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EXHIBIT 10.13
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND, UNLESS REGISTERED, MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.
SUNSHINE MINING AND REFINING COMPANY
SENIOR CONVERTIBLE PROMISSORY NOTE
$7,950,000 New York, New York
November 24, 1997
SUNSHINE MINING AND REFINING COMPANY, a corporation duly
organized and validly existing under the laws of the State of Delaware (the
"Company"), for value received, hereby promises to pay to Neuberger & Berman,
LLC, as nominee, or its permitted assigns (the "Holder"), the principal sum of
Seven Million Nine Hundred Fifty Thousand ($7,950,000) together with interest
thereon from the date hereof (computed on the basis of a 360-day year and
actual days elapsed) at the initial rate of ten percent (10%) per annum,
subject to adjustment as provided in Sections 2.1 and 2.3 hereof, and
additional interest as provided in Section 3 hereof. Interest on this Note
shall be payable semi-annually on each April 1 and October 1, commencing April
1, 1998 (an "Interest Payment Date"). Subject to the provisions of Section 1.2
hereof with respect to mandatory prepayments on this Note and Section 5 hereof
relating to conversion of this Note, the principal on this Note and any accrued
and unpaid interest shall be due and payable on the earlier to occur of (i)
November 24, 2002 (the "Maturity Date") and (ii) when declared due and payable
by the Holder upon the occurrence of an Event of Default (as defined below).
The payment of principal and interest on this Note shall be made either in
shares of the Company's Common Stock valued as provided in Sections 1.3, 2.2 or
3.1 hereof or 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. Principal and interest on this Note payable in cash shall be paid by
wire transfer of federal funds in accordance with the written instructions of
the Holder or, in the absence of such instructions, by check of the Company
mailed to the Holder's address set forth in Section 9.10. Principal and
interest on this Note payable in shares of the Company's Common Stock shall be
paid as provided in Sections 1.3, 2.2 or 3.1 hereof.
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The Company's obligations under this Note are guaranteed by
certain subsidiaries of the Company as provided pursuant to a separate
Guaranty dated the date hereof, and the Holder of this Note is entitled to the
benefits of the Guaranty.
This Note is subject to the terms and provisions of the
Purchase Agreement (the "Purchase Agreement") dated as of the date hereof by
and between the Company and the initial Holders, including the right of the
Company to offset in certain circumstances certain amounts due on this Note
against damages incurred in connection therewith.
This Note is one of a series of Notes (collectively, the
"Notes") issued by the Company on the date hereof in the aggregate principal
amount of $15,000,000. The holders of all of the Notes are collectively
referred to herein as the "Holders" and individually as a "Holder".
1. Prepayments.
1.1 No Optional Prepayments. No prepayments may be made
on principal of this Note, except as provided in Section 1.2 hereof.
1.2 Mandatory Prepayments. Commencing on February 24,
2000, and quarterly thereafter on each May 24, August 24, November 24 and
February 24 up to and including through August 24, 2002 (each a "Mandatory
Prepayment Date"), the Company shall make mandatory prepayments ("Mandatory
Prepayments") on the Notes in the aggregate amount of $1,250,000 (or such
lesser amount of Notes then outstanding) each, in shares of the Company's
Common Stock valued as provided in Section 1.3 hereof, unless the Company
elects to make such payment in cash as set forth below. Notwithstanding the
foregoing, a Mandatory Prepayment shall not be made on any Mandatory Prepayment
Date if (a) the average (the "Average Bid Price") of the closing bid price (the
"Closing Bid Price") of the Company's Common Stock on the New York Stock
Exchange for the 15 Trading Days (as defined below) preceding the Mandatory
Prepayment Date equals or exceeds 106% of the Conversion Price (as defined in
Section 5.1 hereof) in effect on that Mandatory Prepayment Date (or if there
are two Conversion Prices in effect on Notes on that Date, the lower Conversion
Price), (b) the number of shares of the Company's Common Stock into which all
of the Notes were converted during the 30 Trading Days immediately preceding
the Mandatory Prepayment Date exceeded 5% of the aggregate number of shares of
the Company's Common Stock traded on those days during that 30 Trading Day
period on which the Registration Statement (as defined in Section 3.2) was
effective except that this clause (b) shall not be applicable if the
Registration Statement was not effective for 15 or more Trading Days in that
30-Day period, and (c) the sum of the aggregate amount of Mandatory Prepayments
made prior to that date and the
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aggregate principal amount of the Notes converted into shares of the Company's
Common Stock prior to that Mandatory Prepayment Date exceeded the aggregate
amount of Mandatory Prepayments due through and including that Mandatory
Prepayment Date. Any Mandatory Prepayment on the Notes shall be applied pro
rata to all of the Notes, except that if on any Mandatory Prepayment Date, as a
result of a reset of the Conversion Price pursuant to Section 6.1(a), some of
the Notes are convertible at a Conversion Price higher than the Conversion
Price of the other Notes, the Mandatory Prepayment of $1,250,000 (or such
lesser amount) payable on that Date shall be applied first pro rata to the
Notes with the higher Conversion Price, and the remainder, if any, of the
Mandatory Prepayment shall then be applied pro rata to the Notes with the lower
Conversion Price. As used in this Note, "Trading Days" means any day (other
than a Saturday or Sunday) on which the New York Stock Exchange or the
Alternative Stock Exchange (as defined in Section 6.3(a)(vi)), as the case may
be, is open for business.
1.3 Mandatory Prepayment in Common Stock. The Company
may elect, at its sole option, by notice to the Holders of the Notes given at
any time prior to the 15 Trading Day period referred to below in accordance
with Section 9.10 below, to pay any Mandatory Prepayment in whole or in part in
cash. To the extent the Company does not elect to make any Mandatory
Prepayment in cash within such specified time period, the Company shall pay
that Mandatory Prepayment by issuing that number of shares of the Company's
Common Stock (rounded to the nearest whole number), valued as provided below,
with an aggregate value equal to the aggregate amount of the Mandatory
Prepayments on all of the Notes to be paid in shares. For this purpose, the
shares of the Company's Common Stock shall be valued at the Average Bid Price
for the 15 Trading Days immediately preceding the Mandatory Prepayment Date,
less a discount of 6% of such Average Bid Price, or if the Conversion Price is
then being determined pursuant to the Issuer's Election (as defined in Section
6.1(d)), less a discount of 14% of such Average Bid Price. In that event, the
Company shall, as soon as practicable after the Mandatory Prepayment Date,
issue and deliver to the Holder at its address set forth in Section 9.10 hereof
a share certificate or certificates for the number of shares of Common Stock
(rounded to the nearest whole number) issuable to the Holder in payment of the
Mandatory Prepayment or shall issue and deliver such shares as otherwise agreed
to by the Company and the Holder.
