Exhibit C
NOTE PURCHASE AGREEMENT
AMONG
INAMED CORPORATION,
THE PURCHASERS LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
Dated as of September 30, 1998
TABLE OF CONTENTS
Page
1. Issuance and Sale of Notes.............................................2
1.1. Authorization of Notes; Definitions.........................2
1.2. Issuance, Purchase and Sale of Notes........................2
1.3. Deliveries by the Company...................................2
1.4. Deliveries by the Purchasers................................4
2. Representations and Warranties of the Company..........................4
2.1. Organization and Qualification..............................4
2.2. Due Authorization...........................................4
2.3. Subsidiaries................................................5
2.4. SEC Reports Correspondence..................................6
2.5. Financial Statements........................................6
2.6. Litigation..................................................6
2.7. Title to Properties; Insurance..............................7
2.8. Governmental Consents, etc..................................7
2.9. Holding Company Act and Investment Company Act..............8
2.10. Taxes......................................................8
2.11. Compliance with ERISA......................................9
2.12. Intellectual Property Rights..............................10
2.13. Possession of Franchises, Licenses, Etc...................10
2.14. Compliance with Laws......................................10
2.15. Conflicting Agreements and Charter Provisions.............10
2.16. Capitalization............................................11
2.17. Disclosure................................................11
2.18. Offering of Notes.........................................11
2.19. Existing Indebtedness; Future Liens.......................11
2.20. Environmental Matters.....................................12
2.21. Solvency..................................................12
2.22. Labor Relations...........................................12
2.23. Security Documents........................................13
2.24. Litigation Settlement.....................................13
2.25. Brokers or Finders........................................14
2.26. No Material Adverse Change................................14
2.27. Related Party Transactions................................14
2.28. XxXxxx Documents..........................................14
2.29. Year 2000.................................................15
2.30. Statements; Omissions.....................................15
2.31. No Registration Required; Trust Indenture Act.............15
3. Representations and Warranties of the Purchasers......................15
3.1. Organization and Qualification.............................15
3.2. Due Authorization..........................................15
3.3. Acquisition for Investment.................................16
3.4. Offering of Notes..........................................16
3.5. Accredited Investor........................................16
3.6. Brokers or Finders.........................................16
4. Registration, Exchange and Transfer of Notes..........................16
4.1. The Note Register; Persons Deemed Owners...................16
4.2. Issuance of New Notes Upon Exchange or Transfer............17
5. Payment of Notes......................................................17
5.1. Home Office Payment........................................17
5.2. Limitation on Interest.....................................17
5.3. Interest...................................................17
5.4. Principal..................................................17
6. Covenants of the Company..............................................18
6.1. Maintenance of Office or Agency............................18
6.2. Money for Security Payments to be Held in Trust............18
6.3. Existence..................................................18
6.4. Maintenance of Properties..................................19
6.5. Payment of Taxes and Other Claims..........................19
6.6. Limitation on Indebtedness.................................19
6.7. Limitation on Encumbrances.................................19
6.8. Limitation on Related Party Transactions...................19
6.9. Limitation on Dividends; Stock Issuances...................20
6.10. Subsidiary Guarantees.....................................20
6.11. Pledges of Intercompany Notes.............................21
6.12. No Speculative Transactions...............................21
6.13. Restricted Investments....................................21
6.14. Operating Profit..........................................22
6.15. Tangible Assets...........................................22
6.16. Line of Business..........................................22
6.17. Sale of Assets............................................23
6.18. Indenture Relating to the Notes...........................23
6.19. Financial Statements and Information......................23
6.20. Inspection................................................25
6.21. Change-in-Control Purchase Offer..........................26
6.22. Sale and Leaseback Transactions...........................26
6.23. Compliance with Laws......................................26
6.24. Supplemental Disclosure...................................27
6.25. Proceeds..................................................27
6.26. Insurance; Damage to or Destruction of Collateral.........27
6.27. Amendment of Litigation Documents and XxXxxx Documents....28
6.28. Exchange Offer............................................28
6.29. State Takeover Statutes...................................28
7. Events of Default and Remedies........................................28
7.1. Events of Default and Remedies.............................28
7.2. Acceleration of Maturity...................................31
7.3. Other Remedies.............................................31
7.4. Conduct No Waiver; Collection Expenses.....................31
7.5. Annulment of Acceleration..................................32
7.6. Remedies Cumulative........................................32
8. Prepayment of the Notes...............................................32
8.1. Optional Prepayments with Make-Whole Amount................32
8.2. Allocation of Partial Prepayments..........................33
8.3. Maturity; Surrender, etc...................................33
8.4. Purchase of Notes..........................................33
8.5. Make-Whole Amount..........................................33
9. The Collateral Agent..................................................34
9.1 Appointment.................................................34
9.2 Delegation of Duties........................................35
9.3 Exculpatory Provisions......................................35
9.4 Reliance by the Collateral Agent............................35
9.5 Notice of Default...........................................36
9.6 Non-Reliance on Collateral Agent and Other Purchasers.......36
9.7 Indemnification.............................................37
9.8 Collateral Agent in its Individual Capacity.................37
9.9 Successor Collateral Agent..................................37
10. Interpretation.......................................................38
10.1 Definitions................................................38
10.2. Accounting Principles.....................................52
11. Miscellaneous........................................................53
11.1. Payments; Indemnity.......................................53
11.2. Severability..............................................53
11.3. Specific Enforcement......................................54
11.4. Entire Agreement..........................................54
11.5. Counterparts..............................................54
11.6. Notices and other Communications..........................54
11.7. Amendments................................................55
11.8. Successors and Assigns....................................55
11.9. Expenses..................................................55
11.10. Survival.................................................56
11.11. Transfer of Notes........................................56
11.12. GOVERNING LAW............................................56
11.13. Submission to Jurisdiction...............................57
11.14. Service of Process.......................................57
11.15. WAIVER OF JURY TRIAL.....................................57
11.16. Public Announcements.....................................57
11.17. Further Assurances.......................................57
11.18. Representations of Purchasers............................57
11.19. Signatures...............................................58
THIS NOTE PURCHASE AGREEMENT, dated as of September 30, 1998
(this "Agreement"), among INAMED CORPORATION, a Florida corporation (the
"Company"), the parties listed on Exhibit A hereto (each such party, a
"Purchaser" and collectively, the "Purchasers") and APPALOOSA MANAGEMENT,
L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the Company has entered into (i) a Settlement Agreement,
dated April 2, 1998 (the "Class Action Settlement Agreement"), which
provides, among other things, for the settlement of certain claims against
the Company arising out of the litigation in the United States District
Court for the Northern District of Alabama, Southern Division stylized as
"Silicone Gel Breast Implant Products Liability Litigation (MDL926)," (the
"Breast Implant Litigation") and (ii) an agreement with 3M, dated as of
April 16, 1998 (the "3M Agreement"), which provides, among other things,
for the resolution of certain indemnification claims of 3M against the
Company relating to the Breast Implant Litigation and for the Company to
obtain certain releases (the "Releases");
WHEREAS, on June 2, 1998, the United States District Court for
the Northern District of Alabama issued a court order preliminarily
approving the Class Action Settlement Agreement and the 3M Agreement (the
"June 2, 1998 Court Order");
WHEREAS, in order to finance certain of its obligations under the
Class Action Settlement Agreement and the 3M Agreement and to finance
certain of its working capital requirements, the Company has requested the
Purchasers to loan the Company $8,000,000 (the "Loan") by purchasing the
10.00% Senior Secured Notes due March 31, 1999 or, at the option of the
Company exercised as provided therein, September 1, 2000 (the "Notes"), and
Warrants to acquire up to 590,000 shares of Common Stock with an exercise
price of $6.50 per share (the "Loan Warrants");
WHEREAS, upon the terms and subject to the conditions contained
in this Agreement and in the other Transaction Documents (as hereinafter
defined), the Purchasers are willing to make the Loan to the Company by
purchasing the principal amount of Notes set forth opposite such
Purchaser's name in Exhibit A and the number of Loan Warrants set forth
opposite such Purchaser's name in Exhibit A;
WHEREAS, in connection with the purchase and sale of the Notes,
after the date hereof the Company will consummate an Exchange Offer (the
"Exchange Offer") for its issued and outstanding 11% secured convertible
notes due January, 1999 (the "Old Notes") by exchanging therefor (i) the
Company's 11.00% Senior Subordinated Secured Notes due March 31, 1999 or,
at the option of the Company as provided therein, September 1, 2000, in the
form of Exhibit B (the "Exchange Notes"), (ii) Warrants in the form of
Exhibit C to acquire up to 3,671,616 shares of Common Stock with an
exercise price of $5.50 per share (the "Exchange Warrants") and (iii)
Warrants in the form of Exhibit D to acquire up to 500,000 shares of Common
Stock with an exercise price of $7.50 per share (the "Additional
Warrants"); and
WHEREAS, the Purchasers and the Company desire to provide for the
purchase and sale of the Notes and the Loan Warrants and to establish
various rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes.
--------------------------
1.1. Authorization of Notes; Definitions. The Company has
authorized the issuance and sale of the Notes and the Loan Warrants. The
Notes shall be in the form of Exhibit 1.1A hereto and the Loan Warrants
shall be in the form of Exhibit 1.1B hereto. Certain capitalized terms used
in the Agreement are defined in Section 9 hereof; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
1.2. Issuance, Purchase and Sale of Notes. Upon the terms and
subject to the conditions set forth herein, the Company is selling to the
Purchasers and the Purchasers are purchasing from the Company (i) Notes in
the aggregate principal amount of Eight Million Dollars ($8,000,000) and
(ii) the Loan Warrants, for an aggregate purchase price of $8,000,000 in
cash (the "Purchase Price"). The Company and the Purchasers agree that for
U.S. federal, state and local income Tax purposes, the portion of the
Purchase Price allocable to the Loan Warrants is $300,000.00 and the
portion allocable to the Notes is $7,700,000.00, and the Company and the
Purchasers shall take no position inconsistent with such allocation. The
closing of the transactions contemplated hereby (the "Closing") is taking
place simultaneously herewith at the offices of Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, New York, New York.
1.3. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set
forth below) the following:
(i) duly executed Notes in the principal amounts set forth
opposite such Purchaser's name on Exhibit A hereto;
(ii) duly executed Loan Warrants to purchase shares of
Common Stock in the amounts set forth opposite such Purchaser's
name on Exhibit A hereto;
(iii) an opinion of the Company's counsel, dated as of the
date hereof, addressed to such Purchaser in the form of Exhibit
1.3(iii) hereto;
(iv) an Officers' Certificate, dated as of the date hereof,
certifying that the representations and warranties contained in
Article 2 hereof are true and correct;
(v) good standing certificates for the Company and each of
its Material Subsidiaries, dated no earlier than ten days prior
to the date hereof, from the jurisdiction in which each is
incorporated;
(vi) a copy of the resolutions of the board of directors of
the Company and each of its Material Subsidiaries (as applicable)
authorizing the execution of each of the Transaction Documents
and the performance of the transactions contemplated in the
Transaction Documents which shall be certified as true, correct
and effective as of the date hereof by the Secretary or Assistant
Secretary of the Company or such Material Subsidiary;
(vii) duly executed copies of the Guarantee and Security
Agreement, the Guarantee Agreement, the Security Agreement, and
the Registration Rights Agreement in the forms attached hereto as
Exhibits 1.3(vii) A, B, C, and D, and copies of any other
Collateral Documentation including Financing Statements required
to perfect the Holders' first priority security interest in the
Collateral;
(viii) evidence, satisfactory to each Purchaser, of the
commencement of the Exchange Offer;
(ix) a copy of the Rights Plan as in effect on the date
hereof and, which is attached hereto as Exhibit 1.3(ix);
(x) a duly executed copy of the Intercreditor Agreement, in
the form attached hereto as Exhibit 1.3(x);
(xi) the placement fee of $100,000 to Libra Investments in
immediately available funds by wire transfer to one or more
accounts designated by Libra Investments on or prior to the date
hereof and the placement fee of $200,000 to Appaloosa to be
deducted from the portion of the Purchase Price to be paid by
Appaloosa at the Closing; and
(xii) such other instruments and documents as reasonably
requested by each Purchaser.
1.4. Deliveries by the Purchasers. At the Closing, each Purchaser
is delivering to the Company (or to such other parties as otherwise set
forth below) the following:
(i) the amount set forth opposite such Purchaser's name
in Exhibit 1.4(i), such amount being equal to the pro-rata portion of the
Purchase Price allocable to such Purchaser for the principal amount of
Notes and the Loan Warrants being purchased by such Purchaser as set forth
opposite such Purchaser's name in Exhibit A hereto, and less, in the case
of Appaloosa, (i) the placement fee of $200,000, (ii) $3,000,000 to be wire
transferred in immediately available funds at the Closing to Xxxxx X.
