EXHIBIT 4.1
NEITHER THIS NOTE, NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF,
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT OF 1933 AND THIS NOTE HAS BEEN, AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF, WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER
DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY (AS THAT TERM IS DEFINED BELOW) AND ITS COUNSEL,
THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
New York, New York $
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PURSUANT TO THIS PROMISSORY NOTE (the "Note"), dated as of June 30,
2001, Continucare Corporation, a Florida corporation (hereinafter sometimes
called the "Company") hereby promises to pay to the order of _______________
(hereinafter sometimes called the "Securityholder"), in lawful money of the
United States to an account established by Securityholder, the principal amount
of _______________ ($_______________), together with interest as provided
pursuant to the terms of Section 2.1 of this Note, with such principal amount
payable as set forth on Schedule I attached hereto.
W I T N E S S E T H :
This Note supersedes and replaces in its entirety those certain
Convertible Subordinated Note due 2002 referred to in the Indenture dated
October 30, 1997 between Continucare Corporation and American Stock Transfer and
Trust Company, as modified by the First Supplemental Indenture dated January 4,
2000 (the "Old Notes"). In connection with the issuance of this Note, the
Securityholder waives any Event of Default or Default under the Old Note.
In consideration of the premises, and the exchange of the Old Notes for
this Note by the Securityholders, the Company covenants and agrees for the equal
and proportionate benefit of the respective holders from time to time of the
Securities, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The terms defined in this Section 1.1 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Note shall have the respective meanings specified in this Section 1.1. All
other terms used in this Note which are by reference therein defined in the
Securities Act, shall (except as herein otherwise expressly provided or unless
the context otherwise requires) have the meanings assigned to such terms in the
Securities Act as in force at the date of this Note as originally executed. All
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accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any computation.
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Note as a whole and not to any particular Article, Section or
other subdivision. Headings are used for convenience of reference only and do
not affect interpretation. The singular includes the plural and vice versa.
"Affiliate" shall have the meaning as set forth in Rule 501(b) under
the Securities Act.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which banking institutions in The City of New York are authorized or
required by law or executive order to close.
"Capital Lease Obligation" shall mean, with respect to any Person, at
the time any determination thereof is to be made, any obligation of such Person
for the payment of rent or other amounts under a lease of property or assets
which obligation is required to be classified and accounted for as a capitalized
lease on the balance sheet of such Person under generally accepted accounting
principles.
"Call Option" shall have the meaning set forth in Section 10.1.
"Call Option Date" shall have the meaning set forth in Section 10.2.
"Call Option Event" shall have the meaning set forth in Section 10.2.
"Call Option Notice" shall have the meaning set forth in Section 10.3.
"Call Option Notice Date" shall have the meaning set forth in Section
10.2.
"Call Option Purchase Price" shall have the meaning set forth in
Section 10.1.
"Capital Stock" shall mean, with respect to any Person, any capital
stock of such Person and shares, interests, participations or other ownership
interests (however designated) in or of such Person and any rights (other than
debt securities convertible into capital stock), warrants or options to purchase
any of the foregoing, including, without limitation, each class of common stock
and preferred stock of such Person if such Person is a corporation and each
general and limited partnership interest of such Person if such Person is a
partnership.
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"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act.
"Common Stock" shall mean the Common Stock, par value $.0001 per share,
of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Continucare Corporation, a Florida corporation,
and, subject to the provisions of Article VIII, shall include its successors and
assigns.
"Company Notice" shall have the meaning set forth in Section 19.1.
"Consolidated Net Worth" shall mean, with respect to any Person as of
any date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amount reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Capital
Stock).
"Conversion Option" shall have the meaning set forth in Section 10.4.
"Conversion Price" shall have the meaning set forth in Section 12.1.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Daily Market Price" shall mean the price of a share of Common Stock on
the relevant date, determined (a) on the basis of the closing price of the
Common Stock on the American Stock Exchange (the "Amex"), or if the Common Stock
is not then listed on the Amex, as reported on such national securities exchange
upon which the Common Stock is listed or the last reported sale price regular
way of the Common Stock as reported on the Nasdaq Stock Market's National Market
(the "NNM"), or (b) if there is no such reported sale on the day in question, on
the basis of the average of the closing bid and asked quotations regular way as
so reported, or (c) if the Common Stock is not listed on the NNM or on any
national securities exchange, on the basis of the average of the high bid and
low asked quotations regular way on the day in question in the over-the-counter
market as reported by National Association of Securities Dealers Automated
Quotation System, or if not so quoted, as reported by National Quotation Bureau,
Incorporated, or a similar organization.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Definitive Securities" shall mean this Note.
"Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exercisable, redeemable
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or exchangeable), matures, or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the maturity of the Securities.
"Event of Default" shall mean any event specified in Section 4.1,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Note" shall mean this instrument as originally executed or, if amended
as herein provided, as so amended.
"Interest Payment Date" shall have the meaning set forth in Section
2.1.
"Market Capitalization" of the Company, as of any date, shall mean the
product of the current market price (determined in accordance with Section
12.6(e)) of the Common Stock on such date and the number of shares of Common
Stock outstanding on such date.
"Maturity Date" shall mean October 31, 2005.
"Officer" shall mean any of the Chairman, a Vice Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer, a Vice President,
the Treasurer, any Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two Officers
and delivered to the Securityholder.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of or counsel to the Company.
The term "outstanding" when used with reference to Securities, shall,
subject to the provisions of Section 5.4, mean, as of any particular time, all
Securities under this Note, except
(a) Securities theretofore cancelled;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys in the necessary amount shall have been
deposited in trust with any paying agent (other than the
Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying
agent); provided that, if such Securities, or portions
thereof, are to be redeemed prior to maturity thereof, notice
of such redemption shall have been given as in Article XI; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.3 unless proof satisfactory
to the Company is presented that any such Securities are held
by bona fide holders in due course.
(d) Securities converted into Common Stock or redeemed in
accordance with this Note.
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"Permitted Junior Securities" shall mean any securities provided for by
a plan of reorganization or readjustment authorized by a court of competent
jurisdiction in a reorganization proceeding in which the rights of holders of
Senior Indebtedness are not altered without the consent of such holders, which
consent is deemed to have been given if such holders, individually or as a
class, approve such plan.
"Person" shall mean any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Redemption Date," when used with respect to any Security to be
redeemed, shall mean the date fixed for such redemption pursuant to this Note.
"Regular Record Date" shall have the meaning set forth in Section 2.1.
A "Repurchase Event" shall occur if after initial issuance of the
Securities:
(i) any Person (including any syndicate or group deemed to be a
"Person" under Section 13(d)(3) of the Exchange Act), other
than the Company, any Subsidiary of the Company or any current
or future employee or director benefit plan of the Company of
any Subsidiary of the Company or any entity holding capital
stock of the Company for or pursuant to the terms of such
plan, or an underwriter engaged in a firm commitment
underwriting in connection with a public offering of capital
stock of the Company, is or becomes the beneficial owner,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions of shares of
Capital Stock of the Company entitling such Person to exercise
50% or more of the total voting power of all shares of Capital
Stock of the Company entitled to vote generally in the
election of directors;
(ii) the Company sells or transfers all or substantially all of the
assets of the Company to another Person;
(iii) there occurs any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another
Person into the Company (other than a merger (a) which does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock, (b) which
is effected solely to change the jurisdiction of incorporation
of the Company and results in a reclassification, conversion
or exchange of outstanding shares of Common Stock solely into
shares of Common Stock, or (c) a transaction in which the
stockholders of the Company immediately prior to such
transaction owned, directly or indirectly, immediately
following such transaction, at least a majority of the
combined voting power of the outstanding voting stock of the
Company resulting from the transaction, such stock to be owned
by such stockholders in substantially the same proportion as
their ownership of the voting stock of the Company immediately
prior to such transaction);
(iv) a change in the Board of Directors of the Company in which the
individuals who constituted the Board of Directors of the
Company at the beginning of the 24-month period immediately
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preceding such change (together with any other director whose
election by the Board of Directors of the Company or whose
nomination for election by the stockholders of the Company was
approved by a vote of at least a majority of the directors
then in office either who were directors at the beginning of
such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the directors then in office; or (v) the Common
Stock of the Company is the subject of a "Rule 13e-3
transaction" as defined under the Exchange Act.
