 4.15. Change of Control.
(a) In the event of a Change of Control, each Holder shall have the
right, unless the Company has given a notice of redemption, subject to the terms
and conditions of this Indenture, to require the Company to offer to purchase
all or any portion (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes at a purchase price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase, in accordance with the terms set forth below (a "Change of Control
Offer").
(b) On or before the 30th day following the occurrence of any Change
of Control, the Company shall mail, by first-class mail (with a copy to the
Trustee), to each Holder at such Holder's registered address a notice stating:
(i) that a Change of Control has occurred and that such Holder has the right to
require the Company to purchase all or a portion (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes at a purchase price in cash equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Purchase
Date"), which shall be a business day, specified in such notice, that is not
earlier than 30 days or later than 60 days from the date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if any, as of the Change of
Control Purchase Date; (iii) that any Note not tendered will continue to accrue
interest; (iv) that, unless the Company defaults in the payment of the purchase
price for the Notes payable pursuant to the Change of Control Offer, any Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest on the Change of Control Purchase Date; (v) that Holders
electing to have a Note purchased pursuant to a Change of Control Offer will be
required to surrender the Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the second
Business Day prior to the Change of Control Purchase Date; (vi) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the second Business Day prior to the Change of Control Purchase Date,
a facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Notes purchased; (vii)
that Holders whose Notes are purchased only in part will be issued new Notes in
a principal amount equal to the unpurchased portion of the Notes surrendered;
provided, however, that each Note purchased and each new Note issued shall be in
an original principal amount of $1,000 or integral multiples thereof; (viii) the
circumstances and relevant facts regarding such Change of Control; and (ix) such
other information as may be required by applicable laws and regulations.
<PAGE>
(c) On the Change of Control Purchase Date, the Company will (x)
accept for payment all Notes or portions thereof tendered pursuant to the Change
of Control Offer, (y) deposit with the Paying Agent U.S. Legal Tender sufficient
to pay the aggregate purchase price of all Notes or portions thereof accepted
for payment, and (z) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Change of Control Offer. The Paying Agent shall
promptly mail to each Holder of Notes or portions thereof accepted for payment
an amount equal to the purchase price for such Notes plus accrued and unpaid
interest, if any, thereon, and the Trustee shall promptly authenticate and mail
to each Holder of Notes accepted for payment in part a new Note equal in
principal amount to any unpurchased portion of the Notes, and any Note not
accepted for payment in whole or in part shall be promptly returned to the
Holder of such Note. On and after a Change of Control Purchase Date, interest
will cease to accrue on the Notes or portions thereof accepted for payment,
unless the Company defaults in the payment of the purchase price therefor. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Purchase Date.
(d) The Company will comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Change of Control Offer and will be deemed not to be in violation of any of
the covenants under this Indenture to the extent such compliance is in conflict
with such covenants.
SECTION 4.16. Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value (as evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the assets or other property sold or disposed of in the Asset Sale
and (ii) at least 75% of such consideration consists of either cash or Cash
Equivalents; provided, however, that for purposes of this Section 4.16, "cash"
shall include (x) the amount of any Indebtedness (other than any Indebtedness
that is by its terms subordinated to the Notes) of the Company or such
Restricted Subsidiary as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet or in the notes thereto that is assumed by the
transferee of any such assets or other property in such Asset Sale (and
excluding any liabilities that are incurred in connection with or in
anticipation of such Asset Sale), but only to the extent that such assumption is
effected on a basis such that there is no further recourse to the Company or any
of the Restricted Subsidiaries with respect to such liabilities and (y) any
notes, obligations or securities received by the Company or such Restricted
Subsidiary from such transferee that are converted within 60 days by the Company
or such Restricted Subsidiary into cash (to the extent of the cash received).
(b) Within one year after any Asset Sale, the Company or the
applicable Restricted Subsidiary may elect to apply the Net Proceeds from such
Asset Sale to (a) permanently reduce any Senior Bank Debt of the Company and/or
(b) make an investment in, or acquire assets and properties that will be used
in, a Related Business. Pending the final application of any such Net Proceeds,
the Company or any Restricted Subsidiary may temporarily invest such Net
Proceeds in any Investments described under clauses (i) through (iii) of the
definition of Permitted Investments. Any Net Proceeds from an Asset Sale not
applied or invested as provided in the first sentence of this Section 4.16(b)
within one year of such Asset Sale will be deemed to constitute "Excess
Proceeds."
<PAGE>
(c) Each date that the aggregate amount of Excess Proceeds in respect
of which an Asset Sale Offer (as defined below) has not been made exceeds $10.0
million shall be deemed an "Asset Sale Offer Trigger Date." As soon as
practicable, but in no event later than 20 business days after each Asset Sale
Offer Trigger Date, the Company shall commence an offer (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds. Any Notes to be purchased pursuant to an Asset Sale Offer
shall be purchased pro rata based on the aggregate principal amount of Notes
outstanding, and all Notes shall be purchased at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. To the extent that any Excess
Proceeds remain after completion of an Asset Sale Offer, the Company may use the
remaining amount for general corporate purposes otherwise permitted by this
Indenture. Upon the consummation of any Asset Sale Offer, the amount of Excess
Proceeds shall be deemed to be reset to zero.
(d) Notice of an Asset Sale Offer shall be mailed, by first-class mail
(with a copy to the Trustee), by the Company not later than the 20th business
day after the related Asset Sale Offer Trigger Date to each Holder of Notes at
such Holder's registered address, stating: (i) that an Asset Sale Offer Trigger
Date has occurred and that the Company is offering to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds (to
the extent provided in the immediately preceding paragraph), at an offer price
in cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date of the purchase (the "Asset Sale Offer
Purchase Date"), which shall be a business day, specified in such notice, that
is not earlier than 30 days or later than 60 days from the date such notice is
mailed, (ii) the amount of accrued and unpaid interest, if any, as of the Asset
Sale Offer Purchase Date, (iii) that any Note not tendered will continue to
accrue interest, (iv) that, unless the Company defaults in the payment of the
purchase price for the Notes payable pursuant to the Asset Sale Offer, any Notes
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Asset Sale Offer Purchase Date, (v) that Holders electing to
have a Note purchased pursuant to a Asset Sale Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
prior to the Asset Sale Offer Purchase Date, (vi) that Holders will be entitled
to withdraw their election if the Paying Agent receives, not later than the
second Business Day prior to the Asset Sale Offer Purchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased, (vii) that
Holders whose Notes are purchased only in part will be issued new Notes in a
principal amount equal to the unpurchased portion of the Notes surrendered;
provided, however, that each Note purchased and each new Note issued shall be in
an original principal amount of $1,000 or integral multiples thereof, and (viii)
such other information as may be required by applicable laws and regulations.
