EXHIBIT 4.5
ADDITIONAL CORPORATE PROMISSORY NOTE
$18,041,687 May 28, 1996
This Additional Corporate Promissory Note (this "Note") is made and
delivered as of May 28, 1996, to Security Capital Atlantic Incorporated, a
Maryland corporation ("Lender"), by Atlantic Homestead Village Incorporated, a
Maryland corporation ("Borrower"), under the following circumstances:
RECITALS
A. Pursuant to that certain promissory note (the "Prior Corporate Note")
dated January 24, 1996 from Borrower to Lender, in the original principal amount
of $62,031,430 (the "Prior Corporate Loan Amount") and various deeds of trust
and mortgages (the "Prior Corporate Security Documents"), delivered by Borrower
to Lender to secure payment of the Prior Corporate Note and the Prior
Partnership Note (as defined below), prior to the date hereof, Lender has agreed
to advance funds to fund, among other matters, acquisition and construction
costs and expenses incurred by Borrower in connection with acquiring and
developing various real properties as Homestead Village projects. (The Prior
Corporate Note, the Prior Corporate Security Documents and all other instruments
delivered by Borrower in connection therewith to secure the Prior Corporate Note
and the Prior Partnership Note are herein called the "Prior Corporate Loan
Documents.")
B. Pursuant to that certain promissory note (the "Prior Partnership
Note") dated January 24, 1996 from Atlantic Homestead Village Limited
Partnership (the "Partnership") to Lender, in the original principal amount of
$19,213,476 (the "Prior Partnership Loan Amount") and various deeds of trust and
mortgages (the "Prior Partnership Security Documents"), delivered by the
Partnership to Lender to secure payment of the Prior Corporate Note and the
Prior Partnership Note, prior to the date hereof, Lender has agreed to advance
funds to fund, among other matters, acquisition and construction costs and
expense incurred by the Partnership in connection with acquiring and developing
various real properties as Homestead Village projects. (The Prior Partnership
Note, the Prior Partnership Security Documents and all other instruments
delivered by the Partnership in connection therewith to secure the Prior
Partnership Note and the Prior Corporate Note are herein called the "Prior
Partnership Loan Documents." The Prior Corporate Loan Documents and Prior
Partnership Loan Documents are collectively referred to herein as the "Prior
Loan Documents.")
C. Borrower, the Partnership and Lender desire to continue the funding
provided for under the Prior Loan Documents, to provide funds to Borrower and
the Partnership for the costs incurred in connection with the acquisition and
development of Homestead Village projects, and Borrower, the Partnership and
Lender have agreed to increase the Prior Corporate Loan Amount
to $80,073,117 (the "Corporate Loan"), to decrease the Prior Partnership Loan
Amount to $17,955,354 (the "Partnership Loan"), and to amend and restate the
Prior Loan Documents in connection therewith (such loans being collectively
called the "Loans"). Contemporaneously herewith, the Partnership is executing
that certain Amended and Restated Note in the original principal amount of the
Partnership Loan (the "Amended and Restated Partnership Note"). This Note is
being delivered by Borrower to Lender to evidence the increased amount of the
Corporate Loan. The amended and restated Prior Loan Documents being executed and
delivered contemporaneously herewith, and any and all other agreements or
instruments now or hereafter executed by Borrower, the Partnership or any other
person or entity to evidence, or in connection with, or as security for the
payment of this Note and/or the Partnership Note are herein collectively, with
such notes, referred to as the "Loan Documents".
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender agree as follows:
1. Promise to Pay.
On or before October 31, 2006 (the "Due Date"), the undersigned Borrower,
hereby promises to pay to the order of Lender in lawful money of the United
States of America, the lesser of (i) EIGHTEEN MILLION FORTY ONE THOUSAND SIX
HUNDRED EIGHTY SEVEN DOLLARS ($18,041,687) and (ii) the aggregate unpaid
principal amount of all advances made by Lender to Borrower under this Note (the
amount so determined being herein called the "Adjusted Principal Amount"),
together with interest on the Adjusted Principal Amount at a rate equal to 9.0%
per annum (the "Interest Rate"). Interest shall be calculated on the basis of a
360-day year and shall be computed on the actual number of days elapsed.
2. Payments.
Accrued interest on the unpaid Adjusted Principal Amount shall be payable
in arrears every six months beginning with the date that is six months after the
date of this Note, in an amount equal to all of the interest accrued during the
immediately preceding six month period. Borrower shall make a payment of the
total Adjusted Principal Amount of advances then outstanding, together with
accrued and unpaid interest to such date, on the Due Date. Borrower shall have
no obligation to pay the Adjusted Principal Amount, or any portion thereof,
until the Due Date or such earlier date upon which the loan is accelerated.
