Exhibit 4.2
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.
PREMIUM FINANCIAL SERVICES & LEASING, INC.
10% CONVERTIBLE SUBORDINATED DEBENTURE
DUE 2003
No. 01 $XX,000.00
FOR VALUE RECEIVED, Premium Financial Services & Leasing, Inc., a
Wyoming corporation (the "Company"), promises to pay to ________________, whose
address is ________________________________________________, or registered
assigns (the "Holder"), the sum of XX Thousand Dollars ($XX,000.00) in lawful
money of the United States of America on or before the Maturity Date as defined
herein, with all Interest and Bonus Interest thereon as defined and specified
herein.
1. INTEREST. This Debenture shall bear interest ("Interest") at the rate of ten
percent (10%) per annum from the Issue Date through the Maturity Date. The
Company shall pay such Interest in cash semi-annually; however, if the Company
elects to redeem the Debenture prior to the Maturity Date, the Company may pay
the Interest due upon redemption.
2. PRE-PAYMENTS AND MATURITY DATE. This Debenture shall be due and payable in
full, including all accrued Interest thereon, on July __, 2003 ("Maturity
Date"). The Company may prepay this Debenture at any time after issuance without
penalty.
3. EQUAL RANK. This Debenture may be issued in denominations of $1,000 at the
request of the Holder, subject to Paragraph 11, "Assignment, Transfer or Loss of
the Debentures." Such other smaller denominations of the Debentures shall then
represent one of a series of up to $1,000,000 principal amount of the 10%
Convertible Subordinated Debentures due 2003 ("Debentures") issued by the
Company. All Debentures will rank equally and ratably without priority over one
another.
4. CONVERSION OF DEBENTURE.
4.1 Conversion Price. This Debenture is convertible, at the option of the
Holder, into shares ("Shares") of Common Stock, at any time commencing ninety
(90) days after the Issue Date and prior to the close of business on the
business day prior to the Maturity Date, date of redemption or conversion date,
as the case may be. The conversion price (the "Conversion Price") will be equal
to the lower of (i) the lowest price that the Company sells any of its Common
Stock in a public or private offering or (ii) if quoted on an exchange, than at
fifty percent of the Average Stock Price for twenty consecutive trading days
through the Conversion Date, subject to adjustment as hereinafter provided. Upon
conversion, the holder will also receive Bonus Warrants at the rate of one
warrant for every one share of converted stock. The warrant shall be exercisable
within 180 days of issuance at the rate of the Average Stock Price for twenty
consecutive trading days through the Conversion Date, subject to adjustment as
hereinafter provided.
4.2 Adjustment Based Upon Stock Dividends, Combination of Shares or
Recapitalization. The Conversion Price shall be adjusted in the event that the
Company shall at any time (i) pay a stock dividend on the Common Stock, (ii)
subdivide its outstanding Common Stock into a greater number of shares, (iii)
combine its outstanding Common Stock into a smaller number of shares, (iv) issue
by reclassification of its Common Stock any other special capital stock of the
Company, (v) issue to holders of Common Stock, rights or warrants to subscribe
for or purchase Common Stock at less than the current market price (as defined)
of the Common Stock, or (vi) distribute to all holders of Common Stock evidences
of indebtedness or assets (excluding cash dividends) or rights or warrants to
subscribe for Common Stock (other than those mentioned above). No adjustment of
the Conversion Price will be required until cumulative adjustments amount to One
Dollar ($1.00) per $1,000 principal amount of the Debentures or more. Upon the
occurrence of an event requiring adjustment of the Conversion Price, and
thereafter, the Holder, upon surrender of this Debenture for conversion, shall
be entitled to receive the number of shares of Common Stock or other capital
stock of the Company which the Holder would have owned or have been entitled to
receive after the happening of any of the events described above had this
Debenture been converted immediately prior to the happening of such event.
4.3 Adjustment Based Upon Merger or Consolidation. In case of any consolidation
or merger to which the Company is a party (other than a merger in which the
Company is the surviving entity and which does not result in any
reclassification of or change in the outstanding Common Stock of the Company),
or in case of any sale or conveyance to another person, firm, or corporation of
the property of the Company as an entirety or substantially as an entirety, the
Holder shall have the right to convert this Debenture into the kind and amount
of securities and property (including cash) receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such Debenture might have been converted immediately prior thereto.
