BERLINER COMMUNICATIONS, INC. 7% SENIOR SUBORDINATED SECURED CONVERTIBLE NOTE DUE 2008
EXHIBIT
4.1
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”). THE ISSUANCE TO THE HOLDER OF THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS NOTE AND IN PAYMENT OF INTEREST ON THIS NOTE ARE NOT
COVERED BY A REGISTRATION STATEMENT UNDER THE 1933 ACT. PURSUANT TO THE NOTE
PURCHASE AGREEMENT, THIS NOTE HAS BEEN ACQUIRED, AND SUCH SHARES MUST BE
ACQUIRED, FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN
THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE 1933 ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO
THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
BERLINER
COMMUNICATIONS, INC.
7%
SENIOR SUBORDINATED SECURED CONVERTIBLE NOTE DUE 2008
|
No.
07-
|
[$_____]
|
Elmwood
Park, New Jersey
February
2, 2007
FOR
VALUE RECEIVED, BERLINER COMMUNICATIONS, INC.,
a Delaware
corporation (hereinafter called the “Company”), hereby promises to pay to
[NOTEHOLDER] or registered assigns (the “Holder”), or order, the sum of
[PRINCIPAL], on the Maturity Date, and to pay interest on the unpaid principal
balance hereof at the Applicable Rate from the date hereof, until the same
becomes due and payable, whether at maturity or upon acceleration or by
repurchase in accordance with the terms hereof or otherwise. Any amount,
including, without limitation, principal of or interest on this Note or the
Optional Redemption Price or the Repurchase Price, that is payable under this
Note and that is not paid when due shall bear interest at the Default Rate
from
the due date thereof until the same is paid (“Default Interest”). Regular
interest shall be payable in arrears on each Interest Payment Date, commencing
on April 1, 2007, on the principal amount outstanding on such date. Regular
interest on this Note shall be computed on the basis of a 360-day year of twelve
30-day months and actual days elapsed. No regular interest shall be payable
on
an Interest Payment Date on any portion of the principal amount of this Note
which shall have been redeemed prior to such Interest Payment Date so long
as
the Company shall have complied in full with its obligations with respect to
such redemption.
All
payments of principal of and premium, if any, interest, and other amounts on
this Note shall be made in lawful money of the United States of America. All
cash payments shall be made by wire transfer of immediately available funds
to
such account as the Holder may from time to time designate by written notice
in
accordance with the provisions of this Note. Whenever any amount expressed
to be
due by the terms of this Note is due on any day which is not a Business Day,
the
same shall instead be due on the next succeeding day which is a
Business
Day and, in the case of any Interest Payment Date which is not the date on
which
this Note is paid in full, the extension of the due date thereof shall not
be
taken into account for purposes of determining the amount of interest due on
such date. Certain capitalized terms used in this Note are defined in Article
VI.
The
obligations of the Company under this Note shall rank junior to (i) the existing
line of credit with Presidential Financial Corporation of Delaware Valley
(“Presidential”) and (ii) a working capital facility with a working capital
lender(s) approved by Sigma in a principal amount not to exceed $10 million
secured by a first priority security interest in all of the Company’s and its
Subsidiaries’ assets and the proceeds thereof; provided that in no event shall
the total line of credit with Presidential and the working capital facility
exceed $10 million in the aggregate (collectively, the “Senior Debt”). The
obligations of the Company under this Note shall rank senior to all other
obligations of the Company for indebtedness for borrowed money or the purchase
price of property other than the Senior Debt (except for indebtedness permitted
under clause (9) of the definition of Permitted Indebtedness to the extent
that
such indebtedness is secured solely by the equipment purchased or leased).
This
Note is issued pursuant to the Note Purchase Agreement and the Holder of this
Note and this Note are subject to the terms and entitled to the benefits of
the
Note Purchase Agreement.
The
following terms shall apply to this Note:
ARTICLE
I
OPTIONAL
REDEMPTION
1.1 Optional
Redemption.
(a)
At
any time during the Optional Redemption Period, the Company shall have the
right
to redeem at any one time all or from time to time any part of the outstanding
principal amount of this Note at the Optional Redemption Price pursuant to
this
Section 1.1 on any Optional Redemption Date, so long as the following
conditions are met:
(1) during
a
period of 30 consecutive Trading Days ending not more than three Trading Days
prior to the date the Company gives a particular Optional Redemption Notice,
(A)
on each such Trading Day the Market Price of the Common Stock shall be at least
150 percent of the Conversion Price in effect on such Trading Day, and (B)
the
Average Daily Trading Volume Threshold is met;
(2) on
the
date an Optional Redemption Notice is given and at all times to and including
the applicable Optional Redemption Date, no Event of Default and no event which,
with notice or passage of time, or both, would become an Event of Default has
occurred and is continuing (unless the requirements of this clause (2) will
be
satisfied immediately after the redemption of this Note on the applicable
Optional Redemption Date and the Company shall furnish Company Certificates
to
the Holder to such effect on
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the
date
the applicable Optional Redemption Notice is given to the Holder and on the
applicable Optional Redemption Date);
(3) on
the
date an Optional Redemption Notice is given and at all times to and including
the applicable Optional Redemption Date, no Repurchase Event has occurred with
respect to which the Holder has the right to exercise repurchase rights pursuant
to Sections 4.1 and 4.2 with respect to which the Holder has exercised such
repurchase rights and the Repurchase Price has not been paid to the Holder
and
no event which, with notice or passage of time, or both, would become a
Repurchase Event has occurred and is continuing;
(4) on
the
date the Optional Redemption Notice is given and at all times thereafter to
and
including the applicable Optional Redemption Date, the Registration Statement
shall be effective and available for use by the Holder and the holders of the
Warrants for the resale of the shares of Common Stock issued and issuable upon
conversion of this Note and issued or issuable upon exercise of the Warrant
other than “Blackout Periods” permitted under the Note Purchase Agreement not to
exceed two trading days during such period, as the case may be, and is
reasonably expected to remain effective and available for such use for at least
60 days after the applicable Optional Redemption Date; and
(5) on
the
date an Optional Redemption Notice is given, the Company has funds available
to
pay the Optional Redemption Price.
In
order
to exercise its right of redemption under this Section 1.1, the Company
shall give an Optional Redemption Notice to the Holder not less than 30 Trading
Days or more than 40 Trading Days prior to the Optional Redemption Date stating
that: (1) the Company is exercising its right to redeem a specified portion
(which may be all, if so specified by the Company) of this Note in accordance
with this Section 1.1, (2) the principal amount of this Note to be
redeemed, (3) the Optional Redemption Price, (4) the Optional Redemption Date
and that all of the conditions of this Section 1.1 entitling the Company to
call
this Note for redemption have been met. On the applicable Optional Redemption
Date (or such later date as the Holder surrenders this Note to the Company)
the
Company shall pay to or upon the order of the Holder, by wire transfer of
immediately available funds to such account as shall be specified for such
purpose by the Holder at least one Business Day prior to the Optional Redemption
Date, an amount equal to the Optional Redemption Price of the portion (which
may
be all) of this Note to be redeemed. In each such case the aggregate principal
amount of this Note to be so redeemed shall be at least $500,000.00 or such
lesser aggregate principal amount of this Note as shall remain outstanding
at
the time an Optional Redemption Notice is given.
1.2 No
Prepayment.
Except
as specifically provided in Section 1.1, this Note may not be prepaid, redeemed
or repurchased at the option of the Company prior to December 29, 2008.
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ARTICLE
II
CERTAIN
COVENANTS
So
long
as the Company shall have any obligation under this Note for the payment of
the
indebtedness evidenced hereby:
2.1 Limitations
on Certain Indebtedness.
The
Company will not itself, and will not permit any Subsidiary to, create, assume,
incur or in any manner become liable in respect of, including, without
limitation, by reason of any business combination transaction (all of which
are
referred to herein as “incurring”), any Indebtedness other than Permitted
Indebtedness.
2.2 Payment
of Obligations.
The
Company will pay and discharge, and will cause each Subsidiary to pay and
discharge, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested
in
good faith by appropriate proceedings and the Company shall have established
adequate reserves therefor on its books.
2.3 Maintenance
of Property; Insurance.
(a) The
Company will keep, and will cause each Subsidiary to keep, all property which,
in the reasonable business judgment of the Company, is useful and necessary
in
its business in good working order and condition, ordinary wear and tear
excepted.
(b)The
Company will maintain, and will cause each Subsidiary to maintain, with
financially sound and responsible insurance companies, insurance, in at least
such amounts and against such risks as is reasonably adequate for the conduct
of
their respective businesses and the value of their respective
properties.
2.4 Conduct
of Business and Maintenance of Existence.
The
Company will continue, and will cause each Significant Subsidiary to continue,
to engage in business of the same general type as now conducted by the Company,
and will preserve, renew and keep in full force and effect, and will cause
each
Significant Subsidiary to preserve, renew and keep in full force and effect
their respective corporate existence and their respective rights, privileges
and
franchises necessary or desirable in the normal conduct of business, except
where the failure to do so would not have a material adverse effect on (i)
the
business, properties, operations, condition (financial or other), results of
operation or prospects of the Company and the Subsidiaries, taken as a whole
or
(ii) the ability of the Company to pay and perform its obligations under the
Transaction Documents.
2.5 Compliance
with Laws.
The
Company will comply, and will cause each Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules, regulations, decisions,
orders and requirements of governmental authorities and courts (including,
without limitation, environmental laws) except where compliance therewith is
contested in good faith by appropriate proceedings.
-4-
2.6 Investment
Company Act.
The
Company will not be or become an open-end investment trust, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act of 1940, as
amended.
2.7 Limitations
on Asset Sales, Liquidations, Etc.; Certain Matters.
The
Company shall not
(a) sell,
convey or otherwise dispose of all or substantially all of the assets of the
Company as an entirety or substantially as an entirety in a single transaction
or in a series of related transactions; or
(b) liquidate,
dissolve or otherwise wind up the affairs of the Company.
2.8 Limitation
on Certain Issuances.
The
Company shall not (A) offer, sell or issue, or enter into any agreement,
arrangement or understanding to offer, sell or issue, any Common Stock
Equivalent for which the price at which the holder of such Common Stock
Equivalent is entitled to acquire shares of Common Stock varies based on the
market or trading price of the Common Stock.
