Exhibit 3
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF,
AGREES FOR THE BENEFIT OF ALTIVA FINANCIAL CORPORATION (THE "COMPANY") THAT THIS
NOTE MAY BE OFFERED, SOLD OR OTHERWISE DISPOSED OF ONLY (1) TO THE COMPANY OR
(2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A, THAT IS PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE SALE OR OTHER DISPOSITION IS BEING MADE IN
RELIANCE ON RULE 144A. BY PURCHASING THIS NOTE, THE HOLDER HEREOF AGREES AND
REPRESENTS FOR THE BENEFIT OF THE COMPANY THAT (A) IT IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A AND (B) IT WILL NOTIFY ANY
PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
THIS AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE
INTERCREDITOR AND COLLATERAL SUBORDINATION AGREEMENT, DATED AUGUST 31, 1999 (THE
"SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR OTHERWISE
SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG ALTIVA FINANCIAL CORPORATION, AS
BORROWER, GREENWICH CAPITAL MARKETS, INC. AND GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., PARTIES TO THE SENIOR AGREEMENTS REFERRED TO IN THE
SUBORDINATION AGREEMENT, AND THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS
ARISING UNDER THE SUBORDINATION LOAN AGREEMENT REFERRED TO IN THE SUBORDINATION
AGREEMENT.
ALTIVA FINANCIAL CORPORATION
12% SECURED CONVERTIBLE NOTE DUE 2006
No.1 $7,000,000
Altiva Financial Corporation (together with its permitted successors
and assigns hereunder, the "Company"), a corporation duly organized and validly
existing under the laws of the State of Delaware, for value received, hereby
promises to pay Value Partners, LTD, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 or registered assigns, the principal sum of $7,000,000 in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, on August 15, 2006
(the "Maturity Date"), and to pay interest thereon semi-annually as provided
herein in like coin or currency, at the rate per annum of 12%, subject to
adjustment as provided herein.
ARTICLE I
DEFINITIONS
For all purposes hereof, except as otherwise expressly provided or
unless the context otherwise requires, the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" has the meaning set forth in Section 2.1 hereof.
"Board of Directors" means either the Board of Directors of the Company
or any committee of such Board duly authorized to act for it hereunder.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the City of Atlanta, Georgia are
authorized or required by law or executive order to remain closed.
"Capitalized Lease Obligation" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally
2
accepted accounting principles; the amount of such indebtedness shall be the
capitalized amount of such obligations determined in accordance with such
principles.
"Closing Price" has the meaning set forth in Section 7.5(h).
"Collateral Documents" means the Security Agreement, the Escrow
Agreement and the Intercreditor Agreement.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" has the meaning set forth in the first paragraph hereof.
"Default" means any event which is, or after notice or passage of time,
or both, would be, an Event of Default.
"Escrow Agreement" has the meaning set forth in the Agreement.
"Event of Default" means any event specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Holder" or "Noteholder" means a Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person, and without
duplication, (a) the principal of and premium, if any, and interest on, and
fees, costs, enforcement expenses, collateral protection expenses and other
reimbursement or indemnity obligations in respect to all indebtedness or
obligations of such Person to any other Person, including but not limited to
banks and other lending institutions, for money borrowed that is evidenced by a
note, bond, loan agreement or similar instrument or agreement (including
purchase money obligations with original maturities in excess of one year and
noncontingent reimbursement obligations in respect of amounts paid under letters
or credit), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) in respect of Capitalized Lease Obligations on the balance sheet of
such Person, (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a
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creditor against loss in respect of indebtedness, obligations or liabilities of
another Person of the kind described in clauses (a) through (d), (f) any
indebtedness or other obligations, excluding any operating leases such Person is
currently (or may become) a party to, described in clauses (a) through (d)
secured by any mortgage, pledge, lien or other encumbrance existing on property
which is owned or held by such Person, regardless of whether the indebtedness or
other obligation secured thereby shall have been assumed by such Person and (g)
any and all deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kind described in clauses (a) through (f).
"Intercreditor Agreement" has the meaning set forth in the Agreement.
"Liens" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance (whether or not filed, recorded or
otherwise perfected under applicable law) upon or with respect to any property
owned by a Person.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Maturity Date" has the meaning set forth in the first paragraph
hereof.
"Note Register" has the meaning set forth in Section 2.3.
"Notes" has the meaning set forth in Section 2.1.
"Officer" means the Chairman of the Board, the President, the Chief
Financial Officer, the Controller, the Secretary, any Assistant Secretary or any
Vice President of the Company.
"Officer's Certificate" means a certificate signed by two Officers, one
of whom must be the Chairman of the Board, the President, the Chief Executive
Officer or the Chief Financial Officer of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, association, joint stock company, unincorporated organization or
government or any agency or political subdivision thereof.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to the provisions of the
Note.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to the provisions of the
Note.
"Related Agreements" means the Agreement, the Security Agreement, the
Escrow Agreement, the Intercreditor Agreement and the Registration Rights
Agreement.
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"Repurchase Event" has the meaning set forth in Section 8.4.
"Repurchase Price," when used with respect to any Note to be
repurchased, means the price at which it is to be repurchased pursuant to the
terms of the Notes.
"Registration Rights Agreement" has the meaning set forth in the
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisors Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
"Security Agreement" has the meaning set forth in the Agreement.
"Significant Subsidiary" means, with respect to any Person, any
Subsidiary which is a "significant subsidiary" (as defined in Article 1, Rule
1-02 of Regulation S-X, promulgated pursuant to the Securities Act) of such
Person.
"Stockholder Approval" means the approval of the stockholders of the
Company, pursuant to Section 5.1 of the Agreement, of the issuance of Common
Stock upon conversion of the Notes in their entirety.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more Subsidiaries of such Person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof).
"Trading Day" has the meaning set forth in Section 7.5(h).
5
ARTICLE II
ISSUANCE OF NOTES
SECTION 2.1 DESIGNATION AND AMOUNT OF NOTES; RANKING.
This Note is one of a duly authorized issue of notes of the Company,
designated as its 12% Secured Convertible Notes due 2006 (herein called the
"Notes") in the maximum aggregate principal amount of $7,000,000 issued pursuant
to a Secured Convertible Note Purchase Agreement, dated as of August 31, 1999,
by and among Altiva Financial Corporation and the purchaser listed on the
signature page thereto (as amended, supplemented or otherwise modified from time
to time, the "Agreement"), to which all the terms of this Note are subject.
The Notes constitute senior obligations of the Company and shall not be
subordinated in right or priority of payment to any existing or future unsecured
obligation of the Company.
SECTION 2.2. DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST.
The Notes shall be issuable in registered form without coupons in
denominations of $1,000 principal amount and any integral multiple thereof.
Every Note shall be dated August 31, 1999.
Interest on the principal amount of the Notes shall accrue at the rate
set forth in the first paragraph hereof from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance. Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
In the event that the Company is obligated to pay Liquidated Damages to
Holders, the interest rate otherwise payable on the Notes shall be increased for
the period during which the Company is obligated to pay Liquidated Damages by
the amount of such Liquidated Damages and all references herein to interest
shall include Liquidated Damages, if any. The Company shall promptly notify each
Holder of Notes at its address as it appears on the Note Register in the event
that the Company is obligated to pay Liquidated Damages to Holders.
In the event that the Company does not obtain the Stockholder Approval
on or before February 15, 2000, the interest rate otherwise payable on the Notes
shall increase monthly, commencing on February 15, 2000, by 1% per annum, up to
a maximum interest rate of 18% commencing on August 15, 2000 (exclusive of
Liquidated Damages, if any), provided that if the Company subsequently obtains
the Stockholder Approval, the interest rate on the Notes shall revert to the
amount otherwise payable hereunder and shall not reflect any increase in the
interest rate as a result of the requirements of this sentence. The Company
shall promptly notify each Holder of Notes at its address as it appears on the
Note Register in the event that the Company is obligated to increase the
interest rate otherwise payable on the Notes pursuant to the requirements of
this paragraph.