4.4 Exercise of Conversion Privilege. The Conversion Privilege provided for
herein shall be exercisable by the Holder by written notice to the Company or
its successor and the surrender of this Debenture in exchange for the number of
shares (or other securities and property, including cash, in the event of an
adjustment of the Conversion Price) into which this Debenture is convertible
based upon the Conversion Price. Conversion rights will expire at the close of
business on the business day prior to the Maturity Date or redemption date of
this Debenture.
4.5 Corporate Status of Common Stock to be Issued. All Common Stock (or other
securities in the event of an adjustment of the Conversion Price) which may be
issued upon the conversion of this Debenture shall, upon issuance, be fully paid
and nonassessable.
4.6 Issuance of Certificate. Upon the conversion of this Debenture, the Company
shall in due course issue to the Holder a certificate or certificates
representing the number of shares of Common Stock (or other securities in the
event of an adjustment of the Conversion Price) to which the conversion relates.
4.7 Fractional Shares. No fractional Shares will be issued. In lieu thereof, the
Company will pay cash for fractional Share amounts equal to the closing sale
price of the Common Stock on the date of conversion, determined as follows:
4.7.1 If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current
value shall be the last reported sale price of the Common Stock on such
exchange on the last business day prior to the date of conversion of
this Debenture, or if no such sale is made on such day, the average
closing bid and asked prices for such day on such exchange; or
4.7.2 If the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the last reported sale price or
the mean of the last bid and asked prices reported by the National
Association of Securities Dealers Automated Quotation System on the
Nasdaq Small-Cap Market, Nasdaq National Market System or OTC Bulletin
Board (or, if not so quoted on NASDAQ, by the National Quotation
Bureau, Inc. or other reporting system for the public market in which
the Common Stock trades) on the last business day prior to the date of
the conversion of this Debenture; or
4.7.3 If the Common Stock is not so listed or admitted to unlisted trading
privileges and prices are not reported on NASDAQ, the current value
shall be an amount, not less than the book value, determined in such
reasonable manner as may be prescribed by the Board of Directors of the
Company.
4.8 Conversion of Debentures at the Option of the Company. If the Average Stock
Price at any point is one hundred twenty-five percent (125%) of the average of
the closing bid prices of the Common Stock for the first ten (10) days that the
Common Stock trades in a public market, the Company may, upon ten (10) days'
written notice to the Holder, convert the Debentures, and all accrued Interest
thereon, into Common Stock at the Conversion Price on the date of the notice,
provided that the Company shall be able to make such conversion only if it has
an effective registration statement covering the Common Stock to be issued to
the Holders upon conversion of the Debentures.
5. STATUS OF HOLDER OF DEBENTURE. This Debenture shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Company or to any
rights whatsoever except the rights herein expressed, and no dividends shall be
payable or accrue in respect of this Debenture or the securities issuable upon
the conversion hereof unless and until this Debenture shall be converted. Upon
the conversion of this Debenture, the Holder shall, to the extent permitted by
law, be deemed to be the holder of record of the shares of Common Stock issuable
upon such conversion, notwithstanding that the stock transfer books of the
Company shall then be closed or that the certificates representing such shares
of Common Stock shall not then be actually delivered.
6. RESERVE OF SHARES OF COMMON STOCK. The Company shall reserve out of its
authorized shares of Common Stock (and other securities in the event of an
adjustment of the Conversion Price) a number of shares sufficient to enable it
to comply with its obligation to issue shares of Common Stock (and other
securities in the event of an adjustment of the Conversion Price) upon the
conversion of this Debenture.
7. REDEMPTION. If not earlier converted, this Debenture is redeemable by the
Company at any time on or after ninety (90) days from the Issue Date, at its
option, in whole or in part, on a pro rata basis, at a price equal to the
outstanding principal balance plus accrued Interest payable through the date of
redemption upon twenty (20) days' written notice to the Holder at a price equal
to the outstanding principal balance plus accrued Interest on the Debenture. The
Holders will have the right to convert their Debentures, and all accrued
Interest thereon, at the Conversion Price at any time until the close of
business on the date fixed for redemption. The redemption price will be paid
within forty-five (45) days of the redemption date. If fewer than all of the
Debentures are to be redeemed, the Company shall select the Debentures or
portions thereof to be redeemed by lot or by any other method the Company shall
deem fair and reasonable.