1.4 Issuance of New Note upon Mandatory Prepayment. Upon
any Mandatory Prepayment of this Note pursuant to Section 1.2, this Note shall
be cancelled and a new note for the unpaid portion of the principal amount
bearing the date of original issue and having the same rights and privileges as
this Note shall be delivered to the Holder.
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2. Interest.
2.1 Adjustment of Interest Rate. The Notes shall bear
interest initially at a rate per annum equal to 10%; provided, however, that
(i) if the Closing Bid Price has been at least 125% but less than 133% of the
Conversion Price then in effect on each of the 120 Trading Days ending five
Trading Days prior to any Interest Payment Date, then the annual interest rate
on the Notes for the period ending on that Interest Payment Date shall be
reduced to 8%; (ii) if the Closing Bid Price has been at least 133% but less
than 150% of the Conversion Price then in effect on each of the 120 Trading
Days ending five Trading Days prior to any Interest Payment Date, then the
annual interest rate on the Notes for the period ending on that Interest
Payment Date shall be reduced to 6%; (iii) if the Closing Bid Price has been at
least 150% but less than 175% of the Conversion Price then in effect on each of
the 120 Trading Days ending five Trading Days prior to any Interest Payment
Date, then the annual interest rate on the Notes for the period ending on that
Interest Payment Date shall be reduced to 3%; or (iv) if the Closing Bid Price
has been at least 175% of the Conversion Price then in effect on each of the
120 Trading Days ending five Trading Days prior to any Interest Payment Date,
then there shall be no interest due and payable for the period ending on that
Interest Payment Date. For purposes of determining if the Closing Bid Price
exceeded a specified level for 120 consecutive Trading Days, any trading day
for which a Registration Statement was not effective shall not be deemed a
Trading Day. Together with any interest payment at a rate reduced pursuant to
this Section 2.1, the Company shall deliver to the Holder an officer's
certificate certifying to the Closing Bid Price of the Company's Common Stock
during such 120 Trading Day period.
2.2 Interest Payment in Common Stock. The Company may
elect, at its sole option, by notice to the Holders of the Notes given at any
time prior to the 15 Trading Day period referred to below in accordance with
Section 9.10 below, to make any interest payment in whole or in part in cash.
To the extent the Company does not elect to make any interest payment in cash
within such specified time period, the Company shall pay the interest payable,
in whole or in part, by issuing that number of shares (rounded to the nearest
whole number) of the Company's Common Stock, valued as provided below, with an
aggregate value equal to the aggregate amount of interest payable in shares on
that Interest Payment Date. For this purpose, the shares of the Company's
Common Stock shall be valued at the Average Bid Price for the 15 Trading Days
ending five Trading Days prior to the Interest Payment Date, less a discount of
5% of such Average Bid Price, or if the Conversion Price is then being
determined pursuant to the Issuer's Election, less a discount of 10% of such
Average Bid Price. In that event, the Company shall, as soon as practicable
after the Interest Payment Date, issue and deliver to the Holder at its address
set forth in Section 9.10 hereof a share certificate or certificates for the
number of shares of Common Stock (rounded to the nearest whole number) issuable
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in payment of the interest payable to the Holder on that date or shall issue
and deliver such shares as otherwise agreed to by the Company and the Holder.
2.3 Default. Notwithstanding anything to the contrary in
this Note, upon the occurrence and during the continuance of an Event of
Default pursuant to Section 4(i), the annual interest rate shall be 18% per
annum, and upon the occurrence and during the continuance of any other Event of
Default (other than an Event of Default under Section 4(ii), (iii) or (x)
hereof), the annual interest rate shall be 12%, without, in either case,
reduction pursuant to Section 2.1.
3. Additional Interest.
3.1 Payments with respect to Eurobonds. If prior to
maturity on March 21, 2000 the entire $30,000,000 principal amount of Senior
Exchangeable Notes due 2000 (the "Eurobonds") issued by Sunshine Precious
Metals, Inc., a wholly-owned subsidiary of the Company ("SPMI"), has neither
been converted into shares of the Company's Common Stock or refinanced with
Junior Debt (as defined below), then on March 21, 2000, the Company shall pay
to each Holder of the Notes, as additional interest on the Notes, an amount
equal to 10% of the then outstanding principal amount of the Notes held by such
Holder. The Company may elect, at its sole option, by notice to the Holders of
the Notes given at any time prior to the 15 Trading Day period referred to
below, to make the additional payment payable pursuant to this Section 3.1, in
whole or in part, in cash. To the extent the Company does not elect to make
any additional payment in cash within such specified time period, the Company
shall make the additional payment by issuing that number of shares of the
Company's Common Stock (rounded to the nearest whole number), valued as
provided below, with an aggregate value equal to the aggregate amount of the
additional interest payable in shares. For this purpose, the shares of the
Company's Common Stock shall be valued at the Average Bid Price for the 15
Trading Days prior to March 21, 2000, less a discount of 5% of such Average Bid
Price, or if the Conversion Price is then being determined pursuant to the
Issuer's Election, less a discount of 10% of such Average Bid Price. In that
event, the Company shall, as soon as practicable after March 21, 2000, issue
and deliver to the Holder at its address set forth in Section 9.10 hereof a
share certificate or certificates for the number of shares of Common Stock
(rounded to the nearest whole number) issuable to the Holder as payment of the
additional interest or shall issue and deliver such shares as otherwise agreed
by the Company and the Holder.
Additional interest is also payable as provided in Section 4.2
of the Purchase Agreement.
As used in this Agreement, Junior Debt means Indebtedness of
the Company which is subordinated to the Notes or Indebtedness of SPMI which is
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subordinated to the Guaranty to be delivered by SPMI to the Holders pursuant to
Section 8.2.