2.9 Limitations
on Liens. The
Company will not itself, and will not permit any Subsidiary to, create, assume
or suffer to exist any mortgage, lien, pledge, security interest or other charge
or encumbrance (including, without limitation, the lien or retained security
title of a conditional vendor), all of which are referred to below as “liens”,
upon all or any part of its property of any character, whether owned at the
date
hereof or thereafter acquired, except:
(a) liens
upon any property of any Subsidiary or Subsidiaries as security for indebtedness
owing by such Subsidiary to the Company;
(b) liens
securing this Note and the Other Notes ratably;
(c) liens
for
taxes or assessments or governmental charges or levies on its property if such
taxes or assessments or charges or levies shall not at the time be due and
payable or if the amount, applicability, or validity of any such tax,
assessment, charge or levy shall currently be contested in good faith by
appropriate proceedings or necessary preliminary steps are being taken to
contest, compromise or settle the amount thereof or to determine the
applicability or validity thereof and if the Company or such Subsidiary, as
the
case may be, shall have set aside on its books reserves (segregated to the
extent required by sound accounting practice) deemed by it adequate with respect
thereto; deposits or pledges to secure payment of worker's compensation,
unemployment insurance, old age pensions or other social security; deposits
or
pledges to secure performance of bids, tenders, contracts (other than contracts
for the payment of money borrowed or credit extended), leases, public or
statutory obligations, surety or appeal bonds, or other deposits or pledges
for
purposes of like general nature in the ordinary course of business; mechanics',
carriers', workers', repairmen's or other like liens arising in the ordinary
course of business securing obligations which are not overdue for a period
of 60
days, or which are in good faith being contested or litigated, or deposits
to
obtain the release of such liens; liens created by or resulting from any
litigation or legal proceedings or proceedings being
-5-
contested
in good faith by appropriate proceedings, provided any execution levied thereon
shall be stayed; leases made, or existing on property acquired, in the ordinary
course of business; landlords' liens under leases to which the Company or any
Subsidiary is a party; and zoning restrictions, easements, licenses or
restrictions on the use of real property or minor irregularities in title
thereto; provided that all such liens described in this subsection (d) do not,
in the aggregate, materially impair the use of such property in the operations
of the business of the Company or any Subsidiary or the value of such property
for the purpose of such business;
(d) liens
existing on the Issuance Date and listed in Schedule 4(r) to the Note Purchase
Agreement; and
(e) liens
securing Indebtedness permitted in clauses (6) through (10) of the definition
of
“Permitted Indebtedness.”
2.10 Transactions
with Affiliates.
The
Company will not pay, and will not permit any Subsidiary, directly or
indirectly, to pay, any funds to or for the account of, make any investment
(whether by acquisition of stock or Indebtedness, by loan, advance, transfer
of
property, guarantee or other agreement to pay, purchase or service, directly
or
indirectly, any Indebtedness, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate
in,
or effect any transaction in connection with, any joint enterprise or other
joint arrangement with, any Affiliate of the Company, except, on terms to the
Company or such Subsidiary no less favorable than terms that could be obtained
by the Company or such Subsidiary from a Person that is not an Affiliate of
the
Company, as determined in good faith by the Board of Directors; provided,
however, this Section 2.10 shall not in any way restrict (x) advances and
repayment of advances among the Company and BCI Communications, Inc. (“BCI”) or
(y)
regularly
occurring transactions with Affiliates as disclosed in the Company’s filings
with the SEC or which, on an annual basis, do not exceed the amount of $60,000
in the aggregate.
2.11 Rule
144A Information Requirement.
Within
the period prior to the expiration of the holding period applicable to sales
hereof under Rule 144(k) under the 1933 Act (or any successor provision), the
Company shall, during any period in which it is not subject to Section 13 or
15(d) under the 1934 Act, make available to the Holder and any prospective
purchaser of this Note from the Holder, the information required pursuant to
Rule 144A(d)(4) under the 1933 Act upon the request of the Holder and it will
take such further action as the Holder may reasonably request, all to the extent
required from time to time to enable the Holder to sell this Note without
registration under the 1933 Act within the limitations of the exemption provided
by Rule 144A, as Rule 144A may be amended from time to time. Upon the request
of
the Holder, the Company will deliver to the Holder a written statement as to
whether it has complied with such requirements.
2.12 Notice
of Defaults.
The
Company shall notify the Holder promptly, but in any event not later than five
days after the Company becomes aware of the fact, of any failure by the Company
to comply with this Article II.
-6-
ARTICLE
III
EVENTS
OF DEFAULT
3.1 If
any of
the following events of default (each, an “Event of Default”) shall
occur:
(a) Failure
to Pay Principal, Interest, Etc.
The
Company fails (1) to pay the principal, the Optional Redemption Price or the
Repurchase Price hereof when due, whether at maturity, upon acceleration or
otherwise, as applicable, or (2) to pay any installment of interest hereon
when
due; or
(b) Conversion
and the Shares.
The
Company fails to issue or cause to be issued shares of Common Stock to the
Holder or the holder of any Other Note upon exercise of the conversion or
purchase rights of the Holder or such holder within three Trading Days after
the
due date therefor in accordance with the terms of this Note, any Other Note
or
any Warrant or Other Warrant or fails to transfer any certificate for any such
shares of Common Stock as and when required by this Note and the Note Purchase
Agreement or the Other Note or any Warrant or Other Warrant, as the case may
be;
or
(c) Breach
of Certain Covenants.
The
Company fails to comply with Section 2.1, 2.7 or 2.8; or
(d) Breach
of Other Covenants.
The
Company fails to comply with any other provision of Article II of this Note
(other than Section 2.1, 2.7 or 2.8) or breaches any other covenant or other
term or condition of this Note or any of the other Transaction Documents (other
than as specifically provided in clauses (a), (b), and (c) of this Section
3.1)
and such failure continues unremedied for 30 calendar days after receipt by
the
Company of notice thereof from the Holder; or
(e) Breach
of Representations and Warranties.
Any
representation or warranty of the Company made herein or in any agreement,
statement or certificate given in writing pursuant hereto (or pursuant to any
Transaction Documents) shall be false or misleading when made; or
(f) Certain
Voluntary Proceedings.
The
Company or any Subsidiary shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due or shall
admit in writing its inability generally to pay its debts as they become due;
or
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(g) Certain
Involuntary Proceedings.
An
involuntary case or other proceeding shall be commenced against the Company
or
any Subsidiary seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law now
or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 90 consecutive days; or
(h) Judgments.
Any
court of competent jurisdiction shall enter one or more final judgments against
the Company or any Subsidiary or any of their respective properties or other
assets in an aggregate amount in excess of $250,000, which is not vacated,
appealed, bonded, stayed, discharged, satisfied or waived for a period of 30
consecutive days; or
(i) Default
Under Other Agreements.
(a) The
Company or any Subsidiary shall (i) default in any payment with respect to
any
Indebtedness for borrowed money (other than this Note) which Indebtedness has
an
outstanding principal amount in excess of $100,000 individually or $250,000
in
the aggregate for all such Indebtedness, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement,
covenant or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event
or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, any such Indebtedness to become due prior to its stated maturity and
such
default or event shall continue beyond the period of grace, if any, provided
in
the instrument or agreement under which such Indebtedness was created (after
giving effect to any consent or waiver obtained and then in effect thereunder)
and such default shall continue for five days (or to such earlier date as the
holder of any other Indebtedness shall declare the same due and payable by
reason of such default; or (b) any Indebtedness of the Company or any Subsidiary
which has an outstanding principal amount in excess of the $100,000 individually
or $250,000 in the aggregate for all such Indebtedness shall, in accordance
with
its terms, be declared to be due and payable, or required to be prepaid other
than by a regularly scheduled or required payment prior to the stated maturity
thereof;
then,
(1) upon
the
occurrence and during the continuation of any Event of Default specified in
clause (a), (b), (c), or (e) of this Section 3.1, at the option of the
Holder, and upon the occurrence of any Event of Default specified in clause
(f)
or (g) of this Section 3.1: (X) the Company shall pay to the Holder an
amount equal to the outstanding principal amount of this Note plus
accrued
and unpaid interest on such principal amount to the date of payment plus
accrued
and unpaid Default Interest, if any, thereon at the rate provided in this Note
to the date of payment, (Y) all other amounts payable hereunder or under any
of
the other Transaction Documents shall immediately become due and
-8-
payable,
all without demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including, without limitation, reasonable
legal
fees and expenses of collection, and (Z) the Holder shall be entitled to
exercise all other rights and remedies available at law or in equity;
and
(2) upon
the
occurrence and during the continuation of any Event of Default specified in
clause (d), (h) or (i) of this Section 3.1: (A) if any Event of Default
continues during the period of 30 consecutive days following the occurrence
of
such Event of Default, then thereafter so long as any Event of Default is
continuing (i) at the option of the Holder the Company shall pay to the Holder
an amount equal to the outstanding principal amount of this Note plus
accrued
and unpaid interest on such principal amount to the date of payment plus
accrued
and unpaid Default Interest, if any, thereon at the rate provided in this Note
to the date of payment, (ii) all other amounts payable hereunder shall
immediately become due and payable, all without demand, presentment or notice,
all of which hereby are expressly waived, together with all costs, including,
without limitation, reasonable legal fees and expenses, of collection, and
(B)
the Holder shall be entitled to exercise all rights and remedies available
at
law or in equity other than those set forth in the immediately preceding clause
(A).
ARTICLE
IV
REPURCHASE
UPON A REPURCHASE EVENT
4.1 Repurchase
Right Upon Repurchase Event.
If a
Repurchase Event occurs, in addition to any other right of the Holder, the
Holder shall have the right, at the Holder’s option, to require the Company to
repurchase all of this Note, or any portion hereof on the repurchase date that
is five Business Days after the date of the Holder Notice delivered with respect
to such Repurchase Event. The Holder shall have the right to require the Company
to repurchase all or any such portion of this Note if a Repurchase Event occurs
at any time while any portion of the principal amount of this Note is
outstanding at a price equal to the Repurchase Price.
4.2 Notices;
Method of Exercising Repurchase Rights, Etc.
(a) On
or before the fifth Business Day after the occurrence of a Repurchase Event,
the
Company shall give to the Holder a Company Notice of the occurrence of the
Repurchase Event and of the repurchase right set forth herein arising as a
result thereof. Such Company Notice shall set forth:
(i) the
date
by which the repurchase right must be exercised, and
(ii) a
description of the procedure (set forth in this Section 4.2) which the
Holder must follow to exercise the repurchase right.
No
failure of the Company to give a Company Notice or defect therein shall limit
the Holder’s right to exercise the repurchase right or affect the validity of
the proceedings for the repurchase of this Note or portion hereof.
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(b) To
exercise the repurchase right, the Holder shall deliver to the Company on or
before the 30th day after a Company Notice (or if no such Company Notice has
been given, within 40 days after the Holder first learns of the Repurchase
Event) (i) a Holder Notice setting forth the name of the Holder and the
principal amount of this Note to be repurchased, and (ii) this Note, duly
endorsed for transfer to the Company of the portion of the outstanding principal
amount of this Note to be repurchased. A Holder Notice may be revoked by the
Holder at any time prior to the time the Company pays the applicable Repurchase
Price to the Holder.