8. REGISTRATION RIGHTS. The Holders of the Debentures issued to such Holders
without an effective Registration Statement under the Securities Act of 1933
(the "Act") shall have no registration rights.
9. SUBORDINATED INDEBTEDNESS.
9.1 This Debenture constitutes Subordinated Indebtedness of the Company and is
unsecured. The Indebtedness evidenced by this Debenture and all of the
Debentures is subordinated to the prior payment when due of the principal of,
and premium, if any, and accrued and unpaid Interest on, all existing Senior
Indebtedness of the Company. The Debentures will be senior to, in right of
payment of principal of, premium, if any, and accrued and unpaid interest on,
any future Subordinated Indebtedness of the Company.
9.2 Upon any distribution of assets of the Company in any dissolution, winding
up, liquidation or reorganization of the Company, all holders of Senior
Indebtedness of the Company must be paid in full before any payment or
distribution is made with respect to the Debentures. Because of these
subordination provisions, unless sufficient sums are available to pay the
Holders and the holders of Senior Indebtedness of the Company are paid in full,
holders of Senior Indebtedness of the Company, including certain creditors of
the Company who are not holders of Senior Indebtedness of the Company, may
recover more, ratably, than the Holders.
9.3 Upon the maturity of any Senior Indebtedness of the Company by lapse of
time, acceleration or otherwise, unless and until all principal thereof,
premium, if any, and interest thereon and other amounts due thereon shall first
be paid in full, no payment shall be made by or on behalf of the Company with
respect to the principal of, premium, if any, or interest on the Debentures.
Upon the happening of any default in the payment of any principal of or interest
on or other amounts due on any Senior Indebtedness of the Company (a "Payment
Default") unless and until such default shall have been cured or waived or have
ceased to exist, no payment shall be made by or on behalf of the Company with
respect to the principal of or Interest on the Debentures. Upon the happening of
any default or event of default (other than a Payment Default), including any
event which with the giving of notice or the lapse of time or both would become
an event of default and including any default or Event of Default which would
result upon any payment with respect to the Debentures, with respect to any
Senior Indebtedness of the Company, as such default or event of default is
defined therein or in the instrument or agreement or other document under which
it is outstanding, then upon written notice thereof given to the Company by a
holder or holders of any Senior Indebtedness of the Company or their
representative ("Payment Notice"), no payment shall be made by or on behalf of
the Company with respect to the principal of, premium, if any, or Interest on
the Debentures, during the period (the "Payment Blockage Period") commencing on
the date of such receipt of such Payment Notice and ending on the earlier of the
date, if any, on which such default is cured or waived or ceases to exist or the
Senior Indebtedness to which such default relates is discharged.
10. DEFAULT. The Company shall perform its obligations and covenants hereunder
and in each and every other agreement between the Company and Holder pertaining
to the Indebtedness evidenced hereby. The following provisions shall apply upon
failure of the Company so to perform.
10.1 Event of Default. Any of the following events shall constitute an
"Event of Default" hereunder:
10.1.1 Failure by the Company to pay principal, or premium, if any, of any of
the Debentures when due and payable on the Maturity Date;
10.1.2 Failure of the Company to pay Interest when due hereunder, which
failure continues for a period of thirty (30) days after the due date
of the amount involved; or
10.1.3 Failure of the Company to perform any of the covenants, conditions,
provisions or agreements contained herein, or in any other agreement
between the Company and Holder pertaining to the Indebtedness evidenced
hereby, which failure continues for a period of sixty (60) days after
written notice of default has been given to the Company by the Holders
of not less than twenty-five percent (25%) of the principal amount of
the Debentures then outstanding; provided, however, that if the nature
of the Company's obligation is such that more than sixty (60) days are
required for performance, then an Event of Default shall not occur if
the Company commences performance within such sixty (60) day period and
thereafter diligently prosecutes the same to completion; or
10.1.4 The entry of an order for relief under Federal Bankruptcy Code as to
the Company or entry of any order appointing a receiver or trustee for
the Company or approving a petition in reorganization or other similar
relief under bankruptcy or similar laws in the United States of America
or any other competent jurisdiction, and if such order, if involuntary,
is not satisfied or withdrawn within sixty (60) days after entry
thereof; or the filing of a petition by the Company seeking any of the
foregoing, or consenting thereto; or the filing of a petition to take
advantage of any debtor's act; or making a general assignment for the
benefit of creditors; or admitting in writing inability to pay debts as
they mature.
