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Exhibit 4.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES FOR THE BENEFIT OF
ALTIVA FINANCIAL CORPORATION (THE "COMPANY") THAT THIS NOTE MAY BE OFFERED, SOLD
OR OTHERWISE DISPOSED OF ONLY (1) TO THE COMPANY, (2) SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" ("QIB") AS DEFINED IN RULE 144A, THAT IS PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB TO WHOM NOTICE IS GIVEN THAT THE SALE OR
OTHER DISPOSITION IS BEING MADE IN RELIANCE ON RULE 144A, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (4) TO AN "ACCREDITED INVESTOR," AS DEFINED IN RULE 501 UNDER
THE SECURITIES ACT ("ACCREDITED INVESTOR"), THAT IS ACQUIRING THIS NOTE FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER ACCREDITED INVESTOR FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, IF A
SIGNED CERTIFICATION LETTER (A FORM OF WHICH MAY BE OBTAINED FROM THE COMPANY)
IS DELIVERED BY THE TRANSFEREE TO THE COMPANY, (5) AS OTHERWISE PROVIDED IN THE
AGREEMENT (AS DEFINED BELOW) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, PROVIDED THAT,
NOTWITHSTANDING THE FOREGOING, SO LONG AS CERTAIN OF THE COLLATERAL FOR THIS
NOTE MAY BE HELD ONLY BY A QIB, AS REASONABLY DETERMINED BY THE COMPANY (THE
"COLLATERAL RESTRICTION"), THIS NOTE MAY BE OFFERED, SOLD OR OTHERWISE DISPOSED
OF ONLY PURSUANT TO CLAUSES (1) OR (2) ABOVE. BY PURCHASING THIS NOTE, THE
HOLDER HEREOF AGREES AND REPRESENTS FOR THE BENEFIT OF THE COMPANY THAT (A) IT
IS (1) A QIB WITHIN THE MEANING OF RULE 144A OR (2) IN THE EVENT THAT THE
COLLATERAL RESTRICTION IS NO LONGER IN EFFECT, AN ACCREDITED INVESTOR ACQUIRING
THIS NOTE FOR INVESTMENT PURPOSES FOR ITS OWN ACCOUNT
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OR THE ACCOUNT OF ANOTHER ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT
FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT AND (B) IT WILL NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
THIS AGREEMENT IS SUBJECT TO THE TERMS OF THE AMENDED AND RESTATED
SECURED CONVERTIBLE SENIOR NOTE PURCHASE AGREEMENT, DATED FOR REFERENCE PURPOSES
ONLY AS OF FEBRUARY 29, 2000, BETWEEN THE COMPANY AND VALUE PARTNERS, LTD. (AS
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE "AGREEMENT").
COPIES OF THE AGREEMENT MAY BE OBTAINED FROM THE COMPANY.
THIS AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
INTERCREDITOR AND COLLATERAL SHARING AGREEMENT, DATED AS OF FEBRUARY 29, 2000,
BY AND AMONG THE COMPANY, VALUE PARTNERS, LTD., AS ORIGINAL PURCHASER OF CERTAIN
12% SECURED CONVERTIBLE SENIOR NOTES DUE 2006 ISSUED BY THE COMPANY, AND U.S.
TRUST COMPANY OF TEXAS, N.A., AS COLLATERAL AGENT FOR THE HOLDERS FROM TIME TO
TIME OF SUCH CONVERTIBLE NOTES AND THE HOLDERS FROM TIME TO TIME OF THE 12%
SECURED CONVERTIBLE SENIOR NOTES DUE 2006 ISSUED PURSUANT TO THE EXCHANGE
AGREEMENT, AS DEFINED HEREIN (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME, THE "INTERCREDITOR AGREEMENT"). COPIES OF THE INTERCREDITOR
AGREEMENT MAY BE OBTAINED FROM THE COMPANY.
ALTIVA FINANCIAL CORPORATION
AMENDED AND RESTATED
12% SECURED CONVERTIBLE SENIOR NOTE DUE 2006
No.1
$14,000,000
Altiva Financial Corporation (together with its permitted successors
and assigns hereunder, the "Company"), a corporation duly organized and validly
existing under the laws of the State of Delaware, for value received, hereby
promises to pay Value Partners, LTD, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 or registered assigns, the principal sum of
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$14,000,000 in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, no later than 12:00 noon, Eastern Time, on June 15, 2006 (the "Maturity
Date") (or earlier to the extent provided in Article V hereof), and to pay
interest thereon semi-annually as provided herein in like coin or currency, at
the rate per annum of 12%, subject to adjustment as provided herein, such
payments to be made without presentation or surrender of this Note or the making
of any notation thereon, except that any Note paid or prepaid in full shall,
after such payment or prepayment in full, be surrendered to be Company at its
principal office for cancellation.
ARTICLE I
DEFINITIONS
For all purposes hereof, except as otherwise expressly provided or
unless the context otherwise requires, the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the Issue Date, by which the Company or
any of its Subsidiaries (i) acquires any going business or all or substantially
all of the assets of any firm, corporation or limited liability company, or
division thereof, whether through purchase of assets, merger or otherwise, or
(ii) directly or indirectly acquires (in one transaction or in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the Outstanding
ownership interests of a partnership or a limited liability company.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing, provided, however, that for purposes of this definition none of Value
Partners, X. Xxxx Price Recovery Fund and Lutheran Brotherhood High Yield Fund
shall be deemed to be an Affiliate of the Company.
"Agreement" has the meaning set forth in Section 2.1 hereof.
"Beneficial Owners" means the beneficial owners of the Notes identified
in the registry of Beneficial Owners maintained by the Company pursuant to
Section 2.3.
"Board of Directors" means either the Board of Directors of the Company
or any committee of such Board duly authorized to act for it hereunder.
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"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the City of Atlanta, Georgia or New
York, New York are authorized or required by law or executive order to remain
closed.
"Capital Stock" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents or
interests in (however designated) capital stock in such Person, including, with
respect to a corporation or limited liability company, Preferred Stock and other
corporate stock and, with respect to a partnership, including limited liability
partnerships, partnership interests, whether general or limited, and any rights
(other than debt securities convertible into corporate stock, partnership
interests or other capital stock), warrants or options exchangeable for or
convertible into such corporate stock, partnership interests or other capital
stock.
"Capitalized Lease Obligation" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP; the amount of such indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Closing Price" has the meaning set forth in Section 7.5(i).
"Collateral Agent" means U.S. Trust Company of New York, and its
successors and assigns.
"Collateral Documents" means any agreement entered into by the Company,
any Subsidiary of the Company or any other Person to provide collateral or
security for the repayment of the Notes and the Exchange Notes or to Guarantee
the Notes and the Exchange Notes, including without limitation the Security
Agreement, the Exchange Note Indenture, the Exchange Note Security Agreements
and the Intercreditor Agreement, in each case as defined in the Agreement.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" has the meaning set forth in the first paragraph hereof.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i)
provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (ii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital
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Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letters of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iii) depreciation
and amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expenses to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash revenues increasing
such Consolidated Net Income for such period, including without limitation
non-cash income recorded in connection with the ownership of mortgage-related
securities (excluding any non-cash income to the extent it represents an accrual
of cash revenues in any future period), in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Subsidiary of a Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in the same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of termination to be
dividended to the Company by such Subsidiary without prior approval of any
Person (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders;
provided that any contingent restriction contained in any thereof shall not be
deemed to prevent any such dividend until the applicable contingency shall have
occurred.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash (or to the
extent converted into cash) to the referent Person or a Wholly-Owned Subsidiary
thereof, (ii) the Net Income of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
Subsidiary of its Net Income is not at the date of determination permitted
without prior approval of any Person (that has not been obtained) or, directly
or indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders unless waived; provided that
any contingent restriction contained in any thereof shall not be deemed to
prevent any such dividend until the applicable contingency shall have occurred,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the cumulative effect of a change in accounting principles shall
be excluded and (v) any net after-tax extraordinary gains or losses shall be
excluded.
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"Consolidated Net Worth" of a Person means as of the date of
determination all amounts that would be included under stockholders' equity on a
consolidated balance sheet of the Person and its Subsidiaries determined in
accordance with GAAP.
"Consolidated Tangible Net Worth" of a Person means as of the date of
determination all amounts that would be included under stockholders' equity on a
consolidated balance sheet of the Person and its Subsidiaries determined in
accordance with GAAP less an amount equal to the consolidated intangible assets
of the Person and its Subsidiaries determined in accordance with GAAP.
"Default" means any event which is, or after notice or passage of time,
or both, would be, an Event of Default.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part on, or prior to, or is
exchangeable for debt securities of the Company or its Subsidiaries prior to,
the Stated Maturity of principal of the Notes, provided that only the amount of
such Capital Stock that matures or is redeemable prior to the Stated Maturity of
principal of the Notes shall be deemed to be Disqualified Capital Stock.
"Eligible Collateral" means any asset or property of the Company other
than the Note Security.
"Event of Default" means any event specified in Section 5.1.
"Excess Spread" means (i) with respect to a "pool" of Receivables that
has been sold to a trust or other Person in a securitization, the excess of (a)
the weighted average coupon on each pool of Receivables sold over (b) the sum of
the pass-through interest rate plus a normal servicing fee, a trustee fee, an
insurance fee and an estimate of annual future credit losses related to such
assets, in each case calculated in accordance with any applicable GAAP, and (ii)
with respect to Receivables that have been sold to a Person in a whole loan
sale, the cash flow of the Company and its Subsidiaries from such Receivables,
net of, to the extent applicable, a normal servicing fee, a trustee fee, an
insurance fee and an estimate of annual future credit losses related to such
assets, in each case calculated in accordance with any applicable GAAP.
"Excess Spread Receivables" of a Person means the contractual or
certified right to Excess Spread capitalized on such Person's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP, net of any allowance for losses on
loans sold with recourse or other liability allocable thereto, to the extent not
otherwise reflected in such amount). Excess Spread Receivables (a) include
mortgage-related securities backed by Receivables sold by the Company or any
Subsidiary and (b) do not include any servicing rights.
"Exchange" has the meaning set forth in the Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agreement" means the agreement between the Company and the
holders of the Company's 12 1/2% Subordinated Notes due 2001 providing for the
Exchange, as amended, supplemented or otherwise modified from time to time.
"Exchange Notes" means the 12% Secured Convertible Notes due 2006
issued to holders of the Subordinated Notes upon consummation of the Exchange.
"Exchange Note Obligations" means all present and future liabilities,
obligations and indebtedness of the Company, any of its Subsidiaries or any
other obligor owing to any holder of Exchange Notes under or in connection with
the Exchange Agreement, the Exchange Notes and the Collateral Documents,
including without limitation obligations in respect of (i) principal, premium,
if any, and interest on the Exchange Notes, (ii) reimbursement of costs, fees,
taxes or other items and (iii) indemnification and related obligations.
"Fixed Charges" means, with respect to the Company and its Subsidiaries
for any period, the sum, without duplication, of:
(i) the consolidated interest expense of the Company and its
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capitalized Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(ii) the consolidated interest of the Company and its
Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another Person
that is Guaranteed by the Company or one of its Subsidiaries or secured
by a Lien on assets of the Company or one of its Subsidiaries, whether
or not such Guarantee or Lien is called upon; plus
(iv) the product of (a) all dividends, whether paid or accrued
and whether or not in cash, on any series of Preferred Stock of the
Company or any of its Subsidiaries, other than dividends on Capital
Stock payable solely in Capital Stock of the Company (other than
Disqualified Capital Stock) or to the Company or a Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal,
state and local statutory tax rate of the Company and its Subsidiaries,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP.
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"Fixed Charge Coverage Ratio" means with respect to the Company and its
Subsidiaries for any period, the ratio of the Consolidated Cash Flow of the
Company for such period to the Fixed Charges of the Company and its Subsidiaries
for such period. In the event that the Company or any of its Subsidiaries
Incurs, repays, repurchases or redeems any Indebtedness subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated and on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such Incurrence, repayment, repurchase or redemption of Indebtedness, and, if
applicable, the use of the proceeds therefrom to repay other Indebtedness as if
the same had occurred at the beginning of the applicable four-quarter reference
period.
"GAAP" means generally accepted accounting principles as in effect from
time to time, consistently applied.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guarantor" means any Person Guaranteeing any Indebtedness or other
obligation.
"Hedging Obligations" means with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements with respect to Indebtedness that
is permitted by the terms of the Notes and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or the
value of foreign currencies purchased or received by such Person in the ordinary
course of business.
"Holder" means a Person in whose name a Note is registered on the Note
Register.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for. The term "Incurrence" when used as a noun shall have a corresponding
meaning. The accretion of principal of a non-interest bearing or other discount
security shall be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication): (i) the principal of and premium, if any,
in respect of (A) indebtedness of such
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Person for money borrowed, (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable; (ii) all Capital Lease Obligations of such Person; (iii)
all obligations of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (including any such
obligations under repurchase agreements), but excluding trade accounts payable
and expense accruals arising in the ordinary course of business; (iv) all
obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction; (v) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, in the case of a Subsidiary of such
Person, any Preferred Stock (vi) all obligations of the type referred to in
clauses (i) through (v) of other Persons and all dividends of other Persons the
payment of which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, Guarantor or otherwise, including by means of any
Guarantee; (vii) all obligations of the type referred to in clauses (i) through
(vi) of other Persons secured by any Lien on any property or asset of such
Person, and (viii) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations, as described above, and the amount of any Indebtedness under clause
(vi) of this definition for which such Person is responsible or liable, directly
or indirectly, including by way of any Guarantee. Notwithstanding the foregoing,
any securities issued in a securitization by a Securitization Subsidiary formed
by or on behalf of a Person and to which Receivables have been sold or otherwise
transferred by or on behalf of such Person or its Subsidiaries shall not be
treated as Indebtedness of such Person or its Subsidiaries, regardless whether
such securities are treated as indebtedness for tax purposes, provided that (1)
neither the Company nor any of its Subsidiaries (other than the Securitization
Subsidiary) (a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), except for credit
support in the form of "over-collateralization" of the senior certificates
issued in, or subordination of or recourse to all or a portion of Excess Spread
Receivables attributable to, such securitization, in each case to the extent of
the book value of such Excess Spread Receivables, or (b) is directly or
indirectly liable (as a guarantor or otherwise) for such securities, and (2) no
default with respect to such securities would permit (upon notice, lapse of time
or both) any holder of any other Indebtedness of the Company or any of its
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity.