Borrower shall make each payment hereunder not later than 11:00 a.m. (Mountain
Standard Time) on the day when due in U.S. dollars at Lender's office at 0000
Xxxxxx Xxxxxx Xxxxxx, Xx Xxxx, Xxxxx 00000. Each payment shall first be applied
to late charges, costs of collection or enforcement and other similar amounts
due, if any, under this Note, then to interest due and payable hereunder and the
remainder to the Adjusted Principal Amount due and payable hereunder. The
aggregate unpaid Adjusted Principal Amount shown on the records of Lender shall
be rebuttable presumptive evidence of the Adjusted Principal Amount owing and
unpaid on this Note.
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3. Conversion. Subject to the terms of this Note, the holder of this Note
shall have the right, beginning on any Business Day (as defined below) on or
after March 31, 1997, (the "Exercisability Date") and on or prior to the date
on which this Note is fully paid, to convert to shares of Common Stock all or
any portion of the principal amount outstanding on this Note, on the basis of
one fully paid, registered and nonassessable share of Common Stock for each
$11.50 aggregate Adjusted Principal Amount outstanding on this Note. The number
of shares of Common Stock into which this Note may be converted, as adjusted
pursuant hereto, is referred to herein as the "Exercise Rate". For purposes of
this Note, certain capitalized terms used below are defined in Section 4 of this
Note.
(a) The conversion rights under this Section 3 of this Note may be
exercised from time to time on and after the Exercisability Date and on or
prior to the Due Date by surrendering this Note at the principal office of
Borrower with the form of conversion election set forth as Exhibit A hereto
(the "Conversion Exercise") duly completed and signed by the holder of this
Note.
(b) Except as otherwise provided in Section 3(h)(vi) no payment shall
be made on Common Stock issuable upon conversion of this Note on account of
any dividend or distribution declared on Borrower's Common Stock to holders
of such Common Stock of record as of a date prior to the Exercise Date.
(c) The "Exercise Date" shall be the date when all of the items
referred to in subsection (a) of this Section 3 are received by Borrower at
or prior to 2:00 p.m., New York, New York time, on a Business Day and the
conversion of this Note will be effective as of such Exercise Date. If any
items referred to in subsection (a) are received after 2:00 p.m., New York,
New York time, on a Business Day, the conversion of this Note will be
effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of a conversion of this Note on the Expiration Date,
if all of the items referred to in the preceding subsection are received by
Borrower at or prior to 5:00 p.m. New York, New York time, on such
Expiration Date, the conversion of this Note will be effective on the
Expiration Date.
(d) Upon the conversion of this Note in accordance with the terms
hereof Borrower shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the holder of this Note, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of this Note, in fully registered form,
registered in such name or names as may be directed by such holder pursuant
to the Conversion Exercise, together with cash as provided in Section 3(i)
hereof and shall deliver to holder a duly executed replacement note
representing the aggregate principal amount of this Note outstanding less
any amount previously converted (in each case, without the adjustment
provided for in Section 1 of this Note), but otherwise in the same form as
this Note; provided, however, that if any consolidation, merger or lease or
sale of assets is proposed to be effected by Borrower as described in
Section 3(h)(x) hereof, or a tender offer or an exchange offer for shares
of Common
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Stock of Borrower shall be made, upon such surrender of this Note as
aforesaid, Borrower shall, as soon as possible, but in any event not later
than two Business Days thereafter, issue and cause to be delivered the full
number of shares of Common Stock issuable upon the conversion of this Note
in the manner described in this sentence together with cash as provided in
Section 3(i) hereof. Such certificate or certificates shall be deemed to
have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record or such shares of Common Stock as
of the date of the surrender of this Note. No fractional shares shall be
issued upon conversion of this Note in accordance with Section 3(i) hereof.
(e) Borrower will pay all documentary stamp taxes attributable to the
initial issuance of this Note and the issuance of shares of Common Stock
upon conversion of this Note; provided, however, that Borrower shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance of this Note or any certificates for
shares of Common Stock in a name other than that of the registered holder
of this Note surrendered upon the exercise hereof, and Borrower shall not
be required to issue or deliver such Note unless or until the person or
persons requesting the issuance thereof shall have paid to Borrower the
amount of such tax or shall have established to the satisfaction of
Borrower that such tax has been paid.