Gentle, III (the "Escrow Agent") pursuant to the Escrow Agreement, dated as
of October 1, 1998, by and between the Inamed Settlement Fund by and
through the Settlement Class Counsel, the Company and the Escrow Agent (the
"Escrow Agreement") and (iii) its costs and expenses (including the
reasonable fees and expenses of its counsel, Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx and accountants, which amounts shall be wire transferred by
Appaloosa in immediately available funds to one or more accounts designated
by such parties on or prior to the date hereof); and
(ii) a duly executed copy of the Registration Rights
Agreement.
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to each Holder as follows:
2.1. Organization and Qualification. Each Credit Party is a
corporation duly organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated and has the power to own its
respective property and to carry on its respective business as now being
conducted. Except as set forth on Schedule 2.1, each Credit Party is duly
qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification necessary and
where the failure to so qualify would individually or in the aggregate have
a Material Adverse Effect.
2.2. Due Authorization. Each Credit Party has all right, power
and authority to enter into, deliver and perform the Transaction Documents
to which it is a party and to consummate the transactions contemplated
thereby. The execution and delivery of each Transaction Document by each
Credit Party party thereto and the performance by such Credit Party of the
transactions contemplated thereby (including, without limitation, the
issuance and sale of the Notes, the Loan Warrants, the Exchange Notes, the
Exchange Warrants and the Additional Warrants by the Company) and
compliance by each such Credit Party with all the provisions of each
Transaction Document (as applicable) have been duly authorized by all
requisite corporate proceedings on the part of each Credit Party. Each of
the Transaction Documents (other than the Exchange Offer Documents) has
been duly executed and delivered on behalf of each Credit Party party
thereto, and each such Transaction Document constitutes the legal, valid
and binding obligation of such Credit Party, enforceable against such
Credit Party in accordance with their respective terms, except to the
extent limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or by general principles of equity
relating to creditors' rights generally. The Company has furnished to each
Purchaser true and correct copies of the Company's Certificate of
Incorporation and By-Laws as in effect on the date of this Agreement,
copies of which are attached hereto as Exhibits 2.2(i) and 2.2(ii). In
addition, the Company has furnished to each Purchaser a true and correct
copy of the Proxy Statement, relating to the solicitation of votes to
approve the Reincorporation Merger, filed by the Company with the SEC on
September 18, 1998, a copy of which is attached hereto as Exhibit 2.2(iii)
(the "Proxy Statement").
2.3. Subsidiaries. (a) Schedule 2.3(a) contains (except as noted
therein) complete and correct lists (i) of the Company's Material
Subsidiaries, showing, as to each Material Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding
owned by the Company and each other of the Company's Subsidiaries, and (ii)
of the Company's directors and senior officers.
(b) Except as set forth in Schedule 2.3(a), all of the
outstanding shares of capital stock or similar equity interests of each
Material Subsidiary shown in Schedule 2.3(a) as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another of its Subsidiaries
free and clear of any Lien.
(c) There are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which the Company or
any of its Subsidiaries may be required to issue, sell, repurchase or
redeem any of its capital stock or other equity interests in any of the
Company's Subsidiaries.
(d) The Company has furnished to each Purchaser true and correct
copies of the charter, by-laws and/or other organizational documents of
each of the Company's Material Subsidiaries, as in effect on the date of
this Agreement, copies of which are attached hereto as Exhibit 2.3(d).
(e) Schedule 2.3(e) contains (except as noted therein) a complete
and correct list of all of the Company's Non-Significant Subsidiaries.
2.4. SEC Reports Correspondence. Except as set forth in Schedule
2.4, the Company has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act from and after
January 1, 1995; and the Company has furnished each Purchaser true and
complete copies of all annual reports, quarterly reports, proxy statements
and other reports under the Exchange Act filed by the Company from and
after such date, each as filed with the SEC (collectively, the "SEC
Reports"). Except as set forth on Schedule 2.4, each SEC Report was in
compliance in all material respects with the requirements of its respective
report form and did not on the date of filing contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as of the
date hereof there is no fact or facts not disclosed in the SEC Reports
which relate specifically to the Company and/or any of its Subsidiaries and
which individually or in the aggregate may have a Material Adverse Effect.
The Company has made available for inspection by each Purchaser copies of
all correspondence between the Company and the SEC from and after January
1, 1996.
2.5. Financial Statements. Except as set forth in Schedule 2.5,
the financial statements (including any related schedules and/or notes)
included in the SEC Reports have been prepared in accordance with GAAP
consistently followed (except as indicated in the notes thereto) throughout
the periods involved and fairly present the consolidated financial
condition, results of operations, cash flows and changes in stockholders'
equity of the Company and its Subsidiaries as of the respective dates
thereof and for the respective periods then ended (in each case subject, as
to interim statements, to changes resulting from year-end adjustments, none
of which were material in amount or effect). Except as set forth in
Schedule 2.5 or the SEC Reports, the Company has no liabilities or
obligations, contingent or otherwise, except (i) liabilities and
obligations in the respective amounts reflected or reserved against in the
Company's balance sheet as of December 31, 1997 included in the SEC Reports
or (ii) liabilities and obligations incurred in the ordinary course of
business since December 31, 1997 which individually or in the aggregate do
not have a Material Adverse Effect. Since December 31, 1997, the Company
and its Subsidiaries have operated their respective businesses only in the
ordinary course and there has not been individually or in the aggregate any
Material Adverse Effect, other than changes disclosed in the SEC Reports or
otherwise set forth in Schedule 2.5 hereto.
2.6. Litigation. (a) Except as set forth in Schedule 2.6 hereto
or as disclosed in the SEC Reports, there is no action, suit, investigation
or proceeding pending or, to the Knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of their respective
properties or assets by or before any court, arbitrator or other
Governmental Entity.
(b) Except as set forth in Schedule 2.6 or as disclosed in the
SEC Reports, neither the Company nor any of its Subsidiaries is in default
under or in breach of any order of any court, arbitrator or governmental
entity, and neither the Company nor any of its Subsidiaries is subject to
or a party to any order of any court or governmental entity arising out of
any action, suit or proceeding under any Law.
2.7. Title to Properties; Insurance. (a) Except as set forth in
Schedule 2.7(a), the Company and each of its Subsidiaries have good and
valid title to, or, in the case of property leased by any of them as
lessee, a valid and subsisting leasehold interest in, their respective
properties and assets, free of all Liens and encumbrances, except as sold
or otherwise disposed of in the ordinary course of business and except for
such Liens and encumbrances which would not cause a Material Adverse
Effect.
(b) Schedule 2.7(b) sets forth a complete and correct list of all
insurance coverage carried by the Company or its Subsidiaries, the carrier
and the terms and amount of coverage. All of the material assets of the
Company and the Company's Subsidiaries and all aspects of the Company's and
its Subsidiaries' businesses that are of insurable character are covered by
insurance with insurers against risks of liability, casualty and fire and
other losses and liabilities customarily obtained to cover comparable
businesses and assets in amounts, scope and coverage which are consistent
with prudent industry practice. Neither the Company nor any of its
Subsidiaries is in default with respect to its obligations under any such
insurance policy maintained by it. All such policies and other instruments
are in full force and effect and no premiums with respect thereto are past
due and owed. Except as set forth in Schedule 2.7(b), neither the Company
nor any of its Subsidiaries has failed to give any notice or present any
material claim under any such insurance policy in due and timely fashion or
as required by any of such insurance policies, neither the Company nor any
of its Subsidiaries has otherwise, through any act, omission or
non-disclosure, jeopardized or impaired full recovery of any claim under
such policies, and there are no claims by the Company or any of its
Subsidiaries under any of such policies to which any insurance company is
denying liability or defending under a reservation of rights or similar
clause. Neither the Company nor any of its Subsidiaries has received notice
of any pending or threatened termination of any of such policies or any
premium increases for the current policy period with respect to any of such
policies and the consummation of the transactions contemplated by the
Transaction Documents will not result in any such termination or premium
increase. The Company does not maintain directors' and officers' insurance.
2.8. Governmental Consents, etc. No Credit Party is required to
obtain any consent, approval or authorization of, or to make any
registration, declaration or filing with, any Governmental Entity or third
party as a condition to or in connection with the valid execution and
delivery of any of the Transaction Documents or the valid offer, issue,
sale or delivery of the Notes or the Loan Warrants, or the performance by
any such Credit Party of its obligations in respect of any thereof, except
for filings required pursuant to state and federal securities laws to
effect any registration of securities pursuant to the Registration Rights
Agreement, the Financing Statements, and filings to be made with the U.S.
Patent and Trademark Office or the U.S. Copyright Office to perfect the
Holders' first priority security interest in the Intellectual Property
constituting Collateral under the Collateral Documentation, and except for
the filing on Form 8K under the Exchange Act to report the consummation of
the transactions contemplated hereby.
2.9. Holding Company Act and Investment Company Act. No Credit
Party is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an
"affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
2.10. Taxes. Except as set forth in Schedule 2.10:
(a) The Company and its Subsidiaries are each members of the
affiliated group (as defined in Code Section 1504) filing a consolidated
federal income Tax Return of which the Company is the common parent. The
Company and its Subsidiaries (i) have timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company or its
Subsidiaries, all of which Tax Returns are true, correct and complete in
all material respects; (ii) have within the time and manner prescribed by
Law paid all Taxes, required to be paid in respect of the periods covered
by such Tax Returns or otherwise due to any Governmental Authority; (iii)
have established and maintained on their respective books and records,
accruals and reserves that are adequate for the payment of all Taxes not
yet due and payable and attributable to any period preceding the date
hereof; and (iv) have not received notice of any deficiencies for any Tax
from any Governmental Authority against the Company or any of its
Subsidiaries, which deficiency has not been satisfied. Neither the Company
nor any of its Subsidiaries is the subject of any currently ongoing audit
or judicial or administrative proceeding relating to Taxes, nor is any such
audit pending or, to the Company's Knowledge, threatened. With respect to
any taxable period ended prior to December 31, 1992, all Tax Returns
including the Company or any of its Subsidiaries have been audited by the
Internal Revenue Service or are closed by the applicable statute of
limitations. The accruals and reserves for Taxes on the December 31, 1997
Balance Sheet are complete and adequate in all material respects to cover
the liability of the Company and its Subsidiaries for Taxes through such
date. There are no Liens with respect to Taxes upon any of the properties
or assets, real or personal, tangible or intangible, of the Company or any
of its Subsidiaries (other than Liens for Taxes not yet due). No claim has
been made or threatened in writing, and no claim has, to the Company's
Knowledge, otherwise been made or threatened, by a Governmental Authority
in a jurisdiction where the Company and its Subsidiaries do not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction. Neither the Company nor any of its
Subsidiaries has filed an election under Section 341(f) of the Code to be
treated as a consenting corporation. Neither the Company nor any of its
Subsidiaries is or has been a party to any Tax Sharing Agreement.
(b) The Company and its Subsidiaries have duly withheld or
collected all Taxes required by law to have been withheld or collected
(including Taxes required by law to be withheld or collected in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party) and any such amounts required
to be remitted to a Governmental Authority have been timely remitted.
2.11. Compliance with ERISA. The Company has provided or made
available to each Purchaser, or has caused to be provided to each Purchaser
(i) current, accurate and complete copies of all documents embodying or
relating to each employee benefit plan (within the meaning of Section 3(3)
of ERISA) and each Employee Agreement, including all amendments thereto,
and trust or funding agreements with respect thereto (excluding any grantor
trusts established to hold assets subject to the claims of Seller's
creditors) maintained or contributed to by and Credit Party or any ERISA
Affiliate; and (ii) all summary plan descriptions and communications of any
material modifications to any employee or employees relating to any
employee benefit plan (within the meaning of Section 3(3) of ERISA) or
Employee Agreement maintained by any Credit Party or any ERISA Affiliate.
Schedule 2.11 sets forth a complete and correct list of all employee
benefit plans and Employee Agreements described in clause (i) above. Each
employee benefit plan (within the meaning of Section 3(3) of ERISA)
maintained or contributed to by any Credit Party or any ERISA Affiliate has
been established and operated in accordance with terms thereof and all
other applicable laws, including, but not limited to the Code and ERISA.
Neither any Credit Party nor any ERISA Affiliate presently sponsors,
maintains, contributes to, or is required to contribute to, nor has any
Credit Party nor any ERISA Affiliate ever sponsored, maintained,
contributed to, or been required to contribute to, an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) which is
subject to Title IV of ERISA or Section 412 of the Code. Neither any Credit
Party nor any ERISA Affiliate has ever maintained or contributed to or been
required to maintain or contribute to any employee welfare benefits plan
(within the meaning of Section 3(1) of ERISA) which provides for
post-retirement medical or other welfare-type benefits and has no liability
for any such benefits to any present or former employee.