Notwithstanding the foregoing, in no event shall a Repurchase Event be deemed to
have occurred as a result of the acquisition of greater than 50% of the voting
power by Dr. Phillip Frost, or an entity affiliated with Dr. Frost.
"Repurchase Date" shall have the meaning set forth in Section 19.1.
"Restricted Payment" shall mean, with respect to any Person, (i) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets
(other than a payment or distribution consisting solely of Capital Stock of the
Company, other than Disqualified Capital Stock), by such Person in respect of
such Person's Capital Stock, excluding dividends from one Subsidiary of the
Company to another Subsidiary of the Company or to the Company and excluding
cash dividends by the Company which do not exceed $2.0 million in the aggregate
in any fiscal year, (ii) except for the purchase of shares of Common Stock of
the Company in the aggregate amount of up to $2.0 million in any fiscal year,
any payment on account of the purchase, redemption, defeasance or other
requirement of such Person's Capital Stock (other than payment or distribution
consisting solely of Capital Stock of the Company, other than Disqualified
Capital Stock) or any other payment or distribution made in respect thereof,
either directly or indirectly or by merger, consolidation or otherwise or (iii)
any payment, loan, contribution, or other transfer of funds or other property
(other than payments or distributions consisting solely of Capital Stock of the
Company, other than Disqualified Capital Stock) to any stockholder of such
Person in their capacity as stockholders as opposed to employees, directors or
consultants.
"Restricted Security" shall mean Securities that bear or are required
to bear the legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"Securities" means this Note and the Company's 7% convertible
subordinated notes in substantially the same form as this Note.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholder", "holder of Securities", or other similar terms, shall
mean any person in whose name at the time a particular Security is registered on
the register kept by the Company for that purpose in accordance with the terms
hereof.
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"Senior Indebtedness" means, with respect to the Company, any of the
following (without duplication): (i)(a) any liability or obligation of the
Company for borrowed money (including, without limitation, principal of and
premium, if any, interest, fees, penalties, expenses, collection expenses, and
other obligations in respect thereof, and, to the extent permitted by applicable
law, interest accruing after the filing of a petition initiating any proceeding
under the Bankruptcy Law whether or not allowed as a claim in such proceeding),
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any other liability or obligation evidenced by notes, bonds,
debentures or similar instruments whether or not contingent, (b) any deferred
payment obligation of the Company for the payment of the purchase price of
property or assets evidenced by a note or similar instrument (excluding any
obligation for trade payables or constituting the deferred purchase price of
property or assets which is not evidenced by a note or similar instrument and
which is unsecured), (c) any Capital Lease Obligations of the Company, (d) all
obligations of the Company under interest rate and currency swaps, floors, caps,
or similar arrangements intended to fix interest rate obligations or currency
fluctuation risks, (e) all obligations of the Company evidenced by a letter of
credit or any reimbursement obligation of the Company in respect of a letter of
credit, (f) all obligations of others secured by a lien to which any of the
properties or assets of the Company are subject (including, without limitation,
leasehold interests and any intangible property rights), whether or not the
obligations secured thereby have been assumed by the Company or shall otherwise
be the Company's legal obligation and, with respect to any of the foregoing
items described in clauses (a) through (f) above, whether outstanding on the
date of execution of this Note or hereafter created, incurred or assumed and (g)
all obligations of others of the kinds described in the preceding clauses (a),
(b), (c), (d) or (e) assumed by or guaranteed by the Company and the obligations
of the Company under guarantees of any such obligations; and (ii) any
amendments, renewals, extensions, deferrals, modifications, refinancing and
refunding of any of the foregoing. "Senior Indebtedness" shall not include: (i)
indebtedness that by the terms of the instrument or instruments by which such
indebtedness was created or incurred expressly provides that it (a) is junior in
right of payment to the Securities or (b) ranks pari passu in right of payment
with the Securities, (ii) any repurchase, redemption or other obligation in
respect of Disqualified Capital Stock, (iii) any indebtedness of the Company to
any Subsidiary of the Company or to any Affiliate of the Company, (iv) any
indebtedness incurred in connection with the purchase of goods, assets,
materials or services in the ordinary course of business or representing amounts
recorded as accounts payable, trade payables (which are unsecured) or other
current liabilities (other than for borrowed money) or deferred revenue and
deposits of the Company on the books of the Company (other than the current
portion of any long-term indebtedness of the Company that, but for this clause
(iv), would constitute Senior Indebtedness), (v) any indebtedness of or amount
owed by the Company to employees for services rendered to the Company or in
connection with the severance of employment, (vi) any liability for Federal,
state, local or other taxes owing or owed by the Company or (vii) obligations in
respect of the Securities.
"Significant Subsidiary" shall mean any Subsidiary of the Company that
would be a "significant subsidiary" of the Company within the meaning of Rule
1-02(w)(3) under Regulation S-X promulgated by the Commission as in effect on
the date hereof.
"Subsidiary" shall mean with respect to any Person, (i) any corporation
or other entity at least a majority of whose outstanding voting stock of which
is owned, directly or indirectly, by such Person or by one or more of its
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Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Trading Day" shall mean a day on which the principal securities
exchange upon which the Common Stock is listed or, if the Common Stock is not
listed on any securities exchange, the over-the-counter market, is open for
trading in the Common Stock.
"Transfer Restricted Security" shall have the meaning set forth in the
Registration Rights Agreement.
ARTICLE II
SECURITIES
Section 2.1 Interest.
(a) This Security will bear interest at the rate of 7% per
annum (the "Coupon Rate") from November 1, 2001, until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the Coupon Rate, compounded quarterly, payable
quarterly in arrears on July 31, October 31, January 31 and April 30 of each
year (each, an "Interest Payment Date") commencing on January 31, 2002, to the
Person in whose name such Security or any Predecessor Security is registered, at
the close of business on the regular record date for such interest installment,
which shall be July 15, October 15, January 15 and April 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date
(each a "Regular Record Date").
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months, based on actual days elapsed. In the event
that any Interest Payment Date falls on a day that is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), with the same force and effect as if made on such date.
Section 2.2 Transfer and Exchange.
(a) The Securities may not be transferred except in compliance
with the legend contained on the first page of this Note unless otherwise
determined by the Company in accordance with applicable law.
(b) All Definitive Securities issued upon any registration of
transfer or exchange of Definitive Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same benefits under
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this Note, as the Definitive Securities surrendered upon such registration of
transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith.
The Company shall not be required to (i) issue, register the transfer
of or exchange Securities during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption or any notice of
selection of Securities for redemption under Article X hereof and ending at the
close of business on the day of such mailing; or (ii) register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
Prior to due presentment for the registration of a transfer of any
Security, the Company may deem and treat the Person in whose name any Security
is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and interest on such
Securities, and the Company shall be affected by notice to the contrary.
