EXHIBIT 4.4
This Note has not been registered under the Securities Act of 1933, as amended.
No transfer of this Note shall be valid or effective except in accordance with
the applicable requirements of the Securities Act of 1933, as amended.
CONVERTIBLE NOTE
As of June 18, 1998 Palm Beach, Florida
$----------------
FOR VALUE RECEIVED, ENVIRONMENTAL REMEDIATION HOLDING CORPORATION, a Colorado
corporation (the "Company"), hereby promises to pay to the order of
_________________, or any subsequent holder of this Note (the "Payee"), at
________________________, or at such other place as may be designated by the
Payee from time to time by notice to the Company, the principal sum of
_______________Thousand and No/100 Dollars ($______________), together with
simple interest from the date hereof on the unpaid principal amount hereof at an
annual rate equal to twelve percent (12.0%) per annum. Such principal and
interest shall be paid in accordance with the terms of Section I below, in cash,
or by wire transfer to such account as the Payee shall direct, in immediately
available funds and in lawful currency of the United States of America.
1. PAYMENTS.
a) Unless previously fully converted into Common Stock of the Company as herein
provided, the unpaid principal amount of this Note shall be payable to the Payee
in cash the earlier of (i) the receipt by the Company of a sum in excess of Four
Million Dollars ($4,000,000.00) from debt or equity financing and revenue from
the sale of any leases, or (ii) on or before December 18, 1999.
b) Interest on the unpaid principal balance of this Note at the rate
of twelve percent (12.0%) per annum shall accrue from the date hereof and shall
be payable to the Payee in cash semi-annually and such interest may at the
election of the Payee be payable in shares of Common Stock of the Company at 80%
of then current market value.
c) In the event that any payment of principal and/or interest hereunder becomes
due and payable on a Saturday, Sunday or other day on which commercial banks in
the State of New York are authorized or required by law to close, then the
maturity thereof shall be extended to the next succeeding business day; and
during any such extension, interest on principal amounts payable shall accrue
and be payable at the applicable rate.
2. RANKING OF NOTE.
Subject at all time to the subordination provisions set forth in Section 9
hereof, this Note shall constitute senior securities of the Company and, except
as provided below, shall rank pari passu with all other indebtedness for money
borrowed by the Company and senior to any other indebtedness for money borrowed
by the Company which, by its terms shall be made expressly subject and
subordinated to this Note.
3. PREPAYMENT OF NOTE.
a) Subject at all times to the holder's right to convert all or any portion of
this Note into Common Stock pursuant to Section 4 hereof at any time on or
before the 'Prepayment Date' (as herein defined), the principal amount of this
Note may be prepaid, at the option of the Company, in whole or in part, without
premium or penalty, at any time or from time to time from and after that date
(the "Initial Prepayment Date") which shall be the earlier to occur of (i)
eighteen (18) months following the date of the initial issuance of the Note (the
"Issuance Date"), or (ii) the date on which the Company shall register for
resale pursuant to the Securities Act of 1933, as amended (the "Act") all
"Conversion Shares" (as herein defined) issuable upon conversion of the entire
principal amount of this Note, pursuant to a Registration Statement on Form S-1
declared effective by the Securities and Exchange Commission (the "SEC").
b) Each Prepayment Notice shall specify the principal amount of this Note to be
redeemed and the applicable Prepayment Date. Each
prepayment of principal of this Note shall be accompanied by the payment of all
interest accrued and unpaid to the prepayment date on the amount so prepaid.
Each such prepayment shall be made by wire transfer of immediately available
funds or by bank cashier's check payable to the Payee. Any partial prepayment of
this Note, whether optional or mandatory, shall be applied first to accrued and
unpaid interest hereon, and then to the outstanding principal amount of this
Note in the inverse order of maturity.
c) Notwithstanding anything to the contrary set forth in this Section 3, in the
event and to the extent that the Company shall provide the holder of this Note
with a Prepayment Notice, it shall simultaneously provide to the holder of this
Note evidence of the availability of funds to effect such prepayment; which
evidence of availability of funds shall include, without limitation, (i)
confirmation of cash or cash equivalent bank balances, (ii) an irrevocable bank
letter of credit, or (iii) a written commitment from a recognized lending
institution to effect the financing of such prepayment.