"Indenture" means the Indenture between the Company and U.S. Trust
Company of Texas, N.A., as trustee for the holders of the Exchange Notes, as
amended, supplemented or otherwise modified from time to time.
"Intercreditor Agreement" has the meaning set forth in the Agreement.
"Interest Payment Date" has the meaning set forth in Section 2.2
hereof.
"Interest Rate" means 12% per annum, subject to increase as specified
in the third and fourth paragraphs of Section 2.2 hereof.
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"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"IO Securities" means a security representing an undivided interest in
all or a portion of the interest payments due on a pool of Receivables which
back the mortgage-related security to which the IO Securities relate.
"Issue Date" means February 29, 2000.
"Junior Indebtedness" means any Indebtedness of the Company
subordinated in right of payment of either principal, premium (if any) or
interest thereon to the Notes.
"Liens" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance (whether or not filed, recorded or
otherwise perfected under applicable law) upon or with respect to any asset or
property owned by a Person.
"Liquid Assets" means: (i) cash; (ii) any of the following instruments
that have a remaining term to maturity not in excess of 90 days from the
determination date: (a) repurchase agreements on obligations of, or are
guaranteed as to timely receipt of principal and interest by, the United States
or any agency or instrumentality thereof when such obligations are backed by the
full faith and credit of the United States, provided that the party agreeing to
repurchase such obligations is a primary dealer in U.S. Government securities,
(b) federal funds and deposit accounts, including but not limited to
certificates of deposit, time deposits and bankers' acceptances of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state thereof, provided that the debt of such depository
institution or trust company at the date of acquisition thereof has been rated
by Standard & Poor's Corporation in the highest short-term rating category or
has an equivalent rating from another nationally-recognized rating agency, or
(c) commercial paper of any corporation incorporated under the laws of the
United States or any state thereof that on the date of acquisition is rated
investment grade by Standard & Poor's Corporation or has an equivalent rating
from another nationally-recognized rating agency; (iii) any debt instrument
which is an obligation of, or is guaranteed as to the receipt of principal and
interest by, the United States, its agencies or any U.S. Government sponsored
enterprise and (iv) the amount of unused credit available to the Company in the
form of Permitted Warehouse Indebtedness under lines of such Indebtedness in
existence on the determination date which may be secured by existing net loans
or other Receivables held for sale by the Company on the determination date.
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"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Xxxx-to-Market Adjustments" shall have the meaning set forth in
Section 4.12(a)(1).
"Material Adverse Effect" has the meaning set forth in the Agreement.
"Maturity Date" has the meaning set forth in the first paragraph
hereof.
"MCI" means The Money Centre, Inc., a North Carolina corporation.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends.
"Notes" has the meaning set forth in Section 2.1, provided that upon
consummation of the Exchange the Notes and the Exchange Notes shall be
considered as a single class of Pari Passu Indebtedness of the Company.
Notwithstanding any provision to the contrary contained in this Note, except as
expressly provided herein, references herein to actions by the Holders of the
Notes shall in all cases include the holders of the Exchange Notes, such holders
acting together as the holders of a single class of securities of the Company.
"Note Obligations" means all present and future liabilities,
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other obligor owing to any Holder under or in connection with the Agreement, or
any Related Agreement, including without limitation obligations in respect of
(i) principal, premium, if any, and interest on the Notes, (ii) reimbursement of
costs, fees, taxes or other items and (iii) indemnification and related
obligations.
"Note Register" has the meaning set forth in Section 2.3.
"Note Security" means all assets now or from time to time after the
Issue Date subjected to a security interest or other charge (or intended to be
so subjected pursuant to the Agreement or any Related Agreement) to secure the
payment or performance of any of the Note Obligations.
"Officer" means the Chairman of the Board, the President, the Chief
Financial Officer, the Controller, the Secretary, any Assistant Secretary or any
Vice President of the Company.
"Officer's Certificate" means, unless otherwise specified herein, a
certificate signed by two Officers, one of whom must be the Chairman of the
Board, the President, the Chief Executive Officer or the Chief Financial Officer
of the Company.
"Outstanding," (i) when used as of any particular time with reference
to the Notes, means all of the Notes theretofore issued by the Company and
outstanding, which shall not include (x) the Notes theretofore canceled by the
Company or surrendered to the Company for cancellation, and (y) the Notes for
the transfer or exchange of or in lieu of or in substitution for which other
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Notes shall have been delivered by the Company pursuant to the Notes, and (ii)
when used as of any particular time with reference to the Exchange Notes, shall
have the meaning set forth in the Indenture. In determining whether the
registered holders of the requisite aggregate principal amount of Notes and
Exchange Notes have concurred in any demand, request, direction, consent, or
waiver under the Notes, Notes which are owned or held by or for the account of
the Company, or by any other obligor on the Notes, or by any Affiliate of the
Company or any other obligor on the Notes, shall be disregarded and deemed not
to be Outstanding for the purpose of any such determination. Notes so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee shall have the exclusive right to vote such Notes and is not a Person
which is an Affiliate of the Company or any other obligor on the Notes.
"Pari Passu Indebtedness" means any Indebtedness of the Company that is
pari passu in right of payment of principal, premium (if any) and interest
thereon to the Notes.
"Permitted Indebtedness" means:
(i) Permitted Warehouse Indebtedness of the Company and
its Subsidiaries, provided that to the extent any such Indebtedness
ceases to constitute Permitted Warehouse Indebtedness of the Company or
a Subsidiary, such event shall be deemed to constitute the Incurrence
of such Indebtedness (and any related Guarantees, but without
duplication) by the Company or such Subsidiary, as the case may be;
(ii) the Note Obligations and the Exchange Note
Obligations;
(iii) Indebtedness of the Company or a Subsidiary
Outstanding on the Issue Date;
(iv) Hedging Obligations;
(v) Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price, lease or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary, in an aggregate principal
amount not to exceed $3.0 million at any time outstanding;
(vi) intercompany Indebtedness between or among the
Company and any Subsidiary, provided, however, that (i) if the Company
is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Note
Obligations and (ii) (A) any subsequent issuance or transfer of Capital
Stock that results in any such Indebtedness being held by a Person
other than the Company or a Subsidiary and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Subsidiary shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness by the Company or such Subsidiary, as
the case may be; and
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(vii) Permitted Refinancing Indebtedness in exchange for,
or the net proceeds of which are used to refund, refinance or replace
Indebtedness Incurred pursuant to Section 4.13(a) or clause (iii) or
(v) above.
"Permitted Liens" means, with respect to the Company and any
Subsidiary:
(i) Liens for taxes, assessments or governmental charges
or levies on the assets or property of the Company or any Subsidiary if
the same shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(ii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens arising in
the ordinary course of business which secure payment of obligations not
more than 60 days past due;
(iii) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age pensions or
other social security or retirement benefits, or similar legislation;
(iv) Utility easements, building restrictions and such
other encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar character
and which do not in any material way affect the marketability of the
same or interfere with the use thereof in the business of the Company
or its Subsidiaries;
(v) Liens securing Permitted Indebtedness;
(vi) Liens with respect to IO Securities, Residual
Certificates or excess servicing rights arising from the documents
creating and governing such securities, certificates and rights as a
result of the subordinate nature of such assets to other senior
interests created and governed by such documents; and
(vii) Liens on the Capital Stock of, or the assets or
property of, a Subsidiary acquired by the Company in existence at the
time of such acquisition provided that (a) such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition and (b) such Liens do not extend to assets or property
owned by the Company or any other Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund
Indebtedness of the Company or any of its Subsidiaries, provided that (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if
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applicable), plus accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith, including premiums paid, if any, to the
holders thereof); (ii) such Permitted Refinancing Indebtedness has a final
maturity date at or later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than 91 days after the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Subsidiary which is the obligor on
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Permitted Warehouse Indebtedness" means Indebtedness of any Person
under any warehouse line of credit, loan repurchase agreement or similar
facility or under any commercial paper program (a) that is incurred for the
purpose of funding the origination or purchase of Receivables that are intended
to be sold to investors and are eligible to be recorded as held for sale on the
consolidated balance sheet of such Person in accordance with GAAP and are so
recorded, (b) that in the case of any warehouse line of credit or similar
facility is, or, in the case of any commercial paper program, the letters of
credit or revolving credit facility providing credit enhancement or liquidity
backup for such commercial paper program are, secured by Receivables or
securities backed by such receivables or any combination thereof owned by such
Person, (c) the outstanding amount of which shall not exceed 100% of the
aggregate principal amount of the Receivables and/or securities backed by such
receivables securing such Indebtedness and (d) that has not been outstanding in
excess of 360 days.
"Person" means any individual, corporation, partnership, joint venture,
trust, association, joint stock company, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock" means, with respect to any Person, any Capital Stock
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Capital Stock of any other class in such Person.
"Receivables" means loans, leases and other credit receivables commonly
financed by companies in the mortgage lending or consumer finance business in
the United States which are purchased or originated by the Company or any
Subsidiary of the Company in the ordinary course of business.
"Record Date" means, with respect to any Interest Payment Date, the
June 1 or December 1 preceding an Interest Payment Date of June 15 and December
15, respectively.
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"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to the provisions of the
Note.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to the provisions of the
Note.
"Related Agreements" means the Notes and the Collateral Documents.
"Repurchase Event" has the meaning set forth in Section 8.3.
"Repurchase Price," when used with respect to any Note to be
repurchased, means the price at which it is to be repurchased pursuant to the
terms of the Notes.
"Registration Rights Agreement" has the meaning set forth in the
Agreement.
"Residual Certificate" means a security (whether identified as a
certificate, instrument or interest) representing the residual interest in a
real estate mortgage investment conduit or other entity formed by the Company or
a Subsidiary and in which the Company or a Subsidiary has retained a residual
interest which is only payable on a fully subordinated basis after all regular
interests in and/or debt issued by such entity has been fully repaid.
"Restricted Payment" means
(i) the declaration, payment or setting apart of any funds for
the payment of any dividend on, or making of any distribution to
holders of, the Capital Stock of the Company or any Subsidiary of the
Company (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its
Subsidiaries) or make any payment or distribution to or for the benefit
of the direct or indirect holders of the Capital Stock of the Company
or any Subsidiary of the Company (other than (a) dividends or
distributions payable in its Capital Stock (other than Disqualified
Capital Stock) and (b) dividends or distributions payable to the
Company or a Subsidiary of the Company (and if such Subsidiary is not a
Wholly-Owned Subsidiary, to its other holders of Capital Stock on a pro
rata basis);
(ii) the purchase, redemption or other acquisition or
retirement for value, directly or indirectly, of any Capital Stock of
the Company or any Subsidiary of the Company (other than any such
Capital Stock owned by the Company or any of its Subsidiaries and other
than the acquisition of Capital Stock in Subsidiaries solely in
exchange for Capital Stock (other than Disqualified Capital Stock ) of
the Company); or
(iii) the making of any principal payments on, or repurchase,
redemption, defeasance, retirement or other acquisition for value,
directly or indirectly, of any Junior Indebtedness or Pari Passu
Indebtedness, prior to the Stated Maturity of principal or
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scheduled redemption or defeasance of, or any scheduled sinking fund
payment on, such Junior Indebtedness or Pari Passu Indebtedness.
Notwithstanding the above, a Restricted Payment shall not include: (A)
any future payments required to be made to the former shareholders of MCI
pursuant to the Stock Purchase Agreement, dated as of July 15, 1999, by and
among Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxx, Xxxx Xxxxxxx
Xxxx, Xxxxxxx X. Xxxxxx, MCI and the Company; or (B) the repurchase, redemption,
defeasance, retirement or other acquisition for value directly or indirectly of
the Notes in accordance with the terms of the Notes (including without
limitation Section 4.20 hereof).
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securitization Subsidiary" means a Subsidiary of the Company formed in
connection with a securitization of Receivables (i) all the Capital Stock of
which (other than directors' qualifying shares and shares held by other Persons
to the extent such shares are required by applicable law to be held by a Person
other than the Company or a Subsidiary) is owned by the Company or one or more
of its Subsidiaries, (ii) that has no assets other than Excess Spread
Receivables created in such securitization, (iii) that conducts no business
other than holding such Excess Spread Receivables, and (iv) that has no
Indebtedness (other than short-term Indebtedness to the Company or any
Wholly-Owned Subsidiary attributable to the purchase by such Subsidiary from the
Company or such Wholly-Owned Subsidiary of such Receivables, which Indebtedness
is paid in full upon closing of such securitization).
"Significant Subsidiary" means, with respect to any Person, any
Subsidiary which is a "significant subsidiary" (as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act) of such
Person.
"Stated Maturity" when used with respect to any Indebtedness
(including, without limitation, the Notes) means the dates specified in the
instrument governing such Indebtedness as the fixed dates on which any principal
amount of such Indebtedness is due and payable (including, without limitation,
by reason of any required redemption, purchase, defeasance or sinking fund
payment) and, when used with respect to any installment of interest on
Indebtedness, means the date on which such installment is due and payable.
"Stockholder Approvals" means the approval of the stockholders of the
Company, pursuant to Section 5.1 of the Agreement, of (i) the issuance of Common
Stock upon conversion of the Notes in their entirety and (ii) the issuance of
Common Stock upon conversion of the Exchange Notes in accordance with their
terms.