(f) Borrower will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued
shares of Common Stock, for the purpose of enabling it to satisfy any
obligation to issue shares of Common Stock upon conversion of this Note,
the maximum number of shares of Common Stock which may then be deliverable
upon the conversion of this Note. Borrower or the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent transfer agent for
any shares of Borrower's capital stock issuable upon the exercise of any of
the conversion rights aforesaid will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be
required for such purpose. Before taking any action which would cause an
adjustment pursuant to this Section 3 to reduce the Exercise Price below
the then par value (if any) of the shares issuable upon conversion of this
Note, Borrower will take any corporate action which may, in the opinion of
its counsel (which may be counsel employed by Borrower), be necessary in
order that Borrower may validly and legally issue fully paid and
nonassessable shares of Common Stock at the Exercise Price as so adjusted.
(g) At any such time as Common Stock is listed or quoted on any
national securities exchange or inter-dealer quotation system, Borrower
will, at its expense, obtain promptly and maintain the approval for listing
or quotation on each such exchange or inter-dealer quotation system, upon
official notice of issuance after notice of conversion of this Note, the
shares of Common Stock issuable hereunder and maintain the listing or
quotation of such shares after their issuance; and Borrower will also, upon
official notice of issuance after notice of conversion of this Note, list
or quote on such national securities exchange, will register under the
Securities Exchange Act of 1934, as
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amended, and will maintain such listing or quotation of, any Other
Securities (as defined below) that at any time are issuable upon conversion
of this Note, if and at the time that any securities of the same class
shall be listed or quoted on such national securities exchange or inter-
dealer quotation system by Borrower.
(h) The Exercise Rate is subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section 3(h). For purposes
of this Section 3(h), "Common Stock" means the Common Stock and any other
stock of Borrower, however designated, issuable upon conversion of this
Note.
(i) Adjustment for Change in Capital Stock. If Borrower:
a. pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
b. subdivides its outstanding shares of Common Stock into
a greater number of shares;
c. combines its outstanding shares of Common Stock into a
smaller number of shares;
d. makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
e. issues by reclassification of its Common Stock any
shares of its capital stock,
then the Exercise Rate in effect immediately prior to such action
shall be proportionately adjusted so that the holder of this Note may
receive the aggregate number and kind of shares of capital stock of
Borrower which such holder would have owned immediately following such
action if this Note had been exercised immediately prior to such
action or immediately prior to the record date applicable thereto, if
any.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification.
If, after an adjustment, a holder of this Note, upon conversion,
may receive shares of two or more classes of capital stock of
Borrower, the Exercise Rate of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section 3(h).
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Such adjustment shall be made successively whenever any event
listed above shall occur.
(ii) Adjustment for Rights Issue or Sale of Common Stock Below
Current Market Value. If Borrower (i) distributes any rights, warrants
or options to all holders of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than 94% (100% if a stand-by underwriter is used and charges
Borrower a commission) of the Current Market Value at the Time of
Determination (each as defined in Section 4) or (ii) sells any Common
Stock or any securities convertible into or exchangeable or
exercisable for the Common Stock (other than pursuant to (1) the
exercise of this Note (or any other note issued by Borrower pursuant
to or in connection with that certain Merger and Distribution
Agreement dated of even date herewith among Lender Security Capital
Pacific Trust ("PTR"), Security Capital Group Incorporated ("SCG") and
Homestead Village Properties Incorporated ("Homestead") or (2) upon
exercise of outstanding warrants to acquire shares of Common Stock,
which warrants were issued pursuant to a Warrant Agreement executed in
connection with that certain Warrant Purchase Agreement of even date
herewith among Lender, PTR, SCG and Homestead or (3) any security
convertible into, or exchangeable or exercisable for, the Common Stock
as to which the issuance thereof has previously been the subject of
any required adjustment (whether or not actually made) pursuant to
this Section 3(h)) at a price per share less than the Current Market
Value, the Exercise Rate shall be adjusted in accordance with the
formula:
E' = E x (O + N)
---------------
(O + (N x P/M))
where:
E' = the adjusted Exercise Rate;
E = the current Exercise Rate;
O = the number of shares of Common Stock outstanding on the record
date for the distribution to which this subsection (ii) is being
applied or on the date of sale of Common Stock at a price per
share less than the Current Market Value to which this subsection
(ii) applies, as the case may be;
N = the number of additional shares of Common Stock issuable upon
exercise of all rights, warrants and options so distributed or
the number of shares of Common Stock so sold or the maximum
stated number of shares of Common Stock issuable upon the
conversion, exchange or exercise of any such convertible,
exchangeable or exercisable securities, as the case may be;
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P = the offering price per share of the additional shares of Common
Stock upon the exercise of any such rights, options or warrants so
distributed or pursuant to any such convertible, exchangeable or
exercisable securities so sold or the sale price of the shares so
sold, as the case may be; and
M = the Current Market Value as of the Time of Determination or at
the time of sale, as the case may be.