4. CONVERSION.
Subject at all times to the Company's right to prepay the Notes as provided in
Section 3 hereof, the holders of the Notes shall have the following conversion
rights (the "Conversion Rights"):
a) Voluntary Conversion. At any time or from time to time following the Issuance
Date, the holder of this Note may elect to convert up to one hundred (100%)
percent of the original principal amount of this Note, into shares of Common
Stock of the Company, by written notice given to the Company in accordance with
the provisions of Section 4(h) hereof (the "Conversion Notice"). In no event may
the holder of this Note effect a conversion of less than $10,000 principal
amount of this Note. Such right of Voluntary Conversion shall be effected by the
surrender of certificates evidencing the shares of Note to be converted to the
Company at any time during normal business hours at the office of the Company,
accompanied (i) by the Conversion Notice, (ii) if so required by the Company, by
instruments of transfer, in form satisfactory to the Company, duly executed by
the registered holder or by his duly authorized attorney and (iii) transfer tax
stamps or funds therefore, if required pursuant to Section 4(g) herein.
b) Conversion Price. Subject to adjustment from time to time as provided in
Section 4(d) below, the term "CONVERSION Price" shall mean$1.00 per share of
Common Stock.
c) Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section 4(c).
(i) Adjustments for Stock Splits and Combinations. If the Company shall
at any time or from time to time after the Issuance Date, effect a stock split
of the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section 4(c)(i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the
Company shall at any time or from time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the applicable Conversion Price in effect immediately
prior to such event shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying, as applicable, the applicable Conversion
Price then in effect by a fraction;
(A) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 4(c)(iii) with
respect to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 4(c)(i), (ii)
and (iii), or a reorganization, merger, consolidation, or sale of assets
provided for in Section 4(c)(v)), then, and in each event, an appropriate
revision to the Conversion Price shall by made and provisions shall be made (by
adjustments of the Conversion Price of otherwise) so that the holder of this
Note shall have the right thereafter to convert such Note into the kind and
amount of shares of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock into which such Note might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all subject to
further adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company
(other than by way of a stock split or combination of shares or stock dividends
or distributions provided for in Section 4(c)(i), (ii) and (iii), or a
reclassification, exchange or substitution of shares provided for in Section
4(c)(iv)), or a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the Company's properties
or assets to any other person, then as a part of such reorganization, merger,
consolidation, or sale, an appropriate revision to the Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion Price or
otherwise) so that the holder of this Note shall have the right thereafter to
convert this Note into the kind and amount of shares of stock and other
securities or property of the Company or any successor corporation resulting
from such reorganization, merger, consolidation, or sale, to which a holder of
Common Stock deliverable upon conversion of such shares would have been entitled
upon such reorganization, merger, consolidation, or sale, to which a holder of
Common Stock deliverable upon conversion of such shares would have been entitled
upon such reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4(c)(v) with respect to the rights of the holders of this Note
after the reorganization, merger, consolidation, or sale to the end that the
provisions of this Section 4(c)(v) (including any adjustment in the applicable
Conversion Ratio then in effect and the number of shares of stock or other
securities deliverable upon conversion of this Note) shall be applied after that
event in as nearly an equivalent manner as may be practicable.
d) No Impediment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 4 and in
the taking of all such action as may be necessary or Appropriate in order to
protect the Conversion Rights of the holders of the Note against impairment.
e) Certificate as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of the Note pursuant to this Section 4,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish notice to each
holder of such Note, a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the holder of
this Note, at any time, furnish or cause to be furnished to such holder a like
certificate setting forth such adjustments and readjustments, the applicable
Conversion Price in effect at the time and the number of shares of Common Stock
and the amount, if any, of other securities or property which at the time would
be received upon the conversion of such Note. Notwithstanding the foregoing, the
Company shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent of such adjusted
amount.
f) Issue Taxes. The Company shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of this Note
pursuant hereto; provided, however, that the Company shall not be obligated to
pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.
g) Notices and Delivery of Shares. All notices and other communications
hereunder shall be in writing and shall be deemed given (i) on the same date, if
delivered personally or by facsimile by not later than 7:00 p.m. New York time
(provided, that a copy of such facsimile shall be simultaneously sent to Donald
F. Mintmire, Esq. at (561)832-5696, or (ii) three business days following being
mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the holder of record at its address appearing on the
books of the Company. Not later than five (5) Business Days following receipt of
notice of conversion as provided herein (the "Delivery Date"), the Company shall
deliver to the holders of this Note, against delivery of one or more
certificates evidencing Note surrendered for conversion, certificates evidencing
all shares of Common Stock into which this Note shall be converted.
h) Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of the Note. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Company shall pay
cash equal to the product of such fraction multiplied by the Conversion Price of
one share of the Company's Common Stock on the applicable Conversion Date.
i) Reservation of Common Stock. The Company shall at all times reserve and keep
available, out of its authorized but unused shares of Common Stock, solely for
the purpose of effecting the conversion of the Note, the full number of shares
deliverable upon conversion of all the Note from time to time outstanding. The
Company shall, from time to time in accordance with the Colorado General
Corporations Law, as amended, increase the authorized number of shares of Common
Stock if at any time the unused number of authorized shares shall not be
sufficient to permit the conversion of all of the Note at the time outstanding.
In such connection, the Company shall hold a special meeting of stockholders for
the purpose of authorizing additional shares of Common Stork not later than 120
days after any date in which the Company shall have insufficient shares of
Common Stock so reserved.
j) Retirement of Note. Conversion of this Note shall be deemed to have been
effected on the applicable Conversion Date. The converting holder shall be
deemed to have become a stockholder of record of the Common Stock on the
applicable Conversion Date. Upon conversion of only a portion of this Note, the
Company shall issue and deliver to such holder at the expense of the Company,
against receipt of the original note delivered for partial cancellation, a new
Note representing the unconverted portion of this Note so surrendered.
k) Regulatory Compliance.
(i) If any shares of Common Stock to be reserved for the purpose of
conversion of this Note require registration or listing with or approval of any
government authority, stock exchange or other regulatory body under any federal
or state law or regulation or otherwise before such shares may be validly issued
or delivered upon conversion, the Company shall, at its sole cost and expense,
in good faith and as expeditiously as possible, endeavor to secure such
registration, listing or approval, as the case may be.
(ii) The shares of Common Stock issuable upon the election to convert
shall be Rule 144 restricted shares (the "Restricted
Securities"). After issuance of the Shares, Company agrees to use its best
efforts to assist holder in registering the Restricted Securities or to register
the Restricted Securities under the Act subject to the rules, regulations, and
other provisions of said Act.
(iii) In the event the holder elects to convert into ownership of
shares of the Company Stock, at the time of such conversation, the holder of
such shares shall have the following piggyback rights with reference:
(A) At any time that the Company proposes to file a Company
registration statement on Form S-1, including the pending Form S-1 registration
filed on January 8, 1998, under the Act (the "Registrations Statement"), the
Company shall cause to be included in such registration statement any securities
issued or subject to issuance in this transaction; provided, however, that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Company Registration Statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of holder's Restricted
Securities, the Company may, at its election, give written notice of such
determination to holder and, thereupon:
(1) in the ease of a determination not to register,
shall be relieved of its obligation to register holder's Restricted Securities
in connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), and
(2) in the case of a delay in registering, shall be
permitted to delay registering holder's Restricted Securities for the same
period as the delay in registering such other securities.
(B) The Company's obligation to include Restricted Securities
in a Company's Registration Statement pursuant to Section 7(a) shall be subject
to the following limitations:
(1) The Company may elect, at its sole option and for
any reason, not to register holder's Restricted Shares, provided however, that
this right is limited to one (1) time and relative to
one (1) particular Company Registration Statement.
(2) The Company shall not be obligated to include any
Restricted Securities in a registration statement filed on Form S-4, Form S-8 or
such other similar successor forms then in effect under the Securities Act.
(3) If a Company Registration Statement involves an
underwritten offering and the managing underwriter advises the Company in
writing that in its opinion, the number of securities requested to be included
in such Company Registration Statement exceeds the number which can be sold in
such offering without adversely affecting the offering, the Company shall
include in such Company Registration Statement the number of such securities
which the Company is so advised can be sold in such offering without adversely
affecting the offering, determined as follows:
(i) first, the securities proposed by the Company
to be sold for it own account, and
(ii) second, any Restricted Securities requested
to be included in such registration and any other securities of the Company in
accordance with the priorities, if and then existing among the holders of such
securities pro rata among the holders thereof requesting such registration on
the basis of the number of shares of such securities requested to be included by
such holders.
