Exhibit 10.45
THIS NOTE, AND THE INDEBTEDNESS EVIDENCED HEREBY, IS SUBORDINATE AND
JUNIOR IN RIGHT OF PAYMENT IN THE MANNER AND TO THE EXTENT SET FORTH IN THE
INTERCREDITOR SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS
OF JUNE 7, 1996 BY THE MAKER AND PAYEE OF THIS NOTE IN FAVOR OF CORESTATES BANK,
N.A. TO ALL SENIOR DEBT (AS DEFINED IN THE SUBORDINATION AGREEMENT) AT ANY TIME
OWED BY THE MAKER OF THIS NOTE, AND THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE
HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT, AND THIS NOTE MAY BE SOLD
OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE
SUBORDINATION AGREEMENT.
AMENDED AND RESTATED CONVERTIBLE DEMAND NOTE
Philadelphia, Pennsylvania
$343,000 Dated as of: May 9, 1995
FOR VALUE RECEIVED, DIPLOMAT AMBASSADOR, INC., a Pennsylvania
corporation ("Maker"), promises to pay to the order of XXXXX XXXXXXX
("Payee"), an individual residing at 000 Xxxxxxxxxx Xxxx, Xxxxxxxxx Xxxx,
Xxxxxxxxxxxx, the principal sum of Three Hundred Forty Three Thousand Dollars
($343,000) lawful money of the United States of America, together with
interest from the date of this Note, at the rate and on the terms set forth
below, as follows:
1. The principal, interest and all other sums under this Note shall be
payable on March 31, 2000, at the office of the Maker or at such other place
or payee, from time to time may designate in writing. Interest shall accrue
and be payable quarterly at the rate of eight percent (8%) per annum. If the
Company has earnings of $.60 per share for the fiscal year ending
March 31, 1999, the Convertible Notes shall be prepaid at the option of the
Holder, commencing on March 31, 1999.
2. Maker and all endorsers, sureties and guarantors jointly and severally
waive presentment for payment, demand, notice of demand, notice of nonpayment
or dishonor, protest and notice of protest of this Note, and all other notices
in connection with the delivery, acceptance, performance, default, or
enforcement of the payment of this Note, and they agree that the liability of
each of them shall be joint and several and unconditional, without regard to the
liability of any other party, and shall not be affected in any manner by any
indulgence, extension of time, renewal, waiver or modification granted or
consented to by Payee. Maker and all endorsers, sureties, and guarantors consent
to any and all extensions of time, renewals, waivers, or modifications that may
be granted by Payee with respect to the payment or other provisions of this
Note, and to the release of the collateral or any part of it, with or without
substitution, and agree that additional makers, endorsers, guarantors, or
sureties may become parties to it without notice to them or affecting their
liability under this Note.
3. If any provision of this Note is held to be invalid or unenforceable by
a Court of competent jurisdiction, the other provisions of this Note shall
remain in full force and effect and shall be construed liberally in favor of
Payee in order to effectuate the provisions of this Note. In no event shall the
rate of interest payable under this note exceed the maximum rate of interest
permitted to be charged by the applicable law (including the choice of law
rules) and any interest paid in excess of the permitted rate shall be refunded
to Maker. That refund shall be made by application of the excessive amount of
interest paid against any sums outstanding and shall be applied in such order as
Payee may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the sums outstanding shall be refunded in
cash by Payee. Any crediting or refund shall not cure or waive any default by
Maker under this Note. Maker agrees, however, that in determining whether or not
any interest payable under this Note exceeds the highest rate permitted by law,
any non-principal payment shall be deemed, to the extent permitted by law, to be
an expense, fee, premium or penalty rather than interest.
4. Payee shall not be deemed, by any act or omission or commission, to
have waived any of its rights or remedies under this Note unless the waiver is
in writing and signed by Payee, and then only to the extent specifically set
forth in the writing. A waiver on one event shall not be construed as continuing
or as a bar to or waiver of any right or remedy to a subsequent event. This Note
may not be amended except by written agreement executed by both Maker and payee.
