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EXHIBIT 4.19
EXHIBIT A TO THE SECURITIES PURCHASE AGREEMENT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
TEAM COMMUNICATIONS GROUP, INC.
(Incorporated in the State of California)
8% CONVERTIBLE DEBENTURE DUE 2002
No. _______________ Principal Amount U.S. $[ ]
Original Issue Date: January 28, 1999
FOR VALUE RECEIVED, Team Communications Group, Inc., a corporation duly
incorporated and existing under the laws of the State of California (the
"Company"), hereby promises to pay to the order of
________________________________, or registered assigns (hereinafter, the
"Holder"), the principal sum of [ ] ($[ ]) United States Dollars on January 27,
2002 (the "Maturity Date"), subject to earlier conversion or redemption as
provided herein. The Debentures will be convertible into common stock, no par
value per share, of the Company on the terms and subject to the conditions
hereinafter set forth at any time after the date hereof. Interest shall be paid
on the unpaid principal balance of this Debenture at the rate of 8% per annum
from the date hereof, payable, in the manner set forth below, upon conversion,
redemption or maturity of this Debenture to the person that is the Holder on the
date of such event. Interest hereon shall be calculated on the basis of a 360
day year consisting of twelve 30-day months.
1. General. (a) This Debenture is one of a duly authorized issue of
Debentures of the Company in original aggregate principal amount of $2,000,000
designated as its 8% Convertible Debenture due 2002 (herein called the
"Debentures"), issued pursuant to the authorization of the Board of Directors of
the Company and issued pursuant to a Securities Purchase Agreement, dated
January 28, 1999, by and among the Company and the Purchasers identified therein
(the "Securities Purchase Agreement"). The Securities Purchase Agreement
contains certain additional terms that are binding upon the Company and each
Holder of the Debentures.
(b) The Debentures are issuable, without coupons, in principal
denominations of U.S. $10.00 and integral multiples thereof. The Debentures, and
transfers thereof, shall be in registered form as provided in Section 4 hereof.
The registered holder of a Debenture shall (to
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the fullest extent permitted by applicable law) be treated at all times, by all
persons and for all purposes as the absolute owner of such Debenture, regardless
of any notice of ownership, theft or loss or of any writing thereon.
2. Principal Payment. Payment of the principal of this Debenture shall
be made upon presentation of this Debenture at the Company's principal office
for surrender upon payment in full. The Company may not prepay all or any
portion of this Debenture.
3. Interest. Each Debenture shall be entitled to receive cumulative
interest at the rate of 8% per annum, compounded semi-annually, in cash, on the
principal amount thereof. Such interest shall be due and payable upon
conversion, redemption or maturity of this Debenture. Interest shall accrue from
the Original Issue Date (as defined herein), whether or not earned or declared,
until maturity or such time as the Debenture has been converted or redeemed as
herein provided. The interest so payable will be paid to the person in whose
name the Debentures (or one or more predecessor shares) are registered on the
records of the Company regarding registration and transfers of the Debentures;
provided, however, that the Company's obligation to a transferee of a Debenture
arises only if such transfer, sale or other disposition is made in accordance
with the terms and conditions hereof and the Securities Purchase Agreement.
4. Transfers. The Debentures have been issued subject to investment
representations of the original purchaser and may be transferred or exchanged
only in compliance with the Securities Act of 1933, as amended, and applicable
state securities laws. Prior to due presentment for transfer of each Debenture,
the Company may treat the Holder as the owner thereof for the purpose of
receiving payments as herein provided and all other purposes, and the Company
shall not be affected by any notice to the contrary.
5. Conversion at the Option of the Holder. (a) (i) The Debentures shall
be convertible into shares of Common Stock (subject to Section 5(a)(ii) and
Section 5(a)(iii)) at the Conversion Ratio (as defined in Section 9) at the
option of the Holder in whole or in part at any time after the Issue Date. The
Holders shall effect conversions by surrendering the Debentures to be converted
to the Company, together with the form of conversion notice attached hereto as
Exhibit 1 (the "Conversion Notice"). The Conversion Notice may be delivered by
facsimile, with the Debenture to follow within three Trading Days. Each
Conversion Notice shall specify the principal amount of Debentures to be
converted. The date on which such conversion is to be effected shall be the date
the Holder delivers such Conversion Notice by facsimile (the "Conversion Date").
Subject to Sections 5(a)(ii), 5(b) and 5(k) hereof, each Conversion Notice, once
given, shall be irrevocable. If the Holder is converting less than all of the
principal amount represented by the Debenture tendered by the Holder with the
Conversion Notice, or if a conversion hereunder cannot be effected in full for
any reason, the Company shall promptly deliver to such Holder, at the expense of
the Company, (in the manner and within the time set forth in Section 5(b)) a new
Debenture representing the unconverted principal amount, to the same extent as
if the Debenture theretofore representing such unconverted principal amount had
not been surrendered on conversion.