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"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more Subsidiaries of such Person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof).
"Substantial Portion" means, with respect to the assets of the Company
and its Subsidiaries, assets which (i) represent more than 10% of the
consolidated assets of the Company and its Subsidiaries as would be shown in the
consolidated financial statements of the Company and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
Consolidated Net Income of the Company and its Subsidiaries as reflected in the
financial statements referred to in clause (i) above.
"Supermajority Covenants" has the meaning set forth in Section 4.25.
"Value Partners" means Value Partners, Ltd., a Texas limited
partnership.
"Trading Day" has the meaning set forth in Section 7.5(i).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at Stated Maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Subsidiary" means a Subsidiary all of the Capital Stock
of which is owned by the Company or another Wholly-Owned Subsidiary.
ARTICLE II
ISSUANCE OF NOTES
SECTION 2.1 DESIGNATION AND AMOUNT OF NOTES; RANKING.
This Note is one of a duly authorized issue of notes of the Company,
designated as its Amended and Restated 12% Secured Convertible Senior Notes due
2006 (herein called the "Notes") in the maximum aggregate principal amount of
$14,000,000 issued pursuant to an
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Amended and Restated Secured Convertible Senior Note Purchase Agreement, dated
for reference purposes only as of February 29, 2000, by and among Altiva
Financial Corporation and the purchaser listed on the signature page thereto (as
amended, supplemented or otherwise modified from time to time, the "Agreement"),
to which all the terms of this Note are subject.
The Notes constitute senior obligations of the Company and shall not be
subordinated in right or priority of payment to any existing or future
Indebtedness of the Company.
SECTION 2.2. DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST AND PRINCIPAL.
The Notes shall be issuable in registered form without coupons in
denominations of $1,000 principal amount and any integral multiple thereof.
Subject to adjustment pursuant to the penultimate sentence of this
paragraph and the next two paragraphs of this Section 2.2, interest shall accrue
at the Interest Rate on (i) $7,000,000 principal amount of the Notes (the "First
Notes") from August 31, 1999, (ii) $250,000 principal amount of the Notes (the
"Second Notes") from December 13, 1999, (iii) $750,000 principal amount of the
Notes from December 31, 1999, (iv) $1,000,000 principal amount of the Notes
(together with the Notes in clause (III), the "Third Notes" ) from January 5,
2000 , (v) $700,000 principal amount of Notes (the "Fourth Notes") from February
2, 2000, (vi) $300,000 principal amount of Notes from February 11, 2000 and
(vii) the total Outstanding principal amount of the Notes from February 29,
2000. Interest on the Notes shall be payable by the Company in cash to Holders
(i) from the most recent date to which interest has been paid or, if no interest
has been paid, from August 31, 1999, on June 15 and December 15 of each year
(each an "Interest Payment Date"), commencing on June 15, 2001, and (ii) on the
Maturity Date (or earlier to the extent provided in Article V hereof) to the
extent accrued but theretofore unpaid. In addition to the foregoing, pursuant to
the term of the First Notes, the Second Notes and the Third Notes, the Interest
Rate on the Notes shall be increased by 1% per annum for the period from
February 15 through the date immediately preceding the date of receipt of the
Stockholder Approvals, and pursuant to the terms of the Fourth Notes, the
Interest Rate on the Notes shall be increased by 1% per annum for the period
from February 29, 2000 through the date immediately preceding the date of
receipt of the Stockholder Approvals. Interest on the Notes shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.
In the event that the Company is obligated to pay Liquidated Damages to
Holders, the Interest Rate shall be increased for the period during which the
Company is obligated to pay Liquidated Damages by the amount of such Liquidated
Damages and all references herein to interest shall include Liquidated Damages,
if any. The Company shall promptly notify each Holder at its address as it
appears on the Note Register in the event that the Company is obligated to pay
Liquidated Damages to Holders.
In the event that the Company does not obtain the Stockholder Approvals
on or before March 9, 2000 (as may be extended pursuant to Section 8.3 hereof),
the Interest Rate shall increase monthly, commencing on March 9, 2000 (or as
extended), by 1% per annum, up to a maximum interest rate of 18% (exclusive of
Liquidated Damages, if any), provided that if the
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Company subsequently obtains the Stockholder Approvals, the Interest Rate shall
revert as of the date of receipt thereof to the amount otherwise payable
hereunder and shall not thereafter reflect any increase in the Interest Rate as
a result of the requirements of this sentence. The Company shall promptly notify
each Holder at its address as it appears on the Note Register in the event that
the Company is obligated to increase the Interest Rate pursuant to the
requirements of this paragraph.
The Person in whose name any Note is registered at the close of
business on any Record Date with respect to any Interest Payment Date (including
any Note that is converted after the Record Date and on or before the Interest
Payment Date) shall receive the interest payable on such Interest Payment Date
notwithstanding the cancellation of such Note upon any transfer, exchange or
conversion subsequent to the Record Date and on or prior to such Interest
Payment Date. Interest shall be paid by check mailed to the address of such
Person on the Note Register, provided that at the request of a Holder in writing
to the Company at least five days prior to the date set for payment of interest,
interest on such Holder's Notes shall be paid by wire transfer in immediately
available funds in accordance with the wire transfer instructions supplied by
such Holder to the Company. Payment of principal, premium, if any, and interest
due on the Maturity Date similarly shall be paid by the Company by check or, at
the request of a Holder, wire transfer.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names Notes are registered at the
close of business on a special record date for the payment of such
Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment. The Company
shall cause notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the Note
Register not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes were
registered at the close of business on such special record date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner.
SECTION 2.3. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; RESTRICTIONS ON
TRANSFER.
The Company shall cause to be kept at its executive offices a register
(the "Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes. The Note Register shall be
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in written form or in any form capable of being converted into written form
within a reasonably prompt period of time.
The Company shall also maintain a register of Beneficial Owners of the
Notes, which Beneficial Owners shall be placed thereon upon receipt by the
Company of written certification of any such Beneficial Owner as to its
beneficial ownership of a specified principal amount of the Notes accompanied by
evidence thereof reasonably satisfactory to the Company and setting forth its
address and other information which will permit the Company to communicate with
such Beneficial Owners as required herein and deem such Beneficial Owners as
registered Holders for purposes hereof. A copy of any notice sent hereunder to
Holders also shall be sent to the Beneficial Owners on the Company's registry
and any consent, request, direction, approval, objection or other instrument or
action required or permitted by the Notes to be executed or taken by any Holder
(other than a transfer or conversion of a Note) shall be fully effective if
executed or taken by the Beneficial Owner thereof on the Company's registry,
provided that, in the event of conflicting instruments executed by the
registered Holder and the Beneficial Owner, the action by the registered Holder
shall govern. The Company may presume that the Persons that is enters on the
registry of Beneficial Owners are such Beneficial Owners unless it receives
written notification to the contrary.
Upon surrender for registration of transfer of any Note to the Company
and satisfaction of the requirements for such transfer set forth in this Section
2.4 and in the Agreement, the Company shall execute and deliver, in the name of
the designated transferee or transferees, one or more new Notes of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by the Agreement.
Subject to the requirements of the immediately succeeding paragraph,
Notes may be exchanged for other Notes of any authorized denominations and of a
like aggregate principal amount upon surrender of the Notes to be exchanged to
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall execute and deliver the Notes which the Holder making the exchange is
entitled to receive bearing registration numbers not contemporaneously
Outstanding.
Each initial Holder of the Notes shall be issued a Note with a
principal amount equal to such Holder's initial aggregate investment in the
Notes and may not exchange such Note for other Notes of any authorized
denominations and of a like aggregate principal amount unless it has a valid
business reason therefor, provided that nothing herein shall be deemed to
restrict an initial Holder from exchanging Notes for other Notes of authorized
denominations and of a like aggregate principal amount in connection with any
sale, disposition or other transfer of the Notes or any conversion of the Notes
in accordance with Article VII hereof.
All Notes issued upon registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt and
entitled to the same benefits as the Notes surrendered upon such registration of
transfer or exchange.
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All Notes presented or surrendered for registration of transfer or for
exchange, redemption, repurchase or conversion shall (if so required by the
Company) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
SECTION 2.4. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
In case any Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute and deliver a new Note,
bearing a number not contemporaneously Outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution of the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company such indemnity as may be required by the Company to
save it harmless for any loss, liability, cost or expense caused by or connected
with such substitution, and, in every case of destruction, loss or theft, the
applicant shall furnish to the Company, evidence to its satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.4 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of and subject to all the limitations set forth
herein equally and proportionally with any and all other duly issued Notes. To
the extent permitted by law, all Notes shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the
replacement or payment or conversion of mutilated, destroyed, lost or stolen
Notes and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect to
the replacement or payment or conversion of negotiable instruments or other
securities without their surrender.
ARTICLE III
REDEMPTION OF NOTES
SECTION 3.1. OPTIONAL RIGHTS TO REDEEM NOTES.
(a) Except as provided in paragraph (b) below, the Notes are not
redeemable at the Company's option prior to June 15, 2004. Thereafter, the Notes
may be redeemed, in whole but not in part, at the option of the Company at the
Redemption Prices specified below (expressed as percentages of the principal
amount thereof), in each case, together with accrued and unpaid interest, if
any, thereon to the Redemption Date, if redeemed during the 12-month period
beginning on June 15 of the years indicated below:
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Year Redemption Rate
2004 106%
2005 100%
Notwithstanding the foregoing, the Notes may be redeemed at the
Company's option prior to June 15, 2004, in whole but not in part, at a
Redemption Price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest, if any, thereon to the Redemption Date, if the
Closing Price of the Common Stock equals or exceeds $5.00 per share (subject to
adjustment as provided herein, the "Redemption Trading Price") for 35
consecutive Trading Days after the Issue Date and prior to June 15, 2004.
In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Redemption Trading Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Redemption Trading Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, 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 such subdivision or
combination becomes effective.
(b) Notwithstanding any provision hereof to the contrary, if it any
time the total Outstanding principal amount of the Notes shall be less than 10%
of the aggregate principal amount Outstanding on the Issue Date, the Company
may, at its option, redeem all or any part of the Notes then Outstanding at a
Redemption Price equal to the applicable amount set forth in Section 3.1(a)
hereof of the principal amount of the Notes then Outstanding, together with
accrued and unpaid interest, if any, thereon to the Redemption Date.
SECTION 3.2. NOTICE OF OPTIONAL REDEMPTION.
At least 30 days but not more than 90 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of optional redemption by
first-class mail to each Holder of Notes to be redeemed at such Holder's address
as it appears on the Note Register.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the then current Conversion Price;
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(4) that Notes called for redemption must be presented and
surrendered to the Company to collect the Redemption Price;
(5) that the Notes called for redemption may be converted at
any time before the close of business on the fifth Business Day
immediately preceding the Redemption Date;
(6) that Holders who wish to convert Notes must satisfy the
requirements in Article VII of the Notes;
(7) that, unless the Company defaults in making the redemption
payment, the only remaining right of the Holder shall be to receive
payment of the Redemption Price upon presentation and surrender to the
Company of the Notes; and
(8) that interest on Notes called for redemption ceases to
accrue on and after the Redemption Date.
SECTION 3.3. EFFECT OF NOTICE OF OPTIONAL REDEMPTION.
Once notice of optional redemption is mailed, Notes called for
redemption become due and payable on the Redemption Date and at the Redemption
Price stated in the notice, except for Notes that are converted in accordance
with the provisions of Section 7.1. Upon presentation and surrender to the
Company, Notes called for redemption shall be paid at the Redemption Price, plus
accrued interest up to but not including the Redemption Date.
ARTICLE IV
CERTAIN COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided herein. To the extent
lawful, the Company shall pay interest (including post-petition interest in any
proceeding under any bankruptcy law) on (i) overdue principal, at the rate borne
by the Notes at the time, and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semi-annually.
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SECTION 4.2. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of its obligations herein, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantages of any such law.
SECTION 4.3. REPORTS AND CERTIFICATES.
(a) Whether or not required by the rules and regulations of the
SEC, so long as any Notes are Outstanding, the Company will furnish to the
Holders, within five days after the time periods specified in the SEC's rules
and regulations (including any extensions expressly permitted by such rules and
regulations):
(1) all quarterly and annual information,
financial and other, that would be required to be contained in
a filing with the SEC on Forms 10-Q and 10-K (or any successor
forms) if the Company were required to file such forms,
including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and an annual report on
the Company's consolidated financial statements by the
Company's independent certified public accountants; and
(2) all current reports that would be required
to be filed with the SEC on Form 8-K (or any successor form)
if the Company were required to file such reports.
(b) For so long as any Notes are Outstanding, the Company will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Concurrently with the delivery of the annual report described
in Section 4.3(a)(1), the Company will deliver to each Holder at such Holder's
address as it appears on the Note Register a statement of the Company's
independent certified public accountants to the effect that they have reviewed
the Agreement and the Related Agreements and that based on their examination of
the affairs of the Company and its Subsidiaries, performed in connection with
their audit of the Company's annual financial statements, they are not aware of
the occurrence or existence of any condition or event which constitutes a
Default or an Event of Default, or, if they are aware thereof, the nature
thereof.
(d) Concurrently with the delivery of the annual report described
in Section 4.3(a)(1), the Company will deliver to each Holder at such Holder's
address as it appears in the Note Register, within 90 days after the end of each
fiscal year of the Company, an Officer's
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Certificate, signed by each of the Company's Chief Executive Officer and Chief
Financial Officer, to the effect that each such officer has reviewed the
Agreement and the Related Agreements and is not aware of the occurrence or
existence of any condition or event which constitutes a Default or an Event of
Default, or, if they are aware thereof, the nature thereof and what action the
Company is taking or proposes to take with respect thereto.