4. Events of Default. If any of the events specified in this
Section 4 shall occur (herein individually referred to as an "Event of
Default"), the Holder of this Note may, so long as such condition exists,
declare the entire principal and unpaid accrued interest hereon immediately due
and payable, by notice in writing to the Company:
(i) Default is made for a period of five (5) business
days or more in the payment of any principal or accrued interest due
in respect of this Note or in the issuance of shares of Common Stock
to be issued as payment hereunder;
(ii) Any representation or warranty made by the Company in
this Note or the Note Purchase Agreement shall have been false in any
material respect when made;
(iii) The Company shall default in the performance or
observance of any covenant or agreement contained in this Note and, if
capable of being remedied, such default shall continue unremedied for
a period of 10 days after written notice shall have been given by the
Holder to the Company;
(iv) If (i) any other Indebtedness (as defined below) of
the Company or any Principal Subsidiary (as defined below) becomes due
and repayable prior to its stated maturity by reason of an event of
default (howsoever described) or (ii) any such Indebtedness is not
paid when due or within any applicable grace period (as originally
provided) or (iii) the Company or any Principal Subsidiary fails to
pay when due (or, as the case may be, within any originally applicable
grace period) any amount payable by it under any present or future
guarantee for, or indemnity in respect of, any Indebtedness of any
Person (as defined in Section 6.2) or (iv) any security given by the
Company or any Principal Subsidiary for any Indebtedness or any
guarantee or indemnity of Indebtedness of any Person or any guarantee
or indemnity of such Indebtedness of any Person becomes enforceable by
reason of default in relation thereto and steps are taken to enforce
such security save in any such case where there is a bona fide dispute
as to whether the relevant Indebtedness or any such guarantee or
indemnity as aforesaid shall be due and payable; provided that in each
such case the Indebtedness exceeds in the aggregate $1,000,000 and in
each such case such event continues unremedied for a period of 30
calendar days (or such longer period as a Majority of the Holders (as
defined in Section 6.2) may in their sole discretion consent to in
writing upon receipt of written notice from the Company);
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(v) If there is any final judgment or judgments for the
payment of money exceeding in the aggregate $1,000,000 outstanding
against the Company or any Principal Subsidiary which has been
outstanding for more than 60 calendar days from the date of its entry
and shall not have otherwise been discharged in full or stayed by
appeal, bond or otherwise;
(vi) If the Company or any Principal Subsidiary shall fail
to pay its debts as such debts become due (except debts which the
Company or such Principal Subsidiary, as the case may be, may contest
in good faith) generally or shall be declared or adjudicated by a
competent court to be insolvent or bankrupt, consents to the entry of
an order of relief against it in an involuntary bankruptcy case, shall
enter into any assignment or other similar arrangement for the benefit
of its creditors or consents to the appointment of a custodian
(including, without limitation, a receiver, liquidator or trustee);
(vii) If a receiver, administrative receiver, administrator
or other similar official shall be appointed in relation to the
Company or any Principal Subsidiary or in relation to the whole or a
substantial part of the undertaking or assets of any of them or a
distress, execution or other process shall be levied or enforced upon
or sued out against, or an encumbrancer shall take possession of, the
whole or a substantial part of the assets of any of them and in any of
the foregoing cases it or he shall not be paid out or discharged
within 90 calendar days (or such longer period as a Majority of the
Holders may in their absolute discretion consent to in writing upon
receipt of written notice from the Company);
(viii) If the Company or any Principal Subsidiary institutes
proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking organization under the laws of
the Federal Bankruptcy Code or any similar applicable Federal or State
law, or shall consent to the filing of any such petition, or shall
consent to the appointment of a receiver or liquidator or trustee or
assignee (or other similar official) in bankruptcy or insolvency of it
or its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they come due;
(ix) if a decree or order by a court having jurisdiction
in the premises shall have been entered adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition
seeking the reorganization of the Company under the Federal Bankruptcy
Code or any other similar applicable Federal or State law, and such
decree or order shall have continued undischarged or unstated for a
period of 90 calendar days; or a decree or order
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of a court having jurisdiction in the premises for the appointment of
a receiver or liquidator or trustee or assignee (or other similar
official) in bankruptcy or insolvency of the Company or of all or
substantially all of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree
or order shall have continued undischarged and unstayed for a period
of 90 calendar days; or
(x) The Registration Statement has not been declared
effective by the Securities and Exchange Commission within 240 days
after the date hereof, or if, after the Registration Statement is
declared effective, the Registration Statement ceases to be effective
for 100 days within any 12-month period.
As used in this Note, "Indebtedness" of any Person, means any
present or future obligations, which shall include all (i) obligations which in
accordance with the generally accepted accounting principles, shall be
classified upon the balance sheet of such Person as liabilities, (ii)
obligations for borrowed money, (iii) obligations which have been incurred in
connection with the acquisition of any property (including without limitation,
all obligations evidenced by any indenture, bond, note, commercial paper or
other similar security, but excluding, in any case, obligations arising from
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection, (iv) obligations secured by any lien existing on
property owned, even though such Person has not assumed or become liable for
the payment of such obligations, (v) obligations created or arising under
conditional sale or other title retention agreement with respect to property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of such property, (vi) obligations for
capitalized leases, (vii) obligations for all guarantees, whether or not
reflected in the balance sheet of such Person, and (viii) reimbursement and
other payment obligations (whether contingent, mature or otherwise) of such
Person in respect of acceptance or documentary credit. Notwithstanding the
foregoing, Indebtedness shall not include (i) Indebtedness incidental to the
operation of the business of the Person in the ordinary course and in the
aggregate not to exceed $1,000,000 and (ii) Indebtedness represented by
purchase, rental or lease obligations which would cause the direct or
contingent liabilities of the Person and its subsidiaries on a consolidated
basis, in respect of all such obligations, not to exceed $1,000,000 in any
period of 12 months.
As used in this Note, a "Principal Subsidiary" at any time
means a subsidiary of the Company:
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(A) whose gross assets represent 15 percent or more of the
consolidated gross assets of the Company and its subsidiaries as calculated by
reference to the then latest audited financial statements of the Company and
its subsidiaries; or
(B) to which is transferred all or substantially all of the
business, undertaking and assets of a subsidiary of the Company which
immediately prior to such transfer is a Principal Subsidiary, whereupon the
transferor Subsidiary shall immediately cease to be a Principal Subsidiary and
the transferee Subsidiary shall cease to be a Principal Subsidiary under the
provisions of this sub-paragraph (B) (but without prejudice to the provisions
of sub- paragraph (A) above), upon publication of its next audited financial
statements; or
(C) which owns at least 33-1/3% of the Company's interest in
the Pirquitas mine in Argentina.