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(ii) If on the Conversion Date applicable to any conversion, (A)
the Common Stock is then listed for trading on the Nasdaq National
Market, the New York Stock Exchange, the American Stock Exchange or The
Nasdaq Small Cap Market, (B) the Conversion Price then in effect is such
that the aggregate number of shares of Common Stock that would then be
issuable upon conversion of all the outstanding Debentures, together
with any shares of Common Stock previously issued upon conversion of
Debentures, would equal or exceed 20% of the number of shares of Common
Stock outstanding on the Original Issue Date (the "Issuable Maximum"),
and (C) the Company has not previously obtained (or attempted pursuant
to clause (i) of this subsection to obtain) Shareholder Approval (as
defined below), then the Company shall issue to any Holder so requesting
conversion of Debentures its pro rata portion of the Issuable Maximum in
the same ratio that the principal amount of Debentures held by any such
Holder bears to the aggregate principal amount of Debentures then
outstanding and, with respect to the aggregate principal amount of the
Debentures that remains outstanding after such issuance (the "Remaining
Principal Amount"), the Company shall at the Holder's request, (x) as
promptly as possible but in no event later than 60 days after such
Conversion Date, convene a meeting of the holders of the Common Stock
and use its best efforts to obtain the Shareholder Approval or a waiver
of such approval from The Nasdaq Stock Market or the appropriate
exchange and (y) (1) as promptly as possible from time to time, after a
written request by the Holder, issue shares of Common Stock at a
Conversion Price equal to the Per Share Market Value on the Trading Day
immediately preceding the date of such request for all or a portion of
Remaining Principal Amount (plus any accrued interest thereon) held by
such Holder (whether or not subject to the Conversion Notice specified
above) or (2) as promptly as possible but in any event within seven days
after a request by the Holder redeem all or a portion of the Remaining
Principal Amount (plus any accrued interest thereon) to which such
Conversion Notice applies, for an amount, paid in cash, equal to the
greater of (A) the aggregate principal amount of such Debentures, plus
accrued and unpaid interest, multiplied by 130%, or (B) the applicable
Conversion Ratio as of the Conversion Date multiplied by the average Per
Share Market Value for the five Trading Days immediately preceding the
Conversion Date or the date of payment, whichever is greater. If the
Holder has requested that the Company redeem Debentures pursuant to this
Section and the Company fails for any reason to pay the redemption
price, as calculated pursuant to the immediately preceding sentence,
within seven days after such notice is deemed delivered pursuant to the
preceding sentence, the Company will pay interest on the redemption
price at a rate of 15% per annum, in cash to such Holder, accruing from
such seventh day until the redemption price and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty). "Shareholder Approval" means the approval
by a majority of the total votes cast on the proposal, in person or by
proxy, at a meeting of the shareholders of the Company held in
accordance with the Company's articles of incorporation and by-laws, of
the issuance by the Company of shares of Common Stock exceeding the
Issuable Maximum as a consequence of the conversion of the Debentures
into Common Stock at a price less than the greater of the book or market
value on the Original Issue Date as and to the extent required pursuant
to Rule 4460(i) of
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The Nasdaq Stock Market, Inc.'s Marketplace Rules (or any successor or
replacement provision thereof).
(iii) In no event shall a Holder be permitted to convert in
excess of such principal amount of Debentures upon the conversion of
which, (x) the number of shares of Common Stock owned by such Holder
(other than shares of Common Stock issuable upon conversion of
Debentures or upon exercise of the Warrants (as defined in the
Securities Purchase Agreement) plus (y) the number of shares of Common
Stock issuable upon such conversion of such Debentures, would be equal
to or exceed (z) 9.999% of the number of shares of Common Stock then
issued and outstanding, including shares issuable on conversion of the
Debentures held by such Holder after application of this Section
5(a)(iii). To the extent that the limitation contained in this Section
5(a)(iii) applies, the determination of whether Debentures are
convertible (in relation to other securities owned by a Holder) and of
which Debentures are convertible shall be in the sole discretion of such
Holder, and the submission of Debentures for conversion shall be deemed
to be such Holder's determination of whether such Debentures are
convertible (in relation to other securities owned by a Holder) and of
which Debentures are convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. Nothing contained
herein shall be deemed to restrict the right of a Holder to convert such
Debentures at such time as such conversion will not violate the
provisions of this paragraph. The provisions of this Section 5(a)(iii)
may be waived by a Holder of Debentures as to itself (and solely as to
itself) upon not less than 60 days prior notice to the Company, and the
provisions of this Section 5(a)(iii) shall continue to apply until such
60th day (or later, if stated in the notice of waiver). No conversion in
violation of this paragraph but otherwise in accordance with this
Debenture shall affect the status of the securities issued upon such
conversion as validly issued, fully-paid and nonassessable.
(b) (i) Not later than three (3) Trading Days after any Conversion Date,
the Company will deliver to the applicable Holder by express courier (A) a
certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 3.1(b) of the
Securities Purchase Agreement) representing the number of shares of Common Stock
being acquired upon the conversion of Debentures (subject to reduction pursuant
to Section 5(a)(ii) and Section 5(a)(iii)) and (B) a new Debenture representing
the unconverted principal amount. If in the case of any Conversion Notice such
Debenture or Debentures are not delivered to or as directed by the applicable
Holder by the seventh Trading Day after the Conversion Date (the "Delivery
Date"), the holder shall be entitled by written notice to the Company at any
time on or before its receipt of such Debenture or Debentures thereafter, to
rescind such conversion, in which event the Company shall immediately return the
Debentures tendered for conversion, whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the delivery
of such notice of revocation, except that any amounts described in Sections
5(b)(ii) and (iii) shall be payable through the date notice of rescission is
given to the Company.
