EXHIBIT 99(b)
CONVERTIBLE PROMISSORY NOTE
US$ 500,000.00 DATE: APRIL 3, 1997
FOR VALUE RECEIVED, the undersigned, TRANSMEDIA EUROPE, INC. and
TRANSMEDIA ASIA PACIFIC, INC. (collectively, the "Payors"), hereby jointly and
severally promise to pay to the order of TRANSMEDIA NETWORK INC. ("Payee"), at
its principal offices on April 1, 1998, the principal sum of Five Hundred
Thousand Dollars ($500,000.00), in lawful money of the United States and to pay
interest, from the date hereof until said principal sum shall be paid in full,
on said principal sum, or the unpaid principal balance thereof, in like money,
at the rate per annum of 10%. Interest hereon shall be payable in quarterly
installments on the first day of August and November, 1997, February 1998 and at
maturity, commencing August 1, 1997. Notwithstanding such joint and several
liability, it is understood and agreed that each Payor is directly liable for
one half of the principal amount and the interest thereon for the purpose of
allocating responsibility between the Payors and with respect to the conversion
of the principal amount into shares of common stock of the Payors.
The principal amount of this Promissory Note may be prepaid
(together with interest on the amount prepaid to the date of prepayment) in
whole or in part at any time and from time to time, without premium or penalty,
upon ten business days' notice to the Payee.
As provided in Annex A hereto, at the option of Payee, this Note, or
any portion thereof which equals US$1,000 or any integral multiple thereof, may
be converted at any time following the date hereof at the principal amount
thereof, or of such portion thereof, in equal dollar amounts into fully paid and
nonassessable shares of common stock of each Payor in equal amounts, at the
conversion price, determined as hereinafter provided, in effect at the time of
conversion. Such conversion right shall expire at the maturity hereof.
The price at which each share of common stock of each Payor shall be
delivered upon conversion (herein called the "Conversion Price") shall be
initially US$1.20 per share of common stock. The Conversion Price shall be
adjusted in certain instances as provided in paragraphs (a), (b), (c), (d), (e),
(f) and (i) of Section 3 of Annex A. Each Payor hereby covenants not to take any
action to increase the par value per share of its common stock.
Each Pays represents and warrants to Payee (and, while this Note
remains outstanding, shall be deemed continually to represent and warrant to
Payee) that (a) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was organized; (b) it has full
power authority and legal right to execute, deliver and perform this Note and
has taken all corporate, shareholder or other legal actions (and made any
filings and obtained any authorizations by governmental or regulatory
authorities) that are necessary to authorize the execution, delivery and
performance hereof; (c) it has received adequate consideration for
executing, delivering and performing its respective obligations under this Note;
(d) this Note is valid and binding upon it and enforceable in accordance with
its terms; and (e) the execution, delivery and performance hereof by it do not
violate any charter document or by-law, any law or regulation, any judgment,
order or decree of any court, arbitrator or governmental authority, or any
material agreement of any nature whatsoever that is binding upon it.
This Note shall, at Payee's option, become immediately due and
payable in full without notice or demand upon the occurrence of any of the
following events ("events of default"): (i) any payment under this Note is not
made when due; (ii) Payee's discovery that any representation or warranty made
herein to Payee is false or misleading in any material respect; (iii) the
failure by either Payor to perform or observe any condition or agreement
contained herein or in Annex A; (iv) the entry or issuance of any judgment,
warrant, writ of attachment, tax lien, writ of garnishment or the like against
either Payor, which alone or in the aggregate exceeds ten million dollars
(US$10,000,000.00); (v) the dissolution of either Payor or the sale by either
Payor of all or substantially all of its assets; (vi) the institution of a
bankruptcy, insolvency, reorganization or similar proceeding by or against
either Payor, the making by either Payor of an assignment for the benefit of
creditors, or either Payor's seeking to avail itself of the protection of any
other law for the relief of debtors. The Payors shall pay to Payee on demand all
costs and expenses incurred by Payee in collecting or otherwise enforcing its
rights under this Note, including attorneys' fees.
The Payors hereby irrevocably waives presentment for payment,
demand, notice of dishonor and protest hereof and, to the extent permitted by
applicable law, all other notices. In addition, the Payers hereby irrevocably
waive, as a defense to any action arising out of or relating hereto, the
interference of any administrative or governmental authority of the
jurisdiction(s) in which the Payors (or any Payer) is domiciled or the
impossibility of performance resulting from any law or regulation, or from any
change in the law or regulations, of such jurisdiction(s).
