Exhibit 10.34
Execution Copy
XXXXXXXXX-PRICELINE LIMITED
6% CONVERTIBLE NOTE
US$11,110,000 JUNE 27, 2000
Xxxxxxxxx-Priceline Limited, a company organized under the laws
of the Cayman Islands with its registered office at the offices of Xxxxxx
and Xxxxxx, Attorneys-at-Law, Xxxxxx House, P.O. Box 309, Xxxxxx Town,
Grand Cayman, Cayman Islands, British West Indies ("Obligor", which term,
as used herein, shall include any successor thereto), for value received,
hereby executes and delivers this 6% Convertible Note in favor of PCLN
Asia, Inc., a corporation organized under the laws of the State of
Delaware, United States of America ("Holder") and a wholly owned subsidiary
of xxxxxxxxx.xxx Incorporated ("Priceline"), and hereby promises to pay to
Holder, its designees or its successors and permitted assigns, the
principal sum of Eleven Million One Hundred and Ten Thousand Dollars
(US$11,110,000) (the "Principal Amount") on the Maturity Date (as defined
below), together with accrued and unpaid interest through and including
such date as herein provided at a rate per annum of 6%, compounded
semiannually on each June 30 and December 31 occurring through the Maturity
Date. This Convertible Note is issued in connection with the transactions
described in that certain Note Purchase Agreement, dated as of the date
hereof, between Obligor and Holder (the "Purchase Agreement"). Interest
shall be computed on the basis of a 360-day year consisting of twelve
30-day months for the actual number of days elapsed.
Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to such terms in Section 14.
1. Maturity Date.
The then outstanding Principal Xxxxxx, together with accrued
and unpaid interest thereon as set forth above (subject to Section 7),
shall become due and payable on the fifth anniversary of the Issue Date
(the "Maturity Date").
2. Acceleration.
Notwithstanding any provision hereof to the contrary, the
obligations of Obligor hereunder shall forthwith mature and immediately
accelerate and shall be immediately due and payable on the Default Date (as
hereinafter defined) in the event that (i) the business of Obligor is
discontinued, sold, liquidated or otherwise disposed of, whether by
liquidation or dissolution, or (ii) Obligor shall take, or intends to take,
or, as far as Obligor is aware, any other person shall receive a judgment,
order or decree from a court of competent jurisdiction, in each case, for
the Obligor's winding up, liquidation, dissolution, merger or consolidation
that is not pursuant to an agreement between Obligor and Holder, or for the
appointment of a receiver in relation to any or all of Obligor's assets, or
Obligor shall admit in writing its inability to pay its debts as they
become due or shall commit any other act of insolvency (each a "Default
Event"). The date on which any Default Event occurs is referred to herein
as the "Default Date."
3. No Prepayments.
Neither the Principal Amount nor any interest accrued on this
Convertible Note may be prepaid by Xxxxxxx, except as provided in Section 7.
4. Method of Payment.
Obligor shall pay all amounts payable under this Convertible
Note in cash by wire transfer of immediately available funds to an account
designated by Holder or, if no account has been designated, by certified
check delivered to Holder at such place as Holder shall designate to
Obligor in writing.
5. Presentment Waived.
Obligor hereby expressly waives presentment for payment,
demand, notice of dishonor, protest and notice of protest. Acceptance by
Xxxxxx of any payment that is less than the full amount then due and owing
hereunder shall not constitute a waiver of Xxxxxx's right to receive
payment in full at such time or at any prior or subsequent time.