(c) When Definitive Securities are presented to the Security registrar
with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Security registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met; provided,
however, that the Definitive Securities surrendered for registration of transfer
or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Security registrar duly executed by the Securityholder or his
attorney duly authorized in writing; and
(2) in the case of Definitive Securities that are Restricted
Securities, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Restricted Securities are being delivered
to the Security registrar by a Securityholder for registration
in the name of such Securityholder, without transfer, a
certification from such Securityholder to that effect (in
substantially the form set forth on the reverse of the
Security); or
(B) if such Restricted Security is being transferred
to a "qualified institutional buyer" (as defined in Rule 144A)
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in accordance with Rule 144A a certification to that effect
(in substantially the form set forth on the reverse of the
Security); or
(C) if such Restricted Security is being transferred
(i) pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act or (ii)
pursuant to an effective registration statement under the
Securities Act, or (iii) in a minimum principal amount of
$100,000 to an "institutional accredited investor" within the
meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the security for its own
account, or for the account of such an institutional
accredited investor, not with a view to or for offer or sale
in connection with any distribution in violation of the
Securities Act, or (iv) in reliance on another exemption from
the registration requirements of the Securities Act, a
certification to that effect (in substantially the form set
forth on the reverse of the Security) and in the case of (i),
(iii) and (iv) above, if the Company or the Security registrar
so request, an Opinion of Counsel reasonably acceptable to the
Company and to the Security registrar to the effect that such
transfer is in compliance with the Securities Act, and, in the
case of (iii) above, a letter from the transferee
substantially in the form of Annex A to the Company's Offering
Memorandum, dated October 27, 1997.
(d)(1) Except as permitted by the following paragraph (2),
each Security certificate evidencing the Definitive Securities (and all
securities issued in exchange therefor or substitution thereof) shall bear
legends in substantially the form set forth on the first page of this Note.
(2) Upon any sale or transfer of a Restricted Security
pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(A) in the case of any Restricted Security that is a
Definitive Security, the Security registrar shall permit the
Securityholder to exchange such Restricted Security for a
Definitive Security that does not bear the legend required by
the preceding paragraph (1) and rescind any restriction on the
transfer of such Restricted Security in the case of a sale or
transfer pursuant to Rule 144 under the Securities Act, after
the date which is two years after the later of the date hereof
and the last date on which the Company or any Affiliate of the
Company was the owner of such Security or delivery of an
Opinion of Counsel.
Section 2.3 Replacement Securities.
If any mutilated Security is surrendered to the Company and the Company
receives evidence to its satisfaction of the destruction, loss or theft of any
Security, the Company shall issue a replacement Security if the Company's
requirements for replacements of Securities are met. An indemnity bond must be
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supplied by the holder that is sufficient in the judgment of the Company to
protect the Company from any loss that any of them may suffer if a Security is
replaced. The Company may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and shall be
entitled to all of the benefits of this Note equally and proportionately with
all other Securities duly issued hereunder.
Section 2.4 Treasury Securities.
In determining whether the holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding.
Section 2.5 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use). The Company will promptly notify the Securityholder of any
change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
Section 3.1 Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the holders of the
Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on the Securities at the place,
at the respective times and in the manner provided herein. Each installment of
interest on the Securities may be paid by mailing checks for such interest
payable to the order of the holder of Security entitled thereto as they appear
in the Security Register.
Section 3.2 Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain outstanding,
consolidate with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other Person unless the provisions of
Article VIII hereof are complied with.
Section 3.3 Restricted Payments.
The Company shall not make any Restricted Payment to any Person and the
Company shall not permit any Subsidiary of the Company to make any Restricted
Payment other than to the Company.
Section 3.4 Payment of Taxes and Assessments.
The Company shall, and shall cause each Subsidiary of the Company to,
pay all taxes, assessments and governmental charges lawfully levied or assessed
upon it, its property, or upon any part thereof or upon its income or profits,
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or any part thereof, before the same shall become delinquent; provided that
nothing in this Section 3.4 or elsewhere in this Note contained shall require
the Company to pay any such tax assessment or governmental charge so long as the
applicability or validity thereof shall be contested in good faith; and provided
further, that neither the Company nor any Subsidiary of the Company shall be
required to pay any such taxes, assessment or charges, if in the judgment of the
Board of Directors of the Company or such Subsidiary, such payment shall no
longer be advantageous to the Company or such Subsidiary in the conduct of its
business.
ARTICLE IV
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
Section 4.1 Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of the principal of or
premium, if any, of any of the Securities as and when the same shall become due
and payable, and the default continues for a period of 10 days, either at
maturity, upon redemption (including redemption and purchase pursuant to Article
IX), by declaration or otherwise, and in each case whether or not such payment
is prohibited by the provisions of Article XI; or
(b) the Company defaults in the payment of any installment of
interest upon any of the Securities as and when the same shall become due and
payable and the default continues for a period of 30 days, whether or not such
payment is prohibited by the provisions of Article XI; or
(c) the Company defaults in the payment of the Repurchase
Price in respect of any Security on the Repurchase Date therefor, whether or not
such payment is prohibited by the provisions of Article XI; or
(d) the Company fails to perform or breaches any other
covenant or agreement in the Securities or in this Note and the default
continues for the period and after the notice specified in the last paragraph of
this Section 4.1; or
(e) there shall have been entered a decree or order under any
Bankruptcy Law by a court of competent jurisdiction that (A) is for relief in
respect of the Company or any Significant Subsidiary under any Bankruptcy Law,
or (B) appoints a Custodian of the Company or such Significant Subsidiary or of
any substantial part of the property of the Company or such Significant
Subsidiary, as the case may be, or (C) orders the winding-up or liquidation of
the affairs of the Company or such Significant Subsidiary, as the case may be,
and the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days;
(f) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law (A) commences a voluntary case or
proceeding with respect to itself, (B) consents to the entry of a judgment,
decree or order for relief against it in an involuntary case or proceeding, (C)
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applies for, consents to or acquiesces in the appointment of or taking
possession by a Custodian of the Company or such Significant Subsidiary or of a
substantial part of its properties or (D) makes a general assignment for the
benefit of its creditors;
(g) The Company defaults under any loan, extension of credit
or security agreement and, as a result of such default the holder of the Debt
Obligation exercises the holder's right to call the debt obligation in default
and accelerate payment due thereunder with respect to borrowed money (a "Debt
Obligation") that would materially affect any of the Company's property or the
Company's ability to repay this Note or perform the obligations under this Note,
with the exception of the currently outstanding indebtedness with Humana Medical
Plans, Inc. in the amount of approximately $4,000,000; or
(h) Any judgment or judgments against the Company involving
liability or any attachment, levy or execution against any of its properties for
any amount in excess of $150,000 in the aggregate shall remain unpaid, or shall
not be released, discharged, dismissed, stayed or fully bonded for a period of
sixty (60) days or more after its entry, issue or levy.
A Default under clause (d) is not an Event of Default until the holders of at
least 25% in principal amount of the Securities then outstanding notify the
Company in writing of the Default and the Company does not cure the Default
within 10 days after receipt of such notice. The notice must specify the
Default, demand that it be remedied and state the notice is a "Notice of
Default." When a Default is cured, it ceases.
Upon the occurrence of a default under this Note (whether or not it has
become an Event of Default), the Company agrees to pay the costs, expenses,
attorneys', and other fees paid or incurred by the Holder, or adjudged by a
court, including: (i) costs of suit and such amount as the court adjudges for
the fees of an attorney in an action to enforce this Note in whole or in part;
and (ii) reasonable costs of collection, costs and expenses of, and attorneys'
fees incurred or paid towards, the collection, enforcement, or sale of this Note
in whole or in part, or of any security for it.