This Note shall be governed by and construed in accordance with the
law of the State of New York.
Each Payor hereby irrevocably agrees that any action or proceeding
relating hereto may be brought in by the state or federal courts located in the
State, City and County of New York. Each Payor hereby irrevocably submits, in
any such action or proceeding that is brought by Payee, to the non-exclusive
jurisdiction of each such court, irrevocably waives the defense of an
inconvenient forum with respect to any such action or proceeding, and agrees
that service of process in any such action or proceeding may be made upon either
Payor by mailing a copy thereof to such Payor at its address (as well as by any
other lawful method.).
Any notice or other communication given in connection herewith,
including Annex A hereto, to either Payor shall be sent to them by hand
delivery, by mail (postage prepaid) or by telecopy, as follows:
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If to Transmedia Europe:
11 St. James's Square
London 5WI Y4LB
England
If to Transmedia Asia
11 St. James's Square
London 5WI Y4LB
England
If to Payee:
Transmedia Network Inc.
11900 Biscayne Boulevard
Miami, Florida 33181
Facsimile: 305-892-4230/3342
or to such other address as either party may specify.
This Note shall be binding upon any heir, successor, executor,
personal representative or assign of either Payor. Payee's rights hereunder
shall inure to the benefit of any successor or assignee of Payee.
EACH PAYOR AND PAYEE EACH WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING HEREUNDER OR RELATING
HERETO.
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SIGNATURES
TRANSMEDIA EUROPE, INC.,
By: /s/ Paul L. Harrison
------------------------
Name: Paul L. Harrison
Title: CEO
TRANSMEDIA ASIA PACIFIC, INC.
By: /s/ Paul L. Harrison
------------------------
Name: Paul L. Harrison
Title: CEO
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FORM OF CONVERSION NOTICE
TO ___________________
The undersigned hereby irrevocably exercises the option to convert
the Note, or a portion thereof (which is $1,000 or an integral multiple
thereof) designated below, into shares of fully paid non-assessable common
stock in accordance with the terms of Annex A of the Note, and directs
that the shares issuable and deliverable upon the conversion, together
with any check in payment for a fractional share be issued and delivered
to the undersigned unless a different name has been provided below.
Specified Principal Amount to be converted: US$______________
TRANSMEDIA NETWORK INC.
Dated: By:
--------------------------------
Name:
Title:
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ANNEX A
CONVERSION OF NOTE
SECTION 1. Exercise of Conversion
In order to exercise the conversion privilege, the Payee shall surrender
the Note, duly endorsed or assigned to either Payor (on behalf of itself and as
agent for the other Payor) or in blank, at the address of such Payor listed in
the Note, accompanied by written notice to such Payor in the form provided in
the Note (or such other notice as is acceptable to such Payor), that the Payee
elects to convert such Note or, if less than the entire principal amount thereof
is to be converted, the specified principal amount thereof to be converted.
Subject to paragraphs 2(b) and 2(c), no payment or adjustment shall be made upon
any conversion on account of any interest accrued on the Note surrendered (or
specified principal amount thereof) for conversion or on account of any
dividends on the shares of common stock issued upon conversion.
The Note shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of the Note for conversion in
accordance with the foregoing provisions and the person entitled to receive the
common stock issuable upon conversion shall be treated for all purposes as the
record holder of such common stock as and after such time. As promptly as
practicable on or after the conversion date, the Payors shall issue and shall
deliver to the Payee (i) certificates for the respective number of full shares
of common stock of each Payor issuable upon conversion, together with payment in
lieu of any fraction of a share as provided in Section 2; and (ii) the amount of
interest accrued on the principal amount of the Note being converted since the
last date upon which interest was paid.
In the case of the Note being converted in part only, upon such conversion
the Payors shall execute and deliver to the Payee, at the expense of the Payers,
a new convertible promissory note (the "New Note"). The New Note shall have (i)
the same terms as the Note, and (ii) an aggregate principal amount equal to the
unconverted portion of the principal amount of the surrendered Note.
The Payee may convert up to one half of the principal amount of the Note
into a Payor's shares of common stock and the remaining half of the principal
amount of the Note into the other Payor's shares of common stock. The Conversion
Notice shall designate which of each Payor's shares of common stock is subject
to such conversion. All adjustment provisions, notice provisions, covenants and
provisions for mergers, consolidations or sales of assets provided for herein
shall be applied separately to each of the Payors.
