EXHIBIT 10.7(c)
THIS NOTE WAS OFFERED PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND STATE SECURITIES
LAWS, AND HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES AUTHORITY. NO TRANSFER OR SALE OF THIS NOTE SHALL BE MADE
UNLESS SUCH TRANSFER OR SALE COMPLIES WITH THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES
LAW. IN THE EVENT THAT THE TRANSFER OF THIS NOTE IS TO BE MADE, THE COMPANY
SHALL REQUIRE A CERTIFICATE AND, IF APPLICABLE, MAY REQUIRE AN OPINION OF
INDEPENDENT COUNSEL, ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION, DESCRIBING
THE APPLICABLE EXEMPTION AND THE BASIS THEREFOR, FROM SAID ACT AND LAWS OR IS
BEING MADE PURSUANT TO SAID ACT AND LAWS.
CCAIR, INC.
7% CONVERTIBLE SUBORDINATED NOTE DUE 2004
$7,920,000
CCAIR, Inc., a Delaware corporation (hereinafter called the "Company")
which term includes any successors), for value received, hereby promises to pay
to Lynrise Air Lease, Inc. or registered assigns, the principal sum of SEVEN
MILLION NINE HUNDRED TWENTY THOUSAND DOLLARS, in 10 equal semiannual
installments of principal as provided herein, payable on each June 30 and
December 31 (each a "Principal Payment Date"), commencing on December 31, 1999
and on each Principal Payment Date thereafter until and including June 30, 2004.
A final installment in the amount of all outstanding principal, Capitalized
Interest (hereinafter defined) and all accrued and unpaid interest shall be
payable on December 31, 2004.
Interest Payment Dates: March 31, June 30, September 30 and December
31; commencing March 31, 1999.
Record Dates: March 15, June 15, September 15 and December 15.
Reference is made to the further provisions of this Note following the
signature page hereof, which will, for all purposes, have the same effect as if
set forth at this place.
-1-
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
CCAIR, INC.,
a Delaware corporation
By:
Xxxxxxx X. Xxxx
President
Attest: ___________________________
Secretary
-2-
CCAIR, INC.
7% CONVERTIBLE SUBORDINATED NOTE DUE 2004
1. Interest and Principal. CCAIR, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors), promises
to pay interest on the unpaid principal amount of this Note at the rate of 7%
per annum. To the extent it is lawful, the Company promises to pay interest on
any past due principal, and to the extent lawful, on any Capitalized Interest
from the Interest Payment Date on which such Capitalized Interest accrues and
any interest payment due but unpaid at a rate of 8% per annum compounded on June
30 and December 31 of each year.
The Company will pay interest quarterly in Cash on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1999. Interest on this Note will accrue from December 31,
1997; provided that the interest accrued from December 31, 1997 until and
including December 31, 1998 (the "Capitalized Interest"), shall not be due and
payable until December 31, 2004. Interest on the outstanding principal balance
of this Note accruing after December 31, 1998 shall be due and payable on each
Interest Payment Date. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months, and the actual number of days elapsed.
The Company hereby promises to repay the outstanding principal balance
of this Note in 10 equal semiannual installments of principal in the amount of
Four Hundred Thirty-Five Thousand Six Hundred Dollars ($435,600) each, payable
on each June 30 and December 31 of each year (each a "Principal Payment Date"),
commencing December 31, 1999, and on each Principal Payment Date thereafter
until and including June 30, 2004. A final installment in the amount of all
outstanding principal, plus the Capitalized Interest, plus accrued and unpaid
interest, shall be due and payable on December 31, 2004.
2. Method of Payment. The Redemption Price (hereinafter defined) and
each installment of principal of this Note are payable, at the Company's option,
in Cash (hereinafter defined) or subject to the satisfaction of the following
conditions, in Common Stock (hereinafter defined) of the Company: (i) no Event
of Default (hereinafter defined) has occurred and is then continuing; (ii) the
Company's certified independent public accountants issued an unqualified opinion
in connection with their most recent audit report for the Company; and (iii) the
Company's Common Stock is then listed or admitted to trading on a national
securities exchange in the United States or is quoted on the Nasdaq Stock Market
(collectively, the "Common Stock Payment Conditions"). The current market price
per share of a share of Common Stock (the "Current Market Price") on any payment
date shall be deemed to be the average of the last sale prices of a share of
Common Stock as reported on the principal national securities exchange on which
the Common Stock is listed or admitted for trading or, if the Common Stock is
not listed or admitted to trading on any national securities exchange, the
Nasdaq Stock Market's National Market, at the close of
-3-
business (the "Last Sale Price") for the preceding thirty (30) Trading Days
(hereinafter defined) ending on the last Trading Day prior to the applicable
payment date or other applicable date. If on any such Trading Day the Common
Stock is not quoted by any organization referred to in the definition of Last
Sale Price, the fair market value of the Common Stock on such day, as reasonably
determined in good faith by the Board of Directors of the Company, shall be
used. Each installment of interest is payable in Cash. Payment of principal (to
the extent made in Cash) and interest shall be made (i) by check mailed to the
Holder at its address set forth herein or such other address designated by
notice to the Company as provided herein, or (ii) by wire transfer of
immediately available funds in accordance with wire instructions designated by
notice to the Company as provided herein.
3. Paying Agent and Registrar. Initially, the Company at present having
an address at 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
will act as initial paying agent where the Note may be presented for payment
("Paying Agent"). The Company may change the Paying Agent without notice to the
Holder. When acting as Paying Agent, the Company or any Affiliate thereof shall
segregate and hold in a separate trust fund for the benefit of the Holder, all
money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company or any such Affiliate, the Company will
appoint an independent Person (hereinafter defined) to act as Paying Agent. The
Company may have one or more additional Paying Agents.
The term "Paying Agent" includes any additional Paying Agent.
4. Redemption.
(a) Right of Redemption. At any time, upon thirty (30) days'
prior notice to the Holder, the Company will have the right to pay all
Capitalized Interest and redeem all or any part of this Note, provided
that each partial redemption shall be in the principal amount of
$100,000 or an integral multiple thereof, for a redemption price equal
to 100% of the aggregate outstanding principal balance of this Note or
such portion to be redeemed plus payment of all Capitalized Interest
(the "Redemption Price"), in each case (subject to the right of the
Holder, as provided below, to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date [hereinafter
defined]) together with accrued and unpaid interest, if any, to the
Redemption Date.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to Holder. Each notice for redemption shall identify the principal
amount to be redeemed and shall state:
(i) the Redemption Date, and that the Note called for
redemption may not be converted after the Business Day (hereinafter
defined) prior to the Redemption Date;
-4-
(ii) the Redemption Price, plus the amount of accrued and
unpaid interest, if any, to be paid upon such redemption;
(iii) the name and address of the Paying Agent;
(iv) that the Note called for redemption must be surrendered
to the Paying Agent at the address specified in such notice to collect
the Redemption Price;
(v) that, unless (A) the Company defaults in its obligation to
deposit Cash or, at its option but subject to the Common Stock Payment
Conditions, Common Stock with the Paying Agent, or (B) such redemption
payment is prohibited pursuant to Paragraph 10 hereof or otherwise,
interest on the Note called for redemption will cease to accrue on and
after the Redemption Date and the only remaining right of the Holder of
this Note is to receive payment of the Redemption Price, plus accrued
and unpaid interest, if any, to the Redemption Date, upon surrender to
the Paying Agent of the Note called for redemption and to be redeemed;
(vi) if the Note is being redeemed in part, the portion of the
principal amount of the Note to be redeemed and that, after the
Redemption Date, and upon surrender of the Note, a new Note in an
aggregate principal amount equal to the unredeemed portion thereof will
be issued; and
(vii) that the notice is being sent pursuant to the redemption
provisions of Paragraph 4 of this Note.