Section 4.2 Acceleration.
If any Event of Default (other than an Event of Default specified in
Section 4.1(e) or (f) above) occurs and is continuing, the holders of at least
25% in principal amount of the Securities then outstanding, by notice in writing
to the Company, may declare to be due and payable immediately the principal
amount of the Securities plus accrued interest to the date of acceleration. Upon
any such declaration, such amount shall be due and payable immediately. If an
Event of Default specified in Section 4.1(e) or (f) above occurs, all unpaid
principal and accrued interest on the Securities then outstanding shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of any Securityholder. The holders of a majority in principal
amount of the outstanding Securities by notice to the Company may rescind an
acceleration and its consequences if (x) all existing Events of Default, other
than the non-payment of the principal of the Securities which shall have become
due solely by such declaration of acceleration, shall have been cured or waived,
(y) to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal which has become due otherwise
than by such declaration of acceleration has been paid, and (z) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction.
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If the Note is not paid in full upon acceleration, as required above,
interest shall accrue on the outstanding principal of and interest on this Note
from the date of the Event of Default up to and including the date of payment at
a rate equal to the lesser of fifteen percent (15%) per annum or the maximum
interest rate permitted by applicable law.
Section 4.3 Other Remedies.
If an Event of Default occurs and is continuing, the Securityholder may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal or interest on the Securities or to enforce the performance
of any provision of the Securities or this Note.
Section 4.4 Waiver of Defaults and Events of Default.
Subject only to the provisions of Section 4.7 and 7.1 hereof, the
holders of a majority in principal amount of the outstanding Securities by
written notice to the Company may waive an existing Default or Event of Default
and its consequences except (a) a Default in payment of principal or interest on
any Security as specified in clauses (a) and (b) of Section 4.1, (b) the right
of Securityholders to have their Securities repurchased pursuant to Article IX
or to convert their Securities pursuant to Article XII or (c) in respect of a
covenant or provision hereof which under Article VII cannot be modified or
amended without the consent of the holder of each outstanding Security affected.
When a Default or Event of Default is waived, it is cured and ceases; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereto.
Section 4.5 Limitation on Suits.
Except as provided in Section 4.6, a Securityholder may not pursue any
remedy with respect to this Note or the Securities unless:
(a) the holder gives to the Company written notice of a
continuing Event of Default; and
(b) the holders of at least 25% in principal amount of the
Securities then outstanding give a written notification to the Company of their
intent to pursue the remedy;
A Securityholder may not use this Note to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 4.6 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Note, the right of any
holder of a Security to receive payment of the principal of, premium, if any,
and interest on the Security, on or after the respective due dates expressed in
the Security (including the Maturity Date and the Repurchase Date), or to bring
suit for the enforcement of any such payment on or after such respective dates,
is absolute and unconditional and shall not be impaired or affected without the
consent of the holder.
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Notwithstanding any other provision of this Note, the right of any
holder of a Security to convert the Security or to bring suit for the
enforcement of such right shall not be impaired or affected without the consent
of the holder.
Section 4.7 Undertaking to Pay Costs.
All parties to this Note agree, and each holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Note, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 4.7 shall not apply to any suit instituted by any Securityholder, or
group of Securityholders, holding in the aggregate more than 10% in aggregate
principal amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of (or premium, if any) or
interest on any Security against the Company on or after the due date expressed
in such Security.
Section 4.8 Restoration of Rights and Remedies.
If any holder has instituted any proceeding to enforce any right or
remedy under this Note or any Security and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to such holder,
then and in every case, subject to any determination in such proceeding, the
Company and the holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the holders
shall continue as though no such proceeding had been instituted.
Section 4.9 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the holders is
intended to be exclusive of any other right or remedy, and every remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 4.10 Delay or Omission Not Waiver.
No delay or omission or of any holder of any Security to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article IV or by law or to the
holders may be exercised from time to time, and as often as may be deemed
expedient, by the holders.
Section 4.11 Note and Notes Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest on any Note, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Note or in any supplemental indenture or in any Note, or
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because of this Note or any supplemental indenture or any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Note and the
issue of the Notes.
ARTICLE V
CONCERNING THE SECURITYHOLDERS
Section 5.1 Action by Securityholders.
Whenever in this Note it is provided that the holders of a specified
percentage in aggregate principal amount of the Securities may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action) the fact that at the time
of taking any such action the holders of such specified percentage have joined
therein may be evidenced (a) by any instrument or any number of instruments of
similar tenor executed by such Securityholders in person or by agent or proxy
appointed in writing, or (b) by the record of such holders of Securities voting
in favor thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article VI, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
If requested by any Securityholder, the Company shall provide such
Securityholder with the name, address and telephone number of all other
Securityholders.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Company may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Note not later than six
months after the record date.
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Section 5.2 Proof of Execution by Securityholders.
Subject to the provision of Section 6.4, proof of the execution of any
instrument by a Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable rules and regulations as may be prescribed by
the Company or in such manner as shall be satisfactory to the Company.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 6.5.
Section 5.3 Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Security,
the Company, any transfer agent and any Security registrar may deem the person
in whose name such Security shall be registered upon the Security Register to
be, and may treat him as, the absolute owner of such Security (whether or not
such Security shall be overdue) for the purpose of receiving payment of or on
account of the principal of and premium, if any, and interest on such Security
and for all other purposes; and neither the Company nor any transfer agent nor
any Security registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
Section 5.4 Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent or waiver under
this Note, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination.
ARTICLE VI
SECURITYHOLDERS' MEETINGS
Section 6.1 Purposes of Meetings.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VI for any of the following
purposes:
(a) To give any notice to the Company or to consent to the
waiving of any default hereunder and its consequences, or to take any other
action authorized to be taken by Securityholders pursuant to any of the
provisions of Article IV; or
(b) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such
Securities under any other provision of this Note or under applicable law.
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Section 6.2 Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the Board
of Directors, or the holders of at least 10% in aggregate principal amount of
the Securities then outstanding, shall call a meeting of Securityholders, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, the Company or such Securityholders may determine the time
and the place for such meeting and may call such meeting to take any action
authorized in Section 6.1, by mailing notice thereof to the Company or the
Securityholders, as the case may be.
Section 6.3 Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a person shall
be (a) a holder of one or more Securities or (b) a person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Company and its counsel.
Section 6.4 Regulations.
Subject to the provisions of Section 6.3, at any meeting of
Securityholders each holder of Securities or proxy therefor shall be entitled to
one vote for each $1,000 principal amount of Securities held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not outstanding and ruled by the chairman
of the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 6.2 may be adjourned from time to time by a majority
of those present, whether or not constituting a quorum, and the meeting may be
held as so adjourned without further notice.
Section 6.5 Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed. The
record shall show the serial numbers of the Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Securityholder
to be preserved by the Securityholder, the latter to have attached thereto the
ballots voted at the meeting.
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Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE VII
AMENDMENTS
Section 7.1 With Consent of Securityholders.