6. Subordination.
Prior to the Maturity Date, except for the obligations of
Obligor upon any conversion of the Principal Amount in accordance with the
terms of this Convertible Note, all indebtedness evidenced by this
Convertible Note (the "Subordinated Indebtedness") shall be subordinated to
all other indebtedness of Obligor, whether existing as of the Issue Date or
incurred at any time after the Issue Date (the "Senior Indebtedness"), and
in that connection, prior to the Maturity Date, except for the obligations
of Obligor upon any conversion of the Principal Amount in accordance with
the terms of this Convertible Note:
(a) the payment of the Subordinated Indebtedness shall be subordinated to
all and any rights, claims and actions which any other person may now or
hereafter have against Obligor in respect of the Senior Indebtedness;
(b) the Subordinated Indebtedness shall not become capable of being subject
to any right of set-off or counterclaim; and
(c) except upon the Maturity Date, upon the acceleration pursuant to
Section 2, or upon the conversion of the Principal Amount in accordance
with the terms of this Convertible Note, Holder shall not claim, request,
demand, sue for, take or receive (whether by way of set-off or in any other
manner and whether from Obligor or any other person) any money or other
property in respect of the Subordinated Indebtedness or any part thereof.
7. Conversion Rights.
(a) Optional Conversion. At any time prior to the Maturity Date, at the
option of Holder in its sole discretion, all or any portion of the then
outstanding Principal Amount of this Convertible Note may be converted (an
"Optional Conversion") into a number of Shares (the "Optional Conversion
Shares") equal to the amount of the then outstanding Principal Amount to be
converted divided by the Conversion Price. Notwithstanding the foregoing,
Holder shall be entitled to a total of three (3) Optional Conversions, each
in an amount of not less than $3,000,000.
In order to exercise the right of Optional Conversion, Holder
shall surrender this Convertible Note at the principal office of Obligor
and shall give written notice of such exercise, substantially in the form
of Exhibit A attached hereto (the "Optional Conversion Notice"), to Obligor
at such office. Such Optional Conversion shall be deemed to have been
effected at the close of business on the date on which such Optional
Conversion Notice, duly completed and executed, shall have been given as
aforesaid, and, subject to the last sentence of this Section 7(a), at such
time such portion of the Principal Amount as is subject to such Optional
Conversion shall be applied by Obligor in full payment of the Optional
Conversion Shares to be issued in consequence of the Conversion and that
application shall discharge Obligor from all liability in respect of such
portion of the Principal Amount converted, and Holder shall be deemed for
all purposes to have become the holder of the Optional Conversion Shares.
As promptly as practicable, but in no event later than seven
(7) Business Days, after an Optional Conversion, Obligor, at its expense,
shall cause (i) the Optional Conversion Notice presented by Holder to
Obligor, and any other documents necessary for such Optional Conversion to
be effected, to be stamped by the office of the Inland Revenue Department
and as appropriate under the laws of the Cayman Islands, (ii) Holder's name
to be entered in the register of the members of Obligor in respect of the
Optional Conversion Shares, (iii) to be paid to Holder all accrued and
unpaid interest through and including the date of the Optional Conversion
on that portion of the Principal Amount subject to such Optional Conversion
and (iv) to be delivered to Holder a convertible note, in form and
substance identical to this Convertible Note, for the remaining outstanding
Principal Amount if such Optional Conversion was not for the entire portion
of the then outstanding Principal Amount. Notwithstanding any provision of
this Convertible Note to the contrary, no Optional Conversion shall be
deemed to have occurred unless and until Obligor shall have complied with
the obligations set forth in the immediately preceding sentence, whereupon
such Optional Conversion shall be deemed to have been effective as of the
date the Optional Conversion Notice is given to Obligor; provided, however,
that no failure by Obligor to so comply with such obligations shall
prohibit Holder from exercising its rights as the holder of the Optional
Conversion Shares.
(b) Mandatory Conversion. Immediately prior to consummation of the Initial
Public Offering, the entire then outstanding Principal Amount of this
Convertible Note shall be automatically converted (the "Mandatory
Conversion" and, together with any Optional Conversion, a "Conversion")
into a number of Shares (the "Mandatory Conversion Shares" and, together
with the Optional Conversion Shares, "Conversion Shares") equal to the then
outstanding Principal Amount divided by the Conversion Price.