(e) Notwithstanding any other provision hereof to the contrary,
promptly upon acquiring knowledge of any Default or Event of Default, the
Company will promptly deliver to each Holder at such Holder's address as it
appears in the Note Register an Officer's Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
(f) The Company will deliver to each Holder of at least $1.0
million aggregate principal amount of Notes who so requests at such Holder's
address as it appears in the Note Register, within 30 days after the end of each
fiscal quarter of the Company, an Officer's Certificate, signed by the Company's
Chief Executive Officer and Chief Financial Officer, which (i) sets forth in
reasonable detail the calculations which demonstrate the Company's compliance
with the financial covenants set forth in Section 4.12 (regardless whether such
covenants are in effect) and Section 4.13 (regardless whether the Company is
seeking to Incur additional Indebtedness) and (ii) to the effect that each such
officer is not aware of the occurrence or existence of any condition or event
which constitutes a Default or an Event of Default with respect to Section 4.6
or, if they are aware thereof, the nature thereof and what action the Company is
taking or proposes to take with respect thereto.
(g) The Company will deliver to each Holder of at least $1.0
million aggregate principal amount of Notes who so requests at such Holder's
address as it appears in the Note Register, within 30 days after the end of each
calendar month, (i) an unaudited balance sheet and income statement showing the
results of the Company's operations for such month, certified by an Officers'
Certificate which is signed by the Company's Chief Financial Officer or Chief
Accounting Officer, (ii) the amount of originations, purchases and sales of each
type of Receivable by the Company and each Subsidiary of the Company during such
month and fiscal year to date and (iii) the amount of (x) delinquent loans or
other Receivables and (y) real estate owned of the Company and each Subsidiary
of the Company at the end of such month.
SECTION 4.4 TAXES AND OTHER CHARGES.
(a) Each of the Company and its Subsidiaries will duly pay and
discharge, or cause to be paid and discharged, before the same becomes in
arrears, all taxes, assessments and other governmental charges imposed upon such
Person and its properties, sales or activities, or upon the income or profits
therefrom, as well as all claims for labor, materials, supplies or services
which if unpaid might by law become a Lien upon any of its assets; provided,
however, that any such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith by
appropriate proceedings and if such Person shall, in accordance with GAAP, have
set aside on its books adequate reserves with respect thereto; and provided,
further, that each of the Company and its Subsidiaries shall pay or bond, or
cause to be
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paid or bonded, all such taxes, assessments, charges or other governmental
claims immediately upon the commencement of proceedings to foreclose any Lien
which may have attached as security therefor (except to the extent such
proceedings have been dismissed or stayed).
(b) Each of the Company and its Subsidiaries will promptly pay
when due, or in conformity with ordinary business practices, all accounts
payable incident to the operations of such Person not referred to in paragraph
(a) of this Section 4.4; provided, however, that any such Indebtedness need not
be paid if the validity or amount thereof shall at the time be contested in good
faith and if such Person shall, in accordance with GAAP, have set aside on its
books adequate reserves with respect thereto.
SECTION 4.5 CONDUCT OF BUSINESS.
(a) Each of the Company and its Subsidiaries (i) will carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as is conducted generally from time to time by
companies in the mortgage lending business or the consumer finance business in
the United States and will not engage in any other business activities and (ii)
do all things necessary to remain duly incorporated, validly existing and in
good standing as a domestic corporation in its jurisdiction of incorporation and
maintain all requisite authority to conduct its business in each jurisdiction in
which its business is conducted to the extent failure to do so would have, or
could reasonably be expected to have, a Material Adverse Effect.
(b) Each of the Company and its Subsidiaries will comply in all
material respects with all valid and applicable statutes, laws, ordinances,
zoning and building codes and other rules and regulations of the United States
of America, of the states and territories thereof and their counties,
municipalities and other subdivisions and of any foreign country or other
jurisdictions applicable to such Person, except where failure so to comply would
not, individually or in the aggregate, result in any Material Adverse Effect.
SECTION 4.6. CORPORATE EXISTENCE.
(a) Subject to Article VI, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises and those of any
Subsidiary of the Company, provided, however, that the Company and any
Subsidiary of the Company shall not be required to preserve any such right or
franchise if the Board of Directors of the Company shall determine in good faith
that the preservation is no longer desirable in the conduct of the Company's
business and that the loss thereof is not, and will not be, reasonably likely to
result in any Material Adverse Effect.
(b) Notwithstanding anything in paragraph (a) to the contrary, the
Company will exercise its reasonable best efforts to operate MCI in a manner
that will maintain the corporate
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existence and enterprise value of MCI, including but not limited to maintenance
of its production, administration and secondary marketing functions in a fashion
that would make its business a commercially marketable asset, which shall
include:
(i) the maintenance of separate books, records and accounts,
including detailed intercompany payables and receivables accounts;
(ii) separate revenue generation (including loan origination and
loan sales), collection, and credit functions;
(iii) separate expense allocation;
(iv) separate employment of employees, consultants and agents; (v)
separate compensation of employees, consultants and agents; (vi)
maintenance of separate licenses; (vii) maintenance of separate
borrowing facilities, whether in MCI's own name, or as a named borrower
under the Company facilities, including warehouse facilities;
(viii) separation of all material operational functions, including
telephone systems, computer systems, etc.
(ix) separate corporate existence; and
(x) separate business leases and contracts, including as to office
space, phone systems, copy systems, leased furniture and equipment.
(c) The Company will take reasonable steps to ensure that all data
and information reasonably necessary for the operation of MCI as an independent
corporation, including accounting, loan production and loan sales information,
shall be transferable to MCI promptly and without material expense upon
reasonable request by MCI. MCI shall maintain, at MCI, computer systems capable
of maintaining and processing the above and such data shall be forwarded to such
system periodically.
(d) The Company will ensure that all business relations with MCI,
including any services provided to MCI by the Company, are properly documented.
All contracts between MCI and the Company shall include a provision permitting
MCI to terminate such contracts without penalty, at its discretion. The Company
will take no action which it reasonably believes will result in a material
reduction in the enterprise value or marketability of MCI, provided that this
restriction shall not prohibit the Company from transferring money from MCI to
the Company in such manner as the Company determines is necessary, in its
discretion.
(e) The covenants in paragraphs (b) and (c) above shall cease to
be effective at such time on or after August 31, 2001 as the Company shall have
established compliance with all of the financial tests specified in Section 4.12
(a), (b) and (c).
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SECTION 4.7. MAINTENANCE OF PROPERTIES.
The Company and its Subsidiaries will cause all material properties
(real and personal) owned, leased or licensed in the conduct of their business
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof and
thereto, all as in the reasonable judgment of the Board of Directors may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times while any Notes are
Outstanding, provided, however, that nothing in this Section 4.7 shall prevent
the Company and its Subsidiaries from discontinuing the maintenance of any such
properties if, in the reasonable judgment of the Board of Directors, such
discontinuance is desirable in the conduct of the Company's business and is not,
and will not be, reasonably likely to result in any Material Adverse Effect.
SECTION 4.8 INSURANCE.
Each of the Company and its Subsidiaries will maintain with financially
sound and reputable insurers insurance against liability for hazards, risks and
liability to persons and property, to the extent, in amounts and with
deductibles at least as favorable as those generally maintained by businesses of
similar size engaged in similar activities.
SECTION 4.9. RESTRICTED PAYMENTS.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, make any Restricted Payment.
SECTION 4.10. RESTRICTIONS ON ISSUANCE AND SALE OF CAPITAL STOCK OF
SUBSIDIARIES.
The Company will not sell, transfer or otherwise dispose of shares of
Capital Stock of any Subsidiary of the Company or permit any Subsidiary of the
Company to issue, sell or otherwise dispose of shares of its Capital Stock
unless in either case such Subsidiary remains a Wholly-Owned Subsidiary of the
Company.
SECTION 4.11 RESTRICTIONS ON SUBSIDIARY MERGERS AND SALES OF ASSETS.
(a) The Company will not permit any Subsidiary to merge or
consolidate with any Person, except that a Subsidiary, other than MCI, may merge
into the Company or another Wholly-Owned Subsidiary of the Company.
(b) The Company will not permit any Subsidiary to sell, lease or
otherwise dispose of its assets to any other Person, except (i) sales of
Receivables in the ordinary course of business, (ii) sales of mortgage-related
securities which are issued or sponsored by the Subsidiary or an Affiliate of
the Subsidiary in the ordinary course of business or (iii) sales, leases
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or other dispositions of its assets that, together with all other assets of the
Subsidiary previously sold, leased or disposed of (other than Receivables and
securities referred to in clauses (i) and (ii) of this sentence) in accordance
with this Section 4.11(b) during the 12-month period ending with the month in
which any such sale, lease or other disposition occurs, do not constitute a
Substantial Portion of the consolidated assets of the Company under GAAP.
SECTION 4.12. FINANCIAL COVENANTS.
(a) The Company will not at any time permit its Consolidated Net
Worth to be less than the sum of (1) $30.0 million plus (2) 60% of the sum of
the Company's positive Consolidated Net Income (determined in accordance with
GAAP) for each fiscal semi-annual period ending after the Issue Date, commencing
with the semi-annual period ending August 31, 2000, plus (3) 100% of the net
proceeds obtained by the Company through the issuance or sale of Capital Stock
(after the deduction of all costs of such issuance). For purposes of this
Section 4.12(a), Consolidated Net Worth shall not include (i) up to an aggregate
of $5.0 million of increases in the carrying value of the mortgage-related
securities owned by the Company as of the Issue Date (the "Issue Date
Securities") recorded by the Company under GAAP and (ii) up to an aggregate of
$5.0 million of decreases in the carrying value of the Issue Date Securities
recorded by the Company under GAAP, in each case measured from the carrying
value of the Issue Date Securities as of the month-end preceding the Closing
Date, as set forth on an Officers' Certificate delivered to Value Partners and
the Collateral Agent, and as subsequently reflected on any statement of
financial condition of the Company included in a report filed by the Company
pursuant to Section 4.3(a)(1) (the "Xxxx-to-Market Adjustments"). To illustrate,
if the Company decreased the carrying value of the Issue Date Securities under
GAAP as of the month-end preceding the Issue Date by $4.0 million and $3.0
million at August 31, 2000 and November 30, 2000, respectively, the Consolidated
Net Worth of the Company at November 30, 2000 for purposes of Section 4.12(a)(1)
shall be increased by $5.0 million. Similarly, if the Company increased the
carrying value of the Issue Date Securities by such respective amounts at such
respective dates, the Consolidated Net Worth of the Company at November 30, 2000
for purposes of Section 4.12(a)(1) shall be decreased by $5.0 million.
(b) Commencing on August 31, 2001 and thereafter, the Company will
not at any time permit the ratio of (i) the aggregate amount of consolidated
liabilities of the Company and its Subsidiaries (determined in accordance with
GAAP) to (ii) the Consolidated Net Worth of the Company and its Subsidiaries to
exceed 7.0 to 1.0.
(c) Commencing with the fiscal quarter ending August 31, 2001 and
as of the end of each fiscal quarter of the Company thereafter, the Company will
not permit the Fixed Charge Coverage Ratio of the Company to be less than 1.5 to
1.0 on a trailing four-quarter basis.
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SECTION 4.13. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, Incur any Indebtedness or issue any
Disqualified Capital Stock, provided, that the Company and any Subsidiary may
Incur Indebtedness, other than in the case of the Company Indebtedness as a
result of its Guarantee of the Indebtedness of any Person, including without
limitation any Subsidiary of the Company, if at the time of Incurrence no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof and each of the following requirements is satisfied:
(i) The Fixed Charge Coverage Ratio for the Company's most
recently ended four fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is Incurred would have been at least 1.6 to
1.0, determined on a pro forma basis (including, if applicable, a pro
forma application of the net proceeds therefrom to repay other
Indebtedness), as if the additional Indebtedness had been Incurred at
the beginning of such four-quarter period; and
(ii) the ratio of (i) the aggregate amount of consolidated
liabilities of the Company and its Subsidiaries to (ii) the
Consolidated Net Worth of the Company does not exceed 6.0 to 1.0,
determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom).
(b) Notwithstanding paragraph (a) of this Section 4.13, the
Company and its Subsidiaries may incur Permitted Indebtedness while no Default
or Event of Default exists.
SECTION 4.14. LIENS.
(a) The Company will not, and will not permit any Subsidiary to,
create, assume or otherwise cause or suffer to exist or to become effective any
Lien upon any Note Security (or become contractually committed to do so), except
the following:
(i) Liens created under the agreements governing the
securitization of the Receivables underlying the mortgage-related
securities included in the Note Security;
(ii) Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by Section 4.4;
(iii) restrictions under federal and state securities laws on
the transfer of securities; and
(iv) Liens which solely secure the Note Obligations and the
Exchange Note Obligations.
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(b) The Company will not, and will not permit any Subsidiary to,
create, assume or otherwise cause or suffer to exist or become effective any
Lien upon any Eligible Collateral, other than Permitted Liens, to secure any
Indebtedness of the Company (other than the Note Obligations and the Exchange
Note Obligations), any Subsidiary of the Company or any other Person, without in
each case making effective provision whereby all Notes and Exchange Notes shall
be directly secured equally and ratably with (or prior to in the case of Liens
with respect to Junior Indebtedness) such Indebtedness.
SECTION 4.15. SUBSIDIARY GUARANTEES.