(e) On the Asset Sale Offer Purchase Date, the Company will (i) accept
for payment the maximum principal amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer that can be purchased out of Excess Proceeds
from such Asset Sale that are to be applied to an Asset Sale Offer, (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the aggregate purchase
price of all Notes or portions thereof accepted for payment, and (iii) deliver
<PAGE>
or cause to be delivered to the Trustee all Notes tendered pursuant to the Asset
Sale Offer. If less than all Notes tendered pursuant to the Asset Sale Offer are
accepted for payment by the Company for any reason consistent with this
Indenture, selection of the Notes to be purchased by the Company shall be in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis or by lot; provided, however, that Notes accepted for payment in
part shall only be purchased in integral multiples of $1,000. The Paying Agent
shall promptly mail to each Holder of Notes or portions thereof accepted for
payment an amount equal to the purchase price for such Notes plus accrued and
unpaid interest, if any, thereon, and the Trustee shall promptly authenticate
and mail to such Holder of Notes accepted for payment in part a new Note equal
in principal amount to any unpurchased portion of the Notes, and any Note not
accepted for payment in whole or in part shall be promptly returned to the
Holder of such Note. On and after an Asset Sale Offer Purchase Date, interest
will cease to accrue on the Notes or portions thereof accepted for payment,
unless the Company defaults in the payment of the purchase price therefor. The
Company will publicly announce the results of the Asset Sale Offer on or as soon
as practicable after the Asset Sale Offer Purchase Date.
(f) This Section 4.16 will not apply to a transaction consummated in
compliance with Article Five.
(g) The Company will comply with the applicable tender offer rules,
including the requirements of Section 14(e) and Rule 14e-1 under the Exchange
Act, and all other applicable securities laws and regulations in connection with
any Asset Sale Offer and will be deemed not to be in violation of any of the
covenants under this Indenture to the extent such compliance is in conflict with
such covenants.
SECTION 4.17. Limitation on Designation of
Unrestricted Subsidiaries.
(a) The Company shall not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") unless:
(i) no Default shall have occurred and be continuing at
the time of or after giving effect to such Designation;
(ii) immediately after giving effect to such Designation, the
Company would be able to incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under Section 4.10(a); and
(iii) the Company would not be prohibited under this Indenture
from making an Investment at the time of such Designation in an amount
(the "Designation Amount") equal to the greater of (x) the book value
of such Restricted Subsidiary on such date and (y) the Fair Market
Value of such Restricted Subsidiary on such date.
In the event of any such Designation, the Company shall be deemed to have made
an Investment constituting a Restricted Payment pursuant to Section 4.11 for all
purposes of this Indenture in an amount equal to the Designation Amount.
<PAGE>
(b) The Company shall not designate an Unrestricted Subsidiary as a
Restricted Subsidiary (a "Redesignation"), unless:
(i) no Default shall have occurred and be continuing at
the time of and after giving effect to such Redesignation; and
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such Redesignation shall
be deemed to have been incurred at such time and shall have been
permitted to be incurred for all purposes of this Indenture.
An Unrestricted Subsidiary shall be deemed to be redesignated as a
Restricted Subsidiary at any time if (a) the Company or any other Restricted
Subsidiary (i) provides credit support for, or a guarantee of, any Indebtedness
of such Unrestricted Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (ii) is directly or indirectly
liable for any Indebtedness of such Unrestricted Subsidiary or (b) a default
with respect to any Indebtedness of such Unrestricted Subsidiary (including any
right which the holders thereof may have to take enforcement action against it)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity, except in the case of clause (a)
to the extent permitted under Section 4.11.
(c) All Designations and Redesignations shall be evidenced by Board
Resolutions delivered to the Trustee certifying compliance with the foregoing
provisions. Subsidiaries that are not designated by the Board of Directors as
Restricted or Unrestricted Subsidiaries will be deemed to be Restricted
Subsidiaries. The Designation of a Restricted Subsidiary as an Unrestricted
Subsidiary shall be deemed a Designation of all of the Subsidiaries of such
Unrestricted Subsidiary as Unrestricted Subsidiaries.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation
and Sale of Assets.
(a) The Company shall not, in any single transaction or series of
related transactions, consolidate or merge with or into (whether or not the
Company is the Surviving Person), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets
(determined on a consolidated basis for the Company and its Restricted
Subsidiaries) in one or more related transactions to, another Person, and the
Company will not permit any Restricted Subsidiary to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the properties and assets of the Company and the Restricted Subsidiaries, taken
as a whole, to another Person, unless (i) the Surviving Person is a corporation
organized or existing under the laws of the United States, any state thereof or
<PAGE>
the District of Columbia; (ii) the Surviving Person (if other than the Company)
assumes all the obligations of the Company under the Notes, this Indenture and,
if then in effect, the Registration Rights Agreement pursuant to a supplemental
indenture or other written agreement, as the case may be, in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction, no
Default or Event of Default shall have occurred and be continuing; (iv)
immediately after giving pro forma effect to such transaction or series of
related transactions, the Surviving Person (x) would have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately preceding such transaction and (y) would be permitted to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.10(a). Notwithstanding clauses (iii) and (iv) above, any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company or another Restricted Subsidiary.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraph in
which the Company is not the Surviving Person, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company, and the Company shall be discharged from its obligations under,
this Indenture, the Notes and the Registration Rights Agreement.