2.12. Intellectual Property Rights. Except as disclosed on
Schedule 2.12 hereto, to the Company's Knowledge, (i) the Company or one of
its Subsidiaries owns or has the right to use pursuant to license,
sub-license, agreement or permission all of its Intellectual Property; and
(ii) neither the Company nor any of its Subsidiaries has interfered with,
infringed upon or misappropriated any Intellectual Property rights of third
parties, except for interferences, infringements and misappropriations
which would not individually or in the aggregate have a Material Adverse
Effect, and the Company has no Knowledge of any claim, demand or notice
alleging any such interference, infringement or misappropriation (including
any claim that it must license or refrain from using any Intellectual
Property rights of any third party). To the Company's Knowledge, no third
party has interfered with, infringed upon or misappropriated any
Intellectual Property rights of the Company or any of the Company's
Subsidiaries.
2.13. Possession of Franchises, Licenses, Etc. Each Credit Party
possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from
burdensome restrictions, that are necessary for the ownership, maintenance
and operation of their respective properties and assets, except for those
the absence of which would not individually or in the aggregate have a
Material Adverse Effect, and no Credit Party is in violation of any
thereof, except for violations which would not cause a Material Adverse
Effect.
2.14. Compliance with Laws. Each Credit Party is in compliance
with all applicable Laws including, without limitation, those relating to
protection of the environment, employment opportunity and employee safety,
except where the failure to comply would not individually or in the
aggregate have a Material Adverse Effect. No injunction, order or other
decree has been issued nor any Law enacted which prevents, nor does any Law
prohibit the consummation of the transactions contemplated by any of the
Transaction Documents.
2.15. Conflicting Agreements and Charter Provisions. Other than
the Class Action Settlement Agreement, no Credit Party is a party to any
Contract or is subject to any charter or By-Law provision or any judgment
or decree which individually or in the aggregate has or is reasonably
likely to have a Material Adverse Effect. Neither the execution and
delivery of any of the Transaction Documents, nor the issuance of the Notes
or the Loan Warrants, nor the fulfillment of or compliance with the terms
and provisions hereof or thereof, will conflict with or result in a breach
of the terms, conditions, or provisions of, or give rise to a right of
termination under, or constitute a default under, or result in the creation
of any Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of any Credit
Party or any Contract of any Credit Party except where such conflict,
breach, right of termination, default, Lien or violation would not cause a
Material Adverse Effect. No Credit Party is in default under any
outstanding indenture or other debt instrument or with respect to the
payment of the principal of or interest on any outstanding obligations for
borrowed money, or is in default under any of its Contracts except, in the
case of Contracts, where such default would not cause a Material Adverse
Effect.
2.16. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which, as of the date
hereof, 10,990,290 shares were issued and outstanding. All of the
outstanding shares of Common Stock have been validly issued and are fully
paid and nonassessable. No class of Capital Stock of the Company is
entitled to preemptive rights. Except for the Old Notes and the warrants
and options listed on Schedule 2.16 hereto, there are no outstanding
options, warrants, subscription rights, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any class of Capital Stock of the Company, or Contracts, by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of its Capital Stock or options, warrants or other rights
to purchase or acquire any shares of its Capital Stock. Immediately
following the consummation of the transactions contemplated hereby, the
Company's capitalization will be as set forth in Schedule 2.16. The Company
has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January 1, 1995.
2.17. Disclosure. Neither any Transaction Document nor any
Schedule thereto, nor any certificate furnished to any Purchaser by or on
behalf of the Company or any of its Subsidiaries in connection with the
transactions contemplated thereby, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
2.18. Offering of Notes. Neither the Company nor any Person
acting on its behalf has offered the Notes or the Loan Warrants or any
similar securities of the Company for sale to, solicited any offers to buy
the Notes or the Loan Warrants or any similar securities of the Company
from or otherwise approached or negotiated with respect to the Company with
any Person other than the Purchasers and other "accredited investors" (as
defined in Rule 501(a) under the Securities Act). Neither the Company nor
any Person acting on its behalf has taken or, except as contemplated hereby
will take any action (including, without limitation, any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Notes or the Loan
Warrants under the Securities Act) which could reasonably be expected to
subject the offering, issuance or sale of the Notes or the Loan Warrants to
the registration requirements of Section 5 of the Securities Act or violate
the provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
2.19. Existing Indebtedness; Future Liens. (a) Schedule 2.19 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company and its Subsidiaries as of the date hereof. Neither the Company nor
any of its Subsidiaries is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any such
Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment. None of the Company's 4% convertible
debentures, due January 30, 2000, are outstanding.
(b) No Credit Party has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any
Lien.
2.20. Environmental Matters. No Credit Party has Knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against any Credit Party or any of its real
properties now or formerly owned, leased or operated by any of them or
other assets, alleging any damage to the environment or violation of any
Environmental Laws. Except as otherwise set forth in Schedule 2.20, (i) no
Credit Party has Knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or affecting real properties now
or formerly owned, leased or operated by any of them or to other assets or
their use; (ii) except as set forth on Schedule 2.20, no Credit Party has
stored any Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws; and (iii) all
buildings on all real properties now owned, leased or operated by any
Credit Party are in compliance with applicable Environmental Laws; except
in each case for such occurrences which would not cause a Material Adverse
Effect.
2.21. Solvency. No Credit Party is, and after giving effect to
the purchase of the Notes and the application of the proceeds therefrom
will be, insolvent within the meaning of Title 11 of the United States Code
or any comparable state law provision.
2.22. Labor Relations. Except as set forth in Schedule 2.22, no
unfair labor practice complaint or any complaint alleging sexual harassment
or sex, age, race or other employment discrimination has been brought
during the last three years against any Credit Party before the National
Labor Relations Board, the Equal Employment Opportunity Commission or any
other Governmental Authority, nor is there any charge, investigation
(formal or informal) or complaint pending, or to the Knowledge of each
Credit Party, threatened, against any Credit Party regarding any labor or
employment matter. There have been no governmental audits of the equal
employment opportunity practices of any Credit Party and, to the Knowledge
of each Credit Party, no reasonable basis for any such audit exists. Each
Credit Party (i) is in compliance with all applicable federal, state and
local laws, rules and regulations (domestic and foreign) respecting
employment, employment practices, labor, terms and conditions of
employment, collective bargaining and wages and hours, except for such
laws, rules and regulations which would not cause a Material Adverse Effect
and (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to its employees.
2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of
State of Nevada with respect to the Company and upon proper filing of the
Financing Statements (or assignments thereof) in the locations identified
in the Guarantee and Security Agreement, with respect to the domestic
Material Subsidiaries, the Liens granted under the Transaction Documents
(other than the Exchange Offer Documents) shall constitute fully perfected
first priority security interests in all right, title and interest of the
Company or such domestic Material Subsidiary, as the case may be, in and to
the personal property therein prior to any other security interests against
such property or interests therein.
2.24. Litigation Settlement. (a) Attached hereto as Exhibits
2.24A, 2.24B and 2.24C are true and complete copies of the Class Action
Settlement Agreement, the 3M Agreement, and the June 2, 1998 Court Order
approving the Class Action Settlement Agreement and the 3M Agreement
(including the 30-day extension letter thereto).
(b) The plaintiffs in the Breast Implant Litigation have been
preliminarily certified as a Mandatory (non "opt-out" Limited Fund) Class
under Rule 23(b)(1)(B) of the Federal Rules of Civil Procedure.
(c) Except as disclosed in the Company's filing in its 1997 Form
10K, the implementation of the Class Action Settlement Agreement will
preclude further litigation by all persons who are within the scope of the
class and whose claims arise during the class period.
(d) Each Credit Party is in full compliance with all of the terms
of the Class Action Settlement Agreement, the 3M Agreement and the June 2,
1998 Court Order. No Credit Party is in default under or in violation of
the Class Action Settlement Agreement, the 3M Agreement, or the June 2,
1998 Court Order and all of the foregoing are in full force and effect with
respect to each Credit Party. To the Knowledge of each Credit Party, each
Person (other than a Credit Party) who is a party to the Class Action
Settlement Agreement or the 3M Agreement or who is subject to the June 2,
1998 Court Order is in full compliance with the terms of such agreements
and such order, are not in default or in violation of such agreements or
such order, and each of the foregoing is in full force and effect with
respect to such parties.
(e) The Company has delivered to each Purchaser true and correct
copies of the Escrow Agreement and the Interim Agreement for Custodian
Services for the Inamed Settlement Fund, dated as of September 30, 1998, by
and between The Inamed Settlement Fund and Compass Bank (the "Custody
Agreement").
2.25. Brokers or Finders. Other than the $100,000 fee to Libra
Investments and the $200,000 fee to Appaloosa, no agent, broker, investment
banker or other Person is or will be entitled to any broker's fee or any
other commission or similar fee from any Credit Party in connection with
any of the transactions contemplated by this Agreement.
2.26. No Material Adverse Change. Except as set forth in Schedule
2.26, since January 1, 1997, no event has occurred or failed to occur which
has had a Material Adverse Effect.
2.27. Related Party Transactions. (a) Except as set forth in
Schedule 2.27 or as disclosed in the SEC Reports, no Credit Party has
entered into or been a party to any transaction with any Related Party
thereof except in the ordinary course of, and pursuant to the reasonable
requirements of, such party's business and upon fair and reasonable terms
that are at least equivalent to an arms length transaction with a Person
not a Related Party of such party.
(b) Except as set forth in Schedule 2.27 or as disclosed in the
SEC Reports, no Credit Party has entered into any lending or borrowing
transaction with any director, officer or employee of the Company or any of
its Subsidiaries in excess of $10,000 in the aggregate.
2.28. XxXxxx Documents. (a) Attached hereto as Exhibits 2.28(i)
and 2.28(ii), respectively, are true and complete copies of (i) the
Standstill Agreement and (ii) all documents and agreements relating to the
full discharge of all Indebtedness to International Integrated Industries
LLC.
(b) The Company has discharged in full, in a manner satisfactory
to each Purchaser, all indebtedness to International Integrated Industries
LLC.
(c) Each Credit Party is in full compliance with all of the terms
of the documents listed in Section 2.28(a) and is not in default or in
violation of any of the foregoing. All of the documents listed in Section
2.28(a) are in full force and effect with respect to each Credit Party.
(d) To the Knowledge of each Credit Party, each Person (other
than a Credit Party) who is a party to any of the documents listed in
Section 2.28(a) is in full compliance with the terms of such documents, is
not in default or in violation of the foregoing, and each such document is
in full force and effect with respect to such parties.
2.29. Year 2000. The Company reasonably believes that the Company
and its Subsidiaries will on a timely basis successfully resolve the risk
that computer applications used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates, commonly referred to as the "Year 2000 Problem", if the
Company and its Subsidiaries implement the plans for such resolution
currently in place. The Company reasonably believes that the cost to the
Company and its Subsidiaries of correcting their Year 2000 Problem will not
be Material. The Company and its Subsidiaries, on the basis of inquiries
made, believe that each material supplier and customer of the Company and
each of its Subsidiaries will also successfully resolve on a timely basis
the Year 2000 Problem for all of its computer applications.
2.30. Statements; Omissions. With respect to the Exchange Offer,
the Company has provided (or will have provided prior to the consummation
of the Exchange Offer) to the holders of the Old Notes all material facts
relevant to the Company and the Exchange Offer, and the Company has not
made any untrue statements of a material fact or omitted to state a
material fact necessary in order to make any statements made by the
Company, in the light of the circumstances under which they were made, not
misleading.
2.31. No Registration Required; Trust Indenture Act. Subject to
compliance by the holders of the Old Notes with the representations and
warranties set forth in Article III of the Securities Exchange Agreement,
it is not necessary in connection with the Exchange Offer and the granting
of the Exchange Warrants and Additional Warrants to the Holders and by the
Holders to each subsequent holder in the manner contemplated by the
Securities Exchange Agreement to register the Exchange Notes, the Exchange
Warrants and Additional Warrants under the Act. The Exchange Offer
Documents and the transactions contemplated thereby are in full compliance
with the Trust Indenture Act of 1939, as amended.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with
respect to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized and existing in good standing under the laws of the state of its
formation and has the power to own its respective property and to carry on
its respective business as now being conducted.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. Such Purchaser's execution and delivery of each Transaction
Document to which it is a party and the performance by such Purchaser of
the transactions contemplated thereby and compliance by such Purchaser with
all the provisions of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite proceedings on the
part of such Purchaser. Each of the Transaction Documents (other than the
Exchange Offer Documents) to which it is a party has been duly executed and
delivered on behalf of such Purchaser, and each such Transaction Document
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its respective terms,
except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by general principles of
equity relating to creditors' rights generally.
3.3. Acquisition for Investment. Such Purchaser is acquiring the
Notes being purchased by it for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof except in compliance with all applicable securities
Laws.