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The Person in whose name any Note is registered at the close of
business on any record date with respect to any interest payment date (including
any Note that is converted after the record date and on or before the interest
payment date) shall receive the interest payable on such interest payment date
notwithstanding the cancellation of such Note upon any transfer, exchange or
conversion subsequent to the record date and on or prior to such interest
payment date. Interest may, at the option of the Company, be paid by check
mailed to the address of such Person on the Note Register, provided that at the
request of a Holder in writing to the Company at least five days prior to the
date set for payment of interest, interest on such Holder's Notes shall be paid
by wire transfer in immediately available funds in accordance with the wire
transfer instructions supplied by such Holder to the Company. The term "interest
payment date" shall mean August 15 and February 15 of each year commencing on
February 15, 2000. The term "record date" with respect to any interest payment
date shall mean the August 1 or February 1 preceding said August 15 or February
15, respectively.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any said August 15 or February 15 (herein called
"Defaulted Interest") shall be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names Notes are registered at the
close of business on a special record date for the payment of such
Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment. The Company
shall cause notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, first-class postage
prepaid, to each Noteholder at his address as it appears in the Note
Register not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes were
registered at the close of business on such special record date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner.
SECTION 2.3. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; RESTRICTIONS ON
TRANSFER.
The Company shall cause to be kept at its executive offices a register
(the "Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes. The Note Register shall be in written form or in any form
capable of being converted into written form within a reasonably prompt period
of time.
Upon surrender for registration of transfer of any Note to the Company
and satisfaction of the requirements for such transfer set forth in this Section
2.4 and in the Agreement, the Company shall execute and deliver, in the name of
the designated transferee or transferees, one or more new
7
Notes of any authorized denominations and of a like aggregate principal amount
and bearing such restrictive legends as may be required by the Agreement.
Subject to the requirements of the immediately succeeding paragraph,
Notes may be exchanged for other Notes of any authorized denominations and of a
like aggregate principal amount upon surrender of the Notes to be exchanged to
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall execute and deliver the Notes which the Noteholder making the exchange is
entitled to receive bearing registration numbers not contemporaneously
outstanding.
Each initial Holder of the Notes shall be issued a Note with a
principal amount equal to such Holder's initial aggregate investment in the
Notes and may not exchange such Note for other Notes of any authorized
denominations and of a like aggregate principal amount unless it has a valid
business reason therefor, provided that nothing herein shall be deemed to
restrict an initial Holder from exchanging Notes for other Notes of authorized
denominations and of a like aggregate principal amount in connection with any
sale, disposition or other transfer of the Notes or any conversion of the Notes
in accordance with Article VII hereof.
All Notes issued upon registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt and
entitled to the same benefits as the Notes surrendered upon such registration of
transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption, repurchase or conversion shall (if so required by the
Company) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
SECTION 2.4. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
In case any Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute and deliver a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution of the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company such security or indemnity as may be required by
the Company to save it harmless for any loss, liability, cost or expense caused
by or connected with such substitution, and, in every case of destruction, loss
or theft, the applicant shall furnish to the Company, evidence to its
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
8
Every substitute Note issued pursuant to the provisions of this Section
2.4 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of and subject to all the limitations set forth
herein equally and proportionally with any and all other duly issued Notes. To
the extent permitted by law, all Notes shall be held and owned upon the express
condition that the foregoing provisions are exclusive with respect to the
replacement or payment or conversion of mutilated, destroyed, lost or stolen
Notes and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect to
the replacement or payment or conversion of negotiable instruments or other
securities without their surrender.
ARTICLE III
REDEMPTION OF NOTES
SECTION 3.1. OPTIONAL RIGHTS TO REDEEM NOTES.
The Notes are not redeemable at the Company's option prior to August
15, 2004. Thereafter, the Notes may be redeemed, in whole but not in part, at
the option of the Company at the Redemption Prices specified below (expressed as
percentages of the principal amount thereof), in each case, together with
accrued and unpaid interest, if any, thereon to the Redemption Date, if redeemed
during the 12-month period beginning on August 15 of the years indicated below:
YEAR REDEMPTION RATE
2004 106%
2005 100%
Notwithstanding the foregoing, the Notes may be redeemed at the
Company's option prior to August 15, 2004, in whole but not in part, at a
Redemption Price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest, if any, thereon to the Redemption Date, if the
Closing Price of the Common Stock equals or exceeds $15.00 per share (subject to
adjustment as provided herein, the "Redemption Trading Price") for twenty (20)
consecutive Trading Days after the date of issuance of the Notes and prior to
August 15, 2004.
In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Redemption Trading Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Redemption Trading Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be
9
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
SECTION 3.2. NOTICE OF OPTIONAL REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of optional redemption by
first-class mail to each Holder of Notes to be redeemed at such Holder's address
as it appears on the Note Register.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the then current Conversion Price;
(4) that Notes called for redemption must be presented and
surrendered to the Company to collect the Redemption Price;
(5) that the Notes called for redemption may be converted at
any time before the close of business on the fifth Business Day
immediately preceding the Redemption Date;
(6) that Holders who wish to convert Notes must satisfy the
requirements in Article VII of the Notes;
(7) that, unless the Company defaults in making the redemption
payment, the only remaining right of the Holder shall be to receive
payment of the Redemption Price upon presentation and surrender to the
Company of the Notes; and
(8) that interest on Notes called for redemption ceases to
accrue on and after the Redemption Date.
SECTION 3.3. EFFECT OF NOTICE OF OPTIONAL REDEMPTION.
Once notice of optional redemption is mailed, Notes called for
redemption become due and payable on the Redemption Date and at the Redemption
Price stated in the notice, except for Notes that are converted in accordance
with the provisions of Section 7.1. Upon presentation and surrender to the
Company, Notes called for redemption shall be paid at the Redemption Price, plus
accrued interest up to but not including the Redemption Date.
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ARTICLE IV
CERTAIN COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay the principal of and interest on the Notes on the
dates and in the manner provided herein. To the extent lawful, the Company shall
pay interest (including post-petition interest in any proceeding under any
bankruptcy law) on (i) overdue principal, at the rate borne by the Notes at the
time, and (ii) overdue installments of interest (without regard to any
applicable grace period) at the same rate, compounded semi-annually.
SECTION 4.2. CURRENT INFORMATION.
Between the date of issuance of the Notes and the Maturity Date, the
Company shall provide to each Holder of Notes at such Holder's address as it
appears in the Note Register (i) promptly following the filing thereof, copies
of each Securities Document filed by the Company under the Securities Laws and
(ii) concurrently with the mailing thereof, copies of each communication sent by
the Company to its stockholders generally.
SECTION 4.3. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of its obligations herein, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantages of any such law.
SECTION 4.4. COMPLIANCE CERTIFICATES.
The Company shall deliver to each Holder at such Holder's address as it
appears in the Note Register, within 90 days after the end of each fiscal year
of the Company, an Officers' Certificate as to the signer's knowledge of the
Company's compliance with all conditions and covenants on its part contained
herein and in the Related Agreements and stating whether or not the signer knows
of any Default or Event of Default. If such signer knows of such a Default or
Event of Default, the Officers' Certificate shall describe the Default or Event
of Default and the efforts to remedy the same.
SECTION 4.5. NOTICE OF DEFAULTS.
The Company will promptly give written notice to the Holders of any
Default or Event of Default and the efforts to remedy the same.
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SECTION 4.6. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company, directly or by reason
of its ownership of any Subsidiary or upon the income, profits or property of
the Company and (b) all material lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien upon the property of the
Company, provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings or for which adequate provision has been made.
SECTION 4.7. CORPORATE EXISTENCE.
Subject to Article VI, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises, provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine in good faith that the preservation is
no longer desirable in the conduct of the Company's business and that the loss
thereof is not, and will not be, reasonably likely to be adverse in any material
respect to the Holders.
SECTION 4.8. MAINTENANCE OF PROPERTIES.
The Company and its Subsidiaries will cause all material properties
(real and personal) owned, leased or licensed in the conduct of their business
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof and
thereto, all as in the reasonable judgment of the Board of Directors may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times while any Notes are
outstanding, provided, however, that nothing in this Section 4.8 shall prevent
the Company and its Subsidiaries from discontinuing the maintenance of any such
properties if, in the reasonable judgment of the Board of Directors, such
discontinuance is desirable in the conduct of the Company's business and is not,
and will not be, reasonably likely to be adverse in any material respect to the
Holders.