(b) In connection with any such consolidation, merger, amalgamation,
transfer, lease or disposition, the Company or such Person shall have delivered
to the Trustee (i) an Officers' Certificate and an Opinion of Counsel, each in
form and substance reasonably satisfactory to the Trustee, stating that such
consolidation, amalgamation, merger, sale, assignment, conveyance, transfer,
lease or disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture, comply with this Indenture
and that all conditions precedent therein provided for relating to such
transaction have been complied with, and (ii) if a supplemental indenture is
required in connection with such transaction, an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee, that such supplemental
indenture constitutes the legal, valid, binding and enforceable obligation of
the Surviving Person.
(c) For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries, the
Capital Stock of which constitutes all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation, amalgamation or merger, or any sale,
assignment, conveyance, transfer, lease or disposition of all or substantially
all of the properties and assets of the Company in accordance with Section 5.01,
the Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Company under this Indenture, with the same effect
as if such successor had been named as the Company in this Indenture; and
thereafter, the Company shall be discharged from all obligations and covenants
under this Indenture and the Notes.
<PAGE>
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
"Events of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) a default for 30 days in the payment when due of
interest on, or Liquidated Damages (if any) with respect to any Note;
(ii) a default in the payment when due of principal on any
Note, whether upon maturity, acceleration, optional redemption,
required repurchase or otherwise;
(iii) failure to perform or comply with any covenant,
agreement or warranty in this Indenture (other than the defaults
specified in clauses (i) and (ii) above) which failure continues for 30
days after written notice thereof has been 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 then outstanding Notes;
(iv) the occurrence of one or more defaults under any
agreements, indentures or instruments under which the Company or any
Restricted Subsidiary then has outstanding Indebtedness in excess of
$10.0 million in the aggregate and, if not already matured at its final
maturity in accordance with its terms, such Indebtedness shall have
been accelerated;
(v) one or more judgments, orders or decrees for the payment
of money in excess of $10.0 million, either individually or in the
aggregate, shall be entered against the Company or any Restricted
Subsidiary or any of their respective properties and which judgments,
orders or decrees are not paid, discharged, bonded or stayed or stayed
pending appeal for a period of 60 days after their entry; or
(vi) the Company or any Restricted Subsidiary shall (A)
commence a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consent to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (C) consent to the appointment of a Custodian of it
or for substantially all of its property, (D) consent to or acquiesce
in the institution of a bankruptcy or an insolvency proceeding against
it, (E) make a general assignment for the benefit of its creditors, (F)
admit in writing its inability to pay its debts as they become due, or
(G) take any corporate action to authorize or effect any of the
foregoing; or
<PAGE>
(vii) a court of competent jurisdiction shall enter a
judgment, decree or order for relief in respect of the Company or any
Restricted Subsidiary in an involuntary case or proceeding under any
Bankruptcy Law which shall (A) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in
respect of the Company or any Restricted Subsidiary, (B) appoint a
Custodian of the Company or any Restricted Subsidiary or for
substantially all of its property or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days.
The Company shall provide an Officers' Certificate to the Trustee
within five days of the occurrence of any Default or Event of Default (provided,
however, that pursuant to Section 4.06 hereof the Company shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
SECTION 6.02. Acceleration.
(a) If any Event of Default (other than as specified in clause (vi) or
(vii) of Section 6.01 with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may, and the Trustee at the request of such Holders shall,
declare all the Notes to be due and payable immediately by notice in writing to
the Company, and to the Company and the Trustee if by the Holders, specifying
the respective Event of Default and that such notice is a "notice of
acceleration," and the Notes shall become immediately due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
the events specified in clause (vi) or (vii) of Section 6.01 with respect to the
Company, the principal of, premium, if any, and any accrued interest on all
outstanding Notes shall ipso facto become immediately due and payable without
further action or notice.
(b) At any time after a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of a majority in principal amount of the Notes outstanding,
by written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if (i) the Company has paid or deposited with
the Trustee a sum sufficient to pay (A) all sums paid or advanced by the Trustee
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, (B) all overdue interest (including any
interest accrued subsequent to an Event of Default specified in clause (vi) or
(vii) of Section 6.01 hereof) on all Notes, (C) the principal of and premium, if
any, on any Notes which have become due otherwise than by such declaration or
occurrence of acceleration and interest thereon at the rate borne by the Notes,
and (D) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Notes; and (ii) all Events of Default,
other than the non-payment of principal of Notes which have become due solely by
such declaration or occurrence of acceleration, have been cured or waived; and
(iii) the rescission would not conflict with any judgment, order or decree of
any court of competent jurisdiction.
<PAGE>
(c) The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may, on behalf of the Holders of
all of the Notes, waive any existing Default or Event of Default and its
consequences under this Indenture except (i) a continuing Default or Event of
Default in the payment of the principal of, or premium, if any, or interest on,
the Notes (which may be waived only with the consent of each Holder of Notes
affected), or (ii) in respect of a covenant or provision which under this
Indenture cannot be modified or amended without the consent of the Holder of
each Note outstanding.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the principal of, premium, if any, or interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, prior to the declaration of
acceleration of the Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes by written notice to the Trustee may on behalf
of all of the Holders waive any past Default or Event of Default and its
consequences, except a Default in the payment of principal of, premium, if any,
or interest on any Note as specified in clauses (i) and (ii) of Section 6.01 or
a Default in respect of any term or provision of this Indenture that may not be
modified or amended without the consent of each Holder affected as provided in
Section 9.02. In case of any such waiver, the Company, the Trustee and the
Holders shall be restored to their former positions and rights hereunder and
under the Notes, respectively. This paragraph of this Section 6.04 shall be in
lieu of ss. 316(a)(1)(B) of the TIA and such ss. 316(a)(1)(B) of the TIA is
hereby expressly excluded from this Indenture and the Notes, as permitted by the
TIA.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Notes, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it, including, without limitation,
any remedies provided for in Section 6.03; provided, however, that the Trustee
<PAGE>
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction. Subject to Section 7.01, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Holder or that exposes the Trustee to personal liability. This
Section 6.05 shall be in lieu of ss. 316(a)(1)(A) of the TIA, and such ss.