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(ii) The Company understands that a delay in the delivery of the
shares of Common Stock upon conversion of Debentures and failure to
deliver a new Debenture representing the unconverted principal amount
beyond the Delivery Date could result in economic loss to the Holder. If
the Company fails to deliver to the Holder such certificate or
certificates pursuant to this Section hereunder by the Delivery Date for
any reason other than the failure to obtain Shareholder Approval as
provided in Section 5(a)(ii), the Company shall pay to such Holder, in
cash, an amount per Trading Day for each Trading Day until such
certificates are delivered, together with interest on such amount at a
rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full, equal to (i) 1% of the aggregate
principal amount of the Debentures, plus the accrued and unpaid interest
thereon, requested to be converted for the first four Trading Days after
the Delivery Date and (ii) 2% of the aggregate principal amount of the
Debentures, plus the accrued and unpaid interest thereon, requested to
be converted for each Trading Day thereafter (which amounts shall be
paid as liquidated damages and not as a penalty). If the Company fails
to deliver to the Holder such certificate or certificates pursuant to
this Section prior to the 15th Trading Day after the Conversion Date,
the Company shall, at the Holder's option, redeem in cash, from funds
legally available therefor at the time of such redemption, such
principal amount of Debentures then held by such Holder, plus the
accrued and unpaid interest thereon, as requested by such Holder, in
cash. The redemption price shall be equal to the aggregate principal
amount of Debentures then held by such Holder, plus accrued and unpaid
interest thereon, multiplied by the average Per Share Market Value for
the five Trading Days immediately preceding (A) the Conversion Date or
(B) the date of payment in full by the Company of such prepayment price,
whichever is greater, multiplied by the Conversion Ratio calculated on
the Conversion Date. If the Holder has requested that the Company redeem
Debentures pursuant to this Section and the Company fails for any reason
to pay the redemption price, as calculated pursuant to the immediately
preceding sentence, within seven days after such notice is deemed
delivered pursuant to Section 5(a)(i), the Company will pay interest on
the redemption price at a rate of 15% per annum, in cash to such Holder,
accruing from such seventh day until the redemption price and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). Nothing herein shall limit a
Holder's right to pursue actual damages for the Company's failure to
deliver certificates representing shares of Common Stock upon conversion
within the period specified herein (including, without limitation,
damages relating to any purchase of shares of Common Stock by such
Holder to make delivery on a sale effected in anticipation of receiving
certificates representing shares of Common Stock upon conversion, such
damages to be in an amount equal to (A) the aggregate amount paid by
such holder for the shares of Common Stock so purchased minus (B) the
aggregate amount of net proceeds, if any, received by such Holder from
the sale of the shares of Common Stock issued by the Company pursuant to
such conversion), and such Holder shall have the right to pursue all
remedies available to it at law or in equity (including, without
limitation, a decree of specific performance and/or injunctive relief).
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(iii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 5(b)(i) by the Delivery Date and if
after the Delivery Date the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Underlying Shares which the
Holder anticipated receiving upon such conversion (a "Buy-In"), then the
Company shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the
Holder's total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased exceeds (B) the aggregate
principal amount of the Debentures for which such conversion was not
timely honored, together with interest thereon at a rate of 15% per
annum, accruing until such amount and any accrued interest thereon is
paid in full (which amount shall be paid as liquidated damages and not
as a penalty). For example, if the Holder purchases shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted conversion of $10,000 aggregate principal amount
of the Debentures, the Company shall be required to pay the Holder
$1,000, plus interest. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the
Buy-In.
(c) (i) The conversion price for the Debentures (the "Conversion Price")
in effect on any Conversion Date shall be the lesser of (A) an amount equal to
90% of the average Per Share Market Value for five consecutive Trading Days
immediately prior to the Original Issue Date and (B) an amount equal to 85% of
the Per Share Market Value for the Trading Day having the lowest Per Share
Market Value during the five Trading Days prior to the Conversion Date (the
"Look Back Period"), except that if during any period (a "Black-out Period"), a
Holder is unable to trade any Common Stock issued or issuable upon conversion of
Debentures immediately due to the postponement of filing or delay or suspension
of effectiveness of a registration statement or because the Company has
otherwise informed such Holder that an existing prospectus cannot be used at
that time in the sale or transfer of such Common Stock, such Holder shall have
the option but not the obligation on any Conversion Date within ten Trading Days
following the expiration of the Black-out Period of using the Conversion Price
applicable on such Conversion Date or any Conversion Price selected by such
Holder that would have been applicable had such Conversion Date been at any
earlier time during the Black-out Period or within the ten Trading Days
thereafter. Beginning on the 150th day following the Original Issue Date, the
number of Trading Days used in clause (B) above in calculating the Look Back
Period shall be increased by two Trading Days per month up to a maximum of 12
Trading Days.