3.4. Offering of Notes. Such Purchaser has not offered the Notes
for sale by any means of general solicitation or general advertising
including, but not limited to, any advertisements, articles, notices or
other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees were invited by any general solicitation or general advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act. Such Purchaser represents that it has been afforded the opportunity to
ask questions and receive answers concerning the terms and conditions of
the Transaction Documents and the transactions contemplated thereby.
3.6. Brokers or Finders. No agent, broker, investment banker or
other Person is or will be entitled to any broker's fee or any other
commission or similar fee from such Purchaser in connection with any of the
transactions contemplated by this Agreement.
4. Registration, Exchange and Transfer of Notes.
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4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section
11.6, a register for the Notes (the "Note Register"), in which the Company
shall record the name and address of the person in whose name each Note has
been issued and the name and address of each transferee and prior owner of
each Note. The Company may deem and treat the person in whose name a Note
is so registered as the Holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of
such Note for registration of transfer as provided in this Article 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the
office of the Company designated for notices in accordance with Section
11.6, the Company shall execute and deliver, at its expense, one or more
new Notes as requested by the Holder of the surrendered Note, each dated
the date to which interest has been paid on the Note so surrendered (or, if
no interest has been paid, the date of such surrendered Note), but in the
same aggregate unpaid principal amount as such surrendered Note, and
registered in the name of such person or persons as shall be designated in
writing by such Holder. Every Note surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the Holder of such Note or by his attorney duly
authorized in writing. The Company may also condition the issuance of any
new Note or Notes to a Person other than the Holder thereof on the payment
of a sum sufficient to cover any stamp tax or other governmental charge
imposed in respect of such transfer.
5. Payment of Notes.
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5.1. Home Office Payment. The Company will pay to each Purchaser
or any transferee thereof all sums becoming due on the Notes held by such
Purchaser or transferee (including all sums which become due on the Notes
at the maturity thereof) (a) prior to the date of execution of an indenture
(the "Indenture Date") at the account/address to be specified by such
Purchaser or transferee for such purpose by notice to the Company, by wire
transfer of immediately available funds, or at such other address or by
such other method as such Purchaser or transferee shall have designated by
notice to the Company and (b) at any time after the Indenture Date, by wire
transfer to the Trustee, as specified in the indenture. Before selling or
otherwise transferring any Note, such Purchaser or transferee will make a
notation thereon of the aggregate amount of all payments of principal, if
any, theretofore made, and of the date to which interest has been paid.
5.2. Limitation on Interest. No provision of this Agreement or of
the Notes shall require the payment or permit the collection of interest in
excess of the maximum rate which is permitted by Law. If any such excess
interest is provided for herein or in the Notes, or shall be adjudicated to
be so provided for, then the Company shall not be obligated to pay such
interest in excess of the maximum rate permitted by Law, and the right to
demand payment of any such excess interest is hereby waived, any other
provisions in this Agreement or in the Notes to the contrary
notwithstanding.
5.3. Interest. Interest on the principal amount of the Notes
shall be due and payable as provided in the Notes.
5.4. Principal. Unless otherwise provided herein, payment of the
principal amount of the Notes shall be due and payable as provided in the
Notes.
6. Covenants of the Company. The Company covenants that for so long
as any of the Notes are outstanding:
6.1. Maintenance of Office or Agency. The Company shall maintain
in Las Vegas, Nevada an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company
in respect of the Notes may be served. The Company shall give prompt
written notice to the Holders of the location, and any change in the
location, of such office or agency. The Company may also from time to time
designate one or more other offices or agencies (in or outside Nevada)
where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations, provided,
however, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency in Las Vegas,
Nevada for such purposes. The Company shall give prompt written notice to
the Holders of any such designation or rescission and of any change in the
location of any such other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or
before each due date of the principal of or interest on any of the Notes,
the Company shall segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided.
6.3. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, Material rights (charter and statutory) and Material franchises
and the existence, Material rights and Material franchises of all of its
Subsidiaries. Neither the Company nor any of its Subsidiaries shall enter
into any transaction of acquisition of, or merger or consolidation or
amalgamation with, any other Person (including any Subsidiary or Affiliate
of the Company or any of its Subsidiaries), or transfer all or
substantially all of its assets to any foreign Subsidiary, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
make any Material change in the present method of conducting business or
engage in any type of business other than of the same general type now
conducted by it. The Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise modify (i) the Company's articles of
incorporation or certificate of incorporation (as the case may be), (ii)
the Company's by-laws or (iii) the charter, by-laws or other organizational
documents of any of the Company's Subsidiaries. Notwithstanding the
foregoing, the Company shall be permitted to (A) consummate the
Reincorporation Merger to change the Company's state of incorporation from
Florida to Delaware (substantially on the terms described in the Proxy
Statement, the Delaware Charter and the Delaware By-Laws, but in no event
on terms more adverse to the Holders than those contained in the Proxy
Statement, Delaware Charter and Delaware By-Laws and in no event increasing
the number of authorized shares contained therein), provided, however, that
the Company shall not, without the prior written consent of the Required
Holders, amend or otherwise modify the Delaware Charter or the Delaware
By-Laws and (B) effect any transaction otherwise prohibited under this
Section 6.3 solely with respect to its Non-Significant Subsidiaries except
for the provisions of the first two sentences of this Section 6.3.
6.4. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such if such discontinuance is, in the
reasonable, good faith judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in
any Material respect to the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon any Credit Party or upon
the income, profits or property of any Credit Party, and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by Law
become a Lien upon the property of any Credit Party; provided, however,
that the Company shall not be required to pay or discharge or cause to be
paid or discharged any such Tax whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
6.6. Limitation on Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly
liable for the payment of any Indebtedness (excluding Permitted
Indebtedness and Indebtedness which is a Guaranty of an Indebtedness of a
Credit Party that is otherwise Permitted Indebtedness).
6.7. Limitation on Encumbrances. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or otherwise suffer to exist or cause or otherwise suffer to
become effective any Lien in or on any right, title or interest to any
property (real or personal) that constitutes all or any portion of the
Collateral (a "Restricted Encumbrance," which term excludes the Lien
created in favor of the Holders) unless such Restricted Encumbrance is a
Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, enter into or
be a party to any transaction with any Related Parties (other than an
Appaloosa or its Affiliates) except in the ordinary course of, and pursuant
to the reasonable requirements of, such party's business and upon fair and
reasonable terms that are at least equivalent to an arms length transaction
with a Person that is not a Related Party. In addition, if any such
transaction or series of related transactions involves payments in excess
of $25,000 in the aggregate, the terms of those transactions must be
disclosed in advance to each Holder. All such transactions existing as of
the date hereof are set forth in Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of any Credit Party.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any employee
benefit plan (within the meaning of Section 3(3) of ERISA) or Employee
Agreement or (iv) grant any bonus, salary increase, severance or
termination pay to, any employee, officer, director or consultant other
than in the ordinary course of business consistent with past practice.
6.9. Limitation on Dividends; Stock Issuances. The Company shall
not offer or issue any shares of preferred stock of the Company for any
purpose whatsoever including, without limitation, any shares of "blank
check" preferred stock authorized under Article FOURTH of the Delaware
Charter following the effectiveness of the Reincorporation Merger. The
Company shall not offer or issue any shares of Common Stock of the Company
that, if consummated, would cause the aggregate number of shares of Common
Stock outstanding to be greater than 20,000,000 (adjusted for reverse stock
splits and similar transactions). The Company shall not declare any
dividends on any shares of its Capital Stock, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any shares of
its Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash, Securities, property or in obligations of any Credit Party.
6.10. Subsidiary Guarantees. The Company shall cause its existing
and future wholly-owned direct and indirect Material Subsidiaries organized
under the laws of any state of the United States (or the District of
Columbia) to jointly and severally guarantee the obligations of the Company
under the Notes and this Agreement pursuant to the Guarantee and Security
Agreement. The Company shall cause such guarantees to be executed and
delivered by all of the domestic Material Subsidiaries in existence on the
date hereof concurrently with the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, to the extent that the
Company establishes or acquires a direct or indirect Subsidiary that
constitutes a Material Subsidiary, or if an existing Non-Significant
Subsidiary shall become a Material Subsidiary, and such Subsidiary is
organized under the laws of a state of the United States and doing business
in the United States after the date hereof, the Company shall cause such
Subsidiary to jointly and severally guarantee the obligations of the
Company under the Notes and this Agreement pursuant to the Guarantee and
Security Agreement. The Company shall cause its existing and future direct
and indirect Material Subsidiaries organized under the laws of any
jurisdiction other than any state of the United States or the District of
Columbia to jointly and severally guarantee the obligations of the Company
under the Notes and this Agreement pursuant to the Guarantee Agreement. The
Company shall cause such guarantees to be executed, delivered and approved
by all of such foreign Material Subsidiaries in existence on the date
hereof concurrently with the execution and delivery of this Agreement.
Without limiting the generality of the foregoing, to the extent that the
Company establishes or acquires a direct or indirect Subsidiary that
constitutes a Material Subsidiary, or if an existing Non-Significant
Subsidiary shall become a Material Subsidiary, and such Subsidiary is
organized under the laws of any jurisdiction other than any state of the
United States or the District of Columbia, the Company shall cause such
Subsidiary to jointly and severally guarantee the obligations of the
Company under the Notes and this Agreement pursuant to the Guarantee
Agreement.
6.11. Pledges of Intercompany Notes. The Company shall, and shall
cause each of its Material Subsidiaries to, promptly pledge all
Intercompany Notes (and all security agreements and documents relating
thereto), whether in existence or created after the date hereof, to the
Collateral Agent as Collateral under the Collateral Documentation. To the
extent that, on or after the date hereof, the Company makes any cash
investment in any of its Subsidiaries (in accordance with Section 6.13)
which are organized under the laws of and doing business in the United
States, such investment shall be required to be made in the form of a loan,
which shall be evidenced by an Intercompany Note and all such Intercompany
Notes shall be pledged by the Company to the Collateral Agent as Collateral
under the Collateral Documentation.
6.12. No Speculative Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in any transaction
involving commodity options, futures contracts or similar transactions,
except solely to hedge against fluctuations in the prices of commodities
owned or purchased by it and except for interest swaps, currency xxxxxx,
caps or collars.
6.13. Restricted Investments. The Company shall not, directly or
indirectly, make or cause or permit, or permit any of its Subsidiaries to,
make or cause or permit, (i) any direct or indirect advance to, (ii) any
loan or other extension of credit to, (iii) any guarantee of any
Indebtedness of, (iv) any capital contribution to, (v) any purchase or
other acquisition of any Equity Interests in, (vi) any purchase or other
acquisition of assets (other than in the ordinary course of business) from
or (vii) any merger with, any Person, including, without limitation, any of
the Company's Subsidiaries, in each case other than Permitted Investments.
6.14. Operating Profit. The Company's Operating Profit (as
defined below) shall be greater than the amounts listed in the following
chart for the applicable period. "Operating Profit" shall mean, for any
given period, Net Income for such period (exclusive of (A) all amounts in
respect of any extraordinary gains or losses, (B) gains and losses arising
from the sale or other disposition of material assets not in the ordinary
course of business, (C) earnings and losses from discontinued operations
and (D) fees and expenses incurred by the Company (including reasonable
attorneys' and accountants' fees and expenses) in connection with the offer
and sale of the Notes and the Exchange Offer) plus, to the extent reflected
as a charge in the statement of Consolidated Net Income for such period,
the sum of: (i) all taxes measured by income (whether paid or deferred),
(ii) interest expense (net of interest income), (iii) non-cash charges
related to the Class Action Settlement Agreement, and (iv) restructuring
charges disclosed in the 1997 Annual Report on Form 10-K and the June 30,
1998 Quarterly Report on Form 10-Q.
----------------------------- ------------------------------ -----------------------------
MINIMUM OPERATING PROFIT FOR MINIMUM OPERATING PROFIT
THREE-MONTH PERIOD ENDING ON FOR TWELVE-MONTH PERIOD
DATE DATE INDICATED ENDING ON DATE INDICATED
----------------------------- ------------------------------ -----------------------------
June 30, 1998 $2,500,000 n/a
September 30, 1998 $2,500,000 n/a
December 31, 1998 $2,500,000 n/a
March 30, 1999 $2,500,000 $10,000,000
June 30, 1999 $2,500,000 $10,000,000
September 30, 1999 $3,750,000 $11,250,000
December 31, 1999 $3,750,000 $12,500,000
March 31, 2000 $3,750,000 $13,750,000
June 30, 2000 and the last $3,750,000 $15,000,000
day of each calendar
quarter thereafter
6.15. Tangible Assets. The Company's Consolidated Tangible Assets
shall exceed $50 million on September 30, 1998 and each quarter thereafter.