A report by the Auditors that in their opinion a subsidiary of
the Company is or is not or was or was not at any particular time or throughout
any specified period a Principal Subsidiary pursuant to clause (A) or (B) above
shall, in the absence of manifest error, be conclusive and binding on all
parties.
The Company shall send to each Holder, within 14 days after
its annual audited consolidated balance sheet and profit and loss account being
made available to its shareholders, and also within 14 days after any request
by a Majority of the Holders, a certificate signed by two duly authorized
officers of the Company on behalf of the Company to the effect that, having
made all reasonable enquiries, to the best of the knowledge, information and
belief of the Company as at a date (the "Certification Date") being not more
than five days before the date of the certificate no Event of Default had
occurred since the date of this Note or the Certification Date of the last such
certificate (if any) or, if such an event had occurred, giving details of it
together with a list of subsidiaries which are Principal Subsidiaries of the
Company.
5. Conversion.
5.1 Optional Conversion. Subject to the terms and
provisions of this Section 5, the Holder shall have the right, at the Holder's
option, at any time and from time to time, to convert the principal amount of
this Note or such portion of such principal amount (but not any accrued and
unpaid interest thereon) as the Holder may elect into fully paid and
nonassessable shares of the Company's Common Stock . The number of shares of
Common Stock into which this Note may be converted shall be determined by
dividing the principal amount to be converted by the Conversion Price (as
defined below) in effect at the time of such conversion. The price at which
this Note may be converted into shares of the Company's Common Stock (the
"Conversion Price") shall initially be equal to $.95, subject to the
adjustments set forth
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in Section 6 hereof. The accrued interest on any portion of the Note that is
converted shall be paid on the following Interest Payment Date in shares or
cash, at the Company's option, as provided in Section 2.2.
5.2 Partial Conversion. Upon any partial conversion of
this Note pursuant to Section 5.1 hereof, a new note for the unconverted
portion of the principal amount bearing the date of original issue and having
the same rights and privileges as this Note shall be delivered to the Holder.
5.3 Mechanics and Effect of Conversion. To optionally
convert this Note into Common Stock pursuant to Section 5.1 hereof, the Holder
shall surrender this Note at the principal offices of the Company (the date of
surrender being referred to as the "Conversion Date"), together with a written
notice (the "Conversion Notice") to the Company of the Holder's election to
convert. At its expense, the Company shall, as soon as practicable thereafter,
issue and deliver to such Holder at such principal office, a share certificate
or certificates for the number of shares of Common Stock to which such Holder
is entitled upon such conversion or shall issue and deliver such shares as
otherwise agreed by the Company and the Holder. Any conversion of this Note
pursuant to Section 5.1 hereof shall be deemed to have been made immediately
prior to the close of business on the date of the surrender and delivery of
this Note and the corresponding Conversion Notice.
6. Anti-Dilution and Other Provisions.
6.1 Reset of Conversion Price.
(a) If the Average Bid Price for the 15 Trading
Days immediately preceding May 1, 1999 is less than the Conversion Price then
in effect, then the Conversion Price for $7,500,000 of the Notes shall be reset
downward on May 1, 1999 to a Conversion Price equal to such Average Bid Price.
If the Average Bid Price for the 15 Trading Days immediately preceding April 1,
2000 is less than the Conversion Price then in effect, then the Conversion
Price for $7,500,000 of the Notes shall be reset downward on April 1, 2000 to a
Conversion Price equal to such Average Bid Price. If the Conversion Price is
reset on April 1, 2000, and, as a result of the reset on May 1, 1999, some of
the Notes are convertible at a Conversion Price higher than the Conversion
Price of other Notes, the Conversion Price of the Notes with the higher
Conversion Price shall be reset first and then the Conversion Price of the
Notes with the lower Conversion Price shall be reset, until the Conversion
Price of $7,500,000 of the Notes shall have been reset. If pursuant to this
Section 6.1(a) the Conversion Price is reset with respect to less than all of
the outstanding Notes, then the Conversion Price for this Note shall be reduced
with respect to that portion of the principal amount of this Note equal to the
principal amount of this Note times a fraction of which the numerator is
$7,500,000 and the denominator is the aggregate
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principal amount of the Notes outstanding; provided, however, that if pursuant
to this Section 6.1(a) the Conversion Price is reset on May 1, 1999 and reset
again on April 1, 2000 with respect to less than all of the Notes with a lower
Conversion Price, then the Conversion Price for such Notes shall be reduced
with respect to that portion of each such Note equal to the principal amount of
that Note times a fraction of which the numerator is the remainder of the
$7,500,000 principal amount of Notes to be reset (after the Conversion Price of
the Notes with the higher Conversion Price has been reset) and the denominator
is the aggregate principal amount of the Notes with the lower Conversion Price.
In each such event, the Company shall issue and deliver to the Holder two new
Notes in exchange for this Note, each bearing the date of original issue and
having the same rights and privileges as this Note, one in the principal amount
for which the Conversion Price is not changing reflecting the Conversion Price
prior to the reset pursuant to this Section 6.1(a) and the other in the
principal amount for which the Conversion Price is changing and reflecting the
reset Conversion Price.
(b) If after the later of the date hereof or the
last date on which the Conversion Price had been reset pursuant to this Section
6.1, (1) the Company shall issue more than 12 million shares of the Company's
Common Stock (excluding shares issued pursuant to this Note but including
shares issuable upon exercise or conversion of any rights, options, warrants or
convertible or exchangeable securities referred to in clause (2) below), or (2)
the Company shall issue rights, options or warrants to purchase, or securities
convertible or exchangeable into, an aggregate of more than 12 million shares
of the Company's Common Stock, then on the 210th day after the last such
issuance which resulted in the aggregate exceeding 12 million shares, if the
Average Bid Price for the 15 Trading Days immediately preceding such day is
less than the Conversion Price as then in effect, then the Conversion Price
shall be reset to equal such Average Bid Price.
(c) If after the date hereof there is a reverse
stock split of shares of the Company's Common Stock into a lesser number of
shares, then on the 90th day after such split, if the Average Bid Price for the
15 Trading Days immediately preceding such day is less than the Conversion
Price as then in effect, then the Conversion Price shall be reset to equal such
Average Bid Price.