The Company will not permit any Subsidiary of the Company, directly or
indirectly, to Guarantee or assume, or subject any of its assets to a Lien to
secure, any Pari Passu Indebtedness or Junior Indebtedness unless (i) such
Subsidiary simultaneously provides for a Guarantee of, or pledge of assets to
secure, the Note Obligations and the Exchange Note Obligations by such
Subsidiary on terms at least as favorable to the Holders as such Guarantee or
security interest in such assets is to the holders of such Pari Passu
Indebtedness or Junior Indebtedness, except that in the event of a Guarantee or
security interest in such assets with respect to (x) Pari Passu Indebtedness,
the Guarantee or security interest in such assets shall be made pari passu to
the Guarantee or security interest in such assets with respect to such Pari
Passu Indebtedness or (y) Junior Indebtedness, any such Guarantee or security
interest in such assets with respect to such Junior Indebtedness shall be
subordinated to such Subsidiary's guarantee or security interest in such assets
with respect to the Note Obligations and the Exchange Note Obligations to the
same extent as such Junior Indebtedness is subordinated to the Note Obligations
and the Exchange Note Obligations and (ii) such Subsidiary waives and agrees in
writing that it will not in any manner whatsoever claim, or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Subsidiary of the Company as a result of
any payment by such Subsidiary under its guarantees.
SECTION 4.16. PAYMENT OF DIVIDENDS FROM SUBSIDIARIES.
To the extent necessary to enable it to make payments on the Notes in
accordance with their terms, the Company shall cause dividends to be paid to it
by its Subsidiaries (whether in existence as of the date of issuance of the
Notes or thereafter formed or acquired) in amounts which are sufficient to
enable the Company to satisfy its payment obligations under the Notes (and which
shall be so used by the Company), provided that the Company shall not be
required to take any action which would result in a Subsidiary paying dividends
to the extent not permitted by applicable law and regulation and/or restrictions
existing under agreements in effect on the Issue Date if the Company receives an
opinion of counsel (in form and substance satisfactory to the registered holders
of a majority in aggregate principal amount of the Notes and the Exchange Notes,
considered as a single class, at the time Outstanding) as to the existence of
the relevant restriction no later than the applicable Interest Payment Date or
the Stated Maturity of the Notes, whether by acceleration or otherwise.
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SECTION 4.17. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries
(whether in existence as of the date of issuance of the Notes or thereafter
formed or acquired) to, create, assume or otherwise cause or suffer to exist or
to become effective any consensual encumbrance or consensual restriction on the
ability of any such Subsidiary to:
(a) pay any dividends or make any other distribution to the
Company or any other Subsidiary on its Capital Stock or with
respect to any other interest or participation in, or measured
by, its profits;
(b) make payments in respect to any Indebtedness owed to the
Company or any other Subsidiary; or
(c) make loans or advances to the Company or any other Subsidiary
or to guarantee Indebtedness of the Company or any other
Subsidiary;
other than, in the case of (a), (b) and (c),
(1) restrictions existing under agreements in effect on the
Issue Date;
(2) consensual encumbrances or consensual restrictions binding
upon any Person at the time such Person becomes a Subsidiary of the Company so
long as such encumbrances or restrictions (i) are not created, incurred or
assumed in contemplation of such Person becoming a Subsidiary and (ii) do not
encumber or restrict the Company or any other Subsidiary of the Company as set
forth in (a), (b) or (c) above.
(3) restrictions on the transfer of assets which are subject
to Liens; and
(4) restrictions existing under any agreement which refinances
or replaces any of the agreements containing the restrictions in clauses (1) and
(2), provided that the terms and conditions of any such restrictions are not
materially less favorable to the Holders than those under the agreement
evidencing or relating to the Indebtedness refinanced.
SECTION 4.18. INVESTMENTS AND ACQUISITIONS.
The Company will not, nor will it permit any Subsidiary to, make or
suffer to exist any Investments (including, without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor,
or create any Subsidiary or become a partner in any partnership or joint
venture, or make any Acquisition of any Person, in each case whether directly or
indirectly through a transaction which may otherwise be permissible pursuant to
Section 6.1 hereof or otherwise, except:
(i) Short-term obligations of, or fully guaranteed by, the United
States of America;
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(ii) Commercial paper rated A-1 or better by Standard and Poor's
Ratings Group or P-1 or better by Xxxxx'x Investors Service,
Inc.;
(iii) Demand deposit accounts maintained in the ordinary course of
business;
(iv) Certificates of deposit issued by and time deposits with
federally-insured financial institutions having capital and
surplus in excess of $100,000,000;
(v) Investments in existence on the Issue Date;
(vi) Investments in the ordinary course of the Company's business
to originate or purchase (a) Receivables (and in connection
with commitments to purchase the same) and (b) real estate
acquired by foreclosure or by deed-in-lieu thereof, whether
directly or indirectly through a Subsidiary formed for the
sole purpose of holding the same;
(vii) Hedging Obligations; and
(viii) Investments in Securitization Subsidiaries.
SECTION 4.19. LIMITATION ON INVESTMENT COMPANY STATUS.
The Company will not take, and will not permit any Subsidiary to take,
any action, or otherwise permit to exist any circumstance, that would require
the Company or such Subsidiary to register as an "investment company" under the
Investment Company Act of 1940, as amended.
SECTION 4.20. PAYMENTS ON NOTES; REPURCHASE OF NOTES.
(a) Except as expressly provided in the Intercreditor Agreement, the
Company will not make any payment of interest, premium, if any, or principal on
the Notes or the Exchange Notes without making a pro rata payment to all holders
of Notes and Exchange Notes.
(b) The Company will not, and will not permit any Subsidiary or other
Affiliate of the Company to, redeem or purchase (whether in public or private
transactions) any Notes or the Exchange Notes other than pursuant to a
redemption or repurchase offer made to each holder of a Note or an Exchange Note
pro rata in accordance with the aggregate principal amount of Notes and Exchange
Notes held by such holders.
SECTION 4.21. TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of any
asset or the rendering of any service, with any Affiliate (other than the
Company or a Subsidiary of the Company) unless such
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transaction (a) is otherwise not in violation of the Agreement and the Related
Agreements (including without limitation the Notes), and (b) is approved by a
majority of the disinterested members of the Board of Directors, is in the
ordinary course of its business and is upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate, provided that the requirements of this clause
(b) shall not apply to (i) any transaction pursuant to agreements in effect on
the Issue Date and (ii) any transaction or series of related transactions in
which the amount involved does not exceed $250,000.
SECTION 4.22. PAYMENTS FOR CONSENT.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of a Note or an Exchange Note
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Notes (other than article VII thereof) or the Exchange Notes
unless such consideration is paid to all holders of Notes and Exchange Notes
that provide such consent or so waive or agree to amend.
SECTION 4.23 BOARD OF DIRECTORS.
(a) In the event that there is a Default or an Event of Default, the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding shall have the right to nominate a director to the Board of
Directors of the Company, which action may be taken by the written consent of
such Holders. In the event that the Holders elect to nominate a director under
this Section, the Company shall call and hold, within 10 Business Days, a
meeting of its Board of Directors for the purpose of considering electing the
nominee of the Holders for a term expiring at the next annual meeting of
stockholders of the Company and until his or her successor is elected and
qualified. Thereafter, in the event of the election of such nominee by the Board
of Directors of the Company, and subject to the fiduciary duties of the Board of
Directors of the Company, the Company shall include such person on the list of
nominees for director presented by the Board of Directors of the Company and for
which said Board shall solicit proxies at the next annual meeting of
stockholders of the Company.
(b) So long as it is the holder of at least $1.0 million principal
amount of Notes, Value Partners, Ltd. may designate a representative who shall
have the right to attend all regular and special meetings of the Board of
Directors of the Company. The Company shall notify such representative at least
48 hours in advance of the time and place of any meeting of the Board of
Directors of the Company.
SECTION 4.24 SOLVENCY TEST.
Commencing on May 31, 2000, the Company will not permit the sum of the
amount of (i) the Liquid Assets owned by the Company, as of the end of each
fiscal month of the Company,
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which are not subject to any Lien and (ii) the Consolidated Cash Flow of the
Company during the preceding three fiscal months to amount to zero or less.
SECTION 4.25 WAIVER OF CERTAIN COVENANTS.
Except as provided in the next sentence, the Company may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 4.3 to 4.24, inclusive, if before the time for such compliance the
record holders of at least a majority in principal amount of the Notes and the
Exchange Notes, considered as a single class, at the time Outstanding, shall
either waive such compliance in such instance or generally waive compliance with
such covenant or condition. Notwithstanding the foregoing, the Company may omit
in any particular instance to comply with the covenants or conditions set forth
in any of the following sections if before the time for such compliance the
registered holders of at least 70% in aggregate principal amount of the Notes
and the Exchange Notes, considered as a single class, at the time Outstanding,
shall either waive such compliance in such instance or generally waive
compliance with such covenant or condition: Section 4.5(a); Section 4.9; Section
4.11; Section 4.12(a), but only to the extent that the waiver relates to a
Consolidated Net Worth of less than $25.0 million ($20.0 million exclusive of
Xxxx-to-Market Adjustments, if any); Section 4.12(b), but only to the extent
that the waiver relates to an increase in the ratio set forth therein above 8.0
to 1.0; Section 4.12(c), but only to the extent that the waiver relates to a
decrease in the ratio set forth therein below 1.2 to 1.0; Section 4.13(a), but
only to the extent that the waiver relates to a decrease in the ratio set forth
in Section 4.13(a)(i) below 1.3 to 1.0 and/or an increase in the ratio set forth
in Section 4.13(a)(ii) above 7.0 to 1.0; Section 4.14; Section 4.15; Section
4.18, but only to the extent that the waiver relates to an acquisition of the
capital stock or assets of a corporation, firm or other entity which would
constitute a Significant Subsidiary of the Company; Section 4.20; and Section
4.22 (collectively, the "Supermajority Covenants"). No waiver of a covenant
pursuant to this Section 4.25 shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
ARTICLE V
REMEDIES OF NOTEHOLDERS
ON AN EVENT OF DEFAULT
SECTION 5.1. EVENTS OF DEFAULT.
In case one or more of the following Events of Default (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) shall have occurred and be continuing:
(a) default in the payment of any installment of interest upon
any of the Notes as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
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(b) default in the payment of the principal of or premium, if
any, on any of the Notes as and when the same shall become due and
payable at maturity of the Notes, by acceleration or otherwise, or in
connection with any redemption pursuant to Article III; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company in the Agreement or in any of the Related Agreements or in the
Exchange Agreement (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 5.1
specifically dealt with) continued for a period of 60 days after the
date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the registered
holders of at least 25% in aggregate principal amount of the Notes and
the Exchange Notes, considered as a single class, at the time
Outstanding; or
(d) failure of the Company or any Subsidiary of the Company to
make any payment, including any applicable grace period, in respect of
principal or interest on any Indebtedness which default shall have
resulted in Indebtedness in an amount in excess of $1,000,000; or
(e) default by the Company or a Subsidiary of the Company with
respect to any Indebtedness of the Company or such Subsidiary, which
default results in acceleration of any such Indebtedness which is in an
amount in excess of $1,000,000 without such Indebtedness having been
discharged, or such acceleration having been rescinded or annulled,
within the applicable grace period; or
(f) the entry by a court having jurisdiction in the premises
of a final judgment, decree or order against the Company or any
Subsidiary of the Company which shall require the payment by the
Company or any Subsidiary of the Company of an amount (to the extent
not covered by insurance) in excess of $1,000,000 and the continuance
of any such judgment, decree or order unstayed or unsatisfied and in
effect for a period of 60 consecutive days which is not being contested
in good faith by appropriate judicial proceedings; or
(g) the Company or any Subsidiary that is a Significant
Subsidiary of the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official
of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due; or
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(h) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary that is a Significant Subsidiary
of the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its property, and such involuntary case
or other proceeding shall remain undismissed and unstayed for a period
of 60 consecutive days; or
(i) failure on the part of the Company duly to observe or
perform any of the covenants or agreements of the Company in any of the
Collateral Documents continued for a period of 10 days after the date
on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the registered
holders of at least 25% in aggregate principal amount of the Notes and
the Exchange Notes, considered as a single class, at the time
Outstanding; or
(j) any of the Collateral Documents after delivery thereof
shall for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid, binding and
enforceable against the Company in all material respects in accordance
with their terms, or cease in any material respect to create a valid
and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, or the Company shall so
state in writing, and such default shall continue unremedied for a
period of 10 days; or
(k) default by the Company with respect to any of its
obligations contained in Article VIII hereof; or
(l) default by the Company with respect to any of its
obligations contained in Section 4.24 hereof, unless waived pursuant to
Section 5.5 hereof within 10 calendar days thereafter; or
(m) any annual audited financial statement of the Company is
qualified as to going concern or similar qualifications;
then, and in each and every such case (other than an Event of Default specified
in Section 5.1(g) or (h)), unless the principal of all of the Notes shall have
already become due and payable, the registered holders of not less than 25% in
aggregate principal amount of the Notes and the Exchange Notes, considered as a
single class, then Outstanding, by notice in writing to the Company, may declare
the principal of all the Notes and the interest accrued thereon to be due and
payable immediately, without presentment, demand, protest, notice of protest or
dishonor, notice of intent to accelerate or other notice of default of any kind,
all of which are expressly waived by the Company, and upon any such declaration
the same shall become and shall be immediately due and payable, anything herein
contained to the contrary notwithstanding.
If an Event of Default specified in Section 5.1(g) or (h) occurs, the
principal of all the Notes and the interest accrued thereon shall be immediately
and automatically due and payable
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without presentment, demand, protest, notice of protest or dishonor, notice of
intent to accelerate or other notice of default of any kind, all of which are
expressly waived by the Company.
SECTION 5.2. PAYMENT OF NOTES ON DEFAULT; SUIT THEREFOR.
The Company covenants that (a) in case default shall be made in the
payment of any installment of interest upon any of the Notes as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same shall
have become due and payable, whether at maturity of the Notes or in connection
with any redemption or repurchase hereunder, by declaration or otherwise, then
the Company will pay to the Holders the whole amount that then shall have become
due and payable on the Notes for principal and premium, if any, or interest, or
both, as the case may be, with interest upon the overdue principal and premium,
if any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate then borne
by the Notes and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection.