Notwithstanding the foregoing, if the Company has failed to file a
registration statement as required by the Registration Rights Agreement within
30 days after the date (the "Filing Date") it was required to file such
registration statement pursuant to the Registration Rights Agreement or if any
registration statement required to be filed by the Company pursuant to the
Registration Rights Agreement has not been declared effective by the Commission
within 30 days after the date it was required to be declared effective by the
Commission pursuant to the Registration Rights Agreement, or if the Company has
allowed any registration statement required to be filed pursuant to the
Registration Rights Agreement to lapse for a period of 30
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consecutive days, then the Conversion Price shall, immediately after such 30th
day, as applicable, be decreased by 3% and shall be further decreased by an
additional 0.1% for each subsequent day thereafter until such time as such
registration statement is filed, declared effective or had its effectiveness
reinstated, as applicable; provided, that if any such registration statement is
not effective within 180 days after the Filing Date, then the Conversion Price
shall be decreased by an additional 1.25% for each seven calendar days following
such 180th day and continuing until any such registration statement is
effective; provided further, that the Conversion Price shall not be decreased by
more than 50%. The provisions of this Section are not exclusive and shall in no
way limit the Company's obligations under the Registration Rights Agreement.
(ii) If the Company, at any time while any Debentures are
outstanding, (a) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity security payable in shares of Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c)
combine outstanding shares of Common Stock into a smaller number of
shares, or (d) issue by reclassification of shares of Common Stock any
shares of capital stock of the Company, the applicable Conversion Price
shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the
number of shares of Common Stock outstanding after such event. Any
adjustment made pursuant to this Section 5(c)(ii) shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
(iii) If the Company, at any time while Debentures are
outstanding, shall sell or issue additional shares of Common Stock or
rights or warrants to acquire shares of Common Stock at a price per
share less than the Per Share Market Value at the record date mentioned
below, excluding any rights of the holder of the Debentures or the
holders of the Warrants issued pursuant to the Securities Purchase
Agreement to acquire Common Stock, the applicable Conversion Price shall
be multiplied by a fraction, of which the denominator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such shares, rights or warrants
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such shares, rights or warrants
plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Per Share
Market Value. Such adjustment shall be made whenever such shares, rights
or warrants are issued, and shall become effective immediately after the
issuance of such shares, rights or warrants or, if such rights or
warrants are issued to shareholders of the Company, the record date for
the determination of shareholders entitled to receive such rights or
warrants. However, upon the expiration of any right or warrant to
purchase Common Stock the issuance of which resulted in an adjustment in
the applicable Conversion Price pursuant to this Section 5(c)(iii), if
any such right or warrant shall expire and shall not have been
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exercised, the applicable Conversion Price shall immediately upon such
expiration be re-computed and effective immediately upon such expiration
be increased to the price which it would have been (but reflecting any
other adjustments in the applicable Conversion Price made pursuant to
the provisions of this Section 5 after the issuance of such rights or
warrants) had the adjustment of the applicable Conversion Price made
upon the issuance of such rights or warrants been made on the basis of
offering for subscription or purchase only that number of shares of
Common Stock actually purchased upon the exercise of such rights or
warrants actually exercised.
(iv) If the Company, at any time while Debentures are
outstanding, shall distribute to all holders of Common Stock (and not to
holders of Debentures) evidences of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security (excluding those
referred to in Sections 5(c)(ii) and (iii) above), then in each such
case the applicable Conversion Price at which the Debentures shall
thereafter be convertible shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed
for determination of shareholders entitled to receive such distribution
by a fraction of which the denominator shall be the Per Share Market
Value determined as of the record date mentioned above, and of which the
numerator shall be such Per Share Market Value on such record date less
the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one
outstanding share of Common Stock as determined by the Board of
Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent of the net assets of the Company,
such fair market value shall be determined by an Independent Appraiser
(as defined below) selected in good faith by the holders of a majority
in interest of the principal amount of the Debentures then outstanding;
and provided, further, that the Company, after receipt of the
determination by such Independent Appraiser shall have the right to
select an additional Independent Appraiser, in good faith, in which case
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser. In either case the
adjustments shall be described in a statement provided to the holders of
Debentures of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of
Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date mentioned above.
(v) All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(vi) Whenever the applicable Conversion Price is adjusted
pursuant to Section 5(c)(ii),(iii) or (iv) (for purposes of this Section
5(c)(vi), each an "adjustment"), the Company shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board made any
determination hereunder), and the applicable Conversion Price after
giving effect to such adjustment, and shall cause
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copies of such certificate to be delivered to each Holder promptly after
each adjustment. Any dispute between the Company and the Holders with
respect to the matters set forth in such certificate may at the option
of the Holders be submitted to one of the national accounting firms
currently known as the "big five" selected by the holders of a majority
in interest of the principal amount of the Debentures then outstanding,
provided that the Company shall have ten days after receipt of notice
from such Holders of their selection of such firm to object thereto, in
which case the holders of a majority in interest of the principal amount
of the Debentures then outstanding shall select another such firm and
the Company shall have no such right of objection. The firm selected by
the holders of a majority in interest of the principal amount of the
Debentures then outstanding as provided in the preceding sentence shall
be instructed to deliver a written opinion as to such matters to the
Company and the Holders within thirty days after submission to it of
such dispute. Such opinion shall be final and binding on the parties
hereto. The fees and expenses of such accounting firm shall be paid by
the Company.