The adjustment shall be made successively whenever any such
rights, warrants or options are issued and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive the rights, warrants or options. If
at the end of the period during which such rights, warrants or options
are exercisable, not all rights, warrants or options shall have been
exercised, the Exercise Rate shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of
shares actually issued.
No adjustment shall be made under this subsection (ii) if the
application of the formula stated above in this subsection (ii) would
result in a value of E' that is lower than the value of E.
(iii) Adjustment for Other Distributions. If Borrower
distributes to all holders of its Common Stock any of its assets or
debt securities or any rights, warrants or options to purchase any of
its debt securities or assets, the Exercise Rate shall be adjusted in
accordance with the formula:
E' = E x M
---
M-F
where:
E' = the adjusted Exercise Rate;
E = the current Exercise Rate;
M = the Current Market Value; and
F = the fair market value (on the record date for the distribution to
which this subsection (iii) applies) of the assets, securities,
rights, warrants or options to be distributed in respect of each
share of Common Stock in the distribution to which this
subsection (iii) is being applied (including, in the case of cash
dividends or other cash distributions giving rise to an
adjustment, all such cash distributed concurrently).
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The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive
the distribution. If at the end of the period during which such
rights, warrants or options are exercisable, not all rights, warrants
or options shall have been exercised, the Exercise Rate shall be
immediately readjusted to what it would have been if such rights,
warrants or options which are not exercised had not been issued.
This subsection (iii) does not apply to cash dividends or cash
distributions paid out of consolidated retained earnings as shown on
the books of Borrower prepared in accordance with generally accepted
accounting principles other than any Extraordinary Cash Dividend (as
defined below). An "Extraordinary Cash Dividend" shall be that
portion, if any, of the aggregate amount of all cash dividends paid in
any fiscal year which exceeds the sum of (A) Borrower cumulative
undistributed earnings on the date of this Agreement, plus (B) the
cumulative amount of earnings, as determined by the Board of
Directors, after such date, minus (C) the cumulative amount of
dividends accrued or paid in respect of the Common Stock. In all
cases, Borrower shall give the holder of this Note advance notice of a
record date for any dividend payment on the Common Stock which notice
is delivered on a date at least as early as the date of notice to the
holders of Common Stock.
(iv) Consideration Received. For purposes of any computation
respecting consideration received pursuant to subsection (ii) of
Section 3(h), the following shall apply:
a. in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by Borrower for
any underwriting of the issue or otherwise in connection
therewith;
b. in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors (irrespective of the accounting treatment thereof),
whose determination shall be conclusive, and described in a Board
resolution which shall be filed with the records of Borrower; and
c. in the case of the issuance of securities convertible
into or exchangeable for shares, the aggregate consideration
received therefor shall be deemed to be the consideration
received by Borrower for the issuance of such securities plus the
additional minimum consideration, if
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any, to be received by Borrower upon the conversion or exchange
thereof (the consideration in each case to be determined in the
same manner as provided in clauses (1) and (2) of this
subsection).
(v) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require
an increase or decrease of at least 1% in the Exercise Rate. Any
adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 3(h) shall be made to the nearest 1/100th of a share.
(vi) When No Adjustment Required. No adjustment need be made
for a transaction referred to in subsections (i), (ii) or (iii) of
this Section 3(h) if the holder of this Note is offered the
opportunity to participate in the transaction on a basis and with
notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction. To the extent this Note
becomes convertible into cash, no adjustment need be made thereafter
as to the cash. Interest will not accrue on the cash.
(vii) Notice of Adjustment. Whenever the Exercise Rate is
adjusted, Borrower shall provide the notices required by Section 3(j)
hereof.
(viii) Voluntary Adjustment. Borrower from time to time may, as
the Board of Directors deems appropriate, increase the Exercise Rate
by any amount for any period of time if the period is at least 20 days
and if the increase is irrevocable during the period. Whenever the
Exercise Rate is increased, Borrower shall mail to the holder of this
Note a notice of the increase. Borrower shall mail the notice at least
15 days before the date the increased Exercise Rate takes effect. The
notice shall state the increased Exercise Rate and the period it will
be in effect. An increase of the Exercise Rate pursuant to this
Section 3(h)(viii), other than an increase which Borrower has
irrevocably committed will be in effect for so long as this Note is
outstanding, does not change or adjust the Exercise Rate otherwise in
effect for purposes of subsections (i), (ii) or (iii) of this Section
3(h).
