THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF,
BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR (C) IF REGISTERED UNDER THE
1933 ACT AND APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A SECURITIES
PURCHASE AGREEMENT AND PUT AND CALL AGREEMENT, EACH DATED AS OF THE DATE HEREOF,
COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICE, CONTAIN CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING,
WITHOUT LIMITATION, PROVISIONS WHICH (A) LIMIT THE CONVERSION RIGHTS OF THE
HOLDER, (B) SPECIFY VOLUNTARY AND MANDATORY REPAYMENT, PREPAYMENT AND REDEMPTION
RIGHTS AND OBLIGATIONS AND (C) SPECIFY EVENTS OF DEFAULT FOLLOWING WHICH THE
REMAINING BALANCE DUE AND OWING HEREUNDER MAY BE ACCELERATED.
No. BP1 $1,745,915.12
VITECH AMERICA, INC.
10% Convertible Note due October 10, 0000
XXXXXX XXXXXXX, INC., a Florida corporation (together with its
successors, the "Company"), for value received hereby promises to pay to:
BRAZIL PARTNERS LIMITED
(the "Holder") and registered assigns, the principal sum of One Million Seven
Hundred Forty Five Thousand Nine Hundred Fifteen & 12/100 Dollars
($1,745,915.12) or, if less, the principal amount of this Note then outstanding,
on the Maturity Date by wire transfer of immediately available funds to the
Holder 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,
and to pay interest, monthly in arrears, on (i) the last day of each month until
the Maturity Date, commencing May 31, 1999 (unless such day is not a Business
Day, in which event on the next succeeding Business Day) (each an "Interest
Payment Date"), (ii) the Maturity Date, (iii) each Conversion Date, as hereafter
defined, and (iv) the date the principal amount of the Convertible Notes shall
be declared to be or shall automatically become due and payable, on the
principal sum hereof outstanding in like coin or currency, at the rates per
annum set forth below, from the most recent Interest Payment Date to which
interest has been paid on this Convertible Note, or if no interest has been paid
on this Convertible Note, from the date of this Convertible Note until payment
in full of the principal sum hereof has been made.
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CONVERTIBLE NOTE No. 1- Page 1 84661.5
(Vitech America, Inc.)
The interest rate shall be ten percent (10%) per annum (the "Interest
Rate") or, if less, the maximum rate permitted by applicable law. Past due
amounts (including interest, to the extent permitted by law) will also accrue
interest at the Interest Rate plus five percent (5%) per annum or, if less, the
maximum rate permitted by applicable law, and will be payable on demand
("Default Interest"). Interest on this Convertible Note will be calculated on
the basis of a 360-day year of twelve 30-day months. All payments of principal
and interest hereunder shall be made for the benefit of the Holder at the
Holder's account at Xxxxxxx Xxxxxx & Co.
This Convertible Note is transferable and assignable to one or more
purchasers (in minimum denominations of $100,000 or larger multiples of $1,000).
The Company shall keep a register (the "Register") in which shall be entered the
names and addresses of the registered holder of this Convertible Note and
particulars of this Convertible Note held by such holder and of all transfers of
this Convertible Note. References to the Holder or "Holders" shall mean the
Person listed in the Register as the registered holder of such Convertible
Notes. The ownership of this Convertible Note shall be proven by the Register.
1. Payment of Principal. The Company shall repay the remaining unpaid
balance on this Convertible Note on the Maturity Date. The Company may, and
shall be obligated to, prepay all or a portion of this Convertible Note on the
terms specified in the Agreements.
2.1 Conversion of Convertible Note. (a) The Holder shall have the
right, at its option, at any time and from time to time, after the date hereof
to convert the principal amount of this Convertible Note, or any portion of such
principal amount in the minimum amount of $1,000 or any integral multiple
thereof, into that number of fully paid and nonassessable shares of Common Stock
(as such shares shall then be constituted) determined pursuant to this Section
2.1. The number of shares of Common Stock to be issued upon each conversion of
this Convertible Note shall be determined by dividing the Conversion Amount (as
defined below) by the Conversion Price in effect on the date (the "Conversion
Date") a Notice of Conversion is delivered to the Company by the Holder by
facsimile or other reasonable means of communication dispatched prior to 11:00
p.m., New York City Time. The term "Conversion Amount" means, with respect to
any conversion of this Convertible Note, the sum of (i) the principal amount of
this Convertible Note to be converted in such conversion plus (ii) accrued and
unpaid interest, if any, on such principal amount at the interest rates provided
in this Convertible Note to the Conversion Date plus (iii) Default Interest, if
any, on the interest referred to in the immediately preceding clause (ii) plus
(iv) at the Holder's option, any amounts owed to the Holder pursuant to Section
2.2 hereof.