(d) Notwithstanding anything to the contrary in
this Note, the Company may elect, by notice to the Holders of the Notes (the
"Issuer's Election") given on or before any date on which the Conversion Price
would be reset pursuant to this Section 6.1, to set on such reset date the
Conversion Price instead at the lower of $.50 per share (subject to reduction
pursuant to the anti-dilution provisions of Section 6.2 hereof) or the lowest
price at which any shares of the Company's Common Stock were issued after the
date hereof.
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6.2 Adjustment of Conversion Price.
(a) Definitions. As used in this Section 6, the
following terms have the following meanings:
(i) "Shares" means shares of the
Company's Common Stock (and any other shares of stock
resulting from any sub-division, consolidation or
reclassification of such shares).
(ii) "Stock Split" means any kind of
stock split in relation to the Shares and includes a free
share distribution, a stock dividend and a sub-division.
(iii) "Current Market Price" means the
closing bid price on the New York Stock Exchange.
(iv) "Auditors" means the Company's
independent public accountants.
(v) "Majority of the Holders" means the
Holders of more than 50% of the outstanding principal amount
of the Notes.
(vi) "Person" means any individual,
trust, corporation, partnership, limited liability company or
other entity or organization.
(b) Adjustment of Conversion Price. The
Conversion Price shall be adjusted as follows:
(i) If and whenever there shall be an
alteration to the number of Shares
as a result of consolidation,
reclassification or subdivision of
the Shares, the Conversion Price
shall be adjusted by multiplying the
Conversion Price in force
immediately before such alteration
by the following fraction:
A
--
B
where:
A is the number of Shares in issue
immediately before such alteration;
and
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B is the number of Shares in issue
immediately after such alteration.
Such adjustment shall become effective on the
date the alteration takes effect.
(ii) If and whenever the Company shall
issue any Shares credited as fully
paid to its shareholders by way of
capitalization of profits or
reserves (including any share
premium account and capital
redemption reserve), or may make any
Stock Split the Conversion Price
shall be adjusted by multiplying the
Conversion Price in force
immediately before such issue by the
following fraction:
A
--
B
where:
A is the aggregate nominal amount of
the issued Shares immediately before
such issue; and
B is the aggregate nominal amount of
the issued Shares immediately after
such issue.
Such adjustment shall become effective on
the date of such issue.
(iii) If and whenever the Company shall
issue any Shares, or shall issue or
grant any securities (including
options, warrants and other rights)
carrying rights to subscribe for or
purchase any Shares, in each case at
a price per Share which is less than
the Current Market Price per Share
on the Trading Day last preceding
the date on which the terms of such
issue or grant are publicly
announced, the Conversion Price
shall be adjusted by multiplying the
Conversion Price in force
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14
immediately before such issue or grant
by the following fraction:
A + B
-----
A + C
where:
A is the number of Shares in issue
immediately before such announcement;
B is the number of Shares which the
aggregate consideration receivable
for the Shares so issued, or for the
maximum number of Shares to be
issued upon exercise in full of such
rights, would purchase at such
Current Market Price per Share; and
C is the number of Shares so issued or
such maximum number of Shares.
Such adjustment shall become effective on the
date of such issue or grant.
(iv) If and whenever the Company shall
issue any securities (other than
Shares and any securities, options,
warrants or other rights referred to
in paragraph (iii) of this Section
6.2(b)) to its shareholders as a
class by way of rights, or shall
issue or grant to its shareholders
as a class by way of rights
securities (including options,
warrants and other rights) carrying
rights to subscribe for or purchase
any securities (other than Shares
and any securities, options,
warrants or other rights referred to
in such paragraph (iii) or shall
distribute assets, cash or other
property to its shareholders (other
than usual annual or interim
dividends in cash), the Conversion
Price shall be adjusted by
multiplying the Conversion
- 14 -
15
Price in force immediately before
such issue or grant or distribution
by the following fraction:
A - B
------
A
where:
A is the Current Market Price per
Share on the dealing day last
preceding the date on which the
terms of such issue or grant or
distribution are publicly announced;
and
B is the fair market value on the date
of such announcement, as determined
in good faith by an investment
banker of national repute, acting as
an expert, appointed by the Company
and approved in writing by a
Majority of the Holders or, in
default of such appointment or in
the absence of such approval,
appointed by a Majority of the
Holders, of the portion of the
rights attributable to one Share.
Such adjustment shall become effective on the
date of such issue or grant or distribution.
(v) If and whenever the Company or (at
the direction or request of or
pursuant to any arrangements with
the Company or any subsidiary) any
subsidiary or any other company,
Person or entity (otherwise than as
mentioned in paragraph (iii) or (iv)
of this Section 6.2(b)) shall issue
or grant wholly for cash or for no
consideration any securities (other
than the Notes but including
options, warrants and other rights)
carrying rights of conversion into,
or exchange or subscription for,
Shares, or securities which by their
terms might be redesignated as
Shares or so as to carry rights of
conversion into, or exchange or
subscription for, Shares, where the
consideration per Share receivable
upon exercise of such rights or upon
such redesignation is less than the
Current Market Price per Share on
the dealing day last
- 15 -
16
preceding the date on which the terms
of such issue or grant are publicly
announced, the Conversion Price
shall be adjusted by multiplying the
Conversion Price in force
immediately before such issue or
grant by the following fraction:
A + B
------
A + C
where:
A is the number of Shares in issue
immediately before such issue or
grant;
B is the number of Shares which the
aggregate consideration receivable
for the maximum number of Shares to
be issued upon exercise in full of
such rights, or arising from such
redesignation, would purchase at
such Current Market Price per Share;
and
C is the maximum number of Shares to
be issued upon exercise in full of
such rights at the initial
conversion, exchange or subscription
price or rate or to arise upon such
redesignation.
Such adjustment shall become effective on the
date of such issue or grant.
(vi) If the Company (after consultation
with a Majority of the Holders) or a
Majority of the Holders (after
consultation with the Company)
determines that an adjustment should
be made to the Conversion Price as a
result of one or more events or
circumstances not referred to in
paragraphs (i) to (v) of this
Section 6.2(b) (even if the relevant
event or circumstance is
specifically excluded from the
operation of those paragraphs or any
of them) the Company, shall, at its
own expense and acting reasonably,
request the Auditors, acting as
experts, to determine as soon as
practicable what adjustment (if any)
to the Conversion Price is fair and
reasonable to take
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17
account of such event or circumstance
and the date on which such
adjustment should take effect, and
upon such determination such
adjustment (if any) shall be made
and shall take effect in accordance
with such determination, but so that
an adjustment shall be made pursuant
to this sub-paragraph (vi) if the
Auditors are so requested to make
such a determination not more than
21 days after the occurrence of the
relevant event or circumstance.