(ix) Notice of Certain Transactions. If:
a. Borrower takes any action that would require an
adjustment in the Exercise Rate pursuant to subsections (i), (ii)
or (iii) of this Section 3(h) and if Borrower does not arrange
for the holder of this Note to participate pursuant to Section
3(h)(vi); or
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b. there is a liquidation or dissolution of Borrower,
Borrower shall mail to the holder of this Note a notice stating
the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. Borrower shall mail the notice at
least 15 days before such date. Failure to mail the notice or any
defect in it shall not affect the validity of the transaction.
(x) Reorganization of Borrower. If Borrower consolidates or
merges with or into, or transfers or leases all or substantially all
its assets to, any Person, upon consummation of such transaction this
Note shall automatically become exercisable for the kind and amount of
securities, cash or other assets which the holder of this Note would
have owned immediately after the consolidation, merger, transfer or
lease if the holder had exercised this Note immediately before the
effective date of the transaction. Concurrently with the consummation
of such transaction, the corporation formed by or surviving any such
consolidation or merger if other than Borrower, or the Person to which
such sale or conveyance shall have been made (any such Person, the
"Successor Guarantor"), shall enter into a supplemental Note so
providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for
in this Section 3(h). The Successor Guarantor shall mail to the
holder of this Note a notice describing the supplemental Note. If the
issuer of securities deliverable upon conversion of this Note under
the supplemental Note is an Affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the
supplemental Note. If this subsection (x) applies, subsections (i),
(ii) or (iii) of this Section 3(h) do not apply.
(xi) Borrower Determination Final. Any determination that
Borrower or the Board of Directors must make pursuant to subsection
(i), (ii), (iii), (iv) or (vii) of this Section 3(h) is conclusive.
(xii) When Issuance or Payment May Be Deferred. In any case in
which this Section 3(h) shall require that an adjustment in the
Exercise Rate be made effective as of a record date for a specified
event, Borrower may elect to defer until the occurrence of such event
(i) issuing to the holder of this Note exercised after such record
date the shares of Common Stock and other capital stock of Borrower,
if any, issuable upon such conversion over and above the shares of
Common Stock and other capital stock of Borrower, if any, issuable
upon such conversion on the basis of the Exercise Rate and (ii) paying
to such holder any amount in cash in lieu of a fractional share
pursuant to Section 3(i) hereof; provided, however, that Borrower
shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional
shares of Common Stock, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
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(xiii) Adjustments to Par Value. Borrower shall from time to time
make such adjustments to the par value of the Common Stock as may be
necessary so that at all times, upon conversion of this Note, the
shares of Common Stock will be fully paid and nonassessable.
(xiv) Priority of Adjustments. If this Section 3(h) requires
adjustments to the Exercise Rate under more than one of subsections
(i), (ii) or (iii), and the record dates for the distributions giving
rise to such adjustments shall occur on the same date, then such
adjustments shall be made by applying, first, the provisions of
subsection (i), second, the provisions of subsection (iii) and, third,
the provisions of subsection (ii).
(xv) Multiple Adjustments. After an adjustment to the Exercise
Rate under this Section 3(h), any subsequent event requiring an
adjustment under this Section 3(h) shall cause an adjustment to the
Exercise Rate as so adjusted.
(i) Fractional Interests; Accrued Interest. Borrower shall not be
required to issue fractional shares on the conversion of this Note. If any
fraction of a share would, except for the provisions of this Section 3(i),
be issuable on the conversion of this Note, Borrower shall pay to the
holder an amount in cash equal to the product of (i) such fraction of a
share and (ii) the Current Market Value of a share of Common Stock as of
the date of conversion of this Note. Upon any conversion of all or any
portion of the Adjusted Principal Amount in accordance with the terms
hereof, Borrower shall pay to the holder in cash all accrued but unpaid
interest to the effective date of conversion with respect to the portion of
the Adjusted Principal Amount of this Note being converted.
(j) Notices to Holder. Upon any adjustment of the Exercise Rate
pursuant to Section 3(h) hereof, Borrower shall promptly thereafter (i)
cause to be prepared a certificate of a firm of independent public
accountants of recognized standing selected by Borrower (who may be the
regular auditors of Borrower) setting forth the Exercise Rate after such
adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based and setting forth the
number of shares (or portion thereof) issuable after such adjustment in the
Exercise Rate, upon conversion of this Note, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein,
and (ii) cause to be given to the holder of this Note at such holder's
address appearing on the Note register written notice of such adjustments
by first-class mail, postage prepaid. Where appropriate, such notice may
be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 3(j).