316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
No Holder shall have any right 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
the outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities 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 Notes.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture or of the Notes,
the right of any Holder to receive payment of the principal of, premium, if any,
and interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the express prior
written consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (i) or (ii) of Section 6.01 of this Indenture occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Notes for the
whole amount of the principal, premium, if any, and accrued interest remaining
unpaid, together with interest on overdue principal and, to the extent that
payment of such interest is lawful, interest on overdue installments of interest
as set forth in Section 4.01 and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
<PAGE>
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings 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 to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agent and counsel, and any other amounts due the Trustee under Section 7.07. The
Company's payment obligations under this Section 6.09 shall be secured in
accordance with the provisions of Section 7.07 hereunder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the
Company directly without the Trustee, to Holders for their collection
costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as
their interests may appear, or to such party as a court of competent
jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.06, or a suit by a Holder or group of Holders of
more than 10% in principal amount of the outstanding Notes.
<PAGE>
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If 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 thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to the
Trustee; and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions that 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) Notwithstanding anything to the contrary herein contained, 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:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(2) 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 negligent in ascertaining the pertinent facts; and
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.02, 6.04 or 6.05.
(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 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 paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
<PAGE>
(f) The Trustee shall not be liable for interest on any money
or 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 of the Trustee except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers'
Certificate or an Opinion of Counsel, or both, which shall conform to
Sections 10.04 and 10.05. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel or upon the advice of
counsel.
(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 that it
takes or omits to take in good faith which it reasonably 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 document, but the Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Company, to examine the books,
records, and premises of the Company, personally or by agent or
attorney and to consult with the officers and representatives of the
Company, including the Company's accountants and attorneys.
(f) The Trustee shall not be deemed to have knowledge of any
Default or Event of Default (except default in the payment of moneys
which are required by a provision hereof to be paid to the Trustee or
in the delivery of any certificate, opinion or other document required
to be delivered to the Trustee by any provision hereof) unless the
Trustee shall receive from the Company or any Holder notice stating
that a Default or Event of Default has occurred and specifying the
same.
(g) 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
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
<PAGE>
(h) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
(i) Delivery of reports, information and documents to the
Trustee under Section 4.09 hereof is for informational purposes only
and the Trustee's receipt of the foregoing 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 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary, 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 hereof.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement in this Indenture or the Notes or any other document in connection
therewith, other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if a
Trust Officer has knowledge thereof (within the meaning of paragraph (f) of
Section 7.02), the Trustee shall mail to each Holder 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 of, or interest on, any Note, including an accelerated
payment, a Default in payment on the Change of Control Purchase Date pursuant to
a Change of Control Offer or on the Asset Sale Offer Purchase Date pursuant to
an Asset Sale Offer or a Default in compliance with Article Five hereof, the
Trustee may withhold the notice if and so long as its Board of Directors, the
executive committee of its Board of Directors or a committee of its directors
and/or Trust Officers in good faith determines that withholding the notice is in
the interest of the Holders. The foregoing sentence of this Section 7.05 shall
be in lieu of the proviso to ss. 315(b) of the TIA and such proviso to ss.
315(b) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each [August 1] of each year beginning with 1998,
the Trustee shall, to the extent that any of the events described in TIA ss.
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Holder a brief report dated as of such date that complies with TIA ss.
313(a). The Trustee also shall comply with TIA ss.ss. 313(b), (c) and (d).
<PAGE>
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it in connection with the performance of its duties
under this Indenture. Such expenses shall include the reasonable fees and
expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders, Affiliates and directors and
officers for, and hold them harmless against, any and all loss, liability,
damage, claim or expense (including reasonable fees and expenses of counsel),
including taxes (other than taxes based on the income of the Trustee) incurred
by them except for such actions to the extent caused by any negligence, bad
faith or willful misconduct on their part, arising out of or in connection with
the acceptance or administration of this trust including the reasonable costs
and expenses of defending themselves against any claim (whether made by the
Company, any Holder or any other Person) or liability in connection with the
exercise or performance of any of their rights, powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. At the Trustee's sole discretion, the
Company shall defend the claim and the Trustee shall cooperate and may
participate in the defense; provided, however, that any settlement of a claim
shall be approved in writing by the Trustee. Alternatively, the Trustee may at
its option have separate counsel of its own choosing and the Company shall pay
the reasonable fees and expenses of such counsel.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vi) or (vii) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the discharge or termination of this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee.
The Company may remove the Trustee if:
<PAGE>
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the Notes 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,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. 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
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee, and the Company shall pay to
any such replaced or removed Trustee all amounts owed under Section 7.07 upon
such replacement or removal.
SECTION 7.09. 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; provided, however, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
<PAGE>
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA ss.ss. 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the Company, as
obligor on the Notes.
SECTION 7.11. Preferential Collection of
Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company, as obligor on the Notes.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 8.01. Satisfaction and Discharge of
Indenture.
(a) This Indenture shall be discharged and shall cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Notes herein expressly provided for) as to all outstanding Notes and
the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when:
(i) either
(1) Notes theretofore authenticated and delivered
(other than (x) Notes which have been lost, stolen or
destroyed and which have been replaced or paid as provided in
Section 2.07 hereof and (y) Notes for whose payment money has
theretofore been deposited in trust by the Company and
thereafter repaid to the Company or discharged from such
trust) have been delivered to the Trustee for cancellation; or
<PAGE>
(2) all Notes not theretofore delivered to the
Trustee for cancellation (other than (x) Notes which have been
lost, stolen or destroyed and which have been replaced or paid
as provided in Section 2.07 hereof and (y) Notes for whose
payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been
called for redemption pursuant to the terms of this Indenture
or have otherwise become due and payable, and the Company, in
each case, has irrevocably deposited or caused to be deposited
with the Trustee in trust for the purpose U.S. Legal Tender
sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore delivered to the Trustee for
cancellation, for the principal of, premium, if any, and
interest to the date of such deposit;
(ii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
(b) Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 7.07 hereof shall
survive and, if money shall have been deposited with the Trustee pursuant to
clause (a)(i)(2) of this Section 8.01, the obligations of the Trustee under
Sections 8.03 and 8.04 shall survive.
SECTION 8.02. Defeasance or Covenant Defeasance.