6.16. Line of Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the businesses in which
the Company and its Subsidiaries, taken as a whole, are engaged on the date
of this Agreement.
6.17. Sale of Assets. The Company shall not, and shall not permit
any of its Subsidiaries to, sell, transfer or otherwise dispose of
("Transfer") any property or assets, unless the property or asset that is
the subject of such Transfer constitutes (i) inventory held for sale, (ii)
marketable securities available for sale, or (iii) real estate, equipment,
fixtures, supplies or materials no longer required in the operation of the
business of the Company or such Subsidiary or that is obsolete, and, in the
case of any Transfer described in clause (i) or (iii), such Transfer is in
the ordinary course of business.
6.18. Indenture Relating to the Notes. Upon the written request
of the Required Holders, the Company, at its expense, shall cause to be
prepared, executed and delivered within 30 days after such request an
indenture (including a new form of note, any necessary related
documentation and, from time to time thereafter, any necessary supplements
thereto) with respect to the Notes, which indenture (and form of note)
shall contain terms and provisions substantially the same as those set
forth in Articles 6, 8 and 9 hereof and such other terms and provisions as
are required under the Trust Indenture Act of 1939 and such other items and
provisions as are customary in indentures relating to publicly traded
senior secured debt securities having a rating comparable to the rating
that the Notes would receive if rated by a nationally recognized rating
agency. In such event, the Company shall also appoint as trustee under such
indenture a national banking association reasonably acceptable to the
Required Holders having its principal offices in New York, New York, and
having capital, surplus, and undivided profits of at least $50,000,000. In
connection with the execution of any such indenture, the Holders shall
exchange all outstanding Notes for new notes in the form contemplated by
such indenture, and upon such exchange such new notes shall be deemed to be
"Notes" for purposes hereof.
6.19. Financial Statements and Information. The Company shall
furnish to each Holder: (a) as soon as practicable and in any event within
45 days after the end of each of the four quarters of each fiscal year and
within 90 days of the end of each fiscal year (i) copies of the quarterly
and annual reports and of the other information, documents, and other
reports which the Company files or is required to file with the SEC
pursuant to the Exchange Act and of any other reports or information which
the Company delivers or makes available to any of its security holders, at
the time of filing such reports with the SEC or of delivery to the
Company's security holders, as the case may be (but in no event later than
the time such filing or delivery is required pursuant to the Exchange Act)
or (ii) as soon as practicable and in any event within 45 days after the
end of each of the four quarters of each fiscal year and within 90 days of
the end of each fiscal year, quarterly reports for the four quarters of
each fiscal year of the Company and annual reports which the Company would
have been required to file under any provision of the Exchange Act if it
had a class of securities listed on a national securities exchange or was
otherwise required to file such reports under the Exchange Act, within
fifteen Business Days of when such report would have been filed under
Section 13 of the Exchange Act, together with copies of a consolidating
balance sheet of the Company and its Subsidiaries as of the end of each
such accounting period and of the related consolidating statements of
income and cash flow for the portion of the fiscal year then ended, all in
reasonable detail and all certified by the principal financial officer of
the Company to present fairly the information contained therein in
accordance with GAAP (and in the case of annual reports, including
financial statements, audited and certified by the Company's independent
public accountants as required under the Exchange Act); (b) within ninety
days after the end of each fiscal year, a written statement by the
Company's independent certified public accountants stating as to the
Company whether in connection with their audit examination, any Default or
Event of Default has come to their attention; (c)(i) within forty-five days
after the end of the four quarters of the Company's fiscal year and within
ninety days after the end of the Company's fiscal year, an Officers'
Certificate setting forth computations in reasonable detail showing, as at
the end of such quarter or fiscal year, as the case may be, the Company's
compliance with Sections 6.6, 6.7, 6.13, 6.14 and 6.15, and (ii) within 45
days after the end of each fiscal quarter, an Officers' Certificate in the
form of Exhibit 6.19 stating that as of the date of such certificate, based
upon such examination or investigation and review of this Agreement, as in
the opinion of such signer is necessary to enable the signer to express an
informed opinion with respect thereto, to the best Knowledge of such
signer, the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Agreement, and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof, and to the best of such signer's Knowledge, no Default or Event of
Default exists or has existed during such period or, if a Default or Event
of Default shall exist or have existed, specifying all such defaults, and
the nature and period of existence thereof, and what action the Company has
taken, is taking or proposes to take with respect thereto; (d) promptly
after becoming aware of (i) the existence of a Default or Event of Default
or any default in any of the Collateral Documentation, or (ii) any default
or event of default under any Indebtedness of the Company or any of its
Subsidiaries, an Officers' Certificate specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take
with respect thereto, or (iii) any litigation or proceeding affecting any
Credit Party in which the amount claimed is in excess of $100,000 and not
covered by insurance or in which injunctive relief is sought which if
obtained would have a Material Adverse Effect, or (iv) any change that has
or is reasonably likely to have a Material Adverse Effect; and (e) such
other information, including financial statements and computations,
relating to the performance of the provisions of this Agreement and the
affairs of the Company and any of its Subsidiaries as each Holder may from
time to time reasonably request. In addition, the Company shall make
available to securities analysts and broker-dealers, upon their reasonable
request, copies of all annual, quarterly and interim reports filed by the
Company with the SEC pursuant to the Exchange Act (including, without
limitation, copies of (i) each financial statement, report, notice or proxy
statement sent by any Credit Party to public securities holders generally,
and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by any Credit Party with the
SEC and of all press releases and other statements made available generally
by any Credit Party to the public concerning developments that are
Material). The Company shall keep at its principal executive office a true
copy of this Agreement (as at the time in effect), and cause the same to be
available for inspection at said office, during normal business hours and
after reasonable notice to the Company by any Holder.
6.20. Inspection. (a) Any Holder or Holders holding in excess of
25% of the aggregate principal amount of Notes issued and outstanding shall
have the right to visit and inspect any of the properties of any Credit
Party, to examine the books of account and records of any Credit Party, to
be provided with copies and extracts therefrom, to discuss the affairs,
finances and accounts of any Credit Party with, and to be advised as to the
same by, its and their executive officers, and its and their independent
public accountants (and the Company authorizes such independent public
accountants to discuss the Company's or any Subsidiaries' financial matters
with such Holder and its representatives, regardless of whether any
representative of the Company is present, but provided that an officer of
the Company will be afforded a reasonable opportunity to be present at any
such discussion), all at such reasonable times and intervals during normal
business hours, and upon reasonable prior notice to the Company as such
Holder and the Company shall agree and at the expense of the Company
(including the costs incurred by such Holder in hiring accountants to
conduct an audit). The Company will likewise afford each Holder the
opportunity to obtain any information necessary to verify the accuracy of
any of the representations and warranties made by the Company hereunder or
in any Transaction Document or compliance by the Company and its
Subsidiaries with any covenant made hereunder or in any Transaction
Document.
(b) By receipt of information under this Section 6.20, such
Holder agrees that all information (other than such information that is
publicly available or any other information that is in such Holder's
possession prior to any disclosure under this Section 6.20) provided to it
pursuant to this Section 6.20 shall be used by such Holder solely in
connection with its investment in the Company and for no other purpose, and
such Holder shall treat such information as confidential in accordance with
such reasonable internal procedures as it applies generally to information
of this kind and shall not disclose such information to any Person, except
(i) to any governmental entity having jurisdiction over such Holder in the
ordinary course of business to the extent so required by law, (ii) to any
other Person pursuant to subpoena or other process, whether legal,
administrative or other (and such Holder hereby agrees to provide the
Company with prompt notice of any such subpoena or other process and
provide the Company with an opportunity to contest such disclosure), (iii)
to such Holder's officers, directors, trustees, employees, partners, legal
counsel, financial advisors or auditors or accountants who need access to
such information in connection with their duties, (iv) to any transferee or
prospective purchaser of a Note or interest therein who agrees to be bound
by this paragraph, or (v) to the extent necessary in the enforcement of
such Holder's rights hereunder and under the Notes during the continuance
of a Default or Event of Default.
6.21. Change-in-Control Purchase Offer. (a) The Company shall
make an offer, in accordance with the procedures set forth in Section
6.21(b) to acquire the Notes for cash at 101% of the principal amount
thereof (plus accrued and unpaid interest to the date of repurchase) in the
event of (i) a Change of Control, a merger, consolidation or other
combination involving the Company, or (ii) a Change of Control of a
Subsidiary of the Company or a group of Subsidiaries of the Company occurs
and such Subsidiary or group of Subsidiaries, individually or in the
aggregate, together with their consolidated Subsidiaries and all other
Subsidiaries previously subject to a Change of Control, if any, represent
more than 50% of the revenues or net assets of the Company and its
Subsidiaries on a consolidated basis as of the last date of the immediately
preceding fiscal quarter of the Company or for the twelve month period then
ended.
(b) Notice of any redemption of Notes pursuant to this Section
6.21 shall be mailed at least 30 but not more than 60 days prior to the
date fixed for redemption to each Holder. In order to facilitate the
redemption of Notes, the board of directors of the Company may fix a record
date for the determination of Notes to be redeemed which shall be a date at
least 20 days following the date of the notice. Promptly following a Change
in Control (but in no event more than five Business Days thereafter), the
Company shall mail to each Holder, notice of such Change in Control, which
notice shall set forth such Holder's right to require the Company to redeem
any or all Notes held by it. The Company shall thereafter, during a period
of 90 days from the date of such notice redeem any Notes, in whole or in
part, at the option of the such Holder, upon at least five days' written
notice to the Company by such Holder specifying (i) the principal amount of
Notes to be redeemed and (ii) the redemption date. On the date of any
redemption being made pursuant to this Section 6.21 which is specified in a
notice given pursuant to this Section 6.21, the Company shall wire transfer
to such Holder the amount determined in accordance with Section 6.21(a) for
the principal amount of Notes so redeemed, together with an amount equal to
all accrued and unpaid interest thereon to the date of redemption.
6.22. Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Subsidiary to, enter into any Sale-and-Leaseback
Transaction.
6.23. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply with all Laws, ordinances or
governmental rules or regulations to which each of them is subject, and
shall obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such Laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. The Company shall timely file all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act and such statements, reports and other documents shall be
in compliance in all material respects with the requirements of its
respective report form and shall not on the date of filing contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
6.24. Supplemental Disclosure. From time to time as may be
requested by the Required Holders, the Company shall supplement each
Schedule hereto, or any representation herein or in any other Transaction
Document, with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and,
in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show changes made therein); provided that no such
supplement to any such Schedule or representation shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters
disclosed therein.
6.25. Proceeds. The proceeds of the sale of the Notes shall be
used for the purposes set forth in Schedule 6.25. No part of the proceeds
from the sale of the Notes hereunder shall be used, directly or indirectly,
for the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System, or for any purpose which
violates or would be inconsistent with the provisions of Regulations T, U
or X of said Board.
6.26. Insurance; Damage to or Destruction of Collateral. The
Company shall, and shall cause each of its Subsidiaries to, at its sole
cost and expense, maintain the policies of insurance described on Schedule
2.7(b) in form and with insurers reasonably acceptable to the Required
Holders. If the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, the Collateral
Agent may (at the direction of the Required Holders) at any time or times
after ten days written notice to the Company obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Required Holders deem advisable. Neither the
Collateral Agent nor the Required Holders shall have any obligation to
obtain insurance for the Company or any of its Subsidiaries or pay any
premiums therefor. By doing so, the Collateral Agent and the Holders shall
not be deemed to have waived any Default or Event of Default arising from
any Credit Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including reasonable attorneys' fees,
court costs and other charges related thereto, shall be payable on demand
by the Company to the Collateral Agent and shall be secured by the
Collateral. Following the Closing, the Company shall use its reasonable
best efforts to obtain directors' and officers' insurance in amounts, scope
and coverage customarily obtained by comparable businesses.
6.27. Amendment of Litigation Documents and XxXxxx Documents.
Without the prior written consent of the Required Holders, the Company
shall not, and shall not permit any other Credit Party to, amend or
otherwise modify, or waive or relinquish any rights under, or fail to
enforce any rights under, (i) the Standstill Agreement, (ii) any document
or agreement relating to the full discharge of all Indebtedness to
International Integrated Industries, (iii) the Rights Plan (except that the
Company may amend the Rights Plan in accordance with Section 27 thereof (as
amended by Amendment No. 2 thereto, dated as of July 2, 1997)), (iv) the
Class Action Settlement Agreement, (v) the 3M Agreement, (vi) the June 2,
1998 Court Order, (vii) the Escrow Agreement, (viii) the Custody Agreement
or (vii) any instrument, agreement or other document executed or delivered
in connection therewith.
6.28. Exchange Offer. The Company shall consummate the Exchange
Offer pursuant to the Exchange Offer Documents.