SECTION 4.9. PAYMENT OF DIVIDENDS FROM SUBSIDIARIES.
To the extent necessary to enable it to make payments on the Notes in
accordance with their terms, the Company shall cause dividends to be paid to it
by its Subsidiaries (whether in existence as of the date of issuance of the
Notes or thereafter formed or acquired, including without limitation pursuant to
the Stock Purchase Agreement) in amounts which are sufficient to enable the
Company to satisfy its payment obligations under the Notes, provided that the
Company shall not be required to take any action which would result in a
Subsidiary paying dividends to the extent not permitted by applicable law and
regulation and/or restrictions existing under agreements in effect on the date
of issuance of the Notes if the Company receives an opinion of counsel (in form
and substance
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satisfactory to the Holders of a majority in aggregate principal amount of the
Notes) as to the existence of the relevant restriction no later than the
applicable interest payment date or the date of maturity of the Notes, whether
by acceleration or otherwise.
SECTION 4.10. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries
(whether in existence as of the date of issuance of the Notes or thereafter
formed or acquired, including without limitation pursuant to the Stock Purchase
Agreement) to, create, assume or otherwise cause or suffer to exist or to become
effective any consensual encumbrance or restriction on the ability of any such
Subsidiary to:
(a) pay any dividends or make any other distribution on its
capital stock to the Company or any of its
Subsidiaries;
(b) make payments in respect to any Indebtedness owed to
the Company or any other Subsidiary of the Company;
or
(c) make loans or advances to the Company or any Subsidiary
or to guarantee Indebtedness of the Company or any
other Subsidiary of the Company;
other than, in the case of (a), (b) and (c),
(1) restrictions existing under agreements in effect on the
date of issuance of the Notes;
(2) consensual encumbrances or restrictions binding upon any
Person at the time such Person becomes a Subsidiary of the Company so long as
such encumbrances or restrictions (i) are not created, incurred or assumed in
contemplation of such Person becoming a Subsidiary and (ii) do not encumber or
restrict the Company or any other Subsidiary of the Company;
(3) restrictions with respect to a Subsidiary imposed pursuant
to an agreement which has been entered into for the sale or disposition of all
or substantially all the assets (which term may include the capital stock) of
such Subsidiary;
(4) restrictions on the transfer of assets which are subject
to Liens; and
(5) restrictions existing under any agreement which refinances
or replaces any of the agreements containing the restrictions in clauses (1) and
(2), provided that the terms and conditions of any such restrictions are not
materially less favorable to the Holders than those under the agreement
evidencing or relating to the Indebtedness refinanced.
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SECTION 4.11. REPURCHASE OF NOTES.
The Company will not, and will not permit any Subsidiaries to, purchase
any Notes other than pursuant to a repurchase offer made to each Holder pro rata
in accordance with the aggregate principal amount of Notes held by such Holder.
SECTION 4.12 TRANSACTIONS WITH AFFILIATES.
Neither the Company nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of any
asset or the rendering of any service, with any Affiliate (other than the
Company or a Subsidiary of the Company) unless such transaction (a) is otherwise
not in violation of the Notes and the Related Agreements and (b) is approved by
a majority of the disinterested members of the Board of Directors, is in the
ordinary course of its business and is upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate, provided that the requirements of this clause
(b) shall not apply to (i) any transaction pursuant to agreements in effect on
the date of issuance of the Notes and (ii) any transaction or series of related
transactions in which the amount involved does not exceed $250,000.
SECTION 4.13. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder as an inducement to any
consent, waiver or amendment of any of the terms or provisions of the Notes
unless such consideration is paid to all Holders that provide such consent or so
waive or agree to amend.
ARTICLE V
REMEDIES OF NOTEHOLDERS
ON AN EVENT OF DEFAULT
SECTION 5.1. EVENTS OF DEFAULT.
In case one or more of the following Events of Default (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of any installment of interest upon
any of the Notes as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
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(b) default in the payment of the principal of or premium, if
any, on any of the Notes as and when the same shall become due and
payable either at maturity or in connection with any redemption
pursuant to Article III or repurchase pursuant to Article VIII, by
acceleration or otherwise; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company herein or in any of the Related Agreements (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section 5.1 specifically dealt with) continued for a
period of 60 days after the date on which written notice of such
failure, requiring the Company to remedy the same, shall have been
given to the Company by the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding; or
(d) failure of the Company or any Subsidiary of the Company to
make any payment, including any applicable grace period, in respect of
principal or interest on any Indebtedness which default shall have
resulted in Indebtedness in an amount in excess of $2,000,000; or
(e) default by the Company or a Subsidiary of the Company with
respect to any Indebtedness of the Company or such Subsidiary, which
default results in acceleration of any such Indebtedness which is in an
amount in excess of $2,000,000 without such Indebtedness having been
discharged, or such acceleration having been rescinded or annulled,
within the applicable grace period; or
(f) the entry by a court having jurisdiction in the premises
of a final judgment, decree or order against the Company or any
Subsidiary of the Company which shall require the payment by the
Company or any Subsidiary of the Company of an amount (to the extent
not covered by insurance) in excess of $2,000,000 and the continuance
of any such judgment, decree or order unstayed or unsatisfied and in
effect for a period of 60 consecutive days which is not being contested
in good faith by appropriate judicial proceedings; or
(g) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due; or
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or
15
other similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of 60 consecutive days; or
(i) failure on the part of the Company duly to observe or
perform any of the covenants or agreements of the Company in any of the
Collateral Documents continued for a period of 30 days after the date
on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Holders of
at least 25% in aggregate principal amount of the Notes at the time
outstanding; or
(j) any of the Collateral Documents after delivery thereof
shall for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid, binding and
enforceable against the Company in all material respects in accordance
with their terms, or cease in any material respect to create a valid
and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, or the Company shall so
state in writing, and such default shall continue unremedied for a
period of 30 days; or
(k) any annual audited financial statement of the Company is
qualified as to going concern or similar qualifications;
then, and in each and every such case (other than an Event of Default specified
in Section 5.1(g) or (h)), unless the principal of all of the Notes shall have
already become due and payable, the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company, may declare the principal of all the Notes and the interest accrued
thereon to be due and payable immediately, without presentment, demand, protest,
notice of protest or dishonor, notice of intent to accelerate or other notice of
default of any kind, all of which are expressly waived by the Company, and upon
any such declaration the same shall become and shall be immediately due and
payable, anything herein contained to the contrary notwithstanding.
If an Event of Default specified in Section 5.1(g) or (h) occurs, the
principal of all the Notes and the interest accrued thereon shall be immediately
and automatically due and payable without presentment, demand, protest, notice
of protest or dishonor, notice of intent to accelerate or other notice of
default of any kind, all of which are expressly waived by the Company.
SECTION 5.2. PAYMENT OF NOTES ON DEFAULT; SUIT THEREFOR.
The Company covenants that (a) in case default shall be made in the
payment of any installment of interest upon any of the Notes as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same shall
have become due and payable, whether at maturity of the Notes or in connection
with any redemption or repurchase hereunder, by declaration or otherwise, then
the Company will pay to the Holders the whole amount that then shall have become
due and payable on the Notes for principal
16
and premium, if any, or interest, or both, as the case may be, with interest
upon the overdue principal and premium, if any, and (to the extent that payment
of such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate then borne by the Notes and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection.
In case the Company shall fail forthwith to pay such amounts, a Holder
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid to it and to
exercise any of the rights or remedies provided in the Collateral Documents, and
may prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company and collect in the
manner provided by law out of the property of the Company (including without
limitation the collateral held pursuant to the Collateral Documents) wherever
situated the monies adjudged or decreed to be payable.
In the case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company under Title 11 of the United States Code,
or any other applicable law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Company, the property of the
Company, or in the case of any other judicial proceedings relative to the
Company or to the creditors or property of the Company, a Holder, irrespective
of whether the principal of the Notes shall then be due and payable as herein
expressed or by declaration or otherwise, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal, premium, if any, and interest owing
and unpaid in respect of the Notes, and, in case of any judicial proceedings, to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Holders allowed in such judicial
proceedings relative to the Company or its creditors or its property, and to
collect and receive any monies or other property payable or deliverable on any
such claims.