(c) If
the
Holder shall have given a Holder Notice, then on the date which is five Business
Days after the date such Holder Notice is given (or such later date as the
Holder surrenders this Note) the Company shall make payment in immediately
available funds of the applicable Repurchase Price to such account as specified
by the Holder in writing to the Company at least one Business Day prior to
the
applicable repurchase date.
4.3 Other.
A Holder
Notice given by the Holder shall be deemed for all purposes to be in proper
form
unless the Company notifies the Holder within three Business Days after such
Holder Notice has been given (which notice shall specify all defects in such
Holder Notice), and any Holder Notice containing any such defect shall
nonetheless be effective on the date given if the Holder promptly undertakes
to
correct all such defects. No such claim of defect shall limit or delay
performance of the Company's obligation to repurchase any portion of this Note,
the repurchase of which is not in dispute.
ARTICLE
V
CONVERSION
5.1 Right
to Convert.
Subject
to and upon compliance with the provisions of this Note, the Holder shall have
the right, at the Holder's option, at any time prior to the close of business
on
the Maturity Date (except that, if the Holder shall have exercised repurchase
rights under Sections 4.1 and 4.2 or the Company shall have exercised its
redemption rights under Section 1.1, such conversion right shall terminate
with
respect to the portion of this Note to be repurchased or redeemed, as the case
may be, at the close of business on the last Trading Day prior to the later
of
(x) the Optional Redemption Date or the date the Company is required to make
such repurchase, as the case may be, or (y) the date the Company pays or
deposits in accordance with Section 7.10 the applicable Repurchase Price or
Optional Redemption Price unless in any such case the Company shall default
in
payment due upon repurchase or redemption hereof) to convert the principal
amount of this Note, or any portion of such principal amount which is at least
$10,000 (or such lesser principal amount of this Note as shall be outstanding
at
such time), plus accrued and unpaid interest, into that number of fully paid
and
non-assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing (1) the sum of (x) the principal amount of this Note or
portion thereof being converted plus
(y)
accrued and unpaid interest on the portion of the principal amount of this
Note
being converted to the applicable Conversion Date plus
(z)
accrued and unpaid Default Interest, if any, on the amount referred to in the
immediately preceding clause (y) to the applicable Conversion
-10-
Date
by
(2)
the
Conversion Price in effect on the applicable Conversion Date, by giving a
Conversion Notice in the manner provided in Section 5.2; provided,
however, that,
if
at any time this Note is converted in whole or in part pursuant to this Section
5.1 and after the Charter Amendment is effected or required to be effected
in
accordance with the Company’s obligations under the Note Purchase Agreement, the
Company does not have available for issuance upon such conversion as authorized
and unissued shares or in its treasury at least the number of shares of Common
Stock required to be issued pursuant hereto, then, at the election of the Holder
made by notice from the Holder to the Company, this Note (or portion hereof
as
to which conversion has been requested), to the extent that sufficient shares
of
Common Stock are not then available for issuance upon conversion, shall be
converted into the right to receive from the Company, in lieu of the shares
of
Common Stock into which this Note or such portion hereof would otherwise be
converted and which the Company is unable to issue, payment in an amount equal
to the product obtained by multiplying (x) the number of shares of Common Stock
which the Company is unable to issue times
(y)
the
arithmetic average of the Market Price for the Common Stock during the five
consecutive Trading Days immediately prior to the applicable Conversion Date.
Any such payment shall, for all purposes of this Note, be deemed to be a payment
of principal plus a premium equal to the total amount payable less the principal
portion of this Note converted as to which such payment is required to be made
because shares of Common Stock are not then available for issuance upon such
conversion. The Holder is not entitled to any rights of a holder of Common
Stock
until the Holder has converted this Note to Common Stock, and only to the extent
this Note is deemed to have been converted to Common Stock under this Article
V.
For purposes of Sections 5.5 and 5.6, whenever a provision references the shares
of Common Stock into which this Note (or a portion hereof) is convertible or
the
shares of Common Stock issuable upon conversion of this Note (or a portion
hereof) or words of similar import, any determination required by such provision
shall be made as if a sufficient number of shares of Common Stock were then
available for issuance upon conversion in full of this Note.
5.2 Exercise
of Conversion Privilege; Issuance of Common Stock on Conversion; No Adjustment
for Interest or Dividends.
(a) In
order to exercise the conversion privilege with respect to this Note, the Holder
shall give a Conversion Notice (or such other notice which is acceptable to
the
Company) to the Company and the Transfer Agent or to the office or agency
designated by the Company for such purpose by notice to the Holder. A Conversion
Notice may be given by telephone line facsimile transmission to the numbers
set
forth on the form of Conversion Notice.
(b) As
promptly as practicable, but in no event later than three Trading Days, after
a
Conversion Notice is given, the Company shall issue and shall deliver to the
Holder or the Holder's designee the number of full shares of Common Stock
issuable upon such conversion of this Note or portion hereof in accordance
with
the provisions of this Article and deliver a check or cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in Section 5.2(f) and, if applicable, any cash payment
required pursuant to the proviso to the first sentence of Section 5.1 (which
payment, if any, shall be paid no later than five Trading Days after the
applicable Conversion Date).
(c) Each
conversion of this Note (or portion hereof) shall be deemed to have been
effected on the applicable Conversion Date, and the person in whose name any
certificate
-11-
or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on such Conversion Date the holder of record
of
the shares represented thereby; provided,
however, that
if a
Conversion Date is a date on which the stock transfer books of the Company
shall
be closed such conversion shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes
on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the applicable
Conversion Date.
(d) The
Company shall notify the Holder of any claim by the Company of manifest error
in
a Conversion Notice within two Trading Days after the Holder gives such
Conversion Notice and no such claim of error shall limit or delay performance
of
the Company's obligation to issue upon such conversion the number of shares
of
Common Stock which are not in dispute. A Conversion Notice shall be deemed
for
all purposes to be in proper form unless the Company notifies the Holder by
telephone line facsimile transmission within two Trading Days after a Conversion
Notice has been given (which notice from the Company shall specify all defects
in the Conversion Notice) and any Conversion Notice containing any such defect
shall nonetheless be effective on the date given if the Holder promptly
undertakes to correct all such defects. 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 shares of Common Stock or other securities or property on
conversion of this Note in a name other than that of the Holder, and the Company
shall not be required to issue or deliver any such shares or other securities
or
property unless and until the person or persons requesting the issuance thereof
shall have paid to the Company the amount of any such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The
Holder shall be responsible for the amount of any withholding tax payable in
connection with any conversion of this Note.
(e) (1)
If the Holder shall have given a Conversion Notice in accordance with the terms
of this Note, the Company's obligation to issue and deliver the certificates
for
Common Stock shall be absolute and unconditional, irrespective of any action
or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any person or
any
action to enforce the same, any failure or delay in the enforcement of any
other
obligation of the Company to the Holder, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other person of any obligation to the Company or any violation
or
alleged violation of law by the Holder or any other person, and irrespective
of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with such conversion; provided,
however, that
nothing herein shall limit or prejudice the right of the Company to pursue
any
such claim in any other manner permitted by applicable law. The occurrence
of an
event which requires an adjustment of the Conversion Price as contemplated
by
Section 5.3 shall in no way restrict or delay the right of the Holder to receive
certificates for Common Stock upon conversion of this Note and the Company
shall
use its best efforts to implement such adjustment on terms reasonably acceptable
to the Holder within two Trading Days of such occurrence.
(2) If
in any
case the Company shall fail to issue and deliver the shares of Common Stock
to
the Holder in connection with a particular conversion of this Note within three
Trading Days after the Holder gives the Conversion Notice for such conversion,
in addition to
-12-
any
other
liabilities the Company may have hereunder and under applicable law (A) the
Company shall pay or reimburse the Holder on demand for all out-of-pocket
expenses, including, without limitation, reasonable fees and expenses of legal
counsel, incurred by the Holder as a result of such failure, (B) if as a result
of such failure the Holder shall suffer any direct damages or liabilities from
such failure (including, without limitation, margin interest and the cost of
purchasing securities to cover a sale (whether by the Holder or the Holder's
securities broker) or borrowing of shares of Common Stock by the Holder for
purposes of settling any trade involving a sale of shares of Common Stock made
by the Holder during the period beginning on the Issuance Date and ending on
the
date the Company delivers or causes to be delivered to the Holder such shares
of
Common Stock), then the Company shall upon demand of the Holder pay to the
Holder an amount equal to the actual direct, out-of-pocket damages and
liabilities suffered by the Holder by reason thereof which the Holder documents
to the reasonable satisfaction of the Company, and (C) the Holder may by written
notice (which may be given by mail, courier, personal service or telephone
line
facsimile transmission) or oral notice (promptly confirmed in writing), given
at
any time prior to delivery to the Holder of the shares of Common Stock issuable
in connection with such exercise of the Holder's conversion right, rescind
such
exercise and the Conversion Notice relating thereto, in which case the Holder
shall thereafter be entitled to convert that portion of this Note as to which
such exercise is so rescinded and to exercise its other rights and remedies
with
respect to such failure by the Company. Notwithstanding the foregoing the
Company shall not be liable to the Holder under clause (B) of the immediately
preceding sentence to the extent the failure of the Company to deliver or to
cause to be delivered such shares of Common Stock results from fire, flood,
storm, earthquake, shipwreck, strike, war, acts of terrorism, crash involving
facilities of a common carrier, acts of God, or any similar event outside the
control of the Company (it being understood that the action or failure to act
of
the Transfer Agent shall not be deemed an event outside the control of the
Company except to the extent resulting from fire, flood, storm, earthquake,
shipwreck, strike, war, acts of terrorism, crash involving facilities of a
common carrier, acts of God, or any similar event outside the control of the
Transfer Agent or the bankruptcy, liquidation or reorganization of the Transfer
Agent under any bankruptcy, insolvency or other similar law). The Holder shall
notify the Company in writing (or by telephone conversation, confirmed in
writing) as promptly as practicable following the third Trading Day after the
Holder gives a Conversion Notice if the Holder becomes aware that such shares
of
Common Stock so issuable have not been received as provided herein, but any
failure so to give such notice shall not affect the Holder's rights under this
Note or otherwise. If the Holder shall have exercised the conversion right
in
any particular instance and either (1) the Company shall notify the Holder
on or
after the date the Holder gives such Conversion Notice that the shares of Common
Stock issuable upon such conversion might not be delivered within three Trading
Days after the date the Holder gives such Conversion Notice or (2) the Holder
learns after the date which is three Trading Days after the date the Holder
gives such Conversion Notice that the Holder has not received such shares of
Common Stock, then, without releasing the Company of its obligations with
respect thereto, from and after the Trading Day next succeeding the earlier
of
the events described in the preceding clauses (1) and (2) of this sentence
the
Holder shall make reasonable efforts not to sell shares of Common Stock in
anticipation of receipt of such shares of Common Stock in a manner which is
likely to increase materially the liability of the Company under clause (2)
of
the second preceding sentence.