5.
5.1. This Note may be converted at the option of the holder of
this Note, at any time and from time to time prior to the Maturity Date, in
whole, or in part, at the rate of one share of Common Stock for each six
dollars of unpaid principal and interest outstanding on this Note (the
"Conversion Rate"), subject to such adjustment of the Conversion Rate are set
forth in Section 5(e) below. Upon the exercise of the conversion Right under
Section 5.1 all accrued and unpaid interest on the Note with respect to the
principal amount converted shall be canceled and the Maker shall have no
obligation to pay any such amount on the converted portion of this Note.
5.2 The Conversion Rate shall be subject to adjustment from time to
time as follows:
(i) In case the Maker shall pay or make to all holders of
Common Stock of the Maker a dividend or other distribution on such
class of Common Stock in Common Stock, the Conversion Rate in effect
at the opening of business on the day following the date fixed for
the determination of stockholders entitled to receive such dividend
or other distribution shall be increased by multiplying the
Conversion Rate by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination (the "Fixed Number
of Shares") and the numerator shall be the sum of the Fixed Number
of Shares and the total number of shares constituting such dividend
or other distribution, such increase to become effective immediately
after the opening of business on the day following the date fixed
for such determination. For the purposes of this paragraph (i), the
number of shares of Common Stock at any time outstanding shall not
include shares issuable in respect of scrip certificate issued in
lieu of fractions of shares of Common Stock.
(ii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the day
following the day upon which subdivision becomes effective shall be
proportionately increased, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately decreased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the
day upon which subdivision or combination becomes effective;
(iii) In case to Maker shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, any dividend or
distribution paid in cash out of funds of the Maker legally
available for dividends or distributions under the laws of the state
of incorporation of the Maker and any dividend or distribution
referred to in paragraph (i) of this Section), the Conversion Rate
shall be adjusted so that the same shall equal the rate determined
by multiplying the Conversion Rate in effect immediately prior to
the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the current market price per share
(determined as provided in paragraph (vi) of this Section ) of the
Common Stock on the date fixed for such determination less the fair
value (as determined by the Board of Directors of the Maker ("Board
of Directors"), whose determination shall be conclusive and set
forth in a Board resolution, such resolution to be based upon the
opinion of an independent investment banker reasonably satisfactory
to the holder of this Note, if requested by the holder of Note) of
the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and the
numerator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately after the
opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution;
(iv) in case the Maker shall issue shares of Common Stock or
rights or warrants to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per
share (determined as provided in paragraph (vi) of this Section) of
the Common Stock on the date fixed for the determination of
stockholders entitled to receive such shares, rights or warrants,
the Conversion Rate in effect at the opening of business on the day
following the date fixed for such determination shall be increased
by multiplying such Conversion Rate by a fraction of which the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination
-3-
plus the number of shares of Common Stock which the aggregate of the
offering price of the total number of shares of Common Stock so
offered for subscription of purchase would purchase at such current
market price and the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of additional shares of
Common Stock so offered for subscription or purchase, such increase
to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the
purposes of this paragraph (iv), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares
of Common Stock. For purposes of this paragraph (iv), the granting
of the right to purchase shares of Common Stock (whether from
treasury shares or otherwise) pursuant to any dividend or interest
reinvestment plan and/or any Common Stock purchase plan providing
for the reinvestment of dividends or interest payable on securities
of the Maker and/or investment of periodic optional payments at a
price per share of not less than 95% of the current market price per
share (determined as provided in such plans) of Common Stock (so
long as such right to purchase is in no case evidenced by the
delivery of rights or warrants) shall not be deemed to constitute an
issue of shares, rights or warrants by the Maker within the meaning
of this paragraph (iv). If any rights or warrants subsequently
expire or are canceled prior to exercise thereof, the Conversion
Rate shall be readjusted to the Conversion Rate that would have been
in effect had such rights or warrants not been issued;
(v) The reclassification (excluding any reclassification upon