4.2 Conversion Price. The Conversion Price of this Convertible Note
(the "Conversion Price") shall be $11.00 per share (the "Initial Conversion
Price"); provided that, if the Company shall have declined to repay in full this
Convertible Note following the exercise by the Holder of either the First Put
Right or Second Put Right at the Put Price or Second Put Price, as applicable
(as each such term is defined in the Put and Call Agreement), the Conversion
Price shall be the lesser of (i) 0.85 multiplied by the Market Price, where the
Market Price means the
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CONVERTIBLE NOTE No. 1- Page 2 84661.5
(Vitech America, Inc.)
10-Day VWASP (as defined below) of the Common Stock on the Nasdaq Stock Market's
National Market ("Nasdaq"), or on the principal securities exchange or other
securities market on which the Common Stock is then being traded during the
thirty (30) consecutive Trading Day period ending one Trading Day prior to the
Conversion Date, and (ii) the Initial Conversion Price (subject, in each case,
to equitable adjustments for stock splits, stock dividends or rights offerings
by the Company relating to the Company's securities or the securities of any
Subsidiary of the Company, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The term "10-Day VWASP" means,
for any security as of any date, the volume-weighted average sales price on
Nasdaq as reported by Bloomberg, L.P. ("Bloomberg") or, if Nasdaq is not the
principal trading market for such security, the volume-weighted average sales
price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the volume-weighted average sales price of such security
in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no volume-weighted average sales price
is reported for such security by Bloomberg, then the average of the bid prices
of any market makers for such security as reported in the "pink sheets" by the
National Quotation Bureau, Inc., in each case for the lowest ten (10)
consecutive day period during such 30-day period. If the 10-Day VWASP cannot be
calculated for such security on such date on any of the foregoing basis, the
10-Day VWASP of such security on such date shall be the fair market value as
mutually determined by the Company and the Holders of a majority in interest of
Convertible Notes being converted for which the calculation of the closing bid
price is required in order to determine the Conversion Price of such Convertible
Notes.
2.3 Authorized Shares.
(a) The Company (i) acknowledges that it has irrevocably
instructed its transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Convertible Note and (ii) agrees
that its issuance of this Convertible Note shall constitute full
authority to its officers and agents who are charged with the duty of
executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock in accordance with the terms
and conditions of this Convertible Note.
(b) If at any time a Holder of this Convertible Note submits a
Notice of Conversion, (i) the Company does not have sufficient
authorized but unissued shares of Common Stock available to effect such
conversion in full in accordance with the provisions of this Article 2
or (ii) the Company is prohibited by the applicable rules of Nasdaq to
effect such conversion in full in accordance with the provisions of
this Article 2 without stockholder approval (each, a "Conversion
Default"), the Company shall issue to the Holder all of the shares of
Common Stock which are then available to effect such conversion. The
portion of this Convertible Note which the Holder included in its
Conversion Notice and which exceeds the amount which is then
convertible into available shares
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CONVERTIBLE NOTE No. 1- Page 3 84661.5
(Vitech America, Inc.)
of Common Stock (the "Excess Amount") shall, notwithstanding anything
to the contrary contained herein, not be convertible into Common Stock
in accordance with the terms hereof until (and at the Holder's option
at any time after) the date additional shares of Common Stock are
authorized by the Company, or its stockholders, as applicable, at which
time the Conversion Price in respect thereof shall be the lower of (i)
the Conversion Price on the Conversion Default Date (as defined below)
and (ii) the Conversion Price on the Conversion Date thereafter elected
by the Holder in respect thereof. The Company shall pay to the Holder
payments ("Conversion Default Payments") for a Conversion Default in
the amount of (N/365) x .24 x the Excess Amount on the Conversion Date
in respect of the Conversion Default (the "Conversion Default Date"),
where N = the number of days from the Conversion Default Date to the
date (the "Authorization Date") that the Company, or its stockholders,
as applicable, authorizes a sufficient number of shares of Common Stock
to effect conversion of the full outstanding principal balance of this
Convertible Note. The Company shall use its best efforts to authorize,
or cause its stockholders to authorize, as applicable, a sufficient
number of shares of Common Stock as soon as practicable following the
earlier of (i) such time that the Holder notifies the Company or that
the Company otherwise becomes aware that there are or likely will be
insufficient shares of Common Stock to allow full conversion thereof
and (ii) a Conversion Default. The Company shall send notice to the
Holder of the authorization of additional shares of Common Stock, the
Authorization Date and the amount of Holder's accrued Conversion
Default Payments. The accrued Conversion Default Payments for each
calendar month shall be paid in cash or shall be convertible into
Common Stock (at such time as there are sufficient authorized shares of
Common Stock) at the Market Price, at the Holder's option, as follows:
(i) In the event the Holder elects to take such
payment in cash, cash payment shall be made to Holder by the
fifth day of the month following the month in which it has
accrued; and
(ii) In the event the Holder elects to take such
payment in Common Stock, the Holder may convert such payment
amount into Common Stock at the Conversion Price (as in effect
at the time of conversion) at any time after the fifth day of
the month following the month in which it has accrued (at such
time as there are sufficient authorized shares of Common
Stock) in accordance with the terms of this Article 2.