(b) Effect of Notice of Redemption. Once notice of redemption is mailed
in accordance with Subparagraph 4(a), this Note or such portion hereof called
for redemption shall become due and payable on the Redemption Date at the
Redemption Price, plus accrued and unpaid interest, if any, to the Redemption
Date. Upon surrender to the Paying Agent, this Note or such portion hereof
called for redemption shall be paid at the Redemption Price, plus accrued and
unpaid interest, if any, to the Redemption Date; provided that if the Redemption
Date is a Legal Holiday (hereinafter defined), payment shall be made on the next
succeeding Business Day (hereinafter defined) with accrued interest for the
period from such Redemption Date to such succeeding Business Day.
(c) Deposit of Redemption Price; Redemption in Common Stock.
(i) On or prior to the Redemption Date, the Company shall
deposit with the Paying Agent (or, if the Company or an Affiliate
thereof is acting as Paying Agent, segregate and hold in trust) Cash
or, at the Company's option but subject to the Common Stock Payment
Conditions, Common Stock in an amount sufficient to pay the Redemption
Price of, plus accrued and unpaid interest on, this Note or such
portion hereof to be redeemed on
-5-
such Redemption Date and, if this Note is redeemed in full, all
Capitalized Interest plus accrued and unpaid interest thereon. The
Paying Agent shall promptly return to the Company any Cash or Common
Stock so deposited which is not required for that purpose upon the
written request of the Company.
(ii) If the Company complies with clause (c)(i) of this
Paragraph 4 and payment of this Note or such portion hereof called for
redemption is not prohibited under Paragraph 12 or otherwise, interest
on this Note or such portion hereof to be redeemed will cease to accrue
on the applicable Redemption Date, whether or not this Note is
presented for payment. Notwithstanding anything herein to the contrary,
if this Note is surrendered for redemption in the manner provided
herein and is not so paid upon surrender for redemption because of the
failure of the Company to comply with clause (c)(i) of this Paragraph
4, interest shall continue to accrue and be paid from the Redemption
Date until such payment is made on the unpaid principal, and, to the
extent lawful, on any interest not paid on such unpaid principal, in
each case at the rate and in the manner provided in Paragraph 1 hereof.
5. Transfer and Exchange.
(a) When this Note is presented to the Company with a
request:
(x) to register the transfer of this Note; or
(y) to exchange this Note for an equal principal
amount of Notes of other denominations;
the Company shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met;
provided, however, that if surrendered for transfer or exchange, this
Note shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company, duly executed
by the Holder hereof or his attorney duly authorized in writing.
(b) No transfer or sale of this Note shall be made until the
registration requirements of the Securities Act, and any applicable
state securities laws are complied with, or such transfer or sale is
exempt from the registration requirements under the Securities Act and
said laws. No transfer or sale of this Note shall be made to any Person
who is precluded from owning or holding Common Stock under applicable
law or by United States Department of Transportation regulations or
rulings. In the event that a transfer is to be made, the Company shall
require the holder of this Note to deliver, at its expense, a
certificate acceptable to and in form and substance satisfactory to the
Company that such transfer is being made (i) pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the
Securities Act and said laws or is being made pursuant to the
-6-
Securities Act and said laws and that the transferee agrees to be bound
by and to abide by the provisions of this Note, and (ii) to a Person
that is not precluded from owning or holding Common Stock under
applicable law or United States Department of Transportation
regulations or rulings. The Company may request an opinion of counsel
to establish compliance with the Securities Act or said laws. The
opinion of counsel shall not be an expense of the Company.
(c) Obligations with respect to Transfers and Exchanges of
this Note.
(i) To permit registrations of transfers and
exchanges, the Company shall execute Notes at the Holder's
request.
(ii) No service charge shall be made for any
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in
connection therewith.
(iii) The Company shall not be required to register
the transfer of or exchange of (a) this Note to the extent it
is subject to redemption in whole or in part pursuant to
Paragraph 4, except the unredeemed portion of this Note if
being redeemed in part, or (b) this Note for a period
beginning 15 days before the mailing of a notice of an offer
to repurchase pursuant to Paragraph 10 hereof or the mailing
of a notice of redemption pursuant to Paragraph 4 hereof and
ending at the close of business on the day of such mailing.
6. Persons Deemed Owners. The registered Holder of this Note may be
treated as the owner of it for all purposes.
7. Unclaimed Money. If money or Common Stock for the payment of
principal or interest remains unclaimed for two years, the Paying Agent(s) (if
other than the Company) will return the money or Common Stock, as the case may
be to the Company at its written request. After that, all liability of such
Paying Agent(s) with respect to such money or Common Stock shall cease and the
Holder of this Note shall thereafter look only to the Company for payment of
such money or Common Stock.
8. Amendment; Supplement; Waiver. The Holder and the Company, when
authorized by board resolutions, may by written agreement executed by the
Company and Holder amend or supplement this Note for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Note or of modifying in any manner the rights of the Holder under this
Note. The Holder may, in writing, waive compliance by the Company with any
provision of this Note.
-7-
9. Conversion Rights.
(a) Conversion Privilege. Subject to and upon compliance with
the provisions of this Paragraph 9, at the option of the Holder, this
Note may at any time after the date of issuance of this Note, be
converted, in whole, or in part, into fully paid and non-assessable
shares of Common Stock issuable upon conversion of this Note, at the
Conversion Price (hereinafter defined), until and including, but not
after the close of business on the second Business Day prior to the
Stated Maturity (hereinafter defined), provided that, to the extent
that this Note or some portion hereof shall have been called for
redemption or delivered for repurchase prior to such date and no
default is made in making due provision for the payment of the
Redemption Price or Repurchase Price in accordance with the terms
hereof, this Note or such portion thereof may be so converted only
until and including, but not after, the close of business on the
Business Day prior to the Redemption Date or Repurchase Date, as
applicable, unless the Company subsequently fails to pay the applicable
Redemption Price or Repurchase Price, as the case may be.
(b) Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Holder shall surrender this Note to the
Company at any time during usual business hours at its office or agency
maintained for the purpose as provided in this Note, accompanied by a
fully executed written notice, in substantially the form attached to
this Note, that the Holder elects to convert this Note or a stated
portion thereof, and, if this Note is surrendered for conversion during
the period between the close of business on any Record Date and the
opening of business on the next following Interest Payment Date and has
not been called for redemption on a Redemption Date which occurs within
such period, accompanied also by payment to the Company of an amount
equal to the interest payable on such Interest Payment Date on the
principal amount of this Note being surrendered for conversion,
notwithstanding such conversion. The Holder of this Note at the close
of business on a Record Date will be entitled to receive the interest
payable on this Note on the corresponding Interest Payment Date
notwithstanding the conversion thereof after such Record Date. The
interest payment with respect to this Note if called for redemption on
a date during the period from the close of business on or after any
Record Date to the close of business on the Business Day following the
corresponding Interest Payment Date will be payable on the
corresponding Interest Payment Date to the registered Holder at the
close of business on that Record Date (notwithstanding the conversion
of such Note before the corresponding Interest Payment Date) and a
Holder who elects to convert need not include funds equal to the
interest paid. Such notice of conversion shall also state the name or
names (with address) in which the certificate or certificates for
shares of Common Stock shall be issued if other than that of the
Holder. The Note surrendered for conversion shall (if reasonably
required by the Company) be duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder or his attorney duly authorized in writing. As
promptly as practicable after the receipt of such
-8-
notice and the surrender of the Note as aforesaid, the Company shall,
subject to the provisions of this Paragraph 9, issue and deliver at
such office or agency to such Holder, or on his written order, a
certificate or certificates for the number of full shares of Common
Stock issuable on such conversion of the Note in accordance with the
provisions of this Paragraph 9 and Cash, as provided in this Paragraph
9, in respect of any fraction of a share of Common Stock otherwise
issuable upon such conversion. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the date
(herein called the "Date of Conversion") on which the Note shall have
been surrendered as aforesaid, and the person or persons in whose name
or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become
on the Date of Conversion the holder or holders of record of the shares
represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
cause the person or persons in whose name or names the certificate or
certificates for such shares are to be issued to be deemed to have
become the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock
transfer books are open but such conversion shall nevertheless be at
the Conversion Price in effect at the close of business on the date
when the Note shall have been so surrendered with the conversion
notice. In the case of conversion of a portion, but less than all, of
this Note, the Company shall as promptly as practicable execute and
deliver to the Holder, at the expense of the Company, a Note or Notes
in the aggregate principal amount of the unconverted portion of this
Note so surrendered. Except as otherwise expressly provided in this
Note, no payment or adjustment shall be made for interest accrued on
this Note (or portion thereof) converted or for dividends or
distributions on any Common Stock issued upon conversion of this Note.