(a) Subject to the satisfaction of the conditions in Section 8.02(c)
hereof, the Company may, at its option by Board Resolution, at any time, with
respect to the Notes, elect to have the obligations of the Company discharged
with respect to the outstanding Notes ("defeasance"). Upon such defeasance, the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.04 hereof and the other
Sections of and matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such Notes and this
Indenture, except for the following, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of Notes to
receive solely from the trust fund described in Section 8.02(c) and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (ii) the
Company's obligations under Sections 2.03, 2.05, 2.06, 2.07, 2.10 and 4.02,
(iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under Section
7.07, and (iv) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this Section 8.02(a)
notwithstanding the prior exercise of its option under Section 8.02(b) with
respect to the Notes.
<PAGE>
(b) Subject to the satisfaction of the conditions in Section 8.02(c)
hereof, the Company may, at its option by Board Resolution, at any time, elect
to effect covenant defeasance ("covenant defeasance"). On and after the date
such conditions are satisfied, (i) the Company shall be released from its
obligations under any covenant or provision contained in Sections 4.04, 4.05,
4.06(a), 4.07 and 4.09 through 4.17, (ii) clauses (iii) through (vi) of Section
6.01 hereof shall not apply, and (iii) the provisions of Articles Five and Ten
shall not apply, and the Notes shall thereafter be deemed to be 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 and the provisions of Articles Five and Ten, but shall continue to be
deemed "outstanding" for all other purposes hereunder and subject to any
mandatory requirements of the TIA. For this purpose, such covenant defeasance
means that, with respect to the Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such Section or Article, whether directly or indirectly, by reason
of any reference elsewhere herein to any such Section or Article or by reason of
any reference in any such Section or Article to any other provision herein or in
any other document and such omission to comply shall not constitute a Default or
an Event of Default under clauses (iii) through (vi) of Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture shall be
unaffected thereby.
(c) In order to effect defeasance or covenant defeasance, the
following conditions must be satisfied:
(i) the Company shall have irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10
hereof who agrees to comply with the provisions of this Article Eight
applicable to it), as trust funds in trust, for the benefit of the
Holders of such Notes, U.S. Legal Tender, 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 or a nationally recognized investment banking firm, as
evidenced by a written report, without consideration of reinvestment of
interest of such U.S. Government Obligations, to pay the principal of,
premium, if any, and interest on the outstanding Notes (except lost,
stolen or destroyed Notes which have been replaced or paid) to maturity
or redemption, as the case may be, and the Company shall have
irrevocably instructed the Trustee (or such other trustee) to apply
such U.S. Legal Tender or U.S. Government Obligations to said payments
in respect of the Notes;
(ii) the Company shall have delivered to the Trustee one or
more Opinions of Counsel in the United States (which counsel or
counsels shall be independent of the Company) to the effect that:
(A) the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes
as a result of such defeasance or covenant defeasance, as the
case may be, 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 defeasance or covenant
defeasance, as the case may be, had not occurred (which
<PAGE>
opinion, in the case of defeasance, shall be based upon a
ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the Issue
Date);
(B) the trust funds will not be subject to any
rights of holders of Indebtedness of the Company (other than
Holders of the Notes); and
(C) after the 91st day following the deposit the
trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(iii) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit or, in the case of Section
6.01(vi) or (vii), at any time during the period ending on the 91st day
after the date of such deposit;
(iv) such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, the
Indenture or any other material agreement or instrument to which the
Company is a party or by which it is bound; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent (other than conditions requiring the passage of
time) to either defeasance or covenant defeasance, as the case may be,
have been complied with and that no violations under agreements
governing any other outstanding Indebtedness of the Company would
result therefrom.
Opinions required to be delivered under this Section may have
qualifications customary for opinions of the type required.
SECTION 8.03. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01 or 8.02,
and shall apply the deposited U.S. Legal Tender and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of the
principal of and interest on the Notes. The Trustee shall be under no obligation
to invest said U.S. Legal Tender or U.S. Government Obligations except as it may
agree in writing with the Company.
The Company shall pay, and indemnify the Trustee against, any tax, fee
or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.01 or 8.02 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
Notes.
<PAGE>
SECTION 8.04. Repayment to the Company.
Subject to Sections 8.01 and 8.02, the Trustee and the Paying Agent
shall promptly pay to the Company upon request any excess U.S. Legal Tender or
U.S. Government Obligations held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for one year;
provided, however, that the Trustee or such Paying Agent, before being required
to make any payment, may at the expense of the Company cause to be published
once in a newspaper of general circulation in the City of New York or mail to
each Holder entitled to such money notice that such money remains unclaimed and
that after a date specified therein which shall be at least 30 days from the
date of such publication or mailing any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company, Holders
entitled to such money must look to the Company for payment as general creditors
unless an applicable law designates another Person.
SECTION 8.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.01 or 8.02 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 or 8.02, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government
Obligations in accordance with Section 8.01 or 8.02, as the case may be;
provided, however, that if the Company has made any payment of interest on or
principal of any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
SECTION 8.06. Acknowledgment of Discharge
by Trustee.
After (i) the conditions of Section 8.01 or 8.02(a) have been
satisfied, (ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i), above, relating to the
satisfaction and discharge or defeasance of this Indenture have been complied
with, the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.01 or 8.02, as the case may be.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without notice to
or consent of any Holder:
<PAGE>
(i) to cure any ambiguity, defect or inconsistency; provided,
however, that such amendment or supplement does not adversely
affect the rights of any Holder;
(ii) to effect the assumption by a successor Person of all
obligations of the Company under the Notes, this Indenture and, if still in
effect, the Registration Rights Agreement in the event of any Disposition
involving the Company in which the Company is not the Surviving Person;
(iii) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(iv) to comply with any requirements of the Commission in
order to effect or maintain the qualification of this Indenture under the TIA;
(v) to make any change that would provide any additional
benefit or rights to the Holders;
(vi) to provide for issuance of the Exchange Notes (which will
have terms substantially identical in all material respects to the Initial Notes
except that the transfer restrictions contained in the Initial Notes will be
modified or eliminated, as appropriate), and which will be treated together with
any outstanding Initial Notes, as a single issue of securities; or
(vii) to make any other change that does not adversely affect
the rights of any Holder under this Indenture;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 9.01.
SECTION 9.02. With Consent of Holders.
