The transfer of this Debenture is subject to the restrictions set forth in
Section 4 of the Purchase Agreement dated January 20, 2000 between Xxxxx Xxxxxx
Group Inc. and the original holder of this Debenture.
XXXXX XXXXXX GROUP INC.
6.25% CONVERTIBLE XXXXXXXXX XXX 0000
Xx. Xxx Xxxx, Xxx Xxxx
$ January 20, 2000
XXXXX XXXXXX GROUP INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to (the "Employee") the
principal amount of ($ ) on January 20, 2007, and to pay interest (computed on
the basis of a 360-day year for the actual number of days elapsed) on the unpaid
balance of such principal amount at a rate of 6.25% per annum from the date
hereof, payable semiannually on each June 30 and December 31 after the date
hereof, commencing June 30, 2000, until such unpaid balance shall become due and
payable (whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise).
If any payment of principal of or interest on this Debenture
is due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day. Payments of principal of and interest on this
Debenture shall be made in lawful money of the United States of America at the
principal office of the Company in the borough of Manhattan, the City and State
of New York, or at such other office or agency in such Borough as the Company
shall have designated by written notice to the registered holder hereof, or by a
check of the Company payable to the registered holder hereof in such money and
mailed to such holder at his registered address.
This Debenture is being issued pursuant to, and is subject to
and incorporates by reference all of the terms of, the Purchase Agreement dated
as of the date hereof between the Company and the Employee (the "Purchase
Agreement"), including but not limited to the covenants set forth in Section 7
thereof.
1. Conversion and Redemption. On and subject to the terms and
conditions set forth below, all or any portion of the unpaid principal amount of
this Debenture equal to $1,000 or any integral multiple thereof may be converted
into ____ shares of Series A Convertible Redeemable Preferred Stock established
or to be established by the Company pursuant to the terms of the Purchase
Agreement (the "Preferred Stock") at a conversion price equal to the liquidation
value of $38.1875 per share (the "Conversion Price"). No part of this Debenture
may be converted prior to January 20, 2003, except as described below. On such
date and thereafter the original principal amount hereof shall become fully
convertible into shares of Preferred Stock at the Conversion Price.
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Upon any conversion of this Debenture, the registered holder
hereof shall deliver to the Company a Notice of Conversion in the form attached
to this Debenture. The foregoing notwithstanding, this Debenture shall be
convertible as provided herein only under the following circumstances:
(a) While the Employee is a full-time employee of the Company
or any Subsidiary, he shall be entitled to convert this Debenture on or after
January 20, 2003 as of the date the Employee provides a Notice of Conversion,
provided that, if the Company has elected to redeem the debenture as described
below, the Employee may still elect to convert as of the date a Notice of
Conversion is provided to the Company as long as the Employee remains employed
as of the date of such Notice of Conversion and such Notice of Conversion is
provided to the Company prior to the date set forth in the redemption notice,
except as otherwise provided in clause (e) below.
(b) For one year following the death of the Employee or
termination of his employment with the Company or any Subsidiary due to
Retirement or Disability, the Employee or his estate or other legal
representative, as the case may be, shall be entitled to convert 100% of the
principal amount hereof and such conversion shall be effective as of the date
the Notice of Conversion is provided to the Company. If the Employee does not
elect conversion pursuant to this clause (b), the Company will automatically
redeem such Debenture for 100% principal amount, plus accrued interest as soon a
practicable following the expiration of the one year period described herein.
(c) For ninety days following a Termination Without Cause or a
Voluntary Termination by the Employee that occurs on or after January
20, 2003, the Employee shall be entitled to convert 100% of the
principal amount hereof and such conversion shall be effective as of
the date of the Notice of Conversion. To the extent that the Employee
does not elect conversion pursuant to this clause (c) or if such
termination of employment occurs prior to January 20, 2003, the Company
will automatically redeem such Debenture for 100% principal amount,
plus accrued interest as soon a practicable following the expiration of
the conversion period described herein, if any.
(d) If the Employee's employment is terminated for Cause, the
Debenture will cease to be convertible as of the date of such
termination of employment and the Company will redeem it at the
principal amount, plus accrued interest as of such date.
(e)
(A) In the event that prior to January 20, 2003, (i)
the Company enters into an agreement, (ii) the Board of
Directors of the Company approves a transaction, or (iii)
there is a tender offer, which in either case, might result in
a Change in Control, the Employee may elect to have the
Debenture converted even if his employment is terminated other
than for Cause or the Company may elect to redeem such
Debenture prior to the effective time of the Change in Control
and such conversion or redemption will be effective as of the
effective time of the Change in Control. However, if the
Company elects to redeem the Debenture prior to the Employee's
election to convert, the Employee may still elect to convert
such Debenture rather than having the Company redeem it as
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long as the Employee provides a Notice of Conversion prior to
the effective time of the Change in Control. In the event the
Debenture is not redeemed or converted prior to the Change in
Control which occurs prior to January 20, 2003, such Debenture
shall become fully convertible following the Change of Control
but the Company may not redeem such Debenture until on or
after January 20, 2004 as described below. Any conversion or
redemption following a Change in Control will be implemented
in accordance with the procedures described herein. In the
event that the Change in Control does not become effective,
any election to convert or redeem will not be effectuated
unless the Debenture otherwise becomes convertible or
redeemable as described herein.