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SECTION 2. Fraction of Shares.
No fractional share of common stock shall be issued upon conversion of the
Note. Instead of any fractional share of common stock which would otherwise be
issuable upon conversion of the Note (or specified principal amount thereof),
the Payors shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Closing Price (as hereinafter defined) at the
close of business on the day of conversion (or, if such day is not a Trading Day
(as hereafter defined), on the Trading Day immediately preceding such day).
SECTION 3. Adjustment of Conversion Price.
(a) In case a Payor shall pay or make a dividend or other
distribution on the common stock exclusively in common stock or shall pay or
make a dividend or other distribution on any other class of its capital stock
which dividend or distribution includes common stock, the Conversion Price for
the common stock of such Payor in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of common stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. For the
purpose of this paragraph (a), the number of shares of common stock at any time
outstanding shall not include shares held in the treasury of the relevant Payor.
Neither Payor shall pay any dividend or make any distribution on shares of
common stock held in its treasury.
(b) Subject to paragraph (g) of this Section, in case a Payor shall
pay or make a dividend or other distribution on the common stock consisting
exclusively of, or shall otherwise issue to all holders of its common stock,
rights or warrants entitling the holders thereof to subscribe for or purchase
shares of its common stock at a price per share less than the Current Market
Price (determined as provided in paragraph (h) of this Section) on the date
fixed for the determination of shareholders entitled to receive such rights or
warrants, the Conversion Price for the common stock of such Payor in effect at
the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of common stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of common stock which the aggregate of the offering
price of the total number of shares of common stock so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of shares of common stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
common stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes
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of this paragraph (b), the number of shares of common stock at any time
outstanding shall not include shares held in the treasury of the relevant Payor.
Neither Payor shall issue any rights or warrants in respect of shares of common
stock held in its treasury.
(c) In case outstanding shares of common stock of a Payor shall be
subdivided into a greater number of shares of common stock, the Conversion Price
for the common stock of such Payor in effect at the opening of business on the
day following the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of common
stock shall be combined into a smaller number of shares of common stock, the
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which subdivision or combination becomes effective.
(d) Subject to the last sentence of this paragraph (d) and to
paragraph (g) of this Section, in case a Payor shall, by dividend or otherwise,
distribute to all holders of its common stock evidences of its indebtedness,
shares of any class of its capital stock, cash or other assets (including
securities, but excluding any rights or warrants referred to in paragraph (b) of
this Section, excluding any dividend or distribution paid exclusively in cash
and excluding any dividend or distribution referred to in paragraph (a) of this
Section), the Conversion Price for the common stock of such Payor shall be
reduced by multiplying such Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of shareholders
entitled to such distribution by a fraction of which the numerator shall be the
Current Market Price (determined as provided in paragraph (h) of this Section)
on such date less the fair market value (as determined by its Board of
Directors, whose determination shall be described in a Board Resolution) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets to be distributed applicable to one share of common stock
and the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If its Board of Directors determines the fair market value of any
distribution for purposes of this paragraph (d) by reference to the actual or
when-issued trading market for any securities comprising part or all of such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price pursuant to paragraph (h)
of this Section, to the extent possible. For purposes of this paragraph (d), any
dividend or distribution that includes shares of common stock, rights or
warrants to subscribe for or purchase shares of common stock or securities
convertible into or exchangeable for shares of common stock shall be deemed to
be (x) a dividend or distribution of the evidences of indebtedness, cash, assets
or shares of capital stock other than such shares of common stock, such rights
or warrants or such convertible or exchangeable securities (making any
Conversion Price reduction required by this paragraph (d)) immediately followed
by (y) in the case of such shares of common stock or such rights or warrants, a
dividend or distribution thereof (making any further Conversion Price reduction
required by paragraph (a) and (b) of this Section, except any shares of common
stock included in such dividend or distribution shall not be deemed "outstanding
at the close of business on the
Page A-3
date fixed for such determination" within the meaning of paragraph (a) of this
Section), or (z) in the case of such convertible or exchangeable securities, a
dividend or distribution of the number of shares of common stock as would then
be issuable upon the conversion or exchange thereof, whether or not the
conversion or exchange of such securities is subject to any conditions (making
any further Conversion Price reduction required by paragraph (a) of this
Section, except the shares deemed to constitute such dividend or distribution
shall not be deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of paragraph (a) of this Section).