-13-
(f) No
fractional shares of Common Stock shall be issued upon conversion of this Note
but, in lieu of any fraction of a share of Common Stock which would otherwise
be
issuable in respect of such conversion, the Company may round the number of
shares of Common Stock issued on such conversion up to the next highest whole
share or may pay lawful money of the United States of America for such
fractional share, based on a value of one share of Common Stock being equal
to
the Market Price of the Common Stock on the applicable Conversion
Date.
5.3 Adjustment
of Conversion Price.
The
Conversion Price shall be adjusted from time to time by the Company as
follows:
(a) In
case
the Company shall on or after the Issuance Date pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders 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 Record 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 Record Date. If any dividend or
distribution of the type described in this Section 5.3(a) is declared but not
so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
(b) In
case
the Company shall on or after the Issuance Date issue rights or warrants (other
than any rights or warrants referred to in Section 5.3(d)) to all holders of
its
outstanding shares of Common Stock entitling them (for a period expiring within
45 days after the date fixed for the determination of stockholders entitled
to
receive such rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price on the Record
Date
fixed for the determination of stockholders entitled to receive such rights
or
warrants, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect at the
opening of business on the date after such Record Date by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding at
the
close of business on the Record Date plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price, and the denominator shall be the number of shares
of Common Stock outstanding on the close of business on the Record Date plus
the
total number of additional shares of Common Stock so offered for subscription
or
purchase. Such adjustment shall become effective immediately after the opening
of business on the day following the Record Date fixed for determination of
stockholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered pursuant to such rights or warrants,
upon the expiration or termination of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in effect
had the adjustments made upon the issuance of such rights or warrants been
made
on the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then
-14-
be
in
effect if such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether
any
rights or warrants entitle the holder to subscribe for or purchase shares of
Common Stock at less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights or warrants, the value
of such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In
case
the outstanding shares of Common Stock shall on or after the Issuance Date
be
subdivided into a greater number of shares of Common Stock, the Conversion
Price
in effect at the opening of business on the earlier of the day following the
day
upon which such subdivision becomes effective and the day on which “ex-” trading
of the Common Stock begins with respect to such subdivision 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 earlier of the
day
following the day upon which such combination becomes effective and the day
on
which “ex-” trading of the Common Stock with respect to such combination begins
shall be proportionately increased, such reduction or increase, as the case
may
be, to become effective immediately after the opening of business on the earlier
of the day following the day upon which such subdivision or combination becomes
effective and the day on which “ex-” trading of the Common Stock begins with
respect to such subdivision or combination.
(d) In
case
the Company shall on or after the Issuance Date, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which Section
5.3(a) applies) or evidences of its indebtedness, cash or other assets
(including securities, but excluding any rights or warrants referred to in
Section 5.3(b) and dividends and distributions paid exclusively in cash and
excluding any capital stock, evidences of indebtedness, cash or assets
distributed upon a merger or consolidation to which Section 5.4 applies) (the
foregoing hereinafter in this Section 5.3(d) called the “Securities”)), then, in
each such case, subject to the second paragraph of this Section 5.3(d), the
Conversion Price shall be reduced so that the same shall be equal to the price
determined by multiplying the Conversion Price in effect immediately prior
to
the close of business on the Record Date with respect to such distribution
by a
fraction of which the numerator shall be the Current Market Price on such date
less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the Securities so 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 the Record Date; provided,
however, that
in
the event the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal
to or
greater than the Current Market Price on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that the Holder shall
have the right to receive upon conversion of this Note (or any portion hereof)
the amount of Securities such holder would have received had such holder
converted this Note (or portion hereof) immediately prior to such Record Date.
In the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not been declared. If
the
Board of Directors determines
-15-
the
fair
market value of any distribution for purposes of this Section 5.3(d) by
reference to the actual or when issued trading market for any Securities
comprising all or part 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, to the extent possible.
Rights
or
warrants distributed by the Company to all holders of Common Stock entitling
the
holders thereof to subscribe for or purchase shares of the Company's capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events (a “Trigger
Event”): (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, shall not be deemed to have been distributed for purposes of
this
Section 5.3 (and no adjustment to the Conversion Price under this Section 5.3
will be required) 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 Issuance Date, are subject to Trigger Events, upon
the
satisfaction 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 Trigger 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) (so that, by way of illustration and not limitation, the
dates of issuance of any such rights shall be deemed to be the dates on which
such rights become exercisable to purchase capital stock of the Company, and
not
the date on which such rights may be issued, or may become evidenced by separate
certificates, if such rights are not then so exercisable). In addition, in
the
event of any distribution of 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 5.3
was made (1) in the case of any such rights or warrants 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.
For
purposes of this Section 5.3(d) and Sections 5.3(a) and (b), any dividend or
distribution to which this Section 5.3(d) is applicable that also includes
shares of Common Stock, or rights or warrants to subscribe for or purchase
shares of Common Stock to which Section 5.3(b) applies (or both), shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such shares of Common Stock or rights or warrants to which Section 5.3(b)
applies (and any Conversion Price reduction required by this Section 5.3(d)
with
respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required
by
Sections 5.3(a) and (b) with respect to such dividend or distribution shall
then
be made), except (A) the Record Date of such dividend or distribution shall
be
substituted as “the
-16-
date
fixed for the determination of stockholders entitled to receive such dividend
or
other distribution”, “Record Date fixed for such determination” and “Record
Date” within the meaning of Section 5.3(a) and as “the date fixed for the
determination of stockholders entitled to receive such rights or warrants”, “the
Record Date fixed for the determination of the stockholders entitled to receive
such rights or warrants” and “such Record Date” within the meaning of Section
5.3(b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed “outstanding at the close of business on the
Record Date fixed for such determination” within the meaning of Section
5.3(a).
(e) In
case
the Company shall on or after the Issuance Date, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that
is
distributed upon a merger or consolidation to which Section 5.4 applies or
as
part of a distribution referred to in Section 5.3(d)) in an aggregate amount
that, combined with (1) the aggregate amount of any other such distributions
to
all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution, and in respect of which
no
adjustment pursuant to this Section 5.3(e) has been made, and (2) the aggregate
of any cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and set forth in a Board Resolution)
of
consideration payable in respect of any Tender Offer by the Company or any
Subsidiary for all or any portion of the Common Stock concluded within the
12
months preceding the date of payment of such distribution, and in respect of
which no adjustment pursuant to Section 5.3(f) has been made, exceeds 10% of
the
product of (x) the Current Market Price on the Record Date with respect to
such
distribution times
(y)
the
number of shares of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date, unless the
Company elects to reserve such cash for distribution to the Holder upon the
conversion of this Note (and shall have made adequate provision) so that the
Holder will receive upon such conversion, in addition to the shares of Common
Stock to which the Holder is entitled, the amount of cash which the Holder
would
have received if the Holder had, immediately prior to the Record Date for such
distribution of cash, converted this Note into Common Stock, 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 close of
business on such Record Date by a fraction (i) the numerator of which shall
be
equal to the Current Market Price on the Record Date less an amount equal to
the
quotient of (x) the excess of such combined amount over such 10% and (y) the
number of shares of Common Stock outstanding on the Record Date and (ii) the
denominator of which shall be equal to the Current Market Price on the Record
Date; provided,
however, that
in
the event the portion of the cash so distributed applicable to one share of
Common Stock is equal to or greater than the Current Market Price of the Common
Stock on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that the Holder shall have the right to receive
upon
conversion of this Note (or any portion hereof) the amount of cash the Holder
would have received had the Holder converted this Note (or portion hereof)
immediately prior to such Record Date. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
-17-
(f) In
case a
Tender Offer on or after the Issuance Date made by the Company or any Subsidiary
for all or any portion of the Common Stock shall expire and such Tender Offer
(as amended upon the expiration thereof) shall require the payment to
stockholders (based on the acceptance (up to any maximum specified in the terms
of the Tender Offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that combined together with (1) the aggregate of the cash plus
the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), as of the expiration
of such Tender Offer, of consideration payable in respect of any other Tender
Offers, by the Company or any Subsidiary for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such Tender
Offer and in respect of which no adjustment pursuant to this Section 5.3(f)
has
been made and (2) the aggregate amount of any distributions to all holders
of
the Company's Common Stock made exclusively in cash within 12 months preceding
the expiration of such Tender Offer and in respect of which no adjustment
pursuant to Section 5.3(e) has been made, exceeds 10% of the product of (i)
the
Current Market Price as of the last time (the “Expiration Time”) tenders could
have been made pursuant to such Tender Offer (as it may be amended) times
(ii) the
number of shares of Common Stock outstanding (including any tendered shares)
at
the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, 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
close of business on the date of the Expiration Time by a fraction of which
the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered shares) at the Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time
and the denominator shall be the sum of (x) the fair market value (determined
as
aforesaid) of the aggregate consideration payable to stockholders based on
the
acceptance (up to any maximum specified in the terms of the Tender Offer) of
all
shares validly tendered and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the “Purchased
Shares”) and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) at the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time,
such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. In the event that the Company
is obligated to purchase shares pursuant to any such Tender Offer, but the
Company is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
Tender Offer had not been made. If the application of this Section 5.3(f) to
any
Tender Offer would result in an increase in the Conversion Price, no adjustment
shall be made for such Tender Offer under this Section 5.3(f).