(c) The Holder's election pursuant to this Section 2.3 shall
be made in writing to the Borrower at any time prior to 9:00 p.m., New
York City Time, on the third day of the month following the month in
which Conversion Default payments have accrued. If no election is made,
the Holder shall be deemed to have elected to receive cash. Nothing
herein shall limit the Holders right to pursue actual damages (to the
extent in excess of the Conversion Default Payments) due to the
Company's failure to maintain a sufficient number of authorized shares
of Common Stock.
(d) In no event shall the Company issue more than the Maximum
Number of Shares upon conversion of this Convertible Note, unless the
Company shall have obtained Stockholder Approval (as defined below) or
a waiver of such requirement by the
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CONVERTIBLE NOTE No. 1- Page 4 84661.5
(Vitech America, Inc.)
Nasdaq Market. As used herein, Stockholder Approval means approval by
the stockholders of the Company in accordance with Rule 4460(i) of the
rules of the Nasdaq Market. Once the Maximum Number of Shares has been
issued (the date of which is hereinafter referred to as the "Maximum
Conversion Date"). Unless the Company shall have obtained Stockholder
Approval or a waiver of such requirement by the Nasdaq Market within 90
days of the Maximum Conversion Date, the Company shall pay to the
Holder within 10 Business Days of the Maximum Conversion Date (or, if
the Company is, in good faith, using its best efforts to obtain
Stockholder Approval, then the earlier of (x) 90 days following the
Maximum Conversion Date, and (y) such date that it becomes reasonably
apparent that Stockholder Approval will not be obtained within such 90
day period), this Convertible Note in full at the Formula Price. The
Maximum Number of Shares shall be subject to adjustment from time to
time for stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock
occurring after the date hereof. With respect to each Holder of this
Convertible Note, the Maximum Number of Shares shall refer to such
Holder's pro rata share thereof based upon the aggregate principal
balance of the convertible Note then outstanding. In the event that the
Company obtains Stockholder Approval, the approval of the Nasdaq Market
or otherwise is able to increase the number of shares to be issued
above the Maximum Number of Shares (such increased number being the
"New Maximum Number of Shares"), the references to Maximum Number of
Shares above shall be deemed to be, instead, references to the New
Maximum Number of Shares.
2.4 Method of Conversion
(a) Notwithstanding anything to the contrary set
forth herein, upon conversion of this Convertible Note in
accordance with the terms hereof, the Company shall not be
required to physically surrender this Convertible Note to the
Holder unless the entire unpaid principal amount of this
Convertible Note is so converted. The Company and the Holder
shall maintain records showing the principal amount so
converted and the date of such conversions or shall use such
other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this
Convertible Note upon each such conversion. In the event of
any dispute or discrepancy, such records of the Company shall
be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of
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CONVERTIBLE NOTE No. 1- Page 5 84661.5
(Vitech America, Inc.)
this Convertible Note is converted as aforesaid, the Company
may not transfer this Convertible Note unless the Holder first
physically surrenders this Convertible Note to the Company,
whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new note of like tenor, registered
as the Holder (upon payment by the Holder of any applicable
transfer taxes), may request, representing in the aggregate
the remaining unpaid principal amount of this Convertible
Note. The Holder and any assignee, by acceptance of this
Convertible Note, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a
portion of this Convertible Note, the unpaid and unconverted
principal amount of this Convertible Note represented by this
Convertible Note may be less than the amount stated on the
face hereof.