(e) In case a Payor shall, by dividend or otherwise, at any time
distribute to all holders of its common stock cash (excluding any cash that is
distributed as part of a distribution referred to in paragraph (d) of this
Section or in connection with a transaction to which Section 10 applies) in an
aggregate amount that, together with (A) the aggregate amount of any other
distributions to all holders of the common stock made exclusively in cash within
the 12 months preceding the date fixed for the determination of shareholders
entitled to such distribution and in respect of which no Conversion Price
adjustment pursuant to this paragraph (e) has been made previously and (B) the
aggregate of any cash plus the fair market value (as determined by its Board of
Directors, whose determination shall be described in a Board Resolution) as of
such date of determination of any other consideration payable in respect of any
tender offer by such Payor or a subsidiary thereof for all or any portion of the
common stock consummated within the 12 months preceding such date of
determination and in respect of which no conversion price adjustment pursuant to
paragraph (f) of this Section has been made previously, exceeds 10% of the
product of the Current Market Price (determined as provided in paragraph (h) of
this Section) on such date of determination times the number of shares of common
stock outstanding on such date, the Conversion Price for the common stock of
such Payor shall be reduced by multiplying the Conversion Price in effect
immediately prior to the close of business on such date of determination by a
fraction of which the numerator shall be the Current Market Price (determined as
provided in paragraph (h) of this Section) on such date less the amount of such
cash previously distributed or to be distributed at such time applicable to one
share of common stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of business
on the day after such date.
(f) In case a tender offer made by a Payor or any subsidiary or
affiliate thereof for all or any portion of its common stock shall be
consummated and such tender offer shall involve an aggregate consideration
having a fair market value (as determined by its Board of Directors, whose
determination shall be described in a Bond Resolution) as of the last time (the
"Expiration Time") that tenders may be made pursuant to such tender offer (as it
shall have been amended) that, together with (A) the aggregate of the cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be described in a Board Resolution) as of the Expiration
Time of the other consideration paid in respect of any other tender offer by
such Payor or a subsidiary or affiliate thereof for all or any portion of the
common stock consummated preceding the Expiration Time and in respect of which
no Conversion Price adjustment pursuant to this paragraph (f) has been made
previously and (B) the
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aggregate amount of any distributions to all holders of the common stock made
exclusively in cash preceding the Expiration Time and in respect of which no
Conversion Price adjustment pursuant to paragraph (e) of this Section has been
made previously, exceeds 10% of the product of the Current Market Price
(determined as provided in paragraph (h) of this Section) immediately prior to
the Expiration Time times the number of shares of common stock outstanding
(including any tendered shares) at the Expiration Time, the Conversion Price for
the common stock of such Payor shall be reduced by multiplying such Conversion
Price in effect immediately prior to the Expiration Time by a fraction of which
the numerator shall be (x) the product of the Current Market Price (determined
as provided in paragraph (h) of this Section) immediately prior to the
Expiration Time times the number of shares of common stock outstanding
(including any tendered shares at the Expiration Time) minus (y) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
shareholders upon consummation of such tender offer and the denominator shall be
the product of (A) such Current Market Price times (B) such number of
outstanding shares at the Expiration Time minus the number of shares accepted
for payment in such tender offer (the "Purchased Shares"), such reduction to
become effective immediately prior to the opening of business on the day
following the Expiration Time; provided, that if the number of Purchased Shares
or the aggregate consideration payable therefor have not been finally determined
by such opening of business, the adjustment required by this paragraph (f)
shall, pending such final determination, be made based upon the preliminarily
announced results of such tender offer, and, after such final determination
shall have been made, the adjustment required by this paragraph (f) shall be
made based upon the number of Purchased Shares and the aggregate consideration
payable therefor as so finally determined.
(g) The reclassification of common stock of a Payor into securities
which include securities other than common stock (other than any
reclassification upon a consolidation or merger to which Section 10 applies)
shall be deemed to involve (i) a distribution of such securities other than
common stock to all holders of common stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
shareholders entitled to such distribution" within the meaning of paragraph (d)
of this Section), and (ii) a subdivision or combination, as the case may be, of
the number of shares of common stock outstanding immediately prior to such
reclassification into the number of shares of common stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective", as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (c) of this Section).