(B) In the event that on or after January 20, 2003, (i) the
Company enters into an agreement, (ii) the Board of Directors
of the Company approves a transaction, or (iii) there is a
tender offer, which in either case, might result in a Change
in Control, the Debenture will remain convertible in
accordance with the procedures described herein, even if the
Employee's employment is terminated other than for Cause.
However the Company may elect to redeem such Debenture prior
to such Change in Control which occurs on or after January 20,
2003. However, if the Company elects to redeem the Debenture
prior to the Employee's election to convert, the Employee may
still elect to convert such Debenture rather than having the
Company redeem it as long as the Employee provides a Notice of
Conversion to the Company prior to the effective time of the
Change in Control. In the event the Debenture is not redeemed
or converted prior to the Change in Control which occurs on or
after January 20, 2003 or such Change in Control does not
occur, such Debenture shall remain fully convertible to the
extent such Debenture remains outstanding following the Change
in Control but the Company may not redeem such Debenture until
on or after January 20, 2004 in accordance with the procedures
described herein.
Notwithstanding the foregoing, on or after January 20, 2004,
the Company may redeem the Debenture, provided that it has not already been
converted or redeemed upon giving 60 days prior written notice and such
redemption will be effective at the end of the 60 day period. However, if the
Employee is entitled to convert the Debenture as described above, the Employee
may elect to do so following the receipt of a notice of redemption from the
Company and such conversion will be effective as of the date of the Notice of
Conversion as long as such notice is provided to the Company prior to the date
such redemption was to occur.
Promptly after a conversion of this Debenture or any portion
hereof, the Company shall pay to the registered holder hereof all interest
accrued hereon, or on the portion hereof converted, to the Conversion Date (as
hereinafter defined) and shall issue and deliver to the registered holder hereof
a certificate or certificates registered in his or its name for the number of
whole shares of Preferred Stock issuable upon such conversion. The "Conversion
Date" is the date on which this Debenture, or any portion hereof, is surrendered
for conversion as provided above.
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If less than the full principal amount of this Debenture is
converted, the Company shall also deliver to the Pledgee, if any, or otherwise
to the registered holder hereof a new Debenture in the form hereof for the
balance of the principal amount of this Debenture.
2. Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur and be continuing
(whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or otherwise):
(a) the Company fails to (i) make any payment or prepayment of
principal of this Debenture when due, or (ii) pay any interest on this
Debenture when due and such failure to pay interest or such other
amounts remains unremedied for ten Business Days; or
(b) any representation or warranty made by the Company in the
Purchase Agreement proves to have been incorrect, in any material
respect when made; or
(c) the Company fails to perform or observe any other term,
covenant or agreement contained in this Debenture or the Purchase
Agreement on its part to be performed or observed, and any such failure
remains unremedied for 30 days after notice thereof is given to the
Company by the registered holder of this Debenture; or
(d) the Company or PaineWebber Incorporated ("PWI"):
(i) voluntarily commences any proceeding or files any
petition seeking relief under Title 11 of the United States
Code or any other Federal or state bankruptcy, insolvency or
similar law,
(ii) consents to the institution of, or fails to
controvert in a timely and appropriate manner, any such
proceeding or the filing of any such petition,
(iii) applies for or consents to the appointment of a
receiver, trustee, custodian, sequestrator or similar official
for the Company or PWI or for a substantial part of the
property of either of them, or
(iv) makes a general assignment for the benefit of
creditors; or
(e) an involuntary proceeding is commenced or a voluntary
petition is filed in a court of competent jurisdiction seeking:
(i) relief against the Company or PWI, or all or a
substantial part of the property of either of them, under
Title 11 of the United States Code or any other federal or
state bankruptcy, insolvency or similar law,
(ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Company or
PWI or for a substantial part of the property of either of
them, or
(iii) the winding-up or liquidation of the Company
or PWI;
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and such proceeding or petition continues undismissed for 60 days or an
order or decree approving or ordering any of the foregoing is entered;
then, at any time thereafter during the continuance of any such event, the
registered holder hereof may, by written notice to the Company, declare this
Debenture to be due and payable, whereupon it shall forthwith mature and become
due and payable, together with all interest accrued thereon, without
presentment, demand, protest or further notice, all of which are hereby
expressly waived by the Company.
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3. Definitions.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day on which banking
institutions in the Borough of Manhattan, City and State of New York, are open
for business and not authorized or obligated by law or executive order to close.