The Mandatory Conversion shall be effected by Obligor applying
the entire then outstanding Principal Amount of this Convertible Note in
full payment of the Mandatory Conversion Shares to be issued in consequence
of the conversion and that application shall discharge Obligor from all
liability in respect of the entire then outstanding Principal Amount of
this Convertible Note.
As promptly as practicable, but in no event later than seven
(7) Business Days, after a Mandatory Conversion, Obligor, at its expense,
shall cause (i) the Mandatory Conversion Notice presented by Holder to
Obligor, and any other documents necessary for such Mandatory Conversion to
be effected, to be stamped by the office of the Inland Revenue Department
and as appropriate under the laws of the Cayman Islands, (ii) Holder's name
to be entered in the register of the members of Obligor in respect of the
Mandatory Conversion Shares and (iii) to be paid to Holder all accrued and
unpaid interest through and including the date of the Mandatory Conversion
on that portion of the Principal Amount subject to such Mandatory
Conversion. Notwithstanding any provision of this Convertible Note to the
contrary, no Mandatory Conversion shall be deemed to have occurred unless
and until Obligor shall have complied with the obligations set forth in the
immediately preceding sentence, whereupon such Mandatory Conversion shall
be deemed to have been effective as of the date of the Initial Public
Offering; provided, however, that no failure by Obligor to so comply with
such obligations shall prohibit Holder from exercising its rights as the
holder of the Mandatory Conversion Shares.
8. Anti-Dilution Provisions.
The Conversion Price shall be subject to appropriate adjustment
so as to protect the rights of Holder upon the occurrence on or after the
Issue Date and prior to the Initial Public Offering of any stock dividend,
stock split, reverse stock split, recapitalization, reclassification,
merger, combination, consolidation or other similar transaction. Upon each
occurrence of any event described in the immediately preceding sentence,
the Conversion Price in effect immediately prior to such event shall be
adjusted (and any other appropriate actions shall be taken by Obligor,
including, upon the occurrence of any merger, combination, consolidation or
other similar transaction, the issuance to Holder of any securities into
which this Convertible Note shall be converted by operation of law or
pursuant to the express terms of such transaction provided that such
transaction has been approved by the Board of Obligor, which approval shall
include the affirmative vote of at least one PCLN Director and one TH
Director), so that Xxxxxx, upon any Conversion, shall be entitled to
receive the number of Shares or other property, including cash or
securities, that Holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had this
Convertible Note been converted immediately prior to the date of such
event, or if such event has a record date, then the record date applicable
to such event. An adjustment made pursuant to the immediately preceding
sentence shall become effective retroactively to the close of business on
the day upon which such event is effected.
9. Certain Approvals.
Prior to the Initial Public Offering, in addition to any
approval required under applicable law or under Section 3.07 of the
Securityholders' Agreement, the prior approval of the Holder of the
Convertible Note shall be required for Obligor to:
(a) (i) merge, combine or consolidate with, or
agree to merge, combine or consolidate with, or
purchase, or agree to purchase, all or
substantially all of the stock of, any Person or
(ii) purchase, or agree to purchase, all or
substantially all of the assets and properties
of, or otherwise acquire, or agree to acquire,
all or any portion of, any Person, in each case
with respect to this clause (ii), having a value
in excess of US$250,000, including assets and
assumed liabilities;
(b) sell all or substantially all of the assets
and properties of Obligor;
(c) liquidate or dissolve Obligor, effect any
recapitalization or reorganization of Obligor, or
any stock split or reverse stock split, or, in
each case, obligate itself to do so;
(d) amend or propose to amend the
organizational documents of Xxxxxxx;
(e) issue any Ordinary Shares, or securities exercisable or
exchangeable for, or convertible into, Ordinary Shares,
for consideration per Ordinary Share (or an exercise,
exchange or conversion price per Ordinary Share) in an
amount less than the Conversion Price; or
(f) adopt or amend any equity incentive plan for directors,
officers or employees, including the Option Plan, to
permit the grant of, or otherwise grant, options or any
other rights to acquire Ordinary Shares in excess of the
Option Limit.