With the consent (evidenced as provided in Section 5.1) of the holders
of not less than two-thirds in aggregate principal amount of the Securities at
the time outstanding, the Company, when authorized by a Board Resolution, and
the Securityholder may from time to time and at any time amend the Note for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Note or of modifying in any manner the rights of the
holders of the Securities; provided, however, that no such amendment shall
without the consent of the holders of each Security then outstanding and
affected thereby (i) change the Maturity Date or, once a Company Notice has been
sent following a Repurchase Event, the Repurchase Date; (ii) reduce the
principal amount of, or the premium or interest on, any Security or the price
payable upon a repurchase pursuant to Article IX; (iii) change the place of
payment where, or currency in which, any Security or any premium or interest
thereon is payable; (iv) impair the right to institute suit for the enforcement
of any payment on or with respect to any Security; (v) adversely affect the
right to convert the Securities; (vi) adversely affect the right to cause the
Company to repurchase the Securities; (vii) modify the subordination provisions
in a manner adverse to the holders of the Securities; (viii) reduce the above-
stated percentage of outstanding Securities necessary to modify or amend the
Note; or (ix) modify any of the provisions of Section 4.4 except to increase the
percentage of aggregate principal amount of outstanding Securities referred to
therein.
ARTICLE VIII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 8.1 Company May Consolidate, etc., on Certain Terms.
Notwithstanding anything contained herein to the contrary, the Company
may consolidate with or merge with, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets to (each a
"transaction"), another Person; provided (i)(a) the Company is the surviving
entity, or (b) the successor Person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which such assets are
sold, assigned, transferred, leased, conveyed or otherwise disposed is a Person
organized and existing under the laws of the United States or a state thereof or
the District of Columbia and such Person (if other than the Company) expressly
assumes by supplemental indenture all the obligations of the Company under the
Securities; (ii) at the time of and immediately after giving effect to such
transaction, no Default or Event of Default has occurred and is continuing; and
(iii) the Company or the surviving Person (if other than the Company) will have
Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) greater than or
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equal to the Consolidated Net Worth of the Company immediately preceding the
transaction and (iv) the Company has delivered to the Securityholder an
Officer's Certificate and Opinion of Counsel that all conditions precedent
herein relating to such transaction have been complied with.
Section 8.2 Successor Corporation to be Substituted
for Company.
In case of any such transaction in compliance with Section 8.1 and upon
the assumption by the successor corporation, by supplemental Notes, executed and
delivered to the Securityholder and satisfactory in form to the Securityholder,
of the due and punctual payment of the principal of and premium, if any, and
interest on all of the Securities and the due and punctual performance and
observance of all of the covenants and conditions of this Note to be performed
or observed by the Company, such successor Person shall succeed to and be
substituted for the Company, with the same effect as if it had been named herein
as the party of the first part, and the Company thereupon, except in the case of
a lease, shall be relieved of any further liability or obligation hereunder or
upon the Securities.
Section 8.3 Opinion of Counsel to be Given to Securityholders.
The Securityholders may receive an Opinion of Counsel as conclusive
evidence that any transaction, and any assumption, permitted or required by the
terms of this Article VIII complies with the provisions of this Article VIII.
ARTICLE IX
REPURCHASE RIGHT
Section 9.1 Repurchase Right.
In the event that a Repurchase Event occurs after initial issuance of
the Securities, each holder of Securities shall have the right (which right may
not be waived by the Board of Directors) at the holder's option, to require the
Company to repurchase all of such holder's Securities or any authorized
denomination thereof, on the date (the "Repurchase Date") that is 45 calendar
days after the date of the Company Notice (as defined below), for cash at a
price equal to 101% of the principal amount of such Securities to be repurchased
(the "Repurchase Price"), together with accrued interest to the Repurchase Date
in accordance with paragraph (b) of this Section 9.1; provided, however, that a
Repurchase Event shall not be deemed to have occurred if the Daily Market Price
per share of the Common Stock for any 10 Trading Days within the period of 20
consecutive Trading Days ending immediately before the Repurchase Event shall
equal or exceed 120% of the Conversion Price in effect on each such Trading Day.
A "beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act, as in effect on the date of
execution of the Note.
Section 9.2 Notice of Repurchase Event.
Within 15 calendar days after a Repurchase Event, the Company shall
mail a notice (the "Company Notice") to each Securityholder of record as of the
date of the Repurchase Event stating: (a) that a Repurchase Event has occurred
and that such Securityholder has the right to require the Company to repurchase
all or any authorized denomination of such Securityholder's Securities at the
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Repurchase Price; (b) the current Conversion Price, the date on which the right
to convert such Holder's Securities into Common Stock will expire and the place
or places where such Securities may be surrendered for conversion; (c) the
Repurchase Date; (d) that holders electing to have Securities or any authorized
denomination thereof purchased will be required (i) to surrender their
Securities to the paying agent at the address specified in the Company Notice on
or before the fifth Business Day preceding the Repurchase Date with the "Option
of Holder to Elect Purchase" on the reverse thereof completed and (ii) to
complete any form of letter of transmittal proposed by the Company; (e) that
Securities which have been surrendered to the paying agent may be converted into
Common Stock only to the extent that the holder of such Securities withdraws his
election to have such Securities purchased in accordance with the terms of this
Article IX; (f) that any Security not tendered or not accepted for payment will
continue to accrue interest; (g) that, unless the Company defaults in paying the
Repurchase Price, any Security accepted for payment shall cease to accrue
interest after the Repurchase Date; and (h) a description of any other procedure
which a Holder must follow to exercise his right to have Securities repurchased.
Section 9.3 Payment of Repurchase Price.
In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid the price payable
with respect to the Securities as to which the repurchase right had been
exercised in cash to the Securityholder. In the event that a repurchase right is
exercised with respect to less than the entire principal amount of a surrendered
Security, the Company shall issue in the name of the Securityholder a Security
or Securities in the aggregate principal amount of the unpurchased portion of
such surrendered Security.
Section 9.4 Compliance With Laws.
In connection with any repurchase of Securities under this Article IX,
the Company shall (i) comply with Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act, if applicable
(ii) file the related Schedule 13e-4 (or any successor schedule, form or report)
under the Exchange Act, if applicable, and (iii) otherwise comply with all
federal and state securities laws so as to permit the rights and obligations
under this Article IX to be exercised in the time and in the manner specified in
this Article IX.
ARTICLE X CALL OPTION; CONVERSION OPTION
Section 10.1 Call Price.
In the event that a Call Option Event (as defined in Section 10.2)
occurs, the Company shall have the right to purchase (the "Call Option") any
outstanding principal balance of this Note at a purchase price of $0.10 per
dollar (the "Call Option Purchase Price").
Section 10.2 Call Option Event.
As used herein, a "Call Option Event" shall be deemed to have occurred
when (i) the Company's outstanding common stock trades at or above $2.50 per
share for twenty (20) of the thirty (30) trading days prior to the Call Option
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date, so long as such date is prior to the Maturity Date (the "Call Option
Date"), and (ii) the Company's outstanding common stock traded an average of at
least 100,000 shares per week (composite reporting) for the four (4) weeks
preceding the Call Option Date. (In each case, as such amounts may be adjusted
as provided in Article XII).
Section 10.3 Call Option Notice.
Within 15 calendar days after a Call Option Event, the Company shall
deliver by hand, e-mail or facsimile a notice (the "Call Option Notice") to the
Securityholder (the "Call Option Notice Date") stating that a Call Option Event
has occurred the Company is exercising its Call Option, including instructions
regarding the purchase of the Note.
Section 10.4 Conversion Option.
Within 30 calendar days of the Call Option Notice Date, the
Securityholder may send, by first-class mail, postage prepaid, a notice to the
Company electing to convert the outstanding principal balance and any accrued
interest to the date of conversion of the Note into Common Stock at a $1.00 per
share conversion price (the "Conversion Option"), subject to adjustment pursuant
to Article XII hereto.
Section 10.5 Tender of Note.