6.29. State Takeover Statutes. Prior to the consummation of the
Reincorporation Merger, the Board of Directors of the Company shall, and
shall cause the board of directors of the Delaware Subsidiary into which
the Company will merge, to take all action required to (i) determine that
Appaloosa and its affiliates are not (individually or in groups) an
"interested shareholder" within the meaning of Section 607.0901 of the
Florida 1989 Business Corporation Act, and (ii) approve the Reincorporation
Merger (pursuant to which the Company would merge with and into a
wholly-owned Delaware Subsidiary of the Company for the purpose of changing
the Company's state of incorporation from Florida to Delaware). In
addition, the Company shall, and shall cause each of its Subsidiaries to,
take any other board action necessary to render inapplicable to Appaloosa
and its affiliates the restriction on certain business combinations (at the
time of the Reincorporation Merger or thereafter) pursuant to the
provisions of Section 203(a) of the Delaware General Corporation Law.
7. Events of Default and Remedies.
------------------------------
7.1. Events of Default and Remedies. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative
or governmental body):
(a) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 5
days; or
(b) default in the payment of any principal of any Note when it
becomes due and payable; or
(c) default in the performance of any agreement or covenant in,
or provision of, this Agreement, the Notes, or the other documents executed
and delivered in connection with this Agreement (including any Transaction
Document) and to which the Company or any of its Subsidiaries is a party
(other than a covenant or a default in whose performance is elsewhere in
this Section specifically dealt with), which default continues for 5 days
following the Company's receipt of notice (or, if the Company fails to
provide notice pursuant to Section 6.19(d), such default shall be
immediate), or any representation or warranty made in any document executed
and delivered in connection with this Agreement (including any Transaction
Document) was false in any material respect on the date as of which made or
deemed made; or
(d) a default under any mortgage, indenture, instrument or
agreement other than under clause (c) above under which there may be issued
or by which there may be secured or evidenced any Indebtedness of any
Credit Party, whether such Indebtedness now exists or shall be created
hereafter, if the holder or holders of at least $500,000 in principal
amount of such Indebtedness cause such $500,000 (or more) of principal
amount of Indebtedness to become due and payable prior to its stated
maturity; or
(e) other than the Class Action Settlement Agreement, a final
judgment or judgments for the payment of money are entered by a court or
courts of competent jurisdiction against any Credit Party and such remains
undischarged for a period (during which execution shall not effectively be
stayed) of 90 days, provided that the aggregate of all such judgments that
are not covered by insurance under which the Company is a beneficiary
exceeds $1,000,000, or the Required Holders shall determine that any
regulatory body having jurisdiction over any Credit Party including,
without limitation, the SEC, shall have taken or proposed to take any
action that the Required Holders believe would have a Material Adverse
Effect or that adversely affects the Holders' first priority security
interest in the Collateral; or
(f) any Credit Party (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by any Credit Party, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of any Credit Party, or
any such petition shall be filed against any Credit Party and such petition
shall not be dismissed within 60 days; or
(h) a court of competent jurisdiction enters a final judgment
holding any of the documents delivered in connection with this Agreement
(including any Transaction Document) to be invalid or unenforceable and
such judgment remains unstayed and in effect for a period of 20 consecutive
days; or any Credit Party shall assert, in any pleading filed in such a
court, that any of the documents delivered in connection with this
Agreement are invalid or unenforceable; or
(i) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with its
terms (or any Credit Party (or the Trustee in the case of the Intercreditor
Agreement) shall challenge the enforceability of any Transaction Document
or shall assert in writing, or engage in any action or inaction based on
any such assertion, that any provision of any of the Transaction Documents
has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms (other than because such document has not yet
been entered into)), or any security interest created under any Transaction
Document (other than the Exchange Offer Documents) shall cease to be a
valid and perfected first priority security interest or Lien in any of the
Collateral purported to be covered thereby;
(j) (A) any Credit Party shall fail to comply with the terms of,
or violate or fail to enforce its rights under (i) the Class Action
Settlement Agreement, (ii) the 3M Agreement, (iii) the June 2, 1998 Court
Order, (iv) the Standstill Agreement, (v) the agreements relating to the
full discharge of all Indebtedness to International Integrated Industries
or (vi) the Class Action Settlement Agreement is not approved by the United
States District Court for the Northern District of Alabama prior to
February 1, 1998 (or any such approval is reversed) or (B) either of the
Class Action Settlement Agreement or the 3M Agreement shall terminate in
accordance with its terms or any other party thereto shall assert in
writing that any such agreement has terminated;
(k) any Credit Party shall default in the payment of any amounts
in excess of $25,000 due pursuant to the terms of any document executed and
delivered by the Company or such Subsidiary in connection with this
Agreement (other than payments elsewhere in this Section specifically dealt
with); or
(l) the Company shall fail to consummate the Exchange Offer by
November 16, 1998 pursuant to the Exchange Offer Documents.
7.2. Acceleration of Maturity. If any Event of Default shall have
occurred and be continuing, the Required Holders may, by notice to the
Company, declare the entire unpaid principal amount of the Notes, plus (x)
all accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law) to be immediately due and payable, and upon
such declaration all of such amount shall be immediately due and payable,
in each and every case without presentment, demand, protest or further
notice, all of which are hereby waived, anything in the Notes or in this
Agreement to the contrary notwithstanding; provided that if an Event of
Default under clause (f), (g), (h), (i) or (j) of Section 7.1 shall have
occurred, the entire unpaid principal amount of the Notes, plus (x) all
accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law), shall immediately become due and payable,
without any declaration and without presentment, demand, protest or further
notice, all of which are hereby waived, anything in the Notes or this
Agreement to the contrary notwithstanding; and provided, further, that the
Company acknowledges, and the parties hereto agree, that each Holder of a
Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and
that the provision for payment of a Make-Whole Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event
of Default, is intended to provide compensation for the deprivation of such
right under such circumstances.
7.3. Other Remedies. If any Event of Default shall have occurred
and be continuing, from and including the date of such Event of Default to
but not including the date such Event of Default is cured or waived, each
Holder may enforce its rights by suit in equity, by action at law, or by
any other appropriate proceedings, whether for the specific performance (to
the extent permitted by Law) of any covenant or agreement contained in this
Agreement or the Notes or in aid of the exercise of any power granted in
this Agreement or the Notes, and each Holder may enforce the payment of any
Note held by such Holder and any of its other legal or equitable rights.
7.4. Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such
right or otherwise prejudice any Holder's rights, powers and remedies. If
the Company fails to pay, when due, the principal or the premium, if any,
or the interest on any Note, the Company will pay to such Holder, to the
extent permitted by Law, on demand, all costs and expenses incurred by such
Holder in the collection of any amount due in respect of any Note
hereunder, including reasonable legal fees incurred by such Holder in
enforcing its rights hereunder.
7.5. Annulment of Acceleration. If a declaration is made in
accordance with Section 7.2, then and in every such case, the Required
Holders may, by an instrument delivered to the Company, annul such
declaration and the consequences thereof.
7.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under
this Agreement is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now and hereafter existing under
applicable law. Every right and remedy given by this Agreement or by
applicable Law to each Purchaser or the Collateral Agent or the Holders may
be exercised from time to time and as often as may be deemed expedient by
such Purchaser or the Collateral Agent or the Holders.
8. Prepayment of the Notes.
-----------------------
8.1. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all,
or from time to time any part of, the Notes, in an amount not less than
$2,000,000 in the case of a partial prepayment, at 100% of the principal
amount so prepaid, together with interest on such principal amount accrued
to the date of such prepayment, plus the Make-Whole Amount determined for
the prepayment date with respect to such principal amount. The Company will
give each Holder written notice of each optional prepayment under this
Section 8.1 not less than 30 days and not more than 90 days prior to the
date fixed for such prepayment (the "Prepayment Date"). Each such notice
shall specify the Prepayment Date, the aggregate principal amount of the
Notes to be prepaid on the Prepayment Date, the amount of each Note held by
such Holder to be prepaid (determined in accordance with Section 8.2), and
the interest to be paid on the Prepayment Date with respect to such
principal amount being prepaid, and shall be accompanied by a certificate
of an executive officer of the Company as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of
such notice were the date of the prepayment), setting forth the details of
such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder a certificate of an executive officer of the
Company specifying the calculation of such Make-Whole Amount as of the
specified Prepayment Date. Notwithstanding the foregoing, at any time prior
to the date of any such prepayment, any Holders shall be entitled to object
to such computation of the Make-Whole Amount by delivering a notice of
objection to the Company setting forth such holders' computation of the
Make-Whole Amount. If any Holders shall deliver such a notice of objection
to the Company, the Make-Whole Amount specified in such notice shall be
binding, absent manifest error, on the holders and the Company.
8.2. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.1, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
8.3. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Article 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date and the applicable Make-Whole Amount, if any. From and after such
date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any,
as aforesaid, interest on such principal amount shall cease to accrue. Any
Note paid or prepaid in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
8.4. Purchase of Notes. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and
the Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.
8.5. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of all remaining payments of interest and principal with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.1 or has become or
is declared to be immediately due and payable pursuant to Section 7.2, as
the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all remaining payments of
interest and principal with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as
of 10:00 A.M. (New York City time) on the third Business Day preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page USD" on the Bloomberg Financial Markets Service Screen
(or such other display as may replace Page USD on the Bloomberg Financial
Markets Service Screen) for actively traded U.S. Treasury securities issued
on the Settlement Date and maturing on September 30, 2000, or (ii) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as
of the third Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded U.S. Treasury
securities. Such implied yield will be determined, if necessary, by (A)
converting U.S. Treasury xxxx quotations to bond-equivalent yields in
accordance with accepted financial practice and (B) interpolating linearly
between (1) the actively traded U.S. Treasury security with the duration
closest to and greater than the period between the Settlement Date and
September 30, 2000 and (2) the actively traded U.S. Treasury security with
the duration closest to and less than the period between the Settlement
Date and September 30, 2000.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant
to Section 8.1 or has become or is declared to be immediately due and
payable pursuant to Section 7.2, as the context requires.
9. The Collateral Agent.
--------------------
9.1 Appointment. Each Purchaser for itself and for future Holders
hereby irrevocably designates and appoints Appaloosa Management, L.P. as
the Collateral Agent under this Agreement, and irrevocably authorizes the
Collateral Agent to take such action on such Purchaser's behalf and any
future Holder's behalf and to exercise such powers and perform such duties
as are expressly delegated to the Collateral Agent by the terms of the
Transaction Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
in this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser or future Holder, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any of the Transaction Documents or otherwise
exist against the Collateral Agent.
9.2 Delegation of Duties. The Collateral Agent may execute any of
its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in Section 9.3.
9.3 Exculpatory Provisions. Neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or Subsidiaries shall be (i) liable for any action taken or
omitted to be taken by any of them under or in connection with this
Agreement or any of the Transaction Documents, or (ii) responsible in any
manner to any of the Purchasers or future Holders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Transaction Documents or in any
certificate, report, statement or other document referred to or provided
for in, or received by the Collateral Agent under or in connection with,
the Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or
for any failure of any Credit Party to perform its obligation thereunder.
The Collateral Agent shall not be under any obligation to any Purchaser or
future Holder to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, any
Transaction Document, or to inspect the properties, books or records of any
Credit Party.
9.4 Reliance by the Collateral Agent. The Collateral Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without limitation,
counsel to the Company), independent accountants and other experts selected
by the Collateral Agent. The Collateral Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with
the Collateral Agent. The Collateral Agent shall be fully justified in
failing or refusing to take any action under any Transaction Document
unless it shall first receive such advice or concurrence of the Required
Holders (or, where unanimous consent of the Holders is expressly required
hereunder or thereunder, such Holders) as it deems appropriate or it shall
first be indemnified to its satisfaction by the Holders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, under any
Transaction Document in accordance with a request of the Required Holders,
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Purchasers and all future Holders of the
Notes.
9.5 Notice of Default. The Collateral Agent shall not be deemed
to have knowledge or notice of the occurrence of any default or Event of
Default hereunder unless the Collateral Agent has received written notice
from a Holder or the Company referring to this Agreement, describing such
default or Event of Default and stating that such notice is a "notice of
default". In the event that the Collateral Agent receives such a notice,
the Collateral Agent shall promptly give notice thereof to all Holders. The
Collateral Agent shall take such action with respect to such default or
Event of Default as shall be directed by the Required Holders; provided
that (i) the Collateral Agent shall not be required to take any action that
exposes the Collateral Agent to liability or that is contrary to this
Agreement or applicable law and (ii) unless and until the Collateral Agent
shall have received such directions, the Collateral Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such default or Event or Default as it shall deem advisable
in the best interests of the Holders.