(c) Fractional Interests. No fractions of shares shall be
issued upon conversion of this Note. If any fraction of a share of
Common Stock would, except for the foregoing provisions of this
Paragraph 9, be issuable on the conversion of this Note, the Company
shall make payment in lieu thereof in an amount of Cash equal to the
value of such fraction.
(d) Initial Conversion Price. The Initial Conversion Price
(herein so called) per share of Common Stock issuable upon conversion
of this Note shall be $7.50 (or $7.50 in principal amount of this Note
for each such share of Common Stock).
(e) Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation or Sale of Assets. If
any of the following shall occur, namely: (a) any reclassification or
change of outstanding shares 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), (b) any consolidation or merger of the
Company with or into any other Person, or the merger of any other
Person with or into the Company (other than a merger which does not
result in any reclassification,
-9-
change, conversion, exchange or cancellation of outstanding shares of
Common Stock) or (c) any sale, transfer or conveyance of all or
substantially all of the assets of the Company (computed on a
consolidated basis), then the Company, or such successor or purchasing
entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance,
execute and deliver to the Holder an amendment providing that the
Holder of this Note shall have the right to convert this Note only into
the kind and amount of shares of stock and other securities and
property (including Cash) receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance by a holder
of the number of shares of Common Stock issuable upon conversion of
this Note immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or conveyance assuming such
holder of Common Stock of the Company failed to exercise his rights of
an election, if any, as to the kind or amount of securities, cash and
other property receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance (provided that if
the kind or amount of securities, cash, and other property receivable
upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance is not the same for each share of Common Stock
of the Company held immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or conveyance in respect of which
such rights of election shall not have been exercised ("non-electing
share"), then for the purpose of this Paragraph 9 the kind and amount
of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or
conveyance by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing
shares). If, in the case of any such consolidation, merger, sale or
conveyance, the stock or other securities and property (including Cash)
receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and property (including Cash) of a
corporation other than the successor or purchasing corporation, as the
case may be, in such consolidation, merger, sale or conveyance, then
such amendment shall also be executed by such other corporation and
shall contain such additional provisions to protect the interests of
the Holder of this Note as the Board of Directors of the Company shall
reasonably consider necessary by reason of the foregoing. The
provisions of this Paragraph 9 shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(f) Notice of Certain Events. In case:
(i) the Company shall declare a dividend (or any
other distribution) payable to the holders of Common Stock
(other than cash dividends);
(ii) the Company shall authorize the granting to all
of the holders of Common Stock of rights, warrants or options
to subscribe for or purchase any shares of stock of any class
or of any other rights;
-10-
(iii) the Company shall authorize any
reclassification or change of the Common Stock (including a
subdivision or combination of its outstanding shares of Common
Stock), or any consolidation or merger to which the Company is
a party and for which approval of any stockholders of the
Company is required under the laws of the state of
incorporation of the Company, or the sale or conveyance of all
or substantially all the property or business of the Company;
(iv) there shall be proposed any voluntary or
involuntary dissolution, liquidation or winding-up of the
Company; or
(v) the Company or any of its Subsidiaries shall
complete an Offer (hereinafter defined); then, the Company
shall cause to be mailed to the Holder of this Note, at his
address as it shall appear on the registry books of the
Company, at least 20 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice
stating the date on which (1) a record is expected to be taken
for the purpose of such dividend, distribution, rights,
warrants or options or Offer, or if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights,
warrants or options or to participate in such Offer are to be
determined, or (2) such reclassification, change,
consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up is expected to become effective and
the date, if any is to be fixed, 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 or other
property deliverable upon such reclassification, change,
consolidation, merger, sale, conveyance, dissolution,
liquidation or winding-up.
(g) Taxes on Conversion. The Company will pay any and all
documentary, stamp or similar taxes payable to the United States of
America or any political subdivision or taxing authority thereof or
therein in respect of the issue or delivery of shares of Common Stock
on conversion of this Note pursuant hereto; provided, however, that the
Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the Holder of this Note and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Company the amount of
any such tax or has established, to the reasonable satisfaction of the
Company, that such tax has been paid. The Company extends no protection
with respect to any other taxes imposed in connection with conversion
of this Note.
-11-
(h) Company to Provide Stock. The Company shall reserve, free
from preemptive rights, out of its authorized but unissued shares,
sufficient shares to provide for the conversion of this Note from time
to time as such Note is presented for conversion; provided, however,
that nothing contained herein shall be construed to preclude the
Company from satisfying its obligations in respect of the conversion of
this Note by delivery of repurchased shares of Common Stock which are
held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose
of conversion of this Note require registration with or approval of any
governmental authority under any Federal or state law before such
shares may be validly issued or delivered upon conversion, then the
Company covenants that it will in good faith and as expeditiously as
possible use its best efforts to secure such registration or approval,
as the case may be; provided, however, that nothing in this
Subparagraph 9(h) shall be deemed to limit in any way the obligations
of the Company provided in this Paragraph 9.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of this Note will upon issue (i) be fully
paid and non-assessable by the Company, (ii) be free of preemptive
rights, and (iii) have the benefit of demand registration rights
pursuant to the Registration Rights Agreement.
(i) Return of Funds Deposited for Redemption of Converted
Note. Any funds which at any time shall have been deposited by the
Company or on its behalf with any Paying Agent for the purpose of
paying the principal of and interest on this Note and which shall not
be required for such purposes because of the conversion of this Note
shall after such conversion be repaid to the Company by such Paying
Agent.
10. Adjustment of Common Stock Issuable Upon Conversion.
(a) General; Number of Shares; Conversion Price. The number of
shares of Common Stock which the Holder of this Note shall be entitled
to receive upon each conversion hereof shall be determined by
multiplying the number of shares of Common Stock which would otherwise
(but for the provisions of this Section 10) be issuable upon
designation of the amount to be converted hereunder by the Holder
hereof pursuant to Section 9 hereof, by the fraction of which (i) the
numerator is the Initial Conversion Price and (ii) the denominator is
the Conversion Price in effect on the date of such conversion. The
"Conversion Price" shall initially be the Initial Conversion Price,
shall be adjusted and readjusted from time to time as provided in this
Section 10 and, as so adjusted or readjusted, shall remain in effect
until a further adjustment or readjustment thereof is required by this
Section 10.
-12-
(b) Adjustment of Conversion Price.
(i) Issuance of Additional Shares of Common Stock. In
case the Company at any time or from time to time after the
date hereof shall issue or sell additional shares of Common
Stock ("Additional Shares") (including Additional Shares of
Common Stock deemed to be issued pursuant to Subparagraph (c)
or (d) hereof) without consideration or for a consideration
per share less than the Current Market Price in effect
immediately prior to such issue or sale, then, and in each
such case, subject to Subparagraph (g) hereof, such Conversion
Price shall be reduced, concurrently with such issue or sale,
to a price (calculated to the nearest .001 of a cent)
determined by multiplying such Conversion Price by a fraction:
(A) the numerator of which shall be (1) the
number of shares of Common Stock outstanding
immediately prior to such issue or sale plus (2) the
number of shares of Common Stock which the aggregate
consideration received by the Company for the total
number of such Additional Shares of Common Stock so
issued or sold would purchase at such Current Market
Price; and
(B) the denominator of which shall be the
number of shares of Common Stock outstanding
immediately after such issue or sale.