In case the Company shall fail forthwith to pay such amounts, a Holder
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid to it and to
exercise any of the rights or remedies provided in the Collateral Documents, and
may prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company and collect in the
manner provided by law out of the property of the Company (including without
limitation the collateral held pursuant to the Collateral Documents) wherever
situated the monies adjudged or decreed to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company under Title 11 of the United States Code,
or any other applicable law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Company, the property of the
Company, or in the case of any other judicial proceedings relative to the
Company or to the creditors or property of the Company, a Holder, irrespective
of whether the principal of the Notes shall then be due and payable as herein
expressed or by declaration or otherwise, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal, premium, if any, and interest owing
and unpaid in respect of the Notes, and, in case of any judicial proceedings, to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Holders allowed in such judicial
proceedings relative to the Company or its creditors or its property, and to
collect and receive any monies or other property payable or deliverable on any
such claims.
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SECTION 5.3. APPLICATION OF MONIES COLLECTED.
Subject to the terms of the Intercreditor Agreement and Section 4.20
hereof, any monies collected by or on behalf of a Holder pursuant to this
Article V shall be applied in the following order:
First, to reimbursement of expenses and indemnities provided in the
Agreement, the Exchange Agreement, the Notes, the Exchange Notes and the
Collateral Documents;
Second, in case the principal of the Outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes in default in
the order of the maturity of the installments of such interest, with interest
upon the overdue installments of interest at the rate then borne by the Notes,
such payments to be made ratably to the Holders entitled thereto;
Third, in case the principal of the Outstanding Notes shall have become
due, by declaration or otherwise, and be unpaid, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and premium, if any,
and interest, with interest on the overdue principal and premium, if any, and
upon overdue payments of interest at the rate then borne by the Notes, and in
case such monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Notes, then to the payment of such principal and premium, if
any, and interest without preference or priority of principal and premium, if
any, over interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any Note
over any other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and
Fourth, to the payment of the remainder, if any, to the Company or any
other Person lawfully entitled thereto.
SECTION 5.4. REMEDIES CUMULATIVE AND CONTINUING.
Except as provided in the last paragraph of Section 2.4, all powers and
remedies given by this Article V to a Holder shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to a Holder by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained herein, and no delay or omission of any Holder of any of the Notes to
exercise any right or power accruing upon an Event of Default shall impair any
such right or power, or shall be construed to be a waiver of any such default or
any acquiescence therein and every power and remedy given herein, by the
Collateral Documents or by law to the Holders may be exercised from time to
time, and as often as shall be deemed expedient, by the Holders.
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SECTION 5.5. WAIVER OF DEFAULTS BY HOLDERS.
Except as provided in the next sentence, the registered holders of a
majority in aggregate principal amount of the Notes and the Exchange Notes,
considered as a single class, at the time Outstanding may on behalf of the
Holders of all of the Notes waive any past Default or Event of Default hereunder
and its consequences, except (i) a default in the payment of interest or
premium, if any, on, or the principal of, the Notes, (ii) a failure by the
Company to convert any Notes into Common Stock in accordance with the provisions
hereof, (iii) a default in the payment of the Redemption Price pursuant to
Article III or the Repurchase Price pursuant to Article VIII or (iv) a default
in respect of a covenant or provision hereof which under Article X cannot be
modified or amended without the consent of the Holder of each Note affected
thereby. Notwithstanding the foregoing, the record holders of at least 70% in
aggregate principal amount of the Notes and the Exchange Notes, considered as a
single class, at the time Outstanding shall be required on behalf of the Holders
of all the Notes to waive any past Default or Event of Default under any of the
Supermajority Covenants. Upon any waiver pursuant to this Section 5.5, the
Company and the Holders shall be restored to their former positions and rights
hereunder, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. Whenever any Default or
Event of Default hereunder shall have been waived as permitted by this Section
5.5, said Default or Event of Default shall for all purposes of the Notes be
deemed to have been cured and to be not continuing, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
right consequent thereon.
ARTICLE VI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 6.1. COMPANY MAY CONSOLIDATE ETC. ONLY ON CERTAIN TERMS.
Subject to the provisions of Article VIII, nothing contained herein
shall prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance or lease (or
successive sales, conveyances or leases) of the property of the Company,
substantially as an entirety, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and which, in each
case, shall be organized under the laws of the United States of America, any
state thereof or the District of Columbia, provided, that (i) upon any such
consolidation, merger, sale, conveyance or lease, if the Company is not the
surviving entity, the due and punctual payment of the Note Obligations,
including without limitation the principal of and premium, if any, and interest
on all of the Notes, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions to be
performed by the Company under the Agreement, the Notes, the Exchange Notes, the
Collateral Documents and the Exchange Agreement shall be expressly and
unconditionally assumed, by agreement in form and substance reasonably
satisfactory to the registered holders of not less than a majority in
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aggregate principal amount of the Notes and the Exchange Notes, considered as a
single class, at the time Outstanding, executed and delivered to such holders by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the Person which shall have
acquired or leased such property, (ii) the agreement referred to in clause (i)
shall provide for the applicable conversion rights set forth in Section 7.6 and
the applicable repurchase rights set forth in Section 8.5, (iii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing (iv) immediately after giving effect to such
transaction, the Company (or the surviving entity if the Company is not
continuing) would be able to incur an additional $1.00 of Indebtedness pursuant
to Section 4.13, (v) immediately after giving effect to such transaction, the
Company (or the surviving entity if the Company is not continuing) shall have a
Consolidated Tangible Net Worth equal to or greater than the Consolidated
Tangible Net Worth of the Company immediately prior to such transaction and (vi)
the Company or the Person formed by such consolidation, or into which the
Company shall have been merged, or which shall have acquired or leased such
property, as applicable, shall have delivered an Officer's Certificate to the
Holders to the effect that such consolidation, merger, sale, conveyance or lease
complies with the terms hereof and that all conditions precedent provided for
herein relating to such transaction have been complied with.
SECTION 6.2. SUCCESSOR CORPORATION TO BE SUBSTITUTED.
In case of any such consolidation, merger, sale, conveyance or lease
referenced in Section 6.1, and upon the assumption by any Person of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions to be performed by the Company under the Agreement and the Related
Agreements, in accordance with Section 6.1 such Person shall succeed to and be
substituted for the Company, with the same effect as if it had been named herein
as such. In the event of any such consolidation, merger, sale or conveyance (but
not in the event of any such lease), the Person named as the "Company" in the
first paragraph hereof or any successor which shall thereafter have become such
in the manner prescribed in this Article VI shall be released from its
liabilities as obligor and maker of the Notes and from its obligations
hereunder.
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ARTICLE VII
CONVERSION OF NOTES
SECTION 7.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this Article, the
Holder of any Note shall have the right, at his option, at any time before the
close of business on the last Business Day prior to the Maturity Date (except
that, with respect to any Note or portion of a Note which shall be called for
redemption, such right shall terminate, except as provided in Section 7.2, at
the close of business on the last Business Day preceding the date fixed for
redemption of such Note or portion of a Note, unless the Company shall default
in payment due upon redemption thereof), to convert the principal amount of any
such Note, or any portion of such principal amount which is $1,000 or an
integral multiple thereof, into that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
7.2. A Holder is not entitled to any rights of a holder of Common Stock until
such Holder has converted his Notes to Common Stock, and only to the extent such
Notes are deemed to have been converted to Common Stock under this Article VII.
SECTION 7.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.
In order to exercise the conversion privilege with respect to any Note,
the Holder of any such Note, to be converted in whole or in part, shall
surrender such Note, duly endorsed, to the Company, and shall give written
notice of conversion in the form provided herein (or such other notice which is
acceptable to the Company) to the Company that the Holder elects to convert such
Note or the portion thereof specified in said notice. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 7.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the Holder or his duly authorized attorney.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Holder (as if such transfer were a transfer of the Note or Notes (or
portion thereof) so converted), the Company shall issue and shall deliver to
such Holder a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Note or portion thereof in
accordance with the provisions of this Article VII and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 7.3. In case any Note of a
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denomination greater than $1,000 shall be surrendered for partial conversion,
the Company shall execute and deliver to the Holder of the Note so surrendered,
without charge to him, a new Note or Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 7.2 have been satisfied as to such Note (or portion thereof),
and the Person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the Holder of record of the shares represented thereby,
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the registered Holder thereof for all
purposes on the next succeeding day on which such stock transfer books are open,
but such conversion shall be at the Conversion Price in effect on the date upon
which such Note shall be surrendered.
SECTION 7.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Company shall
make an adjustment and payment therefor in cash at the current market value
thereof to the Holder of the Notes. The current market value of a share of
Common Stock shall be the Closing Price on the last Trading Day prior to the day
on which the Notes (or specified portions thereof) are deemed to have been
converted.
SECTION 7.4. CONVERSION PRICE.
Subject to adjustment as provided in this Article VII, the conversion
price shall be $1.78 (herein called the "Conversion Price").
SECTION 7.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by the Company
as follows:
(a) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and of which the denominator shall be the sum of such
number of shares and the total number of shares
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constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. The Company will not pay any dividend or make
any distribution on shares of Common Stock held in the treasury of the Company.
If any dividend or distribution of the type described in this Section 7.5(a) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(b) If the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date fixed for determination of stockholders entitled to receive such rights and
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be successively made whenever
any such rights and warrants are issued, and shall become effective immediately
after the opening of business on the day following the date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the Holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to
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become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(d) If the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 7.5(a)
applies) or evidences of indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 7.5(b), and excluding
any dividend or distribution paid exclusively in cash (any of the foregoing
hereinafter in this Section 7.5(d) called the "Securities")), then, in each such
case (unless the Company elects to reserve such Securities for distribution to
the Holders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Common
Stock to which such Holder is entitled, the amount and kind of such Securities
which such Holder would have received if such Holder had converted its Notes
into Common Stock immediately prior to the Record Date (as defined in Section
7.5(i) for such distribution of the Securities)), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by multiplying
the Conversion Price in effect on the Record Date (as defined below) with
respect to such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on such Record Date less the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of the Board of Directors) on
the Record Date of the portion of the Securities so distributed applicable to
one share of Common Stock and the denominator of which shall be the Current
Market Price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following such Record
Date, provided, however, that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price of
the Common Stock on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon conversion the amount of Securities such Holder would have received
had such Holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution under and for purposes of
this Section 7.5(d) by reference to the actual or when issued trading market for
any securities, it shall in doing so consider the prices in such market over the
same period used in computing the Current Market Price of the Common Stock to
the extent possible.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock, (ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 7.5 (and no adjustment to the Conversion Price under
this Section 7.5 will be required) until the occurrence of the earliest Trigger
Event, whereupon such rights and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to the Conversion
Price
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shall be made under this Section 7.5(d). If any such rights or warrants are
subject to events upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of indebtedness or other
assets, then the date of the occurrence of any and each such event shall be
deemed to be the date of distribution and record date with respect to new rights
or warrants with such rights (and a termination or expiration of the existing
rights or warrants without exercise by any of the Holders thereof). In addition,
in the event of any distribution (or deemed distribution) of rights or warrants,
or any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Price under this
Section 7.5 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any Holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
For purposes of this Section 7.5(d) and Sections 7.5(a) and (b), any
dividend or distribution to which this Section 7.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any further Conversion Price reduction required by this Section 7.5(d) with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 7.5(a) and (b) with respect to such dividend or distribution shall then
be made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 7.5(a) and (b), and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of Section 7.5(a).
(e) If the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 7.6 applies or as part of a
distribution referred to in Section 7.5(d)) in an aggregate amount that,
combined together with (1) the aggregate amount of any other such distributions
to all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to this Section 7.5(e) has been made, and (2) the aggregate
of any cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors) of consideration payable in respect of any tender offer by
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the Company for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of such distribution, and in respect of
which no adjustment pursuant to Section 7.5(f) has been made, exceeds 10% of the
product of the Current Market Price (determined as provided in Section 7.5(i))
on the Record Date with respect to such distribution times the number of shares
of Common Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on such
Record Date by a fraction (i) the numerator of which shall be equal to the
Current Market Price on the Record Date less an amount equal to the quotient of
(x) the excess of such combined amount over such 10% and (y) the number of
shares of Common Stock outstanding on the Record Date and (ii) the denominator
of which shall be equal to the Current Market Price on such Record Date
provided, however, that, if the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market Price
of the Common Stock on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon conversion the amount of cash such Holder would have received had
such Holder converted such Note immediately prior to such Record Date. If such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.
(f) If a tender offer made by the Company or any of its
Subsidiaries for all or any portion of the Common Stock expires and such tender
offer (as amended upon the expiration thereof) requires the payment to
stockholders (based on the acceptance (up to any maximum specified in the terms
of the tender offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) that, combined together with (1) the aggregate of the
cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), as of the expiration of such tender offer, of consideration payable
in respect of any other tender offers, by the Company or any of its Subsidiaries
for all or any portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 7.5(f) has been made and (2) the aggregate
amount of any distributions to all Holders of the Common Stock made exclusively
in cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 7.5(e) has been made, exceeds
10% of the product of the Current Market Price (determined as provided in
Section 7.5(i)) as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be amended) times the number
of shares of Common Stock outstanding (including any tendered shares) at the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the date of the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock Outstanding (including any
tendered shares) at the Expiration Time multiplied by the Current Market Price
of the Common
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Stock on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Price shall again be adjusted to be
the Conversion Price which would then be in effect if such tender offer had not
been made. If the application of this Section 7.5(f) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall be made for
such tender offer under this Section 7.5(f).