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In the event:
(i) Borrower shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants (other than rights, options or warrants issued to all
holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share not less than 94%
(100% if a stand-by underwriter is used and charges Borrower
commission) of the Current Market Value); or
(ii) Borrower shall authorize the distribution to all holders
of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in subsection (i) of
Section 3(h) hereof); or
(iii) of any consolidation or merger to which Borrower is a
party or of the conveyance or transfer of the properties and assets of
Borrower substantially as an entirety, or of any reclassification or
change of Common Stock issuable upon conversion of this Note (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of Borrower; or
(v) Borrower proposes to take any action (other than actions
of the character described in Section 3(h)(i) which would require an
adjustment of the Exercise Rate pursuant to Section 3(h);
then Borrower shall cause to be given to the registered holder of this Note
at its address appearing on the Note register, at least 20 days (or 15 days
in any case specified in clauses (i) or (ii) above) prior to the applicable
record date hereinafter specified, or promptly in the case of events for
which there is no record date, by first-class mail, postage prepaid, a
written notice stating (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares
of Common Stock, or (iii) the date on which any such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as
of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange such shares for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or
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winding up. The failure to give the notice required by this Section 3(j)
or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or
the vote upon any action.
Nothing contained in this Note shall be construed as conferring upon
the holder hereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
directors of Borrower or any other matter, or any rights whatsoever as
shareholders of Borrower.
4. Definitions. For purposes of Section 3 of this Note, the following
terms shall have the meanings indicated:
"Affiliate" means, with respect to another Person, any Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such other Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), when used with respect to
any 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.
"Board of Directors" means the Board of Directors of Borrower.
"Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which commercial banking institutions in The City of New York are
authorized by law to be closed.
"Current Market Value" per share of Common Stock or of any other
security at any date shall be the average of the daily market price, for
the twenty (20) consecutive trading days immediately preceding the day of
such determination. The market price for each such trading day shall be:
(i) the last reported sales price, regular way on such day, or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange ("NYSE") or, (ii) if such security is not listed or admitted
for trading on the NYSE, on the principal national securities exchange on
which such security is listed or admitted for trading or, (iii) if not
listed or admitted for trading on any national securities exchange, on the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or, (iv) if such security is
not quoted on such National Market System, the average of the closing bid
and asked prices on such day in the over-the-counter market as reported by
NASDAQ or, (v) if bid and asked prices for such security on such day shall
not have been reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Chairman of the
Board or the Board of Directors or, (vi) if such bid and asked
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prices are not so furnished, then the fair market value of the security as
established by the Board of Directors acting in their good faith reasonable
judgment.
"Other Securities" means any stock (other than Common Stock) and other
securities of Borrower or any other Person (corporate or otherwise) which
the holder of this Note at any time shall be entitled to receive, or shall
have received, upon the conversion of this Note, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3(h) hereof or otherwise.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Time of Determination" means the time and date of the earlier of (i)
the determination of stockholders entitled to receive rights, warrants, or
options or a distribution, in each case, to which Sections 3(h)(ii) or
(iii) apply and (ii) the time ("Ex-Dividend Time") immediately prior to the
commencement of "ex-dividend" trading for such rights, warrants or
distribution on such national or regional exchange or market on which the
Common Stock is then listed or quoted.
5. Call Option.
Except as expressly set forth in this Section 5, Borrower is prohibited
from making any voluntary prepayment of this Note and shall not have any right
to cause the holder to convert any portion of the Adjusted Principal Amount
outstanding from time to time. From and after the fifth anniversary of the date
of this Note and on or prior to the Due Date, Borrower shall have the right (the
"Call Option") to repay the Adjusted Principal Amount then outstanding, in whole
but not in part, without premium or penalty (other than the imposition, if
applicable, of the Default Rate or "late charge" as provided herein). Borrower
may exercise the Call Option by giving the holder of this Note at any time upon
ninety (90) days' prior written notice of Borrower's intention to exercise the
Call Option, which notice shall state the date on which the Call Option is to be
consummated, the then current Adjusted Principal Amount and all accrued interest
and unpaid interest thereon, together with any other sums evidenced by this
Note, to be paid on such date. Upon the receipt of any such notice, the holder
shall have the right at any time prior to the date proposed for such repurchase
to convert any or all of the Adjusted Principal Amount of this Note in
accordance with the provisions of Section 3.
6. Default.
In the event that any one or more of the following events occur, this Note
shall become immediately due and payable at the option of Lender:
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(a) Borrower or the Partnership, as applicable, shall fail to pay
when due any sums required to be paid under this Note or any other Loan
Documents, and such failure is not cured within 10 days after receipt of
written notice from Lender.