(g) (1)
In
case at any time on or after the Issuance Date the Company shall issue shares
of
its Common Stock or Common Stock Equivalents (collectively, the “Newly Issued
Shares”), other than an issuance pro rata to all holders of its outstanding
Common Stock and other than an issuance in respect of which Section 5.3(h)
is
applicable, at a price below the Current Fair Market Value of the Common Stock
at the time of such issuance, then following such issuance of Newly Issued
Shares the Conversion Price shall be adjusted as provided in this
-18-
Section
5.3(g). The Conversion Price following any such adjustment shall be determined
by multiplying the Conversion Price immediately prior to such adjustment by
a
fraction, of which the numerator shall be the sum of (a) the number of shares
of
Common Stock outstanding immediately prior to the issuance of the Newly Issued
Shares (calculated on a fully-diluted basis assuming the conversion of all
options, warrants, purchase rights or convertible securities which are
exercisable at the time of the issuance of the Newly Issued Shares) plus
(b)
the
number of shares of Common Stock which the aggregate consideration, if any,
received by the Company for the number of Newly Issued Shares would purchase
at
a price equal to the Current Fair Market Value of the Common Stock at the time
of such issuance, and the denominator shall be the sum of (X) the number of
shares of Common Stock outstanding immediately prior to the issuance of the
Newly Issued Shares (calculated on a fully-diluted basis assuming the exercise
or conversion of all options, warrants, purchase rights or convertible
securities which are exercisable or convertible at the time of the issuance
of
the Newly Issued Shares) plus
(Y)
the
number of Newly Issued Shares. The adjustment provided for in this Section
5.3(g) may be expressed as the following mathematical formula:
|
(
O
+(C / FMV))
|
x
CP
|
|
|
NCP=
|
(
O
+ N )
|
where:
|
C
|
=
|
aggregate
consideration received by the Company for the Newly Issued
Shares
|
|
N
|
=
|
number
of Newly Issued Shares
|
|
O
|
=
|
number
of shares of Common Stock outstanding (on a fully diluted basis,
as
described above) immediately prior to the issuance of the Newly Issued
Shares
|
|
FMV
|
=
|
Current
Fair Market Value of the Common Stock at the time of issuance of
the Newly
Issued Shares
|
|
CP
|
=
|
Conversion
Price immediately prior to the issuance of the Newly Issued
Shares
|
|
NCP
|
=
|
Conversion
Price immediately after the issuance of the Newly Issued
Shares
|
(2) Notwithstanding
the foregoing, no adjustment shall be made under this Section 5.3(g) by reason
of:
(A) the
issuance by the Company of shares of Common Stock pro rata to all holders of
the
Common Stock so long as (i) any adjustment to the Conversion Price that is
required by Section 5.3(a) is made and (ii) the Company shall have given notice
of such issuance thereof to the Holder pursuant to Section 5.6;
-19-
(B) the
issuance by the Company of the Notes, the Other Notes, the Warrants or the
Other
Warrants or shares of Common Stock upon conversion of this Note, or the Other
Notes or upon exercise of the Warrants or the Other Warrants or in accordance
with the terms hereof and thereof;
(C) the
issuance of Common Stock upon conversion, exercise or exchange of Common Stock
Equivalents outstanding on the Issuance Date; or
(D) the
issuance of Common Stock and Common Stock Equivalents as consideration for
acquisitions; provided that such shares in the aggregate amount to no more
than
1,853,536 shares (as may be adjusted for stock splits, combinations,
recapitalizations and the like); and provided further that, to the extent any
shares are issued in excess of such amount, adjustment shall be made pursuant
to
this provision with respect to the issuance of all such shares.
(h) (1)
In
case at any time on or after the Issuance Date the Company issues shares of
Common Stock or Common Stock Equivalents at a price per share at which the
Company sells such shares of Common Stock or the price per share at which the
holders of such Common Stock Equivalents are entitled to acquire shares of
Common Stock upon conversion or exercise thereof which is less than the
Conversion Price in effect at the time of such issuance, then following such
issuance the Conversion Price shall be reduced to the price per share (or
weighted average price per share, if such shares are issued, or such Common
Stock Equivalents may be converted or exercised, at different prices) at which
such shares of Common Stock are issued or at which such Common Stock Equivalents
may be exercised, if the same is lower than the Conversion Price in effect
immediately prior to such issuance.
(2) If
any
adjustment in the Conversion Price is made pursuant to this Section 5.3(h)
in
respect of any issuance of shares of Common Stock or Common Stock Equivalents
such issuance pursuant to Section 5.3(g).
(3) Notwithstanding
the foregoing, no adjustment shall be made under this Section 5.3(h) by reason
of:
(A) the
issuance by the Company of shares of Common Stock pro rata to all holders of
the
Common Stock so long as (i) any adjustment required by Section 5.3(a) is made
and (ii) the Company shall have given notice thereof to the Holder pursuant
to
Section 5.6;
(B) the
issuance by the Company of the Notes, the Other Notes, the Warrants or the
Other
Warrants or the issuance by the Company of shares of Common Stock upon
conversion of this Note or the Other Notes or upon exercise of the Warrants
or
the Other Warrants in accordance with the terms hereof and thereof;
(C) the
issuance of Common Stock upon conversion, exercise or exchange of Common Stock
Equivalents outstanding on the Issuance Date;
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(D) the
issuance by the Company of option grants for Common Stock or other of the
Company’s equity securities for employees under a stock option, equity
compensation or similar plan duly adopted by the Board of Directors in an amount
not to exceed 1,853,536 shares (as may be adjusted for stock splits,
combinations, recapitalizations and the like); provided that, to the extent
any
shares are issued in excess of such amount, adjustment shall be made pursuant
to
this provision with respect to the issuance of all such shares; or
(E) the
issuance of Common Stock and Common Stock Equivalents as consideration for
acquisitions; provided that such shares in the aggregate amount to no more
than
1,853,536 shares (as may be adjusted for stock splits, combinations,
recapitalizations and the like); and provided further that, to the extent any
shares are issued in excess of such amount, adjustment shall be made pursuant
to
this provision with respect to the issuance of all such shares.
(i) The
Company may make such reductions in the Conversion Price, in addition to those
required by Sections 5.3(a), (b), (c), (d), (e), (f), (g) and (h), as the Board
of Directors considers to be advisable to avoid or diminish any income tax
to
holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any
event
treated as such for income tax purposes.
(j) No
adjustment in the Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that
any
adjustments which by reason of this Section 5.3(j) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article V shall be made by the Company and 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 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.
(k) Whenever
the Conversion Price is adjusted as herein provided, the Company shall promptly,
but in no event later than five days thereafter, give a notice to the Holder
setting forth the Conversion Price after such adjustment and setting forth
a
brief statement of the facts requiring such adjustment, but which statement
shall not include any information which would be material non-public information
for purposes of the 1934 Act. Failure to deliver such notice shall not affect
the legality or validity of any such adjustment.
(l) In
any
case in which this Section 5.3 provides that an adjustment shall become
effective immediately after a Record Date for an event, the Company may defer
until the occurrence of such event (i) issuing to the Holder in connection
with
any conversion of this Note after such Record Date and before the occurrence
of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment
and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 5.2(f).
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(m) For
purposes of this Section 5.3, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu
of
fractions of shares of Common Stock. The Company will not pay any dividend
or
make any distribution on shares of Common Stock held in the treasury of the
Company other than dividends or distributions payable only in shares of Common
Stock.
5.4 Effect
of Reclassification, Consolidation, Merger or Sale.
(a)
If
any of the following events occur, namely (i) any reclassification or change
of
the outstanding shares of Common Stock (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, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company
as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing Person, as the
case may be, shall execute with the Holder a written agreement providing that
(x) this Note shall be convertible into the kind and amount of shares of stock
and other securities or property or assets (including cash) receivable upon
such
reclassification, change, consolidation, merger, combination, sale or conveyance
by the holder of the number of shares of Common Stock issuable upon conversion
of this Note in full (assuming, for such purposes, a sufficient number of
authorized shares of Common Stock available to convert this Note) immediately
prior to such reclassification, change, consolidation, merger, combination,
sale
or conveyance assuming such holder of Common Stock did not exercise such
holder's rights of election, if any, as to the kind or amount of securities,
cash or other property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance (provided
that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election
shall
not have been exercised (“non-electing share”), then for the purposes of this
Section 5.4 the kind and amount of securities, cash or other property receivable
upon such consolidation, merger, statutory exchange, sale or conveyance for
each
non-electing share shall be deemed to be the kind and amount so receivable
per
share by a plurality of the non-electing shares), (y) in the case of any such
successor or purchasing Person, upon such consolidation, merger, combination,
sale or conveyance such successor or purchasing Person shall be jointly and
severally liable with the Company for the performance of all of the Company's
obligations under this Note and the Note Purchase Agreement and (z) if
registration or qualification is required under the 1933 Act or applicable
state
law for the public resale by the Holder of such shares of stock and other
securities so issuable upon conversion of this Note, such registration or
qualification shall be completed prior to such reclassification, change,
consolidation, merger, combination or sale. Such written agreement shall provide
for adjustments which shall be as nearly equivalent as may be practicable to
the
adjustments provided for in this Article. If, in the case of any such
reclassification, change, consolidation, merger, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by
a
holder of shares of
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Common
Stock includes shares of stock or other securities and assets of a corporation
other than the successor or purchasing corporation, as the case may be, in
such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then such written agreement shall also be executed by such other
corporation and shall contain such additional provisions to protect the
interests of the Holder as the Board of Directors shall reasonably consider
necessary by reason of the foregoing, including, to the extent practicable,
the
provisions providing for the repurchase rights set forth in Article IV
herein.
(b) The
above
provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
(c) If
this
Section 5.4 applies to any event or occurrence, Section 5.3 shall not
apply.
5.5 Reservation
of Shares; Shares to Be Fully Paid; Listing of Common
Stock.
(a) Subject
to the provisions of Section 5(l) of the Note Purchase Agreement, the Company
shall reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock or shares of Common Stock held
in
treasury, solely for issuance upon conversion of this Note, and in addition
to
the shares of Common Stock required to be reserved by the terms of the Warrants,
sufficient shares to provide for the conversion of this Note from time to time
as this Note is converted.
(b) Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value, if any, of the shares of Common Stock issuable upon
conversion of this Note, the Company will take all corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue shares of such Common Stock at such adjusted
Conversion Price.
(c) The
Company covenants that all shares of Common Stock issued upon conversion of
this
Note will be fully paid and non-assessable by the Company and free from all
taxes, liens and charges with respect to the issue thereof.
(d) The
Company covenants that if any shares of Common Stock to be provided for the
purpose of conversion of this Note hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to secure such registration
or
approval, as the case may be.
(e) The
Company covenants that its securities will remain listed or included for
quotation on a Trading Market.
5.6 Notice
to Holder Prior to Certain Actions.
In
case
on or after the Issuance Date:
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(a) the
Company shall declare a dividend (or any other distribution) on its Common
Stock
(other than in cash out of retained earnings); or
(b) the
Company shall authorize the granting to the holders of its Common Stock of
rights or warrants to subscribe for or purchase any share of any class or any
other rights or warrants; or
(c) the
Board
of Directors shall authorize any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from
no
par value to par value), or any consolidation or merger or other business
combination transaction to which the Company is a party and for which approval
of any stockholders of the Company is required, or the sale or transfer of
all
or substantially all of the assets of the Company; or
(d) there
shall be pending the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the
Company shall give the Holder, as promptly as possible but in any event at
least
ten Trading Days prior to the applicable 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 rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, other business
combination transaction, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record who shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, other business combination
transaction, sale, transfer, dissolution, liquidation or winding-up shall be
determined. Such notice shall not include any information which would be
material non-public information for purposes of the 1934 Act. Failure to give
such notice, or any defect therein, shall not affect the legality or validity
of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. In the case of any such action
of which the Company gives such notice to the Holder or is required to give
such
notice to the Holder, the Holder shall be entitled to give a Conversion Notice
which is contingent on the completion of such action.
ARTICLE
VI
DEFINITIONS
6.1 Certain
Defined Terms.
(a)
All
the agreements or instruments herein defined shall mean such agreements or
instruments as the same may from time to time be supplemented or amended or
the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms thereof and of this Note.
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(b) The
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
“Acquisition
Note" means a promissory note issued by the Company in connection with an
Acquisition Transaction in an original principal amount approved in writing
by
Sigma.