(g) If the Company shall issue Common Stock or securities
convertible into, or exchangeable for, Common Stock at a price per share (or, as
applicable, having a conversion or exchange price per share) that is less than
the Current Market Price (determined as provided in Section 7.5(i)) determined
at the time of such issuance, the Conversion Price shall be adjusted so that the
holder of each Note shall be entitled to receive, upon the conversion thereof,
the number of shares of Common Stock determined by multiplying (i) the
Conversion Price on the date (the "Measurement Date") immediately prior to the
day of such issuance by (ii) a fraction, the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on the Measurement Date
day and (2) the number of shares of Common Stock which the aggregate
consideration receivable by the Company for the total number of shares of Common
Stock so issued (or into which the convertible securities may convert) would
purchase at such Conversion Price on the Measurement Date, and the denominator
of which shall be the sum of (x) the number of shares of Common Stock
outstanding on the Measurement Date and (y) the number of additional shares of
Common Stock so issued (or into which the convertible securities may convert).
An adjustment made pursuant to this Section 7.5(g) shall be made on the next
business day following the day on which any such issuance is made and shall be
effective retroactively to the day of such issuance immediately after the close
of business on such date. For purposes of this Section 7.5(g), the aggregate
consideration receivable by the Company in connection with the issuance of
shares of Common Stock or of securities convertible into shares of Common Stock
shall be deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to third
parties) of all such securities plus the minimum aggregate amount, if any,
payable upon conversion of any such convertible securities into shares of Common
Stock; provided, however, that any non-cash consideration received or receivable
by the Company shall be valued at its fair market value as of the date of the
adjustment made pursuant to this Section 7.5(g), such fair market value to be as
determined by the Company's Board of Directors (whose determination shall be
conclusive and described in a resolution of the Board of Directors).
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Notwithstanding any other provision of this Section 7.5(g) to the
contrary, the following shall be deemed not to have been issued for purposes of
this Section 7.5(g): (a) issuances pursuant to any bona fide plan for the
benefit of employees or directors of the Company or any Subsidiary in effect on
the date of issuance of the Notes or thereafter, (b) issuances to acquire all or
any portion of a business in an arm's-length transaction between the Company and
an unaffiliated third party, including, if applicable, issuances upon exercise
of options or warrants assumed or issued in connection with such an acquisition,
(c) issuances in a bona fide public offering pursuant to a firm commitment
underwriting or sales at the market pursuant to a continuous offering stock
program, (d) issuances pursuant to the exercise of rights or warrants, or upon
the conversion of convertible securities, which are issued and outstanding on
the date of issuance of the Notes, or which may be issued in the future at fair
value and with an exercise price or conversion price at least equal to the
Current Market Price (determined as provided in Section 7.5(i)) at the time of
issuance of such right, warrant or convertible security, (e) issuances pursuant
to a dividend reinvestment plan or other plan hereafter adopted for the
reinvestment of dividends or interest, provided, that such Common Stock is
issued at a price at least equal to 95% of the Current Market Price (determined
as provided in Section 7.5(i)) determined at the time of such issuance and (f)
issuances to which Section 7.5(a), (b) or (d) applies.
(h) Upon mandatory conversion of the Exchange Notes in accordance
with their terms, the Conversion Price shall be reduced to an amount which is
equal to the quotient determined by dividing the aggregate principal amount of
the Outstanding Notes by the number of Fully-Diluted Shares. For purposes of
this Section 7.5(i), Fully-Diluted Shares shall consist of the sum of (i) the
number of issued and outstanding shares of Common Stock immediately prior to
consummation of the Exchange plus (ii) the number of shares of Common Stock
issued by the Company upon mandatory conversion of the Exchange Notes plus (iii)
the number of shares of Common Stock issuable by the Company upon conversion of
the outstanding shares of the Company's Series A Convertible Preferred Stock
plus (iv) the number of shares of Common Stock issuable by the Company upon
conversion of outstanding options to acquire Common Stock granted by the Company
with an exercise price on the date of consummation of the Exchange which is
equal to or less than the Current Market Price (regardless whether such options
are then convertible in accordance with their terms).
(i) For purposes of this Section 7.5, the following terms shall
have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar
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generally accepted reporting service, or if not so available, in such
manner as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors or, to the
extent permitted by applicable law, a duly authorized committee
thereof, whose determination shall be conclusive and described in a
resolution of the Board of Directors or the applicable committee.
(2) "Current Market Price" shall mean the average of the
daily Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question, provided,
however, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 7.5(a), (b), (c), (d), (e), (f), (g) or (h) occurs
during such ten consecutive Trading Days, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of
such other event, (2) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 7.5(a), (b),
(c), (d), (e), (f), (g) or (h) occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the
day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event, and (3) if the "ex" date for the issuance or distribution
requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or
(2) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value (as determined by the Board of Directors
or, to the extent permitted by applicable law, a duly authorized
committee thereof in a manner consistent with any determination of such
value for purposes of Section 7.5(d), (f) or (g), whose determination
shall be conclusive and described in a resolution of the Board of
Directors or such duly authorized committee thereof, as the case may
be) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For purposes of any
computation under Section 7.5(f) or (g), the Current Market Price of
the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the
next two succeeding Trading Days, provided, however, that if the "ex"
date for any event (other than the tender or exchange offer requiring
such computation) that requires an adjustment to the Conversion Price
pursuant to Section 7.5(a), (b), (c), (d), (e), (f), (g) or (h) occurs
on or after the Expiration Time for the tender or exchange offer
requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required
to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex"
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date, (1) when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender or exchange
offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the Expiration Time of such
offer.
(3) "fair market value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's-length
transaction.
(4) "Record Date" shall mean, for purposes of this
Article VII, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock have the
right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property,
the date fixed for determination of stockholders entitled to receive
such cash, securities or other property (whether such date is fixed by
the Board of Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x), if the applicable
security is listed or admitted for trading on the New York Stock
Exchange, the Nasdaq Stock Market (National Market) or another national
security exchange, a day on which the New York Stock Exchange, the
Nasdaq Stock Market (National Market) or another national security
exchange is open for business or (y) if the applicable security is
quoted on the Nasdaq National Market, a day on which trades may be made
thereon or (z) if the applicable security is not so listed, admitted
for trading or quoted, any day other than a Saturday or Sunday or a day
on which banking institutions in the State of Georgia are authorized or
obligated by law or executive order to close.
(j) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 7.5(a), (b), (c), (d), (e), (f), (g)
and (h) as the Board of Directors considers to be advisable to avoid or diminish
any income tax to Holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period and
the Board of Directors shall have made a determination that such reduction would
be in the best interests of the Company, which determination shall be conclusive
and described in a resolution of the Board of Directors. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail to
Holders a notice of the reduction at least 15 days prior to the date the reduced
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Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.
(k) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1.00% in such
price, provided, however, that any adjustments which by reason of this Section
7.5(k) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article VIII
shall be made by the Company and shall be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be.
(l) Whenever the Conversion Price is adjusted as herein provided,
the Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail notice of such adjustment of the
Conversion Price to the Holder of each Note at his last address reflected in the
Note Register. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
(m) In any case in which this Section 7.5 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
Holder of any Note converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above such
conversion by reason of the adjustment required by such event and above the
Common Stock issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such Holder any amount in cash in lieu of any
fraction pursuant to Section 7.5.
(n) For purposes of this Section 7.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
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SECTION 7.6. EFFECT OF RECLASSIFICATION, CONSOLIDATION MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification
or change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 7.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company and the successor or purchasing corporation, as
the case may be, shall take appropriate steps to ensure that the legal
documentation evidencing any such transaction provides, in form and substance
reasonably satisfactory to the holders of not less than a majority in aggregate
principal amount of the Notes at the time Outstanding, that the Notes shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a holder of a
number of shares of Common Stock issuable upon conversion of such Notes
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance, assuming such holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance, provided that, if the kind or amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
is not the same for each share of Common Stock in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purposes of this Section 7.6 the kind and amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares. Such legal
documentation shall provide for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Article.
The Company shall cause notice of the execution of such legal
documentation to be mailed to each Holder, at his last address reflected in the
Note Register, within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of such legal documentation.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 7.6 applies to any event or occurrence, Section 7.5
shall not apply.
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SECTION 7.7. TAXES ON SHARES ISSUED.
The issue of stock certificates on conversions of Notes shall be made
without charge to the converting Holder for any tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the Holder of any Note converted, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the Person or Persons requesting the issue thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
SECTION 7.8. RESERVATION OF SHARES TO BE FULLY PAID; COMPLIANCE WITH
GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK.
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares of
Common Stock to provide for the conversion of the Notes from time to time as
such Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes and Liens with respect to the issue
thereof.
The Company covenants that it will in good faith and as expeditiously
as possible comply with its obligations under the Registration Rights Agreement.
The Company further covenants that so long as the Common Stock shall be
listed or quoted on the New York Stock Exchange, the Nasdaq Stock Market
(National Market) or any other national securities exchange the Company will, if
permitted by the rules of such exchange, list and keep listed so long as the
Common Stock shall be so listed on such market or exchange, all Common Stock
issuable upon conversion of the Notes.
SECTION 7.9. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
If:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 7.5, or
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(b) the Company shall authorize the granting to all or
substantially all the holders of its Common Stock of rights or warrants
to subscribe for or purchase any share of any class of Common Stock or
any other rights or warrants, or
(c) there is a reclassification or reorganization of the
Common Stock (other than a subdivision or combination of outstanding
Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or a consolidation or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or a sale or transfer of all
or substantially all of the assets of the Company, or
(d) there is a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company shall cause to be mailed to each Holder at his last address
reflected in the Note Register, as promptly as possible but in any event at
least 15 days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights or warrants are to be determined, or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
SECTION 7.10. RESTRICTION ON CONVERSION OF NOTES.
Notwithstanding any other provision hereof to the contrary, unless and
until the Company has obtained stockholder approval of the issuance of Common
Stock upon the conversion of the Notes in their entirety, the Notes may be
converted into a maximum of 11,027 shares (subject to adjustment as provided
below, the "Maximum Number"), which is equal to 19.99% of the number of shares
of Common Stock issued and outstanding on the date of issuance of the Notes,
less the 600,000 shares issued by the Company in connection with its acquisition
of MCI. Unless and until the Company has obtained such stockholder approval, and
subject to the $1,000 authorized denomination of the Notes set forth in Section
2.2, any individual Note may be converted pursuant to Section 7.1 into a maximum
number of shares of Common Stock equal to the amount determined by multiplying
the Maximum Number by a fraction (rounded to the nearest one-thousandth) of
which the numerator is the principal amount of the Note to be converted and the
denominator of which is the total principal amount of the Outstanding Notes, and
thereafter the remaining Notes shall not be convertible into shares of Common
Stock unless and until the Company has obtained such stockholder approval. To
illustrate, prior to obtainment of such stockholder approval, a Holder of a Note
with a principal amount of $2,000,000 may convert $15,000 principal amount of
such Note into 3,000 shares of Common Stock and the $1,985,000 principal amount
of Note or Notes to be issued by the Company to the converting Holder upon such
conversion may not be converted into shares of Common Stock unless
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and until the Company has obtained such stockholder approval. The Maximum Number
shall be subject to appropriate adjustment by reason of a stock dividend,
split-up, merger, recapitalization, combination, subdivision, conversion,
exchange of shares, distribution on or in respect of the Common Stock or any
similar transaction, and proper provision shall be made in the agreements
governing such transaction, so that a Holder shall receive upon conversion the
number of shares of Common Stock that a Holder would have held immediately after
such event if the Notes had been converted immediately prior to such event, or
the record date therefor, as applicable.
ARTICLE VIII
REPURCHASE OF NOTES AT OPTION OF THE HOLDER
SECTION 8.1. RIGHT TO REQUIRE REPURCHASE.
In the event that a Repurchase Event (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, to require
the Company to repurchase, and upon the exercise of such right the Company shall
repurchase, all of such Holder's Notes, or any portion of the principal amount
thereof that is an integral multiple of $1,000 (provided that no single Note may
be repurchased in part unless the portion of the principal amount of such Note
to be Outstanding after such repurchase is equal to $1,000 or an integral
multiple of $1,000), on the date (the "Repurchase Date") that is 60 days after
the date of the Company Notice (as defined in Section 8.2) for cash at a
purchase price equal to 101% of the aggregate principal amount of such Notes in
the event that the Repurchase Event is the event specified in clause (i) of the
definition such term and 112% of the aggregate principal amount of such Notes in
the event that the Repurchase Event is an event specified in clause (ii) or
clause (iii) of the definition of such term (the "Repurchase Price"), plus
interest accrued and unpaid to, but excluding, the Repurchase Date.
Whenever in this Note there is a reference, in any context, to the
principal of any Note as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Note to the extent
that such Repurchase Price is, was or would be so payable at such time, and
express mention of the Repurchase Price in any provision of this Note shall not
be construed as excluding the Repurchase Price in those provisions of this Note
when such express mention is not made.
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SECTION 8.2. NOTICES; METHOD OF EXERCISING PURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for
redemption all of the Outstanding Notes pursuant to Article III, on or before
the fifth day after the occurrence of a Repurchase Event, the Company shall give
to all Holders of Notes notice (the "Company Notice") of the occurrence of the
Repurchase Event and of the repurchase right set forth herein arising as a
result thereof.
Each notice of a repurchase right shall state:
(1) the Repurchase Event and the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must
follow to exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price will
become due and payable upon each such Note designated by the Holder to
be repurchased, and that interest thereon shall cease to accrue on and
after said date,
(6) the Conversion Price, the date on which the right to
convert the Notes to be repurchased will terminate and the place where
such Notes may be surrendered for conversion, and
(7) the place where such Notes are to be surrendered for
payment of the Repurchase Price and accrued interest, if any.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Notes to be
repurchased (and, if any Note is to be repurchased in part, the portion of the
principal amount thereof to be repurchased and the name of the Person in which
the portion thereof to remain Outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right is
being made thereby, and (ii) the Notes with respect to which the repurchase
right is being exercised.
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(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid the
Repurchase Price in cash to the Holder on the Repurchase Date, together with
accrued and unpaid interest to, but excluding, the Repurchase Date payable with
respect to the Notes as to which the repurchase right has been exercised.