In the event that the Securityholder does not exercise the Conversion
Option, the Securityholder shall tender, in accordance with the Call Option
Notice, the Note for cancellation within 30 calendar days of the Call Notice
Date and the Company shall pay the Securityholder, within 5 calendar days after
the cancellation of the Note, the Call Option Purchase Price in cash, to an
account specified by the Securityholder.
Section 10.6 Registration of Shares.
In the event that the Securityholder exercises its Conversion Option,
the Company shall be required, if it has not already done so, and if requested
in writing by the Securityholder, to register the shares of Common Stock
issuable upon conversion of the Note if such shares of Common Stock are not
otherwise allowable for sale under Rule 144 without volume restrictions. The
effective date of the conversion of the Note into Common Stock shall be, unless
otherwise agreed in writing by the parties, the latter of the effective date of
the registration statement (if so required and requested by the Securityholder)
or the date of the Call Option.
Section 10.7 Mechanics of Conversion.
Once the Securityholder has notified the Company of its election of the
Conversion Option, the Securityholder shall be required to convert the Note and
the Call Option shall cease. As promptly as practicable after the Securityholder
surrenders this Note for conversion, the Company shall issue and deliver to or
upon the written order of the Securityholder a certificate or certificates for
the number of full shares of Common Stock as may be determined in accordance
with the above provisions to which the Securityholder is entitled and a check or
cash with respect to any fractional interest in a share of such capital stock.
In lieu of any fractional shares of capital stock to which the Securityholder
would otherwise be entitled, the Company shall pay cash equal to the product of
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such fraction multiplied by the fair market value of one share of Common Stock,
as determined in good faith by the Board of Directors of the Company. The person
in whose name the certificate or certificates for such Common Stock are to be
issued shall be deemed to have become a shareholder of record on the next
succeeding after the date of conversion on which the transfer books are open.
The Company covenants that all shares which may be issued upon conversion hereof
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens and charges caused or created by the Company with respect to the issue
thereof.
In the event of conflict between the provisions of Article IX and
Article X, Article X shall be deemed to prevail.
ARTICLE XI
SUBORDINATION OF SECURITIES
Section 11.1 Agreement that Securities to Be Subordinate.
The Company covenants and agrees, and each holder of Securities issued
hereunder by his acceptance thereof likewise covenants and agrees, that all
payments of principal of, premium, if any, and interest on the Securities and
all other monetary claims, including such monetary claims as may result from
rights of repurchase, under or in respect of the Securities shall be
subordinated in accordance with the provisions of this Article XI to the prior
payment in full in cash of all amounts payable under all Senior Indebtedness,
whether outstanding as of the date of this Note or thereafter incurred.
Section 11.2 Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of the Company: (a) holders of all Senior Indebtedness then
outstanding shall be entitled to receive payment in full in cash of all amounts
owing with respect to all Senior Indebtedness before Securityholders shall be
entitled to receive any payment on or with respect to the Securities; and (b)
until all Senior Indebtedness is paid in full in cash, any distribution to which
Securityholders would be entitled but for this Article XI shall be made to
holders of Senior Indebtedness as their interests may appear, except that the
Securityholders may receive Permitted Junior Securities.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of the properties and assets of the Company
substantially as an entirety to another Person upon the terms and conditions set
forth in Article VIII shall not be deemed a liquidation, dissolution, winding
up, reorganization, insolvency, receivership or similar proceeding of the
Company for the purposes of this Section.
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Section 11.3 Company Not to Make Payments with Respect to
Securities in Certain Circumstances.
(a) Unless Section 11.2 shall be applicable, upon the
occurrence of any default in the payment of any obligation on or with respect to
any Senior Indebtedness, whether with respect to scheduled payments or amounts
due upon acceleration (a "Payment Default"), then no payment or distribution of
any assets of the Company of any kind or character shall be made by the Company
on account of principal of or premium, if any, or interest on the Securities or
on account of the purchase, redemption or other acquisition of Securities or any
of the obligations of the Company under the Securities unless and until such
Payment Default shall have been cured or waived or shall have ceased to exist or
such Senior Indebtedness shall have been discharged or paid in full, immediately
after which the Company shall resume making any and all required payments,
including missed payments, in respect of its obligations under the Securities.
Section 11.4 Payment Over of Proceeds in Certain Events.
In the event that any payment or distribution of assets of the Company
of any kind or character not permitted by Sections 11.2 or 11.3, whether in
cash, property or securities, shall be received by the holders of the Securities
before all Senior Indebtedness is paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of the holders
of Senior Indebtedness and shall forthwith be paid over or delivered by such
holders of the Securities, as the case may be, directly to the holders of Senior
Indebtedness (pro rata to each such holder on the basis of the respective
amounts of Senior Indebtedness held by such holder) or the Senior Representative
or the trustee under the indenture or other agreement (if any) pursuant to which
Senior Indebtedness may have been issued, for application to the payment of, all
Senior Indebtedness remaining unpaid to the extent necessary to pay all
obligations in respect of such Senior Indebtedness in full in cash in accordance
with its terms, after giving effect to any other concurrent payment or
distribution to the holders of such Senior Indebtedness.
Section 11.5 No Waiver of Subordination Provisions.
Without notice to or the consent of the Securityholders, the holders of
Senior Indebtedness may at any time and from time to time, without impairing or
releasing the subordination herein made, change the manner, place or terms of
payments, or change or extend the time of payment of or renew or alter the
Senior Indebtedness, or amend or supplement in any manner any instrument
evidencing the Senior Indebtedness, any agreement pursuant to which the Senior
Indebtedness was issued or incurred or any instrument securing or relating to
the Senior Indebtedness; release any person liable in any manner for the payment
or collection of the Senior Indebtedness; exercise or refrain from exercising
any rights in respect of the Senior Indebtedness against the Company or any
other person; apply any moneys or other property paid by any person or released
in any manner to the Senior Indebtedness; or accept or release any security for
the Senior Indebtedness.
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Section 11.6 Notice to Securityholder of Specified Events;
Reliance on Certificate of Liquidating Agent.
The Company shall give prompt written notice to the Securityholder of
any fact known to the Company that would prohibit the making of any payment in
respect of the Securities pursuant to the provisions of this Article XI.
Upon any distribution of assets of the Company or payment by or on
behalf of the Company referred to in this Article XI, the holders of the
Securities shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
Section 11.3 are pending, and the holders of the Securities shall be entitled to
rely upon a certificate of the liquidating trustee or agent or other person
making any such distribution to the holders of the Securities for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XI.
Section 11.7 Subrogation.
After all Senior Indebtedness is paid in full and until the Securities
are paid in full, Securityholders shall be subrogated to the rights of holders
of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the
Securityholders have been applied to the payment of Senior Indebtedness. A
distribution made or payment over made under this Article XI to holders of
Senior Indebtedness which otherwise would have been made to Securityholders is
not, as between the Company, its creditors other than the holders of Senior
Indebtedness and Securityholders, a payment or distribution by the Company on or
on account of Senior Indebtedness, it being understood that the provisions of
this Article XI are, and are intended, solely for the purpose of defining the
relative rights of the Securityholders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
Section 11.8 Obligation to Pay Not Impaired.
Nothing contained in this Article XI or elsewhere in this Note, or in
the Securities, is intended to or shall alter or impair, as between the Company,
its creditors other than the holders of Senior Indebtedness, and the holders of
the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Securities the principal of (and
premium, if any) and interest on the Securities at the time and place and at the
rate and in the currency therein prescribed, or to affect the relative rights of
the holders of the Securities and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent or
the holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Note, subject to the right, if any, under
this Article XI of the holders of the Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
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Section 11.9 Reliance by Senior Indebtedness on
Subordination Provisions.