(ii) Dividends and Distributions. In case the Company
at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution
(including without limitation any distribution of Cash, other
or additional stock or other securities or property or Options
[as hereafter defined], by way of dividend or spin off,
reclassification, recapitalization or similar corporate
rearrangement or otherwise) on the Common Stock, other than a
dividend payable in Additional Shares of Common Stock, then,
and in each such case, subject to Subparagraph (g) hereof, the
Conversion Price in effect immediately prior to the close of
business on the Record Date fixed for the determination of
holders of any class of securities entitled to receive such
dividend or distribution shall be reduced, effective as of the
close of business on such Record Date, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such
Conversion Price by a fraction:
(A) the numerator of which shall be the
Current Market Price in effect on such record date,
less the amount of such dividend or distribution (as
reasonably determined in good faith by the Board of
Directors of the Company) applicable to one share of
Common Stock; and
-13-
(B) the denominator of which shall be such
Current Market Price.
(c) Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof
shall issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities entitled to
receive, any options or warrants for either Common Stock or securities
convertible into Common Stock (collectively, "Options") or securities
convertible into Common Stock ("Convertible Securities"), then, and in
each such case, the maximum number of Additional Shares of Common Stock
(as set forth in the instrument relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such number
the purpose of which is to protect against dilution) at any time
issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of
the close of business on such record date; provided, however, that such
Additional Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined pursuant to
Subparagraph (e) hereof) of such shares would be less than the greater
of the Current Market Price or the Conversion Price in effect on the
date of and immediately prior to such issue, sale, grant or assumption
or immediately prior to the close of business on such record date, as
the case may be; and provided, further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued:
(i) no further adjustment of the Conversion Price
shall be made upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the
consequent issue or sale of Convertible Securities or shares
of Common Stock;
(ii) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the Company,
or decrease in the number of Additional Shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof
(by change of rate or otherwise), the Conversion Price
computed upon the original issue, sale, grant or assumption
thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible Securities,
which are outstanding at such time;
(iii) upon the expiration (or purchase by the Company
and cancellation or retirement) of any such Options which
shall not have been exercised, or the expiration of any rights
of conversion or exchange under any such Convertible
-14-
Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of
conversion or exchange under which) shall not have been
exercised, the Conversion Price computed upon the original
issue, sale, grant or assumption thereof (or upon the
occurrence of the record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon (and
effective as of) such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(A) in the case of Options or Convertible
Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of
Common Stock, if any, actually issued or sold upon
the exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the consideration
actually received by the Company for the issue, sale,
grant or assumption of all such Options, whether or
not exercised, plus the consideration actually
received by the Company upon such exercise, or for
the issue or sale of all such Convertible Securities
which were actually converted or exchanged, plus the
additional consideration, if any, actually received
by the Company upon such conversion or exchange, and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued or sold upon the exercise of such
Options were issued at the time of the issue, sale,
grant or assumption of such Options, and the
consideration received by the Company for the
Additional Shares of Common Stock deemed to have then
been issued was the consideration actually received
by the Company for the issue, sale, grant or
assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been
received by the Company (pursuant to Subparagraph (e)
hereof) upon the issue or sale of such Convertible
Securities with respect to which such Options were
actually exercised; and
(iv) no readjustment pursuant to clause (ii) or (iii)
above (either individually or cumulatively together with all
prior readjustments made in respect of such Options or
Convertible Securities) shall have the effect of increasing
the Conversion Price by a proportion (relative to the
Conversion Price in effect immediately prior to such
readjustment) in excess of the inverse of the aggregate
proportional adjustment thereof made in respect of the issue,
sale, grant or assumption of such Options or Convertible
Securities.
If the consideration provided for in any Option or the additional consideration,
if any, payable upon the conversion or exchange of any Convertible Security
shall be reduced, or the rate at which any
-15-
Option is exercisable or any Convertible Security is convertible into or
exchangeable for shares of Common Stock shall be increased, at any time under or
by reason of provisions with respect thereto designed to protect against
dilution, then, effective concurrently with each such change, the Conversion
Price then in effect shall first be adjusted to eliminate the effects (if any)
of the issuance (or deemed issuance) of such Option or Convertible Security on
the Conversion Price and then readjusted as if such Option or Convertible
Security had been issued on the date of such change with the terms in effect
after such change, but only if as a result of such adjustment the Conversion
Price then in effect hereunder is thereby reduced.
(d) Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof
shall declare or pay any dividend on the Common Stock payable in Common
Stock, or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock
shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at
the close of business on the date immediately prior to the day upon
which such corporate action becomes effective.
(e) Computation of Consideration. For the purposes of this
Section 10:
(i) the consideration for the issue or sale of any
Additional Shares of Common Stock shall, irrespective of the
accounting treatment of such consideration:
(A) insofar as it consists of Cash, be
computed at the amount of Cash actually received by
the Company net of any expenses paid or incurred by
the Company or any commissions or compensations paid
or concessions or discounts allowed to underwriters,
dealers or others performing similar services in
connection with such issue or sale;
(B) insofar as it consists of property
(including securities) other than Cash actually
received by the Company, be computed at the fair
value thereof at the time of such issue or sale, as
reasonably determined in good faith by the Board of
Directors of the Company;
(C) insofar as it consists neither of Cash
nor of other property, be computed as having no
value; and
(D) in case Additional Shares of Common
Stock are issued or sold together with other stock or
securities or other assets of the Company for a
-16-
consideration which covers both, be the portion of
such consideration so received, computed as provided
in clauses (A), (B) and (C) above, allocable to such
Additional Shares of Common Stock, all as reasonably
determined in good faith by the Board of Directors of
the Company;
(ii) Additional Shares of Common Stock deemed to have
been issued pursuant to Subparagraph (c) hereof shall be
deemed to have been issued for a consideration per share
determined by dividing:
(A) the total amount of Cash and other
property, if any, received and receivable by the
Company as direct consideration for the issue, sale,
grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate
amount of additional consideration (as set forth in
the instruments relating thereto, without regard to
any provision contained therein for a subsequent
adjustment of such consideration the purpose of which
is to protect against dilution) payable to the
Company upon the exercise in full of such Options or
the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange
of such Convertible Securities, in each case
computing such consideration as provided in the
foregoing clause (i),
by
(B) the maximum number of shares of Common
Stock (as set forth in the instruments relating
thereto, without regard to any provision contained
therein for a subsequent adjustment of such number
the purpose of which is to protect against dilution)
issuable upon the exercise of such Options or the
conversion or exchange of such Convertible
Securities; and
(iii) Additional Shares of Common Stock deemed to
have been issued pursuant to Subparagraph (d) hereof shall be
deemed to have been issued for no consideration.
(f) Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common
Stock, the Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness
of such combination or consolidation, be proportionately increased.
-17-
(g) Minimum Adjustment of Conversion Price. If the amount of
any adjustment of the Conversion Price required pursuant to this
Section 10 would be less than one-tenth of one percent (.1%) of the
Conversion Price in effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with
any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate at least
one-tenth of one percent (.1%) of such Conversion Price.
(h) Shares Deemed Outstanding. For all purposes of the
computations to be made pursuant to this Section 10, (i) there shall be
deemed to be outstanding all shares of Common Stock issuable pursuant
to the exercise of Options and conversion of Convertible Securities
outstanding on the date hereof, including without limitation this Note,
(ii) immediately after any Additional Shares of Common Stock are deemed
to have been issued pursuant to Section 2.3 or 2.4 hereof, such
Additional Shares shall be deemed to be outstanding, (iii) treasury
shares shall not be deemed to be outstanding and (iv) no adjustment
shall be made in the Conversion Price upon the issuance of shares of
Common Stock pursuant to Options and Convertible Securities so deemed
to be outstanding, but this Subparagraph (h) shall not prevent other
adjustments in the Conversion Price arising by virtue of such
outstanding Options or Convertible Securities pursuant to the
provisions of Subparagraph (c) hereof; provided, however, that, for
purposes of calculating adjustments to the Conversion Price, there
shall be deemed to be outstanding immediately after giving effect to
any issuance of shares of Common Stock, Options or Convertible
Securities all shares of Common Stock issuable upon the exercise of
Options and conversion of Convertible Securities then outstanding
(including without limitation this Note) after giving effect to
antidilution provisions contained in all such outstanding Options and
Convertible Securities which cause an adjustment in the number of
shares of Common Stock so issuable, either by virtue of such issuance
of shares of Common Stock, Options or Convertible Securities or by
virtue of the operation of such antidilution provisions.