SECTION 5.3. APPLICATION OF MONIES COLLECTED.
Any monies collected by or on behalf of a Holder pursuant to this
Article V shall be applied in the following order:
First, to reimbursement of expenses and indemnities provided herein and
in the Related Documents;
Second, in case the principal of the outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes in default in
the order of the maturity of the installments of such interest, with interest
upon the overdue installments of interest at the rate then borne by the Notes,
such payments to be made ratably to the Holders entitled thereto;
Third, in case the principal of the outstanding Notes shall have become
due, by declaration or otherwise, and be unpaid, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and premium, if any,
and interest, with interest on the overdue principal and premium, if any, and
upon overdue payments of interest at the rate then borne by the Notes, and in
17
case such monies shall be insufficient to pay in full the whole amounts so due
and unpaid upon the Notes, then to the payment of such principal and premium, if
any, and interest without preference or priority of principal and premium, if
any, over interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any Note
over any other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and
Fourth, to the payment of the remainder, if any, to the Company or any
other Person lawfully entitled thereto.
SECTION 5.4. REMEDIES CUMULATIVE AND CONTINUING.
Except as provided in the last paragraph of Section 2.4, all powers and
remedies given by this Article V to a Holder shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to a Holder by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained herein, and no delay or omission of any Holder of any of the Notes to
exercise any right or power accruing upon an Event of Default shall impair any
such right or power, or shall be construed to be a waiver of any such default or
any acquiescence therein and every power and remedy given herein, by the
Collateral Documents or by law to the Holders may be exercised from time to
time, and as often as shall be deemed expedient, by the Holders.
SECTION 5.5. WAIVER OF DEFAULTS BY MAJORITY OF HOLDERS.
The Holders of a majority in aggregate principal amount of the Notes at
the time outstanding may on behalf of the Holders of all of the Notes waive any
past Default or Event of Default hereunder and its consequences, except (i) a
default in the payment of interest or premium, if any, on, or the principal of,
the Notes, (ii) a failure by the Company to convert any Notes into Common Stock
in accordance with the provisions hereof, (iii) a default in the payment of the
Redemption Price pursuant to Article III or the Repurchase Price pursuant to
Article VIII or (iv) a default in respect of a covenant or provision hereof
which under Article X cannot be modified or amended without the consent of the
Holders of all Notes then outstanding. Upon any such waiver, the Company and the
Holders shall be restored to their former positions and rights hereunder, but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereon. Whenever any Default or Event of Default
hereunder shall have been waived as permitted by this Section 5.5, said Default
or Event of Default shall for all purposes of the Notes be deemed to have been
cured and to be not continuing, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
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SECTION 5.6 SET-OFF.
Upon the occurrence of any Event of Default, any Noteholder shall have
the right to set-off any funds of the Company in the possession of the
Noteholder against any Indebtedness (or accrued interest on Indebtedness) then
due by the Company to the Noteholder. The rights of a Noteholder under this
Section 5.6 are in addition to any other rights and remedies that a Noteholder
may have hereunder.
ARTICLE VI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 6.1. COMPANY MAY CONSOLIDATE ETC. ONLY ON CERTAIN TERMS.
Subject to the provisions of Section 8.1, nothing contained herein
shall prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance or lease (or
successive sales, conveyances or leases) of the property of the Company,
substantially as an entirety, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and which, in each
case, shall be organized under the laws of the United States of America, any
state thereof or the District of Columbia, provided, that (i) upon any such
consolidation, merger, sale, conveyance or lease, if the Company is not the
surviving entity, the due and punctual payment of the principal of and premium,
if any, and interest on all of the Notes, according to their tenor, and the due
and punctual performance and observance of all of the covenants and conditions
to be performed by the Company hereunder and under the Related Agreements, shall
be expressly and unconditionally assumed, by agreement in form and substance
reasonably satisfactory to the Holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, executed and delivered to
the Noteholders by the Person (if other than the Company) formed by such
consolidation, or into which the Company shall have been merged, or by the
Person which shall have acquired or leased such property, (ii) the agreement
referred to in clause (i) shall provide for the applicable conversion rights set
forth in Section 7.6 and the applicable repurchase rights set forth in Section
8.5, (iii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing and (iv) the Company or
the Person formed by such consolidation, or into which the Company shall have
been merged, or which shall have acquired or leased such property, as
applicable, shall have delivered an Officer's Certificate to the Noteholders to
the effect that such consolidation, merger, sale, conveyance or lease complies
with the terms hereof and that all conditions precedent provided for herein
relating to such transaction have been complied with.
SECTION 6.2. SUCCESSOR CORPORATION TO BE SUBSTITUTED.
In case of any such consolidation, merger, sale, conveyance or lease
referenced in Section 6.1, and upon the assumption by any Person of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the
19
covenants and conditions to be performed by the Company hereunder and under the
Related Agreements, in accordance with Section 6.1 such Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as such. In the event of any such consolidation, merger, sale or
conveyance (but not in the event of any such lease), the Person named as the
"Company" in the first paragraph hereof or any successor which shall thereafter
have become such in the manner prescribed in this Article VI shall be released
from its liabilities as obligor and maker of the Notes and from its obligations
hereunder.
ARTICLE VII
CONVERSION OF NOTES
SECTION 7.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this Article, the
Holder of any Note shall have the right, at his option, at any time before the
close of business on the last Business Day prior to the Maturity Date (except
that, with respect to any Note or portion of a Note which shall be called for
redemption, such right shall terminate, except as provided in Section 7.2, at
the close of business on the last Business Day preceding the date fixed for
redemption of such Note or portion of a Note, unless the Company shall default
in payment due upon redemption thereof), to convert the principal amount of any
such Note, or any portion of such principal amount which is $1,000 or an
integral multiple thereof, into that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
7.2. A Holder of Notes is not entitled to any rights of a holder of Common Stock
until such Holder has converted his Notes to Common Stock, and only to the
extent such Notes are deemed to have been converted to Common Stock under this
Article VII.
SECTION 7.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.
In order to exercise the conversion privilege with respect to any Note,
the Holder of any such Note, to be converted in whole or in part, shall
surrender such Note, duly endorsed, to the Company, and shall give written
notice of conversion in the form provided herein (or such other notice which is
acceptable to the Company) to the Company that the Holder elects to convert such
Note or the portion thereof specified in said notice. Such notice shall also
state the name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 7.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the Holder or his duly authorized attorney.
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As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Holder a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of such Note or portion thereof in
accordance with the provisions of this Article VII and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 7.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
the Company shall execute and deliver to the Holder of the Note so surrendered,
without charge to him, a new Note or Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Note.
Each conversion shall be deemed to have been effected as to any such
Note (or portion thereof) on the date on which the requirements set forth above
in this Section 7.2 have been satisfied as to such Note (or portion thereof),
and the Person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the Holder of record of the shares represented thereby,
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record Holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
SECTION 7.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same Holder, the number of full
shares which shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Notes (or specified portions thereof to
the extent permitted hereby) so surrendered. If any fractional share of stock
would be issuable upon the conversion of any Note or Notes, the Company shall
make an adjustment and payment therefor in cash at the current market value
thereof to the Holder of Notes. The current market value of a share of Common
Stock shall be the Closing Price on the last Trading Day prior to the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
SECTION 7.4. CONVERSION PRICE.
Subject to adjustment as provided in this Article VII, the conversion
price shall be $5.00 (herein called the "Conversion Price").