(a) Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of not less than a majority in aggregate principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes), may amend or supplement this Indenture or the
Notes without notice to any other Holder. Subject to Section 6.02 and 6.07, the
Holder or Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes may waive compliance by the Company with any
provision of this Indenture or the Notes without notice to any other Holder.
(b) Notwithstanding Section 9.02(a) hereof, no amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, shall, without the prior
written consent of each Holder of each Note affected thereby:
(i) reduce the principal amount of the Notes whose Holders
must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of
any Note, or alter or waive the provisions with respect to the
redemption of the Notes in a manner adverse to the Holders of the Notes
other than with respect to a Change of Control Offer or an Asset Sale
Offer;
(iii) reduce the rate of or change the time for payment of
interest on any Notes;
(iv) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes (except that
Holders of at least a majority in aggregate principal amount of the
then outstanding Notes may (a) rescind an acceleration of the Notes
that resulted from a non-payment default and (b) waive the payment
default that resulted from such acceleration);
<PAGE>
(v) make any Note payable in money other than that stated
in the Notes;
(vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults or Events of Default or the rights
of Holders to receive payments of principal of, or premium, if any, or
interest on, the Notes; or
(vii) following the occurrence of a Change of Control, amend,
change or modify the Company's obligation to make and consummate a
Change of Control Offer in the event of a Change of Control or modify
any of the provisions or definitions with respect thereto in a manner
adverse to the Holders, or following the occurrence of an Asset Sale,
amend, change or modify the Company's obligation to make and consummate
an Asset Sale Offer or modify any of the provisions or definitions with
respect thereto in a manner adverse to the Holders.
(c) 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.
(d) After an amendment, supplement or waiver under this Section 9.02
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.
SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; provided, however, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
SECTION 9.04. 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 Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
<PAGE>
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 at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to 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 Holder, unless it makes any change described in Section 9.02(b), in
which case, the amendment, supplement or waiver shall bind only each Holder of a
Note who has consented to it and every subsequent Holder of a Note or portion of
a Note that evidences the same debt as the consenting Holder's Note; provided,
however, that any such waiver shall not impair or affect the right of any Holder
to receive payment of principal of and interest on a Note, on or after the
respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note 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 Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided, however, 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 Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee or the
Holders.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control; provided, however, that this Section
10.01 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
<PAGE>
SECTION 10.02. Notices.
Any notices or other communications 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, addressed as follows:
if to the Company:
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
Telecopier No.: (714) 641-7228
Attention: General Counsel
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Telecopier No.: (212) 852-1626/1627
Attention: Corporate Trust Division
Each of the Company and the Trustee by written notice to the other may
designate additional or different addresses for notices to such Person. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if faxed; and five (5)
calendar 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 Holder 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 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.
SECTION 10.03. Communications by Holders
with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA ss.
312(c).
<PAGE>
SECTION 10.04. Certificate and Opinion as
to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company,
if any, provided for in this Indenture relating to the proposed action
have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06 shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion 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
(d) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 10.06. Rules by Trustee, Paying
Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.07. Legal Holidays.
A "Legal Holiday" as 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 or at such place of payment are not required to be open. If a
payment date is a Legal Holiday at such place, 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.
<PAGE>
SECTION 10.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICT OF LAWS. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Indenture.
SECTION 10.09. No Adverse Interpretation
of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of the Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. No Recourse Against Others.
A director, officer, employee, stockholder, incorporator or
controlling person, as such, of the Company or of the Trustee shall not have any
liability for any obligations of the Company under the Notes or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creations. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 10.11. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 10.13. Severability.
In case any one or more of the provisions in this Indenture or in the
Notes 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 10.14. Independence of Covenants.
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
ICN PHARMACEUTICALS, INC.
By: /s/ David C. Watt
-------------------------------
Name: David C. Watt
Title: Executive Vice President, General Counsel
and Corporate Secretary
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ James McGinley
--------------------------------
Name: James McGinley
Title:
<PAGE>
A-3
EXHIBIT A
ICN PHARMACEUTICALS, INC.
9 1/4% SENIOR NOTE DUE 2005
CUSIP No.: [ ]
No. $
ICN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company", which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of Dollars, on
August 15, 2005.
Interest Payment Dates: February 15 and August 15, commencing
on February 15, 1998
Record Dates: February 1 and August 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ICN PHARMACEUTICALS, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Certificate of Authentication
This is one of the 9 1/4% Senior Notes due 2005 referred to in
the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:
------------------------------------
Authorized Signatory
Date of Authentication:
<PAGE>
A-2
(REVERSE OF SECURITY)
9 1/4% Senior Note due 2005
1. Interest. ICN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from August 14, 1997. The Company will pay interest semi-annually in arrears on
each Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful, from time to time on demand at the rate borne by the Notes.
2. Method of Payment. The Company shall pay interest on the Notes
(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 even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, United States Trust Company
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.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of August 14, 1997 (the "Indenture"), between the Company and the Trustee.
This Note is one of a duly authorized issue of Initial Notes of the Company
designated as its 9 1/4 % Senior Notes due 2005 (the "Initial Notes"). The Notes
are limited in aggregate principal amount to $275,000,000. The Notes include the
Initial Notes and the Exchange Notes, as defined below, issued in exchange for
the Initial Notes pursuant to the Indenture. The Initial Notes and the Exchange
Notes are treated as a single class of securities under the Indenture.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and the TIA for a statement of them. The Notes are general unsecured obligations
of the Company. Each Holder, by accepting a Note, agrees to be bound by all of
the terms and provisions of the Indenture, as the same may be amended from time
to time in accordance with its terms.
<PAGE>
5. Optional Redemption. The Notes are redeemable, at the Company's
option, in whole or in part, at any time on and after August 15, 2001 at the
redemption prices (expressed as percentages of the principal amount of the
Notes) if redeemed during the twelve-month period commencing on August 15 of the
year set forth below, plus, in each case, accrued and unpaid interest thereon,
if any, to the Redemption Date:
Year Percentage
2001.......................................... 104.625%
2002.......................................... 103.083
2003.......................................... 101.542
2004 and thereafter........................... 100.000
The Notes are not entitled to the benefit of any sinking fund.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
8. Registration Rights. Pursuant to the Registration Rights Agreement
dated as of the date of the Indenture, among the Company and Schroder & Co.