11. Subordination.
(a) Note Subordinated to Existing Senior Indebtedness. The
Company and Holder, by its acceptance of this Note, agree that (i) the
payment of the principal of and interest on this Note and (ii) any
other payment in respect of this Note, including on account of the
acquisition or redemption of this Note by the Company is subordinated,
to the extent and in the manner provided in this Paragraph 11, to the
prior payment in full of all Existing Senior Indebtedness (hereinafter
defined), and that these subordination provisions are for the benefit
of the holders of Existing Senior Indebtedness. This Note will rank
pari passu in right of payment with all Indebtedness of the Company
other than the Existing Senior Indebtedness.
-18-
This Paragraph 11 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of, or
continue to hold, Existing Senior Indebtedness, and such provisions are
made for the benefit of the holders of Existing Senior Indebtedness,
and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
(b) No Payment on Note in Certain Circumstances.
(i) No payment may be made by the Company on account
of the principal of or interest on this Note, or to acquire
this Note (including repurchases of this Note at the option of
the Holder) for cash, securities or property, or on account of
the redemption provisions of this Note (except for any payment
or distribution of equity or debt securities which are
subordinated to the payment in full of all Existing Senior
Indebtedness then outstanding to at least the same extent as
the obligations evidenced hereby are subordinated to the
payment in full of all Existing Senior Indebtedness hereunder
and which, in any case, do not mature prior to the maturity of
the Existing Senior Indebtedness), (A) upon the maturity of
any Existing Senior Indebtedness of the Company by lapse of
time, acceleration (unless waived) or otherwise, unless and
until all principal of and interest on such Existing Senior
Indebtedness are first paid in full (or such payment is duly
provided for), or (B) in the event of default in the payment
of any principal of or interest on any Existing Senior
Indebtedness when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration
or otherwise (a "Payment Default"), unless and until such
Payment Default has been cured or waived or otherwise has
ceased to exist.
(ii) Upon (A) the happening of an event of default
(other than a Payment Default) that permits the holders of
Existing Senior Indebtedness or their representative
immediately to accelerate its maturity and (B) the giving of
written notice of such event of default given to the Company
by the holders of at least 25% in aggregate principal amount
outstanding of such Existing Senior Indebtedness or their
representative (a "Payment Notice"), then, unless and until
such event of default has been cured or waived or otherwise
has ceased to exist, no payment (by set off or otherwise) may
be made by or on behalf of the Company on account of the
principal of or interest on this Note, or to acquire or
repurchase this Note for Cash, securities or property, or on
account of the redemption provisions of this Note, in any such
case (except for any payment or distribution which the Holder
is entitled to receive pursuant to the parenthetical clause in
the foregoing Subparagraph 11(b)(i)). Notwithstanding the
foregoing, unless (i) the Existing Senior Indebtedness in
respect of which such event of default exists has been
declared due and payable in its entirety within 179 days after
the Payment Notice is delivered as set forth above (the
-19-
"Payment Blockage Period"), and (ii) such declaration has not
been rescinded or waived at the end of the Payment Blockage
Period, the Company shall be required to pay all sums not paid
to the Holder of this Note during the Payment Blockage Period
due to the foregoing prohibitions and to resume all other
payments as and when due on this Note. Any number of Payment
Notices may be given; provided, however, that (i) not more
than one Payment Notice shall be given within a period of any
360 consecutive days and (ii) no event of default that existed
upon the date of such Payment Notice or the commencement of
such Payment Blockage Period (whether or not such event of
default is on the same issue of Existing Senior Indebtedness)
shall be made the basis for the commencement of any other
Payment Blockage Period.
(iii) In the event that, notwithstanding the
foregoing provisions of this Paragraph 10, any payment or
distribution of assets of the Company shall be received by the
Holder at a time when such payment or distribution is
prohibited by the provisions of this Paragraph 11, then such
payment or distribution (subject to the provisions of
Subparagraph 11(f)) shall be received and held in trust by
Holder or such Paying Agent for the benefit of the holders of
Existing Senior Indebtedness, and shall be paid or delivered
by Holder or such Paying Agent, as the case may be, to the
holders of Existing Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or
to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Existing Senior
Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Existing
Senior Indebtedness held or represented by each, for
application to the payment of all Existing Senior Indebtedness
remaining unpaid to the extent necessary to pay or to provide
for the payment of all such Existing Senior Indebtedness in
full after giving effect to any concurrent payment and
distribution to the holders of such Existing Senior
Indebtedness.
(c) Note Subordinated to Prior Payment of All Existing Senior
Indebtedness on Dissolution, Liquidation or Reorganization. Upon any
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(i) the holders of all Existing Senior Indebtedness
shall first be entitled to receive payments in full (or have
such payment duly provided for) before the Holder is entitled
to receive any payment on account of the principal of and
interest on the Note (except for any payment or distribution
which the Holder is entitled to receive pursuant to the
parenthetical in the foregoing Subparagraph 11(b)(i));
-20-
(ii) any payment or distribution of assets of the
Company of any kind or character, whether in Cash, property or
securities (except for any payment or distribution which the
Holder is entitled to receive pursuant to the parenthetical in
the foregoing Subparagraph 11(b)(i)) to which the Holder would
be entitled (by setoff or otherwise), except for the
provisions of this Paragraph 11, shall be paid by the
liquidating trustee or agent or other Person making such a
payment or distribution directly to the holders of Existing
Senior Indebtedness or their representative to the extent
necessary to make payment in full of all such Existing Senior
Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such
Existing Senior Indebtedness; and
(iii) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities (except for any payment or distribution which the
Holder is entitled to receive pursuant to the parenthetical in
the foregoing Subparagraph 11(b)(i)), shall be received by the
Holder or any Paying Agent (or, if the Company or any
Affiliate of the Company is acting as its own Paying Agent,
money for any such payment or distribution shall be segregated
or held in trust) on account of the principal of or interest
on this Note before all Existing Senior Indebtedness is paid
in full, such payment or distribution (subject to the
provisions of Subparagraph 11(f)) shall be received and held
in trust by the Holder or Paying Agent for the benefit of the
holders of such Existing Senior Indebtedness, or their
respective representative, ratably according to the respective
amounts of such Existing Senior Indebtedness held or
represented by each, to the extent necessary to make payment
as provided herein of all such Existing Senior Indebtedness
remaining unpaid after giving effect to all concurrent
payments and distributions and all provisions therefor to or
for the holders of such Existing Senior Indebtedness, but only
to the extent that as to any holder of such Existing Senior
Indebtedness, as promptly as practical following notice from
the Company to the holders of such Existing Senior
Indebtedness that such prohibited payment has been received by
the Holder or Paying Agent (or has been segregated as provided
above), such holder (or a representative therefor) notifies
the Company of the amounts then due and owing on such Existing
Senior Indebtedness, if any, held by such holder and only the
amounts specified in such notices to the Company shall be paid
to the holders of such Existing Senior Indebtedness.
(d) Holder to Be Subrogated to Rights of Holders of Existing
Senior Indebtedness. Subject to the payment in full of all Existing
Senior Indebtedness as provided herein, the Holder of this Note shall
be subrogated to the rights of the holders of such Existing Senior
Indebtedness to receive payments or distributions of assets of the
Company applicable to the Existing Senior Indebtedness until all
amounts owing on this Note shall be
-21-
paid in full, and for the purpose of such subrogation no such payments
or distributions to the holders of such Existing Senior Indebtedness by
the Company, or by or on behalf of the Holder by virtue of this
Paragraph 11, which otherwise would have been made to the Holder shall,
as between the Company and the Holder, be deemed to be payment by the
Company or on account of such Existing Senior Indebtedness, it being
understood that the provisions of this Paragraph 11 are and are
intended solely for the purpose of defining the relative rights of the
Holder, on the one hand, and the holders of such Existing Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holder would
otherwise have been entitled but for the provisions of this Paragraph
11 shall have been applied, pursuant to the provisions of this
Paragraph 11, to the payment of amounts payable under Existing Senior
Indebtedness, then the Holder shall be entitled to receive from the
holders of such Existing Senior Indebtedness any payments or
distributions received by such holders of Existing Senior Indebtedness
in excess of the amount sufficient to pay all amounts payable under or
in respect of such Existing Senior Indebtedness in full.