SECTION 7.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by the Company
as follows:
21
(a) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and of which the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company. If any dividend or
distribution of the type described in this Section 7.5(a) is declared but not so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
(b) If the Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date fixed for determination of
stockholders entitled to receive such rights or warrants by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for determination of stockholders entitled
to receive such rights and warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the total number
of additional shares of Common Stock offered for subscription or purchase. Such
adjustment shall be successively made whenever any such rights and warrants are
issued, and shall become effective immediately after the opening of business on
the day following the date fixed for determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of Common Stock are
not delivered after the expiration of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in effect
had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the Holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) If the outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day
22
following the day upon which such subdivision becomes effective shall be
proportionately reduced, and conversely, in case outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(d) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock shares of any class of capital stock of the Company
(other than any dividends or distributions to which Section 7.5(a) applies) or
evidences of indebtedness or assets (including securities, but excluding any
rights or warrants referred to in Section 7.5(b), and excluding any dividend or
distribution paid exclusively in cash (any of the foregoing hereinafter in this
Section 7.5(d) called the "Securities")), then, in each such case (unless the
Company elects to reserve such Securities for distribution to the Holders upon
the conversion of the Notes so that any such Holder converting Notes will
receive upon such conversion, in addition to the shares of Common Stock to which
such Holder is entitled, the amount and kind of such Securities which such
Holder would have received if such Holder had converted its Notes into Common
Stock immediately prior to the Record Date (as defined in Section 7.5(h) for
such distribution of the Securities)), the Conversion Price shall be reduced so
that the same shall be equal to the price determined by multiplying the
Conversion Price in effect on the Record Date (as defined below) with respect to
such distribution by a fraction of which the numerator shall be the Current
Market Price per share of the Common Stock on such Record Date less the fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive, and described in a resolution of the Board of Directors) on the
Record Date of the portion of the Securities so distributed applicable to one
share of Common Stock and the denominator of which shall be the Current Market
Price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following such Record
Date, provided, however, that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price of
the Common Stock on the Record Date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Noteholder shall have the right to
receive upon conversion the amount of Securities such Holder would have received
had such Holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
Section 7.5(d) by reference to the actual or when issued trading market for any
securities, it must in doing so consider the prices in such market over the same
period used in computing the Current Market Price of the Common Stock to the
extent possible.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock, (ii)
23
are not exercisable and (iii) are also issued in respect of future issuances of
Common Stock, shall be deemed not to have been distributed for purposes of this
Section 7.5 (and no adjustment to the Conversion Price under this Section 7.5
will be required) until the occurrence of the earliest Trigger Event, whereupon
such rights and warrants shall be deemed to have been distributed and an
appropriate adjustment (if any is required) to the Conversion Price shall be
made under this Section 7.5(d). If any such rights or warrants are subject to
events upon the occurrence of which such rights or warrants become exercisable
to purchase different securities, evidences of indebtedness or other assets,
then the date of the occurrence of any and each such event shall be deemed to be
the date of distribution and record date with respect to new rights or warrants
with such rights (and a termination or expiration of the existing rights or
warrants without exercise by any of the Holders thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or warrants, or any
Trigger Event or other event (of the type described in the preceding sentence)
with respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section 7.5
was made, (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any Holders thereof, the
Conversion Price shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder or holders of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
For purposes of this Section 7.5(d) and Sections 7.5(a) and (b), any
dividend or distribution to which this Section 7.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any further Conversion Price reduction required by this Section 7.5(d) with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 7.5(a) and (b) with respect to such dividend or distribution shall then
be made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 7.5(a) and (b), and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of Section 7.5(a).
(e) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which Section 7.6 applies or as part of a
distribution referred to in Section 7.5(d)) in an aggregate amount that,
combined together with (1) the aggregate amount of any other such distributions
to all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment
24
of such distribution, and in respect of which no adjustment pursuant to this
Section 7.5(e) has been made, and (2) the aggregate of any cash plus the fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a resolution of the Board of Directors) of
consideration payable in respect of any tender offer by the Company for all or
any portion of the Common Stock concluded within the 12 months preceding the
date of payment of such distribution, and in respect of which no adjustment
pursuant to Section 7.5(f) has been made, exceeds 10% of the product of the
Current Market Price (determined as provided in Section 7.5(h)) on the Record
Date with respect to such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately after
the close of business on such date, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the close of business on such Record Date
by a fraction (i) the numerator of which shall be equal to the Current Market
Price on the Record Date less an amount equal to the quotient of (x) the excess
of such combined amount over such 10% and (y) the number of shares of Common
Stock outstanding on the Record Date and (ii) the denominator of which shall be
equal to the Current Market Price on such Record Date provided, however, that,
if the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each Noteholder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted such Note immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(f) If a tender offer made by the Company or any of its Subsidiaries
for all or any portion of the Common Stock expires and such tender offer (as
amended upon the expiration thereof) requires the payment to stockholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of Purchased Shares (as defined below)) of an aggregate consideration having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that, combined together with (1) the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors), as of the
expiration of such tender offer, of consideration payable in respect of any
other tender offers, by the Company or any of its Subsidiaries for all or any
portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 7.5(f) has been made and (2) the aggregate amount of any
distributions to all Holders of the Common Stock made exclusively in cash within
12 months preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to Section 7.5(e) has been made, exceeds 10% of the
product of the Current Market Price (determined as provided in Section 7.5(h))
as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended) times the number of shares
of Common Stock outstanding (including any tendered shares) at the Expiration
Time, then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
date of the Expiration
25
Time by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding (including any tendered shares) at the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time and the denominator shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender offer) of all shares validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction (if any) to become
effective immediately prior to the opening of business on the day following the
Expiration Time. If the Company is obligated to purchase shares pursuant to any
such tender offer, but the Company is permanently prevented by applicable law
from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender offer had not been made. If the application of
this Section 7.5(f) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer under this
Section 7.5(f).
(g) If the Company shall issue Common Stock or securities convertible
into, or exchangeable for, Common Stock at a price per share (or, as applicable,
having a conversion or exchange price per share) that is less than the Current
Market Price (determined as provided in Section 7.5(h)) determined at the time
of such issuance, the Conversion Price shall be adjusted so that the holder of
each Note shall be entitled to receive, upon the conversion thereof, the number
of shares of Common Stock determined by multiplying (i) the Conversion Price on
the date (the "Measurement Date") immediately prior to the day of such issuance
by (ii) a fraction, the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding on the Measurement Date day and (2) the
number of shares of Common Stock which the aggregate consideration receivable by
the Company for the total number of shares of Common Stock so issued (or into
which the convertible securities may convert) would purchase at such Conversion
Price on the Measurement Date, and the denominator of which shall be the sum of
(x) the number of shares of Common Stock outstanding on the Measurement Date and
(y) the number of additional shares of Common Stock so issued (or into which the
convertible securities may convert). An adjustment made pursuant to this Section
7.5(g) shall be made on the next business day following the day on which any
such issuance is made and shall be effective retroactively to the day of such
issuance immediately after the close of business on such date. For purposes of
this Section 7.5(g), the aggregate consideration receivable by the Company in
connection with the issuance of shares of Common Stock or of securities
convertible into shares of Common Stock shall be deemed to be equal to the sum
of the aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such securities plus
the minimum aggregate amount, if any, payable upon conversion of any such
convertible securities into shares of Common Stock; provided, however, that any
non-cash consideration received or receivable by the Company shall be valued at
its fair market value as of the date of the adjustment made pursuant to this
Section 7.5(g), such fair market value to be as determined by the Company's
Board of Directors (whose determination shall be conclusive and described in a
resolution of the Board of Directors).
26
Notwithstanding any other provision of this Section 7.5(g) to the
contrary, the following shall be deemed not to have been issued for purposes of
this Section 7.5(g): (a) issuances pursuant to any bona fide plan for the
benefit of employees or directors of the Company or any Subsidiary in effect on
the date of issuance of the Notes or thereafter, (b) issuances to acquire all or
any portion of a business in an arm's-length transaction between the Company and
an unaffiliated third party, including, if applicable, issuances upon exercise
of options or warrants assumed or issued in connection with such an acquisition,
(c) issuances in a bona fide public offering pursuant to a firm commitment
underwriting or sales at the market pursuant to a continuous offering stock
program, (d) issuances pursuant to the exercise of rights or warrants, or upon
the conversion of convertible securities, which are issued and outstanding on
the date of issuance of the Notes, or which may be issued in the future at fair
value and with an exercise price or conversion price at least equal to the
Current Market Price (determined as provided in Section 7.5(h)) at the time of
issuance of such right, warrant or convertible security, (e) issuances pursuant
to a dividend reinvestment plan or other plan hereafter adopted for the
reinvestment of dividends or interest, provided, that such Common Stock is
issued at a price at least equal to 95% of the Current Market Price (determined
as provided in Section 7.5(h)) determined at the time of such issuance and (f)
issuances to which Section 7.5(a), (b) or (d) applies.