Inc., as initial purchaser of the Initial Notes, the Company is obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's Series B 9 1/4% Senior
Notes due 2005 (the "Exchange Notes"), which shall have been registered under
the Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
<PAGE>
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes, subject to the provisions of the
Indenture with respect to record dates for the payment of interest.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, or comply with Article Five of the Indenture or make any other change
that does not adversely affect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and the Subsidiaries to, among other things, incur
additional Indebtedness, make Restricted Payments or Restricted Investments,
create or incur Liens, enter into transactions with Affiliates, create dividend
or other payment restrictions affecting Subsidiaries and issue Preferred Stock
of Subsidiaries, and on the ability of the Company and the Subsidiaries to merge
or consolidate with any other Person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the assets of the Company and
the Subsidiaries. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Company must annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal or interest when due, a
Default in payment on the Change of Control Purchase Date pursuant to a Change
of Control Offer or on the Asset Sale Offer Purchase Date pursuant to an Asset
Sale Offer or a Default in compliance with Article Five of the Indenture) if it
determines that withholding notice is in their interest.
<PAGE>
17. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Company, the Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
19. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
20. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note 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).
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: ICN Pharmaceuticals, Inc., 3300 Hyland
Avenue, Costa Mesa, CA 92626, Attn: Secretary.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _____________________________________, agent to transfer
this Note 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 Note)
Signature Guarantee: ........
(Signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.)
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) , 1999, the undersigned confirms that it has not utilized any
general solicitation or general advertising in connection with the transfer:
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"); or
(3) __ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of 1933, as
amended; or
<PAGE>
(4) __ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended, if available; or
(5) __ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(6) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
__ The transferee is an Affiliate of the Company.
Unless one of the numbered boxes is checked, the Trustee will refuse to register
any of the Notes evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3), (4) or
(6) is checked, the Company or the Trustee may require, prior to registering any
such transfer of the Notes, in its sole discretion, such written legal opinions,
certifications (including an investment letter in the case of box (3)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended.
If none of the foregoing boxes is checked, the Trustee or Registrar
shall not be obligated to register this Note in the name of any person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated: ___________________ Signed:
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ____________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note 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 "qualified
institutional buyer" 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 the undersigned 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 the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated: __________________
NOTICE: To be executed by
an executive officer
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$-------------------
Dated: __________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without
alteration or enlargement or
any change whatsoever and be
guaranteed.
Signature Guarantee: ........
(Signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.)
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
B-1
EXHIBIT B
ICN PHARMACEUTICALS, INC.
SERIES B 9 1/4% SENIOR NOTE DUE 2005
CUSIP No.:
No. $
ICN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company", which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of Dollars, on
August 15, 2005.
Interest Payment Dates: February 15 and August 15, commencing
on February 15, 1998
Record Dates: February 1 and August 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ICN PHARMACEUTICALS, INC.
By:
Name:
Title:
By:
Name:
Title:
Certificate of Authentication
This is one of the Series B 9 1/4% Senior Notes due 2005
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:
Authorized Signatory
Date of Authentication:
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-3
(REVERSE OF SECURITY)
Series B 9 1/4% Senior Note due 2005
1. Interest. ICN PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from August 14, 1997. The Company will pay interest semi-annually in arrears on
each Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful, from time to time on demand at the rate borne by the Notes.
2. Method of Payment. The Company shall pay interest on the Notes
(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 even if the Notes are canceled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, United States Trust Company
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.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of August 14, 1997 (the "Indenture"), between the Company and the Trustee.
This Note is one of a duly authorized issue of Exchange Notes of the Company
designated as its Series B 9 1/4% Senior Notes due 2005 (the "Exchange Notes").
The Notes are limited in aggregate principal amount to $275,000,000. The Notes
include the Exchange Notes and the Initial Notes in exchange for which the
Exchange Notes were issued pursuant to the Indenture. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
<PAGE>
and the TIA for a statement of them. The Notes are general unsecured obligations
of the Company. Each Holder, by accepting a Note, agrees to be bound by all of
the terms and provisions of the Indenture, as the same may be amended from time
to time in accordance with its terms.
5. Optional Redemption. The Notes are redeemable, at the Company's
option, in whole or in part, at any time on and after August 15, 2001 at the
redemption prices (expressed as percentages of the principal amount of the
Notes) if redeemed during the twelve-month period commencing on of the year set
forth below, plus, in each case, accrued and unpaid interest thereon, if any, to
the Redemption Date:
Year Percentage
2001.......................................... 104.625%
2002.......................................... 103.083
2003.......................................... 101.542
2004 and thereafter........................... 100.000
The Notes are not entitled to the benefit of any sinking fund.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at such Holder's registered address. Notes in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
7. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
8. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and in denominations of $1,000 and integral multiples of
$1,000. A Holder shall register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay certain
transfer taxes or similar governmental charges payable in connection therewith
as permitted by the Indenture. The Registrar need not register the transfer of
or exchange of any Notes or portions thereof selected for redemption.
9. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes, subject to the provisions of the
Indenture with respect to record dates for the payment of interest.
<PAGE>
10. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity. If the Company at any
time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
12. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, or comply with Article Five of the Indenture or make any other change
that does not adversely affect the rights of any Holder of a Note.
13. Restrictive Covenants. The Indenture imposes certain limitations
on the ability of the Company and the Subsidiaries to, among other things, incur
additional Indebtedness, make Restricted Payments or Restricted Investments,
create or incur Liens, enter into transactions with Affiliates, create dividend
or other payment restrictions affecting Subsidiaries and issue Preferred Stock
of Subsidiaries, and on the ability of the Company and the Subsidiaries to merge
or consolidate with any other Person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of the assets of the Company and
the Subsidiaries. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Company must annually report to the Trustee on compliance with such limitations.
14. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
15. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default in payment of principal or interest when due, a
<PAGE>
Default in payment on the Change of Control Purchase Date pursuant to a Change
of Control Offer or on the Asset Sale Offer Purchase Date pursuant to an Asset
Sale Offer or a Default in compliance with Article Five of the Indenture) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Company, the Subsidiaries or their respective
Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
19. Governing Law. This Note and the Indenture shall be governed by
and construed in accordance with the laws of the State of New York, as applied
to contracts made and performed within the State of New York, without regard to
principles of conflict of laws.
20. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note 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).
21. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: ICN Pharmaceuticals, Inc., 3300 Hyland
Avenue, Costa Mesa, CA 92626, Attn: Secretary.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _____________________________________, agent to transfer
this Note 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 Note)
Signature Guarantee: ........
(Signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.)
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$-------------------
Dated: _________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without
alteration or enlargement or
any change whatsoever and be
guaranteed.
Signature Guarantee:
(Signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.)
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C-1 EXHIBIT C
Form of Certificate To Be Delivered
in Connection with Transfers
______Pursuant to Regulation S_____
--------------, ----
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Re: ICN Pharmaceuticals, Inc. (the "Company")
9 1/4% Senior Notes due 2005 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $___________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By:
Authorized Signature
The computation of net income per share for the three and six months ended June
30, 1997 and 1996 is as follows: (000's omitted except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
(unaudited) (unaudited)
1997 1996 1997 1996
------------------------ ---------------------------
Primary
<S> <C> <C> <C> <C>
Net income $ 21,268 $ 14,893 $ 43,580 $ 36,896
Add: Adjustments to net income
net of tax, related to
convertible debentures (354) (398) (1,077) (725)
Adjustments to net income related
to the stated and embedded dividends
on the series B preferred stock (1,117) 00 (4,426) 00
--------- ----------- ----------- -----------
Adjusted net income $ 19,797 $ 14,495 $ 38,077 $ 36,171
========= =========== =========== ===========
Average common shares outstanding 34,656 31,515 33,990 31,085
Dilutive common equivalent shares
issuable upon the exercise of
options currently outstanding to
purchase common shares 926 1,383 1,014 1,243
Conversion of Debentures 2,055 1,472 2,055 1,472
--------- ----------- ----------- -----------
37,637 34,370 37,059 33,800
========= =========== =========== ===========
Net income per share $ .53 $ .42 $ 1.03 $ 1.07
========= =========== =========== ===========
Fully Diluted
Net income $ 21,268 $ 14,893 $ 43,580 $ 36,896
Add: Adjustments to net income
net of tax, related to
convertible debentures 1,526 1,433 2,693 2,831
Adjustments to net income related
to the stated and embedded dividends
on the series B preferred stock (1,117) 00 (4,426) 00
--------- ----------- ----------- -----------
Adjusted net income $ 21,677 $ 16,326 $ 41,847 $ 39,727
========= =========== =========== ===========
Average common shares outstanding 34,656 31,515 33,990 31,085
Dilutive common equivalent shares
issuable upon the exercise of options
currently outstanding to purchase
common shares 1,494 1,387 1,490 1,336
Conversion of Debentures 7,255 6,684 7,255 6,684
Put option common stock equivalents 00 00 00 00
--------- ----------- ----------- -----------
43,405 39,586 42,735 39,105
========= =========== =========== ===========
Net income per share $ .50 $ .41 $ .98 $ 1.02
========= =========== =========== ===========
</TABLE>
Exhibit 15.1
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of
ICN Pharmaceuticals, Inc.
We have reviewed the accompanying consolidated condensed balance sheet of ICN
Pharmaceuticals, Inc. and subsidiaries as of June 30, 1997 and the related
consolidated condensed statements of income for the three and six month period
ended June 30, 1997 and 1996 and the consolidated condensed statements of cash
flows for the six month periods then ended. These consolidated condensed
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1996, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated March 4,
1997, which included an emphasis of matter paragraph relating to the Company's
net monetary assets at ICN Yugoslavia which would be subject to foreign exchange
loss if a devaluation of the Yugoslavian dinar were to occur, as more fully
described in Note 13 to the consolidated statements, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the consolidated condensed balance sheet as of December
31, 1996, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Newport Beach, California
July 31, 1997
Exhibit 15.2
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
August 13, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Registrations on Form S-8 (File No. 33-56971) and Form S-3
(File Nos. 333-08179, 333-10661, and 333-16409)
We are aware that our report dated July 31, 1997, on our review of
interim financial information of ICN Pharmaceuticals, Inc. for the three and six
month period ended June 30, 1997 and included in the Company's quarterly report
on Form 10-Q for the period then ended is incorporated by reference in the
Registrations on Form S-8 (File No. 33-56971) and on Form S-3 (File Nos.
333-08179, 333-10661, and 333-16409). Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CAPTION>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> Dec-31-1997 Dec-31-1997
<PERIOD-START> May-01-1997 Jan-01-1997
<PERIOD-END> Jun-30-1997 Jun-30-1997
<CASH> $ 42,521 $ 42,521
<SECURITIES> 00 00
<RECEIVABLES> 323,076 323,076
<ALLOWANCES> 00 00
<INVENTORY> 122,670 122,670
<CURRENT-ASSETS> 509,638 509,638
<PP&E> 284,926 284,926
<DEPRECIATION> (51,367) (51,367)
<TOTAL-ASSETS> 871,978 871,978
<CURRENT-LIABILITIES> 161,375 161,375
<BONDS> 00 00
00 00
1 1
<COMMON> 347 347
<OTHER-SE> 362,261 362,261
<TOTAL-LIABILITY-AND-EQUITY> 871,978 871,978
<SALES> 160,229 319,197
<TOTAL-REVENUES> 160,229 319,197
<CGS> 75,957 150,761
<TOTAL-COSTS> 75,957 150,761
<OTHER-EXPENSES> 00 00
<LOSS-PROVISION> 2,026 1,586
<INTEREST-EXPENSE> 3,423 7,382
<INCOME-PRETAX> 11,701 38,705
<INCOME-TAX> (11,594) (11,790)
<INCOME-CONTINUING> 00 00
<DISCONTINUED> 00 00
<EXTRAORDINARY> 00 00
<CHANGES> 00 00
<NET-INCOME> 21,268 43,580
<EPS-PRIMARY> .53 1.03
<EPS-DILUTED> .50 .98
</TABLE>