(e) Obligations of the Company Unconditional. Nothing
contained in this Paragraph 11 or elsewhere in this Note is intended to
or shall impair as between the Company and the Holder, the obligation
of the Company, which is absolute and unconditional, to pay to the
Holder the principal of and interest on this Note as and when the same
shall become due and payable in accordance with the terms hereof, or is
intended to or shall affect the relative rights of the Holder and
creditors of the Company other than the holders of the Existing Senior
Indebtedness, nor shall anything herein or therein prevent Holder from
exercising all remedies otherwise permitted by applicable law upon
default under the Note, subject to the rights, if any, under this
Paragraph 11, of the holders of Existing Senior Indebtedness in respect
of cash, property or securities of the Company received upon the
exercise of any such remedy. Notwithstanding anything to the contrary
in this Paragraph 11 or elsewhere in this Note, upon any distribution
of assets of the Company referred to in this Paragraph 11, the Holder
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate
of the liquidating trustee or agent or other Person making any
distribution to the Holder for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the
Existing Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Paragraph 11 so long as such court has been apprised of the provisions
of, or the order, decree or certificate makes reference to, the
provisions of this Paragraph 11.
-22-
(f) Application of Assets. Any deposit of assets with any
Paying Agent (whether or not in trust) for the payment of principal of
or interest on this Note shall be subject to the provisions of
Subparagraphs 11(a), (b), (c) and (d); provided that, if prior to one
Business Day preceding the date on which by the terms of this Note any
such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or interest on
any Note) the Paying Agent shall not have received with respect to such
assets written notice from one or more holders of Existing Senior
Indebtedness or from any representative therefor of the existence of
facts that would prohibit the making of any payment to the Holder, then
such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which
may be received by it on or after such date.
(g) Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Existing Senior Indebtedness. No right of any
present or future holders of any Existing Senior Indebtedness to
enforce subordination provisions contained in this Paragraph 11 shall
at any time in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company
with the terms of this Note, regardless of any knowledge thereof which
any such holder may have or be otherwise charged with. The holders of
Existing Senior Indebtedness may extend, renew, modify or amend the
terms of the Existing Senior Indebtedness or any security therefor and
release, sell or exchange such security and otherwise deal freely with
the Company, all without affecting the liabilities and obligations of
the Company or the Holder.
(h) Holder Authorizes Holders of Existing Senior Indebtedness
to Effectuate Subordination of Note. If in the event of any
dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency or receivership proceedings or upon
an assignment for the benefit of creditors of the Company), Holder does
not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file
such claim or claims, then the holders of the Existing Senior
Indebtedness or their representative are or is hereby authorized to
have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holder of this Note. Nothing
herein contained shall be deemed to authorize the holders of Existing
Senior Indebtedness or their representative to authorize or consent to
or accept or adopt on behalf of Holder any plan of reorganization,
arrangement, adjustment or composition affecting this Note or the
rights of Holder hereof, or to authorize the holders of Existing Senior
Indebtedness or their representative to vote in respect of the claim of
Holder in any such proceeding.
-23-
12. Repurchase of Note at Option of Holder Upon a Change of Control.
(a) In the event that a Change of Control occurs, Holder shall
have the right, at Holder's option, subject to the terms and conditions
of this Note, to require the Company to repurchase all or any part of
Holder's Note at a price (the "Repurchase Price"), payable in Cash or,
at Holder's option, Common Stock and in an amount equal to 100% of the
outstanding principal amount of this Note or such part hereof, together
with accrued and unpaid interest (including Capitalized Interest) to
the Repurchase Date.
(b) In the event that a Change of Control occurs, the Company
shall commence an irrevocable and unconditional offer to purchase this
Note (a "Repurchase Offer"), in accordance with the procedures set
forth in this Paragraph 12 as follows:
(1) the Repurchase Offer shall commence within 20
Business Days following a Change of Control;
(2) the Repurchase Offer shall remain open for at
least 20 Business Days following its commencement, but in any
case not more than 60 Business Days following the Change of
Control (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase Offer, the
Company shall purchase this Note to the extent tendered in
response to the Repurchase Offer;
(4) if the Repurchase Date (hereinafter defined) is
on or after a Record Date and on or before the related
Interest Payment Date, any accrued interest (other than
Capitalized Interest) will be paid to the Person in whose name
this Note is registered at the close of business on such
Record Date, and no additional interest (other than
Capitalized Interest) will be payable to the Holder if this
Note is tendered pursuant to the Repurchase Offer; and
(5) on or before the commencement of any Repurchase
Offer, the Company shall send, by first-class mail, a notice
to the Holder, which (to the extent consistent with the terms
hereof) shall govern the terms of the Repurchase Offer and
shall state:
(i) that the Repurchase Offer is being made
pursuant to such notice and this Paragraph 12 and
that this Note, or any portion thereof, tendered will
be accepted for payment in Cash or, at the Holder's
option, Common Stock;
-24-
(ii) the Repurchase Price (including the
amount of accrued and unpaid interest, if any), the
date this Note may be tendered, purchased and paid
for in accordance with this Paragraph 12 (the
"Repurchase Date") and the Repurchase Put Date
(hereinafter defined);
(iii) that this Note, or any portion
thereof, not tendered or accepted for payment will
continue to accrue interest;
(iv) that, unless the Company defaults in
depositing Cash or, at the Holder's option, Common
Stock with the Paying Agent in accordance with the
last paragraph of this clause (b) or such payment is
prevented pursuant to the subordination provisions of
this Note or otherwise, this Note, or such portion
thereof, tendered and accepted for payment pursuant
to the Repurchase Offer shall cease to accrue
interest after the Repurchase Date;
(v) if the Holder elects to have this Note,
or such portion thereof, purchased pursuant to a
Repurchase Offer it will be required to surrender
this Note, with the form entitled "Option of Holder
to Elect Purchase" attached hereto completed, to the
Paying Agent (which may not for purposes of this
Paragraph 12, notwithstanding anything in this Note
to the contrary, be the Company or any Affiliate of
the Company) at the address specified in the notice
prior to the close of business on the earlier of (a)
the third Business Day prior to the Repurchase Date
and (b) the third Business Day following the
expiration of the Repurchase Offer (such earlier date
being the "Repurchase Put Date");
(vi) that the Holder will be entitled to
withdraw its election, in whole or in part, if the
Paying Agent (which may not for purposes of this
Paragraph 12, notwithstanding anything in this Note
to the contrary, be the Company or any Affiliate of
the Company) receives, up to the close of business on
the Repurchase Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder
is withdrawing and a statement that the Holder is
withdrawing his election to have such principal
amount of this Note purchased; and
(vii) a brief description of the events
resulting in such Change of Control.
On or before the Repurchase Date, the Company shall (i) accept for
payment this Note or portions hereof properly tendered pursuant to the
Repurchase Offer on or before the Repurchase Put
-25-
Date, and (ii) deposit with the Paying Agent Cash or, at the Holder's option,
Common Stock in an amount sufficient to pay the Repurchase Price (together with
accrued and unpaid interest, if any) of this Note or portions hereof so
tendered. The Paying Agent shall promptly mail to the Holder of this Note so
accepted payment in an amount equal to the Repurchase Price (together with
accrued and unpaid interest, if any), and the Company shall promptly mail or
deliver to such Holder a new Note equal in principal amount to any unpurchased
portion of this Note so surrendered. In the event the Holder elects to have the
Repurchase Price paid in Common Stock, the current market price per share of
Common Stock on the Repurchase Date shall be deemed to be the average of the
Last Sale Prices of a share of Common Stock for the preceding thirty (30)
Trading Days ending on the last Trading Day prior to the Repurchase Date. If on
any such Trading Day the Common Stock is not quoted by any organization referred
to in the definition of Last Sale Price, the fair market value of the Common
Stock on such day, as reasonably determined by the Board of Directors of the
Company, shall be used.