10.2 Acceleration. Upon any Event of Default (in addition to any other rights or
remedies provided for under this Debenture), at the option of the Holders of not
less than twenty-five percent (25%) of the principal amount of the Debentures
then outstanding, all sums evidenced hereby, including all principal, premium,
if any, accrued but unpaid Interest, fees and all other amounts due hereunder,
shall become immediately due and payable. If an Event of Default in the payment
of principal or Interest should occur and be continuing with respect to the
Debenture, any one or more holders of the Debentures then outstanding may
declare the principal of the Debentures to be immediately due and payable. In
the Event of a Default due to a breach of any other covenant or term, Holders
representing twenty-five percent (25%) of the principal amount of the Debentures
may take action to accelerate the Debentures. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company or any
Subsidiary occurs and is continuing, the principal of and premium, if any, and
interest on all the Debentures will become and be immediately due and payable
without any declaration or other act on the part of any holders of the
Debentures. Under certain circumstances, the Holders of a majority in principal
amount of the outstanding Debentures may rescind any such acceleration with
respect to the Debentures and its consequences.
10.3 Notice by Company. Upon the happening of any Event of Default specified in
this paragraph that is not cured within the respective periods prescribed above,
the Company will give prompt written notice thereof to the Holder of this
Debenture.
10.4 No Waiver. Failure of the Holder to exercise any option hereunder shall not
constitute a waiver of the right to exercise the same in the event of any
subsequent Event of Default, or in the event of continuance of any existing
Event of Default after demand or performance thereof.
10.5 Default Interest. Default Interest will accrue on an unpaid principal or
Interest due hereunder at the rate of fourteen percent (14%) per annum upon the
occurrence of any Event of Default until the Event of Default is cured.
10.6 Pursuit of any Remedy. No Holder of a Debenture may pursue any remedy under
the Debentures unless (i) the Company shall have received written notice of a
continuing Event of Default from the Holder and (ii) the Company shall have
received a request from Holders of at least twenty-five percent (25%) of
principal amount of the Debentures to pursue such remedy. The Holders of
fifty-one percent (51%) of principal amount of the Debentures then outstanding
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Debentureholders under the
Debentures.
11. ASSIGNMENT, TRANSFER OR LOSS OF THE DEBENTURE.
11.1 No Holder of this Debenture may assign, transfer, hypothecate or sell all
or any part of this Debenture or in any way alienate or encumber the Debenture
without the express written consent of the Company, the granting or denial of
which shall be within the absolute discretion of the Company. Any attempt to
effect such transfer without the consent of the Company shall be null and void.
The Company has not registered this Debenture under the Act or the applicable
securities laws of any state in reliance on exemptions from registration. Such
exemptions depend upon the investment intent of the Holder at the time he
acquires his Debenture. Each Holder has acquired his Debenture for his own
account for investment purposes only and not with a view toward distribution or
resale of such Debenture within the meaning of the Act and the applicable
securities laws of any state. The Company shall be under no duty to register the
Debenture or to comply with an exemption in connection with the sale, transfer
or other disposition under the applicable laws and regulations of the Act or the
applicable securities laws of any state. The Company may require the Holder to
provide, at his expense, an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer or other assignment of the Debenture will
not result in a violation of the applicable federal or state securities laws or
any other applicable federal or state laws or regulations.
11.2 All expenses, including reasonable legal fees incurred by the Company in
connection with any permitted transfer, assignment or pledge of this Debenture
will be paid by the Holder requesting such transfer, assignment or pledge.