"Cause" shall mean (i) the Employee's conviction or plea of no
contest to a felony involving the business of the Company or any Subsidiary,
(ii) the Employee's fraud against the business of the Company or any Subsidiary
as determined by the Compensation Committee, (iii) any intentional act or
omission by the Employee not undertaken in the good faith belief that it was in
pursuit of the business of the Company or any Subsidiary and which is intended
to cause and does cause material injury to the business, financial condition or
prospects of the Company or any Subsidiary, or (iv) the Employee's continued and
repeated failure to perform the material duties of the Employee's position with
the Company or any Subsidiary (other than by reason of approved leave of
absence, illness or disability) after the Employee has received written notice
from the Company or any Subsidiary of such failure.
"Change in Control" shall mean the occurrence of one or more
of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than the Company or any Subsidiary (collectively referred
to as "PWG"), any trustee or other fiduciary holding securities under
an employee benefit plan of PWG, or any corporation owned, directly or
indirectly, by the stockholders of Xxxxx Xxxxxx in substantially the
same proportions as their contemporaneous ownership of voting
securities of Xxxxx Xxxxxx, is or becomes a "20% Beneficial Owner." For
purposes of this provision, a "20% Beneficial Owner" shall mean a
person who is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
Company representing 20% or more of the combined voting power of
Company's then-outstanding voting securities (a "20% Beneficial
Owner"); provided that (A) the term "20% Beneficial Owner" shall not
include any Beneficial Owner that has crossed such 20% threshold solely
as a result of an acquisition of securities directly from Company, or
solely as a result of an acquisition by Company of Company securities,
until such time thereafter as such person acquires additional voting
securities other than directly from Company and, after giving effect to
such acquisition, such person would constitute a 20% Beneficial Owner
and (B) with respect to any person who is and remains eligible to file
a Schedule 13G pursuant to Rule 13d-1(b)(1) under the Exchange Act with
respect to Company securities, there shall be excluded from the number
of securities deemed to be beneficially owned by such person for
purposes of determining whether such person is a 20% Beneficial Owner a
number of securities representing 10% of the combined voting power of
Company's then-outstanding voting securities;
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company,
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together with any new director (other than a director designated by a
person who has entered into an agreement with Company to effect a
transaction described in paragraph (i), (iii) or (iv) hereof) whose
election by the Board of Directors or nomination for election by
Company's stockholders was approved by a vote of at least two-thirds
(K) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for
election was previously so approved (the "Continuing Directors"), cease
for any reason to constitute at least a majority thereof;
(iii) the stockholders of Company approve a merger,
consolidation, recapitalization, or reorganization of Company, or a
reverse stock split of any class of voting securities of Company, or
the consummation of any such transaction if stockholder approval is not
obtained, other than any such transaction which would result in at
least 80% of the total voting power represented by the voting
securities of Company or the surviving entity outstanding immediately
after such transaction being beneficially owned by persons who together
beneficially owned at least 80% of the combined voting power of the
voting securities of Company outstanding immediately prior to such
transaction, with the relative voting power of each such continuing
holder compared to the voting power of each other continuing holder not
substantially altered as a result of the transaction; provided that,
for purposes of this paragraph (iii), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied
if the failure to meet such 80% threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of voting
securities by an employee benefit plan of Company or such surviving
entity or of any subsidiary of Company or such surviving entity;
(iv) the stockholders of Company approve a plan of
complete liquidation of PWG or an agreement for the sale or disposition
by PWG of all or substantially all of PWG's assets (or any transaction
having a similar effect); or
(v) any other event which the Board of the Company
determines shall constitute a Change in Control for purposes of the
Program.
"Common Stock" shall mean the common stock, $1.00 par value
per share, of the Company.
"Disability" shall have the same meaning as is ascribed to
such term in the PaineWebber Long Term Disability Plan.
"Pledgee" shall mean any person or other entity that holds the
Debenture in pledge and has given written notice thereof, and of its current
mailing address, to the Company.
"Retirement" shall mean the Employee's termination of
employment on the first day of the month coincident with or next following (x)
the tenth anniversary of the date on which his employment with the Company
commenced and the date the Employee is at least 55 years old; provided that the
Compensation Committee of the Company approves of such retirement, or (y) the
date of his 65th birthday.
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"Subsidiary" shall mean any corporation, association or other
business entity which is required to be consolidated with the Company under
generally accepted accounting principles.
"Termination Without Cause" shall mean a termination by the
Company or a Subsidiary of the Employee's employment for any reason other than
death, Retirement, Disability or Cause, if the Employee does not continue in the
employment of, or promptly commence employment with, the Company or any
Subsidiary.
"Voluntary Termination" shall mean a termination of employment
with the Company or a Subsidiary at the initiative of the Employee, (unless upon
such termination, the Employee remains in the employment of, or commences
employment with, the Company or one or more Subsidiaries.
4. Governing Law. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
XXXXX XXXXXX GROUP INC.
By:
------------------------
Title:
8