(h) For purposes of this Section 7.5, the following terms shall
have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in
good faith by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question, provided,
however, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 7.5(a), (b), (c), (d), (e), (f) or (g) occurs
during such ten consecutive Trading Days, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result
27
of such other event, (2) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 7.5(a), (b),
(c), (d), (e), (f) or (g) occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the
day in question, the Closing Price for each Trading Day on and after
the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event, and (3) if the "ex" date for the issuance or distribution
requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or
(2) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value (as determined by the Board of Directors
or, to the extent permitted by applicable law, a duly authorized
committee thereof in a manner consistent with any determination of such
value for purposes of Section 8.5(d), (f) or (g), whose determination
shall be conclusive and described in a resolution of the Board of
Directors or such duly authorized committee thereof, as the case may
be) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For purposes of any
computation under Section 7.5(f) or (g), the Current Market Price of
the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the
next two succeeding Trading Days, provided, however, that if the "ex"
date for any event (other than the tender or exchange offer requiring
such computation) that requires an adjustment to the Conversion Price
pursuant to Section 7.5(a), (b), (c), (d), (e), (f) or (g) occurs on or
after the Expiration Time for the tender or exchange offer requiring
such computation and prior to the day in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal
of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any
tender or exchange offer means the first date on which the Common Stock
trades regular way on such exchange or in such market after the
Expiration Time of such offer.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or
other
28
property, the date fixed for determination of stockholders entitled to
receive such cash, securities or other property (whether such date is
fixed by the Board of Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x), if the applicable security
is listed or admitted for trading on the New York Stock Exchange, the
Nasdaq Stock Market (National Market) or another national security
exchange, a day on which the New York Stock Exchange, the Nasdaq Stock
Market (National Market) or another national security exchange is open
for business or (y) if the applicable security is quoted on the Nasdaq
National Market, a day on which trades may be made thereon or (z) if
the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of Georgia are authorized or
obligated by law or executive order to close.
(i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 7.5(a), (b), (c), (d), (e), (f) and (g),
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to Holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time if the
period is at least 20 days, the reduction is irrevocable during the period and
the Board of Directors shall have made a determination that such reduction would
be in the best interests of the Company, which determination shall be
conclusive. Whenever the Conversion Price is reduced pursuant to the preceding
sentence, the Company shall mail to Holders of record of the Notes a notice of
the reduction at least 15 days prior to the date the reduced Conversion Price
takes effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1.00% in such
price, provided, however, that any adjustments which by reason of this Section
7.5(j) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article VIII
shall be made by the Company and shall be made to the nearest cent or to the
nearest one hundredth of a share, as the case may be.
(k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail notice of such adjustment of the
Conversion Price to the Holder of each Note at his last address reflected in the
Note Register. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
29
(l) In any case in which this Section 7.5 provides that an adjustment
shall become effective immediately after a record date for an event, the Company
may defer until the occurrence of such event (i) issuing to the Holder of any
Note converted after such record date and before the occurrence of such event
the additional shares of Common Stock issuable upon such conversion by reason of
the adjustment required by such event over and above such conversion by reason
of the adjustment required by such event and above the Common Stock issuable
upon such conversion before giving effect to such adjustment and (ii) paying to
such Holder any amount in cash in lieu of any fraction pursuant to Section 7.5.
(m) For purposes of this Section 7.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
SECTION 7.6. EFFECT OF RECLASSIFICATION, CONSOLIDATION MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification
or change of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 7.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which Holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
Holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company and the successor or purchasing corporation, as
the case may be, shall take appropriate steps to ensure that the legal
documentation evidencing any such transaction provides, in form and substance
reasonably satisfactory to the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, that the Notes shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a Holder of a
number of shares of Common Stock issuable upon conversion of such Notes
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance, assuming such Holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance, provided that, if the kind or amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
is not the same for each share of Common Stock in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purposes of this Section 7.6 the kind and amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of
30
the non-electing shares. Such legal documentation shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article.
The Company shall cause notice of the execution of such legal
documentation to be mailed to each Holder of Notes, at his last address
reflected in the Note Register, within 20 days after execution thereof. Failure
to deliver such notice shall not affect the legality or validity of such legal
documentation.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 7.6 applies to any event or occurrence, Section 7.5
shall not apply.
SECTION 7.7. TAXES ON SHARES ISSUED.
The issue of stock certificates on conversions of Notes shall be made
without charge to the converting Noteholder for any tax in respect of the issue
thereof. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of stock
in any name other than that of the Holder of any Note converted, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the Person or Persons requesting the issue thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
SECTION 7.8. RESERVATION OF SHARES TO BE FULLY PAID; COMPLIANCE WITH
GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK.
The Company shall reserve, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares of
Common Stock to provide for the conversion of the Notes from time to time as
such Notes are presented for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes, liens and charges with respect to the
issue thereof.
The Company covenants that it will in good faith and as expeditiously
as possible comply with its obligations under the Registration Rights Agreement.
31
The Company further covenants that so long as the Common Stock shall be
listed or quoted on the New York Stock Exchange, the Nasdaq Stock Market
(National Market) or any other national securities exchange the Company will, if
permitted by the rules of such exchange, list and keep listed so long as the
Common Stock shall be so listed on such market or exchange, all Common Stock
issuable upon conversion of the Notes.
SECTION 7.9. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
If:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 7.5, or
(b) the Company shall authorize the granting to all or
substantially all the holders of its Common Stock of rights or warrants
to subscribe for or purchase any share of any class of Common Stock or
any other rights or warrants, or
(c) there is a reclassification or reorganization of the
Common Stock (other than a subdivision or combination of outstanding
Common Stock, or a change in par value, or from par value to no par
value, or from no par value to par value), or a consolidation or merger
to which the Company is a party and for which approval of any
stockholders of the Company is required, or a sale or transfer of all
or substantially all of the assets of the Company, or
(d) there is a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company shall cause to be mailed to each Holder at his last address
reflected in the Note Register, as promptly as possible but in any event at
least 15 days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights or warrants are to be determined, or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
32
SECTION 7.10. RESTRICTION ON CONVERSION OF NOTES.
Notwithstanding any other provision hereof to the contrary, unless and
until the Company has obtained the Stockholder Approval, the Notes may be
converted into a maximum of 11,027 shares (subject to adjustment as provided
below, the "Maximum Number"), which is equal to 19.99% of the number of shares
of Common Stock issued and outstanding on the date of issuance of the Notes,
less the 600,000 shares to be issued by the Company in connection with its
acquisition of The Money Centre, Inc. Unless and until the Company has obtained
the Stockholder Approval, and subject to the $1,000 authorized denomination of
the Notes set forth in Section 2.2, any individual Note may be converted
pursuant to Section 7.1 into a maximum number of shares of Common Stock equal to
the amount determined by multiplying the Maximum Number by a fraction (rounded
to the nearest one one-thousandth) of which the numerator is the principal
amount of the Note to be converted and the denominator of which is the total
principal amount of the outstanding Notes, and thereafter the remaining Notes
shall not be convertible into shares of Common Stock unless and until the
Company has obtained the Stockholder Approval. To illustrate, prior to
obtainment of the Stockholder Approval a holder of a Note with a principal
amount of $2,000,000 may convert $15,000 principal amount of such Note into
3,000 shares of Common Stock and the $1,985,000 principal amount of Note or
Notes to be issued by the Company to the converting Holder upon such conversion
may not be converted into shares of Common Stock unless and until the Company
has obtained the Stockholder Approval. The Maximum Number shall be subject to
appropriate adjustment by reason of a stock dividend, split-up, merger,
recapitalization, combination, subdivision, conversion, exchange of shares,
distribution on or in respect of the Common Stock or any similar transaction,
and proper provision shall be made in the agreements governing such transaction,
so that a Holder shall receive upon conversion the number of shares of Common
Stock that a Holder would have held immediately after such event if the Notes
had been converted immediately prior to such event, or the record date therefor,
as applicable.