10. Covenants of Obligor.
(a) Obligor shall maintain financial statements in accordance
with International Accounting Standards applied on a
consistent basis, with a reconciliation to United States
generally accepted accounting principles included in the
footnotes;
(b) Prior to the Initial Public Offering, Holder shall have
reasonable rights to inspect the books and records of
Obligor and shall have reasonable access to the legal,
tax, accounting and other personnel of Obligor;
(c) Prior to the Initial Public Offering,
Obligor shall deliver to Holder the following
documents:
(i) Annual audited consolidated financial
statements within ninety (90) days after
the end of each fiscal year and quarterly
unaudited consolidated financial statements
within forty-five (45) days after the end
of each fiscal quarter, in each case, of
Obligor and its subsidiaries;
(ii) Monthly financial reports furnished
to senior management of Xxxxxxx,
contemporaneously with delivery to senior
management; and
(iii) Copies of reports, if any, submitted to Obligor by
independent accountants in connection with each
annual or interim audit of the books and records of
Obligor made by such accountants.
11. Treatment of Note.
Obligor will treat, account and report this Convertible Note as
debt and not equity for accounting and tax (with respect to any returns
filed with federal, state, local or foreign tax authorities) purposes.
12. Miscellaneous.
(a) Actions by Obligor. Prior to the Initial Public Offering, any right,
option, discretion, obligation, notice, approval, consent, authorization or
other action required or permitted to be exercised, performed, given or
taken by Obligor or the Board under this Convertible Note in order to
enforce Obligor's rights under this Convertible Note shall be exercised,
performed, given or taken only pursuant to a resolution duly adopted by the
Board with the affirmative vote of at least one director designated by TH
and at least one director designated by Holder.
(b) Specific Performance. Obligor and Xxxxxx acknowledge and agree that in
the event of any breach of this Convertible Note, the non-breaching party
would be irreparably harmed and could not be made whole solely by monetary
damages. Obligor and Holder hereby agree that in addition to any other
remedy to which any party may be entitled at law or in equity, to the
extent permitted by applicable law, Obligor and Holder shall be entitled to
obtain an injunction or compel specific performance of this Convertible
Note in any action instituted in any Court.
(c) Interpretation. The headings and captions in this Convertible Note are
for convenience of reference only and shall not control or affect the
meaning or construction of any provisions hereof. When used in this
Convertible Note, (i) the symbol "US$" shall refer to the lawful currency
of the United States of America and (ii) the words "including" and
"include" shall be deemed followed by the words "without limitation."
(d) Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be (i) delivered by hand,
(ii) delivered by a reputable commercial overnight delivery service, or
(iii) transmitted by facsimile, in each case, sent to the address or
telecopier number set below. Such notices shall be effective: (i) in the
case of hand deliveries, when received; (ii) in the case of an overnight
delivery service, when received; and (iii) in the case of facsimile
transmission, when electronic confirmation of receipt is received by the
sender. Any party may change its address and telecopy number by written
notice to another party in accordance with this provision, provided that
such notice shall be effective only upon receipt.
If to Obligor, to:
Xxxxxxxxx-Priceline Limited
Unit 2007, 20th Floor
0 Xxxxxxx Xxxxx
00 Xxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx, Xxxx Xxxx
Telecopy: 011-852-2189-7207
Attention: Chief Executive Officer
with a copy to:
A.S. Xxxxxx & Company, Limited
Xxxxxx House
0-0 Xx Xxx Xxxx Xxxx
Xx Xxx, Xxxxxx, Xxx Xxxxxxxxxxx, Xxxx Xxxx
Telecopy: 011-852-2693-4404
Attention: Managing Director
If to Holder, to:
PCLN Asia, Inc.