(vii) In case the Company after the Original Issue Date shall do
any of the following (each, a "Triggering Event") (a) consolidate with
or merge into any other person and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, or
(b) permit any other person to consolidate with or merge into the
Company and the Company shall be the continuing or surviving person but,
in connection with such consolidation or merger, any capital stock of
the Company shall be changed into or exchanged for securities of any
other person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other person, or
(d) effect a capital reorganization or reclassification of its capital
stock, the holders of the Debentures then outstanding shall have the
right thereafter to convert such shares only into the shares of stock
and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such Triggering Event, and the
holders of the Debentures shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common
Stock of the Company into which such Debentures could have been
converted immediately prior to such Triggering Event would have been
entitled; provided, however, that each Holder shall have the option to
require the Company to redeem, from funds legally available therefor at
the time of such redemption, such principal amount of its Debentures at
a price equal to the aggregate principal amount of Debentures to be
redeemed, plus accrued and unpaid interest thereon, multiplied by the
product of (i) the average Per Share Market Value for the five Trading
Days immediately preceding (1) the effective date, the date of the
closing or the date of the announcement, as the case may be, of the
Triggering Event triggering such redemption right or (2) the date of
payment in full by the Company of the redemption price hereunder,
whichever is greater, and (ii) the Conversion Ratio calculated on the
date of the closing or the effective date, as the case may be, of the
Triggering Event triggering such redemption right, as the case may be.
The entire redemption price shall be paid in cash. If the Holder has
requested that the Company redeem Debentures pursuant to this Section
and the Company fails for any reason to pay the redemption price, as
calculated pursuant to the immediately preceding sentence, within seven
days after such notice is deemed delivered pursuant to the
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preceding sentence, the Company will pay interest on the redemption
price at a rate of 15% per annum, in cash to such Holder, accruing from
such seventh day until the redemption price and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty). The terms of any such Triggering Event
shall include such terms so as to continue to give to the holder of
Debentures the right to receive the securities, cash or property set
forth in this Section 5(c)(vii) upon any conversion or redemption
following such Triggering Event. This provision shall similarly apply to
successive Triggering Events.
(viii) If:
A. the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
C. the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
D. the approval of any shareholders of the Company
shall be required in connection with any
Triggering Event; or
E. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding
up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Debentures, and shall cause to be mailed to the
Holders of Debentures at their last addresses as they shall appear upon the
stock books of the Company, at least 30 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, 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,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice. Holders are entitled
to convert Debentures during the 30-day period commencing the date of such
notice to the effective date of the event triggering such notice.
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(d) If at any time conditions shall arise by reason of action taken by
the Company which in the opinion of the Board of Directors are not adequately
covered by the other provisions hereof and which might materially and adversely
affect the rights of the holders of Debentures (different than or distinguished
from the effect generally on rights of holders of any class of the Company's
capital stock) or if at any time any such conditions are expected to arise by
reason of any action contemplated by the Company, the Company shall mail a
written notice briefly describing the action contemplated and the material
adverse effects of such action on the rights of the holders of Debentures at
least 10 calendar days prior to the effective date of such action, and an
Independent Appraiser selected by the holders of majority in interest of the
principal amount of the Debentures then outstanding shall give its opinion as to
the adjustment, if any (not inconsistent with the standards established in this
Section 5), of the Conversion Price (including, if necessary, any adjustment as
to the securities into which Debentures may thereafter be convertible) and any
distribution which is or would be required to preserve without diluting the
rights of the holders of Debentures; provided, however, that the Company, after
receipt of the determination by such Independent Appraiser, shall have the right
to select an additional Independent Appraiser, in good faith, in which case the
adjustment shall be equal to the average of the adjustments recommended by each
such Independent Appraiser. The Board of Directors shall make the adjustment
recommended forthwith upon the receipt of such opinion or opinions or the taking
of any such action contemplated, as the case may be; provided, however, that no
such adjustment of the Conversion Price shall be made which in the opinion of
the Independent Appraiser(s) giving the aforesaid opinion or opinions would
result in an increase of the Conversion Price to more than the Conversion Price
then in effect.
(e) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Debentures free from preemptive rights or any
other actual contingent purchase rights of persons other than the holders of
Debentures, not less than such number of shares of Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Securities Purchase Agreement) be issuable (taking into
account the adjustments and restrictions of Section 5(c)) upon the conversion of
all outstanding Debentures. The Company covenants that all shares of Common
Stock that shall be so issuable shall, upon issue, be duly and validly
authorized, issued and fully paid, nonassessable and freely tradable.
(f) Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share based on the Per Share Market Value at such time. If the Company
elects not, or is unable, to make such a cash payment, the holder of a Debenture
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.
(g) The issuance of certificates for shares of Common Stock on
conversion of Debentures shall be made without charge to the holders thereof for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificate.
12
(h) Debentures converted into Common Stock shall be canceled and retired
by the Company.
(i) Any and all notices or other communications or deliveries to be
provided by the holders of Debentures hereunder, including, without limitation,
any Conversion Notice, shall be in writing and delivered personally, by
facsimile or sent by a nationally recognized overnight courier service,
addressed to the attention of the President and to the Secretary of the Company
at the facsimile telephone number or address of the principal place of business
of the Company as set forth in the Securities Purchase Agreement. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to each Holder of
Debentures at the facsimile telephone number or address of such holder appearing
on the books of the Company, or if no such facsimile telephone number or address
appears, at the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed given and effective on the
earlier of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m., New York City time, (ii) the date after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section later than 5:00 p.m., New
York City time, on any date and earlier than 11:59 p.m., New York City time, on
such date, (iii) receipt, if sent by a nationally recognized overnight courier
service, or (iv) actual receipt by the party to whom such notice is required to
be given.