Provided that where the circumstances giving rise to
any adjustment pursuant to this Section 6.2(b) have
already resulted or will result in an adjustment to
the Conversion Price or where the circumstances
giving rise to any adjustment arise by virtue of any
other circumstances which have already given or will
give rise to an adjustment to the Conversion Price,
such modification (if any) shall be made to the
operation of the provisions of this Section 6.2(b) as
may be advised by the Auditors, acting as experts, to
be in their opinion appropriate in order to give the
intended effect.
(c) Calculation of Consideration Receivable. For
the purpose of any calculation of the consideration receivable pursuant to
Section 6.2(b) the following provisions shall apply:
(i) the aggregate consideration
receivable for Shares issued for
cash shall be the amount of such
cash received or receivable by the
Company, provided that in no case
shall any deduction be made for any
commission or any expenses paid or
incurred by the Company for any
underwriting of the issue or
otherwise in connection therewith;
(ii) the aggregate consideration
receivable for Shares to be issued
upon the exercise of rights of
exchange or subscription shall be
the consideration received or
receivable by the Company which is
attributed by the Company to such
rights or, if no part of such
consideration is so attributed or
the Majority of the Holders so
requires by notice in writing to the
Company, the fair market value of
such rights as at the date on
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18
which the terms of issue of the
relevant securities (including
options, warrants and other rights)
are publicly announced (as
determined in good faith by an
investment banking firm of national
repute, acting as an expert,
appointed by the Company and
approved in writing by a Majority of
the Holders or, in default of such
appointment or in the absence of
such approval, appointed by a
Majority of the Holders) plus the
additional consideration to be
received by the Company as a
consequence of such exercise, such
additional consideration to be the
amount (including any premium) to be
treated by the Company as paid up on
the Shares or other securities
arising from such exercise (the
consideration in all such cases to
be determined subject to the proviso
in paragraph (i) of this Section
6.2(c));
(iii) the consideration per Share
receivable upon the exercise of
rights, exchange or subscription
shall be the aggregate consideration
referred to in paragraph (ii) of
this Section 6.2(c), converted into
dollars if such consideration is
expressed in a currency other than
dollars at such rate of exchange as
may be determined in good faith by
an investment banking firm of
national repute, acting as an
expert, appointed by the Company and
approved in writing by a Majority of
the Holders or, in default of such
appointment or in the absence of
such approval, appointed by a
Majority of the Holders, to be the
spot rate ruling at the close of
business on the date on which the
terms of issue of the relevant
securities (including options,
warrants and other rights) are
publicly announced, divided by the
number of Shares to be issued upon
such exercise at the initial
conversion, exchange or subscription
price or rate; and
(iv) if the consideration receivable for
Shares or upon the exercise of
rights, exchange or subscription is
property other than cash, then the
amount of the consideration
receivable shall be the fair market
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19
value of such property as determined
in good faith by the chief financial
officer of the Company, except that
if the market value of the Shares
issued exceeds $10,000,000 and a
Majority of the Holders dispute the
determination by the chief financial
officer, then as determined in good
faith by an investment banking firm
of national repute, acting as an
expert, appointed by the Company and
approved in writing by a Majority of
the Holders; provided, however, that
if the Eurobonds are exchanged, the
fair market value of the Eurobonds
shall be deemed to be the face value
of the Eurobonds (regardless of any
price at which they may be traded).
(d) Post-record date Adjustments. If the
Conversion Date in relation to any Note shall be after the record date for any
such issue, grant or offer as is mentioned in Section 6.2(b), but before the
relevant adjustment becomes effective under Section 6.2(b), the Company shall
(conditional upon such adjustment becoming effective) procure that there shall
be issued to the converting Holder or in accordance with the instructions
contained in the Conversion Notice (subject to any applicable exchange control
or other laws or other regulations) such additional number of Shares as,
together with the Shares issued or to be issued on conversion of the relevant
Note, is equal to the number of Shares which would have been required to be
issued on conversion of such Note if the relevant adjustment (more particularly
referred to in such paragraphs) to the Conversion Price had in fact been made
and become effective immediately after the relevant record date. Such
additional Shares will be allotted as at, and within one month after, the
relevant Conversion Date or of the date of issue of Shares if the adjustment
results from the issue of Shares and certificates for such Shares will be
despatched within such period of one month.
(e) Other Provisions Relating to Adjustments.
The Company may at any time or from time to time reduce the Conversion Price
either permanently or temporarily (a "Voluntary Reduction"). Notwithstanding a
Voluntary Reduction, the determination of the interest rate payable pursuant to
Section 2.1 and the determination of whether a Mandatory Prepayment is due
pursuant to Section 1.2 shall be made without giving effect to the Voluntary
Reduction. Notwithstanding the provisions of this Section 6.2, the Conversion
Price will not be reduced as a result of any adjustment, and the Company
covenants not to take any action, if, after giving effect thereto, the
Conversion Price would be reduced to such an extent that, under applicable law
then in effect, Notes may not be converted at such reduced Conversion Price for
legally issued, fully paid and non-assessable Shares. The Conversion Price may
also not be reduced so that, on exchange of Notes, Shares would be issued at a
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20
discount to their par value (the Company hereby agreeing not to take any action
to increase the par value of the shares of the Company's Common Stock). No
adjustment will be made where such adjustment would be less than 5 percent of
the Conversion Price then in effect. Any adjustment not so made will be
carried forward and taken into account in any subsequent adjustment. On any
adjustment, the resultant Conversion Price, if not an integral multiple of one
cent shall be rounded down to the nearest one cent.
Where more than one event which gives or may give rise to an
adjustment to the Conversion Price occurs within such a short period of time
that in the opinion of the Auditors the foregoing provisions would need to be
operated subject to some modification in order to give the intended result,
such modification shall be made to the operation of the foregoing provisions as
may be advised by the Auditors to be in their opinion appropriate in order to
give such intended result.
No adjustment will be made to the Conversion Price when Shares
or other securities (including rights or options) are issued, offered or
granted to employees (including directors holding executive office) of the
Company or any subsidiary or any associated company of the Company pursuant to
any employee benefit, compensation or profit sharing plan, whether now in
effect or hereafter created or amended.