13. Dispositions of Assets. The company shall not sell, assign,
transfer or otherwise dispose of any of its assets except (a) obsolete or worn
out property disposed of in the ordinary course of business or property that is
no longer useful in the conduct of the Company's business disposed of in the
ordinary course of business; (b) transfers resulting from any casualty or
condemnation of property or assets; or (c) any sale or other transfer of any
property or assets, provided that the net proceeds of all such sales and
transfers shall not exceed $50,000 in the aggregate during any fiscal year of
the Company.
14. Events of Default and Remedies.
(a) "Event of Default," wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and
whether it shall be caused voluntarily or involuntarily or effected,
without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) failure by the Company to pay any installment of
interest on this Note as and when due and payable, or failure
by the Company to perform any conversion of this Note required
hereunder, and the continuance of such failure for a period of
5 Business Days, whether or not any such payment or conversion
is prohibited by the subordination provisions of this Note;
(2) failure by the Company to pay any installment of
principal on this Note as and when due and payable or failure
by the Company to pay all or any part of the principal of or
on this Note when and as the same become due and payable at
maturity, by acceleration or otherwise, or in respect of any
repurchase or redemption, including, without limitation,
default in the payment of the Repurchase Price on the
-26-
Repurchase Date in accordance with the terms hereof, whether
or not any such payment is prohibited by the subordination
provisions hereof;
(3) failure by the Company to observe or perform any
covenant or agreement contained in this Note (other than a
default in the performance of any covenant or agreement which
is specifically dealt with elsewhere in this Paragraph 13),
and, if such default is subject to cure, continuance of such
failure for a period of 30 days after there has been given, by
registered or certified mail, to the Company by the Holder, a
written notice specifying such default or breach, requesting
it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(4) a default under (i) any Existing Senior
Indebtedness or (ii) Indebtedness of the Company with an
aggregate principal amount in excess of $500,000, in either
case, (a) resulting from the failure to pay principal, premium
or interest when due that extends beyond any stated period of
grace applicable thereto or (b) as a result of which the
maturity of such Indebtedness has been accelerated prior to
its stated maturity;
(5) Insolvency; Voluntary Proceeding. The Company,
(i) ceases or fails to be solvent, or generally fails to pay,
or admits in writing its inability to pay, its debts as they
become due; (ii) voluntarily ceases to conduct its business in
the ordinary course; (iii) commences any Insolvency Proceeding
with respect to itself; or (iv) takes any action to effectuate
or authorize any of the foregoing.
(6) Insolvency; Involuntary Proceeding. (i) Any
involuntary Insolvency Proceeding is commenced or filed
against the Company, or any writ, judgment, warrant of
attachment, warrant of execution or similar process is issued
or levied against any assets with an aggregate fair market
value in excess of $250,000 of the Company, and such
proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, warrant of execution or
similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the
Company admits the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency
Proceeding, or (iii) the Company acquiesces in the appointment
of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor) or other similar
Person for itself or a substantial portion of its property or
business.
(7) final unsatisfied judgments not covered by
insurance (including self-insurance), or the issuance of any
warrant of attachment against any portion of
-27-
the property or assets of the Company, aggregating in excess
of $250,000 at any one time shall have been rendered against
the Company and not have been stayed, bonded or discharged for
a period (during which execution shall not be effectively
stayed) of 60 days (or, in the case of any such final judgment
which provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable
payment date provided therein).
Notwithstanding the 30-day period and notice requirement
contained in Paragraph 14(a)(3) above, with respect to a default under
Paragraph 12 the 30-day period referred to in Paragraph 14(a)(3) shall
be deemed to have begun as of the date the Change of Control notice is
required to be sent in the event that the Company has not complied with
the provisions of Paragraph 12 and the Holder thereafter gives the
Notice of Default referred to in Paragraph 14(a)(3) to the Company;
provided, however, that if the breach or default is a result of a
default in the payment when due of the Repurchase Price on the
Repurchase Date, such Event of Default shall be deemed, for purposes of
this Paragraph 14(a), to arise no later than on the Repurchase Payment
Date.
If a Default occurs and is continuing, the Company shall,
within 30 days after the occurrence of such default, give to the Holder
notice of such Default.
(b) Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Subparagraph 14(a)(5) or (6) relating to the Company) occurs and is
continuing, then, and in every such case, unless the principal of this
Note shall have already become due and payable, the Holder, by a notice
in writing to the Company (an "Acceleration Notice"), may declare all
of the principal of this Note (or the Repurchase Price if the Event of
Default includes failure to pay the Repurchase Price, determined as set
forth below), including in each case accrued interest thereon, to be
due and payable immediately. If an Event of Default specified in
Subparagraph 14(a)(5) or (6) relating to the Company occurs, all
principal and accrued interest thereon will be immediately due and
payable on this Note without any declaration or other act on the part
of the Holder.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has
been obtained by the Holder as hereinafter provided, the Holder, by
written notice to the Company, may rescind any such declaration of
acceleration.
(c) Collection of Indebtedness and Suits for Enforcement. The
Company covenants that if an Event of Default in payment of principal
or interest specified in clause (1) or (2) of Paragraph 14(a) occurs
and is continuing, the Company shall, upon demand of the Holder,
subject to the Common Stock Payment Conditions and at Holder's option,
pay
-28-
to it Cash or deliver to it Common Stock, in an amount equal to the
whole amount then due and payable on this Note for principal, interest
and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal and on any overdue
interest, at the rate borne by this Note, and, in addition thereto,
such further amount as shall be sufficient to cover the reasonable
costs and expenses of collection, including the reasonable fees of
counsel. In the event that Holder elects to receive payment of
accelerated amounts then owing to it in Common Stock, the Holder shall
provide 30 days prior written notice of such election to the Company.
In such event, the current market price per share of the Common Stock
shall be computed on the basis of the average of the Last Sale Prices
for the preceding 30 Trading Days ending on the last Trading Day prior
to the delivery of such Common Stock to the Holder. If on any such
Trading Day the Common Stock is not quoted by any organization referred
to in the definition of Last Sale Price, the fair market value of the
Common Stock on such day, as reasonably determined by the Board of
Directors of the Company, shall be used.
If the Company fails to pay such amounts forthwith upon such
demand as required hereby, the Holder may institute a judicial
proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce
the same against the Company or any other obligor upon this Note and
collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor
upon this Note, wherever situated.
If an Event of Default occurs and is continuing, the Holder
may in its discretion proceed to protect and enforce its rights by such
appropriate judicial proceedings as the Holder shall deem most
effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Note or in
aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
In addition to all other amounts due hereunder, Holder shall
be entitled to recover reasonable costs and expenses incurred in
connection with the administration, workout or enforcement of this
Note, including without limitation, reasonable attorneys' fees and
expenses.
(d) Priorities. Any money collected by the Holder pursuant to
this Paragraph 14 shall be applied in the following order:
FIRST: To the Holder to reimburse it for the costs and
expenses of collection and enforcement including, without limitation,
reasonable attorneys' fees;
SECOND: To the holders of Existing Senior Indebtedness to the
extent required in Paragraph 11;
-29-
THIRD: To the Holder in payment of the amounts then due and
unpaid for principal of and interest on this Note in respect or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on this Note for principal and interest, respectively; and
FOURTH: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
(e) Unconditional Right of Holder to Receive Principal and
Interest. Notwithstanding any other provision of this Note, the Holder
shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on this Note when due
(including, in the case of redemption, the Redemption Price on the
applicable Redemption Date, and in the case of the Repurchase Price, on
the applicable Repurchase Date) and to institute suit for the
enforcement of any such payment after such respective dates, and such
rights shall not be impaired without the consent of Holder.