(b) To the extent any such failure, breach or inaccuracy has a
Material Adverse Effect (as hereinafter defined), the failure by Borrower
or the Partnership to perform or observe, as and when required, any
covenant, agreement, obligation or condition required to be performed or
observed under this Note or any other Loan Documents, or the existence of
any breach or inaccuracy in any of the representations, covenants or
warranties set forth in the Loan Documents, provided, however, that (i) no
default shall exist hereunder on account of a breach of any representation,
covenant or warranty set forth in the Loan Documents (other than this Note)
until either Borrower or Partnership, as applicable, shall have failed to
cure such breach within any applicable notice and cure period therein
provided; and (ii) no default shall exist hereunder on account of a breach
of any representation, covenant or warranty set forth herein unless and
until Lender shall provide written notice of such breach to Borrower, and
Borrower shall fail to cure the same within 30 days after receipt of such
notice, provided if such breach is of such a nature that it cannot be cured
within such 30 day period, it shall not constitute a default hereunder so
long as Borrower commences its cure of such breach within such 30 day
period and thereafter diligently and continuously proceeds with the curing
of same within a reasonable period of time not to exceed 180 days.
"Material Adverse Effect" means any material and adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Borrower and its affiliates,
subsidiaries and any parent entity, taken as a whole.
7. Default Rate; Late Charge.
Upon the maturity of any portion of this Note, whether by acceleration or
otherwise, Borrower further promises to pay interest at the rate per annum equal
to the sum of 2.0%, plus the Interest Rate, on the then outstanding past-due
amount of principal, until such amount is paid in full. In addition, a late
charge of four percent (4%) of the amount of any installment or the amount due
on the Due Date which is not paid when due shall be due and payable to the
holder of this Note to cover the extra expense involved in handling delinquent
payments. Said "late charge" shall be due and payable upon demand of the
Lender.
8. Security; Governing Law.
(a) This Note evidences indebtedness incurred for the purpose of
financing the acquisition and development of real property, and payment of
this Note is secured by the Loan Documents. It is agreed that, at the
election of the holder hereof, the principal sum remaining unpaid hereon,
together with accrued interest thereon, shall become at once due and
payable at the place of payment aforesaid in the event that a default has
occurred under any of the Loan Documents.
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(b) This Note shall be governed by, and construed in accordance with,
the laws of the State of New Mexico, United States.
9. Controlling General Provisions.
The provisions in this Section 9 shall govern and control over any
irreconcilably inconsistent provision, the Loan Documents or any other
instrument contemplated hereunder or thereunder. In no event shall the
aggregate of all interest paid or payable by Borrower to Lender ever exceed the
maximum rate of interest which may lawfully be charged to (or payable by)
Borrower under applicable law on the Adjusted Principal Amount of this Note from
time to time remaining unpaid. In this connection, it is expressly stipulated
and agreed that it is the intent of Lender and Borrower in the execution and
delivery of this Note to contract in strict compliance with any applicable usury
laws. In furtherance of the foregoing, none of the terms of the Loan Documents
or any such other instruments contemplated hereunder or thereunder shall ever be
construed to create a contract to charge or pay for interest in excess of the
maximum interest rate permitted to be contracted for, charged to, or payable by
Borrower under applicable law. Borrower and any guarantors, endorsers or other
parties now or hereafter becoming liable for payment of this Note shall never be
liable for interest in excess of the maximum interest that may be lawfully
charged under applicable law, and the provisions of this Section 9 shall govern
over all other provisions of the Loan Documents, and any other instruments
evidencing or securing the Loan, should such provisions be in apparent conflict
herewith.
Specifically and without limiting the generality of the foregoing
paragraph, it is expressly agreed that:
(a) In the event of the payment of the principal of the
Adjusted Principal Amount of this Note, prior to the due date for
payment thereof, resulting from acceleration of maturity of this Note,
if the aggregate amounts of interest accruing hereunder prior to such
payment plus the amount of any interest accruing after such maturity
up to the date of payment and plus any other amounts paid or accrued
in connection with the Loan Documents, including, if applicable, all
or any portion of the value of any Common Stock issued to Lender under
Section 3 of this Note, which by law are deemed interest under such
Loan Documents and which aggregate amounts paid or accrued (if
calculated in accordance with the provisions of this Note other than
pursuant to this Section 9) would exceed the maximum lawful rate of
interest which could be charged on the principal balance of this Note
from the date hereof to the date of final payment thereof, then in
such event the amount of such excess shall be credited, as of the date
paid, toward the payment of principal of this Note so as to reduce the
amount of the final payments of Adjusted Principal Amount due on this
Note;
(b) If under any circumstances the aggregate amounts paid
under the Loan Documents prior to and incident to the final payment
hereof, including,
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without limitation, if applicable, all or any portion of the value of
any Common Stock issued to Lender under Section 3 of this Note,
include amounts which by applicable law are deemed interest and which
would exceed the maximum amount of interest which could lawfully have
been charged or collected on this Note, Borrower stipulates that such
payment and collection will have been and will be deemed to have been
the result of a mathematical error on the part of both Borrower and
Lender, and Lender shall promptly refund the amount of such excess (to
the extent only of the excess of such payments above the maximum
amount which could lawfully have been collected and retained) upon the
discovery of such error by the party receiving such payment or notice
thereof from the party making such payment; and
(c) All calculations as to the rate of interest contracted
for, charged or received under this Note or the other Loan Document
which are made for the purposes of determining whether such rate
exceeds the maximum rate of interest which may lawfully be charged
shall be made, to the extent permitted by applicable usury laws, if
any, by amortizing, prorating, allocating and spreading, in equal
parts, during the period of the full stated term of the Loan evidenced
hereby, all interest any time contracted for, charged or received from
Borrower or otherwise by Lender in connection with such indebtedness.