6.3 Covenants Relating to Conversion.
(a) The Company hereby undertakes to and
covenants with the Holders of the Notes that so long as any Conversion Right
remains exercisable, it will, save with the prior written approval of all of
the Holders of the Notes:
(i) Issue and ensure sufficient share
capital: issue Shares to Holders of
the Notes on the exercise of
Conversion Rights in accordance with
the terms of the Notes and at all
times keep available for issue free
from pre-emptive rights out of its
authorized but unissued capital such
number of Shares as would enable the
Conversion Rights and all other
rights of subscription and exchange
for and exchange into Shares to be
satisfied in full;
(ii) Limited modification of rights: not
in any way modify the rights
attaching to the Shares with respect
to voting, dividends or liquidation
nor issue any other class of equity
share capital
- 20 -
21
carrying any rights which are more
favorable than the rights attaching
to the Shares;
(iii) Restricted action: not make any
issue, grant or distribution or take
any other action if the effect
thereof would be that, on the
conversion of Notes, Shares would
have to be issued at a discount or
otherwise could not, under any
applicable law then in effect, be
legally issued as fully paid;
(iv) Officers' certificate on adjustment
of Conversion Price: upon the
happening of an event as a result of
which the Conversion Price will be
adjusted pursuant to the Notes, as
soon as reasonably practicable
deliver to the Holders of the Notes
a certificate signed by two duly
authorized officers of the Company
on behalf of the Company setting
forth brief particulars of the
event, the adjusted Conversion
Price, the date on which such
adjustment takes effect and such
other particulars and information as
the Holders may reasonably require;
and
(v) Maintain Listing: maintain a
listing for all the issued shares of
the Company's Common Stock on the
New York Stock Exchange, it being
understood that if the Company is
unable to obtain or maintain such
listing of the shares, it will seek
to obtain and maintain a listing for
all the shares issued on conversion
of the Notes on the American Stock
Exchange or the NASDAQ National
Market System, or if it is unable to
obtain a listing thereon, on any
other stock exchange or on NASDAQ or
on the National Quotation Bureau
Incorporated (each an "Alternative
Stock Exchange") as the Company may
from time to time (with the written
consent of a Majority of the Holders
which consent shall not be
unreasonably withheld and which
consent shall be deemed given if not
denied within three (3) business
days of receipt of a notice
requesting consent) determine and
will forthwith give notice to the
Holders of the listing, de-listing
or
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22
quotation or lack of quotation of the
Shares (as a class) by any such
Alternative Stock Exchange.
6.4 Adjustment for Consolidations and Mergers.
In case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the
Company is the surviving corporation) or the sale of all or
substantially all of the assets of the Company to another corporation,
this Note thereafter shall be convertible into the kind and amount of
shares of stock or other securities or property to which a Holder of
the number of shares of the Company's Common Stock issuable upon
conversion of this Note would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions in
this Section 6, to the end that the provisions set forth in this
Section 6 (including provisions with respect to changes in and
adjustments of the number of shares of Common Stock into which this
Note is convertible) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of
this Note.
6.5 No Impairment. The Company will not, by amendment of
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Holder against
impairment.
6.6 Notices to Holder. If at any time,
(a) The Company shall take any action which would
require an adjustment pursuant to this Section 6 in the Conversion Price or in
the number of shares issuable upon conversion of this Note; or
(b) The Company shall issue any additional shares
of Common Stock or declare any dividend (or any other distribution) on its
Common Stock; or
(c) there shall be any capital reorganization or
reclassification of the Common Stock, or any consolidation or merger to which
the Company is a party, or any sale or transfer of all or substantially all of
the assets of the Company; or
- 22 -
23
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of such cases, the Company shall give written notice
to the Holder, not less than 20 days before any record date or other date set
for definitive action, or of the date on which such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the current Conversion
Price and the kind and amount of shares of the Company's Common Stock and other
securities and property deliverable upon conversion of this Note. Such notice
shall also specify the date as of which the holders of the Company's Common
Stock of record shall be entitled to exchange their shares of the Company's
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
7. Put Upon Merger. In case of any consolidation or merger of
the Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving corporation) in which the
shareholders of the Company receive solely cash for their shares of the
Company's Common Stock, the Holder may elect, at its sole option, by notice to
the Company given at any time within 30 days after the notice from the Company
of the consummation of the consolidation or merger, to require the Company to
purchase the Note at a purchase price equal to 100% of the principal amount of
the Note, plus all accrued and unpaid interest. If the Holder so elects, a
closing shall be held at the principal offices of the Company on a date
determined by the Company not later than 30 days after the notice from the
Holder; at the closing, the Holder shall surrender the Note to the Company, and
the Company shall pay the purchase price for the Note in cash.
8. Covenants by the Company.
8.1 Ranking. The Notes are direct, unconditional and
unsecured obligations of the Company and rank, and will rank pari passu,
without any preference among themselves, and such obligations will rank senior
to all other outstanding and unsecured subordinated obligations of the Company,
present and future, but, in the event of bankruptcy or insolvency of the
Company, only to the extent permitted by the applicable laws relating to
creditors' rights.
- 23 -
24
8.2 Additional Guaranty. At such time as the Eurobonds
are repaid or converted into shares of the Company's Common Stock so that no
Eurobonds are outstanding or if the Eurobonds are refinanced with Junior Debt
or on a pari passu basis with the guaranty to be issued by SPMI as referred to
below, the Company shall cause SPMI to guaranty the Company's obligations
pursuant to the Notes pursuant to a Guaranty in the same form as the Guaranty
executed by the Company's other subsidiaries on the date hereof. If the
Eurobonds are refinanced on a basis that requires the Guaranty to be issued by
SPMI to be subordinated to such refinanced debt, then the Guaranty shall be so
subordinated to the refinanced indebtedness. At such time as the Company forms
any additional subsidiary, the Company shall cause the subsidiary to guaranty
the Company's obligations pursuant to the Notes pursuant to a Guaranty in the
same form as the Guaranty executed by the Company's other subsidiaries on the
date hereof.
8.3 Additional Debt. Except for Project Debt (as defined
in Section 8.3), neither the Company nor any of its subsidiaries shall issue or
incur any additional Indebtedness that is secured by any assets of the Company
or its subsidiaries unless the Notes are equally secured on a pari passu basis
by such assets. As used in this Note, Project Debt means Indebtedness incurred
by a subsidiary of the Company expressly to fund the construction or
development of a specific project by that subsidiary.