(j) In the event a Holder shall elect to convert any Debentures as
provided herein, the Company cannot refuse conversion based on any claim that
such Holder or any one associated or affiliated with such Holder has been
engaged in any violation of law, unless, an injunction from a court, on notice,
restraining and or adjoining conversion of all or of said Debentures shall have
issued and the Company posts a surety bond for the benefit of such Holder in the
amount of the principal amount of Debentures sought to be converted, which bond
shall remain in effect until the completion of arbitration/litigation of the
dispute and the proceeds of which shall be payable to such Holder in the event
it obtains judgment.
(k) If on the Conversion Date, the average Per Share Market Value for
the five Trading Days immediately preceding the Conversion Date is equal to or
less than $1.50 per share, then the Company may elect, in lieu of delivering the
shares of Common Stock, to redeem, from funds legally available therefor at the
time of such redemption, such principal amount of Debentures tendered by such
Holder for Conversion, in cash. The redemption price shall be equal to the
aggregate principal amount of Debentures then held by such Holder, plus accrued
and unpaid interest thereon, multiplied by 115%. The Company shall deliver
written notice of its election to redeem Debentures pursuant to this Section
5(k) providing for a redemption date of not less than five Trading Days after
the Conversion Date and not more than ten Trading Days after the Conversion
Date. If the Company fails for any reason to pay the redemption price, as
calculated pursuant to the immediately preceding sentence, on the redemption
date the Company will pay interest on the redemption price at a rate of 15% per
annum, in cash to such Holder, accruing from such seventh day until the
redemption price and any accrued interest thereon is
13
paid in full (which amount shall be paid as liquidated damages and not as a
penalty). The Holder shall be entitled by written notice to the Company at any
time after receipt of the redemption notice and prior to the redemption date, to
rescind its Conversion Notice, in which event the Company shall immediately
return the Debentures tendered for conversion, whereupon the Company and the
Holder shall each be restored to their respective positions immediately prior to
the delivery of such notice of revocation, except that any amounts described in
Sections 5(b)(ii) and (iii) shall be payable through the date notice of
rescission is given to the Company
6. Mandatory Conversion. (a) From and after the date of effectiveness of
the Registration Statement (as defined in the Registration Rights Agreement) and
for so long as such Registration Statement remains effective, and in the event
that the Per Share Market Value is at least $4.00 per share and less than $5.00
per share for five out of any seven consecutive Trading Days, subject to
adjustment for stock splits, stock dividends, combinations and other similar
recapitalizations, and so long as the average daily trading volume during the
preceding seven Trading Days is at least 50,000 shares per day, then the Company
shall have the right to cause the Holders to convert up to $1,000,000 principal
amount of Debentures, in the aggregate, into shares of Common Stock at the
applicable Conversion Price, in accordance with this Section 6 (such date being
referred to herein as the "Initial Mandatory Conversion Date"). Each Holder
shall be required to convert Debentures pursuant to this Section 6(a) in the
same ratio the aggregate principal amount of Debentures held by such Holder
bears to the aggregate amount of Debentures outstanding prior to such
conversion.
(b) From and after the date of effectiveness of the Registration
Statement (as defined in the Registration Rights Agreement) and for so long as
such Registration Statement remains effective, and in the event that the Per
Share Market Value is at least $5.00 per share for five out of any seven
consecutive Trading Days, subject to adjustment for stock splits, stock
dividends, combinations and other similar recapitalizations and so long as the
average daily trading volume during the preceding seven Trading Days is at least
50,000 shares per day, then the Company shall have the right to cause the
Holders to convert the remaining outstanding aggregate principal amount of
Debentures into shares of Common Stock at the applicable Conversion Price, in
accordance with this Section 6 (such date being referred to herein as the "Final
Mandatory Conversion Date", each of the Initial Mandatory Conversion Date and
the Final Mandatory Conversion Date collectively referred to herein as a
"Mandatory Conversion Date"). Each Holder shall be required to convert
Debentures pursuant to this Section 6(b) in the same ratio the aggregate
principal amount of Debentures held by such Holder bears to the aggregate amount
of Debentures outstanding prior to such conversion. For the avoidance of doubt,
the Company and each Holder understands (i) that the Per Share Market Value
referenced in sub-clause (a) above (at least $4.00 per share and less than $5.00
per share for five out of any seven consecutive Trading Days) may not occur and
(ii) the Company may choose not to exercise any of its rights under sub-clause
(a) above. In either case, once the conditions of this sub-clause (b) are met,
the Company may exercise its right to cause the Holders to convert all of the
outstanding aggregate principal amount of Debentures pursuant to the provisions
of this sub-clause (b).
(c) The Company will send each Holder written notice of any Mandatory
Conversion Date and the place designated for mandatory conversion of the
Debentures pursuant to this
14
Section 6 (the "Mandatory Conversion Notice"). The Mandatory Conversion Notice
need not be given in advance of the occurrence of the Mandatory Conversion Date.