(f) Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Holder is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or
in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
(g) Delay or Omission Not Waiver. No delay or omission by the
Holder of this Note to exercise any right or remedy arising upon any
Event of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right and
remedy given by the terms of this Note or by law to the Holder may be
exercised from time to time, and as often as may be deemed expedient,
by the Holder.
15. No Recourse Against Others. No direct or indirect partner,
employee, stockholder or officer, as such, past, present or future, of the
Company or any successor corporation or any Subsidiary or any of the Company's
Affiliates shall have any personal liability in respect of the obligations of
the Company under this Note by reason of his, her or its status as such partner,
stockholder, director, officer or employee. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
16. Notices. Any notices or other communications to the Company or
Holder required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery,
-30-
by telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company:
CCAIR, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Partners, L.P.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, III
Telecopy: (000) 000-0000
if to the Holder:
Lynrise Air Lease, Inc.
0000 00xx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attention: Xx. Xxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Ropes & Gray
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and three Business Days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
If a notice or communication is mailed in the manner provided above, it
is duly given, whether or not the addressee receives it.
-31-
17. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to close. If a payment date is a Legal Holiday at such
place, payment may be made at such place on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the intervening period.
18. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, EXCLUDING PRINCIPLES OF CONFLICTS OF
LAWS. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THE NOTE, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
19. Registration Rights. Holder is entitled to certain registration
rights with respect to this Note pursuant to, and subject to the terms of, the
Registration Rights Agreement.
20. Definitions. For the purposes hereof, the following terms shall
have the meanings set forth below:
"Affiliate" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, (ii)
any spouse, immediate family member, or other relative who has the same
principal residence of any person described in clause (i) above, and (iii) any
trust in which any person described in clause (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means the power to
direct the management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise.
-32-
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Cash" means such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts.
"Change of Control" occurs upon the occurrence of any of the following
events: (i) any sale, transfer or other disposition, whether direct or indirect,
of all or substantially all of the assets of the Company, on a consolidated
basis, in one transaction or a series of related transactions to any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated by the SEC thereunder (the "Exchange Act"), whether or not
applicable), (ii) the acquisition in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) of any securities of the
Company as a result of such acquisition, such person or group either
beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 51% of the total voting power in the
aggregate normally entitled to vote in the election of directors of the Company,
(iii) when, during any period of 12 consecutive months after the Issue Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office, (iv) a sale, transfer or other disposition, whether directly or
indirectly, by the Company of all or substantially all of its assets, on a
consolidated basis, or (v) the pro rata distribution by the Company to its
stockholders of substantially all of its assets.
-33-
For purposes of this definition, the terms "person" and "group" shall
have the meanings used for purposes of Rules 13d-3 and 13d-5 of the Exchange Act
as in effect on the date hereof, whether or not applicable.
"Common Stock" means the Company's common stock, par value $.01 per
share, or as such stock may be reconstituted from time to time.
"Credit Facilities" means the lines of credit the Company has entered
into with British Aerospace and Centura Bank, together with the documents
related thereto, as the same may be amended, extended, renewed, restated,
supplemented or otherwise modified (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time, and any agreement governing Indebtedness incurred to refund or refinance
the borrowings and commitments then outstanding or permitted to be outstanding
under such credit facilities or successor credit facilities, whether by the same
or any other lenders or group of lenders.
"Default" means any event, act or condition which with notice, lapse of
time or both, would constitute an Event of Default.
"Existing Senior Indebtedness" means any Indebtedness of the Company
under the Credit Facilities and all refinancings and refundings thereof, unless
the instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior, in right of payment, to this Note or to
other Indebtedness which is pari passu with, or subordinated to, this Note;
provided, that, the principal amount of Existing Senior Indebtedness shall be
limited to an aggregate amount at any time outstanding not to exceed $4,400,000.
Notwithstanding the foregoing, in no event shall Existing Senior Indebtedness
include (a) Indebtedness of the Company owed or owing to any Subsidiary of the
Company or any officer, director or employee of the Company or any Subsidiary of
the Company, (b) Indebtedness to trade creditors or (c) any liability for taxes
owed or owing by the Company.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except such as would constitute trade payables to trade creditors in the
ordinary course of business, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a capitalized lease obligation, or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and Hedging
Obligations; (c) all liabilities of others of the kind described in the
preceding clause (a) or (b) that such person has guaranteed or that is otherwise
its legal liability and all obligations to purchase, redeem or acquire any
Capital Stock; and (d) any and
-34-
all deferrals, renewals, extensions, refinancings, refundings (whether direct or
indirect) of any liability of the kind described in any of the preceding clauses
(a), (b) or (c), or this clause (d), whether or not between or among the same
parties.
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors
(including any proceeding under the Bankruptcy Laws); (b) any general assignment
for the benefit of creditors, composition, marshaling of assets for creditors,
or other, similar arrangement in respect of such Person's creditors generally or
any substantial portion of such creditors; (c) the entering of any decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over such Person or over all or a substantial part of such
Person's respective properties; or (d) the appointment of an interim receiver,
trustee or other custodian of such Person for all or a substantial part of such
Person's properties.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Officer" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company.
"Person" or "person" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to Paragraph 4 of this Note.
-35-
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, by and among the Company and the Holder, as
such agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"SEC" means the Securities and Exchange Commission.
"Stated Maturity," when used with respect to any Note, means December
31, 2004.
"Subsidiary" with respect to any person, means (i) a corporation a
majority of whose Capital Stock with voting power normally entitled to vote in
the election of directors is at the time, directly or indirectly, owned by such
person, by such person and one or more Subsidiaries of such person or by one or
more Subsidiaries of such person, (ii) a partnership in which such person or a
Subsidiary of such person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such person a majority of the
partnership interests, or (iii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the New York
Stock Exchange (or, if the Common Stock is not listed or admitted to trading
thereon, on the principal national securities exchange on which the Common Stock
is listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the Nasdaq Stock
Market's National Market if the Common Stock is quoted thereon).
-36-
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Paragraph ____ of the Note, check the box: [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Paragraph ____ of the Note, state the amount you want to be
purchased: $______________.
If you want the purchase price for this Note or such part thereof to be
paid in Common Stock, check the box: [ ]
Date:____________________ Signature:__________________________________________
(Sign exactly as your name appears on the other side
of this Note)
-37-
[FORM OF] ASSIGNMENT
I or we assign this Note, without recourse, representation or warranty,
to _____________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee.)
________________________________________________________________________________
________________________________________________________________________________
(Please insert Social Security or other identifying number of assignee.)
_______________________ and irrevocably appoint __________ agent to transfer
this Note on the books of the Company. The agent may substitute another to act
for him.
Date:____________________ Signature:__________________________________________
(Sign exactly as your name appears on the other side
of this Note)
Signature Guarantee.1
--------
1 Participant in a recognized Signature Guarantee Medallion Program (or
other signature acceptable to the Trustee).
-38-
FORM OF CONVERSION NOTICE
To: CCAIR, Inc.
7% Convertible Subordinated Note due 2004
The undersigned owner of this Note hereby: (i) irrevocably exercises
the option to convert this Note, or the portion hereof below designated, for
shares of Common Stock of CCAIR, Inc. in accordance with the terms of this Note
and (ii) directs that such shares of Common Stock deliverable upon the
conversion, together with any check in payment for fractional shares and any
Note representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares are to be delivered registered in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Note.
Date:____________________ Signature:__________________________________________
Fill in for registration of shares if to be delivered, and of the Note
if to be issued, otherwise than to and in the name of the registered holder.
Social Security or other Taxpayer Identifying Number
___________________________________________
(Name)
___________________________________________
(Street Address)
___________________________________________
(City, State and Zip Code)
(Please print name and address)
Principal amount to be converted: (if less than all)
$_______________________
Signature Guarantee.2
772732- 041798 v18 - 183:17336-1
--------
2 Participant in a recognized Signature Guarantee Medallion Program (or
other signature acceptable to the Trustee).
-39-