In care of xxxxxxxxx.xxx Incorporated
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: + 0-000-000-0000
Attention: General Counsel
With a copy to:
Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP
One Xxxxxx Square
P.O. Box 636
Wilmington, DE 19899-0636
Telecopy: + 0-000-000-0000
Attention: Xxxxxxxx Xxxxx Xxxxx, Esquire
(e) Governing Law; Forum; Service of Process. This Convertible Note shall
be governed by and construed in accordance with the laws of England and
Wales (without giving effect to conflicts of law principles) as to all
matters, including validity, construction, effect, performance and remedies
of and under this Convertible Note. Venue in any and all suits, actions and
proceedings between the parties hereto and relating to the subject matter
of this Convertible Note shall be in the courts located in and for England
and Wales (the "Courts"), which shall have exclusive jurisdiction for such
purpose, and Holder and Obligor hereby irrevocably submit to the exclusive
jurisdiction of such Courts and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such suit, action or
proceeding. Service of process may be made in any manner recognized by such
Courts. Holder and Obligor each hereby irrevocably waives its right to a
jury trial arising out of any dispute in connection with this Convertible
Note or the transactions contemplated hereby.
(f) Severability. The invalidity, illegality or unenforceability of one or
more of the clauses or provisions of this Convertible Note in any
jurisdiction shall not affect the validity, legality or enforceability of
this Convertible Note in such jurisdiction or the validity, legality or
enforceability of this Convertible Note, including any such clause or
provision in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest
extent permitted by law.
(g) Successors; Assigns; Third-Party Beneficiaries. The provisions of this
Convertible Note shall be binding upon the parties hereto and their
respective heirs, successors and permitted assigns. Neither this
Convertible Note nor the rights or obligations of Obligor may be assigned
by Obligor without the prior written consent of Xxxxxx. Holder may assign
its rights or obligations hereunder to any Affiliate of Priceline, provided
that any assignment to an Affiliate of Priceline which is not a wholly
owned subsidiary of Priceline shall be subject to the prior written consent
of Obligor which consent shall not be unreasonably withheld or delayed. Any
attempted assignment in contravention of this Convertible Note shall be
null and void and of no effect. This Convertible Note is for the sole
benefit of the parties hereto and their respective heirs, successors and
permitted assigns and no provision hereof, whether express or implied, is
intended, or shall be construed, to give any other Person any rights or
remedies, whether legal or equitable, hereunder.
(h) Amendments. This Convertible Note may not be amended, modified
or supplemented except in a writing signed by Xxxxxxx and Holder.
(i) Waiver. Any waiver (whether express or implied) of any default or
breach of or by any party to this Convertible Note shall be effective
unless evidenced by a writing signed by the party against which such waiver
is sought to be enforced. No such waiver for any purpose shall constitute a
waiver of any other or subsequent default or breach, or for any other
purpose.
(j) Counterparts. This Convertible Note may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same Convertible Note.
13. Definitions.
As used in this Convertible Note, the following terms shall
have the following meanings:
"Affiliate" has the meaning specified in Rule 12b-2 promulgated
under the United States Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Board" means the board of directors of Obligor.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks in the City of New York, State of New York, United
States of America or Hong Kong are required or authorized to be closed.
"Conversion Price" means US$1.25 per share, as may be adjusted
pursuant to Section 8.
"Convertible Note" means this 6% Convertible Note and all
amendments made hereto in accordance with the provisions hereof.
"Court" has the meaning specified in Section 12(e).
"Default Date" has the meaning specified in Section 2.
"Holder" has the meaning specified in the Preamble.
"Initial Public Offering" means the first Public Offering of
Shares resulting in aggregate net proceeds (after expenses and underwriting
commissions and discounts) to Obligor, if such Public Offering occurs in
the United States of America, of at least US$50 million, or, if such Public
Offering does not occur in the United States of America, an amount,
denominated in the currency of the jurisdiction in which such Public
Offering occurs, equivalent to US$50 million at then applicable exchange
rate.