a consolidation or merger) of Common Stock into securities other
than Common Stock shall be deemed to involve (a) a distribution of
such securities other than the Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of stockholders
entitled to receive such distribution" and "the date fixed for such
determination" within the meaning of paragraph (iii) of this
Section), and (b) a subdivision or combination, the case may be, of
the number of shares of Common Stock outstanding immediately prior
to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such
combination becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day
upon which such subdivision or combination becomes effective" within
the meaning of paragraph (ii) of this Section);
(vi) For the purpose of Section 5, the current market price
per share of Common Stock on any day shall be deemed to be (a) the
average of the last reported sales price of Common Stock on the
National Market of the National Association of Securities Dealers,
Inc., Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then
-4-
in common use for the 30 consecutive trading days immediately
preceding the day on which the current market price is to be
determined, if so quoted, or (b) if not quoted as described in
clause (a), the mean between the high bid and low asked quotations
for Common Stock as reported by the National Quotation Bureau
Incorporated for the 30 consecutive trading days immediately
preceding the day on which the current market price is to be
determined, if so quoted, or (c) if the Common Stock is listed or
admitted for trading on any national securities exchange, the last
sales price, or the closing bid price if no sale occurred, of Common
Stock on the principal securities exchange on which Common Stock is
listed for the 30 consecutive trading days immediately preceding the
day on which the current market price is to be determined, if so
quoted. If Common Stock is quoted on a national securities or
central market system, in lieu of a market or quotation system
described above, the closing price shall be determined in the manner
set forth in clause (b) of the preceding sentence if bid and asked
quotations are reported but actual transactions are not, and in the
manner set forth in clause (c) of the preceding sentence if actual
transactions are reported. If none of the conditions set forth above
is met, the current market price per share on any day shall be such
fair market value as shall be determined by a resolution of the
Board of Directors, based upon the opinion of an independent
investment banker reasonably satisfactory to the holder of this
Note, if requested by the holder of this Note;
(vii) No fractional shares will be issued upon conversion to
the extent of legally available funds. The right to convert this
Note terminates on the Maturity Date; and
(viii)Notwithstanding anything contained in this Section, no
adjustment in the Conversion Rate in respect of this Note shall be
required upon the issuance or sale of (a) shares of Common Stock
issued or sold under options granted or to be granted (or shares of
Common Stock otherwise issuable or salable) pursuant to any present
or future stock option plan, stock option agreement, stock purchase
plan, employees' savings or profit sharing plan or other incentive
or benefit plan providing for the sale or other issuance of Common
Stock by the Maker to officers, directors or employees (including
former officers, directors or employees) of the Maker or any of its
subsidiaries (including any such plan or agreement assumed by the
Maker or any subsidiary in connection with the acquisition of a
going concern business), and (b) shares of Common Stock for a
consideration per share equal to or greater than the current market
price per share (determined as provided in paragraph (vi) of this
Section) of Common Stock in effect immediately prior to such sale or
issuance.
5.3 The Maker shall not effect any consolidation, merger,
sale, transfer or other disposition of substantially all of the assets of the
Maker in which the Maker is not the continuing person (other than (i) a merger
with a wholly-owned subsidiary or (ii) a transfer or disposition of assets to
one or more wholly-owned subsidiaries of the Maker), unless prior to the
-5-
consummation thereof the successor or surviving corporation, as the case may be,
or the corporation purchasing such assets shall assume, by written instrument
executed and mailed to the holder of this Note, at the address appearing in the
first paragraph of this Note or at such other address as may be specified to the
Maker in writing, all of the obligations under this Note. The successor,
surviving or purchasing corporation shall be deemed substituted for the Maker
for all purposes of this Note. The provision of this Section governing the
substitution of another corporation for the Maker shall similarly apply to
successive instances in which the corporation then deemed to be the Maker
hereunder shall either sell all or substantially all of its properties and
assets to any other corporation, shall consolidate with or merge into any other
corporation or shall be the surviving corporation of the merger into it of any
other corporation, as a result of which the holders of any of its stock or other
securities shall become entitled to the stock or other securities of any
corporation other than the corporation at the time deemed to be the Maker
hereunder.