“Acquisition
Transaction” means a transaction pursuant to which the Company or a Subsidiary
acquires the business or assets of another company, which transaction has been
approved in writing by Sigma.
“Affiliate”
means, with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the subject Person. For purposes of this definition,
“control” (including, with correlative meaning, the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
“AMEX”
means the American Stock Exchange, Inc.
“Applicable
Rate” means 7 percent per annum or, if an Event of Default shall occur, then so
long as any Event of Default shall continue, 10 percent per annum (or in either
case such lesser rate as shall be the highest rate permitted by applicable
law).
“Average
Daily Trading Volume Threshold” means, with respect to any period, that the
average daily trading volume of the Common Stock during such period as reported
by Bloomberg, L.P. (or if such source ceases to be available, a comparable
source selected by the Holder and acceptable to the Company in its reasonable
judgment) shall be at least 100,000 shares (such amount to be subject to
equitable adjustment for stock splits, stock dividends and similar events
relating to the Common Stock that are reflected in the trading market for the
Common Stock on or before the last Trading Day in such period).
“Board
of
Directors” means the Board of Directors of the Company.
“Board
Resolution” means
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, or duly authorized
committee thereof (to the extent permitted by applicable law), and to be in
full
force and effect on the date of such certification, and delivered to the
Holder.
“Business
Day” means any day other than a Saturday, Sunday or a day on which commercial
banks in The City of New York are authorized or required by law or executive
order to remain closed.
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“Common
Stock” means the Common Stock, par value $.00002 per share, or any shares of
capital stock of the Company into which such shares shall be changed or
reclassified after the Issuance Date.
“Common
Stock Equivalent” means any warrant, option, subscription or purchase right with
respect to shares of Common Stock, any security convertible into, exchangeable
for, or otherwise entitling the holder thereof to acquire, shares of Common
Stock or any warrant, option, subscription or purchase right with respect to
any
such convertible, exchangeable or other security.
“Company”
shall have the meaning provided in the first paragraph of this
Note.
“Company
Certificate” means a certificate of the Company signed by an
Officer.
“Company
Notice” means a Company Notice in the form attached hereto as Exhibit
B.
“Conversion
Date” means the date on which a Conversion Notice is given in accordance with
Section 5.2(a).
“Conversion
Notice” means
a
duly executed Notice of Conversion of 7% Senior Subordinated Secured Convertible
Note due 2008 substantially in the form of Exhibit
D
to this
Note.
“Conversion
Price” means
$1.10, subject to adjustment as provided in Section 5.3; provided, however,
that
in the event the Company does not attain the revenue or EBITDA amounts for
the
fiscal year ended June 30, 2007 set forth on Exhibit E hereto, as reflected
in
the audited financial statements of the Company filed with the Securities and
Exchange Commission and as certified to the Buyers in a Company Certificate
delivered to Buyers no later than the date of such filing or October 15, 2007,
whichever date is earlier, a portion or all of this Note shall have a Conversion
Price of $.50 (subject to adjustment as provided in Section 5.3), such amount
to
be calculated in accordance with Exhibit E hereof.
“Current
Fair Market Value” means when used with respect to the Common Stock as of a
specified date with respect to each share of Common Stock, the average of the
closing prices of the Common Stock sold on all securities exchanges on which
the
Common Stock may at the time be listed, or, if there have been no sales on
any
such exchange on such day, the average of the last sales price on all such
exchanges at the end of the most recent day on which there was a sale on any
such exchange, or, if on the day of determination of Current Fair Market Value
the Common Stock is not so listed, the average of the last sales price quoted
in
the NASDAQ System as of 4:00 p.m., New York City time, or, if on such day the
Common Stock is not quoted in the NASDAQ System, the average of the last sales
price on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of the five most recent Trading Days
on
which sales of the Company’s stock occurred prior to the day as of which the
Current Fair Market Value of Common Stock is being determined (or if such day
is
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not
a
Trading Day, the Trading Day next preceding such day). If on the date for which
Current Fair Market Value is to be determined the Common Stock is not listed
on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Current Fair Market Value of Common Stock shall be the highest
price
per share which the Company could then obtain from a willing buyer (not an
employee or director of the Company at the time of determination) in an
arms'-length transaction for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by the Board of
Directors.
“Current
Market Price” shall
mean the arithmetic average of the daily Market Prices per share of Common
Stock
for the ten consecutive Trading Days immediately prior to the date in question;
provided,
however, that
(1)
if the “ex” date (as hereinafter defined) for any event (other than the issuance
or distribution requiring such computation) that requires an adjustment to
the
Conversion Price pursuant to Section 5.3(a), (b), (c), (d), (e), (f), (g) or
(h), occurs during such ten consecutive Trading Days, the Market Price for
each
Trading Day prior to the “ex” date for such other event shall be adjusted by
multiplying such Market Price by the same fraction by which the Conversion
Price
is so required to be adjusted as a result of such other event, (2) 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
Section 5.3(a), (b), (c), (d), (e), (f), (g) or (h), occurs on or after the
“ex”
date for the issuance or distribution requiring such computation and prior
to
the day in question, the Market Price for each Trading Day on and after the
“ex”
date for such other event shall be adjusted by multiplying such Market Price
by
the reciprocal of the fraction by which the Conversion Price is so required
to
be adjusted as a result of such other event, and (3) if the “ex” date for the
issuance or distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to clause
(1) or (2) of this proviso, the Market 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 (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section 5.3(d)
or (f), whose determination shall be conclusive and 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 purposes of any computation under
Section 5.3(f), the Current Market Price of the Common Stock on any date shall
be deemed to be the arithmetic average of the daily Market Prices per share
of
Common Stock for such day and the next two succeeding Trading Days; 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
Section 5.3(a), (b), (c), (d), (e), (f), (g) or (h), occurs on or after the
Expiration Time for the Tender Offer requiring such computation and prior to
the
day in question, the Market Price for each Trading Day on and after the “ex”
date for such other event shall be adjusted by multiplying such Market Price
by
the reciprocal of the fraction by which the Conversion Price is so required
to
be adjusted as a result of such other event. For purposes of this paragraph,
the
term “ex” date, (1) 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 Market Price was
obtained without the right to receive such issuance or distribution, (2) 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
-27-
becomes
effective, and (3) when used with respect to any Tender Offer means the first
date on which the Common Stock trades, regular way, on such exchange or in
such
market after the Expiration Time of such Tender Offer. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Price are called
for pursuant to Section 5.3, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the intent of
Section 5.3 and to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.
“Default
Interest” shall have the meaning provided in the first paragraph of this
Note.
“Default
Rate” means 10 percent per annum.
“Eligible
Bank” means a corporation organized or existing under the laws of the United
States or any other state, having combined capital and surplus of at least
$100
million and subject to supervision by federal or state authority and which
has a
branch located in New York, New York.
“Expiration
Time” shall have the meaning provided in Section 5.3(f).
“Event
of
Default” shall have the meaning provided in Section 3.1.
“Fundamental
Change” means
(a) Any
consolidation or merger of the Company or any Subsidiary with or into another
entity (other than a merger or consolidation of a Subsidiary into the Company
or
a wholly-owned Subsidiary) where the stockholders of the Company immediately
prior to such transaction do not collectively own at least 75% of the
outstanding voting securities of the surviving corporation of such consolidation
or merger immediately following such transaction; or the sale of all or
substantially all of the assets of the Company and the Subsidiaries in a single
transaction or a series of related transactions; or
(b) The
occurrence of any transaction or event in connection with which all or
substantially all the Common Stock shall be exchanged for, converted into,
acquired for or constitute the right to receive consideration (whether by means
of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise) which is not
all
or substantially all common stock which is (or will, upon consummation of or
immediately following such transaction or event, will be) listed on a national
securities exchange or approved for quotation on Nasdaq or any similar United
States system of automated dissemination of transaction reporting of securities
prices; or
(c) The
acquisition by a Person or entity or group of Persons or entities acting in
concert as a partnership, limited partnership, syndicate or group, as a result
of a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, of
-28-
beneficial
ownership of securities of the Company representing 25% or more of the combined
voting power of the outstanding voting securities of the Company ordinarily
(and
apart from rights accruing in special circumstances) having the right to vote
in
the election of directors; provided, however, that any re-allocation of shares
of the Company’s Common Stock currently held by Old Berliner, Inc. that may, at
some future date, be distributed to the stockholders of Old Berliner shall
not
constitute a Fundamental Change; or
(d) A
change
in the current Chairman of the Board, President, or Chief Executive Officer
of
the Company or BCI, which officer is not replaced within 90 days with a person
reasonably acceptable to Sigma.
“Generally
Accepted Accounting Principles” for any Person means the generally accepted
accounting principles and practices applied by such Person from time to time
in
the preparation of its audited financial statements.
“Holder”
shall have the meaning provided in the first paragraph of this
Note.
“Holder
Notice” means a Holder Notice in the form attached hereto as Exhibit
C.
“Indebtedness”
as used in reference to any Person means all indebtedness of such Person for
borrowed money, the deferred purchase price of property, goods and services
and
obligations under leases which are required to be capitalized in accordance
with
Generally Accepted Accounting Principles and shall include all such indebtedness
guaranteed in any manner by such Person or in effect guaranteed by such Person
through a contingent agreement to purchase and all indebtedness for the payment
or purchase of which such Person has contingently agreed to advance or supply
funds and all indebtedness secured by mortgage or other lien upon property
owned
by such Person, although such Person has not assumed or become liable for the
payment of such indebtedness, and, for all purposes hereof, such indebtedness
shall be treated as though it has been assumed by such Person.
“Interest
Payment Date” means each January 1, April 1, July 1, and October 1 and the
Maturity Date.
“Issuance
Date” means December 29, 2006.
“Market
Price” with
respect to any security on any day shall mean the closing bid price of such
security on such day on the Nasdaq, the NYSE or the AMEX, as applicable, or,
if
such security is not listed or admitted to trading on the Nasdaq, the NYSE
or
the AMEX, on the principal national securities exchange or quotation system
on
which such security is quoted or listed or admitted to trading, in any such
case
as reported by Bloomberg, L.P. (or if such source ceases to be available,
comparable source selected by the Holder and acceptable to the Company in its
reasonable judgment) or, if not quoted or listed or admitted to trading on
any
national securities exchange or quotation system, the average of the closing
bid
and asked prices of such security on the over-the-counter market on the day
in
question, as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or if not so
-29-
available,
in such manner as furnished by any NYSE member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution.
“Maturity
Date” means the earlier of December 29, 2008 or such date that the Note is
redeemed.
“Nasdaq”
means the Nasdaq Global Market or Global Select Market.
“Nasdaq
Capital Market” means the Nasdaq Capital Market.
“1934
Act” means the Securities Exchange Act of 1934, as amended.
“1933
Act” means the Securities Act of 1933, as amended.