11.3 Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Debenture and, in the case of any
such loss, theft or destruction of any Debenture, upon delivery of an indemnity
bond in such reasonable amount as the Company may determine (or, in the case of
any Debenture held by the original Debentureholder, of an indemnity agreement
reasonably satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Debenture to the Company at its principal office for
cancellation, the Company at its expense will execute and deliver, in lieu
thereof, a new Debenture of like tenor, dated the date to which interest
hereunder shall have been paid on such lost, stolen, destroyed or mutilated
Debenture.
11.4 Subject to Subparagraph 11.5 below, the Holder may, at his option, either
in person or by duly authorized attorney, surrender this Debenture for
registration of transfer at the principal office of the Company and, upon
payment of any expenses associated with the transfer, receive in exchange
therefor a Debenture or Debentures, dated as of the date to which interest has
been paid on the Debenture so surrendered, each in the principal amount of
$1,000 or any multiple thereof, for the same aggregate unpaid principal amount
as the Debenture so surrendered and registered as payable to such person or
persons as may be designated by the Holder. Every Debenture surrendered for
registration of transfer shall be duly endorsed or shall be accompanied by a
written instrument of transfer duly executed by the Holder or his attorney duly
authorized in writing. Every Debenture, so made and delivered by the Company in
exchange for any Debenture surrendered, shall in all other respects be in the
same form and have the same terms as the Debenture surrendered. No transfer of
any Debenture shall be valid unless made in such manner at the principal office
of the Company.
11.5 The Company may treat the person in whose name this Debenture is registered
as the owner and Holder of this Debenture for the purpose of receiving payment
of all principal of and all Interest on this Debenture, and for all other
purposes whatsoever, whether or not such Debenture shall be overdue and, except
for transfers effected in accordance with this subparagraph, the Company shall
not be affected by notice to the contrary.
12. MODIFICATIONS AND AMENDMENTS. Modifications and amendments to the Debentures
may be made by the Company with the consents of the holders of a majority in
principal amount of the Debentures then outstanding; provided, that no such
modification or amendment may, without the consent of the holder of each
Debenture then outstanding affected thereby, (i) reduce the percentage of
principal amount of Debentures whose holders may consent to an amendment,
supplement or waiver; (ii) reduce the rate or change the time for payment of
Interest, including default interest, on any Debenture; (iii) reduce the
principal amount of any Debenture or change the Maturity Date of the Debentures;
or (iv) reduce the redemption price, including premium, if any, payable upon
redemption of any Debenture or change the time at which any Debenture may or
shall be redeemed; (v) reduce the repurchase price, including premium, if any,
payable upon the repurchase of any Debenture or change the time at which any
Debenture may or shall be repurchase; (vi) make any Debenture payable in money
other than that stated in the Debenture; (vii) impair the right to institute
suit for the enforcement of any payment of principal of, or premium, if any, or
interest on, any Debenture; (viii) make any change in the percentage of
principal amount of Debentures necessary to waive compliance with certain
provisions of the Debenture; or (ix) waive a continuing Default or Event of
Default in the payment of principal of, premium, if any, or interest on the
Debentures. The modifications and amendments of the Debentures may be made by
the Company without the consent of any holders of Debentures in certain limited
circumstances, including (a) to cure any ambiguity, omission, defect or
inconsistency, (b) to provide for the assumption of the obligations of the
Company under the Debentures upon the merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company and (c) to
make any change that does not adversely affect the rights of any holder of
Debentures. The Debentures provide that the Holders of a majority in aggregate
principal amount of the Debentures then outstanding may waive any past default
under the Debentures, except a default in the payment of principal, premium, if
any, or interest.
13. NOTICES. All notices provided for herein shall be validly given if in
writing and delivered personally or sent by certified mail, postage prepaid, to
the office of the Company or such other address as the Company may from time to
time designate in writing sent by certified mail, postage prepaid, to the Holder
at his address set forth below or such other address as the Holder may from time
to time designate in writing to the Company by certified mail, postage prepaid.