5.4
(i) Upon any adjustment of the Conversion Rate, then, and in
each such case, the Maker shall give written notice thereof to the
holder of this Note, which notice shall state the Conversion Rate
resulting from such adjustment and the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise
of the conversion rights hereunder, setting forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based. In addition, whenever the Conversion Rate
shall be adjusted as provided in Section 5.2, the Maker shall
forthwith file and keep on record at the office of the Secretary of
the Maker or at such other place as may be designated by the Maker,
a statement, signed by its Treasurer or Chief Financial Officer,
showing in detail the facts requiring such adjustment and the
Conversion Rate that shall be in effect after such adjustment. The
Maker shall also cause a copy of such statement to be sent by
first-class, certified mail, return receipt requested, postage, to
the holder of this Note at such holder's appearing address in the
first paragraph of this Note or at such other address as may be
specified to the Maker in writing. Where appropriate, such copy may
be given in advance of any such adjustment and may be included as
part of a notice otherwise required to be given to the holder of
this Note.
(ii) In the event the Maker shall propose to take any action
of the types described in Section 5.2(i), (ii), (iii) or (iv), or
any contemplated redemption of capital stock of the Maker, the Maker
shall give notice to the holder of this Note in the manner set forth
in Section 5.4(i), which notice shall specify the record date, if
any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate
the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Rate with respect to this
Note, and the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable upon each
conversion of this
-6-
Note. In the case of any such action, such notice shall be given at
least 10 days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(iii) The Maker shall, within 90 days after the end of each of
its fiscal years, and at such other times as the holder of this Note
may reasonably request, mail to the holder of this Note, at such
holder's address appearing in the first paragraph of this Note or at
such other address as may be specified to the Maker in writing, a
certificate of the independent public accountants for the Maker
specifying the Conversion Rate in effect as of the end of such
fiscal year.
(e)
(i) In order to convert into Common Stock the principal and
interest on this Note, the holder shall give written notice thereof
to the Maker duly executed by it, indicating its intention to
convert the principal hereof into Common Stock (the "Conversion
Notice").
(ii) Any conversion of this Note shall be deemed to have
occurred on the date of the Conversion Notice as provided above and
the converting holder of this Note shall be treated for all purposes
as the record holder of such Common Stock on such date (such date
being herein referenced as the "Conversion Date").
(iii) As soon as practicable on or after a Conversion Date,
the Maker shall issue and deliver to such converting holder of this
Note a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion.
(f) The Maker shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock,
for the purposes of issuance upon conversion of this Note, the full number of
shares of Common Stock then deliverable upon the conversion of the full
principal amount of this Note then outstanding.
6. This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania. Each of the parties hereto agree that
sole and exclusive jurisdiction over and proper venue to any controversy or
claim arising out of or relating to this Note or the breach thereof shall reside
in the courts of the Commonwealth of Pennsylvania and the United States District
Court for the Eastern District of Pennsylvania. This Note shall be construed
without the aid of any canon, custom or rule of law requiring construction
against the draftsman.
7. Whenever used, the singular number shall include the plural, the plural
and singular, the use of any gender shall be applicable to all genders, and the
words "Payee" and "Maker" shall be deemed to include the respective heirs,
personal representatives, successors and
- 7 -
assigns of Payee and Maker. If Maker consists of more than one (1) person,
corporation or other entity, the obligations and liabilities of such persons,
corporations or other entities under this Note shall be joint and several and
the word "Maker" shall mean all or some of any of them.
IN WITNESS WHEREOF, Maker, intending to be legally bound, has caused this
Note to be executed on the date stated above.
Witness: DIPLOMAT AMBASSADOR, INC.
a Delaware corporation
By:
----------------------------- --------------------------------
Xxxxxxx Xxxxxxx
- 8 -