"Issue Date" means the date of first issuance of this
Convertible Note as first set forth above.
"Mandatory Conversion" has the meaning specified in Section 7(b).
"Mandatory Conversion Certificates" has the meaning specified
in Section 7(b).
"Mandatory Conversion Shares" has the meaning specified in
Section 7(b).
"Maturity Date" has the meaning specified in Section 1.
"Obligor" has the meaning specified in the Preamble.
"Option Limit" means a number of Shares issuable upon exercise
of options or any other rights to acquire Ordinary Shares granted under the
Option Plan not to exceed 10% of the outstanding Shares of Obligor on a
fully diluted basis, including after giving effect to the issuance of
Shares upon exercise of such options or such other rights and the
conversion of the Convertible Note.
"Option Plan" means the stock option plan for directors,
officers and employees of Obligor on terms to be approved by the Board,
provided that the Option Plan shall limit the number of Shares issuable
upon the exercise of options granted thereunder to the Option Limit.
"Optional Conversion" has the meaning specified in Section 7(a).
"Optional Conversion Certificates" has the meaning specified in
Section 7(a).
"Optional Conversion Notice" has the meaning specified in
Section 7(a).
"Optional Conversion Shares" has the meaning specified in
Section 7(a).
"PCLN Director" means a director of Obligor designated by
Xxxxxx.
"Person" means any individual, firm, corporation, proprietary,
public or private company, partnership, limited liability company, public
liability company, trust or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Priceline" means xxxxxxxxx.xxx Incorporated, a corporation
organized under the laws of the State of Delaware, United States of
America.
"Principal Amount" has the meaning specified in the Preamble.
"Public Offering" means a public offering of Shares pursuant to
a prospectus, an effective registration statement or listing agreement in
compliance with the laws, rules and regulations in such jurisdiction as may
be approved by the Board to be the jurisdiction for the primary listing and
trading of Obligor's securities.
"Purchase Agreement" has the meaning specified in the Preamble.
"Securityholders' Agreement" means the Securityholders'
Agreement, dated as of the date hereof, among Obligor, Holder and TH.
"Services Agreement" means the Services Agreement, dated as of
the date hereof, between Priceline and Obligor.
"Shares" means the ordinary shares of Obligor.
"TH" means Trio Happiness Limited, a company organized under
the laws of the British Virgin Islands and a wholly owned subsidiary of
Xxxxxxxxx Whampoa Limited.
"TH Director" means a director of Obligor designated by TH.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Xxxxxxx has caused this Convertible Note to
be duly executed and delivered as of the date first set forth above.
XXXXXXXXX-PRICELINE LIMITED
By:
------------------------------
Name:
Title:
IN WITNESS WHEREOF, Xxxxxxx has caused this Convertible Note to
be duly executed as a deed as of the date first set forth above.
EXECUTED AS A DEED for and on behalf of XXXXXXXXX-PRICELINE
LIMITED
By:
------------------------------
Name:
Title:
In the presence of :
--------------------------
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Witness
EXHIBIT A TO CONVERTIBLE NOTE
CONVERSION NOTICE
To: Xxxxxxxxx-Priceline Limited
The undersigned registered holder of the attached 6%
Convertible Note, dated as of June ___, 2000, originally executed by
Xxxxxxxxx-Priceline Limited, a company organized under the laws of the
Cayman Islands ("Obligor"), in favor of PCLN Asia, Inc. ("Convertible
Note") hereby irrevocably exercises the option to convert US$_________ of
the Principal Amount outstanding under the Convertible Note into the
Conversion Shares in accordance with the terms of the Convertible Note, and
directs that the Certificates representing the Conversion Shares issuable
and deliverable upon such conversion be issued and delivered to the
registered holder hereof unless a different name has been indicated below.
Capitalized terms used in this Conversion Notice and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Convertible Note.
Dated:
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Signature(s)