14. USURY. All Interest, Bonus Interest, fees, charges, goods, things in action
or any other sums or things of value, or other contractual obligations
(collectively, the "Additional Sums") paid by the Company hereunder, whether
pursuant to this Debenture or otherwise, with respect to the Indebtedness
evidenced hereby, or any other document or instrument in any way pertaining to
the Indebtedness, which, under the laws of the State of Wyoming may be deemed to
be Interest with respect to such loan or Indebtedness, shall, for the purpose of
any laws of the State of Wyoming, which may limit the maximum amount of Interest
to be charged with respect to such loan or Indebtedness, be payable by the
Company as, and shall be deemed to be, Interest and for such purposes only, the
agreed upon and contracted rate of Interest shall be deemed to be increased by
the Additional Sums. Notwithstanding any provision of this Debenture to the
contrary, the total liability for payments in the nature of Interest under this
Debenture shall not exceed the limits imposed by applicable law. The Company
shall not assert a claim, and shall actively resist any attempts to compel it to
assert a claim, respecting a benefit under any present or future usury laws
against any Holder of this Debenture.
15. BINDING EFFECT. This Debenture shall be binding upon the parties hereto and
their respective heirs, executors, administrators, representatives, successors
and permitted assigns.
16. COLLECTION FEES. Except as otherwise provided herein, the Company shall pay
all costs of collection, including reasonable attorneys' fees and all costs of
suit and preparation for such suit (and whether at trial or appellate level), in
the event the unpaid principal amount of this Debenture, or any payment of
Interest is not paid when due, or in the event Holder is made party to any
litigation because of the existence of the Indebtedness evidenced by this
Debenture, or if at any time Holder should incur any attorneys' fees in any
proceeding under the Federal Bankruptcy Code (or other similar laws for the
protection of debtors generally) in order to collect any Indebtedness hereunder
or to preserve, protect or realize upon any security for, or guarantee or surety
of, such Indebtedness whether suit be brought or not, and whether through courts
of original jurisdiction, as well as in courts of appellate jurisdiction, or
through a bankruptcy court or other legal proceedings.
17. CONSTRUCTION. This Debenture shall be governed as to its validity,
interpretation, construction, effect and in all other respects by and in
accordance with the laws and interpretations thereof of the State of Wyoming.
Unless the context otherwise requires, the use of terms in singular and
masculine form shall include in all instances singular and plural number and
masculine, feminine and neuter gender.
18. SEVERABILITY. In the event any one or more of the provisions contained in
this Debenture or any future amendment hereto shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Debenture or such
other agreement, and in lieu of each such invalid, illegal or unenforceable
provision there shall be added automatically as a part of this Debenture a
provision as similar in terms to such invalid, illegal or unenforceable
provision as may be possible and be valid, legal and enforceable.
19. DEFINITIONS.
19.1 "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 Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
19.2 "Average Stock Price" is the average of the daily closing bid prices of the
Common Stock for the twenty (20) consecutive trading days immediately preceding
the relevant date.
19.3 "Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person duly authorized to act on behalf of the Board of Directors of such
Person.
19.4 "Capital Stock" means, with respect to any Person, any and all shares,
interests, equity participations or other equivalents (however designated) of
corporate stock or partnership interests and any and all warrants, options and
rights with respect thereto (whether or not currently exercisable), including
each class of common stock and preferred stock of such Person.
19.5 "Conversion Date" shall mean the date of any written notice given by the
Holder or the Company, as the case may be, of the conversion of the Debentures
into shares of Common Stock.
19.6 "GAAP" means generally accepted accounting principles as in effect in the
United States of America as of the Issue Date.
19.7 "Holder" means a Person in whose name a Debenture is registered on the
Company's books.
19.8 "Indebtedness" means, without duplication, with respect to any Person, (a)
all obligations of such Person (i) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such person or only
to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar
instruments, (iii) representing the balance deferred and unpaid of the purchase
price of any property or services (other than accounts payable or other
obligations arising in the ordinary course of business), (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v) for
the payment of money relating to a capitalized lease obligation under GAAP, or
(vi) evidenced by a letter of credit or a reimbursement obligation of such
Person with respect to any letter of credit; (b) all net obligations of such
Person under interest rate swap obligations and foreign currency hedges; (c) all
liabilities of others of the kind described in the preceding clauses (a) or (b)
that such Person has guaranteed or that are otherwise its legal liability; (d)
Indebtedness (as otherwise defined in this definition) of another Person secured
by lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person, the amount of such obligations being deemed to be the lesser of
(1) the full amount of such obligations so secured, and (2) the fair market
value of such asset, as determined in good faith by the Board of Directors of
such Person, which determination shall be evidenced by a board resolution; and
(e) any and all deferrals, renewals, extensions, refinancings and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a), (b),
(c), (d) or this clause (e), whether or not between or among the same parties.