Notwithstanding anything contained in this Note or the other Loan Documents
to the contrary, interest under this Note shall never exceed the lesser of (1)
the highest non-usurious rate allowed by applicable law or (2) seventeen percent
(17%) per annum on a compounded basis.
10. Invalidity.
The parties hereto intend and believe that each provision of this Note
comports with all applicable laws and judicial decisions. However, if any
provision or provisions, or if any portion of any provision or provision, in
this Note is found by a court of law to be in violation of any applicable
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions of this
Note to be illegal, invalid, void or unenforceable as written, then it is the
intent of all parties hereto (i) that such portion, provision or provisions
shall be given force to the fullest possible extent that they are legal, valid
and enforceable, (ii) that the remainder of this Note shall be construed as if
such illegal, invalid, void or unenforceable portion, provision or provisions
were not contained therein, and (iii) that the rights, obligations and interest
of Borrower and the holder hereof under the remainder of this Note shall
continue in full force and effect.
11. Waiver; Expenses.
(a) Borrower hereby waives presentment, demand for payment, notice of
dishonor and all other notices or demands in connection with the delivery,
acceptance,
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performance, default or enforcement of this Note and hereby consents to and
extensions of time, renewals, waivers or modifications that may be granted
or consented to by the holder of this Note in respect of the time of
payment or any other provision of this Note. Borrower hereby waives and
renounces for itself, its successors and assigns, all rights to the
benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption,
appraisement, or exemption now provided, or which may hereafter be
provided, by the Constitution and laws of the United States and of any
state thereof, both as to itself and in and to all of its property, real
and personal against the enforcement and collection of the obligations
evidenced by this Note.
(b) In the event that the holder hereof shall institute any action
for the enforcement of the collection of this Note, there shall be
immediately due from Borrower in addition to the unpaid interest and
principal, all costs and expenses of such action, including but not limited
to attorneys' fees and expenses.
12. Miscellaneous.
(a) This Note and all provision hereof shall be binding upon Borrower
and its successors and assigns and shall inure to the benefit of Lender,
together with its successors and assigns, including each owner and holder
from time to time of this Note.
(b) Time is of the essence as to all dates set forth herein subject
to any applicable grace or cure period expressly provided herein or the in
the Loan Documents; provided, however, that unless otherwise stated,
whenever any payment to be made under this Note shall be stated to be due
on a day other than a business day, such payment may be made on the
immediately preceding business day. For purposes of this Note, a business
day shall be any day that is not a Saturday, Sunday or national bank
holiday.
(c) All notices, demands or requests relating to any matters set
forth herein shall be in writing and delivered as set forth, and shall be
effective in the time set forth, in the Funding Agreement.
(d) Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS
HEREIN PROVIDED FOR.
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date set
forth above.
ATLANTIC HOMESTEAD VILLAGE INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
_________________________________
Name: Xxxxx X. Xxxxxxxx, Xx.
Title: Managing Director
Address: 000 Xxxxxxx Xxxxxx
Xxxxx Xx, Xxx Xxxxxx 00000
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EXHIBIT A
Form of Exercise Notice
(To Be Executed Upon Conversion of Note)
The undersigned hereby irrevocably elects to convert the entire outstanding
principal amount of the Note (currently $__________) into __________ shares of
Common Stock in accordance with the terms thereof. The undersigned requests
that a certificate for such shares be registered in the name of
________________, whose address is _____________________ and that such shares be
delivered to ________________________ whose address is __________________.
Date:___________________
____________________________
Name:_______________________
Title:______________________
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