Each holder of a Security by his acceptance thereof acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness (by
its original terms or amendment thereof), whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and hold, or to continue to hold, such Senior Indebtedness, and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in holding,
such Senior Indebtedness. The subordination provisions in this Article XI may be
enforced directly by the holders of Senior Indebtedness.
Section 11.10 Subordination Not to Be Prejudiced by
Certain Acts.
No present or future holder of Senior Indebtedness shall be prejudiced
in his right to enforce subordination of the indebtedness evidenced by the
Securities by any act or failure to act in good faith by any such holder or by
noncompliance by the Company with the terms and provisions and covenants herein
regardless of any knowledge thereof any such holder may have or otherwise be
charged with.
ARTICLE XII
CONVERSION
Section 12.1 Conversion Privilege.
A holder of a Security may convert it into fully paid and nonassessable
shares of Common Stock of the Company at any time after 60 days following the
date of original issuance thereof and prior to and including maturity at the
Conversion Price then in effect, except that, with respect to any Security
called for redemption or delivered for repurchase, such conversion right shall
terminate at the close of business on the Trading Day immediately preceding the
Redemption Date or Repurchase Date (unless the Company shall default in making
the payment due upon such redemption or repurchase, in which case the conversion
right shall terminate on the date such default is cured). The number of shares
of Common Stock issuable upon conversion of a Security is determined by dividing
the principal amount of the Security to be converted by the conversion price in
effect on the Conversion Date (the "Conversion Price").
The initial Conversion Price is $1.00 and is subject to adjustment as
provided in this Article XII.
A holder may convert a portion of a Security equal to any integral
multiple of $1,000. Provisions of this Note that apply to conversion of all of a
Security also apply to conversion of a portion of it.
Section 12.2 Conversion Procedure.
To convert a Security, a holder must satisfy the requirements in the
Securities. The date on which the holder satisfies all of those requirements is
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the conversion date (the "Conversion Date"). As soon as practicable after the
Conversion Date, the Company shall deliver to the holder through the Conversion
Agent a certificate for the number of whole shares of Common Stock issuable upon
the conversion and a check for any fractional share determined pursuant to
Section 12.3. The person in whose name the certificate is registered shall
become the stockholder of record on the Conversion Date and, as of such date,
such person's rights as a Securityholder shall cease; provided, however, that no
surrender of a Security on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the person entitled to receive
the shares of Common Stock upon such conversion as the stockholder of record of
such shares of Common Stock on such date, but such surrender shall be effective
to constitute the person entitled to receive such shares of Common Stock as the
stockholder of record thereof for all purposes at the close of business on the
next succeeding day on which such stock transfer books are open; provided
further, however, that such conversion shall be at the Conversion Price in
effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
No payment or adjustment will be made for dividends or distributions on
shares of Common Stock issued upon conversion of a Security. However, upon
conversion of a Security, the holder thereof shall be entitled to receive
interest, if any, accrued and unpaid through the date of such conversion, which
interest shall be payable by the Company (without any additional interest) on
the next succeeding Interest Payment Date.
If a holder converts more than one Security at the same time, the
number of whole shares of Common Stock issuable upon the conversion shall be
based on the total principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall issue for the holder a new Security equal in principal amount to the
unconverted portion of the Security surrendered.
Section 12.3 Fractional Shares.
The Company will not issue fractional shares of Common Stock upon
conversion of a Security. In lieu thereof, the Company will pay an amount in
cash based upon the Daily Market Price of the Common Stock on the Trading Day
prior to the date of conversion.
Section 12.4 Taxes on Conversion.
The issuance of certificates for shares of Common Stock upon the
conversion of any Security shall be made without charge to the converting
Securityholder for such certificates or for any tax in respect of the issuance
of such certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, the holder or holders of the
converted Security; provided, however, that in the event that certificates for
shares of Common Stock are to be issued in a name other than the name of the
holder of the Security converted, such Security, when surrendered for
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conversion, shall be accompanied by an instrument of transfer, in form
satisfactory to the Company, duly executed by the registered holder thereof or
his duly authorized attorney; and provided further, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid or is not applicable.
Section 12.5 Company to Provide Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of issuance upon conversion of Securities as herein provided, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Securities for shares of Common Stock. All shares of Common Stock
which may be issued upon conversion of the Securities shall be duly authorized,
validly issued, fully paid and nonassessable when so issued. Shares of Common
Stock issuable upon conversion of a Transfer Restricted Security shall bear such
restrictive legends as the Company shall provide in accordance with applicable
law. If shares of Common Stock are to be issued upon conversion of a Transfer
Restricted Security and they are to be registered in a name other than that of
the holder of such Transfer Restricted Security, then the person in whose name
such shares of Common Stock are to be registered must deliver to the Company a
certificate satisfactory to the Company and signed by such person as to
compliance with the restrictions on transfer contained in such restrictive
legends.
Section 12.6 Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time to time
as follows:
(a) In case the Company shall (1) pay a dividend in shares of
Common Stock to holders of Common Stock, (2) make a distribution in shares of
Common Stock to holders of Common Stock, (3) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights, warrants or
options to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into Common Stock) at
a price per share less than the current market price (as determined pursuant to
subsection (e) below) of the Common Stock on such record date, the Conversion
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to such record date
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common Stock
which the aggregate offering price of the offered shares of Common Stock (or the
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aggregate conversion price of the convertible securities so offered) would
purchase at such current market price, and of which the denominator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock offered (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever any such rights, warrants or options are distributed, and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, warrants or options. If at the
end of the period during which such rights, warrants or options are exercisable
not all such rights, warrants or options shall have been exercised, the adjusted
Conversion Price shall be immediately readjusted to what it would have been
based upon the number of additional shares of Common Stock actually issued (or
the number of shares of Common Stock issuable upon conversion of convertible
securities or the exchange of exchangeable securities actually issued).
(c) In case the Company shall distribute to all holders of
Common Stock shares of any class of stock other than Common Stock, evidences of
indebtedness, cash or other assets (including securities, but excluding those
rights, options, warrants and securities referred to in subsection (b) above and
excluding dividends and distributions paid exclusively in cash), then in each
such case the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect immediately
prior the date of such distribution by a fraction of which the numerator shall
be the current market price (determined as provided in subsection (e) below) of
the Common Stock on the record date mentioned below less the then fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive evidence of such fair market value and described in a Board
Resolution) of the portion of the evidences of indebtedness and/or assets and/or
securities so distributed applicable to one share of Common Stock, and of which
the denominator shall be such current market price of the Common Stock. Such
adjustment shall become effective immediately prior to the opening of business
on the day following the record date for the determination of the holders of
Common Stock entitled to receive such distribution; provided, however that in
the event the fair market value (as so determined) of the portion of the
evidences of indebtedness, shares of capital stock, cash, securities and assets
so distributed applicable to one share of Common Stock is equal to greater than
such current market price per share of Common Stock, or if the excess of such
current market price per share over such fair market value is less than $1.00,
then the Company shall also distribute to the holders of the Securities the
amount of evidences of indebtedness, shares of capital stock, cash, securities
and assets such Holder would have received had the Holder converted the
Securities immediately prior to the record date for such distribution. If the
Board of Directors determines the fair market value of any distribution for
purposes of this subsection (c) by reference to the actual or when issued
trading market for any securities included in such distribution, it shall in
doing so consider the prices in such market over the same period used in
computing the current market price per share pursuant to subsection (c) of this
Section.