(b) The Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in
the issuance and delivery of shares of Common Stock or other
securities or property on conversion of this Convertible Note
in a name other than that of the Holder (or in street name),
and the Company shall not be required to issue or deliver any
such shares or other securities or property unless and until
the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the
Holder's account) requesting the issuance thereof shall have
paid to the Company the amount of any such tax or shall have
established to the satisfaction of the Company that such tax
has been paid.
(c) Upon receipt by the Company of a Notice of
Conversion, the Holder shall be deemed to be the holder of
record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and
unpaid interest on this Convertible Note shall be reduced to
reflect such conversion, and, unless the Company defaults on
its obligations under this Article 2, all rights with respect
to the portion of this Convertible Note being so converted
shall forthwith terminate except the right to receive the
Common Stock or other securities, cash or other assets, as
herein provided, on such conversion. If the Holder shall have
given a Notice of Conversion as provided herein, the Company's
obligation to issue and deliver the certificates for shares of
Common Stock shall be absolute and unconditional, irrespective
of the absence of any action by the Holder to enforce the
same, any waiver or consent with respect to any provision
thereof, the recovery of any judgment against any person or
any action by the Holder to enforce the same, any waiver or
consent with respect to any provision thereof, the recovery of
any judgment against any person or any action to enforce the
same, any failure or delay in the enforcement of any other
obligation of the Company to the holder of record, or any
setoff, counterclaim, recoupment, limitation or termination,
or any breach or alleged breach by the Holder of any
obligation to the Company, and irrespective of any other
circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with such conversion.
The date of receipt of such Notice of Conversion shall be the
Conversion Date so long as it is received before 11:00 p.m.,
New York City Time, on such date.
(d) Notwithstanding the foregoing, if a Holder has
not received certificates for all shares of Common Stock prior
to the second (2nd) business day after the expiration of the
Deadline with respect to a conversion of any portion of this
Convertible Note following delivery of a properly completed
Notice of Conversion for any reason, then (unless the Holder
otherwise elects to retain its
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CONVERTIBLE NOTE No. 1- Page 6 84661.5
(Vitech America, Inc.)
status as a holder of Common Stock by so notifying the
Company), the Holder shall regain the rights of a Holder of
this Convertible Note with respect to such unconverted
portions of this Convertible Note and the Company shall, as
soon as practicable, return such unconverted Convertible Note
to the holder or, if the Convertible Note has not been
surrendered, adjust its records to reflect that such portion
of this Convertible Note has not been converted. In all cases,
the Holder shall retain all of its rights and remedies
(including, without limitation, (i) the right to receive
Conversion Default Payments to the extent required thereby for
such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect
to subsequent conversions determined in accordance with
Section 2.3) for the Company's failure to convert this
Convertible Note.
(e) In lieu of delivering physical certificates
representing the shares of Common Stock assessable upon
conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of the
Holder and its compliance with the provisions contained in
Section 2.1 and in this Section 2.4, the Company shall use its
best efforts to cause its transfer agent to electronically
transmit the shares of Common Stock assessable upon conversion
to the Holder by crediting the account of Holder's Prime
Broker with DTC through its Deposit Withdrawal Agent
Commission system.
3. Modification of Convertible Note. This Convertible Note may be
modified without prior notice to any Holder but with the written consent of the
Majority Holders and the Company. However, without the consent of each Holder
affected, an amendment, supplement or waiver may not (i) reduce the principal
amount of Convertible Note whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate or extend the time for payment of
interest on any Convertible Note, (iii) reduce the principal amount of or extend
the fixed maturity of any Convertible Note or alter the redemption or conversion
provisions with respect thereto or (iv) make any Convertible Note payable in
money or property other than as stated in the Convertible Note.
4. Miscellaneous. This Convertible Note shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State.
The parties hereto, including all guarantors or endorsers, hereby waive
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance and enforcement of this
Convertible Note, except as specifically provided herein, and assent to
extensions of the time of payment, or forbearance or other indulgence without
notice. The Company hereby submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for purposes of all legal proceedings
arising out of or relating to this Convertible Note. The Company irrevocably
waives, to the fullest extent
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CONVERTIBLE NOTE No. 1- Page 7 84661.5
(Vitech America, Inc.)
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
The Holder of this Convertible Note by acceptance of this Convertible
Note agrees to be bound by the provisions of this Convertible Note which are
expressly binding on such Holder.
[Signature Page Follows]
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CONVERTIBLE NOTE No. 1- Page 8 84661.5
(Vitech America, Inc.)
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: April 30, 1999.
VITECH AMERICA, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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CONVERTIBLE NOTE No. 1- Page 9 84661.5
(Vitech America, Inc.)