(4) The Company shall not be obligated to include
Restricted Securities in more than one (1) Company Registration Statement.
(C) To the extent holder's Restricted Securities are intended
to be included in a Company Registration Statement, holder may include any of
its Restricted Securities in such Company Registration Statement pursuant to
this Agreement only if holder furnishes to the Company in writing, within ten
(10) business days after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Act or such other information
as the Company may reasonably request for use in connection with the Company
Registration Statement or Prospectus or preliminary Prospectus included therein
and in any application to the NASD. Holder as to which the Company Registration
Statement is being effected agrees to furnish promptly to the Company all
information
required to be disclosed in order to make all information previously furnished
to the Company by holder not materially misleading.
l) Limitations on Amount of Conversion. Notwithstanding anything contained in
this Note to the contrary, in no event shall any holder of Note be entitled or
required to convert this Note in excess of that number of shares of Note which,
upon giving effect to such conversion, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to
exceed 4.9% of the outstanding shares of the Company's Common Stock immediately
following such conversion. For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such proviso
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) conversion of the remaining, unconverted Note
beneficially owned by such holder and its affiliates, and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company (including without limitation any warrants) which are beneficially
owned by the holder and its affiliates and which are subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. Any holder of Note may waive the foregoing
limitations set forth in this paragraph by written notice to the Company upon
not less than 30 days prior notice (with such waiver taking effect only upon the
expiration of such 30-day notice period).
5. EVENTS OF DEFAULT.
The occurrence and continuance of any one or more of the following events is
herein referred to as an Event of Default:
a) If the Company shall default in converting the applicable principal amount of
this Note into Common Stock and delivering stock certificates in respect of such
conversion within ten (10) "Business Days" (defined as any days on which
national banks in the United
States are open for business) from the Company's receipt of applicable notice of
conversion pursuant to the provisions hereof, whether on the-Maturity Date or
otherwise; or
b) If the Company shall default in the payment of any installment of interest on
this Note when payable in accordance with the terms thereof for more than ten
(10) calendar days after the same shall become due; or
c) If the Company shall not, at the time of receipt of a Conversion Notice
hereunder, have a sufficient number of authorized and unissued shares of its
Common Stock available for issuance to the holder of this Note upon conversion
of all or any portion of this Note in accordance with the terms hereof, and such
default shall not have been remedied within sixty (60) calendar days from the
date of such Conversion Notice; or
d) If the Company shall default in the performance of or compliance with any of
its material covenants or agreements contained herein and such default shall not
have been remedied within thirty (30) calendar days after written notice thereof
shall have been delivered to the Company by the holder of this Note; or
e) If any representation or warranty made in writing by or on behalf of the
Company in connection with the transactions contemplated thereby shall prove to
have been false or incorrect in any material respect on the date as of which
made; or
f) If the Company or any of its Significant Subsidiaries shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts as they become due, or shall file a voluntary petition in
bankruptcy or shall have an order for relief under the Bankruptcy Act granted
against it or them, or shall be adjudicated a bankrupt or insolvent, or shall
file any petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, or shall file any answer admitting
or not contesting the material allegations of a petition filed against the
Company or any of its Significant
Subsidiaries in any such proceeding, or shall seek or consent to or acquiesce in
the appointment of any trustee, custodian, receiver or liquidator of the Company
or of all or any substantial part of the properties of the Company or any of its
Significant Subsidiaries, or the Company or its directors shall take any action
looking to the dissolution or liquidation of the Company or any of its
Significant Subsidiaries. For purposes of this Section 5(f), the term
Significant Subsidiary shall mean and include Bass American Petroleum Corp. and
any other person, firm or corporation (i) more than 50% of the common stock or
equity interests of which are owned of record by the Company or any Subsidiary
of the Company, and (ii) the net income before taxes or total assets of which
represent more than 15% of the consolidated net income before taxes or
consolidated assets of the Company and all of its Subsidiaries; of
g) If, within sixty (60) days after the commencement of any proceeding against
the Company or any Significant Subsidiary seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed, or if, within sixty (60) days after the
appointment, without the consent or acquiescence of the Company or any
Significant Subsidiary, of any trustee, receiver or liquidator of the Company or
any Significant Subsidiary or of all or any substantial part of the properties
of the Company or any Significant Subsidiary, such appointment shall not have
been vacated.