9.6 Non-Reliance on Collateral Agent and Other Purchasers. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representation or warranties to it
and that no act by the Collateral Agent hereafter taken, including any
review of the affairs of the Credit Parties, shall be deemed to constitute
any representation or warranty by the Collateral Agent to any such
Purchaser or Holder. Each Purchaser for itself and all future Holders of
the Notes acquired by such Purchaser represents to the Collateral Agent
that it has, independently and without reliance upon the Collateral Agent
or any other Holder, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operation, property, financial and other condition and
creditworthiness of the Credit Parties and made its own decision to make
its loan hereunder and to enter into this Agreement. Each Purchaser also
represents for itself and all future Holders of the Notes acquired by such
Purchaser that it will, independently and without reliance upon the
Collateral Agent or any other Holder, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under the Transaction Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Credit
Parties. Except for notices, reports and other documents expressly required
to be furnished to the Holders by the Collateral Agent hereunder, the
Collateral Agent shall not have any duty or responsibility to provide any
Holder with any credit or other information concerning the business,
financial condition, assets, liabilities, net assets, properties, results
of operations, value, prospects and other condition or creditworthiness of
the Credit Parties which may come into the possession of the Collateral
Agent or any of its officers, directors, employees, agents,
attorneys-in-fact, Affiliates or any of its Subsidiaries.
9.7 Indemnification. The Purchasers and the future Holders
jointly and severally agree to indemnify the Collateral Agent in its
capacity as such (to the extent not reimbursed by the Credit Parties and
without limiting the obligation of the Credit Parties to do so), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of the
Transaction Documents or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or
omitted by the Collateral Agent under or in connection with any of the
foregoing; provided that no Purchaser or future Holder shall be liable for
the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Collateral Agent's gross negligence
or willful misconduct. The agreements contained in this Section 9.7 shall
survive the payment of the Notes and all other amounts payable hereunder.
9.8 Collateral Agent in its Individual Capacity. The Collateral
Agent and its Affiliates and Subsidiaries may make loans to, accept
deposits from and generally engage in any kind of business with the Credit
Parties as though the Collateral Agent were not the Collateral Agent
hereunder. With respect to its loans made or renewed by it or any Note
issued to it, the Collateral Agent shall have the same rights and powers,
duties and liabilities under the Transaction Documents as any Holder and
may exercise the same as though it were not the Collateral Agent and the
terms "Purchaser", "Purchasers", "Holder" and "Holders" shall include the
Collateral Agent in its individual capacities.
9.9 Successor Collateral Agent. The Collateral Agent may resign
as Collateral Agent upon 30 days' notice to the Company (and the Company
shall promptly notify the Holders). If the Collateral Agent shall resign as
Collateral Agent under the Transaction Documents, then the Required Holders
shall appoint a successor agent for the Holders which successor agent shall
be approved by the Company (which approval shall not be unreasonably
withheld) whereupon such successor agent shall succeed to the rights,
powers and duties of the Collateral Agent and the term "Collateral Agent"
shall mean such successor agent effective upon its appointment, and the
former Collateral Agent's rights, powers and duties as Collateral Agent
shall be terminated, without any other or further act or deed on the part
of such former Collateral Agent or any of the parties to this Agreement or
any Holders of the Notes. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Article 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Collateral Agent under the Transaction Documents.
10. Interpretation.
--------------
10.1 Definitions.
-----------
"Additional Warrants" shall have the meaning ascribed thereto in
the Recitals.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of any Purchaser or Holder or any limited partners of a
limited partner of any Purchaser or Holder.
"Appaloosa" shall mean Appaloosa Investment Limited Partnership I.
"Beneficially Own" with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
"Breast Implant Litigation" shall have the meaning ascribed
thereto in the Recitals.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Called Principal" shall have the meaning ascribed to such term
in Section 8.5.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Change in Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), other than Appaloosa or its Affiliates, of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the
combined voting power of the then outstanding Voting Securities
of the Company, but excluding, for this purpose, any such
acquisition by (i) the Company or any of its Subsidiaries, (ii)
any employee benefit plan (or related trust) of the Company or
any of its Subsidiaries, or (iii) any corporation with respect to
which, following such acquisition, 50% or more of the combined
voting power of the then outstanding Voting Securities of such
corporation is then beneficially owned, directly or indirectly,
by individuals and entities who were the beneficial owners of
Voting Securities of the Company immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the combined
voting power of the then outstanding Voting Securities of the
Company; or
(b) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the Persons
who were the respective Beneficial Owners of the Voting
Securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 35% of the combined voting
power of the then outstanding Voting Securities of the
corporation resulting from such reorganization, merger or
consolidation; or
(c) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board; or
(d) the sale, lease or other disposition of all or a
substantial part of the Company's assets in one transaction or a
series of related transactions.
"Class Action Settlement Agreement" shall have the meaning
ascribed thereto in the Recitals.
"Closing" shall have the meaning ascribed thereto in Section 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" means all real and personal property and interests
in real and personal property including, without limitation, Intellectual
Property, rights under leases and royalty rights and agreements, now owned
or hereafter acquired by the Company or its Material Subsidiaries in or
upon which a Lien is granted or made under the Collateral Documentation.
"Collateral Agent" shall mean Appaloosa Management, L.P.
"Collateral Documentation" means the Guarantee and Security
Agreements, the Guarantee Agreements, the Security Agreement, the Financing
Statements, the Intercompany Notes and the endorsements thereof to the
Collateral Agent (for the benefit of the Holders) or to the Holders, and
all other deeds of trust, assignments, endorsements, pledged stock,
collateral assignments and other instruments, documents, agreements or
conveyances at any time creating or evidencing Liens or assigning Liens to
the Collateral Agent (for the benefit of the Holders) or to the Holders, to
secure the obligations of the Company or any of its Subsidiaries hereunder
and under the Notes and the Registration Rights Agreement.
"Common Stock" shall mean the Common Stock of the Company, par
value $0.01 per share.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Consolidated Tangible Assets" shall mean, as at any date for any
Person, the sum for such Person and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following:
(a) the book value of all assets of the Company as reflected on
its most recent balance sheet, minus
(b) the sum of the following: the book value of all assets which
should be classified as intangibles, including goodwill, minority
interests, research and development costs, trademarks, trade names,
copyrights, patents and franchises, unamortized debt discount and expense,
all reserves and any write-up in the book value of assets resulting from a
revaluation of such assets subsequent to December 31, 1997.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Copyrights" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b)
all renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present or future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to xxx for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Credit Party" shall mean each of the Company and each of its
Subsidiaries.
"Delaware By-Laws" shall mean the by-laws, to be used by the
Company after the Reincorporation Merger, in the form included in the Proxy
Statement.
"Delaware Charter" shall mean the certificate of incorporation,
to be used by the Company after the Reincorporation Merger, in the form
included in the Proxy Statement.
"Discounted Value" shall have the meaning ascribed to such term
in Section 8.5.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or contract between any Credit Party or any ERISA Affiliate and any
employee pursuant to which any Credit Party or any ERISA Affiliate has or
may have any liability contingent or otherwise.
"Environmental Laws" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"Equity Interests" means any Capital Stock, partnership interest,
joint venture interest or other equity interest or warrants, options or
other rights to acquire any Capital Stock, partnership interest, joint
venture interest or other equity interest.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member
of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the
Company under Section 414(o) of the Code, or is under "common control" with
the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Escrow Agent" shall have the meaning ascribed thereto in Section
1.4.
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Exchange Notes" shall have the meaning ascribed thereto in the
Recitals.
"Exchange Offer" shall have the meaning ascribed thereto in the
Recitals.
"Exchange Offer Documents" shall mean the Exchange Notes, the
Exchange Warrants, the Additional Warrants, the Subordinated Indenture, the
Securities Exchange Agreement, the Exchange Offer Registration Rights
Agreement, the Subordinated Guarantee and Security Agreement, the
Subordinated Security Agreement, the Subordinated Guarantee and the
Exchange Offer Intercreditor Agreement.
"Exchange Offer Intercreditor Agreement" shall mean the
agreement, dated as of the date hereof, between the Collateral Agent and
the Trustee for the Exchange Notes under the Subordinated Indenture, in the
form of Exhibit 10.1A.
"Exchange Offer Registration Rights Agreement" shall mean the
agreement to be entered into between the Trustee and the holders of the
Exchange Notes in the form of Exhibit 10.1B.
"Exchange Warrants" shall have the meaning ascribed thereto in
the Recitals.
"Financing Statements" means Form UCC-1 financing statements to
be filed in all jurisdictions necessary or desirable in order to perfect
the Holders' security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holders and filings to be made
in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other obligation or
liability or any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such obligation, liability or dividend.
"Guarantee Agreement" shall mean the agreement, dated as of the
date hereof, made by the Company's foreign Material Subsidiaries in favor
of the Holders providing for Guarantees from such Material Subsidiaries.
"Guarantee and Security Agreement" shall mean the agreement,
dated as of the date hereof, between the Collateral Agent and the Company's
domestic Material Subsidiaries, providing for a first priority security
interest in the domestic Material Subsidiaries' Collateral and Guarantees
from such Material Subsidiaries.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose
name a Note is registered in the Note Register at such time.
"Incumbent Board" shall mean the individuals who, immediately
after the Closing, constitute the board of directors of the Company;
provided, however, that any individual becoming a director subsequent to
the Closing whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed to be a
member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 11.1.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereon, and all Patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof,
(b) all Trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(c) all copyrightable works, all Copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and
all applications, registrations and renewals in connection therewith, (e)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses or agreements in connection
with the foregoing.
"Intercompany Notes" means the notes from the Subsidiaries or
Affiliates of the Company in favor of the Company in the form of Exhibit
10.1C, as the same may be amended, modified or supplemented from time to
time in accordance with their terms, and all other promissory notes or
other instruments evidencing Indebtedness of Affiliates or Subsidiaries of
the Company to the Company between the Company and its Affiliates.
"Intercreditor Agreement" shall mean the agreement, dated as of
the date hereof, between the Collateral Agent and the Trustee for the Old
Notes under the Indenture, dated as of January 2, 1996, between the Trustee
and the Company (as amended).
"June 2, 1998 Court Order" shall mean the June 2, 1998
preliminary court order approving the Class Action Settlement Agreement and
the 3M Agreement issued by the United States District Court for the
Northern District of Alabama.
"Knowledge", with respect to the Company, shall mean the actual
knowledge of each member of the board of directors of the Company and each
officer of the Company, and the knowledge that any of the foregoing persons
would have after due and reasonable inquiry and investigation.
"Law" shall include any foreign, federal, state, or local law,
statute, ordinance, rule, regulation, order, judgment or decree.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Loan" shall have the meaning ascribed thereto in the Recitals.
"Loan Warrants" shall have the meaning ascribed thereto in the
Recitals.
"Make-Whole Amount" shall have the meaning ascribed thereto in
Section 8.5.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, liabilities or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the property, business, prospects (including, without limitation, the
prospects for the settlement of the Breast Implant Litigation), operations,
earnings, assets, liabilities or the condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, whether or not in the
ordinary course of business, (b) the ability of any Credit Party to perform
its obligations under any of the Transaction Documents to which it is a
party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
"Material Subsidiaries" at any time, shall mean any Subsidiary of
the Company, other than any Non-Significant Subsidiary of the Company.
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with
GAAP on a consolidated basis as reflected in the financial statements
furnished to the Holders in accordance with Section 6.19.
"Non-Significant Subsidiary" at any time, shall mean any
Subsidiary of the Company which at such time has total assets (including
the total assets of any Subsidiaries) that have a fair market value of, or
for which the Company or any of its Subsidiaries shall have paid (including
the assumption of Indebtedness) in connection with the acquisition of
capital stock (or other equity interests) or the total assets of such
Subsidiary, less than $100,000, provided that the total assets of all
Non-Significant Subsidiaries at any time does not exceed 5% of the total
assets of the Company and its Subsidiaries on a consolidated basis.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Officers' Certificate" means a certificate signed by any two
officers of the Company, one of whom must be the Chairman of the Board, the
President, the Chief Executive Officer, the Treasurer or a Vice President
of the Company.
"Old Notes" shall have the meaning ascribed thereto in the
Recitals.
"Operating Profit" shall have the meaning ascribed to it in
Section 6.14.