“Note”
means this instrument as originally executed, or if later amended or
supplemented in accordance with its terms, then as so amended or supplemented.
“Note
Purchase Agreement” means the Note Purchase Agreement, dated as of December 29,
2006, by and among the Company and the original Holders of this Note and the
Other Notes.
“NYSE”
means the New York Stock Exchange, Inc.
“Officer”
means the Chairman of the Board, the Chief Executive Officer, the President
or
the Chief Financial Officer of the Company.
“Optional
Redemption Date” means each Business Day on which this Note is to be redeemed in
whole or in part pursuant to Section 1.1.
“Optional
Redemption Notice” means an Optional Redemption Notice in the form attached
hereto as Exhibit
A.
“Optional
Redemption Period” means the period which commences on the date that is one year
after the Closing Date and ends on the Maturity Date.
“Optional
Redemption Price” means an amount in cash equal to the sum of (1) 100% of the
outstanding principal amount of this Note specified in an Optional Redemption
Notice as being redeemed by the Company plus
(2)
accrued and unpaid interest on such principal amount to the applicable Optional
Redemption Date plus
(3)
accrued and unpaid Default Interest, if any, on the amount referred to in the
immediately preceding clause (2) at the rate provided in this Note to the
Optional Redemption Date.
“Other
Notes” means the 7% Senior Subordinated Secured Convertible Promissory Notes due
2008, dated December 29, 2006, issued by the Company pursuant to the Note
Purchase Agreement other than this Note.
-30-
"Other
Warrants" means the Common Stock Purchase Warrants issued by the Company to
the
original holder of this Note in connection with the Other Notes.
“Permitted
Indebtedness” means
(1) Indebtedness
outstanding on the Issuance Date prior to issuance of this Note and listed
on
Schedule 4(l) to the Note Purchase Agreement; and
(2) Indebtedness
evidenced by the Note and the Other Notes;
(3) Indebtedness
incurred after the Issuance Date which is unsecured, subordinated to this Note
and the Other Notes as to payment on terms approved in advance of such
incurrence by the Holder of this Note and the Other Notes as evidenced by the
written approval of the Holders given prior to the incurrence of such
Indebtedness, and for which no payment of principal of such Indebtedness is
scheduled to be due prior to the date that is six months after the latest
scheduled Maturity Date;
(4) endorsements
for collection or deposit in the ordinary course of business; and
(5) Indebtedness
owed by the Company or any Subsidiary to the Company or BCI;
(6) Indebtedness
in connection with performance and bid bonds obtained by BCI in the ordinary
course of its business;
(7) Indebtedness
evidenced by an Acquisition Note;
(8) the
Senior Debt and all renewals, extensions, replacements (including by another
lender) and modifications thereof; and
(9) Indebtedness
incurred to finance the purchase or lease of equipment to the extent that the
indebtedness relating thereto does not exceed $250,000 at any date.
so
long
as at the time of incurrence of such Indebtedness no Event of Default has
occurred and is continuing or would result from such incurrence and no event
which, with notice or passage of time, or both, would become an Event of Default
has occurred and is continuing or would result from such incurrence and so
long
as in the case of such Indebtedness referred to in the preceding clauses (2)
thru (6), inclusive, such Indebtedness shall have been approved by the Board
of
Directors prior to the incurrence thereof.
“Person”
means any natural person, corporation, partnership, limited liability company,
trust, incorporated organization, unincorporated association or similar entity
or any government, governmental agency or political subdivision.
-31-
“QIB”
means a “qualified institutional buyer” as defined in Rule 144A.
“Record
Date” shall
mean, with respect to any dividend, distribution or other transaction or event
in which the holders of Common Stock have the right to receive any cash,
securities or other property or in which the Common Stock (or other applicable
security) is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders entitled
to
receive such cash, securities or other property (whether such date is fixed
by
the Board of Directors or by statute, contract or otherwise).
“Registration
Statement” means the Registration Statement required to be filed by the Company
with the SEC pursuant to Section 8(a)(1) of the Note Purchase
Agreement.
“Repurchase
Event” means the occurrence of any one or more of the following
events:
(a) The
Common Stock ceases to be traded on the Over-The-Counter Bulletin Board and
is
not listed for trading on Nasdaq, the NYSE or the AMEX;
(b) Any
Fundamental Change;
(c) The
adoption of any amendment to the Company's Certificate of Incorporation (other
than any certificate designating a series of preferred stock of the Company)
which materially and adversely affects the rights of the Holder or the taking
of
any other action by the Company which materially and adversely affects the
rights of the Holder in respect of the Holder’s interest in the Common Stock in
a different and more adverse manner than it affects the rights of holders of
Common Stock generally;
(d) The
inability of the Holder for 20 Trading Days (whether or not consecutive) during
any period of 365 consecutive days occurring on or after the SEC Effective
Date
to sell shares of Common Stock issued or issuable upon conversion of this Note
or exercise of the Warrants pursuant to the Registration Statement (1) by reason
of the requirements of the 1933 Act, the 1934 Act or any of the rules or
regulations under either thereof or (2) due to the Registration Statement
containing any untrue statement of material fact or omitting to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or other failure of the Registration Statement to comply with
the
rules and regulations of the SEC other than by reason of a review by the SEC
staff of the Registration Statement or a post effective amendment to the
Registration Statement; or
(f) The
occurrence of any Event of Default specified in Article III of this
Note.
“Repurchase
Price” means with respect to any repurchase pursuant to Sections 4.1 and 4.2 an
amount in cash equal to the sum of (1) 100% of the outstanding principal amount
of this Note plus
(2)
accrued and unpaid interest on such principal amount to the date of
such
-32-
repurchase
plus
(3)
accrued and unpaid Default Interest, if any, thereon at the rate provided in
this Note to the date of such repurchase.
“Rule
144A” means Rule 144A as promulgated under the 1933 Act or any successor rule
thereto.
“SEC”
means the Securities and Exchange Commission.
“SEC
Effective Date” means the date the Registration Statement is first declared
effective by the SEC.
“Significant
Subsidiary” shall have the meaning provided in Regulation S-X of the SEC, except
that a Subsidiary shall not be a Significant Subsidiary only if such Subsidiary,
when consolidated for financial reporting purposes with all other Subsidiaries
which are not Significant Subsidiaries, would not constitute a Significant
Subsidiary.
“Subsidiary”
means any corporation or other entity of which a majority of the capital stock
or other ownership interests having ordinary voting power to elect a majority
of
the board of directors or other Persons performing similar functions are at
the
time directly or indirectly owned by the Company.
“Tender
Offer” means a tender offer or exchange offer.
“Trading
Day” means at any time a day on which any of a national securities exchange,
Nasdaq, the OTC Bulletin Board or such other securities market as at such time
constitutes the principal securities market for the Common Stock is open for
general trading of securities.
“Trading
Market” means the Over-The-Counter Bulletin Board, the American Stock Exchange,
Inc., the Nasdaq, or the New York Stock Exchange, Inc.
“Transaction
Documents” has the meaning provided in the Note Purchase Agreement.
“Transfer
Agent” means American Stock Transfer & Trust Company, or its successor as
transfer agent and registrar for the Common Stock.
“Warrants”
means Common Stock Purchase Warrants of the Company issued to the original
Holder of this Note pursuant to the Note Purchase Agreement.
-33-
ARTICLE
VII
MISCELLANEOUS
7.1 Failure
or Indulgency Not Waiver.
No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privileges. All rights
and remedies existing hereunder are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
7.2 Notices.
Except
as otherwise specifically provided herein, any notice herein required or
permitted to be given shall be in writing and may be personally served, sent
by
telephone line facsimile transmission or delivered by courier or sent by United
States mail and shall be deemed to have been given upon receipt if personally
served, sent by telephone line facsimile transmission or sent by courier or
three days after being deposited in the facilities of the United States Postal
Service, certified, with postage pre-paid and properly addressed, if sent by
mail. For the purposes hereof, the address and facsimile line transmission
number of the Holder shall be as furnished by the Holder for such purpose and
shown on the records of the Company; and the address of the Company shall be
▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: Chief Executive Officer
(telephone line facsimile transmission number (▇▇▇)▇▇▇-▇▇▇▇).
The
Holder or the Company may change its address for notice by service of written
notice to the other as herein provided.
7.3 Amendment,
Waiver, Etc.
Neither
this Note nor any terms hereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in writing signed by
(x)
the Company if the Company is to be charged with enforcement or (y) by a
majority in interest of the Holders of this Note and the Other Notes, if the
Holders are to be charged with enforcement, based upon the aggregate principal
amount of the Notes and Other Notes then outstanding, and in any such case
shall
be effective only in the specific instance and for the purpose for which given.
7.4 Assignability. This
Note
shall be binding upon the Company and its successors, and shall inure to the
benefit of and be binding upon the Holder and its successors and permitted
assigns. The Company may not assign its rights or obligations under this
Note.
7.5 Certain
Expenses. The
Company shall pay on demand all expenses incurred by the Holder, including
reasonable attorneys' fees and expenses, as a consequence of, or in connection
with (x) any amendment or waiver of this Note or any other Transaction Document,
(y) any default or breach of any of the Company’s obligations set forth in the
Transaction Documents and (z) the enforcement or restructuring of any right
of,
including the collection of any payments due, the Holder under the Transaction
Documents, including any action or proceeding relating to such enforcement
or
any order, injunction or other process seeking to restrain the Company from
paying any amount due the Holder.
-34-
7.6 Governing
Law.
This
Note shall be governed by the internal laws of the State of New York, without
regard to the principles of conflict of laws.
7.7 Transfer
of Note and Noteholder Payment Amount.
This
Note has not been and is not being registered under the provisions of the 1933
Act or any state securities laws and this Note may not be transferred unless
the
Holder shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that
this Note may be sold or transferred without registration under the 1933 Act.
Prior to any such transfer, such transferee shall have represented in writing
to
the Company that such transferee has requested and received from the Company
all
information relating to the business, properties, operations, condition
(financial or other), results of operations or prospects of the Company and
the
Subsidiaries deemed relevant by such transferee; that such transferee has been
afforded the opportunity to ask questions of the Company concerning the
foregoing and has had the opportunity to obtain and review the reports and
other
information concerning the Company which at the time of such transfer have
been
filed by the Company with the SEC pursuant to the 1934 Act. If such transfer
is
intended to assign the rights and obligations under 5(a), 5(b), 8, 9 and 10
of
the Note Purchase Agreement, such transfer shall otherwise be made in compliance
with Article V of the Note Purchase Agreement.
7.8 Enforceable
Obligation. The
Company represents and warrants that at the time of the original issuance of
this Note it received the full purchase price payable pursuant to the Note
Purchase Agreement in an amount at least equal to the original principal amount
of this Note, and that this Note is an enforceable obligation of the Company
which is not subject to any offset, reduction, counterclaim or disallowance
of
any sort.