6. REMEDIES ON DEFAULT; ACCELERATION.
Upon the occurrence and during the continuance of an Event of Default, the
entire unpaid balance of principal and accrued interest on this Note may be
accelerated and declared to be immediately due and payable by the Payee. Unless
waived by the written consent of the Payee and other holder of any of the Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein, or for
an injunction against a violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law. In the event of
an Event of Default, the Company agrees to pay to the holder of this Note such
further amount as shall be sufficient to cover the cost and expense of
collection, including, without limitation, reasonable attorneys' fees and
expenses. No course of dealing and no delay on the part of the holder of this
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers and remedies. No right,
power or remedy conferred hereby upon the holder hereof shall be exclusive of
any other right, power or remedy referred to herein nor now or hereafter
available at law, in equity, by statute or otherwise.
7. NOTICES.
All notices, requests, demands or other communications hereunder shall be in
writing and personally addressed or sent by telecopier or by registered or
certified mail, return receipt requested, postage pre-paid, addressed or
telecopied as follows or to such other address or telecopier number of which
notice has been given pursuant hereto:
If to the Company: Environmental Remediation Holding Corp.
3-5 Audrey Avenue
Oyster Bay, New York 11771
Attn: James A. Griffin, Secretary
Fax (516) 922-4312
-and-
Environmental Remediation Holding Corp.
Attn: Noreen Wilson, Vice President and
Chief Financial Officer
Fax (561) 624-1171
with copy to: Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Attn: Donald F. Mintmire, Esq.
Fax (561) 659-5371
If to the Holder:
to such Holder at the address set
forth on the records of the Company.
In addition,
copies of all such notices or other
communications shall be concurrently
delivered by the person giving the
same to each person who has been
identified to the Company by such
Holder as a person who is to receive
copies of such notices.
8. GOVERNING LAW.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Florida, without giving effect to conflict of law
principles.
9. SUBORDINATION TO SENIOR DEBT.
a) Payment of the principal of and interest on this Note is subordinated, to the
extent and in the manner provided herein, to the prior payment of all
indebtedness of the Company and/or all Subsidiaries of the Company, for money
borrowed or other obligations which is now or may hereafter be owed
(collectively, "Senior Debt") to any bank, commercial finance company, factor,
insurance company or other institution the lending activities are regulated by
law (individually, a "Senior Lender" and collectively, "Senior Lenders"), which
may, hereafter on any one or more occasions provide financing to the Company or
any of its Subsidiaries, secured by liens on any of the assets and properties of
the Company and/or any of its Subsidiaries (individually and collectively, an
"Institutional Borrower").
b) Upon any payment or distribution of assets or securities of the Institutional
Borrower, as the case may be, of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of the Institutional Borrower, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts payable under Senior Debt shall first be paid in full in cash, or
payment provided for in cash or cash equivalents, before the holder hereof shall
be entitled to receive any payment on account of principal of or interest on
this Note. Before any payment may be made by the Institutional Borrower of the
principal of or interest on this
Note upon any such dissolution or winding up or liquidation or reorganization,
any payment or distribution of assets or securities of the Institutional
Borrower of any kind of character, whether in cash, property or securities, to
which the holder hereof would be entitled, except for the provisions of this
Section 9, shall be made by the Institutional Borrower or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, directly to the holders of Senior Debt or their
representatives to the extent necessary to pay all such Senior Debt in full
after giving effect to any concurrent payment or distribution to the holders of
such Senior Debt.
c) Upon the happening of any default in payment of the principal of or interest
on any Senior Debt, then, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment in cash,
property or securities, by set-off or otherwise, shall be made or agreed to be
made by the Institutional Borrower on account of the principal of or interest on
this Note.
d) Upon the happening of an event of default (other than under circumstances
when the terms of Section 9(c) above are applicable) with respect to any Senior
Debt pursuant to which the holder thereof is entitled under the terms of such
Senior Debt to accelerate the maturity thereof, and upon written notice thereof
given to each of the Institutional Borrower and the holder of this Note by such
holder of Senior Debt ("Payment Notice"), then, unless and until such event of
default shall have been cured or waived or shall have ceased to exist, no action
shall or may be taken for collection of any amounts under this Note, and no
direct or indirect payment in cash, property or securities, by set-off or
otherwise, shall be made or agreed to be made by the Institutional Borrower an
account of the principal of or interest on this Note until such Senior Debt has
been paid in full accordance with its terms.