"Outstanding" or "outstanding" shall mean when used with
reference to the Notes at a particular time, all Notes theretofore issued
as provided in this Agreement, except (i) Notes theretofore reported as
lost, stolen, damaged or destroyed, or surrendered for transfer, exchange
or replacement, in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes therefore canceled by
the Company, except that, for the purpose of determining whether Holders of
the requisite principal amount of Notes have made or concurred in any
waiver, consent, approval, notice or other communication under this
Agreement, Notes registered in the name of, or owned beneficially by, the
Company or any of its Subsidiaries of any thereof, shall not be deemed to
be outstanding.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part of all patents or patent applications
and (c) all rights, now existing or hereafter coming into existence, (i) to
all income, royalties, damages, and other payments (including in respect of
all past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to xxx for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) $25.5 million aggregate principal amount of 6.00%
subordinated notes to be issued pursuant to the Class Action Settlement
Agreement (having the terms set forth therein); (ii) Indebtedness and
obligations under the Notes and the Exchange Notes; (iii) any other
Indebtedness and obligations outstanding on the date hereof and set forth
on Schedule 2.19 hereof; (iv) Indebtedness of a domestic Subsidiary of the
Company to the Company as long as such Subsidiary has executed the
Guarantee and Security Agreement and such Indebtedness is evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral as provided in Section 6.11 or (v) Indebtedness which
refinances any of the Indebtedness specified herein, provided that the
terms of such refinancing Indebtedness shall not have a Material Adverse
Effect (in comparison to the terms of the Indebtedness being refinanced),
such refinancing Indebtedness shall be unsecured and subordinate in right
of payment to the Notes, shall mature at least one year after all of the
Notes have matured and shall have such other terms as are reasonably
acceptable to the Required Holders.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Corporation or Xxxxx'x Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
(d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company or any of its Subsidiaries; and (e) loans or
advances of money by the Company or any Material Subsidiary to the
Company's domestic Subsidiaries that have executed the Guarantee and
Security Agreement as long as such loans or advances are evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral as provided in Section 6.11 hereof.
"Permitted Liens" means (i) Liens existing on the date hereof and
set forth in Schedule 2.19, all of which are subordinate to the Lien of the
Collateral Documentation; (ii) Liens (other than any Lien imposed under
ERISA or any Environmental Laws) for taxes, assessments or charges of any
governmental authority for claims not yet due or which are being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP
and enforcement thereof is stayed; (iii) Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) not voluntarily granted for amounts not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with the provisions of GAAP, and enforcement thereof is stayed; (iv) Liens
(other than any Lien imposed under ERISA), incurred or deposited made in
the ordinary course of business, including without limitation, surety bonds
and appeal bonds, in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions,
charges or encumbrances (whether or not recorded) and other Liens incurred
in the ordinary course of business, which do not secure indebtedness or the
deferred purchase price of any asset and which do not interfere materially
with the ordinary conduct of the business of the Company and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to the Company; (vi) building
restrictions, zoning laws and other statutes, laws, rules, regulations,
ordinances and restrictions, and any amendments thereto, now or at any time
hereafter adopted by any governmental authority having jurisdiction; and
(vii) purchase money liens to the extent such liens secure Permitted
Indebtedness.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Prepayment Date" shall have the meaning ascribed thereto in
Section 8.1.
"Proxy Statement" shall have the meaning ascribed thereto in
Section 2.2.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof between the Purchasers and the
Company with respect to the Notes.
"Reincorporation Merger" shall mean the merger, if consummated,
the primary purpose of which is to effect the reincorporation of the
Company in the state of Delaware as described in the Proxy Statement.
"Reinvestment Yield" shall have the meaning ascribed to such term
in Section 8.5.
"Related Parties" shall mean Affiliates of the Company or any of
its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of directors and officers).
"Releases" shall have the meaning ascribed thereto in the
Recitals.
"Required Holders" means, at any time, the holders of at least
51% in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 6.7.
"Rights Plan" shall mean the plan (as amended) adopted by the
Company's board of directors on June 10, 1997.
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any of its
Subsidiaries shall sell or transfer to any Person (other than the Company
or a Subsidiary of the Company) any property, whether now owned or
hereafter acquired, and, as part of the same transaction or series of
transactions, the Company or any of its Subsidiaries shall rent or lease as
lessee (other than pursuant to a Capitalized Lease), or similarly acquire
the right to possession or use of, such property or one or more properties
which it intends to use for the same purpose or purposes as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
"Secured Obligations" shall mean any and all obligations of any
Credit Party at any time and from time to time for the performance of its
agreements, covenants and undertakings under or in respect of the
Transaction Documents to which it is a party.
"Securities Exchange Agreement" shall mean the agreement to be
entered into by the Company and the securityholders parties thereto in the
form of Exhibit 10.1D.
"Security Agreement" shall mean the agreement, dated as of the
date hereof, between the Collateral Agent and the Company, providing for a
first priority security interest in the Collateral.
"Standstill Agreement" shall mean the agreement, dated July 8,
1998, between the Company and Xx. Xxxxxx X. XxXxxx restricting Xx. XxXxxx'x
ability to vote his Common Stock.
"Stated Maturity" when used with respect to any security or any
installment of interest thereon, means the date specified in such security
as the fixed date on which the principal of such security or such
installment of interest is due and payable.
"Subordinated Guarantee Agreement" shall mean the guarantee to be
made by the Company's foreign Material Subsidiaries in favor of the holders
of the Exchange Notes in the form of Exhibit 10.1E.
"Subordinated Guarantee and Security Agreement" shall mean the
agreement to be entered into by the Company's domestic Material
Subsidiaries and the Trustee in the form of Exhibit 10.1F.
"Subordinated Indenture" shall mean the agreement to be entered
into between the Company and the Trustee in the form of Exhibit 10.1G.
"Subordinated Security Agreement" shall mean the agreement to be
entered into by the Company and the Trustee in the form of Exhibit 10.1H
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including without limitation a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions) or (iii) any other Person required to
be consolidated with such Person in accordance with generally accepted
accounting principles. For purposes of this definition (and for the
determination of whether or not a Subsidiary is a wholly-owned Subsidiary
of a Person), any directors' qualifying shares or investment by foreign
nationals mandated by applicable law shall be disregarded in determining
the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Authority and, including, without limitation,
any Taxes of another person owing under a contract, as transferee or
successor, under Treas. Reg. ss. 1.1502-6 or analogous state, local or
foreign law, or otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"3M" shall mean the Minnesota Mining & Manufacturing Company.
"3M Agreement" shall have the meaning ascribed thereto in the
Recitals.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service xxxx
registrations and applications for trademark and service xxxx
registrations, (b) all renewals and extensions of any of the foregoing and
(c) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to xxx for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, together, in each case, with the product lines and
goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service xxxx.
"Transaction Documents" shall mean this Agreement, the Notes, the
Registration Rights Agreement, the Security Agreement, the Guarantee and
Security Agreement, the Guarantee Agreement, the Loan Warrants, the
Intercreditor Agreement, the Assignment, dated as of the date hereof, from
the Company to the Collateral Agent, the Letter Agreement, dated as of the
date hereof, between the Company and the Collateral Agent and the Exchange
Offer Documents.
"Transfer" shall have the meaning ascribed thereto in Section
6.17.
"Voting Securities" shall mean at any time shares of any class of
capital stock of the Company (or other corporation) which are then entitled
to vote generally in the election of directors of the Company (or such
other corporation).
"Year 2000 Problem" shall have the meaning ascribed thereto in
Section 2.29.
10.2. Accounting Principles. The character or amount of any
asset, liability, capital account or reserve and of any item of income or
expense required to be determined pursuant to this Agreement, and any
consolidation or other accounting computation required to be made pursuant
to this Agreement, and the construction of any definition in this Agreement
containing a financial term, shall be determined or made, as the case may
be, in accordance with generally accepted accounting principles, to the
extent applicable, unless such principles are inconsistent with the express
requirements of this Agreement.
11. Miscellaneous.
-------------
11.1. Payments; Indemnity. (a) The Company agrees that, so long
any Notes shall remain outstanding, it will make all interest, principal
and other payments hereunder and under the Notes in immediately available
funds by wire transfer on the date due in such manner as each Holder may
reasonably request in writing. Anything in this Agreement or the Notes to
the contrary notwithstanding, any payment of principal of or interest on
any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day. If the date for payment is extended to
the next succeeding Business Day by reason of the preceding sentence, the
period of such extension will be included in the computation of the
interest payable on such next succeeding Business Day.
(b) Each Credit Party shall jointly and severally indemnify and
hold harmless each Purchaser, each Holder and each of their respective
Affiliates, and each such Person's respective officers, directors,
partners, members, employees, attorneys, agents and representatives (each,
an "Indemnified Person") from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and out-of-pocket
expenses (including reasonable attorneys' fees and disbursements and other
costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended
or terminated under this Agreement and the other Transaction Documents and
the administration of such credit, and in connection with or arising out of
the transactions contemplated hereunder and thereunder and any actions or
failures to act in connection therewith.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Person from and against any
such Taxes.
11.2. Severability. If any term, provision, covenant or
restriction of this Agreement or any exhibit hereto is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement and
such exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
11.3. Specific Enforcement. The Purchasers, on the one hand, and
the Company, on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
11.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
11.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
11.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
0000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Executive Vice President
With a copy to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
The Purchasers, to each Purchaser's address as set forth in the
Note Register
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
The Collateral Agent, to:
Appaloosa Management, L.P.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxx Xxxxx
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
11.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written
consent of the Required Holders. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
11.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent holder of a Note).
11.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents or any
of the Notes (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of such Holder relating to the
enforcement of any of the Transaction Documents.
11.10. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Transaction Documents,
regardless of any investigation made by or on behalf of any party.
11.11. Transfer of Notes. Each Purchaser understands and agrees
that the Notes have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws, or transactions as to
which an exemption from the registration requirements of the Securities Act
and, where applicable, such laws are available. Each Purchaser acknowledges
that, except as provided in the Registration Rights Agreement, such
Purchaser has no right to require the Company to register the Notes. Each
Purchaser understands and agrees that each Note or certificate representing
the Notes shall bear the following legends:
"THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS CERTIFICATE]
[THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A NOTE PURCHASE AGREEMENT
DATED AS OF SEPTEMBER _, 1998, A COPY OF WHICH IS ON FILE AT THE
OFFICES OF THE COMPANY."
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS NOTE HAS]
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS. THIS INSTRUMENT
WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR INFORMATION REGARDING THE
ISSUE PRICE, ISSUE DATE, YIELD TO MATURITY AND AMOUNT OF ORIGINAL
ISSUE DISCOUNT, CONTACT EXECUTIVE VICE PRESIDENT, AT INAMED
CORPORATION."
11.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
11.13. Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by any Holder in order to enforce any right or
remedy under this Agreement or any of the Notes, the Company hereby
consents and will submit, and will cause each of its Subsidiaries to
submit, to the jurisdiction of any state or federal court of competent
jurisdiction sitting within the area comprising the Southern District of
New York on the date of this Agreement. The Company hereby irrevocably
waives any objection, including, but not limited to, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action, proceeding or
litigation in such jurisdiction.
11.14. Service of Process. Nothing herein shall affect the right
of any Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
11.15. WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH, THIS AGREEMENT OR ANY OF THE NOTES.
11.16. Public Announcements. Neither the Company nor any
Purchaser shall make any public statements, including, without limitation,
any press releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other party
(which consent shall not be unreasonably withheld) except as may be
required by law. If a public statement is required to be made by law, the
parties shall consult with each other in advance as to the contents and
timing thereof.
11.17. Further Assurances. The Company and each of its
Subsidiaries agrees that it shall and shall cause each other to, at the
Company's expense and upon the reasonable request of Collateral Agent, duly
execute and deliver, or cause to be duly executed and delivered, to the
Collateral Agent such further instruments, agreements and documents
(including, without limitation, financing statements under the Code,
security agreements in respect of Intellectual Property, stock powers
executed in blank and other items necessary or desirable in connection with
the perfection of Liens in the Collateral) and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of the
Collateral Agent to carry out more effectually the provisions and purposes
of the Transaction Documents.
Each Purchaser (other than Appaloosa and its affiliates),
severally and not jointly, represents and warrants to Appaloosa with
respect to such Purchaser as follows: (i) such Purchaser acknowledges that
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx is acting solely on behalf of
Appaloosa, (ii) such Purchaser has, or such Purchaser together with its
advisers, if any, have, such knowledge and experience in financial and
business matters that such Purchaser is, or such Purchaser together with
its advisers, if any, are, and will be capable of evaluating the merits and
risks relating to such Purchaser's purchase of the Notes and Loan Warrants
under this Agreement, (iii) such Purchaser has been given the opportunity
to obtain information and documents relating to the Company and to ask
questions of and receive answers from representatives of the Company
concerning the Company and such Purchaser's investment in the Notes and the
Loan Warrants and such Purchaser's decision to invest in the Company has
been based upon independent investigations made by such Purchaser and its
advisers, if any.
11.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed
by each of the parties hereto.
IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and delivered by
their respective officers or partners thereunto duly authorized.
INAMED CORPORATION
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
------------------------------
Title: Executive V.P.
-----------------------------
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its general
partner
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
------------------------------
Title:
-----------------------------
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
------------------------------
Title: Vice President
-----------------------------
PALOMINO FUND LTD.
By: Appaloosa Management L.P., its
Investment Advisor
By: Appaloosa Partners Inc., its General
Partner
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
------------------------------
Title: Vice President
-----------------------------