(d) If any Note (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such Note
(or portion thereof, as the case may be) shall, until paid, bear interest from
the Repurchase Date at the rate per annum then currently in effect, and each
Note shall remain convertible into Common Stock until the principal of such Note
(or portion thereof, as the case may be) shall have been paid or duly provided
for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Company (with, if the Company so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute and deliver to the Holder of such Note without service
charge, a new Note or Notes, containing identical terms and conditions, each in
an authorized denomination in aggregate principal amount equal to and in
exchange for the portion of the principal of the Note so surrendered that was
not repurchased.
(f) Any Holder that has delivered to the Company its written
notice exercising its right to require the Company to repurchase its Notes upon
a Repurchase Event shall have the right to withdraw such notice at any time
prior to the close of business on the Repurchase Date by delivery of a written
notice of withdrawal to the Company prior to the close of business on such date.
A Note in respect of which a Holder is exercising its option to require
repurchase upon a Repurchase Event may be converted into Common Stock in
accordance with Article VII only if such Holder withdraws its notice in
accordance with the preceding sentence.
SECTION 8.3. REPURCHASE EVENT.
A "Repurchase Event" shall be deemed to occur (i) upon the occurrence
of a Change in Control, (ii) in the event that the Company fails to obtain
either of the Stockholder Approvals on or before March 9, 2000 or (iii) in the
event that the Exchange Notes are not mandatorily converted into shares of
Common Stock in accordance with their terms on or before March 9, 2000, provided
that the date set forth in clauses (ii) and (iii) may be extended to March 31,
2000 with the consent of the registered holders of a majority of the aggregate
principal amount of the Notes and the Exchange Notes, considered as a single
class, at the time Outstanding.
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SECTION 8.4. CERTAIN DEFINITIONS.
For purposes of this Article VIII,
(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the Commission pursuant to the Exchange Act;
(b) the term "Person" shall include any syndicate or group which
would be deemed to be a "Person" under Section 13(d)(3) of the Exchange Act;
(c) the term "controlled" shall mean ownership or control of more
than 50% of the voting power of an entity; and
(d) the term "Change in Control" shall mean the occurrence of any
of the following events after the Issue Date:
(i) any Person, other than the Company, any Subsidiary of the
Company or any entity controlled by the foregoing, or any employee
benefit plan of the Company or any such Subsidiary, becomes the
beneficial owner, directly or indirectly, through a purchase or other
acquisition transaction or series of transactions (other than a merger
or consolidation involving the Company), of shares of capital stock of
the Company entitling such Person to exercise in excess of 50% of the
total voting power of all shares of Capital Stock of the Company
entitled to vote generally in the election of directors, provided that
a Change in Control shall not be deemed to have occurred pursuant to
this paragraph (a) as a result of issuances of capital stock by the
Company upon the exercise of rights or warrants, or upon conversion of
convertible securities, which are issued and outstanding on the Issue
Date to the holders of such rights, warrants or convertible securities
on the date of issuance of the Notes;
(ii) there occurs any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another
Person into the Company, or any sale or transfer of the assets of the
Company as, or substantially as, an entirety to another Person (other
than (i) any such transaction pursuant to which the holders of the
Common Stock immediately prior to such transaction have, directly or
indirectly, shares of capital stock of the continuing or surviving
corporation immediately after such transaction which entitle such
holders to exercise in excess of 50% of the total voting power of all
shares of capital stock of the continuing or surviving corporation
entitled to vote generally in the election of directors and (ii) any
merger (1) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock or (2)
which is effected solely to change the jurisdiction of incorporation of
the Company and results in a reclassification, conversion or exchange
of outstanding shares of Common Stock solely into shares of Common
Stock and separate series of Common Stock carrying substantially the
same relative rights as the Common Stock); or
(iii) individuals who constituted the Board of Directors of
the Company at the beginning of any one-year period (together with any
other director whose election by the Board of Directors of the Company
or whose nomination for election by the stockholders of the Company was
approved by a vote of at least a majority of the directors then in
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office either who were directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then in
office.
SECTION 8.5. CONSOLIDATION, MERGER, ETC.
In the case of any reclassification, change, consolidation, merger,
combination, sale or conveyance in which the Common Stock is changed or
exchanged as a result into the right to receive shares of stock and other
securities or property or assets (including cash) which includes shares of
Common Stock or common stock of another Person that are, or upon issuance will
be, traded on a United States national securities exchange or approved for
trading on an established automated over-the-counter trading market in the
United States and such shares constitute at the time such change or exchange
becomes effective in excess of 50% of the aggregate fair market value of such
shares of stock and other securities, property and assets (including cash) (as
determined in good faith by the Board of Directors of the Company, which
determination shall be conclusive and binding), then the Person formed by such
consolidation or resulting from such merger or combination or which acquires the
properties or assets (including cash) of the Company, as the case may be, shall
execute and deliver to the Holders, at their last address reflected in the Note
Register, an amendment to the Notes, in form and substance satisfactory to the
registered holders of not less than a majority in aggregate principal amount of
the Notes and the Exchange Notes, considered as a single class, at the time
Outstanding, modifying the provisions of the Notes relating to the right of
Holders to cause the Company to repurchase the Notes following a Repurchase
Event, including without limitation the applicable provisions of this Article
VIII and the definitions of Common Stock and Change in Control, as appropriate,
and such other related definitions set forth herein as determined in good faith
by the Board of Directors of the Company (which determination shall be
conclusive and binding), to make such provisions apply to the common stock and
the issuer thereof if different from the Company and the Common Stock (in lieu
of the Company and the Common Stock).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
SECTION 9.1. ACTION BY HOLDERS.
When herein it is provided that the registered holders of a specified
percentage in aggregate principal amount of the Notes and the Exchange Notes may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action), the fact that
at the time of taking any such action, the registered holders of such specified
percentage have joined therein may be evidenced (a) by any instrument or any
number of instruments of similar tenor executed by such registered holders in
person or by agent or proxy appointed in writing and delivered to the Company
and the Collateral Agent, which shall be available for inspection by any Holder,
or (b) by the record of such registered holders
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voting in favor thereof at any meeting of such holders duly called and held in
accordance with the provisions hereof and applicable law, a copy of which record
shall be maintained by the Company and delivered to the Collateral Agent and be
available for inspection by any Holder, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
registered holders. Whenever the Company solicits the taking of any action by
the record holders of the Notes and the Exchange Notes, the Company may fix in
advance of such solicitation a date as the record date for determining such
record holders entitled to take such action. The record date shall be not more
than 15 days prior to the date of commencement of solicitation of such action.
SECTION 9.2 WHO ARE DEEMED ABSOLUTE OWNERS.
Except to the extent provided in the second paragraph of Section 2.3,
the Company may deem the Person in whose name a Note is registered on the Note
Register to be, and may treat him as, the absolute owner of such Note (whether
or not such Note shall be overdue and notwithstanding any notation of ownership
or other writing thereon) for the purpose of receiving payment of or on account
of the principal of, premium, if any, and interest on such Note, for conversion
of such Note and for all other purposes and the Company shall not be affected by
any notice to the contrary. All such payments so made to any Holder for the time
being, or upon his order, shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for monies payable
upon such Note.
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ARTICLE X
AMENDMENT, ETC.
No provision of the Notes may be amended, modified, supplemented or
waived without notice to the Company and the written consent of the registered
holders of not less than a majority in aggregate principal amount of the Notes
and the Exchange Notes, considered as a single class, at the time Outstanding,
provided that (i) no such amendment, modification, supplement or waiver shall,
unless signed by each Holder affected hereby, (x) extend the fixed maturity of
such Note, or reduce the rate or extend the time of payment of interest thereon,
or reduce the principal amount thereof or premium, if any, thereon, or reduce
any amount payable on redemption thereof, or impair the right of any such Holder
to institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided herein, or change the obligation of the Company to repurchase any
Note upon the occurrence of a Repurchase Event in a manner adverse to such
Holder, or impair the right to convert the Notes into Common Stock in any
material respect, or (y) reduce the aforesaid percentage of Notes and the
Exchange Notes, considered as a single class, the record holders of which are
required to consent to any such amendment, modification, supplement or waiver;
(ii) the provisions of Article VII hereof may be amended, modified, supplemented
or waived by notice to and the written consent of the Company and the Holders of
not less than a majority in aggregate principal amount of the Notes at the time
Outstanding; (iii) the Supermajority Covenants, the second sentence of Section
4.25, the date March 31, 2000 in the proviso clause to Section 8.3 and the
provisions of this clause (iii) may be amended, modified, supplemented or waived
without notice to the Company and the written consent of the registered holders
of not less than 70% in aggregate principal amount of the Notes and the Exchange
Notes, considered as a single class, at the time Outstanding.
ARTICLE XI
SECURITY FOR NOTES; RELATED AGREEMENTS
The Notes shall be secured by the Collateral Documents, duly executed
by the Company and the other parties thereto for the ratable benefit of the
holders of the Notes and the Exchange Notes granting a security interest in the
collateral covered thereby, which security interest shall not be subordinate in
priority to any other Liens. The Notes are entitled to the benefits of and
subject to the limitations contained in the Agreement and the Related
Agreements, and the Holder of any Note may enforce such rights in accordance
with the terms hereof and thereof, as applicable.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. ASSIGNMENT; SUCCESSORS.
A Note and the rights and obligations of the Company thereunder may not
be assigned or otherwise transferred by the Company without the prior written
consent of the Holder thereof. A Note may not be assigned or otherwise
transferred by any Holder to any Person, other than an Affiliate of such Holder,
unless the Holder has complied with the applicable requirements set forth in
Section 3.2(b) of the Agreement. This Note shall be binding upon and inure to
the benefit of the Company and the Holder and their respective permitted
successors and assigns.
SECTION 12.2. OFFICIAL ACTS BY SUCCESSOR CORPORATION.
Any act or proceeding by any provision hereof authorized or required to
be done or performed by any board, committee or officer of the Company shall and
may be done and performed with like force and effect by the like board,
committee or officer of any corporation that shall at the time be the lawful
sole successor of the Company.
SECTION 12.3. ADDRESSES FOR NOTICES, ETC.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(a) if to the Holder of this Note, initially at the address
set forth above, and thereafter at such other address, notice of which
is given in accordance with this Section 12.3;
(b) if to the Issuer, initially at Altiva Financial
Corporation,1000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000,
and thereafter at such other address, notice of which is given in
accordance with this Section 12.3; and
(c) If to the Collateral Agent, initially at U.S. Trust
Company of New York, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx,
00000, Attention: Xxxx X. Xxxxxxxxx, and thereafter at such other
address, notice of which is given in accordance with this Section 12.3.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
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Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 12.4. GOVERNING LAW.
THE PARTIES HERETO ACKNOWLEDGE THAT THE TRANSACTIONS CONTEMPLATED BY
THE AGREEMENT AND THE NOTES BEAR A REASONABLE RELATION TO THE STATE OF MARYLAND
IN THAT, INTERALIA, A PARTICIPANT IN THE NOTES HAS ITS PRINCIPAL PLACE OF
BUSINESS IN THE STATE OF MARYLAND AND PART OF THE NEGOTIATIONS RELATING TO THE
ISSUANCE OF THE NOTES AND THE CLOSING OF SUCH ISSUANCE OCCURRED IN THE STATE OF
MARYLAND. THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
SECTION 12.5. USURY.
All agreements between the Company and the Holders, whether now
existing or hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of the maturity of the
Notes or otherwise, shall the interest contracted for, charged, received, paid
or agreed to be paid to the Holders exceed the maximum amount permissible under
the laws of the State of Maryland (hereinafter the "Applicable Law"). If, from
any circumstance whatsoever, interest would otherwise be payable to the Holders
in excess of the maximum amount permissible under the Applicable Law, the
interest payable to the Holders shall be reduced to the maximum amount
permissible under the Applicable Law, and if from any circumstance the Holders
shall ever receive anything of value deemed interest by the Applicable Law in
excess of the maximum amount permissible under the Applicable Law, an amount
equal to the excessive interest shall be applied to the reduction of the
principal of the Notes and not to the payment of interest, or if such excessive
amount of interest exceeds the unpaid principal amount of the Notes, such excess
shall be refunded to the Company. All interest paid or agreed to be paid to the
Holders shall, to the extent permitted by the Applicable Law, be amortized,
prorated, allocated and spread throughout the full term of the Notes (including
any renewal or extension) until payment in full of the principal so that the
interest on the Notes for such full term shall not exceed the maximum amount
permissible under the Applicable Law. Each Holder expressly disavows any intent
to contract for, charge or receive interest in an amount which exceeds the
maximum amount permissible under the Applicable Law. This paragraph as well as
similar paragraphs set forth in the Agreement and the Collateral Documents shall
control all agreements between the Company and the Holders.
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SECTION 12.6. LEGAL HOLIDAYS.
In any case where the date of maturity of interest on or principal of
the Notes or the date fixed for redemption or repurchase of any Note will not be
a Business Day, then payment of such interest on or principal of the Notes need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the date of maturity or the date
fixed for redemption or repurchase, and no interest shall accrue for the period
from and after such date.
SECTION 12.7 SEVERABILITY OF PROVISIONS.
Any provision of this Note which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability only without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 12.8. HEADINGS AND GENDER.
The titles and headings of the articles and sections hereof have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof. Use of a particular gender herein shall be considered to represent the
masculine, feminine or neuter gender whenever appropriate.
SECTION 12.9 BENEFITS OF NOTES.
Except to the extent provided in the definition of the term "Notes" in
Article I hereof, nothing in the Notes, express or implied, shall give any
Person, other than the holders of the Notes, any benefit or legal or equitable
right, remedy or claim under the Notes.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated for References Purposes only: February 29, 2000.
ALTIVA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title:Chairman and Chief Executive
Officer