19.9 "Issue Date" means the date on which the Debentures are first issued.
19.10 "Maturity Date" means July __, 2003.
19.11 "Person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization or government or any agency or
political subdivision thereof.
19.12 "Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated), which is
preferred as to the payment of dividends, or upon any voluntary or involuntary
liquidation or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.
19.13 "Senior Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date hereof or hereafter incurred, unless such Indebtedness
is pari passu with or contractually subordinate or junior in right of payment to
the Debentures, except Indebtedness to any Affiliate of the Company which shall
be junior and subordinate to the Debentures.
19.14 "Subordinated Indebtedness of the Company" means any Indebtedness of the
Company, whether outstanding on the date of this Debenture or hereafter
incurred, which is contractually subordinate or junior in right of payment to
the Debentures.
19.15 A "subsidiary" of any Person means (i) a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned by such Person, by
one or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, (ii) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if such Person or its subsidiary is
entitled to receive more than fifty percent (50%) of the assets of such
partnership upon its dissolution, or (iii) any other Person (other than a
corporation or partnership) in which such Person, directly or indirectly, at the
date of determination thereof, has (x) at least a majority ownership interest or
(y) the power to elect or direct the election of a majority of directors or
other governing body of such Person.
19.16 "U.S. Legal Tender" means such coin or currency of the United States as at
the time of payment shall be legal tender for the payment of public and private
debts.
19.17 "Subsidiary" means any subsidiary of the Company.
19.18 "Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof,
whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency, to vote in the election of members of the
Board of Directors or other governing body of such Person.
19.19 "Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock (other
than directors' qualifying shares, if applicable) of which is owned by the
Company or another Wholly Owned Subsidiary.
20. MISCELLANEOUS. Except as otherwise provided herein, the Company waives
demand, diligence, presentment for payment and protest, notice of extension,
dishonor, maturity and protest. Time is of the essence with respect to the
performance of each and every covenant, condition, term and provision hereof.
IN WITNESS WHEREOF, this Debenture has been issued on the ___ day of
July, 2002.
PREMIUM FINANCIAL SERVICES & LEASING, INC.
By
-----------------------------------
Michael Gooch
Chairman of the Board and President
Mailing Address of Holder:
Name:
XXX
City, State
PREMIUM FINANCIAL SERVICES & LEASING, INC.
10% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003
NOTICE OF CONVERSION AND SUBSCRIPTION
(To be completed and signed only upon a conversion
of the Debenture into Common Stock in whole or in part)
TO: PREMIUM FINANCIAL SERVICES & LEASING, INC.
The undersigned, the Holder of the attached 10% Convertible
Subordinated Debenture Due 2003 ("Debenture"), hereby irrevocably elects to
exercise the right to convert part or all of the outstanding principal balance
and accrued Interest on the Debenture into shares of Common Stock of the Company
and thereby purchase ______ Shares. The undersigned makes payment of $ for the
Shares by converting and canceling the indebtedness represented by the
Debenture. The undersigned hereby requests that the Certificate(s) for such
securities be issued in the name(s) and delivered to the address(es) as follows:
Name:
Address:
Deliver to:
Address:
If the foregoing Notice of Conversion and Subscription evidences the
conversion of less than the entire principal amount of the Debenture and accrued
Interest thereon, please issue a new Debenture, of like tenor, for the remaining
principal amount of the Debenture in the name(s), and deliver the same to the
address(es), as follows:
Name:
Address:
DATED: _________________, 2003.
(Name of Holder)
(Signature of Holder or Authorized Signatory)
(Social Security or Taxpayer Identification Number of Holder)