7.9 Note
Register; Replacement of Notes. The
Company shall maintain a register showing the names, addresses and telephone
line facsimile numbers of the Holder and the registered holders of the Other
Notes. The Company shall also maintain a facility for the registration of
transfers of this Note and the Other Notes and at which this Note and the Other
Notes may be surrendered for split up into instruments of smaller denominations
or for combination into instruments of larger denominations. Upon receipt by
the
Company of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Note and (a) in the case of
loss,
theft or destruction, of indemnity from the Holder reasonably satisfactory
in
form to the Company (and without the requirement to post any bond or other
security) or (b) in the case of mutilation, upon surrender and cancellation
of
this Note, the Company will execute and deliver to the Holder a new Note of
like
tenor without charge to the Holder.
7.10 Payment
of Note on Redemption or Repurchase; Deposit of Redemption Price or Repurchase
Price, Etc.
(a)
If
this Note or any portion of this Note is to be redeemed as provided in
Section 1.1 or repurchased as provided in Sections 4.1 and 4.2 and any
notice required in connection therewith shall have been given as provided
therein and the Company shall have otherwise complied with the requirements
of
this Note with respect thereto, then this Note or the portion of this Note
to be
so redeemed or repurchased and with respect to which any such notice has been
given shall become due and payable on the date stated in such notice at the
applicable Optional Redemption Price or Repurchase Price. On and after
the
-35-
Optional
Redemption Date or repurchase date so stated in such notice, provided that
the
Company shall have deposited with an Eligible Bank on or prior to such Optional
Redemption Date or repurchase date, an amount sufficient to pay the applicable
Optional Redemption Price or Repurchase Price, interest on this Note or the
portion of this Note to be so redeemed or repurchased shall cease to accrue,
and
this Note or such portion hereof shall be deemed not to be outstanding and
shall
not be entitled to any benefit with respect to principal of or interest on
the
portion to be so redeemed or repurchased except to receive payment of the
applicable Optional Redemption Price or Repurchase Price. On presentation and
surrender of this Note or such portion hereof, this Note or the specified
portion hereof shall be paid and redeemed or repurchased at the applicable
Optional Redemption Price or Repurchase Price. If a portion of this Note is
to
be redeemed or repurchased, upon surrender of this Note to the Company in
accordance with the terms hereof, the Company shall execute and deliver to
the
Holder without service charge, a new Note or Notes, having the same date hereof
and containing identical terms and conditions, in such denomination or
denominations as requested by the Holder in aggregate principal amount equal
to,
and in exchange for, the unredeemed or unrepurchased portion of the principal
amount of this Note so surrendered.
(b) Upon
the
payment in full of all amounts payable by the Company under this Note or the
deposit thereof as provided in Section 7.10(a), thereafter the obligations
of
the Company under this Note shall be as set forth in this Article VII, and,
in
the case of such deposit, to pay the Optional Redemption Price or Repurchase
Price, as the case may be, from the funds so deposited. Upon such payment or
deposit, any Event of Default which occurred prior to such payment or deposit
by
reason of one or more provisions of this Note with which the Company thereafter
is no longer obligated to comply, then shall no longer exist.
[Remainder
of Page Intentionally Left Blank]
-36-
IN
WITNESS WHEREOF,
the
Company has caused this Note to be signed in its name by its duly authorized
officer as of the day and in the year first above written.
BERLINER
COMMUNICATIONS, INC.
By:
/s
▇▇▇▇
▇▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Chief Executive Officer
-37-
For
value
received _________________________ hereby sell(s), assign(s) and transfer(s)
unto _________________________ (Please insert social security or other Taxpayer
Identification Number of assignee: ______________________________) the within
Note, and hereby irrevocably constitutes and appoints _________________________
attorney to transfer the said Note on the books of Berliner Communications,
Inc., a Delaware corporation (the “Company”), with full power of substitution in
the premises.
In
connection with any transfer of the Note within the period prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the 1933 Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under
the
1933 Act), the undersigned confirms that such Note is being
transferred:
| o |
To
the Company or a subsidiary thereof;
or
|
| o |
To
a QIB pursuant to and in compliance with Rule 144A;
or
|
| o |
To
an “accredited investor” pursuant to and in compliance with the
1933 Act; or
|
| o |
Pursuant
to and in compliance with Rule 144 under the 1933 Act;
|
and
unless the box below is checked, the undersigned confirms that, to the knowledge
of the undersigned, such Note is not being transferred to an “affiliate” of the
Company as defined in Rule 144 under the 1933 Act (an “Affiliate”).
| o |
The
transferee is an Affiliate of the
Company.
|
Capitalized
terms used in this Assignment and not defined in this Assignment shall have
the
respective meanings provided in the Note.
Dated:___________________
|
NAME:
|
|
|
Signature(s)
|
-38-
Exhibit
A
BERLINER
COMMUNICATIONS, INC.
OPTIONAL
REDEMPTION NOTICE
(Section 1.1
of 7% Senior Subordinated Secured
Convertible
Note due 2008)
TO:
(Name
of
Holder)
(1) Pursuant
to the terms of the 7% Senior Subordinated Secured Convertible Note due 2008
(the “Note”), Berliner Communications, Inc., a Delaware corporation (the
“Company”), hereby notifies the above-named Holder that the Company is
exercising its right to redeem the Note in accordance with Section 1.1 of
the Note as set forth below:
(i) The
principal amount of the Note to be redeemed is $ .
(ii) The
Optional Redemption Price is $ .
(iii) The
Optional Redemption Date is .
(2) All
of
the conditions specified in Section 1.1 of the Note entitling the Company to
call the Note for redemption have been satisfied.
(3) Capitalized
terms used herein and not otherwise defined herein have the respective meanings
provided in the Note.
Date
_________________________
BERLINER
COMMUNICATIONS, INC.
By:
Title:
A-1
Exhibit
B
BERLINER
COMMUNICATIONS, INC.
COMPANY
NOTICE
(Section 4.2(a)
of 7% Senior Subordinated Secured
Convertible
Note due 2008)
TO:
(Name
of
Holder)
(1) A
Repurchase Event described in the 7% Senior Subordinated Secured Convertible
Note due 2008 (the “Note”) of Berliner Communications, Inc., a Delaware
corporation (the “Company”), occurred on ,
200 .
As a
result of such Repurchase Event, the Holder is entitled to exercise its
repurchase rights pursuant to Section 4.2 of the Note.
(2) The
Holder’s repurchase right must be exercised on or before ,
200 .
(3) At
or
before the date set forth in the preceding paragraph (2), the Holder must
deliver to the Company:
(a) a
Holder
Notice, in the form attached as Exhibit
C
to the
Note; and
(b) the
Note,
duly endorsed for transfer to the Company of the portion of the principal amount
to be repurchased.
(4) Capitalized
terms used herein and not otherwise defined herein have the respective meanings
provided in the Note.
Date
_________________________
BERLINER
COMMUNICATIONS, INC.
By:
Title:
B-1
Exhibit
C
BERLINER
COMMUNICATIONS, INC.
HOLDER
NOTICE
(Section 4.2(b)
of 7% Senior Subordinated Secured
Convertible
Note due 2008)
| TO: |
BERLINER
COMMUNICATIONS, INC.
|
(1) Pursuant
to the terms of the 7% Senior Subordinated Secured Convertible Note due 2008
(the “Note”), the undersigned Holder hereby elects to exercise its right to
require repurchase by the Company pursuant to Sections 4.2(a) and 4.2(b) of
$
of the
Note, equal to the sum of $
principal amount of the Note, $
of
accrued and unpaid interest on such principal amount and $
of
Default Interest on such interest at the Repurchase Price provided in the
Note.
(2) Capitalized
terms used herein and not otherwise defined herein have the respective meanings
provided in the Note.
Date:__________
NAME
OF
HOLDER:
By:
Signature
of Registered Holder
(Must
be
signed exactly as name appears
in the Note.)
C-1
Exhibit
D
NOTICE
OF CONVERSION
OF
7% SENIOR SUBORDINATED SECURED CONVERTIBLE
NOTE
DUE 2008
OF
BERLINER COMMUNICATIONS, INC.
|
To:
Berliner Communications, Inc.
[Address]
Facsimile
No.: (___) _________
[Transfer
Agent]
[Address]
Attention:
Facsimile
No.: (____) _____________
|
|
1. Pursuant
to the terms of the 7% Senior Subordinated Secured Convertible Note due 2008
(the “Note”), the undersigned hereby elects to convert $_______________ of the
Note, equal to the sum of $_______________ principal amount of the Note,
$_______________ of accrued and unpaid interest on such principal amount and
$_______________ of Default Interest on such interest into shares of Common
Stock of Berliner Communications, Inc., a Delaware corporation (the “Company”),
at a Conversion Price per share equal to $_______________. Capitalized terms
used herein and not otherwise defined herein have the respective meanings
provided in the Note.
2. The
number of shares of Common Stock issuable upon the conversion of the Note to
which this Notice relates is _______________ (the “Conversion Shares”).
3. Please
issue a certificate or certificates for _______________ shares of Common Stock
in the name(s) specified immediately below or, if additional space is necessary,
on an attachment hereto:
|
Name
|
Name
|
|
|
Address
|
Address
|
|
|
SS
or Tax ID Number
|
SS
or Tax ID Number
|
|
|
Delivery
Instructions for Common Stock:
|
||
D-1
4. If
the
shares of Common Stock issuable upon conversion of the Note have not been
registered for resale under the Securities Act of 1933, as amended (the “Act”),
and the provisions of Rule 144(k) under the 1933 Act are inapplicable to the
undersigned with respect to the Conversion Shares relating to this Notice,
the
undersigned represents and warrants that (i) the shares of Common Stock issuable
upon the conversion of the Note to which this Notice relates are being acquired
for the account of the undersigned for investment, and not with a view to,
or
for resale in connection with, the distribution thereof, and that the
undersigned has no present intention of distributing or reselling such shares
and (ii) the undersigned is an “accredited investor” as defined in Regulation D
under the ▇▇▇▇ ▇▇▇. If the provisions of Rule 144(k) under the 1933 Act are
inapplicable to the undersigned with respect to the Conversion Shares relating
to this Notice, the undersigned further agrees that (A) such shares shall not
be
sold or transferred unless (i) they first shall have been registered under
the
1933 Act and applicable state securities laws or (ii) the Company shall have
been furnished with an opinion of legal counsel reasonably satisfactory in
form,
scope and substance to the Company to the effect that such sale or transfer
is
exempt from the registration requirements of the 1933 Act and (B) until such
shares are registered for resale by the undersigned under the 1933 Act, the
Company may place a legend on the certificate(s) for the shares to that effect
and place a stop-transfer restriction in its records relating to the
shares.
|
NAME:
|
|||
| Date: | |||
|
Signature
of Registered Holder
|
|||
|
(Must
be signed exactly as name appears
in the Note.)
|
D-2