The Mandatory Conversion Notice shall be sent by facsimile to the facsimile
number in the Securities Purchase Agreement or by first class or registered
mail, postage prepaid, to each Holder at the address indicated in the Securities
Purchase Agreement. Upon receipt of such notice, each Holder shall surrender the
Debentures subject to such conversion pursuant to Section 6(a) or 6(b), as the
case may be, to the Company at the place designated in such notice, and shall
thereafter receive certificates for the number of shares of Common Stock to
which such holder is entitled as a result of such Mandatory Conversion. On the
Mandatory Conversion Date, all rights with respect to the Debentures so
converted, including the rights, if any, to receive notices and vote, will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which the Debentures have been converted.
The Company shall deliver to such Holder a certificate or certificates for the
number of full shares of Common Stock into which the Debentures have been
converted and cash as provided herein with respect to any fraction of a share of
Common Stock, in accordance with Section 5(b)(i) hereof as if such Mandatory
Conversion Date were a Conversion Date.
(d) All Debentures that are required to be surrendered for conversion in
accordance with the provisions hereof shall, from and after the Mandatory
Conversion Date, be deemed to have been retired and canceled and the principal
amount of Debentures represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the Holder to surrender such Debentures
on or prior to such date.
7. Events of Default.
Each of the following shall constitute an event of default ("Event 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 or order of any court or any order, rule or regulation of any
administrative, governmental or non-governmental body or otherwise howsoever:
(a) the Company shall default in any payment of principal of, or
interest on, the Debentures or any other amounts due under the Transaction
Documents when and as due (whether at maturity, upon acceleration or otherwise);
or
(b) the Company shall fail duly to perform or observe any term, covenant
or agreement contained in any of the Debentures or in the Securities Purchase
Agreement or in the Registration Rights Agreement for a period of seven days
after the date on which written notice of such failure shall first have been
given to the Company; or
(c) a final judgment shall be entered by any court against the Company
for the payment of money which together with all other outstanding final
judgments against the Company exceeds $10,000 in the aggregate, or (ii) a
warrant of attachment or execution or similar process shall be issued or levied
against any of the Company's property which exceeds in
15
value $10,000 in the aggregate, and if, within 30 days after the entry, issue or
levy thereof, such judgment, warrant or process shall not have been paid or
discharged; or
(d) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or for any
substantial part of the property of it or ordering the winding-up or liquidation
of the affairs of it and such decree or order shall remain unstayed and in
effect for a period of 30 days; or
(e) the Company shall commence a voluntary case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or shall make any general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become due or
shall take any corporate action in furtherance of any of the foregoing; or
(f) an event of default, as defined in any indenture or instrument
evidencing or under which the Company shall have outstanding indebtedness for
borrowed money in excess of $10,000, inclusive of accrued interest, accrued
premium, if any, or any additional amounts payable, shall happen and be
continuing and such default shall involve the failure to pay the principal of
such indebtedness (or any part thereof), when due and payable after the
expiration of any applicable grace period with respect thereto, or such
indebtedness shall have been accelerated so that the same shall be or become due
and payable prior to the date on which the same would otherwise have become due
and payable, and failure to pay shall not have been cured by the Company within
30 days after such failure or such acceleration shall not be rescinded or
annulled within 30 days after notice thereof shall have first been given to the
Company; provided that if such event of default under such indenture or
instrument shall be remedied or cured by the Company or waived by the holders of
such indebtedness, then the Event of Default hereunder by reason thereof shall
be deemed likewise to have been thereupon remedied, cured or waived without
further action upon the part of any of the holders of Debentures; or
(g) the Common Stock is delisted from, or trading in the Common Stock
shall have been suspended for more than ten Trading Days on, The Nasdaq
Small-Cap Market or such other principal market or exchange on which the Common
Stock is listed for trading; or
(h) the Company fails to timely deliver the shares of Common Stock to
the Holder or a replacement Debenture representing any unconverted portion of
this Debenture pursuant to this Debenture; or
16
(i) the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities (as defined in the Registration Rights
Agreement) or the initiation of any proceedings for that purpose.
With the exception of an Event of Default specified in clauses (d) or (e) above,
upon the occurrence and continuance of an Event of Default, the Holder may
declare the principal of and interest on the Debentures and all other amounts
owing under the Transaction Documents to be forthwith due and payable by giving
written notice thereof to the Company without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything in
the Transaction Documents to the contrary notwithstanding. Upon the occurrence
and continuance of an Event of Default specified in clauses (d) or (e) above,
such principal, interest and other amounts shall thereupon and concurrently
therewith become automatically due and payable all without any action by the
Holder and without presentment, demand, protest or other notice of any kind, all
of which are expressly waived, anything in the Transaction Documents to the
contrary notwithstanding.
Interest on overdue principal and interest (and other amounts, if any)
shall accrue from the date on which such principal and interest (and other
amounts, if any) were due and payable to the date such principal and interest
(and other amounts, if any) are paid or duly provided for, at a rate of 15% per
annum (to the extent payment of such interest shall be legally enforceable).