Rights or warrants issued by a Payor to all holders of its common stock
entitling the holders thereof to subscribe for or purchase shares of common
stock (either initially or under certain circumstances), which rights or
warrants (i) are deemed to be transferred with such shares of common stock, (ii)
are not exercisable and (iii) are also issued in respect of future issuances of
common stock, in each case in clauses (i) through (iii) until the occurrence of
a specified event or
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events ("Trigger Event"), shall for purposes of this Section 3 not be deemed
issued until the occurrence of the earliest Trigger Event. If any such rights or
warrants, including any such existing rights or warrants distributed prior to
the date of the Note, are subject to subsequent events, upon the occurrence of
each of which such rights or warrants shall become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the
occurrence of each such event shall be deemed to be such date of issuance and
record date with respect to new rights or warrants (and a termination or
expiration of the existing rights or warrants without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed distribution)
of such rights or warrants, or any Trigger Event with respect thereto, that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 3 was made, (1) in the
case of any such rights or warrant which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of common stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of common stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants which shall have expired or been terminated
without exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
Notwithstanding any other provision of this Section 3 to the contrary,
rights, warrants, evidences of indebtedness, other securities, cash or other
assets (including, without limitation, any rights distributed pursuant to any
stockholder rights plan) shall be deemed not to have been distributed by a Payor
for purposes of this Section 3 if such Payor makes proper provision so that if
Payee converts the Note (or any portion of the principal amount thereof) after
the date fixed for determination of stockholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in addition to
the shares of common stock issuable upon such conversions, the amount and kind
of such distributions that Payee would have been entitled to receive if Payee
had, immediately prior to such determination date, converted the Note (or any
portion of the principal amount thereof) into common stock.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section 3, the current market price per
share of common stock of a Payor (the "Current Market Price") on any date shall
be deemed to be the average of the daily Closing Prices on the principal
exchange or market on which such common stock is traded for the 5 consecutive
Trading Days selected by the Payee commencing not more than 20 Trading Days
before, and ending not later than, the date in question; provided, however, that
(i) if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after
the 20th Trading Day prior to the date in question and prior to the "ex" date
for the issuance or distribution requiring such computation, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the
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same fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the Conversion Price for the common stock of such Payor pursuant to paragraph
(a), (b), (c), (d), (e) or (f) above occurs on or after the "ex" date for the
issuance or distribution requiring such computation and on or prior to the date
in question, the Closing Price for each Trading Day on and after the "ex" date
for such other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which such Conversion Price is so required to be
adjusted as a result of such other event, and (iii) if the "ex" date for the
issuance or distribution requiring such computation is on or prior to the date
in question, after taking into account any adjustment required pursuant to
clause (ii) of this proviso, the Closing Price for each Trading Day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash and
the fair market value on the date in question (as determined by such Payor's
Board of Directors in a manner consistent with any determination of such value
for purposes of paragraph (d) or (e) of this Section 3, whose determination
shall be described in a Board Resolution) of the evidences of indebtedness,
shares of capital stock or assets being distributed applicable to one share of
common stock as of the close of business on the day before such "ex" date. For
the purpose of any computation under paragraph (f) of this Section, the Current
Market Price on any date shall be deemed to be the average of the daily Closing
Prices for the five (5) consecutive Trading Days selected by the Payors
commencing on or after the latest (the "Commencement Date") of (i) the date 20
Trading Days before the date in question, (ii) the date of commencement of the
tender offer requiring such computation and (iii) the date of the last
amendment, if any, of such tender offer involving a change in the maximum number
of shares for which tenders are sought or a change in the consideration offered,
and ending not later than the Expiration Time of such tender offer; provided,
however, that if the "ex" date for any event (other than the tender offer
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on or after
the Commencement Date and prior to the Expiration Time for the tender offer
requiring such computation, the Closing Price for each Trading Day prior to the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. The closing price for any Trading Day
(the "Closing Price") shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, on the principal securities exchange
on which the common stock is listed or admitted to trading. For purposes of this
paragraph, the term "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally not
traded on the applicable securities exchange and the term "`ex' date," (i) when
used with respect to any issuance or distribution, means the first date on which
the common stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Prices were obtained without the right to receive
such issuance or distribution, (ii) when used with respect to any subdivision or
combination of shares of common stock, means the first date on which the common
stock trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (iii) when used
with respect to any tender offer means the first date on which the common stock
trades regular way on such
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exchange or in such market after the last time that tenders may be made pursuant
to such tender offer (as it shall have been amended).
(i) Each Payor may make such reductions in the Conversion Price for
its common stock, in addition to those required by paragraphs (a), (b), (c),
(d), (e) and (f) of this Section, as it considers to be advisable (as evidenced
by a Board Resolution) in order that any event treated for U.S. federal or
foreign income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients or, if that is not possible, to diminish any income
taxes that are otherwise payable because of such event.