e) In the event than, notwithstanding the provisions of this Section 9, any
payment shall be made on account of the principal of or interest on this Note in
contravention of such provisions, then such payment shall be held for the
benefit of, and shall be paid over and delivered to, the holders of such Senior
Debt remaining unpaid to the
extent necessary to pay in fall in cash or cash equivalents the principal of and
interest on such Senior Debt in accordance with its terms after giving effect to
any concurrent payment or distribution to the holders of such Senior Debt.
f) Nothing contained in this Section 9 shall
(i) impair the conversion rights of the holder hereof referred to
in Section 4 above,
(ii) impair, as between the Company and the holder of this Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder hereof principal and interest as the same shall become due and payable,
or (iii) prevent the holder hereof from exercising all rights, powers and
remedies otherwise provided herein or by applicable law, all subject to the
express limitations provided herein.
g) Upon the occurrence of an Event of Default, if any Senior Debt shall then be
outstanding, no acceleration of the maturity of this Note shall be effective
until the earlier of (i) ten (10) days shall have passed following the date of
delivery to the Institutional Borrower by a Senior Lender(s) of written notice
of acceleration of any Senior Debt, or (ii) the maturity of any then outstanding
Senior Debt shall have been accelerated by reason of a default hereon. The
Company may pay the holder hereof any defaulted payment and all other amounts
due following any such acceleration of the maturity of this Note if this Section
9 would not prohibit such payment to be made at that time.
h) Upon payment in full of all Senior Debt, the Payee of this Note shall be
subrogated to the rights of the holder or holders of Senior Debt to receive all
payments or distributions applicable on Senior Debt to the extent of the prior
application thereto of moneys or other assets which would have been received in
respect of this Note, but for these subordination provisions, until the
principal of, and interest on, this Note shall have been paid in full.
i) The Payee, by accepting this Note
(i) shall be bound by all of the foregoing subordination
provisions;
(ii) agrees expressly for the benefit of the present and future holders
of Senior Debt that this Note is subject to the foregoing subordination
provisions; (iii) authorizes such persons as shall be designated by all holders
of Senior Debt at any given time, on his or its benefit to execute and deliver
such agreements, assignments, proofs of claim and other documents appropriate to
effectuate the foregoing subordination provisions; and (iv) hereby appoints the
person so designated his or its attorney-in-fact for such purpose.
j) The foregoing subordination provisions shall be for the benefit of all
holders of Senior Debt from time to time outstanding, and each of such holders
may proceed to enforce such provisions either directly against the holder hereof
or in any other manner provided by law.
k) Notwithstanding anything to the contrary set forth in this Section 9, the
security interest of the holder of this Note (as specified in Section 10 hereof)
is subject and subordinated only to the prior first lien and security interest
of any holder of Senior Debt of the Company, unless otherwise expressly
consented to in writing by the Payee.
10. PERMITTED PAYMENTS.
Notwithstanding the provisions of Section 9 of this Note, and provided that no
default or event of default (or event which, with the passage of time or giving
of notice or both) has occurred, will occur as a result of the "Permitted
Payment" (herein defined), or will occur with the passage of time or giving of
notice or both, under any document or instrument evidencing such Senior Debt,
the Company may pay to the Payee, and the Payee may accept from the Company, the
principal payments of, and/or interest payments on, the outstanding principal
amount of this Note when due on an unaccelerated basis (herein, "Permitted
Payments"); it being understood and agreed by the Payee by accepting this Note
that neither:
a) the payment terms set forth in Section l of this Note;
b) the subordination provisions contained in Section 9 of this Note,
nor
c) the provisions of this Section 10 of this Note, may be modified or
amended without the prior written consent of each and every holder of
Senior Debt.
11.SUCCESSORS AND ASSIGNS.
This Note shall be binding upon and inure to the benefit of the Company and the
holder hereof and their respective successors and assigns; provided, however,
that the Company may not transfer or assign any of its rights or obligations
hereunder without the prior written consent of the holder hereof. IN WITNESS
WHEREOF, the Company has caused this Note to be executed by its duly authorized
officers as of the date first set forth above.
ENVIRONMENTAL REMEDIATION HOLDING CORP.
By:_________________________________
Noreen G. Wilson, Chief Financial Officer
Attest:___________________________________