8. Definitions. For the purposes hereof, the following terms shall have
the following meanings:
"Common Stock" means the common stock, no par value per share, of the
Company and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"Conversion Ratio" means the number of shares of Common Stock issuable
upon conversion of each Debentures determined by the application of the
following formula where "D" equals the accrued and unpaid interest on the
aggregate principal amount of Debentures so converted as of the Conversion Date:
Principal Amount to be Converted + D
------------------------------------
Conversion Price
"Independent Appraiser" means a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capital stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Company or any
Holder.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
17
"Original Issue Date" shall mean the date of the first issuance of any
Debentures regardless of the number of transfers of any particular Debentures
and regardless of the number of certificates which may be issued to evidence
such Debentures.
"Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on The Nasdaq Small-Cap
Market, the Nasdaq National Market or other registered national stock exchange
on which the Common Stock is then listed or if there is no such price on such
date, then the closing bid price on such exchange or quotation system on the
date nearest preceding such date, or (b) if the Common Stock is not listed then
on The Nasdaq Small-Cap Market, the Nasdaq National Market or any registered
national stock exchange, the closing bid price for a share of Common Stock in
the over-the-counter market, as reported by NASDAQ or in the National Quotation
Bureau Incorporated or similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date, or (c) if
the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), then the average of the over-the-counter quotes on the
Electronic Bulletin Board of the National Association of Securities Dealers,
Inc. for the relevant conversion period, as determined in good faith by the
holder, or (d) if the Common Stock is not then publicly traded the fair market
value of a share of Common Stock as determined by an Independent Appraiser
selected in good faith by the holders of a majority in interest of the shares of
the Debentures; provided, however, that the Company, after receipt of the
determination by such Independent Appraiser, shall have the right to select an
additional Independent Appraiser, in which case, the fair market value shall be
equal to the average of the determinations by each such Independent Appraiser;
and provided, further that all determinations of the Per Share Market Value
shall be appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The determination of fair market value
by an Independent Appraiser shall be based upon the fair market value of the
Company determined on a going concern basis as between a willing buyer and a
willing seller and taking into account all relevant factors determinative of
value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to
any restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Original Issue Date, by and among the Company and the original
Holders.
"Trading Day" means (a) a day on which the Common Stock is traded on The
Nasdaq Small-Cap Market, the Nasdaq National Market or other registered national
stock exchange on which the Common Stock has been listed, or (b) if the Common
Stock is not listed on The Nasdaq Small-Cap Market, the Nasdaq National Market
or any registered national stock exchange, a day or which the Common Stock is
traded in the over-the-counter market, as
18
reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day
shall mean any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other government action to close.
"Underlying Shares" means the number of shares of Common Stock into
which the Debentures are convertible in accordance with the terms hereof and the
Securities Purchase Agreement.
9. Taxes. The Company shall pay any and all taxes attributable to the
issuance and delivery of Common Stock or other securities upon conversion of the
Debentures.
10. No Impairment. The Company shall not by any action including,
without limitation, amending the articles of incorporation or the by-laws of the
Company, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this
Debenture, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against dilution (to the
extent specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Company will (i) not permit the par value, if
any, of its Common Stock to exceed the then effective Conversion Price, (ii) not
amend or modify any provision of the articles of incorporation or by-laws of the
Company in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Debentures, (iii) take all such action as may be reasonably necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this
Debentures, and (iv) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be reasonably necessary to enable the Company to perform its
obligations under this Debenture.
11. Governing Law. The Debentures shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
12. Countersignature and Registration. This Debenture shall not become
valid or obligatory for any purpose until the Debentures shall have been duly
executed by the Company and such signature attested to by an authorized Officer
thereof.
19
13. Warranty of the Company. The Company hereby certifies and warrants
that all acts, conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this Debenture, and to
constitute the same as legal, valid and binding obligations of the Company
enforceable in accordance with their terms, have been done and performed and
have happened in due and strict compliance with all applicable laws.
14. Descriptive Headings. The descriptive headings appearing herein are
for convenience of reference only and shall not alter, limit or define the
provisions hereof.
20
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed in its corporate name by the manual or facsimile signature of a duly
authorized signatory, as attested to by another duly authorized signatory of the
Company.
Dated: January , 1999
TEAM COMMUNICATIONS GROUP, INC.
By:
--------------------------------------
Name:
Title:
ATTEST:
By:
--------------------------------------
Name:
Title:
21
EXHIBIT 1
CONVERSION NOTICE
Reference is made to the debenture certificate (the "Debenture Certificate") of
Team Communications Group, Inc., a California corporation (the "Company"). In
accordance with and pursuant to the Debenture Certificate, the undersigned
hereby elects to have the Company convert the principal amount of 8% Convertible
Debentures due 2002 (the "Debentures"), of the Company, indicated below into
shares of Common Stock, no par value per share (the "Common Stock"), of the
Company, by tendering the certificate(s) representing the Debentures specified
below as of the date specified below.
Date of Conversion: _______________________________
Principal amount of Debentures to be converted: _______________________________
Certificate no(s). of Debentures to be converted:_______________________________
Please confirm the following information: _______________________________
Conversion Price: _______________________________
Please issue the Common Stock and, if applicable, any check drawn on an account
of the Company into which the Debentures are being converted in the following
name and to the following address:
Issue to: _______________________________
_______________________________
_______________________________
_______________________________
Facsimile Number: _______________________________
Authorization: _______________________________
By:
--------------------------------------
Title:
--------------------------------
Dated:
--------------------------------