ARTICLE VIII
REPURCHASE OF NOTES AT OPTION OF THE HOLDER
SECTION 8.1. RIGHT TO REQUIRE REPURCHASE.
In the event that a Repurchase Event (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, to require
the Company to repurchase, and upon the exercise of such right the Company shall
repurchase, all of such Holder's Notes, or any portion of the principal amount
thereof that is an integral multiple of $1,000 (provided that no single Note may
be repurchased in part unless the portion of the principal amount of such Note
to be outstanding after such repurchase is equal to $1,000 or an integral
multiple of $1,000), on the date (the "Repurchase Date") that is 60 days after
the date of the Company Notice (as defined in Section 8.2) for cash at a
purchase price equal to 101% of the aggregate principal amount of such Notes in
the event that the Repurchase Event is a Change in Control (as hereinafter
defined) and 112% of the aggregate
33
principal amount of such Notes in the event that the Repurchase Event is the
failure to obtain the Stockholder Approval on or before February 28, 2000 (the
"Repurchase Price"), plus interest accrued and unpaid to, but excluding, the
Repurchase Date.
Whenever in this Note there is a reference, in any context, to the
principal of any Note as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Note to the extent
that such Repurchase Price is, was or would be so payable at such time, and
express mention of the Repurchase Price in any provision of this Note shall not
be construed as excluding the Repurchase Price in those provisions of this Note
when such express mention is not made.
SECTION 8.2. NOTICES; METHOD OF EXERCISING PURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for redemption all
of the outstanding Notes pursuant to Article III, on or before the 15th day
after the occurrence of a Repurchase Event, the Company shall give to all
Holders of Notes notice (the "Company Notice") of the occurrence of the
Repurchase Event and of the repurchase right set forth herein arising as a
result thereof.
Each notice of a repurchase right shall state:
(1) the Repurchase Event and the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must follow
to exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price will
become due and payable upon each such Note designated by the Holder to
be repurchased, and that interest thereon shall cease to accrue on and
after said date,
(6) the Conversion Price, the date on which the right to
convert the Notes to be repurchased will terminate and the place where
such Notes may be surrendered for conversion, and
(7) the place where such Notes are to be surrendered for
payment of the Repurchase Price and accrued interest, if any.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
34
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Notes to be
repurchased (and, if any Note is to be repurchased in part, the portion of the
principal amount thereof to be repurchased and the name of the Person in which
the portion thereof to remain outstanding after such repurchase is to be
registered) and a statement that an election to exercise the repurchase right is
being made thereby, and (ii) the Notes with respect to which the repurchase
right is being exercised.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid the Repurchase
Price in cash to the Holder on the Repurchase Date, together with accrued and
unpaid interest to, but excluding, the Repurchase Date payable with respect to
the Notes as to which the repurchase right has been exercised.
(d) If any Note (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Note (or
portion thereof, as the case may be) shall, until paid, bear interest from the
Repurchase Date at the rate per annum then currently in effect, and each Note
shall remain convertible into Common Stock until the principal of such Note (or
portion thereof, as the case may be) shall have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Company (with, if the Company so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute and deliver to the Holder of such Note without service
charge, a new Note or Notes, containing identical terms and conditions, each in
an authorized denomination in aggregate principal amount equal to and in
exchange for the portion of the principal of the Note so surrendered that was
not repurchased.
(f) Any Holder that has delivered to the Company its written notice
exercising its right to require the Company to repurchase its Notes upon a
Repurchase Event shall have the right to withdraw such notice at any time prior
to the close of business on the Repurchase Date by delivery of a written notice
of withdrawal to the Company prior to the close of business on such date. A Note
in respect of which a Holder is exercising its option to require repurchase upon
a Repurchase Event may be converted into Common Stock in accordance with Article
VII only if such Holder withdraws its notice in accordance with the preceding
sentence.
SECTION 8.3. CERTAIN DEFINITIONS.
For purposes of this Article VIII,
35
(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 promulgated by the Commission pursuant to the Exchange Act;
(b) the term "Person" shall include any syndicate or group which would
be deemed to be a "Person" under Section 13(d)(3) of the Exchange Act; and
(c) the term "controlled" shall mean ownership or control of more than
50% of the voting power of an entity.
SECTION 8.4. REPURCHASE EVENT.
A "Repurchase Event" shall be deemed to occur upon the occurrence of a
Change in Control or in the event that the Company fails to obtain the
Stockholder Approval on or before February 15, 2000.
A "Change in Control" shall be deemed to have occurred if after the
date of issuance of the Notes:
(a) any Person, other than the Company, any Subsidiary of the Company
or any entity controlled by the foregoing, or any employee benefit plan of the
Company or any such Subsidiary, becomes the beneficial owner, directly or
indirectly, through a purchase or other acquisition transaction or series of
transactions (other than a merger or consolidation involving the Company), of
shares of capital stock of the Company entitling such Person to exercise in
excess of 50% of the total voting power of all shares of capital stock of the
Company entitled to vote generally in the election of directors, provided that a
Change in Control shall not be deemed to have occurred pursuant to this
paragraph (a) as a result of issuances of capital stock by the Company upon the
exercise of rights or warrants, or upon conversion of convertible securities,
which are issued and outstanding on the date of issuance of the Notes to the
holders of such rights, warrants or convertible securities on the date of
issuance of the Notes;
(b) there occurs any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company, or any sale or transfer of the assets of the Company as, or
substantially as, an entirety to another Person (other than (i) any such
transaction pursuant to which the Holders of the Common Stock immediately prior
to such transaction have, directly or indirectly, shares of capital stock of the
continuing or surviving corporation immediately after such transaction which
entitle such Holders to exercise in excess of 50% of the total voting power of
all shares of capital stock of the continuing or surviving corporation entitled
to vote generally in the election of directors and (ii) any merger (1) which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or (2) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of Common Stock and separate series of Common Stock carrying substantially the
same relative rights as the Common Stock); or
36
(c) individuals who constituted the Board of Directors of the Company
at the beginning of any one-year period (together with any other director whose
election by the Board of Directors of the Company or whose nomination for
election by the stockholders of the Company was approved by a vote of at least a
majority of the directors then in office either who were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors then in office.
SECTION 8.5. CONSOLIDATION, MERGER, ETC.
In the case of any reclassification, change, consolidation, merger,
combination, sale or conveyance to which Section 7.6 applies, in which the
Common Stock of the Company is changed or exchanged as a result into the right
to receive shares of stock and other securities or property or assets (including
cash) which includes shares of Common Stock of the Company or common stock of
another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such shares of stock and other securities,
property and assets (including cash) (as determined by the Board of Directors of
the Company, which determination shall be conclusive and binding), then the
Person formed by such consolidation or resulting from such merger or combination
or which acquires the properties or assets (including cash) of the Company, as
the case may be, shall execute and deliver to the Holders of the Notes, at their
last address reflected in the Note Register, an amendment to the Notes, in form
and substance satisfactory to the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, modifying the
provisions of the Notes relating to the right of Holders to cause the Company to
repurchase the Notes following a Repurchase Event, including without limitation
the applicable provisions of this Article VIII and the definitions of Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Board of Directors of the
Company (which determination shall be conclusive and binding), to make such
provisions apply to the common stock and the issuer thereof if different from
the Company and Common Stock of the Company (in lieu of the Company and the
Common Stock of the Company).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
SECTION 9.1. ACTION BY HOLDERS.
When herein it is provided that the Holders of a specified percentage
in aggregate principal amount of the Notes may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action), the fact that at the time of taking any such
action, the Holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by Holders in person or by agent or proxy appointed in writing, or (b)
by the record of the Holders of Notes voting in favor
37
thereof at any meeting of Holders duly called and held in accordance with the
provisions hereof and applicable law or (c) by a combination of such instrument
or instruments and any such record of such a meeting of Holders. Whenever the
Company solicits the taking of any action by the Holders, the Company may fix in
advance of such solicitation a date as the record date for determining Holders
entitled to take such action. The record date shall be not more than 15 days
prior to the date of commencement of solicitation of such action.