(j) No adjustment in the Conversion Price for the common stock of
either Payor shall be required unless such adjustment (plus any other
adjustments not previously made by reason of this paragraph (j)) would require
an increase or decrease of at least 1% in such Conversion Price; provided,
however, that any adjustments which by reason of this paragraph (j) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
(k) Notwithstanding any other provision of this Section 3, no
adjustment to a Conversion Price shall reduce the Conversion Price below the
then par value per share of the relevant common stock, and any such purported
adjustment shall instead reduce such Conversion Price to such par value.
SECTION 4. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price for the common stock of a Payor is adjusted
as provided herein, such Payor shall compute the adjusted Conversion Price in
accordance with Section 3 and shall prepare, and deliver to the Payee, an
Officers' Certificate signed by its chief executive officer or chief financial
officer setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based.
SECTION 5. Notice of Certain Corporate Action.
If, in case:
(a) a Payor shall declare a dividend (or any other
distribution) on its common stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that
would require a Conversion Price adjustment pursuant to paragraph
(e) of Section 3; or
(b) a Payor shall authorize the granting to the holders
of its common stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other
rights (excluding shares of capital stock
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or option for capital stock issued pursuant to a benefit plan for
employees, officers or directors of the Payors); or
(c) of any reclassification of the common stock of a
Payor (other than a subdivision or combination of the outstanding
shares of common stock), or of any consolidation, merger or share
exchange to which a Payor is a party and for which approval of any
stockholders is required, or of the sale or transfer of all or
substantially all of its assets; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of a Payor; or
(e) a Payor or any subsidiary or affiliate thereof shall
commence a tender offer for all or a portion of the outstanding
shares of common stock (or shall amend any such tender offer to
change the maximum number of shares being sought or the amount or
type of consideration being offered therefor);
then such Payor shall deliver to the Payee to the address set forth in the Note,
at least 21 days (or 11 days in any case specified in clause (a), (b) or (e)
above) prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of common
stock of record who will be entitled to such dividend, distribution, rights or
warrants are to be determined, (y) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of common stock of record shall be entitled to exchange
their shares of common stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up, or (z) the date on which such
tender offer commenced, the date on which such tender offer is scheduled to
expire unless extended, the consideration offered and the other material terms
thereof (or the material terms of any amendment thereto). Neither the failure to
give any such notice nor any defect therein shall affect the legality or
validity of any action described in clause (a) through (e) of this Section 5.
SECTION 6. Payors to Reserve Common stock.
Each Payor shall at all times reserve and keep available, free from
preemptive and other rights, out of its authorized but unissued common stock or
out of its common stock held in treasury, for the purpose of effecting the
conversion of the Note, the full number of shares of its common stock then
issuable upon the conversion of the Note.
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SECTION 7. Covenant as to Common stock.
Each Payor covenants that all shares of its common stock which may be
issued upon conversion of the Note will upon issue be fully paid and
nonassessable and such Payor will pay all taxes, liens and charges with respect
to the issue thereof.
SECTION 8. Provisions of Consolidation, Merger or Sale of Assets.
In case of any consolidation of a Payor with, or merger of a Payor into,
any other person, any merger of another person into a Payor (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of common stock) or any sale or transfer of
all or substantially all of the assets of a Payor (other than to a wholly-owned
subsidiary) or the acquisition by any person of all or substantially all of the
common stock of a Payor, the person formed by such consolidation or resulting
from such merger or which acquires such assets or common stock, as the case may
be, shall execute and deliver to the Payee a New Note providing that the Payee
shall have the right thereafter, during the period such New Note shall be
convertible as specified in the Note, to convert such New Note only into the
kind and amount of securities, cash and other property, if any, receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of common stock into which such New Note might have been converted immediately
prior to such consolidation, merger, sale or transfer, assuming such holder of
common stock (i) is not a person with which such Payor consolidated or into
which it merged or which merged into it or to which such sale or transfer was
made, as the case may be (a "Constituent Person"), or an affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of common
stock held immediately prior to such consolidation, merger, sale or transfer by
other than a Constituent Person or an affiliate thereof and in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purpose of this Section the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by
each nonelecting share shall be deemed to be the kind and amount so receivable
per share by a plurality of the nonelecting shares). Such New Note shall provide
for adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
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