8.4 Federal Tax Matters. The Company shall deduct for
Federal income tax purposes the interest payable on the Notes only to the
extent of the interest paid or payable on the Notes in cash or shares of the
Company's Common Stock pursuant to Sections 2 and 3 hereof.
8.5 Financial Information. The Company shall deliver to
the Holder promptly, but in any event within 10 days, after any distribution to
its shareholders generally of an annual report, proxy statement, registration
statement or other similar report or communication, a copy of each such report,
proxy statement, registration statement or other similar report or
communication; and promptly, but in any event within 10 days after any filing
with the Securities and Exchange Commission or with any national securities
exchange or with the NASD of any publicly available annual or periodic or
special report or proxy statement or registration statement, a copy of such
report or statement; and promptly, but in any event within two business days,
after released, copies of all press releases and other statements made
available generally by the Company to the public concerning material
developments.
- 24 -
25
8.6 Merger. The Company shall not merge or consolidate
with or sell, convey or otherwise dispose of all or substantially all of its
assets to any other corporation, partnership or other legal entity unless (i)
the Company shall be the surviving corporation, partnership or other legal
entity in the case of a merger, or the surviving, resulting or transferee
corporation, partnership or other legal entity ("the successor corporation")
shall expressly assume the due and punctual payment of the principal of and
interest on all the Notes, according to their tenor, and due and punctual
performance of all of the covenants and obligations of the Company under the
Notes, and (ii) the Company or such successor corporation, as the case may be,
shall not immediately after such merger, consolidation, sale or conveyance be
in default in the performance of any covenants or obligations of the Company
under the Notes.
9. Miscellaneous.
9.1 Waiver. The Company hereby waives presentment for
payment, demand, notice of non-payment, protest and notice of protest.
9.2 Binding Effect. This Note shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the
Holder and its successors, assigns and transferees. The Holder may assign this
Note to any Investor (as defined in the Purchase Agreement) or to any affiliate
(within the meaning of the Securities Exchange Act of 1934) of any Investor,
but shall not assign this Note to any other Person without the consent of the
Company, which consent shall not be unreasonably withheld and which consent
shall be deemed given if not denied within three (3) business days of receipt
of a notice requesting consent. Notwithstanding the foregoing, this Note may
not be assigned or transferred in whole or in part, if as a result of such
transfer or assignment there would be more than an aggregate of 10 Holders.
Any such permitted assignee or transferee shall be bound by the terms and
provisions hereof and the Note Purchase Agreement. Any transfer or assignment
in contravention of this Section shall be null and void.
9.3 Legal Fees. The Company shall pay to the Holder all
costs of suit, including reasonable attorneys' fees, should legal proceedings
be instituted at any time to collect any amount due hereon or otherwise to
enforce this Note.
9.4 Governing Law. This Note shall be governed by and
construed in accordance with the internal laws of the State of New York
(without reference to its rules as to conflicts of law).
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26
9.5 Headings. All headings used herein are for
convenience only and shall not be used to construe or interpret this Note.
9.6 Other Exchange. If the Company's Common Stock is not
traded on the New York Stock Exchange, any reference to the New York Stock
Exchange shall be deemed a reference to the principal exchange on which the
Company's Common Stock is traded.
9.7 Restriction on Right to Issue Common Stock.
Notwithstanding anything to the contrary in this Note, the Company shall have
no right to make any principal or interest payment or any payment pursuant to
Section 3.1 or 3.2 in shares of the Company's Common Stock at a time when no
Registration Statement is effective or at a time when the Company's Common
Stock is not traded on the New York Stock Exchange, the American Stock Exchange
or the NASDAQ National Market System, without the consent of a Majority of the
Holders.
9.8 Limit on Number of Shares. Notwithstanding anything
to the contrary in this Note, the Purchase Agreement or the Warrants, the
aggregate number of shares of the Company's Common Stock issuable pursuant to
the Notes and the Warrants shall not exceed the maximum number of shares of
the Company's Common Stock that can be issued without obtaining shareholder
approval under the rules of the New York Stock Exchange (the "Maximum Number").
The Company shall not make any principal or interest payment in shares of the
Company's Common Stock to the extent such issuance, together with all shares
previously issued pursuant to the Notes or the Warrants, would exceed the
Maximum Number. Notwithstanding anything to the contrary in the Notes, the
Purchase Agreement or the Warrants, in the event that the shares of the
Company's Common Stock to be issued upon conversion of this Note, in whole or
in part, would, upon issuance, exceed the Maximum Number, the Company shall, in
lieu of issuing such shares, pay to the Holder an amount equal to the
difference between the Conversion Price and the Closing Bid Price on the date
of conversion for each share that would otherwise be issuable upon such
conversion.
9.9 Limitation on Ownership. Notwithstanding anything to
the contrary in this Note, during the term of the Notes the Holder and its
affiliates (within the meaning of the Securities Exchange Act of 1934) shall
not have the right to convert this Note into shares of the Company's Common
Stock that would result in the Holder and its affiliates becoming, the
beneficial owners (as defined in Rule 13d-3 under that Exchange Act) of more
than 4.75% of the Company's Common Stock; provided that the Holders shall have
the right to waive this restriction upon 61 days prior notice to the Company.
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27
9.10 Notices. Any notice or other communication under
this Note shall be in writing and shall be considered given when delivered
personally or by facsimile, one day after being sent by a reputable overnight
courier, or four days after being mailed by registered mail, return receipt
requested, to the Company or the Holder to the address set forth below (or at
such other address as the Company or the Holder may specify by notice to the
other):
If to the Holder, to it at:
c/o Stonehill Investment Corporation
110 East 5th Street - 30th Floor
New York, New York, 10022
Attn: John Motulsky
If to the Company, to it at:
Sunshine Mining and Refining Company
5956 Sherry Lane
Suite #1621
Dallas, Texas 75225
with a copy to:
Haynes and Boone, LLP
901 Main Street - Suite 3100
Dallas, Texas 75202
Attn: Janice V. Sharry, Esq.
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28
IN WITNESS WHEREOF, the Company has caused this Note to be
signed by a duly authorized officer and has caused its corporate seal to be
affixed and attested by its secretary.
SUNSHINE MINING AND REFINING COMPANY
By: /s/ WILLIAM W. DAVIS
--------------------------------
Name: William W. Davis
Title: Executive Vice President
and Chief Financial
Officer
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