(d) In case the Company shall, (i) by dividend or otherwise,
at any time distribute to all holders of its Common Stock cash (excluding any
cash portions of distributions referred to in (c) above or cash distributions
upon a merger or consolidation to which Section 12.12 applies) in an aggregate
amount that, combined together with (a) all other such all-cash distributions
made within the preceding 12 months in respect to which no adjustment has been
made and (b) any cash and the fair market value of any other consideration paid
or payable in respect of any tender offers by the Company for Common Stock
concluding within the preceding 12 months in respect of which no adjustment has
been made, exceeds 12.5% of the Company's Market Capitalization on the record
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date for such distribution (as determined by the Board of Directors, whose
determination shall be described in an Officers' Certificate delivered to the
Securityholder and any Conversion Agent), or (ii) purchase Common Stock pursuant
to a tender offer made by the Company or any of its Subsidiaries which involves
an aggregate consideration that together with (a) any cash and the fair market
value of any other consideration paid or payable in any other tender offer by
the Company or any of its Subsidiaries of Common Stock expiring within the 12
months preceding the expiration of such tender offer in respect of which no
adjustment has been made (as determined by the Board of Directors, whose
determination shall be described in an Officers' Certificate delivered to the
Securityholder and any Conversion Agent) and (b) the aggregate amount of any
such all-cash distributions referred to in (i) above to all holders of Common
Stock within the 12 months preceding the expiration of such tender offer in
respect of which no adjustments have been made, exceeds 12.5% of the Company's
Market Capitalization on the expiration of such tender offer, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this subsection
(d) by a fraction of which the numerator shall be the current market price per
share (determined as provided in subsection (e) of this Section 12.6) of the
Common Stock on the date of such effectiveness less the amount of cash so
distributed applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock (determined as
aforesaid), such reduction to become effective immediately prior to the opening
of business on the day following the date fixed for the payment of such
distribution.
(e) The current market price per share of Common Stock on any
date shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) thirty consecutive Business Days ending on the last full Trading
Day on the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination or (ii) the period commencing on the
date next succeeding the first public announcement of the issuance of such
rights, such warrants, such options or such other distribution or such
negotiated transaction through such last full Trading Day on the exchange or
market referred to in determining such Daily Market Prices prior to the time of
determination.
(f) In any case in which this Section 12.6 shall require that
an adjustment be made immediately following a record date, the Company may elect
to defer (but only until five Business Days following the delivery by the
Company to the Securityholder of the certificate described in Section 12.10
below) issuing to the holder of any Security converted after such record date
the shares of Common Stock and other capital stock of the Company issuable upon
such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance of
which is so deferred, the Company shall issue or cause its transfer agents to
issue due bills or other appropriate evidence of the right to receive such
shares.
Section 12.7 No Adjustment.
No adjustment in the Conversion Price shall be required until
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted; provided, however, that any adjustments which by reason of this
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Section 12.7 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article XII
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest. No
adjustment need be made for a change in the par value of the Common Stock, or
from par value to no par value, or from no par value to par value.
Section 12.8 Other Adjustments.
In the event that, as a result of an adjustment made pursuant to
Section 12.6 above, the holder of any Security thereafter surrendered for
conversion shall become entitled to receive any Capital Stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any Securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in this
Article XII.
Section 12.9 Adjustments for Tax Purposes.
The Company may make such reductions in the Conversion Price, in
addition to those required by Section 12.6 above, as it determines to be
advisable in order that any stock dividend, subdivision of shares, distribution
or rights to purchase stock or securities or distribution of securities
convertible into or exchangeable for stock made by the Company to its
stockholders will not be taxable to the recipients thereof.
Section 12.10 Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall promptly
mail to Securityholders at the addresses appearing on the Registrar's books a
notice of the adjustment and deliver to the Securityholder an Officer's
Certificate briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence of the correctness of
such adjustment.
Section 12.11 Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an adjustment
in the Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 12.12; or
(3) there is a dissolution or liquidation of the Company;
a holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, options, securities or assets which a
holder of shares of Common Stock on that date may receive. Therefore, the
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Company shall mail to Securityholders at the addresses appearing on the Security
registrar's books a notice stating the proposed record or effective date, as the
case may be. The Company shall mail the notice at least 15 days before such
date; however, failure to mail such notice or any defect therein shall not
affect the validity of any transaction referred to in clause (1), (2) or (3) of
this Section 12.11.
Section 12.12 Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege.
If any of the following shall occur, namely: (i) any reclassification
or change of outstanding shares of Common Stock issuable upon conversion of
Securities (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which the Company is a party
other than a merger in which the Company is the continuing corporation and which
does not result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination) in, outstanding shares
of Common Stock or (iii) any sale or conveyance of all or substantially all of
the property or business of the Company as an entirety, then the Company, or
such successor or purchasing Person, as the case may be, shall, as a condition
precedent to such reclassification, change, consolidation, merger, sale or
conveyance, execute and deliver to the holder thereof a Supplemental Note
satisfactory to the Company providing that the holder shall have the right to
convert such Security into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock deliverable upon conversion of such Security immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article XII. If, in
the case of any such consolidation, merger, sale or conveyance, the stock or
other securities and property (including cash) receivable thereupon by a holder
of Common Stock includes shares of stock or other securities and property of a
Person other than the successor or purchasing Person, as the case may be, in
such consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other Person and shall contain such additional
provisions to protect the interests of the holders of the Securities as the
Board of Directors of the Company shall reasonably consider necessary by reason
of the foregoing. The provision of this Section 12.12 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.1 Successors.
All the covenants, stipulations, promises and agreements in this Note
contained by the Company shall bind its successors and assigns whether so
expressed or not.
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Section 13.2 Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Note authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
Section 13.3 Surrender of Company Powers.
The Company by instrument in writing executed by authority of
two-thirds of its Board of Directors may surrender any of the powers reserved to
the Company, and thereupon such power so surrendered shall terminate both as to
the Company, as the case may be, and as to any successor Person.
Section 13.4 Addresses for Notices, etc.
Any notice or demand which by any provision of this Note is required or
permitted to be given or served by the holders of Securities on the Company may
be given or served by being deposited postage prepaid by registered or certified
mail in a post office letter box addressed to the Company, 80 S.W. 8th Street,
23rd Floor, Miami, Florida 33130, Attention: President. Any notice, direction,
request or demand by any Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of the _______________ located at _______________, Attention:
_______________.
Section 13.5 Governing Law.
This Note and each Security shall be deemed to be a contract made under
the laws of the State of New York, and for all purposes shall be governed by and
construed in accordance with the laws of said State, without regard to conflicts
of laws principles thereof.
Section 13.6 Business Days.
In any case where the date of payment of principal of or premium, if
any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not be
made on such date but may be made on the next succeeding Business Day, with the
same force and effect as if made on the date of payment and no interest shall
accrue for the period from and after such date.
Section 13.7 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Note have been inserted for convenience of reference only, are
not to be considered a part hereof, and shall in no way modify or restrict any
of the terms or provisions hereof.
Section 13.8 Execution in Counterparts.
This Note may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
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Section 13.9 Separability.
In case any one or more of the provisions contained in this Note or in
the Securities 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 provisions of this Note or of the Securities, but
this Note and the Securities shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
Section 13.10 Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Note to a direct or indirect wholly
owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company, as the case may be, will remain liable for all such
obligations. Subject to the foregoing, the Note is binding upon and inures to
the benefit of the parties thereto and their respective successors and assigns.
This Note may not otherwise be assigned by the parties thereto.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed by a duly authorized officer, effective as of the day and year first
above written.
CONTINUCARE CORPORATION
By:
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Spencer J. Angel, President and Chief Executive Officer
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