SECTION 9.2 WHO ARE DEEMED ABSOLUTE OWNERS.
The Company may deem the Person in whose name a Note is registered on
the Note Register to be, and may treat him as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, premium, if any, and interest on such Note, for
conversion of such Note and for all other purposes and the Company shall not be
affected by any notice to the contrary. All such payments so made to any Holder
for the time being, or upon his order, shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for monies
payable upon such Note.
SECTION 9.3 COMPANY-OWNED NOTES DISREGARDED.
In determining whether the Holders of the requisite aggregate principal
amount of Notes have concurred in any direction, consent, waiver or other action
hereunder, Notes which are owned by the Company or any other obligor on the
Notes or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any other obligor on
the Notes shall be disregarded and deemed not to be outstanding for the purpose
of any such determination.
ARTICLE X
AMENDMENT, ETC.
No provision of the Notes may be amended, modified, supplemented or
waived without notice to and the written consent of the Company and the Holders
of not less than a majority in aggregate principal amount of the Notes at the
time outstanding, provided that no such amendment, modification, supplement or
waiver shall, unless signed by each Holder of a Note affected hereby, (i) extend
the fixed maturity of such Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or reduce any amount payable on redemption thereof, or impair
the right of any such Holder to institute suit for the payment thereof, or make
the principal thereof or interest or premium, if any, thereon payable in any
coin or currency other than that provided herein, or change the obligation of
the Company to repurchase any Note upon the occurrence of a Repurchase Event in
a manner adverse to such Holder, or impair the right to convert the Notes into
Common Stock in any material respect, or (ii) reduce
38
the aforesaid percentage of Notes, the Holders of which are required to consent
to any such amendment, modification, supplement or waiver.
ARTICLE XI
SECURITY FOR NOTES; RELATED AGREEMENTS
The Notes shall be secured by the Collateral Documents, duly executed
by the Company and the other parties thereto for the ratable benefit of the
Noteholders granting a security interest in the collateral covered thereby,
which security interest shall be subordinate in priority only to those Liens
granted in certain of the same collateral to secure the performance of the
Company under the senior loan agreements referred to therein. The Notes are
entitled to the benefits of and subject to the limitations contained in the
Collateral Documents and the other Related Agreements, and the Holder of any
Note may enforce such rights in accordance with the terms hereof and thereof.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. ASSIGNMENT; SUCCESSORS.
A Note and the rights and obligations of the Company thereunder may not
be assigned or otherwise transferred by the Company without the prior written
consent of the Holder thereof. A Note may not be assigned or otherwise
transferred by any Holder to any Person, other than an Affiliate of such Holder,
unless the Holder has complied with the applicable requirements set forth in
Section 3.2(b) of the Agreement. This Note shall be binding upon and inure to
the benefit of the Company and the Holder and their respective permitted
successors and assigns.
SECTION 12.2. OFFICIAL ACTS BY SUCCESSOR CORPORATION.
Any act or proceeding by any provision hereof authorized or required to
be done or performed by any board, committee or officer of the Company shall and
may be done and performed with like force and effect by the like board,
committee or officer of any corporation that shall at the time be the lawful
sole successor of the Company.
SECTION 12.3. ADDRESSES FOR NOTICES, ETC.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
39
(a) if to the Holder, initially at the address set forth
above, and thereafter at such other address, notice of which is given
in accordance with this Section 12.3;
(b) if to the Issuer, initially at 0000 Xxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx 00000, and thereafter at such other address,
notice of which is given in accordance with this Section 12.3.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 12.4. GOVERNING LAW.
THE PARTIES HERETO ACKNOWLEDGE THAT THE TRANSACTIONS CONTEMPLATED BY
THE AGREEMENT AND THE NOTES BEAR A REASONABLE RELATION TO THE STATE OF MARYLAND
IN THAT, INTERALIA, A PARTICIPANT IN THE NOTES HAS ITS PRINCIPAL PLACE OF
BUSINESS IN THE STATE OF MARYLAND AND PART OF THE NEGOTIATIONS RELATING TO THE
ISSUANCE OF THE NOTES AND THE CLOSING OF SUCH ISSUANCE OCCURRED IN THE STATE OF
MARYLAND. THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
SECTION 12.5. USURY.
All agreements between the Company and the Holders, whether now
existing or hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of the maturity of the
Notes or otherwise, shall the interest contracted for, charged, received, paid
or agreed to be paid to the Holders exceed the maximum amount permissible under
the laws of the State of Maryland (hereinafter the "Applicable Law"). If, from
any circumstance whatsoever, interest would otherwise be payable to the Holders
in excess of the maximum amount permissible under the Applicable Law, the
interest payable to the Holders shall be reduced to the maximum amount
permissible under the Applicable Law, and if from any circumstance the Holders
shall ever receive anything of value deemed interest by the Applicable Law in
excess of the maximum amount permissible under the Applicable Law, an amount
equal to the excessive interest shall be applied to the reduction of the
principal of the Notes and not to the payment of interest, or if such excessive
amount of interest exceeds the unpaid principal amount of the Notes, such excess
40
shall be refunded to the Company. All interest paid or agreed to be paid to the
Holders shall, to the extent permitted by the Applicable Law, be amortized,
prorated, allocated and spread throughout the full term of the Notes (including
any renewal or extension) until payment in full of the principal so that the
interest on the Notes for such full term shall not exceed the maximum amount
permissible under the Applicable Law. Each Holder expressly disavows any intent
to contract for, charge or receive interest in an amount which exceeds the
maximum amount permissible under the Applicable Law. This paragraph as well as
similar paragraphs set forth in the Agreement and the Collateral Documents shall
control all agreements between the Company and the Holders.
SECTION 12.6. LEGAL HOLIDAYS.
In any case where the date of maturity of interest on or principal of
the Notes or the date fixed for redemption or repurchase of any Note will not be
a Business Day, then payment of such interest on or principal of the Notes need
not be made on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the date of maturity or the date
fixed for redemption or repurchase, and no interest shall accrue for the period
from and after such date.
SECTION 12.7 SEVERABILITY OF PROVISIONS.
Any provision of this Note which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability only without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
SECTION 12.8. HEADINGS AND GENDER.
The titles and headings of the articles and sections hereof have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof. Use of a particular gender herein shall be considered to represent the
masculine, feminine or neuter gender whenever appropriate.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated: August 31, 1999
ALTIVA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive
Officer
41
CONVERSION NOTICE
To: ALTIVA FINANCIAL CORPORATION
The undersigned registered owner of this Note hereby
irrevocably exercises the option to convert this Note, or the portion hereof
(which is $1,000 or an integral multiple thereof) below designated, into shares
of Common Stock of Altiva Financial Corporation in accordance with the terms of
this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes 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 or any portion of this Note not converted are to be
issued in the name of a Person other than the undersigned, the undersigned will
set forth the appropriate information below and pay all transfer taxes payable
with respect thereto.
Date:
-------------------------
-----------------------------
-----------------------------
Signature (s)
NOTICE: The above signatures of the Holder(s) hereof must correspond with the
name as written upon the face of the Note in every particular without
alteration, enlargement or any change whatever.
Fill in for registration of shares of Common Stock if to be
issued, and Notes to be delivered, other than to and in the name of the
registered Holder:
---------------------------
(Name)
---------------------------
(Street Address)
---------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all): $_____________
-------------------------------------------------------
Social Security or Other Taxpayer Identification Number
2
OPTION TO ELECT REPURCHASE
UPON A REPURCHASE EVENT
To: ALTIVA FINANCIAL CORPORATION
The undersigned registered owner of this Note hereby
irrevocably acknowledges receipt of a notice from Altiva Financial Corporation
(the "Company") as to the occurrence of a Repurchase Event with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of this Note at
the repurchase price, together with accrued interest to, but excluding, such
date, to the registered Holder hereof.
Date:
-----------------------
-----------------------------
-----------------------------
Signature (s)
NOTICE: The above signatures of the Holder(s) hereof must correspond with the
name as written upon the face of the Note in every particular without
alteration, enlargement or any change whatever.
Principal amount to be repurchased (if less than all): $_________
---------------------------------------------
Social Security or Other Taxpayer Identification Number
